RECORDING REQUESTED BY
CHICAGO TITLE
and when recorded mail to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.L.C.
Two North Central Avenue,18th Floor
Phoenix, Arizona 85004
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING
The Promissory Note secured by this Deed
of Trust contains provisions for a variable
interest rate.
This Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing
(hereinafter referred to as "Deed of Trust") made
and entered into as of this 18th day of February,
1997, by TDC/Emeritus Paso ▇▇▇▇▇▇ Associates, a
Washington general partnership ("Trustor"), whose
address is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to Chicago Title Company, a
California corporation ("Trustee"), whose address
is ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. Box 810, San Luis
Obispo, California, 93206, for the benefit of
FINOVA Capital Corporation, a Delaware corporation
("Beneficiary"), whose address is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
ARTICLE I
DEFINITIONS
1.1 As used herein, the following terms
shall have the following meanings:
(a) BENEFICIARY: FINOVA Capital
Corporation and the subsequent holder or holders,
from time to time, of the Note.
(b) COLLATERAL: The meaning given such
term in Article IX below.
(c) DEBTOR RELIEF LAWS: Any applicable
state, federal or other liquidation,
conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization, or
similar laws affecting the rights or remedies of
creditors generally, as in effect from time to
time.
(d) ESCROWED SUMS: The amounts paid
by Trustor to Beneficiary pursuant to
paragraph 11.14 hereof to be held by
Beneficiary in a fund for the payment of
Impositions and insurance premiums.
(e) ENVIRONMENTAL CERTIFICATE. That
certain Environmental Certificate with
Representations, Covenants and Warranties of
even date herewith, as amended, renewed,
replaced or restated.
(f)Event of Default: Any happening or
occurrence described in Article VI herein.
(g) FINANCIAL STATEMENTS: The
balance sheets, profit and loss statements,
reconciliations of capital and surplus,
changes in financial condition, schedules of
sources and applications of funds, and other
financial information of Trustor heretofore
furnished to Beneficiary or required to be
furnished to Beneficiary under the terms of
the Security Documents from time to time,
which statements shall be prepared in such
scope, detail and form as shall be reasonably
acceptable to Beneficiary and shall be
certified by Trustor.
(h) FIXTURES: All of Trustor's
materials, supplies, equipment, apparatus and
other items now or hereafter attached to,
installed on or in the Land or the
Improvements, or which in some fashion are
deemed to be fixtures to the Land or
Improvements under the laws of the State of
California, including the California Uniform
Commercial Code, as it may be amended from
time to time (the "UCC"), other than those
owned by tenants under any lease. The term
"Fixture" shall include, without limitation,
all items of Trustor's Personalty to the
extent that the same may be deemed fixtures
under applicable law.
(i) GOVERNMENTAL AUTHORITY: Any and
all courts, boards, agencies, commissions,
offices or authorities of any nature
whatsoever for any governmental unit (federal,
state, county, district, municipal, city or
otherwise) whether now or hereafter in
existence.
(j) GOVERNMENTAL REQUIREMENTS: The
term Governmental Requirements shall mean all
statutes, laws, ordinances, orders, writs,
injunctions, decrees, rules and regulations of
any Governmental Authority applicable to
Trustor, the Mortgaged Property or the
Improvements.
(k) GUARANTORS: Emeritus Corporation, a
Washington corporation, and TDC Convalescent,
Inc., a California corporation.
(1) GUARANTY: Any instrument of Guaranty
executed by any of the Guarantors and delivered to
Beneficiary guaranteeing the repayment of all or
any portion of the Indebtedness and the
performance of the Obligations.
(m) IMPOSITIONS: All real estate and
personal property taxes; water, gas, sewer,
electricity and other utility rates and charges;
charges imposed pursuant to any subdivision,
planned unit development or condominium
declaration or restrictions; charges for any
easement, license or agreement maintained for the
benefit of the Mortgaged Property, and all other
taxes, charges and assessments and any interest,
costs or penalties with respect thereto of any
kind and nature whatsoever which at any time prior
to or after the execution hereof may be assessed,
levied or imposed upon the Mortgaged Property or
the ownership, use, occupancy or enjoyment
thereof.
(n) IMPROVEMENTS: Any and all buildings,
structures, open parking areas and other
improvements, and any and all accessions,
additions, replacements, substitutions or
alterations thereof or appurtenances thereto, now
or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.
2
(o) INDEBTEDNESS: (i) The principal of,
interest on and all other amounts and payments now
or hereafter due under or secured by the Note and
the other Security Documents, together with all
funds hereafter advanced by Beneficiary to or for
the benefit of Trustor as contemplated by any
covenant or provision herein contained or
contained in the Note or any other Security
Document, all such advances to have the same
priority as the funds initially advanced under the
Note, (ii) payment and performance of all
obligations of Trustor under this Deed of Trust,
including payment of all sums expended or advanced
by Beneficiary hereunder to protect or preserve
the Mortgaged Property, or the lien hereof on the
Mortgaged Property, or for taxes, assessments or
insurance premiums as hereinafter provided,
together with interest thereon as provided herein,
(iii) payment and performance of all future
advances and other obligations that Trustor may
agree to pay or perform (whether as principal,
surety or guarantor) for the benefit of
Beneficiary, when such obligation is evidenced by
a writing which states that it is secured by this
Deed of Trust, and (iv) all modifications,
extensions and renewals (if any) of one or more of
the obligations secured hereby, including without
limitation (a) modifications of the required
principal payment dates or interest payment dates,
deferring or accelerating payment dates wholly or
partly, and (b) modifications, extensions or
renewals at a different rate of interest whether
or not, in the case of a note or other contract,
the modification, extension or renewal is
evidenced by a new or additional promissory note
or other contract.
(p) LAND: The real estate or any
interest therein described in Exhibit "A"
attached hereto and made a part hereof,
together with all Improvements and Fixtures
and all rights, titles and interests
appurtenant thereto.
(q) LEASES: All of the lessor's
right, title and interest in and to any and
all leases, subleases, licenses, concessions
or other agreements (written or verbal, now or
hereafter in effect) which grant a possessory
interest in and to, or the right to extract,
mine, reside in, sell or use the Mortgaged
Property, and all other agreements, including,
but not limited to, utility contracts,
maintenance agreements and service contracts,
which in any way relate to the use, occupancy,
operations, maintenance, enjoyment or
ownership of the Mortgaged Property, save and
except any and all leases, subleases or other
agreements pursuant to which Trustor is
granted a possessory interest in the Land.
(r) LEGAL REQUIREMENTS: (i) Any and
all present and future judicial decisions,
statutes, rulings, rules, regulations,
permits, certificates or ordinances of any
Governmental Authority in any way applicable
to Trustor or the Mortgaged Property,
including but not limited to those respecting
the ownership, use, occupancy, possession,
operation, maintenance, alteration, repair or
reconstruction thereof, (ii) Trustor's
presently or subsequently effective by-laws
and articles of incorporation, or any
instruments establishing any partnership,
limited partnership, joint venture, trust or
other form of business association (if either,
both or all by any of same), (iii) any and all
Leases and other contracts (written or oral)
of any nature to which Trustor may be bound
and (iv) any and all restrictions,
reservations, conditions, easements or other
covenants or agreements of record affecting
the Mortgaged Property.
3
(s) LOAN AGREEMENT: That certain
Loan Agreement between Trustor and Beneficiary
of even date herewith.
