RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP (JJS)
Plaza VII
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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Freddie Mac Loan No. 981222048
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC.
MULTIFAMILY LEASEHOLD DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(CALIFORNIA)
ATTENTION COUNTY RECORDER: THIS INSTRUMENT IS INTENDED TO BE EFFECTIVE
AS A FINANCING STATEMENT FILED AS A FIXTURE FILING PURSUANT TO SECTION
9402 OF THE CALIFORNIA COMMERCIAL CODE. PORTIONS OF THE GOODS
COMPRISING A PART OF THE MORTGAGED PROPERTY ARE OR ARE TO BECOME
FIXTURES RELATED TO THE LAND DESCRIBED IN EXHIBIT A HERETO. THIS
INSTRUMENT IS TO BE FILED FOR RECORD IN THE RECORDS OF THE COUNTY WHERE
DEEDS OF TRUST ON REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED AS
BOTH A DEED OF TRUST AND AS A FINANCING STATEMENT COVERING FIXTURES.
THE ADDRESSES OF GRANTOR (DEBTOR) AND LENDER (SECURED PARTY) ARE
SPECIFIED IN THE FIRST PARAGRAPH ON PAGE 1 OF THIS INSTRUMENT.
BROOKDALE LIVING COMMUMITIES OF CALIFORNIA - RC, INC.
LEASEHOLD
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND
FIXTURE FILING
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (the "Instrument") is made as of this 18th day of December,
1998, by BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC., a corporation
organized and existing under the laws of Delaware, whose address is ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as trustor ("Grantor"), to
CHICAGO TITLE COMPANY, as trustee ("Trustee"), for the benefit of ▇▇▇▇▇▇
FINANCIAL GROUP, INC., a corporation organized and existing under the laws of
Minnesota, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as beneficiary ("Lender").
The Woodside Business Trust, a Delaware business trust ("Borrower") is
justly indebted to the Lender in the principal sum of thirty one million five
hundred thousand dollars ($31,500,000) for money loaned ("Loan") to Borrower by
▇▇▇▇▇▇, as evidenced by that certain Multifamily Note of even date herewith,
issued by ▇▇▇▇▇▇▇▇ and made payable to the order of Lender (the "Note") and
secured by the Multifamily Deed of Trust, Assignment of Rents and Security
Agreement executed by the Borrower (the "Borrower Mortgage"). Grantor has
guaranteed to Lender the payment and performance of ▇▇▇▇▇▇▇▇'s obligations under
the Note pursuant to a certain Brookdale California - RC Multifamily Guaranty
Agreement of even date herewith from Grantor to Lender (the "Brookdale Calif -
RC Guaranty"). The Brookdale Calif - RC Guaranty is a valid, binding and legally
enforceable obligation of Grantor, and this Instrument is a valid, binding and
legally enforceable Instrument.
Grantor, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the leasehold estate (the
"Leasehold Estate") acquired by the Grantor pursuant to that certain lease dated
December 18, 1998, entered into by and between Borrower and Grantor (the
"Operator Lease") and described in Exhibit C attached to this Instrument for the
Leasehold Estate on the Land located in San Mateo County, State of California
and described in Exhibit A attached to this Instrument.
TO SECURE TO LENDER the payment of the Indebtedness, the payment of all
sums advanced by or on behalf of Lender to protect the security of this
Instrument under Section 12, and the performance of the covenants and agreements
of Grantor contained in the Loan Documents.
Grantor represents and warrants that Grantor is lawfully seized of the
Mortgaged Property and has the right, power and authority to grant, convey and
assign the Mortgaged Property, and that the Mortgaged Property is unencumbered.
Grantor covenants that Grantor will warrant and defend generally the title to
the Mortgaged Property against all claims and demands, subject to
any easements and restrictions listed in a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously with the execution
and recordation of this Instrument and insuring ▇▇▇▇▇▇'s interest in the
Mortgaged Property pursuant to this Instrument. Covenants. ▇▇▇▇▇▇▇ and Lender
covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following meanings:
(a) "Borrower" and "Grantor" mean the entities identified as "Borrower"
and "Grantor" on the first page of this Instrument, together with all their
respective successors and assigns.
(b) "Collateral Agreement" means any separate agreement between Grantor
and Lender for the purpose of establishing replacement reserves for the
Mortgaged Property, establishing a fund to assure the completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Grantor and Lender which
provide for the establishment of any other fund, reserve or account.
(c) "Controlling Entity" means an entity which owns, directly or
indirectly through one or more intermediaries, (A) a general partnership
interest or more than 50% of the limited partnership interests in Grantor (if
Grantor is a partnership or joint venture), (B) a manager's interest in Grantor
or more than 50% of the ownership or membership interests in Grantor (if Grantor
is a limited liability company), or (C) more than 50% of any class of voting
stock of Grantor (if Grantor is a corporation).
(d) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.
(e) "Event of Default" means the occurrence of any event listed in
Section 22. "Fixtures" means all property which is so attached to the Land or
the Improvements as to constitute a fixture under applicable law, including:
machinery, equipment, engines, boilers, incinerators, installed building
materials; systems and equipment for the purpose of supplying or distributing
heating, cooling, electricity, gas, water, air, or light; antennas, cable,
wiring and conduits used in connection with radio, television, security, fire
prevention, or fire detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related machinery and equipment;
fire detection, prevention and extinguishing systems and apparatus; security and
access control systems and apparatus; plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,
dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants;
swimming pools; and exercise equipment.
(g) "Governmental Authority" means any board, commission, department or
body of any municipal, county, state or federal governmental unit, or any
subdivision of any of them, that has or acquires jurisdiction over the Mortgaged
Property or the use, operation or improvement of the Mortgaged Property.
(h) "Hazardous Materials" means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable
PAGE 2
materials; radioactive materials; polychlorinated biphenyls ("PCBs") and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(i) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Grantor or to the Mortgaged Property.
Hazardous Materials Laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the
Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, and their state analogs.
(j) "Impositions" and "Imposition Deposits" are defined in Section
7(a).
(k) "Improvements" means the buildings, structures, improvements, and
alterations now constructed or at any time in the future constructed or placed
upon the Land, including any future replacements and additions.
(l) "Indebtedness" means the principal of, interest on, and all other
amounts due at any time under, the Brookdale Calif - RC Guaranty, this
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances as provided in Section 12 to protect the
security of this Instrument.
(m) "Initial Owners" means, with respect to Grantor, the persons or
entities who on the date of the Note own in the aggregate 100% of the ownership
interests in Grantor.
(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all of Grantor's interest in present and future
leases, residential agreements, subleases, licenses, concessions or grants or
other possessory interests now or hereafter in force, whether oral or written,
covering or affecting the Mortgaged Property, or any portion of the Mortgaged
Property (including proprietary leases or occupancy agreements if Grantor is a
cooperative housing corporation), and all modifications, extensions or renewals.
The term "Leases" shall not include the Grantor's interest in the Operator Lease
or the Leasehold Estate.
(p) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument, or any subsequent holder of the Note.
(q) "Loan Documents" means the Brookdale Calif - RC Guaranty, this
Instrument, all guaranties, all indemnity agreements, all Collateral Agreements,
O&M Programs, and any other documents now or in the future executed by Grantor
or any guarantor in connection with the Indebtedness.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices under
the Note, this Instrument and any
PAGE 3
other Loan Document, and otherwise to service the loan evidenced by the Note for
the benefit of ▇▇▇▇▇▇. Unless Grantor receives notice to the contrary, the Loan
Servicer is the entity identified as "Lender" in the first paragraph of this
Instrument.
(s) "Mortgaged Property" means all of Grantor's present and future
right, title and interest in and to all of the following:
(1) Operator Lease and Leasehold Estate; provided, however,
the Grantor's rights in the certificates of deposit identified as
Certificate A and Certificate B in the Operator Lease shall not be
deemed to be a part of the Mortgaged Property;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights,
development rights, zoning rights and other similar rights or
interests, easements, tenements, rights-of-way, strips and gores of
land, streets, alleys, roads, sewer rights, waters, watercourses, and
appurtenances related to or benefitting the Land or the Improvements,
or both, and all rights-of-way, streets, alleys and roads which may
have been or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the
Land, the Improvements, the Fixtures, the Personalty or any other part
of the Mortgaged Property, whether or not Grantor obtained the
insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be
made by any municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any other part
of the Mortgaged Property, including any awards or settlements
resulting from condemnation proceedings or the total or partial taking
of the Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property under the power of eminent domain
or otherwise and including any conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale
of the Leasehold Estate, the Improvements, the Fixtures, the Personalty
or any other part of the Mortgaged Property entered into by Grantor now
or in the future, including cash or securities deposited to secure
performance by parties of their obligations;
(9) all proceeds from the conversion, voluntary or
involuntary, of any of the above into cash or liquidated claims, and
the right to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of the
Mortgaged Property, and all undisbursed proceeds of the loan secured by
this Instrument and, if Grantor is a cooperative housing corporation,
maintenance charges or assessments payable by shareholders or
residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any municipal,
state or federal authority or insurance company (other than refunds
applicable to periods before the real property tax year in which this
Instrument is dated);
(14) all tenant or resident's security deposits which have not
been forfeited by any tenant under any Lease; and
PAGE 4
(15) all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade names, and
goodwill relating to any of the Mortgaged Property.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda, as such
Multifamily Note may be amended from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment (hardware
and software) and other tangible personal property (other than Fixtures) which
are used now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements and all other intangible property and rights relating to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or
non-residential space), service fees and charges, revenues and other income of
the Land or the Improvements, including parking fees, laundry and vending
machine income and fees and charges for food, health care and other services
provided at the Mortgaged Property, whether now due, past due, or to become due,
and deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are levied,
assessed or imposed by any public authority or quasi-public authority, and
which, if not paid, will become a lien, on the Land or the Improvements.
(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law); (B) the
granting, creating or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary or by operation of law); (C) the issuance or
other creation of an ownership interest in a legal entity, including a
partnership interest, interest in a limited liability company or corporate
stock; (D) the withdrawal, retirement, removal or involuntary resignation of a
partner in a partnership or a member or manager in a limited liability company;
or (E) the merger, dissolution, liquidation, or consolidation of a legal entity
or the reconstitution of one type of legal entity into another type of legal
entity. "Transfer" does not include (i) a conveyance of the Mortgaged Property
at a judicial or non-judicial foreclosure sale under this Instrument or (ii) the
Mortgaged Property becoming part of a bankruptcy estate by operation of law
under the United States Bankruptcy Code. For purposes of defining the term
"Transfer," the term "partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and the term
"partner" shall mean a general partner, a limited partner and a joint venturer.
Notwithstanding anything in this paragraph to the contrary, a Transfer will not
include a transfer of the Mortgaged
PAGE 5
Property to the Borrower under the terms of the Operator Lease so long as the
Borrower satisfies the conditions set forth in section 17(e) hereof.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is also
a security agreement under the Uniform Commercial Code for any of the Mortgaged
Property which, under applicable law, may be subject to a security interest
under the Uniform Commercial Code, whether acquired now or in the future, and
all products and cash and non-cash proceeds thereof (collectively, "UCC
Collateral"), and Grantor hereby grants to Lender a security interest in the UCC
Collateral. Grantor shall execute and deliver to Lender, upon ▇▇▇▇▇▇'s request,
financing statements, continuation statements and amendments, in such form as
Lender may require to perfect or continue the perfection of this security
interest. Grantor shall pay all filing costs and all costs and expenses of any
record searches for financing statements that Lender may require. Without the
prior written consent of Lender, Grantor shall not create or permit to exist any
other lien or security interest in any of the UCC Collateral. If an Event of
Default has occurred and is continuing, Lender shall have the remedies of a
secured party under the Uniform Commercial Code, in addition to all remedies
provided by this Instrument or existing under applicable law. In exercising any
remedies, Lender may exercise its remedies against the UCC Collateral separately
or together, and in any order, without in any way affecting the availability of
▇▇▇▇▇▇'s other remedies. This Instrument constitutes a financing statement with
respect to any part of the Mortgaged Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; ▇▇▇▇▇▇ IN POSSESSION.
(a) As part of the consideration for the Indebtedness, Grantor absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention
of Grantor to establish a present, absolute and irrevocable transfer and
assignment to Lender of all Rents and to authorize and empower Lender to collect
and receive all Rents without the necessity of further action on the part of
Grantor. Promptly upon request by ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ agrees to execute and deliver
such further assignments as ▇▇▇▇▇▇ may from time to time require. Grantor and
▇▇▇▇▇▇ intend this assignment of Rents to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute assignment of
Rents, and for no other purpose, Rents shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if this
present, absolute and unconditional assignment of Rents is not enforceable by
its terms under the laws of the Property Jurisdiction, then the Rents shall be
included as a part of the Mortgaged Property and it is the intention of the
Grantor that in this circumstance this Instrument create and perfect a lien on
Rents in favor of Lender, which lien shall be effective as of the date of this
Instrument.