(t) MORTGAGED PROPERTY: The Land,
Improvements, Fixtures, Personalty, Leases and
Rents, together with:
(i) all rights, privileges, tenements,
hereditaments, rights-of way, easements,
appendages and appurtenances in anywise
appertaining thereto, and all right, title and
interest of Trustor in and to any streets, ways,
alleys, strips or gores of land adjoining the Land
or any part therein or thereof;
(ii) all betterments, accessions,
additions, appurtenances, substitutions,
replacements and revisions thereof and thereto and
all reversions and remainders therein;
(iii) all other interest of every kind
and character which Trustor now has or at anytime
hereafter acquires in and to the above-described
real and personal property and all property which
is used or useful in connection therewith,
including rights of ingress and egress, easements,
licenses, and all reversionary rights or interests
of Trustor with respect to such property. To the
extent permitted by law, all of the Personalty and
Fixtures are to be deemed and held to be a part of
and affixed to the Land. In the event the estate
of Trustor in and to any of the Land and
Improvements is a leasehold estate, this
conveyance shall include and the lien, security
interest and assignment created hereby shall
encumber and extend to all other, further or
additional title, estates, interest or rights
which may exist now or at any time be acquired by
Trustor in or to the property demised under the
lease creating such leasehold estate and including
Trustor's rights, if any, to purchase the property
demised under such lease and, if fee simple title
to any of such property shall ever become vested
in Trustor, such fee simple interest shall be
encumbered by this Mortgage in the same manner as
if Trustor had fee simple title to such property
as of the date of execution hereof; and
(iv) any and all other security and
collateral of any nature whatsoever, now or
hereafter given for the repayment of the
Indebtedness or the performance and discharge of
the Obligations, including the Escrowed Sums,
hereinafter defined.
As used in this Mortgage, the term
"Mortgaged Property" is expressly defined as
meaning all or, where the context permits or
requires, any portion of the above and all or,
where the context permits or requires, any
interest therein.
(u) NOTE: One certain promissory note of
even date herewith, executed by Trustor, payable
to the order of Beneficiary in the principal
amount of $6,000,000.00 as same may be amended,
renewed or extended from time to time.
(v) OBLIGATIONS: Any and all of the
covenants, warranties, representations and other
obligations, including the obligation to repay the
Indebtedness, made or undertaken by Trustor or
others to Beneficiary, Trustee or others as set
forth in the Security Documents, and any other
documents or instruments executed in connection
with the Indebtedness.
4
(w) PERMITTED ENCUMBRANCES: The
outstanding liens, easements, building lines,
restrictions, security interests and other matters
(if any) as set forth on Schedule B of the title
policy delivered to Beneficiary by Trustor in
connection with the recording of this Deed of
Trust.
(x) PERSONALTY: All of the right, title
and interest of Trustor in and to all tangible and
intangible personal property which is now or
becomes attached to, installed on or placed on or
used on or in connection with or which is acquired
for such attachment, installation, placement or
use, or which arises out of the development,
improvement, financing, leasing, sale, operation
or use of the Land, Improvements, Fixtures or
other goods located on the Land or Improvements,
whether now owned or hereafter acquired,
including, but not limited to:
(i) all furnishings, building materials,
supplies, machines, engines, boilers, stokers,
pumps, fans, vents, blowers, dynamos, furnaces,
elevators, ducts, shafts, pipes, furniture
cabinets, shades, blinds, screens; plumbing,
heating, air conditioning, lighting, lifting,
ventilating, refrigerating, cooking, medical,
laundry and incinerating equipment; partitions,
drapes, carpets, rugs and other floor coverings,
awnings; call and sprinkler systems, fire
prevention and extinguishing apparatus and
equipment, water tanks, swimming pools,
compressors, vacuum cleaning systems; disposals,
dishwashers, ranges, ovens, kitchen equipment,
cafeteria equipment and recreational equipment;
(ii) all equipment, inventory,
attachments, partitions, goods, instruments,
appliances, furnishings, machinery, tools, raw
materials, component parts, work in progress and
materials, and all other tangible personal
property of whatsoever kind, used or consumed in
the improvement, use or enjoyment of the Land, the
Improvements or the Fixtures, now or any time
hereafter owned or acquired by Trustor, wherever
located and all products thereof whether in
possession of Trustor or whether located on the
Land or elsewhere;
(iii) all general intangibles relating
to the design, development, operation, management
and use of the Land, the Improvements and the
Fixtures, including, but not limited to: (a) all
names under which or by which the Land, the
Improvements and the Fixtures, may at any time be
owned and operated under, any such names or any
variant thereof and all goodwill in any way
relating to the Land, the Improvements and the
Fixtures; (b) all permits, licenses,
authorizations, variances, trademarks, service
marks, trade names, symbols, land use
entitlements, approvals, consents, clearances, and
rights obtained from governmental agencies issued
or obtained in connection with the Land, the
Improvements and the Fixtures; (c) all permits,
licenses, approvals, consents, authorizations,
franchises and agreements issued or obtained in
connection with the use, occupation or operation
of the Land, the Improvements and the Fixtures;
and (d) all materials prepared for filing or filed
with any governmental agency;
(iv) all evidence of ownership of any
part of the Land, the Improvements, and the
Fixtures that is owned by Trustor in common with
others, including all water stock relating to the
Land, if any, and all documents or rights of
membership in any owners' or members' association
or similar group having responsibility for
managing or operating any part of the Land;
5
(v) all accounts, deposit accounts,
security deposits, accounts receivable,
instruments, documents, chattel paper, bank
deposits, books and records, documents of title,
general intangibles, rights to payment of every
kind, all of Trustor's rights, direct or indirect,
under or pursuant to any and all construction,
development, financing, guaranty, indemnity,
maintenance, management, service, supply and
warranty agreements, commitments, contracts,
subcontracts, insurance policies and the proceeds
therefrom, licenses and bonds now or anytime
hereafter arising from construction on the Land or
the use or enjoyment of the Land and the
Improvements including, without limitation,
maintenance agreements, service contracts and all
contracts and agreements for the operation,
management and leasing of the Land and/or the
Improvements;
(vi) all water, water stock, water
capacity or other water rights, licenses, permits,
warranties, irrigation rights, oil and gas rights,
minerals, crops and timber, and wastewater and
storm drainage discharge capacity attributable or
allowable to all or any portion of the
Land, the Improvements and any other property,
both real and personal, hereinabove described;
(vii) all rights, titles and interests
in and to all of the plans, specifications,
drawings, surveys, maps and plats, including, but
not limited to, plot plans, foundation plans,
floor plans, elevations, framing plans, cross-
sections of walls, mechanical plans, electrical
plans and architectural and engineering studies
and analyses heretofore or hereafter prepared by
any architect or engineer in respect to the Land,
Improvements or Fixtures;
(viii) all of Trustor's right, title and
interest in and to any award, remuneration,
settlement of compensation heretofore made or
hereafter to be made by any Governmental Authority
to Trustor, including those for any vacation of,
change of grade in, any streets affecting the Land
or the Improvements;
(ix) all of Trustor's right, title and
interest in and to all proceeds. arising from or
by virtue of the sale, lease or other disposal of
all or any part of the Mortgaged Property (consent
to same not granted or to be implied hereby); and,
all proceeds (including premium refunds) payable
or to be payable under each policy of insurance
relating to the Mortgaged Property; and
(x) all additions, accessions,
accessories, amendments, modifications,
extensions, renewals and enlargements, and
additions to, substitutions for the products
thereof, and all proceeds, whether cash proceeds
or noncash proceeds, and including insurance and
condemnation proceeds, received when any of the
foregoing property described in (i) through (ix)
above (or the proceeds thereof is sold, exchanged,
leased, licensed, or otherwise disposed of,
whether voluntarily or involuntarily or when
earlier received; such proceeds shall include any
of the foregoing specifically described property
of Trustor acquired with cash proceeds, together
with, and without limiting the above items, all
Goods, Accounts, Documents, Instruments, Money,
Chattel Paper and General Intangibles located on
or related to the Land, as those terms are defined
in the California Uniform Commercial Code.
6
(y) RENTS: All of the rents, revenues,
income, proceeds, royalties, profits and other
benefits paid or payable for using, leasing,
licensing, possessing, operating from or in,
residing in, selling, mining,
extracting or otherwise enjoying or using the
Land, Fixtures, Personalty or
payable pursuant to the Leases.
(z) SECURITY DOCUMENTS: The Note, this
Deed of Trust, the Loan Agreement and any other
documents now or hereafter evidencing, securing
otherwise ancillary to the Note or the loan made
pursuant to the Loan Agreement, as they may be
hereafter amended, renewed, replaced or restated.
(aa) TRUSTEE: Chicago Title Company.
(bb) TRUSTOR: The above defined Trustor
and any and all subsequent record or equitable
owners of the Mortgaged Property.
ARTICLE II
GRANT
2.1 For purposes of securing the payment
and performance of the Obligations (other than
those arising out of the Environmental
Certificate) (i) Trustor irrevocably grants,
transfers and assigns to Trustee in trust, with
power of sale and right of entry and possession,
the Mortgaged Property and (ii) Trustor absolutely
and irrevocably assigns to Beneficiary all right,
title and interest of Trustor in, to and under the
Leases, together with all Rents. Provided there
does not exist an Event of Default, Trustor shall
have a license to collect the Rents and exercise
the rights of Lessor under the Leases as more
fully set forth in that certain Assignment of
Leases and Rents of even date herewith from
Trustor in favor of Beneficiary. For the purposes
of securing the payment and performance of-the
Obligations (other than those arising out of the
Environmental Certificate) and to protect the
security of this Deed of Trust, Trustor has
executed and delivered this Deed of Trust and
makes the representations, warranties and
covenants set forth herein.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
Trustor hereby unconditionally warrants
and represents to Beneficiary
as follows:
3.1 ORGANIZATION AND POWER: (a) That
Trustor is a duly organized, and validly existing
general partnership under the laws of the State of
Washington, all in accordance with applicable
Legal Requirements, and the Partnership Agreement
of Trustor is in ful1 force and effect and has not
been amended or changed
7
except as disclosed in writing to Beneficiary; (b)
no proceeding is pending, planned or threatened
for the dissolution or annulment of Trustor or any
of its partners; (c) all licenses, filing fees,
income and other taxes due and payable by Trustor
have been paid in full; (d) all conditions
prerequisite to Trustor doing business in
California have been done; and (e) Trustor has all
requisite power and authority to own, lease,
operate and encumber the Mortgaged Property.
3.2 VALIDITY OF DOCUMENTS: The
execution, delivery and performance by Trustor of
the Security Documents and the borrowing evidenced
by the Note (a) are within Trustor's powers and
have been duly authorized by the general partners
of Trustor and all other requisite action; (b)
have received all (if any) requisite prior
governmental approval in order to be legally
binding and enforceable in accordance with the
terms thereof; and (c) will not violate, be in
conflict with, result in a breach of or constitute
(with due notice or lapse of time, or both) a
default under, any Legal Requirement or result in
the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon
Trustor's property or assets, except as
contemplated by the provisions of the Security
Documents. The Security Documents constitute
legal, valid and binding obligations of Trustor
obligated under the terms of the Security
Documents in accordance with their respective
terms (other than as such enforceability may be
subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium, similar
laws relating or affecting rights of creditors
generally or general principles of equity), and
Trustor has full and lawful authority to bargain,
grant, sell, mortgage, assign, transfer and convey
all of the Mortgaged Property as set forth herein.
3.3 INFORMATION: All information,
reports, papers and data given to Beneficiary with
respect to Trustor or the Mortgaged Property are
accurate, complete and correct in all material
respects and do not omit any fact the inclusion of
which is necessary to prevent the facts contained
therein from being materially misleading.
3.4 TITLE TO MORTGAGED PROPERTY AND LIEN
OF THIS INSTRUMENT: Trustor has good and
indefeasible title in fee simple to the Land
described on Exhibit "A" attached hereto, and good
and indefeasible title to the Improvements, the
Fixtures and Personalty, Leases and Rents, free
and clear of any liens, charges, encumbrances,
security interests and adverse claims whatsoever
except the Permitted Encumbrances. This Deed of
Trust constitutes a valid, subsisting, first lien
deed of trust on the Land, the Improvements, the
Fixtures and a valid, subsisting first security
interest in and to the Personalty, Leases and
Rents, all in accordance with the terms hereof.
3.5 TAXES AND OTHER PAYMENTS: Trustor
has filed all federal, state, county, municipal
and city income and other tax returns required to
have been filed by it and has paid all taxes which
have become due pursuant to such returns or
pursuant to any assessments received by Trustor,
and Trustor does not know of any basis for any
additional assessment in respect of any such
taxes. Trustor has paid or will pay in full all
sums owing or claimed for labor, material,
supplies, personal property (whether or not
constituting a Fixture hereunder) and services of
every kind and character used, furnished or
installed in the Mortgaged Property which Trustor
is obligated to pay (subject to Trustor's right to
contest such amount owing on the condition that
Trustor immediately records and serves a surety
bond pursuant to applicable law or otherwise fully
protects
8
Beneficiary from any loss or liability arising
therefrom) and no claim for same currently exists,
to the best of Trustor's knowledge, or will be
permitted to become past due.
3.6 LITIGATION: There are no actions,
suits or proceedings pending or, to the knowledge
of Trustor, threatened against or affecting the
Mortgaged Property (except as disclosed in writing
to Beneficiary) or involving the validity or
enforceability of this Deed of Trust or the
priority of the lien and security interest hereof,
and no event has occurred (including specifically
Trustor's execution of the Security Documents and
its consummation of the loan represented thereby)
which will violate, be in conflict with, result in
the breach of or constitute (with due notice or
lapse of time, or both) a default under, any Legal
Requirement or result in the creation or
imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of Trustor's
property other than the lien and security interest
created by the Security Documents.
3.7 UTILITIES: All utility services in
such capacities as are necessary for the Mortgaged
Property and the operation thereof for their
intended purpose are available to the Mortgaged
Property and the operation thereof for their
intended purpose, including water supply, storm
and sanitary sewer facilities, gas, electric and
telephone facilities.
3.8 STREETS AND PARKING: All parking
areas, streets, roads, and/or highways necessary
for the full utilization of the Improvements for
their intended purposes have been completed or the
necessary rights-of way therefor have either been
acquired by the appropriate Governmental Authority
or have been dedicated to the public use and
accepted by such Governmental Authority.
3.9 PERMITS: All zoning, utility,
building, health and operating permits (if any)
required for the operation of the Improvements
have been obtained or will be obtained as
contemplated by and pursuant to the Loan
Agreement.
ARTICLE IV
AFFIRMATIVE COVENANTS
Trustor hereby unconditionally covenants and
agrees with Beneficiary
as follows:
4.1 PAYMENT AND PERFORMANCE: Trustor
will pay the Indebtedness as and when called for
in the Security Documents and will perform all of
the Obligations in full and on or before the dates
they are to be performed.