(b) After the occurrence of an Event of Default, Grantor authorizes
▇▇▇▇▇▇ to collect, sue for and compromise Rents and directs each tenant of the
Mortgaged Property to pay all Rents to, or as directed by, ▇▇▇▇▇▇. However,
until the occurrence of an Event of Default, Lender hereby grants to Grantor a
revocable license to collect and receive all Rents, to hold all Rents in trust
for the benefit of Lender and to apply all Rents to pay the amounts due under
the Operator Lease including the "Basic Rent" as defined in the Operator Lease
and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and expenses of
managing, operating and maintaining the Mortgaged Property,
PAGE 6
including utilities, Taxes and insurance premiums (to the extent not included in
Imposition Deposits), tenant improvements and other capital expenditures. So
long as no Event of Default has occurred and is continuing, the Rents remaining
after application pursuant to the preceding sentence may be retained by Grantor
free and clear of, and released from, ▇▇▇▇▇▇'s rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of Default, and
without the necessity of Lender entering upon and taking and maintaining control
of the Mortgaged Property directly, or by a receiver, Grantor's license to
collect Rents shall automatically terminate and Lender shall without notice be
entitled to all Rents as they become due and payable, including Rents then due
and unpaid. Grantor shall pay to Lender upon demand all Rents to which ▇▇▇▇▇▇ is
entitled. At any time on or after the date of ▇▇▇▇▇▇'s demand for Rents, Lender
may give, and Grantor hereby irrevocably authorizes Lender to give, notice to
all tenants of the Mortgaged Property instructing them to pay all Rents to
Lender, no tenant shall be obligated to inquire further as to the occurrence or
continuance of an Event of Default, and no tenant shall be obligated to pay to
Grantor any amounts which are actually paid to Lender in response to such a
notice. Any such notice by ▇▇▇▇▇▇ shall be delivered to each tenant personally,
by mail or by delivering such demand to each rental unit. Grantor shall not
interfere with and shall cooperate with ▇▇▇▇▇▇'s collection of such Rents.
(c) Grantor represents and warrants to Lender that Grantor has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the proceeds of
the loan evidenced by the Note), that Grantor has not performed, and Grantor
covenants and agrees that it will not perform, any acts and has not executed,
and shall not execute, any instrument which would prevent Lender from exercising
its rights under this Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any Rents for more
than two months prior to the due dates of such Rents. Grantor shall not collect
or accept payment of any Rents more than two months prior to the due dates of
such Rents.
(d) If an Event of Default has occurred and is continuing, Lender may,
regardless of the adequacy of Lender's security or the solvency of Grantor and
even in the absence of waste, enter upon and take and maintain full control of
the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and
maintenance of the Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of repairs to
the Mortgaged Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for
such other purposes as Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is continuing, regardless
of the adequacy of ▇▇▇▇▇▇'s security, without regard to Grantor's solvency and
without the necessity of giving prior notice (oral or written) to Grantor,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set forth
in the preceding sentence. If Lender elects to seek the appointment of a
receiver for the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Grantor, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the
appointment of a receiver ex parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender's entering upon and taking possession and control of
the Mortgaged Property, Grantor shall surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the
PAGE 7
case may be, all documents, records (including records on electronic or magnetic
media), accounts, surveys, plans, and specifications relating to the Mortgaged
Property and all security deposits and prepaid Rents. In the event Lender takes
possession and control of the Mortgaged Property, Lender may exclude Grantor and
its representatives from the Mortgaged Property. ▇▇▇▇▇▇▇ acknowledges and agrees
that the exercise by ▇▇▇▇▇▇ of any of the rights conferred under this Section 3
shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged
Property so long as Lender has not itself entered into actual possession of the
Land and Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be liable to
account only to Grantor and only for those Rents actually received. Lender shall
not be liable to Grantor, anyone claiming under or through Grantor or anyone
having an interest in the Mortgaged Property, by reason of any act or omission
of Lender under this Section 3, and Grantor hereby releases and discharges
Lender from any such liability to the fullest extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of taking control
of and managing the Mortgaged Property and collecting the Rents, any funds
expended by Lender for such purposes shall become an additional part of the
Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged Property
by Lender or the receiver, as the case may be, and any application of Rents as
provided in this Instrument shall not cure or waive any Event of Default or
invalidate any other right or remedy of Lender under applicable law or provided
for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY. (a)
As part of the consideration for the Indebtedness, Grantor absolutely and
unconditionally assigns and transfers to Lender all of Grantor's right, title
and interest in, to and under the Leases, including ▇▇▇▇▇▇▇'s right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease. It is the intention of Grantor to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Grantor's right, title
and interest in, to and under the Leases. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ intend this
assignment of the Leases to be immediately effective and to constitute an
absolute present assignment and not an assignment for additional security only.
For purposes of giving effect to this absolute assignment of the Leases, and for
no other purpose, the Leases shall not be deemed to be a part of the "Mortgaged
Property" as that term is defined in Section 1(s). However, if this present,
absolute and unconditional assignment of the Leases is not enforceable by its
terms under the laws of the Property Jurisdiction, then the Leases shall be
included as a part of the Mortgaged Property and it is the intention of the
Grantor that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.
(b) Until Lender gives notice to Grantor of ▇▇▇▇▇▇'s exercise of its
rights under this Section 4, Grantor shall have all rights, power and authority
granted to Grantor under any Lease (except as otherwise limited by this Section
or any other provision of this Instrument), including the right, power and
authority to modify the terms of any Lease or extend or terminate any Lease.
PAGE 8
Upon the occurrence of an Event of Default, the permission given to Grantor
pursuant to the preceding sentence to exercise all rights, power and authority
under Leases shall automatically terminate. Grantor shall comply with and
observe Grantor's obligations under all Leases, including Grantor's obligations
pertaining to the maintenance and disposition of tenant security deposits.
(c) Grantor acknowledges and agrees that the exercise by ▇▇▇▇▇▇, either
directly or by a receiver, of any of the rights conferred under this Section 4
shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged
Property so long as Lender has not itself entered into actual possession of the
Land and the Improvements. The acceptance by ▇▇▇▇▇▇ of the assignment of the
Leases pursuant to Section 4(a) shall not at any time or in any event obligate
Lender to take any action under this Instrument or to expend any money or to
incur any expenses. Lender shall not be liable in any way for any injury or
damage to person or property sustained by any person or persons, firm or
corporation in or about the Mortgaged Property. Prior to Lender's actual entry
into and taking possession of the Mortgaged Property, Lender shall not (i) be
obligated to perform any of the terms, covenants and conditions contained in any
Lease (or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the Lease
or the Mortgaged Property; or (iii) be responsible for the operation, control,
care, management or repair of the Mortgaged Property or any portion of the
Mortgaged Property. The execution of this Instrument by Grantor shall constitute
conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Mortgaged Property is and shall be that of Grantor,
prior to such actual entry and taking of possession.
(d) Upon delivery of notice by ▇▇▇▇▇▇ to Grantor of ▇▇▇▇▇▇'s exercise
of ▇▇▇▇▇▇'s rights under this Section 4 at any time after the occurrence of an
Event of Default, and without the necessity of Lender entering upon and taking
and maintaining control of the Mortgaged Property directly, by a receiver, or by
any other manner or proceeding permitted by the laws of the Property
Jurisdiction, Lender immediately shall have all rights, powers and authority
granted to Grantor under any Lease, including the right, power and authority to
modify the terms of any such Lease, or extend or terminate any such Lease.
(e) Grantor shall, promptly upon ▇▇▇▇▇▇'s request, deliver to Lender an
executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be for
initial terms of at least thirty days and not more than two years, and shall not
include options to purchase.
(f) Grantor shall not lease any portion of the Mortgaged Property for
non-residential use except with the prior written consent of Lender and ▇▇▇▇▇▇'s
prior written approval of the Lease agreement. Grantor shall not modify the
terms of, or extend or terminate, any Lease for non-residential use (including
any Lease in existence on the date of this Instrument) without the prior written
consent of Lender. Grantor shall, without request by ▇▇▇▇▇▇, deliver an executed
copy of each non-residential Lease to Lender promptly after such Lease is
signed. All non-residential Leases, including renewals or extensions of existing
Leases, shall specifically provide that (1) such Leases are subordinate to the
lien of this Instrument; (2) the tenant shall attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
sale or by Lender in any manner; (3) the tenant agrees to execute such further
evidences of attornment as
PAGE 9
Lender or any purchaser at a foreclosure sale may from time to time request; (4)
the Lease shall not be terminated by foreclosure or any other transfer of the
Mortgaged Property; (5) after a foreclosure sale of the Mortgaged Property,
Lender or any other purchaser at such foreclosure sale may, at Lender's or such
purchaser's option, accept or terminate such Lease; and (6) the tenant shall,
upon receipt after the occurrence of an Event of Default of a written request
from ▇▇▇▇▇▇, pay all Rents payable under the Lease to Lender.
(g) Grantor shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Grantor shall pay the Indebtedness when due in accordance
with the terms of the Brookdale Calif - RC Guaranty and the other Loan Documents
and shall perform, observe and comply with all other provisions of the Brookdale
Calif - RC Guaranty and the other Loan Documents. Grantor shall pay a prepayment
premium in connection with certain prepayments of the Indebtedness, including a
payment made after ▇▇▇▇▇▇'s exercise of any right of acceleration of the
Indebtedness, as provided in the Brookdale Calif - RC Guaranty.
6. LIMITS ON PERSONAL LIABILITY. (a) Except as otherwise provided in
this Section 6, Grantor shall have no personal liability under the Brookdale
Calif - RC Guaranty, this Instrument or any other Loan Document for the
repayment of the Indebtedness or for the performance of any other obligations of
Grantor under the Loan Documents, and ▇▇▇▇▇▇'s only recourse for the
satisfaction of the Indebtedness and the performance of such obligations shall
be Lender's exercise of its rights and remedies with respect to the Mortgaged
Property and any other collateral held by ▇▇▇▇▇▇ as security for the
Indebtedness. This limitation on Grantor's liability shall not limit or impair
Lender's enforcement of its rights against Grantor , Borrower, any other
guarantor of the Indebtedness or any guarantor of any obligations of Borrower or
Grantor.
(b) Grantor shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to ZERO percent (0%) of the principal balance
of the Note, plus any other amounts for which Grantor has personal liability
under the Brookdale Calif - RC Guaranty or this Instrument.
(c) In addition to Grantor's personal liability under Section 6 (b),
Grantor shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by ▇▇▇▇▇▇ as a
result of (i) failure of Grantor to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of this
Instrument and the amount of all security deposits collected by Grantor from
tenants then in residence; (ii) failure of Grantor to apply all insurance
proceeds and condemnation proceeds as required by this Instrument, or (iii)
failure of Grantor or Borrower to comply with Section 14(d) or (e) of this
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Grantor's personal liability under
Section 6(b) and (c), all payments made by ▇▇▇▇▇▇▇▇, Grantor or any guarantor of
the Note with respect to the Indebtedness and all amounts received by Lender
from the enforcement of its rights under this Instrument shall be applied first
to the portion of the Indebtedness for which Grantor has no personal liability.
PAGE 10
(e) Grantor shall become personally liable to Lender for the repayment
of all of the Indebtedness upon the occurrence of any of the following Events of
Default: (i) Grantor's or Borrower's acquisition of any property or operation of
any business not permitted by Section 33 of this Instrument, (ii) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Sections 16 or Section 21 of this Instrument, other than a
Transfer consisting solely of the involuntary removal or involuntary withdrawal
of a general partner in a limited partnership or a manager in a limited
liability company; or (iii) fraud or written intentional material
misrepresentation by Grantor, or any officer, director, partner, member or
employee of Grantor in connection with the application for or creation of the
Indebtedness or any request for any action or consent by ▇▇▇▇▇▇.
(f) In addition to any personal liability for the Indebtedness, Grantor
shall be personally liable to Lender for (i) the performance of all of Grantor's
obligations under Section 18 of this Instrument (relating to environmental
matters); (ii) the costs of any audit under Section 14(d) of this Instrument,
and (iii) any costs and expenses incurred by Lender in connection with the
collection of any amount for which Grantor is personally liable under this
Section 6, including fees and out of pocket expenses of attorneys and expert
witnesses and the costs of conducting any independent audit of ▇▇▇▇▇▇▇'s books
and records to determine the amount for which Grantor has personal liability.
(g) To the extent that Grantor has personal liability under this
Section 6, Lender may exercise its rights against Grantor personally without
regard to whether ▇▇▇▇▇▇ has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against Borrower or any guarantor,
or pursued any other rights available to Lender under the Note, the Brookdale
Calif - RC Guaranty, this Instrument, any other Loan Document or applicable law.