4.2 EXISTENCE: Trustor will preserve and
keep in full force and effect its existence,
rights, franchises and trade names.
4.3 COMPLIANCE WITH LEGAL REQUIREMENTS:
Trustor will promptly and faithfully comply or
cause compliance with, conform to and obey all
present and future Legal Requirements whether or
not same shall necessitate structural changes in,
improvements to, or interfere with the use or
enjoyment of, the Mortgaged
9
Property. Without limiting the generality of the
foregoing covenant, Trustor will comply or cause
compliance with the Americans with Disabilities
Act of 1990 (42 U.S.C. Section 12101 et seq.) as
applicable to the Mortgaged Property.
4.4 PAYMENT OF IMPOSITIONS: Subject to
the provisions of paragraph 11.14 herein, Trustor
will pay and discharge, the Impositions not later
than the earlier of the date same becomes
delinquent, the day any fine, penalty, interest or
cost may be added thereto or imposed or the day
any lien may be filed for the nonpayment thereof
(if such day is used to determine the due date of
the respective item); provided, however, that
Trustor may, if permitted by law and if
installment payments would not create or permit
the filing of a lien against the Mortgaged
Property, pay the Impositions in installments
whether or not interest shall accrue on the unpaid
balance of such Impositions. Trustor may in good
faith, in lieu of paying such Impositions as they
become due and payable, by appropriate
proceedings, contest the validity thereof. During
such contest Trustor shall not be deemed in
default hereunder because of such nonpayment if,
prior to delinquency of the asserted tax or
assessment, Trustor furnishes Beneficiary an
indemnity bond, conditioned that such tax or
assessment with interest, cost and penalties be
paid as herein stipulated, secured by a deposit in
cash or security acceptable to Beneficiary or with
surety acceptable to Beneficiary, in the amount of
the tax or assessment being contested by Trustor
and a reasonable additional sum to pay all
possible costs, interest and penalties imposed or
incurred in connection therewith. Upon conclusion
of such contest Trustor shall promptly pay any
amount adjudged by a court of competent
jurisdiction to be due, with all costs, penalties
and interest thereon prior to the date such
judgment becomes final or any writ or order is
issued under which the Mortgaged Property may be
sold pursuant to such judgment.
4.5 REPAIR: Following completion of the
improvements being constructed with the proceeds
of the Note, Trustor will keep or cause the
Mortgaged Property to be kept in a good condition
and presenting a good appearance and will make or
cause tenants of the Mortgaged Property to make
all repairs, replacements, renewals, additions,
betterments, improvements and alterations thereof
and thereto, interior and exterior, structural and
nonstructural, ordinary and extraordinary,
foreseen and unforeseen, which are necessary or
reasonably appropriate to keep same in such order
and condition, reasonable wear and tear excepted.
Trustor will also use all reasonable efforts to
prevent any act or occurrence which might impair
the value or usefulness of the Mortgaged Property
for its intended usages as set forth in any plans
and specifications for the Improvements submitted
to Beneficiary or in the Security Documents. In
instances where repairs, replacements, renewals,
additions, betterments, improvements or
alterations are required in and to the Mortgaged
Property on an emergency basis to prevent loss,
damage, waste or destruction thereof, Trustor
shall proceed to construct same, or cause same to
be constructed, notwithstanding anything to the
contrary contained in paragraph 5.2 hereinbelow;
provided, however, that in instances where such
emergency measures are to be taken, Trustor will
promptly notify Beneficiary in writing of the
commencement of such emergency measures and, when
same are completed, the completion date and the
measures actually taken.
4.6 INSURANCE: Trustor shall obtain and
maintain, or cause to be obtained and maintained,
insurance upon and relating to the Mortgaged
Property as provided in the Loan Agreement.
10
4.7 RESTORATION FOLLOWING CASUALTY: If
any act or occurrence of any kind or nature
(including any casualty for which insurance was
not obtained or obtainable) shall result in damage
to or loss or destruction of the Mortgaged
Property, Trustor will give notice thereof to
Beneficiary.
(a) CASUALTY DURING CONSTRUCTION TERM.
In case any act or occurrence of any kind or
nature shall result in damage to or loss or
destruction of the Mortgaged Property during the
"Construction Term" as defined on the Loan
Agreement, (i) Beneficiary, at its option, shall
be entitled to receive and retain the proceeds of
all insurance policies related to such damage or
loss and apply same to the Indebtedness, and (ii)
if Beneficiary makes the proceeds of insurance
available to Trustor for purposes of restoring the
Mortgaged Property, Trustor wil1 promptly and at
Trustor's sole cost and expense commence and
continue diligently to completion to restore,
repair, replace and rebuild the Mortgaged Property
as nearly as possible to its value, condition, and
character immediately prior to such damage, loss
or destruction. In such a circumstance, such
insurance proceeds shall be disbursed in the same
manner and subject to the same condition and
requirement as contained in the Loan Agreement
with respect to advances of the proceeds of the
Note.
(b) CASUALTY DURING PERMANENT TERM. In
case of any act or occurrence of any kind or
nature shall result in damage or loss or
destruction of the Mortgaged Property during the
"Permanent Term" as defined in the Loan Agreement,
the terms of this subparagraph (b) shall apply. In
case of loss in which the cost of the restoration,
repair or replacement (hereinafter referred to as
the "Work") of the Mortgaged Property estimated by
Beneficiary shall not exceed the proceeds paid to
Beneficiary, then such proceeds may be used for
the prosecution of the Work in the manner
hereinafter provided. If the cost of the Work
estimated by Beneficiary shall exceed the proceeds
paid to Beneficiary, then unless Trustor deposits
with Beneficiary the difference between the
estimated cost of the Work and the amount of such
proceeds paid to Beneficiary within thirty (30)
days after written demand therefor, Beneficiary,
at its option, shall be entitled to receive and
retain the proceeds of the insurance policies,
applying the same upon the Indebtedness.
Notwithstanding anything herein to the contrary if
any loss shall occur (i) within one ( 1 ) year
prior to the scheduled maturity date of the Note,
or (ii) at anytime when there shall exist an Event
of Default hereunder, Beneficiary shall be
entitled to the benefit of all insurance policies
held by or for any Trustor, to the extent as if
same had been made payable to Beneficiary to the
extent of the Indebtedness; and upon foreclosure
hereunder, Beneficiary shall become the owner of
any insurance proceeds paid or to be paid under
said policies to the extent of the Indebtedness.
Subject to the foregoing, Beneficiary shall make
such insurance proceeds available to Trustor to
rebuild the Mortgaged Property. Unless Beneficiary
is entitled to retain the insurance proceeds,
Trustor will promptly and at Trustor's sole cost
and expense and regardless of whether the
insurance proceeds (if any) shall be sufficient
for the purpose, commence and continue diligently
to completion to restore, repair, replace and
rebuild the Mortgaged Property as nearly as
possible to its value, condition and character
immediately prior to such damage, loss or
destruction.
(c) DISBURSEMENT OF INSURANCE PROCEEDS.
Notwithstanding the foregoing to the contrary, if
the proceeds of the insurance described in
paragraph 4.6 hereinabove are to be used for the
prosecution of the Work, such proceeds shall be
paid out by Beneficiary from time to time to
Trustor (or, at
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the option of Beneficiary, jointly to Trustor and
the persons furnishing labor and/or material
incident to such restoration, repair or
replacement or directly to such persons) as the
Work progresses, subject to the following
conditions: (a) an architect or engineer, approved
by ▇▇▇▇▇▇▇▇▇▇▇, shall be retained by Trustor (at
Trustor's expense) and charged with the
supervision of the Work and Trustor shall have
prepared, submitted to Beneficiary and secured
Beneficiary's written approval of the plans and
specifications for such Work which shall not be
unreasonably withheld or delayed; (b) each request
for payment by Trustor shall be made on ten ( I 0)
days prior written notice to Beneficiary and shall
be accompanied by a certificate executed by the
architect or engineer supervising the Work
stating, among such other matters as may be
reasonably required by Beneficiary that: (i) all
of the Work completed has been done in compliance
with the approved plans and specifications; (ii)
the sum requested is justly required to reimburse
Trustor for payments by Trustor to, or is justly
due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or
other persons rendering services or materials for
the Work (giving a brief description of such
services and materials); (iii) when added to all
sums previously paid out by Trustor, the sum
requested does not exceed the value of the Work
done to the date- of such certificate; and (iv)
the amount of insurance proceeds remaining in the
hands of Beneficiary will be sufficient on
completion of the Work to pay for the same in full
(giving in such reasonable detail as the
Beneficiary may require an estimate of the cost of
such completion); (c) each request shall be
accompanied by waivers of lien satisfactory in
form and substance to Beneficiary covering all
parts of the Work completed prior to that part of
the Work for which payment or reimbursement is
being requested, and by a search prepared by a
title company or licensed abstracter or by other
evidence satisfactory to Beneficiary that there
has not been filed with respect to the Mortgaged
Property any mechanic's lien or other lien,
affidavit or instrument asserting any lien or any
lien rights with respect to the Mortgaged
Property; (d) there has not occurred any Event of
Default (as herein defined) since the hazard,
casualty or contingency giving rise to payment of
the insurance proceeds occurred; (e) in the case
of the request for the final disbursement, such
request is accompanied by a copy of any
certificate of occupancy or other certificate
required by any Legal Requirement to render
occupancy of the damaged portion of the Mortgaged
Property lawful; and (f) if, in Beneficiary's
reasonable judgment, the amount of such insurance
proceeds will not be sufficient to complete the
Work (which determination may be made prior to or
during the performance of the Work), Trustor shall
deposit with Beneficiary, within thirty (30) days
after written request therefor, an amount of money
which when added to such insurance proceeds will
be sufficient, in Beneficiary's reasonable
judgment, to complete the Work. If, upon
completion of the Work, any portion of the
insurance proceeds has not been disbursed to
Trustor (or one or more of the other aforesaid
persons) incident thereto, Beneficiary may at
Beneficiary's option, disburse such balance to
Trustor or apply such balance toward the payment
of the Indebtedness. Nothing herein shall be
interpreted to prohibit Beneficiary from (y)
withholding from each such disbursement ten
percent (10%) (or such
4.11 FUTURE IMPOSITIONS: At any time any
law shall be enacted imposing or authorizing the
imposition of any tax upon this Deed of Trust or
upon any rights, titles, liens or security
interests created hereby or upon the Note, or any
part thereof, Trustor shall immediately pay all
such taxes; provided that, in the alternative,
Trustor may, in the event of the enactment of such
a law, and must if it is unlawful for Trustor to
pay such taxes, prepay the Note together with the
applicable ;`Prepayment
12
Fee" as defined in the Note, in full within sixty
(60) days after demand therefor by Beneficiary.
4.12 ESTOPPEL CERTIFICATES. Trustor
shall, upon request, promptly furnish, at any time
and from time to time a written statement or
affidavit, in such form as may be reasonably
required by Beneficiary, stating the amount of the
unpaid balance of the Note and that there are no
offsets or defenses against full payment of the
Note and performance of the terms hereof or, if
there are any such offsets and defenses,
specifying them in detail.
4.13 ENVIRONMENTAL MATTERS :
(a) REPRESENTATIONS COVENANTS AND
WARRANTIES. Except as may be otherwise expressly
stated in the Disclosure Schedule attached as
Exhibit "B" to the Environmental Certificate (the
"Disclosure Schedule"), Trustor hereby represents,
covenants and warrants to Beneficiary and its
successors and assigns, as follows, and as to such
representations and warranties, the same are made
based upon contents of the Phase I report
described in the Disclosure Schedule and to the
best of Trustor's knowledge:
(i) The location and construction,
occupancy, operation and use of all Improvements
do not and will not violate any applicable laws,
statute, ordinance, rule, regulation, policy,
order or determination of any Governmental
Authority or any board of fire underwriters- (or
other body exercising similar functions), or any
restrictive covenant or deed restriction affecting
any portion of the Mortgaged Property, including
without limitation, any applicable zoning
ordinances and building codes, flood disaster laws
and health and environmental laws, rules and
regulations (hereinafter collectively called the
"Applicable Laws").
(ii) Without in any way limiting the
generality of (a) above, neither the Mortgaged
Property nor the Trustor are the subject of
pending or, to the best of Trustor's knowledge,
threatened investigation or inquiry by any
Governmental Authority, or are subject to any
remedial obligations under any Applicable Laws
pertaining to health or the environment
("Applicable Environmental Laws"), including,
without limitation, the Comprehensive
Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), the
Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and the Toxic Substances Control
Act, The Clean Air Act, and The Clean Water Act,
and applicable state laws, and this representation
and warranty would continue to be true and correct
following disclosure to any applicable
Governmental Authority of all relevant facts,
conditions and circumstances pertaining to the
Mortgaged Property and/or the Trustor.
(iii) Trustor is not required to obtain
any permits, licenses or authorizations to
construct, occupy, operate or use any portion of
the Mortgaged Property by reason of any Applicable
Environmental Laws, or if any such permits,
licenses or authorizations are required by any
Applicable Environmental Laws, such permits,
licenses or authorizations have, as of the date
hereof, been obtained or will be obtained in the
manner required by any Applicable Environmental
Laws in a timely manner.
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(iv) Trustor has determined, to the best
of its knowledge, that no hazardous substances,
solid wastes, or other substances known or
suspected to pose a threat to health or the
environment ("Hazards") have been disposed of or
otherwise released on or to the Mortgaged Property
or exist on or within any portion of the Mortgaged
Property except as described on the Disclosure
Schedule. No prior use, either by Trustor or the
prior owners of the Mortgaged Property, has
occurred which violates any Applicable
Environmental Laws. The use which Trustor makes
and intends to make of the Mortgaged Property will
not result in the disposal or release of any
hazardous substance, solid waste or Hazards on, in
or to the Mortgaged Property except as described
on the Disclosure Schedule. The terms "hazardous
substance" and "release" shall each have the
meanings specified in CERCLA, including, without
limitation, petroleum products and petroleum
wastes of any kind, and the terms "solid waste"
and "disposal" (or "disposed") shall each have the
meanings specified in RCRA; provided, however,
that in the event either that CERCLA or RCRA is
amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply
subsequent to the effective date of such
amendment; and provided further that, to the
extent that the laws of the State of California
establish a meaning for "hazardous substance; '
"release; ' "solid waste; ' or "disposal" which is
broader than that specified in either CERCLA or
RCRA, such broader definition shall apply.
(v) To the best of Trustor's knowledge
and belief, there are no on-site or off site
locations where hazardous substances generated
from the Mortgaged Property, including such
substances as asbestos and Polychlorinated
Biphenyls, solid wastes, or Hazards, have been
stored, treated, recycled, or disposed of except
as described on the Disclosure Schedule.