For purposes of this Section 6, the term "Mortgaged Property" shall not include
any funds that (i) have been applied by Grantor as required or permitted by this
Instrument prior to the occurrence of an Event of Default or (ii) Grantor was
unable to apply as required or permitted by this Instrument because of a
bankruptcy, receivership, or similar judicial proceeding.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Grantor shall deposit with Lender on the day monthly installments
of principal or interest, or both, are due under the Note (or on another day
designated in writing by Lender), until the Indebtedness is paid in full, an
additional amount sufficient to accumulate with Lender the entire sum required
to pay, when due (1) any water and sewer charges which, if not paid, may result
in a lien on all or any part of the Mortgaged Property, (2) the premiums for
fire and other hazard insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4) amounts for other
charges and expenses which Lender at any time reasonably deems necessary to
protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect ▇▇▇▇▇▇'s interests, all as
reasonably estimated from time to time by Lender, plus one-sixth of such
estimate. The amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the "Imposition Deposits". The obligations of
Grantor for which the Imposition Deposits are required are collectively referred
to in this Instrument as "Impositions". The amount of the Imposition Deposits
shall be sufficient to enable Lender to pay each Imposition before the last date
upon which such payment may be made without any penalty or interest charge being
added. Lender shall maintain records indicating how much of the monthly
Imposition Deposits and how much of the aggregate
PAGE 11
Imposition Deposits held by Lender are held for the purpose of paying Taxes,
insurance premiums and each other obligation of Grantor for which Imposition
Deposits are required. Any waiver by ▇▇▇▇▇▇ of the requirement that Grantor
remit Imposition Deposits to Lender may be revoked by ▇▇▇▇▇▇, in ▇▇▇▇▇▇'s
discretion, at any time upon notice to Grantor.
(b) Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency. Lender shall not be obligated to open
additional accounts or deposit Imposition Deposits in additional institutions
when the amount of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Lender shall apply the Imposition
Deposits to pay Impositions so long as no Event of Default has occurred and is
continuing. Unless applicable law requires, Lender shall not be required to pay
Grantor any interest, earnings or profits on the Imposition Deposits. Grantor
hereby pledges and grants to Lender a security interest in the Imposition
Deposits as additional security for all of Grantor's obligations under this
Instrument and the other Loan Documents. Any amounts deposited with Lender under
this Section 7 shall not be trust funds, nor shall they operate to reduce the
Indebtedness, unless applied by Lender for that purpose under Section 7(e).
(c) If ▇▇▇▇▇▇ receives a bill or invoice for an Imposition, ▇▇▇▇▇▇
shall pay the Imposition from the Imposition Deposits held by ▇▇▇▇▇▇. Lender
shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by ▇▇▇▇▇▇. Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.
(d) If at any time the amount of the Imposition Deposits held by ▇▇▇▇▇▇
for payment of a specific Imposition exceeds the amount reasonably deemed
necessary by Lender plus one-sixth of such estimate, the excess shall be
credited against future installments of Imposition Deposits. If at any time the
amount of the Imposition Deposits held by Lender for payment of a specific
Imposition is less than the amount reasonably estimated by Lender to be
necessary plus one-sixth of such estimate, Grantor shall pay to Lender the
amount of the deficiency within 15 days after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender may
apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in ▇▇▇▇▇▇'s discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, ▇▇▇▇▇▇ shall
refund to Grantor any Imposition Deposits held by ▇▇▇▇▇▇.
8. COLLATERAL AGREEMENTS. Grantor shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform all
other obligations of Grantor under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Grantor or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by ▇▇▇▇▇▇, in ▇▇▇▇▇▇'s discretion. Neither Lender's acceptance of an
amount which is less than all amounts then due and payable nor Lender's
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the
PAGE 12
application of any such amount to the Indebtedness, ▇▇▇▇▇▇▇'s obligations under
this Instrument and the Brookdale Calif - RC Guaranty shall remain unchanged.
10. COMPLIANCE WITH LAWS. Grantor shall comply in all material respects
with all laws, ordinances, regulations and requirements of any Governmental
Authority and all recorded lawful covenants and agreements relating to or
affecting the Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety, construction of
improvements on the Mortgaged Property, fair housing, zoning and land use, and
Leases. Grantor also shall comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits. Grantor shall at all
times maintain records sufficient to demonstrate compliance with the provisions
of this Section 10. Grantor shall take appropriate measures to prevent, and
shall not engage in or knowingly permit, any illegal activities at the Mortgaged
Property that could endanger tenants or visitors, result in damage to the
Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise
materially impair the lien created by this Instrument or ▇▇▇▇▇▇'s interest in
the Mortgaged Property. Grantor represents and warrants to Lender that no
portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Grantor shall
not (a) except for any change in use approved by Lender, allow changes in the
use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in the
zoning classification of the Mortgaged Property, or (d) establish any
condominium or cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF ▇▇▇▇▇▇'S SECURITY. (a) If Grantor fails to perform
any of its obligations under this Instrument or any other Loan Document, or if
any action or proceeding is commenced which purports to affect the Mortgaged
Property, ▇▇▇▇▇▇'s security or Lender's rights under this Instrument, including
eminent domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then Lender at
Lender's option may make such appearances, disburse such sums and take such
actions as Lender reasonably deems necessary to perform such obligations of
Grantor and to protect ▇▇▇▇▇▇'s interest, including (1) payment of fees and out
of pocket expenses of attorneys, accountants, inspectors and consultants, (2)
entry upon the Mortgaged Property to make repairs or secure the Mortgaged
Property, (3) procurement of the insurance required by Section 19, and (4)
payment of amounts which Grantor has failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or under any
other provision of this Instrument that treats such disbursement as being made
under this Section 12, shall be added to, and become part of, the principal
component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the "Default Rate", as
defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged Property
(including
PAGE 13
environmental inspections and tests) during normal business hours, or at any
other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Grantor shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon ▇▇▇▇▇▇'s request shall make
available at the Mortgaged Property, complete and accurate books of account and
records (including copies of supporting bills and invoices) adequate to reflect
correctly the operation of the Mortgaged Property, and copies of all written
contracts, Leases, and other instruments which affect the Mortgaged Property.
The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection at any reasonable time by ▇▇▇▇▇▇.
(b) Grantor shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of
Grantor, a statement of income and expenses for Grantor's operation of
the Mortgaged Property for that fiscal year, a statement of changes in
financial position of Grantor relating to the Mortgaged Property for
that fiscal year and, when requested by ▇▇▇▇▇▇, a balance sheet showing
all assets and liabilities of Grantor relating to the Mortgaged
Property as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon ▇▇▇▇▇▇'s request, a rent schedule
for the Mortgaged Property showing the name of each tenant, and for
each tenant, the space occupied, the lease expiration date, the rent
payable for the current month, the date through which rent has been
paid, and any related information requested by ▇▇▇▇▇▇;
(3) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon ▇▇▇▇▇▇'s request, an accounting of
all security deposits held pursuant to all Leases, including the name
of the institution (if any) and the names and identification numbers of
the accounts (if any) in which such security deposits are held and the
name of the person to contact at such financial institution, along with
any authority or release necessary for Lender to access information
regarding such accounts;
(4) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon ▇▇▇▇▇▇'s request, a statement that
identifies all owners of any interest in Grantor and any Controlling
Entity and the interest held by each, if Grantor or a Controlling
Entity is a corporation, all officers and directors of Grantor and the
Controlling Entity, and if Grantor or a Controlling Entity is a limited
liability company, all managers who are not members;
(5) upon ▇▇▇▇▇▇'s request, quarterly income and expense
statements for the Mortgaged Property;
(6) upon ▇▇▇▇▇▇'s request at any time when an Event of Default
has occurred and is continuing, monthly income and expense statements
for the Mortgaged Property;
(7) upon ▇▇▇▇▇▇'s request, a monthly property management
report for the Mortgaged Property, showing the number of inquiries made
and rental applications received from tenants or prospective tenants
and deposits received from tenants and any other information requested
by ▇▇▇▇▇▇; and
(8) upon ▇▇▇▇▇▇'s request, a balance sheet, a statement of
income and expenses for Grantor and a statement of changes in financial
position of Grantor for ▇▇▇▇▇▇▇'s most recent fiscal year.
PAGE 14
(c) Each of the statements, schedules and reports required by Section
14(b) shall be certified to be complete and accurate by an individual having
authority to bind Grantor, and shall be in such form and contain such detail as
Lender may reasonably require. Lender also may require that any statements,
schedules or reports be audited at Grantor's expense by independent certified
public accountants acceptable to Lender.
(d) If Grantor fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), Lender shall have the right to
have Grantor's books and records audited, at Grantor's expense, by independent
certified public accountants selected by ▇▇▇▇▇▇ in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender
shall become immediately due and payable and shall become an additional part of
the Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing, Grantor
shall deliver to Lender upon written demand all books and records relating to
the Mortgaged Property or its operation.
(f) Grantor authorizes ▇▇▇▇▇▇ to obtain a credit report on Grantor at
any time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Grantor shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Grantor shall pay the
expenses of operating, managing, maintaining and repairing the Mortgaged
Property (including insurance premiums, utilities, repairs and replacements)
before the last date upon which each such payment may be made without any
penalty or interest charge being added.
(c) As long as no Event of Default exists and Grantor has timely
delivered to Lender any bills or premium notices that it has received, Grantor
shall not be obligated to pay Taxes, insurance premiums or any other individual
Imposition to the extent that sufficient Imposition Deposits are held by Lender
for the purpose of paying that specific Imposition. If an Event of Default
exists, Lender may exercise any rights Lender may have with respect to
Imposition Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Grantor for failing to pay any
Impositions to the extent that any Event of Default has occurred and is
continuing, insufficient Imposition Deposits are held by ▇▇▇▇▇▇ at the time an
Imposition becomes due and payable or Grantor has failed to provide Lender with
bills and premium notices as provided above.
(d) Grantor, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of
any Imposition other than insurance premiums, if (1) Grantor notifies Lender of
the commencement or expected commencement of such proceedings, (2) the Mortgaged
Property is not in danger of being sold or forfeited, (3) Grantor deposits with
Lender reserves sufficient to pay the contested Imposition, if requested by
▇▇▇▇▇▇, and (4) Grantor furnishes whatever additional security is required in
the proceedings or is reasonably requested by ▇▇▇▇▇▇, which may include the
delivery to Lender of the reserves established by Grantor to pay the contested
Imposition.
(e) Grantor shall promptly deliver to Lender a copy of all notices of,
and invoices for, Impositions, and if Grantor pays any Imposition directly,
Grantor shall promptly furnish to Lender receipts evidencing such payments.
PAGE 15
16. LIENS; ENCUMBRANCES. Grantor acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
"Lien") on the Mortgaged Property (other than the lien of this Instrument) or on
certain ownership interests in Grantor, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over the lien of
this Instrument, is a "Transfer" which constitutes an Event of Default and
subjects Grantor to personal liability under the Brookdale Calif - RC Guaranty.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
Grantor (a) shall not commit waste or permit impairment or deterioration of the
Mortgaged Property, (b) shall not abandon the Mortgaged Property, (c) shall
restore or repair promptly, in a good and workmanlike manner, any damaged part
of the Mortgaged Property to the equivalent of its original condition, or such
other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair, (d) shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with items of equal or
better function and quality, (e) shall provide for professional third party
management of the Mortgaged Property by a residential rental property manager
familiar with senior housing, satisfactory to Lender under a contract approved
by Lender in writing if the Mortgaged Property is not operated by Grantor under
the terms of the Operator Lease, and (f) shall give notice to Lender of and,
unless otherwise directed in writing by ▇▇▇▇▇▇, shall appear in and defend any
action or proceeding purporting to affect the Mortgaged Property, ▇▇▇▇▇▇'s
security or ▇▇▇▇▇▇'s rights under this Instrument. Grantor shall not (and shall
not permit any tenant or other person to) remove, demolish or alter the
Mortgaged Property or any part of the Mortgaged Property except in connection
with the replacement of tangible Personalty.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations and
maintenance approved in writing by ▇▇▇▇▇▇ (an "O&M Program") or matters
described in Section 18(b), Grantor shall not cause or permit any of the
following:
(1) the presence, use, generation, release, treatment,
processing, storage (including storage in above ground and underground
storage tanks), handling, or disposal of any Hazardous Materials on or
under the Mortgaged Property or any other property of Grantor that is
adjacent to the Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or
any other property of Grantor that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in violation of
Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or any
property of Grantor that is adjacent to the Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the safe and
lawful use and storage of quantities of (1) pre-packaged supplies, cleaning
materials and petroleum products
PAGE 16
customarily used in the operation and maintenance of comparable multifamily
properties, (2) cleaning materials, personal grooming items and other items sold
in pre-packaged containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (3) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Mortgaged Property's parking areas, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Hazardous Materials Laws.
(c) Grantor shall take all commercially reasonable actions (including
the inclusion of appropriate provisions in any Leases executed after the date of
this Instrument) to prevent its employees, agents, and contractors, and all
tenants and other occupants from causing or permitting any Prohibited Activities
or Conditions. Grantor shall not lease or allow the sublease or use of all or
any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.
(d) If an O&M Program has been established with respect to Hazardous
Materials, Grantor shall comply in a timely manner with, and cause all
employees, agents, and contractors of Grantor and any other persons present on
the Mortgaged Property to comply with the O&M Program. All costs of performance
of ▇▇▇▇▇▇▇'s obligations under any O&M Program shall be paid by Grantor, and
▇▇▇▇▇▇'s out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and ▇▇▇▇▇▇▇'s performance shall be paid by Grantor
upon demand by ▇▇▇▇▇▇. Any such out-of-pocket costs of Lender which Grantor
fails to pay promptly shall become an additional part of the Indebtedness as
provided in Section 12.
(e) Grantor represents and warrants to Lender that, except as
previously disclosed by Grantor to Lender in writing:
(1) Grantor has not at any time engaged in, caused or
permitted any Prohibited Activities or Conditions;
(2) to the best of ▇▇▇▇▇▇▇'s knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist or have
existed;
(3) except to the extent previously disclosed by Grantor to
Lender in writing, the Mortgaged Property does not now contain any
underground storage tanks, and, to the best of Grantor's knowledge
after reasonable and diligent inquiry, the Mortgaged Property has not
contained any underground storage tanks in the past. If there is an
underground storage tank located on the Property which has been
previously disclosed by Grantor to Lender in writing, that tank
complies with all requirements of Hazardous Materials Laws;
(4) Grantor has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of
Hazardous Materials. Without limiting the generality of the foregoing,
Grantor has obtained all Environmental Permits required for the
operation of the Mortgaged Property in accordance with Hazardous
Materials Laws now in effect and all such Environmental Permits are in
full force and effect;
(5) no event has occurred with respect to the Mortgaged
Property that constitutes, or with the passing of time or the giving of
notice would constitute, noncompliance with the terms of any
Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending
or, to the best of ▇▇▇▇▇▇▇'s knowledge after reasonable and diligent
inquiry, threatened that involve the
PAGE 17
Mortgaged Property and allege, arise out of, or relate to any
Prohibited Activity or Condition; and
(7) Grantor has not received any complaint, order, notice of
violation or other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions or Hazardous
Materials, or any other environmental, health or safety matters
affecting the Mortgaged Property or any other property of Grantor that
is adjacent to the Mortgaged Property. The representations and
warranties in this Section 18 shall be continuing representations and
warranties that shall be deemed to be made by Grantor throughout the
term of the loan evidenced by the Note, until the Indebtedness has been
paid in full.
(f) Grantor shall promptly notify Lender in writing upon the occurrence
of any of the following events:
(1) Grantor's discovery of any Prohibited Activity or
Condition;
(2) Grantor's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any Governmental
Authority or other person with regard to present or future alleged
Prohibited Activities or Conditions or any other environmental, health
or safety matters affecting the Mortgaged Property or any other
property of Grantor that is adjacent to the Mortgaged Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement. Any such notice given by
Grantor shall not relieve Grantor of, or result in a waiver of, any
obligation under this Instrument, the Brookdale Calif - RC Guaranty, or
any other Loan Document.
(g) Grantor shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required by Lender in
connection with any foreclosure or deed in lieu of foreclosure, or as a
condition of Lender's consent to any Transfer under Section 21, or required by
Lender following a reasonable determination by Lender that Prohibited Activities
or Conditions may exist. Any such costs incurred by ▇▇▇▇▇▇ (including the fees
and out-of-pocket costs of attorneys and technical consultants whether incurred
in connection with any judicial or administrative process or otherwise) which
Grantor fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of ▇▇▇▇▇▇ and
Lender shall have no obligation to disclose or otherwise make available to
Grantor or any other party such results or any other information obtained by
Lender in connection with its Environmental Inspections. Lender hereby reserves
the right, and Grantor hereby expressly authorizes ▇▇▇▇▇▇, to make available to
any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by Lender
with respect to the Mortgaged Property. Grantor consents to Lender notifying any
party (either as part of a notice of sale or otherwise) of the results of any of
▇▇▇▇▇▇'s Environmental Inspections. Grantor acknowledges that Lender cannot
control or otherwise assure the truthfulness or accuracy of the results of any
of its Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may have a
material and adverse effect upon the amount which a party may bid at such sale.
▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇▇ shall have no liability whatsoever as a result of
delivering the results
PAGE 18
of any of its Environmental Inspections to any third party, and Grantor hereby
releases and forever discharges Lender from any and all claims, damages, or
causes of action, arising out of, connected with or incidental to the results
of, the delivery of any of ▇▇▇▇▇▇'s Environmental Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("Remedial Work") is necessary to comply with
any Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property under any Hazardous Materials Law, Grantor
shall, by the earlier of (1) the applicable deadline required by Hazardous
Materials Law or (2) 30 days after notice from Lender demanding such action,
begin performing the Remedial Work, and thereafter diligently prosecute it to
completion, and shall in any event complete the work by the time required by
applicable Hazardous Materials Law. If Grantor fails to begin on a timely basis
or diligently prosecute any required Remedial Work, Lender may, at its option,
cause the Remedial Work to be completed, in which case Grantor shall reimburse
Lender on demand for the cost of doing so. Any reimbursement due from Grantor to
Lender shall become part of the Indebtedness as provided in Section 12.
(i) Grantor shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial order which arises
from any alleged Prohibited Activity or Condition.
(j) Grantor shall indemnify, hold harmless and defend (i) Lender, (ii)
any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any prior
Loan Servicer, (v) the officers, directors, shareholders, partners, employees
and trustees of any of the foregoing, and (vi) the heirs, legal representatives,
successors and assigns of each of the foregoing (collectively, the
"Indemnitees") from and against all proceedings, claims, damages, penalties and
costs (whether initiated or sought by Governmental Authorities or private
parties), including fees and out of pocket expenses of attorneys and expert
witnesses, investigatory fees, and remediation costs, whether incurred in
connection with any judicial or administrative process or otherwise, arising
directly or indirectly from any of the following:
(1) any breach of any representation or warranty of Grantor in
this Section 18;
(2) any failure by Grantor to perform any of its obligations
under this Section 18;
(3) the existence or alleged existence of any Prohibited
Activity or Condition;
(4) the presence or alleged presence of Hazardous Materials on
or under the Mortgaged Property or any property of Grantor that is
adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials
Law.
(k) Counsel selected by Grantor to defend Indemnitees shall be subject
to the approval of those Indemnitees. However, any Indemnitee may elect to
defend any claim or legal or administrative proceeding at the Grantor's expense.
(l) Grantor shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim"), settle or compromise the Claim if the settlement (1)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender; or (2) may
materially and adversely affect Lender, as determined by ▇▇▇▇▇▇ in its
discretion.
PAGE 19
(m) Grantor's obligation to indemnify the Indemnitees shall not be
limited or impaired by any of the following, or by any failure of Grantor or any
guarantor to receive notice of or consideration for any of the following:
(1) any amendment or modification of any Loan Document;
(2) any extensions of time for performance required by any
Loan Document;
(3) any provision in any of the Loan Documents limiting
▇▇▇▇▇▇'s recourse to property securing the Indebtedness, or limiting
the personal liability of Grantor or any other party for payment of all
or any part of the Indebtedness;
(4) the accuracy or inaccuracy of any representations and
warranties made by Grantor under this Instrument or any other Loan
Document;
(5) the release of Grantor or any other person, by ▇▇▇▇▇▇ or
by operation of law, from performance of any obligation under any Loan
Document;
(6) the release or substitution in whole or in part of any
security for the Indebtedness; and
(7) ▇▇▇▇▇▇'s failure to properly perfect any lien or security
interest given as security for the Indebtedness.
(n) Grantor shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or administrative
proceeding incident to any matters against which Indemnitees are
entitled to be indemnified under this Section 18;
(2) reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are entitled to
be indemnified under this Section 18; and
(3) reimburse Indemnitees for any and all expenses, including
fees and out of pocket expenses of attorneys and expert witnesses, paid
or incurred in connection with the enforcement by Indemnitees of their
rights under this Section 18, or in monitoring and participating in any
legal or administrative proceeding.
(o) In any circumstances in which the indemnity under this Section 18
applies, ▇▇▇▇▇▇ may employ its own legal counsel and consultants to prosecute,
defend or negotiate any claim or legal or administrative proceeding and Lender,
with the prior written consent of Grantor (which shall not be unreasonably
withheld, delayed or conditioned) may settle or compromise any action or legal
or administrative proceeding. Grantor shall reimburse Lender upon demand for all
costs and expenses incurred by ▇▇▇▇▇▇, including all costs of settlements
entered into in good faith, and the fees and out of pocket expenses of such
attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any and
all other obligations and liabilities that Grantor may have under applicable law
or under other Loan Documents, and each Indemnitee shall be entitled to
indemnification under this Section 18 without regard to whether Lender or that
Indemnitee has exercised any rights against the Mortgaged Property or any other
security, pursued any rights against any guarantor, or pursued any other rights
available under the Loan Documents or applicable law. If Grantor consists of
more than one person or entity, the obligation of those persons or entities to
indemnify the Indemnitees under this Section 18 shall be joint and several. The
obligation of Grantor to indemnify the Indemnitees under this Section 18 shall
survive any repayment or discharge of the
PAGE 20
Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of
any deed in lieu of foreclosure, and any release of record of the lien of this
Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Grantor shall keep the Improvements insured at all times against
such hazards as Lender may from time to time require, which insurance shall
include but not be limited to coverage against loss by fire and allied perils,
general boiler and machinery coverage, and business income coverage. ▇▇▇▇▇▇'s
insurance requirements may change from time to time throughout the term of the
Indebtedness. If Lender so requires, such insurance shall also include sinkhole
insurance, mine subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage. If any of the Improvements is located in an
area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is
available in that area, Grantor shall insure such Improvements against loss by
flood.
(b) All premiums on insurance policies required under Section 19(a)
shall be paid in the manner provided in Section 7, unless ▇▇▇▇▇▇ has designated
in writing another method of payment. All such policies shall also be in a form
approved by Lender. All policies of property damage insurance shall include a
non-contributing, non-reporting mortgage clause in favor of, and in a form
approved by, Lender. Lender shall have the right to hold the original policies
or duplicate original policies of all insurance required by Section 19(a).
Grantor shall promptly deliver to Lender a copy of all renewal and other notices
received by Grantor with respect to the policies and all receipts for paid
premiums. At least 30 days prior to the expiration date of a policy, Grantor
shall deliver to Lender the original (or a duplicate original) of a renewal
policy in form satisfactory to Lender.
(c) Grantor shall maintain at all times commercial general liability
insurance, workers' compensation insurance and such other liability, errors and
omissions and fidelity insurance coverages as Lender may from time to time
require.
(d) All insurance policies and renewals of insurance policies required
by this Section 19 shall be in such amounts and for such periods as Lender may
from time to time require, and shall be issued by insurance companies
satisfactory to Lender.
(e) Grantor shall comply with all insurance requirements and shall not
permit any condition to exist on the Mortgaged Property that would invalidate
any part of any insurance coverage that this Instrument requires Grantor to
maintain.
(f) In the event of loss, Grantor shall give immediate written notice
to the insurance carrier and to Lender. Grantor hereby authorizes and appoints
▇▇▇▇▇▇ as attorney-in-fact for Grantor to make proof of loss, to adjust and
compromise any claims under policies of property damage insurance, to appear in
and prosecute any action arising from such property damage insurance policies,
to collect and receive the proceeds of property damage insurance, and to deduct
from such proceeds ▇▇▇▇▇▇'s expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and therefore is
irrevocable. However, nothing contained in this Section 19 shall require Lender
to incur any expense or take any action. Lender may, at ▇▇▇▇▇▇'s option, (1)
hold the balance of such proceeds to be used to reimburse Grantor for the cost
of restoring and repairing the Mortgaged Property to the equivalent of its
original condition or to a condition approved by Lender (the "Restoration"), or
(2) apply the balance of
PAGE 21
such proceeds to the payment of the Indebtedness, whether or not then due. To
the extent Lender determines to apply insurance proceeds to Restoration, Lender
shall do so in accordance with Lender's then-current policies relating to the
restoration of casualty damage on similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds to
the payment of the Indebtedness if all of the following conditions are met: (1)
no Event of Default (or any event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default) has occurred and
is continuing; (2) Lender determines, in its discretion, that there will be
sufficient funds to complete the Restoration; (3) Lender determines, in its
discretion, that the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating costs and other
expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; and (4) Lender determines, in
its discretion, that the Restoration will be completed before the earlier of (A)
one year before the maturity date of the Note or (B) one year after the date of
the loss or casualty.