(vi) To the best of Trustor's knowledge
and belief, there has been no litigation brought
or threatened nor any settlement reached by or
with any parties alleging the presence, disposal,
release, or threatened release, of any hazardous
substance, solid wastes or Hazards from the use or
operation of the Mortgaged Property.
(vii) To the best of Trustor's knowledge
and belief, the Mortgaged Property is not on any
federal or state "Superfund" list, and not on
EPA's Comprehensive Response, Compensation &
Liability System (CERCLIS) list or on any state
environmental agency list of sites under
consideration for CERCLIS, nor subject to any
environmentally related liens.
(viii) Neither Trustor nor, to the best
of Trustor's knowledge and belief, any tenant of
any portion of the Mortgaged Property, has
received any notice from any Governmental
Authority with respect to any violation of any
Applicable Laws.
(ix) Trustor shall not cause any
violation of any Applicable Environmental Laws, or
permit any tenant of any portion of the Mortgaged
Property to cause such a violation, nor permit any
environmental liens to be placed on any portion of
the Mortgaged Property.
All of the foregoing representations and
warranties shall be continuing and shall be true
and correct for the period from the date hereof
through and as of the date of the final payment of
all indebtedness owed by Trustor to Beneficiary
and the final
14
performance of all obligations under all
instruments evidencing, governing, securing or
relating to such indebtedness, with the same force
and effect as if made each day throughout such
period, and all of such representations and
warranties shall
survive such payment and performance.
(b) COVENANT TO CLEAN UP AND NOTIFY.
Trustor shall conduct and complete, or cause to be
conducted and completed, all investigations,
studies, sampling, and testing and all remedial,
removal, and other actions necessary to clean up
and remove hazardous substances, solid wastes, or
Hazards on, in, from or affecting any portion of
the Mortgaged Property (a) in accordance with all
Applicable Laws, (b) to the satisfaction of
Beneficiary, and (c) in accordance with the orders
and directives of all Governmental Authorities.
Trustor shall (a) give notice to Beneficiary
immediately upon (i) Trustor's receipt of any
notice from any Governmental Authority of a
violation of any Applicable Laws or acquiring
knowledge of the receipt of any such notice by any
tenant of any portion of the Mortgaged Property
and (ii) acquiring knowledge of the presence of
any hazardous substances, solid wastes or Hazards
(other than those described in the Disclosure
Schedule) on the Mortgaged Property in a condition
that is resulting or could reasonably be expected
to result in any adverse environmental impact,
with a full description thereof; (b) promptly
comply with all Applicable Environmental Laws
requiring the notice, removal, treatment, or
disposal of such hazardous substances, solid
wastes or Hazards and provide Beneficiary with
satisfactory evidence of such compliance; and (c)
provide Beneficiary, within thirty (30) days after
demand by Beneficiary, with a bond, letter of
credit, or similar financial assurance evidencing
to Beneficiary's satisfaction that sufficient
funds are available to pay the cost of removing,
treating, and disposing of such hazardous
substances, solid wastes or Hazards and
discharging any assessments that may be
established on the Mortgaged Property as a result
thereof.
(c) SITE ASSESSMENT. If Beneficiary
shall ever have reason to believe that there are
hazardous substances, solid wastes or Hazards
(other than those described in the Disclosure
Schedule) affecting any of the Mortgaged Property,
Beneficiary (by its officers, employees and
agents) at any time and from time to time, either
prior to or after the occurrence of an Event of
Default, may contract for the services of persons
(the "Site Reviewers") to perform environmental
site assessments ("Site Assessments") on the
Mortgaged Property for the purpose of determining
whether there exists on the Mortgaged Property any
environmental condition that could result in any
liability, cost, or expense to the owner,
occupier, or operator of such Mortgaged Property
arising under any Applicable Environmental Laws.
The Site Assessments may be performed at any time
or times, upon reasonable notice, and under
reasonable conditions established by Trustor that
do not impede the performance of the Site
Assessments. The Site Reviewers are hereby
authorized to enter upon the Mortgaged Property
for such purposes. The Site Reviewers are further
authorized to perform both above and below the
ground testing for environmental damage or the
presence of hazardous substances, solid wastes and
hazards on the Mortgaged Property and such other
tests on the Mortgaged Property as may be
necessary to conduct the Site Assessments in the
reasonable opinion of the Site Reviewers. Trustor
will supply to the Site Reviewers such historical
and operational information regarding the
Mortgaged Property as may be reasonably requested
by the Site Reviewers to facilitate the Site
Assessment and will make available for meetings
15
with the Site Reviewers appropriate personnel
having knowledge of such matters. On request,
Beneficiary shall make the results of such Site
Assessments fully available to Trustor, which
(prior to an Event of Default) may, at its
election, participate under reasonable procedures
in the direction of such Site Assessments and the
description of tasks of the Site Reviewers. The
cost of performing such Site Assessments shall be
paid by Trustor upon demand of Beneficiary.
(d) INDEMNITY AND HOLD HARMLESS. Trustor
hereby defends, indemnifies and holds harmless
Beneficiary, its employees, agents, shareholders,
officers and directors (collectively, the
"Indemnified Parties"), from and against any
claims, demands, obligations, penalties, fines,
suits, liabilities, settlements, damages, losses,
costs or expenses (including, without limitation,
attorney and consultant fees and expenses,
investigation and laboratory fees and expenses,
cleanup costs, and court costs and other
litigation expenses) of whatever kind or nature,
known or unknown, contingent or otherwise, arising
out of or in any way related to (i) the presence,
disposal, release, threatened release, removal or
production of any hazardous substances, solid
wastes or Hazards which are on, in, from or
affecting any portion of the Mortgaged Property;
(ii) any personal injury (including wrongful
death) or property damage (real or personal)
arising out of or related to such hazardous
substances, solid wastes or Hazards; (iii) any
lawsuit brought or threatened, settlement reached,
or order by Governmental Authority relating to
such hazardous substances, solid wastes or
Hazards; and/or (iv) any violation of any
Applicable Laws, or demands of Governmental
Authorities, or violation of any policies or
requirements of Beneficiary, which are based upon
or in any way related to such hazardous
substances, solid wastes or Hazards, regardless of
whether or not any of the conditions described
under any of the foregoing subsections (i) through
iv, inclusive, was or is caused by or within the
control of Trustor. Trustor agrees, upon notice
and request by an Indemnified Party, to contest
and defend any demand, claim, suit, proceeding or
action with respect to which Trustor has
hereinabove indemnified and held the Indemnified
Parties harmless and to bear all costs and
expenses of such contest and defense. Trustor
further agrees to reimburse any Indemnified Party
upon demand for any costs or expenses incurred by
any Indemnified Party in connection with any
matters with respect to which Trustor has
hereinabove indemnified and held the Indemnified
Parties harmless. The provisions of this paragraph
shall be in addition to any other obligations and
liabilities Trustor may have to Beneficiary at
common law, in equity or under documentation
executed in connection with the Note, and shall
survive the closing, funding and payment in full
of the Note, as well as any foreclosure or
granting of any deed in lieu of foreclosure and
the recordation of any release of the lien of this
Deed of Trust.
(e) BENEFICIARY RIGHT TO REMOVE
HAZARDOUS MATERIALS. Beneficiary shall have the
right, but not the obligation, without in any way
limiting Beneficiary's other rights and remedies
under the Mortgage, to enter onto the Mortgaged
Property or to take such other actions as it deems
necessary or advisable to clean up, remove,
resolve, or minimize the impact of, or otherwise
deal with, any hazardous substances, solid wastes
or Hazards on or affecting the Mortgaged Property
following receipt of any notice from any person or
entity asserting the existence of any hazardous
substances, solid wastes or Hazards pertaining to
the Mortgaged Property or any part thereof that,
if true, could result in an order, notice, suit,
imposition of a lien on the Mortgaged Property, or
other action or that, in Beneficiary's sole
opinion, could jeopardize Beneficiary's security
under this Deed of Trust. All reasonable costs and
16
expenses paid or incurred by Beneficiary in the
exercise of any such rights shall be Indebtedness
secured by this Deed of Trust and shall be payable
by Trustor upon demand.
(f) RELIANCE AND BINDING NATURE. Trustor
acknowledges that Beneficiary has and will rely
upon the representations, covenants, warranties
and agreements set forth in closing and funding
the loan evidenced by the Note and that the
execution and delivery of this Deed of Trust is an
essential condition but for which Beneficiary
would not close or fund the Note. The
representations, covenants, warranties and
agreements herein contained shall be binding upon
Trustor, its successors, assigns and legal
representatives and shall inure to the benefit of
Beneficiary, its successors, assigns and legal
representatives.
ARTICLE V
NEGATIVE COVENANTS
Trustor hereby covenants and agrees with
Beneficiary that, until the
entire Indebtedness shall have been paid in full
and all of the Obligations which are then subject
to performance and discharge shall have been fully
performed and
discharged:
5.1 USE VIOLATIONS: Trustor will not
use, maintain, operate or occupy, or allow the
use, maintenance, operation or occupancy of the
Mortgaged Property in any manner which (a)
violates any Legal Requirement, including, without
limitation, Legal Requirements with respect to the
disposal of medical waste products, (b) may be
dangerous unless safeguarded as required by law,
or (c) constitutes a public or private nuisance.
5.2 ALTERATIONS: Trustor (i) will not
commit or permit any waste of the Mortgaged
Property and (ii) will not (subject to the
provisions of paragraph 4.5 and 4.7 herein), after
completion of the construction of the Improvements
as contemplated by the Loan Agreement, without the
prior written consent of Beneficiary, make or
permit to be made any alterations or additions to
the Mortgaged Property which affect the structural
portions of any Improvements, the exterior side or
common areas of any Improvements, or any areas
visible from the exterior or common areas of the
Improvements.
5.3 REPLACEMENT OF FIXTURES AND
PERSONALTY: Trustor will not, without the prior
written consent of Beneficiary, permit any of. the
Fixtures or Personalty to be removed at any time
from the Land or Improvements unless the removed
item is removed temporarily for maintenance and
repair or, if removed permanently, is replaced by
a new article of equal suitability and value,
owned by Trustor, free and clear of any lien or
security interest except such as may be first
approved in writing by Beneficiary. The foregoing
shall not limit the right of tenants under Leases
to install removable fixtures subject to security
interests on the Mortgaged Property which can be
removed without damage to the Mortgaged Property
and which pursuant to the Leases and the written
consent of Trustor obtained prior to installation
shall remain the property of such tenants and
shall not be considered part of the Mortgaged
Property.
17
5.4 ZONING; TITLE MATTERS: Trustor will
not, without Beneficiary's express prior written
consent, (A) initiate or support any zoning
reclassification of the Mortgaged Property or seek
any variance under existing zoning ordinances
applicable thereto; (B) modify, amend or
supplement any Permitted Encumbrances; (C) impose
any restrictive covenants or any other encumbrance
upon the Mortgaged Property, execute or file any
subdivision plat affecting the Mortgaged Property
or consent to the annexation of the Mortgaged
Property to any municipality; or (D) permit or
offer the Mortgaged Property to be used by the
public or any person in such manner as might make
possible a claim of adverse usage or possession or
of any implied dedication or easement by
prescription.
5.5 NO FURTHER ENCUMBRANCES. Trustor
will not, without the prior written consent of
Beneficiary, create, place, suffer or permit to be
created or placed or, through any act or failure
to act, acquiesce in the placing of or allow to
remain, any mortgage, pledge, lien (statutory,
constitutional or contractual), security interest,
encumbrance or charge on, or conditional sale or
other title retention agreement, regardless of
whether same are expressly subordinate to the
liens of the Security Documents, with respect to
the Mortgaged Property, other (i) than the
Permitted Encumbrances, and (ii) leases or
financing agreements for furniture, fixtures,
equipment and other personal property used on the
Mortgaged Property provided that (A) the amount of
all such financing does not exceed $250,000
outstanding at any one time, and (B) Trustor has
first offered to permit Beneficiary to enter into
any such lease or financing agreement on the same
terms and conditions offered by a third party
lender and Beneficiary has refused such offer.
ARTICLE VI
EVENTS OF DEFAULT
6.1 DEFAULT. Any "Event of Default" as
described in the Loan Agreement or under any of
the other Security Documents shall constitute an
"Event of Default" hereunder and under the
Security Documents.
ARTICLE VII
DEFAULT AND FORECLOSURE
7.1 REMEDIES: Upon the occurrence of an
Event of Default, Beneficiary may at any time, at
its option and in its sole discretion, declare the
entire Indebtedness to be due and payable and the
same shall thereupon become immediately due and
payable, including the Prepayment Fee payable
under the terms of the Note. Beneficiary may also
do any or all of the following although it shall
have no obligation to do any of the following:
(a) Either in person or by agent, with
or without bringing any action or proceeding, or
by a receiver appointed by a court and without
regard to the adequacy of Beneficiary's security,
enter upon and take possession of the Mortgaged
Property, or any part thereof, and do any acts
which Beneficiary deems necessary or desirable to
preserve the value, marketability or rentability
of the Mortgaged Property, or to increase the
income therefrom or to protect the security hereof
and, with or without taking possession of any of
the Mortgaged Property, sue for or otherwise
collect all rents and profits, and expenses of
operation and collection, including attorney's
fees and expenses, upon the
18
indebtedness, al1 in such order as Beneficiary may
determine. The collection of rents and profits and
the application thereof shall not cure or waive
any Event of Default or notice thereof or
invalidate any act done in response thereto or
pursuant to such notice.
(b) Bring an action in any court of
competent jurisdiction to foreclose this Deed of
Trust or to enforce any of the covenants hereof.
(c) Exercise any or all of the remedies
available to a secured party under the UCC,
including, but not limited to:
(1) either personally or by means of a
court appointed receiver, take possession of all
or any of the Collateral and exclude therefrom
Trustor and all others claiming under Trustor and
thereafter hold, store, use, operate, manage,
maintain and control, make repairs, replacements,
alterations, additions and improvements to and
exercise all rights and powers of Trustor in
respect to the Collateral; and in the event
Beneficiary demands or attempts to take possession
of the Collateral in the exercise of any of its
rights hereunder, Trustor promises and agrees
promptly to turn over and deliver complete
possession thereof to Beneficiary;
(2) without notice to or demand upon
Trustor, make such payments and do such acts as
Beneficiary may deem necessary to protect its
security interest in the Collateral, including,
without limitation, paying, purchasing, contesting
or compromising any encumbrance, charge or lien
which is prior or superior to the security
interest granted hereunder, and in exercising any
such powers or authority, to pay all expenses
incurred in connection therewith;
(3) require Trustor to assemble the
Collateral on the Land and promptly to deliver
such Collateral to Beneficiary or an agent or
representative designated by it. Beneficiary, its
agents and representatives, shall have the right
to enter upon any or all of the Trustor's premises
and property to exercise the Beneficiary's rights
hereunder; and
(4) sell, lease or otherwise dispose of
the Collateral at public sale, with or without
having the Collateral at the place of sale, and
upon such terms and in such manner as Beneficiary
may determine; and Beneficiary may be a purchaser
at any such sale. Beneficiary shall not be deemed
to have accepted any property other than cash in
satisfaction of the Indebtedness or any portion
thereof unless Beneficiary shall make an express
written election of said remedy under UCC section
9505 or other applicable law.