(h) If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically succeed to
all rights of Grantor in and to any insurance policies and unearned insurance
premiums and in and to the proceeds resulting from any damage to the Mortgaged
Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Grantor shall promptly notify Lender of any action or proceeding
relating to any condemnation or other taking, or conveyance in lieu thereof, of
all or any part of the Mortgaged Property, whether direct or indirect (a
"Condemnation"). Grantor shall appear in and prosecute or defend any action or
proceeding relating to any Condemnation unless otherwise directed by ▇▇▇▇▇▇ in
writing. Grantor authorizes and appoints ▇▇▇▇▇▇ as attorney-in-fact for Grantor
to commence, appear in and prosecute, in ▇▇▇▇▇▇'s or Grantor's name, any action
or proceeding relating to any Condemnation and to settle or compromise any claim
in connection with any Condemnation. This power of attorney is coupled with an
interest and therefore is irrevocable. However, nothing contained in this
Section 20 shall require Lender to incur any expense or take any action. Grantor
hereby transfers and assigns to Lender all right, title and interest of Grantor
in and to any award or payment with respect to (i) any Condemnation, or any
conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged
Property caused by governmental action that does not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
▇▇▇▇▇▇'s expenses incurred in the collection of such amounts, at Lender's
option, to the restoration or repair of the Mortgaged Property or to the payment
of the Indebtedness, with the balance, if any, to Grantor. Unless Lender
otherwise agrees in writing, any application of any awards or proceeds to the
Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments. ▇▇▇▇▇▇▇ agrees
to execute such further evidence of assignment of any awards or proceeds as
Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN GRANTOR. [RIGHT
TO UNLIMITED TRANSFERS -- WITH LENDER APPROVAL]
(a) The occurrence of any of the following events shall constitute an
Event of Default under this Instrument:
PAGE 22
(1) a Transfer of all or any part of the Mortgaged Property or any interest in
the Mortgaged Property;
(2) if Grantor is a limited partnership, a Transfer of (A) any general
partnership interest, or (B) limited partnership interests in Grantor that would
cause the Initial Owners of Grantor to own less than 51% of all limited
partnership interests in Grantor;
(3) if Grantor is a general partnership or a joint venture, a Transfer of any
general partnership or joint venture interest in Grantor;
(4) if Grantor is a limited liability company, a Transfer of (A) any membership
interest in Grantor which would cause the Initial Owners to own less than 51% of
all the membership interests in Grantor, or (B) any membership or other interest
of a manager in Grantor;
(5) if Grantor is a corporation, (A) the Transfer of any voting stock in Grantor
which would cause the Initial Owners to own less than 51% of any class of voting
stock in Grantor or (B) if the outstanding voting stock in Grantor is held by
100 or more shareholders, one or more transfers by a single transferor within a
12-month period affecting an aggregate of 5% or more of that stock; and
(6) if Grantor is a trust, (A) a Transfer of any beneficial interest in Grantor
which would cause the Initial Owners to own less than 51% of all the beneficial
interests in Grantor, or (B) the termination or revocation of the trust, or (C)
the removal, appointment or substitution of a trustee of Grantor.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not constitute
an Event of Default under this Instrument, notwithstanding any provision of
Section 21(a) to the contrary:
(1) a Transfer to which ▇▇▇▇▇▇ has consented;
(2) a Transfer that occurs by devise, descent, or by operation of law upon the
death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling unit for a term
of two years or less not containing an option to purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and quality,
which are free of liens, encumbrances and security interests other than those
created by the Loan Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender determines that the
easement will not materially affect the operation or value of the Mortgaged
Property or Lender's interest in the Mortgaged Property, and Grantor pays to
Lender, upon demand, all costs and expenses incurred by Lender in connection
with reviewing Grantor's request; and
(6) the creation of a mechanic's, materialman's, or judgment lien against the
Mortgaged Property which is released of record or otherwise remedied to ▇▇▇▇▇▇'s
satisfaction within 30 days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at which
the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness, to a Transfer that would otherwise violate
this Section 21 if, prior to the Transfer, Grantor has satisfied each of the
following requirements:
PAGE 23
(1) the submission to Lender of all information required by ▇▇▇▇▇▇ to make the
determination required by this Section 21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit, management and other
standards (including but not limited to any standards with respect to previous
relationships between Lender and the transferee and the organization of the
transferee) customarily applied by ▇▇▇▇▇▇ at the time of the proposed Transfer
to the approval of Borrowers in connection with the origination or purchase of
similar mortgages on multifamily properties;
(4) the Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition that are customarily applied by ▇▇▇▇▇▇ at
the time of the proposed Transfer to the approval of properties in connection
with the origination or purchase of similar mortgages on multifamily properties;
(5) in the case of a Transfer of all or any part of the Mortgaged Property, (A)
the execution by the transferee of an assumption agreement that is acceptable to
Lender and that, among other things, requires the transferee to perform all
obligations of Grantor set forth in the Note, this Instrument and any other Loan
Documents, and may require that the transferee comply with any provisions of
this Instrument or any other Loan Document which previously may have been waived
by ▇▇▇▇▇▇, and (B) if a guaranty has been executed and delivered in connection
with the Note, this Instrument or any of the other Loan Documents, the
transferee causes one or more individuals or entities acceptable to Lender to
execute and deliver to Lender a guaranty in a form acceptable to Lender;
(6) in the case of a Transfer of any interest in a Controlling Entity, if a
guaranty has been executed and delivered in connection with the Guaranty, this
Instrument or any of the other Loan Documents, the Grantor causes one or more
individuals or entities acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender; and
(7) ▇▇▇▇▇▇'s receipt of all of the following:
(A) a review fee in the amount of $2000;
(B) a transfer fee in an amount equal to 1.0% of the unpaid principal balance of
the Indebtedness immediately before the applicable Transfer; and
(C) the amount of ▇▇▇▇▇▇'s out-of-pocket costs (including reasonable attorneys'
fees) incurred in reviewing the Transfer request.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Grantor to pay or deposit when due any amount
required by the Brookdale Calif - RC Guaranty, this Instrument or any other Loan
Document;
(b) any failure by Grantor to maintain the insurance coverage required
by Section 19;
(c) any failure by Grantor to comply with the provisions of Section 33;
(d) fraud or material intentional misrepresentation or material
omission by Grantor, any of its officers, directors, trustees, general partners
or managers or any guarantor in connection with (A) the application for or
creation of the Indebtedness, (B) any financial statement, rent roll, or other
report or information provided to Lender during the term of the Indebtedness, or
(C) any request for ▇▇▇▇▇▇'s consent to any proposed action, including a request
for disbursement of funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
PAGE 24
(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in ▇▇▇▇▇▇'s reasonable judgment, could result in a
forfeiture of the Mortgaged Property or otherwise materially impair the lien
created by this Instrument or ▇▇▇▇▇▇'s interest in the Mortgaged Property;
(g) any failure by Grantor to perform any of its obligations under this
Instrument (other than those specified in Sections 22(a) through (f) ,as and
when required, which continues for a period of 30 days after notice of such
failure by ▇▇▇▇▇▇ to Grantor. However, no such notice or grace period shall
apply in the case of any such failure which could, in ▇▇▇▇▇▇'s judgment, absent
immediate exercise by ▇▇▇▇▇▇ of a right or remedy under this Instrument, result
in harm to Lender, impairment of the Note or this Instrument or any other
security given under any other Loan Document;
(h) any failure by Grantor to perform any of its obligations as and
when required under any Loan Document other than this Instrument which continues
beyond the applicable cure period, if any, specified in that Loan Document;
(i) any exercise by the holder of any debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of a
right to declare all amounts due under that debt instrument immediately due and
payable; Grantor voluntarily files for bankruptcy protection under the United
States Bankruptcy Code or voluntarily becomes subject to any reorganization,
receivership, insolvency proceeding or other similar proceeding pursuant to any
other federal or state law affecting debtor and creditor rights, or an
involuntary case is commenced against Grantor by any creditor (other than
Lender) of Grantor pursuant to the United States Bankruptcy Code or other
federal or state law affecting debtor and creditor rights and is not dismissed
or discharged within 60 days after filing; any Event of Default shall occur
under the Borrower Mortgage or under any document or instrument executed and
delivered in connection therewith.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order.
24. FORBEARANCE. (a) Lender may (but shall not be obligated to) agree
with Grantor, from time to time, and without giving notice to, or obtaining the
consent of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions: extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan Document; release anyone liable for
the payment of any amounts under this Instrument, the Brookdale Calif-RC
Guaranty, or any other Loan Document; accept a renewal of the Note; modify the
terms and time of payment of the Indebtedness; join in any extension or
subordination agreement; release any Mortgaged Property; take or release other
or additional security; modify the rate of interest or period of amortization of
the Note or change the amount of the monthly installments payable under the
Note; and otherwise modify this Instrument, the Brookdale Calif-RC Guaranty, the
Note, or any other Loan Document.
(b) Any forbearance by ▇▇▇▇▇▇ in exercising any right or remedy under
the Note, this Instrument, the Brookdale Calif-RC Guaranty or any other Loan
Document or otherwise afforded
PAGE 25
by applicable law, shall not be a waiver of or preclude the exercise of any
right or remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender's right to require
prompt payment when due of all other payments on account of the Indebtedness or
to exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Indebtedness shall not constitute an election by
▇▇▇▇▇▇ of remedies so as to preclude the exercise of any other right available
to Lender. ▇▇▇▇▇▇'s receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Grantor is interpreted so that
any charge provided for in any Loan Document, whether considered separately or
together with other charges levied in connection with any other Loan Document,
violates that law, and Grantor is entitled to the benefit of that law, that
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the principal of the Indebtedness.
For the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Grantor has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Grantor hereby waives the right
to assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, the Brookdale Calif - RC Guaranty, any other Loan Document
or applicable law. Lender shall have the right to determine the order in which
any or all portions of the Indebtedness are satisfied from the proceeds realized
upon the exercise of such remedies. Grantor and any party who now or in the
future acquires a security interest in the Mortgaged Property and who has actual
or constructive notice of this Instrument waives any and all right to require
the marshalling of assets or to require that any of the Mortgaged Property be
sold in the inverse order of alienation or that any of the Mortgaged Property be
sold in parcels or as an entirety in connection with the exercise of any of the
remedies permitted by applicable law or provided in this Instrument.
28. FURTHER ASSURANCES. Grantor shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to better assure,
▇▇▇▇▇, and convey to Lender the rights intended to be granted, now or in the
future, to Lender under this Instrument and the Loan Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from ▇▇▇▇▇▇,
Grantor shall deliver to Lender a written statement, signed and acknowledged by
▇▇▇▇▇▇▇,
PAGE 26
certifying to Lender or any person designated by ▇▇▇▇▇▇, as of the date of such
statement, (i) that the Loan Documents are unmodified and in full force and
effect (or, if there have been modifications, that the Loan Documents are in
full force and effect as modified and setting forth such modifications); (ii)
the unpaid principal balance of the Note; (iii) the date to which interest under
the Note has been paid; (iv) that Grantor is not in default in paying the
Indebtedness or in performing or observing any of the covenants or agreements
contained in this Instrument or any of the other Loan Documents (or, if the
Grantor is in default, describing such default in reasonable detail); (v)
whether or not there are then existing any setoffs or defenses known to Grantor
against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by ▇▇▇▇▇▇.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the laws
of the jurisdiction in which the Land is located (the "Property Jurisdiction").
(b) Grantor agrees that any controversy arising under or in relation to
the Note, the Brookdale Calif - RC Guaranty, this Instrument, or any other Loan
Document shall be litigated exclusively in the Property Jurisdiction. The state
and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to the Note, the Brookdale Calif - RC Guaranty,
any security for the Indebtedness, or any other Loan Document. Grantor
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice") under or
concerning this Instrument shall be in writing. Each notice shall be addressed
to the intended recipient at its address set forth in this Instrument, and shall
be deemed given on the earliest to occur of (1) the date when the notice is
received by the addressee; (2) the first Business Day after the notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third Business Day
after the notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested. As used in this Section 31, the term
"Business Day" means any day other than a Saturday, a Sunday or any other day on
which Lender is not open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice given to the other
party in accordance with this Section 31. Each party agrees that it will not
refuse or reject delivery of any notice given in accordance with this Section
31, that it will acknowledge, in writing, the receipt of any notice upon request
by the other party and that any notice rejected or refused by it shall be deemed
for purposes of this Section 31 to have been received by the rejecting party on
the date so refused or rejected, as conclusively established by the records of
the U.S. Postal Service or the courier service.
(c) Any notice under the Note, the Brookdale Calif - RC Guaranty and
any other Loan Document which does not specify how notices are to be given shall
be given in accordance with this Section 31.
PAGE 27
32. SALE OF NOTE; CHANGE IN SERVICER. The Note and the Brookdale Calif
- RC Guaranty or a partial interest in the Note and the Brookdale Calif - RC
Guaranty (together with this Instrument and the other Loan Documents) may be
sold one or more times without prior notice to Grantor. A sale may result in a
change of the Loan Servicer. There also may be one or more changes of the Loan
Servicer unrelated to a sale of the Note and the Brookdale Calif - RC Guaranty.
If there is a change of the Loan Servicer, Grantor will be given notice of the
change.
33. SINGLE ASSET GRANTOR. Until the Indebtedness is paid in full,
Grantor (a) shall not acquire any real or personal property other than the
Mortgaged Property, personal property related to the operation and maintenance
of the Mortgaged Property and Certificate A and Certificate B acquired pursuant
to the terms of the Operator Lease; (b) shall not operate any business other
than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify. Provided,
however, the acquisition by the Grantor of the Borrower's interest in the
Property shall not be a violation of this Section so long as Grantor has assumed
the obligations of Borrower under the Note and Borrower Mortgage.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors and
assigns of ▇▇▇▇▇▇ and Grantor. However, a Transfer not permitted by Section 21
shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Grantor, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between ▇▇▇▇▇▇ and Grantor shall be solely that of
creditor and debtor, respectively, and nothing contained in this Instrument
shall create any other relationship between ▇▇▇▇▇▇ and Grantor.
(b) No creditor of any party to this Instrument and no other person
shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (1) any
arrangement (a "Servicing Arrangement") between the Lender and any Loan Servicer
for loss sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Grantor for the payment of the Indebtedness, (2) Grantor shall not be a third
party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the parties as to
the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of this
Instrument are for convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an "Exhibit" or a "Section"
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are
incorporated by
PAGE 28
reference into this Instrument. Any reference in this Instrument to a statute or
regulation shall be construed as referring to that statute or regulation as
amended from time to time. Use of the singular in this Agreement includes the
plural and use of the plural includes the singular. As used in this Instrument,
the term "including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the Loan
Servicer unless ▇▇▇▇▇▇▇ receives notice to the contrary. If Grantor receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding
Grantor or the Mortgaged Property to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including but not limited to
trustees, master servicers, special servicers, rating agencies, and
organizations maintaining databases on the underwriting and performance of
multifamily mortgage loans. Grantor irrevocably waives any and all rights it may
have under applicable law to prohibit such disclosure, including but not limited
to any right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan Application") and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects. There has been no material adverse change in any fact or
circumstance that would make any such information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation of
Grantor for the payment of money that is secured by a pre-existing mortgage,
deed of trust or other lien encumbering the Mortgaged Property (a "Prior Lien"),
such loan proceeds shall be deemed to have been advanced by Lender at Grantor's
request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of
the obligation secured by the Prior Lien, whether or not the Prior Lien is
released.
43. ACCELERATION; REMEDIES. If an Event of Default has occurred and is
continuing, Lender, at ▇▇▇▇▇▇'s option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the power of
sale and any other remedies permitted by California law or provided in this
Instrument or in any other Loan Document. Grantor acknowledges that the power of
sale granted in this Instrument may be exercised by Lender without prior
judicial hearing. Lender shall be entitled to collect all costs and expenses
incurred in pursuing such remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title reports.
If the power of sale is invoked, ▇▇▇▇▇▇ shall execute a written notice
of the occurrence of an Event of Default and of Lender's election to cause the
Mortgaged Property to be sold and shall cause the notice to be recorded in each
county in which the Mortgaged Property or some part of the Mortgaged Property is
located. Trustee shall give notice of default and notice of sale and shall sell
the Mortgaged Property according to California law. Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in the
notice of sale in
PAGE 29
one or more parcels and in such order as Trustee may determine. Trustee may
postpone the sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled sale. Lender or
▇▇▇▇▇▇'s designee may purchase the Mortgaged Property at any sale.
Trustee shall deliver to the purchaser at the sale, within a reasonable
time after the sale, a deed conveying the Mortgaged Property so sold without any
express or implied covenant or warranty. The recitals in Trustee's deed shall be
prima facie evidence of the truth of the statements made in those recitals.
Trustee shall apply the proceeds of the sale in the following order: (a) to all
costs and expenses of the sale, including Trustee's fees not to exceed 5% of the
gross sales price, attorneys' fees and costs of title evidence; (b) to the
Indebtedness in such order as Lender, in ▇▇▇▇▇▇'s discretion, directs; and (c)
the excess, if any, to the person or persons legally entitled to the excess.
44. RECONVEYANCE. Upon payment of the Indebtedness, ▇▇▇▇▇▇ shall
request Trustee to reconvey the Mortgaged Property and shall surrender this
Instrument and the Note and the Brookdale Calif - RC Guaranty to Trustee.
Trustee shall reconvey the Mortgaged Property without warranty to the person or
persons legally entitled to the Mortgaged Property. Such person or persons shall
pay Trustee's reasonable costs incurred in so reconveying the Mortgaged
Property.
45. SUBSTITUTE TRUSTEE. ▇▇▇▇▇▇, at ▇▇▇▇▇▇'s option, may from time to
time, by a written instrument, appoint a successor trustee, which instrument,
when executed and acknowledged by ▇▇▇▇▇▇ and recorded in the office of the
Recorder of the county or counties where the Mortgaged Property is situated,
shall be conclusive proof of proper substitution of the successor trustee. The
successor trustee shall, without conveyance of the Mortgaged Property, succeed
to all the title, power and duties conferred upon the Trustee in this Instrument
and by California law. The instrument of substitution shall contain the name of
the original Lender, Trustee and Grantor under this Instrument, the book and
page where this Instrument is recorded, and the name and address of the
successor trustee. If notice of default has been recorded, this power of
substitution cannot be exercised until after the costs, fees and expenses of the
then acting Trustee have been paid to such Trustee, who shall endorse receipt of
those costs, fees and expenses upon the instrument of substitution. The
procedure provided for substitution of trustee in this Instrument shall govern
to the exclusion of all other provisions for substitution, statutory or
otherwise.
46. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the
maximum allowed by applicable law for furnishing the statement of obligation as
provided in Section 2943 of the Civil Code of California.
47. SPOUSE'S SEPARATE PROPERTY. Each Grantor who is a married person
expressly agrees that recourse may be had against his or her separate property.
48. FIXTURE FILING. This Instrument is also a fixture filing under the
Uniform Commercial Code of California.
49. ADDITIONAL PROVISION REGARDING APPLICATION OF PAYMENTS. In addition
to the provisions of Section 9, ▇▇▇▇▇▇▇ further agrees that, if ▇▇▇▇▇▇ accepts a
guaranty of only a portion of the Indebtedness, Grantor waives its right under
California Civil Code Section 2822(a), to designate the portion of the
Indebtedness which shall be satisfied by a guarantor's partial payment.
PAGE 30
50. WAIVER OF MARSHALLING; OTHER WAIVERS. To the extent permitted by
law, Grantor waives (i) the benefit of all present or future laws providing for
any appraisement before sale of any portion of the Mortgaged Property, (ii) all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Indebtedness and marshalling
in the event of foreclosure of the lien created by this Instrument, (iii) all
rights and remedies which Grantor may have or be able to assert by reason of the
laws of the State of California pertaining to the rights and remedies of
sureties, (iv) the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce
the Note, the Brookdale Calif - RC Guaranty or any other obligation secured by
this Instrument, and (v) any rights, legal or equitable, to require marshalling
of assets or to require upon foreclosure sales in a particular order, including
any rights under California Civil Code Sections 2899 and 3433. Lender shall have
the right to determine the order in which any or all of the Mortgaged Property
shall be subjected to the remedies provided by this Instrument. Lender shall
have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of the
remedies provided by this Instrument. By signing this Instrument, Grantor does
not waive its rights under Section 2924c of the California Civil Code.
51. ADDITIONAL PROVISIONS CONCERNING ENVIRONMENTAL HAZARDS. In addition
to the provisions of Section 18:
(a) Except for matters covered by an O&M Program or matters described
in Section 18(b), Grantor shall not cause or permit any lien (whether or not
such lien has priority over the lien created by this Instrument) upon the
Mortgaged Property imposed pursuant to any Hazardous Materials Laws. Any such
lien shall be considered a Prohibited Activity or Condition.
(b) Grantor represents and warrants to Lender that, except as
previously disclosed by Grantor to Lender in writing:
(1) at the time of acquiring the Mortgaged Property, ▇▇▇▇▇▇▇
undertook all appropriate inquiry into the previous ownership and uses
of the Mortgaged Property consistent with good commercial or customary
practice and no evidence or indication came to light which would
suggest that the Mortgaged Property has been or is now being used for
any Prohibited Activities or Conditions; and
(2) the Mortgaged Property has not been designated as
"hazardous waste property" or "border zone property" pursuant to
Section 25220, et seq., of the California Health and Safety Code.
The representations and warranties in this Section 51(b) shall
be continuing representations and warranties that shall be deemed to be
made by Grantor throughout the term of the loan evidenced by the Note,
until the Indebtedness has been paid in full.
(c) Without limiting any of the remedies provided in this Instrument,
▇▇▇▇▇▇▇ acknowledges and agrees that each of the provisions in Section 18 and in
this Section 51 is an environmental provision (as defined in Section 736(f)(2)
of the California Code of Civil Procedure) made by Grantor relating to the real
property security (the "Environmental Provisions"), and that ▇▇▇▇▇▇▇'s failure
to comply with any of the Environmental Provisions will be a breach of contract
that will entitle Lender to pursue the remedies provided by Section 736 of the
California Code of Civil Procedure ("Section 736") for the recovery of damages
and for the
PAGE 31
enforcement of the Environmental Provisions. Pursuant to Section 736, ▇▇▇▇▇▇'s
action for recovery of damages or enforcement of the Environmental Provisions
shall not constitute an action within the meaning of Section 726(a) of the
California Code of Civil Procedure or constitute a money judgment for a
deficiency or a deficiency judgment within the meaning of Sections 580a, 580b,
580d, or 726(b) of the California Code of Civil Procedure.
(d) Any reference in this Instrument or in any other Loan Document to
Section 18 of this Instrument shall be construed as referring together to
Section 18 and this Section 51.
52. WAIVER OF TRIAL BY JURY. GRANTOR AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS GRANTOR AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:
X Exhibit A Description of the Land (required).
X Exhibit B Modifications to Instrument
X Exhibit C Description of Operator Lease
X Exhibit D Description of Contracts
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇ has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
PAGE 32
EXHIBIT A
[DESCRIPTION OF THE LAND]
PARCEL 1 OF PARCEL MAP NO. 87-3 BEING RESUBDIVISION COMBINING PORTIONS OF LOTS
4, 5, 10, 11, 12, 13 AND ALL OF LOT 9 IN BLOCK "E" AND A PORTION OF ASH STREET
(FORMERLY IVY STREET) AS SAID LOTS AND STREET ARE SHOWN UPON THAT CERTAIN "MAP
OF ▇▇▇▇ AND KENTS ADDITION" RECORDED IN BOOK "D" OF MAPS AT PAGE 10 AND COPIED
INTO BOOK 3 OF MAPS AT PAGE 66 AND A PORTION OF LOT 1 AND ALL OF LOT 2 AS SHOWN
ON THE MAP OF "▇▇▇▇▇▇ TRACT" RECORDED IN BOOK 15 OF MAPS AT PAGES 19 AND 20 AND
THE LAND GRANTED TO THE HILLSIDE GROUP, A CALIFORNIA CORPORATION BY DEEDS
RECORDED UNDER SERIES NUMBERS 87029378 AND 87091420 (87091420 WAS CORRECTED PER
SERIES NUMBER (87096091) SAN MATEO COUNTY RECORDS, WHICH PARCEL MAP WAS FILED ON
JULY 2, 1987, IN BOOK 59 OF PARCEL MAPS PAGES 28 AND 29 RECORDS OF SAN MATEO
COUNTY.
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that proceeds
this Exhibit:
1. The period at the end of Section 13 is deleted and there is added at
the end thereof the following: "and upon reasonable notice."
2. The period at the end of Section 14(a) is deleted and there is added at
the end thereof the following: "during normal business hours and upon
reasonable notice."
3. There is inserted in the first line of Section 17 after the word
"commit" and before the word "waste" the word "material."
4. There is inserted in line 7 of Section 17 after the word "fixtures" and
before the word "with" the words "when necessary".
5. The semicolon at the end of Section 18(a)(1) is deleted and there is
added at the end thereof the following: "in violation of any Hazardous
Material Laws;".
6. The semicolon at the end of Section 18(a)(2) is deleted and there is
added at the end thereof the following: "in violation of Hazardous
Material Laws;".
7. There is deleted from Section 18(a)(3) in line 3 thereof the following:
"or may be".
8. There is added to the third line of Section 18(b) after the word
"comparable" and before the words "multifamily properties" the
following: "senior housing or ".
9. There is added in Section 18(f)(3) after the words "untrue" and before
the word "after" the following: "in any material respect".
10. There is added at the end of line 5 of Section 18(h) after the words
"required by" the word "such".
11. There is added at the end of Section 18 a new paragraph (q) as follows:
"Notwithstanding anything herein to the contrary, this Section shall
not apply to the introduction and initial release of Hazardous
Materials on the Mortgaged Property from and after the date that the
Lender acquires title to the Mortgaged Property through foreclosure or
deed in lieu of foreclosure (the "Transfer Date"); provided, however,
the Grantor shall bear the burden of proof that the introduction and
initial release of Hazardous Materials (i) occurred subsequent to the
Transfer Date, and (ii) did not occur as a result of any action of the
Grantor, and (iii) did not occur as a result of any
PAGE B-1
continuing migration or release of any Hazardous Materials introduced
prior to the Transfer Date in, on, under, or near the Mortgaged
Property."
12. Section 19(b) is modified to delete the fourth sentence thereof which
reads as follows: "Lender shall have the right to hold the original
policies or duplicate original policies of all insurance required by
Section 19(a).
13. The last sentence of Section 19(b) is modified in its entirety to read
as follows: "At least 30 days prior to the expiration date of a policy,
Grantor shall deliver or cause to be delivered to Lender a certificate
of insurance in form satisfactory to Lender."
14. The first sentence of Section 19(f) is modified in its entirety to read
as follows: "In the event of loss of any of the Mortgaged Property,
Grantor shall give prompt written notice to the insurance carrier and
to Lender."
15. The second sentence of Section 19(f) is modified to delete the period
at the end thereof and to add at the end thereof the following: ",
provided however, that the Grantor may itself make proof of loss,
adjust and compromise any claims under policies of property damage
insurance, appear in and prosecute any action arising out of such
property damage insurance policies and collect and receive the proceeds
of property damage insurance for any losses arising out of a single
occurrence aggregating no in excess of $100,000 and in the case of
losses arising out of a single occurrence aggregating not in excess of
$250,000 may make proof of loss, adjust and compromise any claims under
policies of property damage insurance, appear in and prosecute any
action arising from such property damage insurance policies but may not
collect and receive the proceeds of property damage insurance, the same
having been assigned to Lender hereunder."
16. Section 19(h) is amended to delete from the third line thereof the
following: "any insurance policies and unearned insurance premiums and
in and to".
17. Section 20(a) is amended to delete the period at the end of the third
sentence thereof and to add the following: ", provided however, that
the Grantor may itself appear in, prosecute any action or proceeding
relating to any condemnation and settle or compromise any claim
aggregating not in excess of $10,000 and may, itself appear in,
prosecute any action or proceeding relating to any condemnation and
settle and compromise any claim aggregating not in excess of $50,000
but may not collect and receive the proceeds of property damage
insurance, the same having been assigned to Lender hereunder."
18. Section 21(a) (6) is amended to delete the following: ", or (C) the
removal, appointment or substitution of a trustee of Borrower".
PAGE B-2
19. Section 21(b)(3) is amended to read in its entirety to read as follows:
"The grant of a leasehold interest in an individual dwelling unit for
an initial term of two years or less not containing an option to
purchase;"
20. Section 21(b)(4) is amended to add in the second line thereof after the
word: "replaced" and before the word "buy" the following: "to the
extent necessary for operation of the Mortgaged Property."
21. Section 21(b)(5) is amended to add in the second line thereof after the
word: "materially" and before the word "affect" the words "and
adversely".
22. Section 21(b)(6) is amended to delete the period at the end thereof and
to add at the end thereof the following: " provided, however, that
Grantor shall not be required to release of record such lien as long as
the Grantor shall in good faith contest the same or the validity
thereof by appropriate legal proceedings which shall operate to prevent
the collection of the lien so contested and the sale of the Mortgaged
Property or any part thereof, to satisfy the same, and provided that
Grantor shall, prior to the date such lien is due and payable, have
given such reasonable security as may be demanded by the Lender to
insure such payments plus interest or penalties thereon and prevent any
sale or forfeiture of the Mortgaged Property by reason of such non
payment and such contest shall have been completed within 90 days. Any
such contest shall be prosecuted with due diligence and the Grantor
shall promptly after final determination thereof, pay the amount of any
such lien so determined, together with all interest and penalties which
may be payable in connection therewith. Notwithstanding these
provisions Grantor shall (and if Grantor shall fail so to do, Lender
may, but shall not be required to) pay any such lien notwithstanding
such contest if in the opinion of Lender the Mortgaged Property shall
be in jeopardy or in danger of being forfeited or foreclosed."
23. Section 21(c)(3) is amended to add in the last line thereof after the
words "mortgages on" and before the word "multifamily" the words
"senior housing".
24. Section 21(c)(4) is amended to add in the last line thereof before the
words "multifamily properties" the words "senior housing".
25. The first sentence of Section 22 (g) is amended in its entirety to read
as follows: "Any failure by Grantor to perform any of its obligations
under this Instrument (other than those specified in Sections 22(a)
through (f) (as and when required, which continues for a period of
thirty (30) days after notice of such failure by Lender to Grantor or,
if such failure cannot reasonably be cured within thirty (30) days,
such reasonable additional time as is necessary to cure the same not to
exceed 120 days provided that the Grantor commence to cure the failure
within such thirty (30) day period and diligently and a good faith
continues the same to completion."
PAGE B-3
26. The words, "to the extent such statements are true and correct as of
the date made" are added after the words "such statement" in Line 3 of
Section 29.
27. Section 29 is amended to delete the words "(ii) the unpaid principal
balance of the Note; (iii) to date which interest under the Note has
been paid;" and the "(iv)" is changed to: "(ii)", and the "(v)" is
changed to "(iii)" and the "(vi)" is changed to "(iv)".
28. Section 31(a) is amended to add at the end thereof the following:
"Lender shall provide to Grantor upon delivery to Borrower copies of
any and all notices delivered to Borrower under or with respect to the
Note, Borrower Mortgage or the documents and instruments securing or
made in connection with the Note."
29. The following new sections are added at the end of the Instrument after
the last numbered Section, but there are no Sections between the last
numbered Section and Section 55:
"55. REPRESENTATIONS AND WARRANTIES REGARDING OPERATOR LEASE. Grantor
warrants and represents to Lender that, as of the date of this
Instrument: (i) the Operator Lease is in full force and effect in
accordance with its terms; (ii) Grantor has not waived, canceled or
surrendered any of its rights under the Operator Lease; (iii) Grantor
is the sole owner of, and has good and marketable title to, the
Leasehold Estate, subject to title exceptions permitted by Lender in
the Lender's policy of title insurance, (iv) the Mortgaged Property are
free and clear of all liens, encumbrances and other matters affecting
title, other than the lien of this Instrument and the easements and
restrictions listed in a schedule of exceptions to coverage in the
title insurance policy issued to Lender contemporaneously with the
execution and recordation of this Instrument and insuring ▇▇▇▇▇▇'s
interest in the Mortgaged Property; (v) there is no existing Default
and no event has occurred which, with the passage of time or the giving
of notice, or both, would constitute a Operator Lease Default.
56. NOTICES UNDER OPERATOR LEASE. Grantor shall deliver to Lender,
within ten (10) days after ▇▇▇▇▇▇▇'s receipt, a true and correct copy
of each notice, demand, complaint or request from Borrower under, or
with respect to, the Operator Lease.
57. ▇▇▇▇▇▇▇'S OBLIGATIONS TO COMPLY WITH OPERATOR LEASE. Subject to
Section 15, Grantor shall (i) pay all sums of money due and payable at
any time and from time to time under the Operator Lease as and when
such sums become due and payable, but in any event before the
expiration of any grace period provided in the Operator Lease for the
payment of any such sum, and (ii) at all times fully perform, observe
and comply with all other terms, covenants and conditions of the
Operator Lease to be performed, observed or complied with by Grantor as
lessee under the Operator Lease. If the Operator Lease does not provide
for a grace period for the payment of a
PAGE B-4
sum of money, Grantor shall make the payment on or before the date on
which the payment becomes due and payable. Grantor shall deliver
evidence of the payment to Lender within ten (10) days after receipt of
a written request from Lender for evidence of the payment.
58. COVENANTS TO PROTECT LEASEHOLD ESTATE. Grantor shall not, without
the written consent of Lender (which may be given or withheld by Lender
in its discretion), (i) surrender the Leasehold Estate to Borrower or
terminate or cancel the Operator Lease, except as specifically provided
in the Operator Lease (ii) amend, modify or change the Operator Lease,
either orally or in writing, or waive any of Grantor's rights under the
Operator Lease, or (iii) subordinate the Operator Lease or the
Leasehold Estate other than to the Borrower Mortgage to any mortgage,
deed of trust or other lien on ▇▇▇▇▇▇▇▇'s fee title to the Land.
Grantor absolutely and unconditionally transfers and assigns to Lender
all of Grantor's rights to surrender, terminate, cancel, modify and
change the Operator Lease except as specifically provided in the
Operator Lease, and any such surrender, termination, cancellation,
modification or change made without the prior written consent of Lender
shall be void and have no legal effect.
59. OPTION TO RENEW OR EXTEND OPERATOR LEASE. Grantor shall give Lender
written notice of ▇▇▇▇▇▇▇'s intention to exercise each option to renew
or extend the term of the Operator Lease at least concurrently with the
exercise thereof under the Operator Lease. If Grantor intends to renew
or extend the term of the Operator Lease, it shall deliver to Lender,
together with the notice of such decision, a copy of the notice of
renewal or extension it delivers to Borrower.
60. EXHIBIT C. Exhibit C is attached to this Instrument."
61. SENIOR HOUSING.
(a) The Mortgaged Property will be used as an independent
and assisted living facility (the "Intended Use").
(b) Additional Definitions.
(1) The term "Mortgaged Property" shall also
include, where applicable, payments received
from occupants, payment of second party
charges added to base rental income, base
and/or additional meal sales, payments
received from commercial operations located
on the Mortgaged Property or provided as a
service to the occupants of the Mortgaged
Property, rental from guest suites, seasonal
lease charges, rental payment under
furniture leases, income from laundry
service, and fees from any and all other
PAGE B-5
services provided to third parties in
connection with the Mortgaged Property,
together with the following items: licenses
and contracts, all rights to payments from
Medicare or Medicaid programs or similar
federal, state or local programs or agencies
and rights to payment from residents or
private insurers, arising from the operation
of the Mortgaged Property, whether as a
community residential, independent living,
adult congregate care, assisted living or
skilled nursing care facility, all personal
property acquired by Grantor after the date
of this Instrument in connection with the
ownership and operation of the Mortgaged
Property as such a facility, utility
deposits, unearned premiums, accrued,
accruing or to accrue under insurance
policies obtained by the Grantor now or in
the future and all proceeds of any
conversion of the Mortgaged Property or any
part of it including replacements and
additions thereto.
(2) The term "Lease" shall also include any
occupancy agreements pertaining to occupants
of the Mortgaged Property, including both
residential and commercial agreements and
patient admission or resident care
agreements.
(3) The term "Hazardous Materials" shall also
include any medical products or devices,
including, those materials defined as
"medical waste" or "biological waste" under
relevant statutes or regulations pertaining
to hazardous materials law.
(c) In addition to those representations and warranties
contained in the Instrument, Grantor hereby
represents and warrants to Lender as follows:
(1) Grantor has obtained (in its own name and/or
in the relevant operator's or manager's
name, if any, and in any event in the name
of the person(s) as required under all
applicable legal requirements) all licenses,
permits, certificates, approvals or
authorizations necessary to use and operate
the Mortgaged Property for its Intended Use
(collectively, the "Licenses"), and all such
Licenses are in full force and effect. The
use being made of the Mortgaged Property is
in conformity in all respects with the
certificate of occupancy and/or Licenses for
such property and any other restrictions,
covenants or conditions affecting such
property. The Mortgaged Property contains
all equipment necessary to use and operate
such property for its Intended Use.
PAGE B-6
(2) Grantor and the Mortgaged Property (and its
operation) are in compliance in all material
respects with the applicable provisions of
all laws, statutes, regulations, ordinances,
orders, standards, restrictions and rules of
any federal, state or local government or
quasi-governmental body, agency, board or
authority having jurisdiction over the
operation of the Mortgaged Property,
including: (A) health care and fire safety
codes; (B) laws regulating the handling and
disposal of medical or biological waste; (C)
the applicable provisions of all laws,
rules, regulations and published
interpretations thereof to which the Grantor
or the Mortgaged Property is subject by
virtue of its Intended Use; and (D) all
criteria established to classify the
Mortgaged Property as housing for older
persons under Fair Housing Amendments Act of
1988.
(3) Grantor does not currently participate in
any Medicaid or Medicare programs or any
other third party payors' programs, or other
similar provider payment programs in
connection with the operation of the
Mortgaged Property.
(4) Grantor and the Mortgaged Property are not
subject to any proceeding, suit or
investigation by any federal, state or local
government or quasi-government body, or
agency or any other administrative or
investigative body, and Grantor has received
no notice from any such agency which may
result in the imposition of a fine, or
alternative, interim or final sanction,
would have a material adverse effect on
Grantor or the operation of the Mortgaged
Property, would result in the appointment of
a receiver or manager, would affect
Grantor's ability to accept and/or retain
residents, or would result in the
revocation, transfer, surrender, suspension
or other impairment of any License for the
Mortgaged Property.
(5) Neither the execution and delivery of the
Guaranty, the Instrument or any other loan
documents, ▇▇▇▇▇▇▇'s performance thereunder,
the recordation of the Instrument, nor the
exercise of any remedies by ▇▇▇▇▇▇, will
adversely affect the Licenses.
(6) Grantor is not a participant in any federal
program whereby any federal, state or local
government or quasi-governmental body or
agency may have the right to recover funds
by reason of the advance of federal funds.
Grantor has received no notice of, and is
not aware of, any violation of applicable
antitrust laws.
PAGE B-7
(7) In the event any existing management
agreement is terminated or Lender acquires
the Mortgaged Property through foreclosure
or otherwise, neither Grantor, Lender, any
subsequent manager, nor any subsequent
purchaser (through foreclosure or otherwise)
must obtain a certificate of need from any
applicable state health care regulatory
authority or agency (other than giving such
notice required under the applicable state
law or regulation) prior to applying for any
applicabl License, provided that no service
or the unit compliment is changed.
(d) Grantor shall furnish to Lender, within ten (10) days
after receipt by Grantor, any operator or any
manager, any and all notices from any licensing
and/or certifying agency that any License is being
downgraded to a substandard category, revoked, or
suspended, or that action is pending or being
considered.
(e) Grantor shall furnish to Lender, within ten (10) days
after receipt, a copy of any licensing agency survey
or report and any statement of deficiencies, and
within the time period required by the particular
agency for furnishing a plan of correction, shall
furnish to Lender a copy of the plan of correction.
Grantor shall correct any deficiency, the curing of
which is a condition of continued licensure, by the
date required for cure by such agency.
(f) Upon ▇▇▇▇▇▇'s request, Grantor shall furnish to
Lender true and correct copies of all residency and
resident care agreements.
(g) Grantor shall operate in a manner such that all
applicable Licenses shall remain in full force and
effect.
(h) Without the prior written consent of Lender, which
may be granted or withheld in its discretion, Grantor
shall not, and shall not permit any operator or
manager at the Mortgaged Property to, participate in
Medicare and Medicaid, or any provider agreement
under Medicare and Medicaid, or accept any residents
whose ability to reside in the Mortgaged Property
requires that Grantor, the Mortgaged Property or any
operator or manager participate in Medicare, Medicaid
or any similar provider program.
(i) Grantor shall not, and shall not allow any operator
or manager to: (A) transfer any License to any
location other than the Mortgaged Property, (B)
pledge any License as collateral security for any
other loan or
PAGE B-8
indebtedness; (C) rescind, withdraw, modify, or
otherwise alter any License if doing so would have a
material affect on the Mortgaged Property; or (D)
pledge any receivables as collateral security for any
other loan or indebtedness.
62. ASSIGNMENT OF SERVICE CONTRACTS.
(a) In addition to the provisions of the Instrument,
Grantor hereby assigns to Lender all of its right,
title and interest in and to the contracts described
on Exhibit "D" attached hereto and made a part hereof
(together with any future contracts for services at
the Mortgaged Property, the "Contracts").
(b) If an Event of Default exists, Lender shall have the
right to exercise all the rights under the Contracts
that Grantor would have as owner of the Mortgaged
Property. Lender does not assume any obligations or
duties of the Grantor concerning the Contracts until
and unless Lender shall exercise its rights under
this subsection.
(c) Grantor irrevocably constitutes and appoints ▇▇▇▇▇▇
as the Grantor's attorney-in-fact to demand, receive
and enforce the Grantor's rights with respect to the
Contracts, to give appropriate receipts, releases and
satisfactions on ▇▇▇▇▇▇▇'s behalf and to do any and
all acts in Grantor's name or in the name of Lender
with the same force and effect as Grantor could do if
this assignment had not been made. This appointment
shall be deemed to be coupled with an interest and
irrevocable.
(d) Grantor represents and warrants to Lender that (1)
except as provided in the Contracts, the Contracts
are assignable and no previous assignment of
▇▇▇▇▇▇▇'s interest in the Contracts has been made;
and (2) to Grantor's knowledge the Contracts are in
full force and effect in accordance with their
respective terms and there are no defaults under any
of the contracts. Grantor shall fully perform all of
its material obligations under the Contracts, and
Grantor shall not assign, pledge, or otherwise
encumber its interests in any of the Contracts so
long as this assignment is in effect, or consent to
any transfer, assignment or other disposition of its
interests in any Contract without the prior written
approval of Lender. A material default by Grantor
under any of the Contracts or a breach of this
assignment, which continues beyond the expiration of
any applicable cure period, shall constitute an Event
of Default.
(e) Each Contract entered into by Grantor, the average
annual consideration of which, directly or
indirectly, is at least $20,000, shall provide that
it shall
PAGE B-9
be terminable, at ▇▇▇▇▇▇'s option, upon the
occurrence of an Event of Default.
63. ADDITIONAL DEFAULTS. The following shall also constitute an Event
of Default under the Instrument:
(a) Grantor's failure within the time deadlines set by
any federal, state or local licensing or similar
agency, to correct any deficiency that may cause any
action by such agency with respect to the Mortgaged
Property that may have a material adverse affect on
the income or operation of the Mortgaged Property or
on Grantor's interest in the Mortgaged Property,
including, a termination, revocation or suspension of
any applicable License, or a ban on new resident
admissions.
(b) Grantor's failure to do any of the following without
the prior written consent of Lender, to be granted or
withheld in its discretion: (1) operate the Mortgaged
Property as its Intended Use; (2) provide facilities
and services normally associated with its Intended
Use; (3) provide or contract for skilled nursing care
for any of the units other than that level of care
which Grantor would be permitted to provide or
contract for at the Mortgaged Property given its
Intended Use, state or local statutes, regulations,
orders, standards, rules or restrictions.
(c) (1) non residential space in the Mortgaged Property
exceeds ten percent (10%) of the net rental area of
the Improvements; (2) the Mortgaged Property is no
longer classified as housing for older persons
pursuant to the Fair Housing Amendments Act of 1988;
(3) Grantor participates, or permits the manager or
operator at the Mortgaged Property to participate in
Medicare, Medicaid, or any similar or successor
payment provider plan; or (4) skilled nursing care
(A) is provided in a number of units exceeding
twenty-five percent (25%) of the total number of
units at the Mortgaged Property or (B) accounts for
more than twenty-five percent (25%) of the total
annual gross income of the Mortgaged Property.
64. PERFORMANCE OF CERTAIN COVENANTS. ▇▇▇▇▇▇ acknowledges that Grantor
(under the Loan Documents) and Borrower (under those Loan Documents
executed by Borrower) are each obligated to perform certain covenants
which need only be performed by one of them. Accordingly with respect
to the covenants set forth in paragraphs 7, 10, 14(a), 14(b), 14(c),
15, 17, 18(d), 18(h) and 19 of this Instrument, the timely performance
thereof by either Borrower or Grantor (as required by the Operator
Lease) shall be accepted by ▇▇▇▇▇▇ as performed by each of them.
PAGE B-10
65. GRANTOR'S LIMITED RIGHT TO CURE. By acceptance of this Instrument
and the Borrower Mortgage, ▇▇▇▇▇▇ agrees that notwithstanding anything
in this Instrument or any of the other Loan Documents to the contrary,
if an Uncurable Event of Default (as hereinafter defined) occurs and
Lender desires to exercise its rights hereunder or under any of the
other Loan Documents with respect to such Uncurable Event of Default
(individually and collectively the "Remedies"), provided no other Event
of Default then exists, Lender shall give Grantor written notice of
such Uncurable Event of Default and of Lender's intent to exercise its
Remedies and Lender shall abstain from exercising its Remedies until
the earliest to occur of (a) the date which is fifteen (15) days after
delivery of such written notice by ▇▇▇▇▇▇ if Grantor does not advise
Lender within said fifteen (15) day period of Grantor's intention to
take the actions necessary to satisfy the terms and conditions
described in th next sentence and has commenced taking such actions (b)
the date which is forty-five (45) days after delivery of such written
notice by ▇▇▇▇▇▇ and (c) the occurrence of an Event of Default other
than an Uncurable Event of Default, provided that Lender need not so
abstain if such abstention could reasonably be anticipated to prejudice
or impair its right to collect the Indebtedness or exercise its
remedies after the expiration of such abstention period. Except as
provided in the precedin sentence, Lender shall not exercise its
Remedies in connection with the Uncurable Event of Default identified
in the written notice delivered to Grantor if Grantor has given the
notice and taken the action described in clause (a) of the preceding
sentence and, prior to the dates or events described in clauses (b) and
(c) of the foregoing sentence, the following events and conditions
shall have occurred or be satisfied, as applicable, (i) the Grantor has
acquired the Mortgaged Property, a defined in the Borrower Mortgage, or
if the Uncurable Event of Default did not arise out of a violation of
Paragraph 21 of the Borrower Mortgage, Grantor has acquired 100% of the
beneficial interest in Borrower, has assumed in writing all of the
obligations of the Borrower under the Loan Documents and has executed
and delivered such other documentation as may be reasonably required by
▇▇▇▇▇▇, (ii) to the extent feasible, Grantor shall have cured such
Uncurable Event of Default, (iii) Grantor pays all reasonable expenses
incurred by Lender in connection with such transfer, and (iv) if
Grantor shall have acquired the Mortgaged Property, as defined in the
Borrower Mortgage, Grantor shall have delivered to Lender an updated
Title Insurance Policy showing title to the Mortgaged Property in
Grantor and insuring that Lender has a valid first lien on Grantor's
interest in the Land and Improvements and the easements and
restrictions listed in the schedule of exceptions to coverage in the
title insurance policy accepted by ▇▇▇▇▇▇ insuring the lien of the
Borrower Mortgage together with such modifications, amendments or
supplements to the Loan Documents as Lender may reasonably request.
Upon consummation of the transfer of the title to the Mortgaged
Property to Grantor and
PAGE B-11
the assignment by ▇▇▇▇▇▇▇▇ and assumption by Grantor of ▇▇▇▇▇▇▇▇'s
obligations under the Loan Documents executed by ▇▇▇▇▇▇▇▇, Grantor
shall be considered the "Borrower" under the Loan Documents made by
▇▇▇▇▇▇▇▇, as defined in the Borrower Mortgage, as well as the Grantor
under the Loan Documents made by Grantor and shall have all of the
obligations of "Borrower" under the Loan Documents as well as all of
the obligations of "Grantor" under the Loan Documents. If Grantor fails
to give the notice and take the action described in clause (a) of the
first sentence of this Paragraph or if the time period described in
clause (b) or any of the events described in (c) of the first sentence
of this Paragraph 65 expires or occurs, as applicable, or any of the
events or conditions described in the second sentence of this Paragraph
65 do not occur or are not satisfied prior to the occurrence or
expiration of any of the events or time periods described in clauses
(b) and (c) of the first sentence of this Paragraph 65, Lender shall be
entitled to exercise all of its Remedies. For purposes hereof,
"Uncurable Event of Default" means an Event of Default, as defined in
Paragraph 22(b), 22(c), 22(d), 22(e), 22(f), or 22(j) of the Borrower
Mortgage if such Event of Default is solely the result of the act or
omission of Borrower and cannot be cured by the payment of money or the
taking of any action by Grantor or Paragraph 22(i) of the Borrower
Mortgage if not caused by Grantor's failure to pay rent or to perform
any of its other obligations under the Operator Lease, provided that
each such Event of Default occurs without the consent, participation or
cooperation of Grantor or the owner of Grantor and is not the result of
any act or intentional omission of Grantor or the owner of Grantor.
PAGE B-12
EXHIBIT C
[DESCRIPTION OF OPERATOR LEASE]
That certain Lease dated December ---, 1998, entered into by and between The
Woodside Business Trust, a Delaware business trust, as lessor and Brookdale
Living Communities of California - RC, Inc., a Delaware corporation, a
memorandum of which has been filed for record on December ---, 1998, in the
office of the ------- of San Mateo County, California as Document No. -----, in
Book -----, Page ------.
Note: The description of the Ground Lease should include the names of the
original lessor and original lessee, the date of the lease, the date on which
the lease (or a memorandum of the lease) was recorded among the applicable land
records, the book and page number (or other similar identifying information) of
the applicable land records in which the lease (or memorandum) is recorded. If
Grantor is not the original lessee, the description should also include the same
information with respect to the assignment(s) or other instrument(s) pursuant to
which Grantor acquired the lessee's interest in the lease.
PAGE B-13