(d) Elect to sell by power of sale the
portion of the Mortgaged Property which is real
property and such portion of the Mortgaged
Property which is personal property or fixtures
which Beneficiary shall elect to include in such
sale, and upon such election, such notice of Event
of Default and election to sell shall be given as
may then be required by law. Thereafter, upon the
expiration of such time and the giving of such
notice of sale as may then be required by law, at
the time and place specified in the notice of
sale, Trustee shall sell such property, or any
portion thereof specified by Beneficiary, at
public auction to the highest bidder for cash in
lawful money of the United States. Trustee may,
and upon request of Beneficiary shall, from time
to time, postpone the sale by public announcement
thereof at the time and place noticed therefor. If
the Mortgaged Property consists of several lots,
parcels or interests, Beneficiary may designate
the order in which the same shall be offered for
sale or sold. Trustor waives all
19
rights to direct the order in which any of the
Mortgaged Property will be sold in the event of
any sale under this Deed of Trust, and also of any
right to have any of the Mortgaged Property
marshalled upon any sale. In the case of a sale
under this Deed of Trust, the said propriety,
real, personal and mixed, may be sold in one
parcel or more than one parcel. Should Beneficiary
desire that more than one such sale or other
disposition be conducted, Beneficiary may, at its
option, cause the same to be conducted
simultaneously, or successively on the same day,
or at such different days or times and in such
order as Beneficiary may deem to be in its best
interest. Any person, including Trustor, Trustee
or Beneficiary, may purchase at the sale. Upon any
sale, Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying
the property so sold, but without any covenant or
warranty whatsoever, express or implied, whereupon
such purchaser or purchasers shall be let into
immediate possession. Beneficiary, from time to
time before the trustee's sale pursuant to this
section, may rescind any notice of breach or
default and of election to cause to be sold the
Mortgaged Property by executing and delivering to
Trustee a written notice of such rescission, which
notice, shall also constitute a cancellation of
any prior declaration of default and demand for
sale. The exercise by Beneficiary of such right of
rescission shall not constitute a waiver of any
breach or default then existing or subsequently
occurring or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided,
other declarations of default and demands for
sale, and notices of breach or default of the
obligations hereof, nor otherwise affect any
provision, covenant or condition of the Note
and/or of this Deed of Trust or any of the rights,
obligations or remedies of the parties thereunder
or hereunder.
(e) Exercise each of its other rights
and remedies under this Deed of Trust and each of
the other Security Documents.
(f) Except as otherwise required by
law, apply the proceeds of any foreclosure or
disposition hereunder to payment of the following:
(i) the expenses of such foreclosure or
disposition, (ii) the cost of any search or other
evidence of title procured in connection therewith
and revenue stamps on any deed or conveyance,
(iii) all sums expended under the terms hereof,
not then repaid, with accrued interest in the
amount provided herein, (iv) all other sums
secured hereby and (v) the remainder, if any, to
the person or persons legally entitled thereto.
(g) Upon any sale or sales made under or
by virtue of this paragraph, whether made under
the power of sale or by virtue of judicial
proceedings or of a judgment or decree of
foreclosure and sale, Beneficiary may bid for and
acquire the Mortgaged Property or any part
thereof. In lieu of paying cash for the Mortgaged
Property, Beneficiary may make settlement for the
purchase price by crediting against the
Indebtedness the sale price of the Mortgaged
Property, as adjusted for the expenses of sale and
the costs of the action and any other sums for
which Trustor is obligated to reimburse Trustee or
Beneficiary under this Deed of Trust:
(h) In the event that Trustor has an
equity of redemption and the Mortgaged Property is
sold pursuant to the power of sale or otherwise
under or by virtue of this paragraph, the
purchaser may, during any redemption period
allowed, make such repairs or alterations on said
property as may be reasonably necessary for the
proper operation, care, preservation, protection
and insuring thereof. Any sums so paid together
with interest thereon from the time of such
expenditures at the Default Rate provided in
20
the Loan Agreement shall be added to and become a
part of the amount required to be paid for
redemption from such sale.
7.2 WAIVERS: To the fullest extent
permitted by law; Trustor hereby waives the
benefit of all laws now existing or hereafter
enacted providing for the pleading of any statute
of limitation as a defense to any of the
Indebtedness or the Obligations or extending the
time for the enforcement of the collection of any
of the Indebtedness or the performance of the
Obligations; and Trustor agrees that Trustor shall
not at any time insist upon, plead, claim or take
the benefit or advantage of any law now or
hereafter in force providing for any stay of
execution, extension or marshalling in the event
of foreclosure of the liens and security interests
hereby created. In addition, Trustor expressly
waives and relinquishes any and all rights and
remedies which Trustor may have or be able to
assert by reason of any laws pertaining to the
rights and remedies of Sureties or any law
pertaining to the marshalling of assets, the
administration of estates of decedents and any
exemption from execution or sale of the Mortgaged
Property or any portion thereof. Further, Trustor
shall not at any time claim, take or insist upon
any benefit or advantage now or hereafter in force
providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to
any sale or sales thereof, nor after any such sale
or sales, claim or exercise any right under any
statute to redeem the property so sold or any
property thereof.
7.3 PREPAYMENT: If Beneficiary shall
accelerate the Indebtedness following the
occurrence of an Event of Default, any payments
received by Beneficiary following such
acceleration (including voluntary payments made by
Trustor and payments received by Beneficiary as a
result of the sale of the Mortgaged Property at
foreclosure) shall be deemed voluntary prepayments
of the Note and accordingly, the Prepayment Fee
required under the Note shall also be payable by
Trustor; provided, however, that the obligation of
Trustor to pay any such Prepayment Fee is
expressly subject to paragraph 11.10 of this Deed
of Trust.
ARTICLE VIII
CONDEMNATION
8.1 APPLICATION OF PROCEEDS: If the
Mortgaged Property or any part thereof, shall be
condemned or otherwise taken for public or quasi-
public use under the power of eminent domain, or
be transferred in lieu thereof, all damages or
other amounts awarded Trustor for the taking, or
injury to, the Mortgaged Property (the
"Award") shall be paid to Beneficiary to be
applied towards the Indebtedness. To enforce its
rights hereunder, Beneficiary shall be entitled to
participate in and control any condemnation
proceedings and to be represented therein by
counsel of its own choice, and Trustor will
deliver, or cause to be delivered, to Beneficiary
such instruments as may be requested by it from
time to time to permit such participation. In the
event Beneficiary, as a result of any such
judgment, decree or award, believes that the
payment or performance of any obligation secured
by this Deed of Trust is impaired, Beneficiary may
declare all of the Indebtedness secured hereby
immediately due and payable.
In case of a taking during the
"Permanent Term" (as defined in the Loan
Agreement) in which the cost of the restoration,
repair or replacement (hereinafter referred to as
the "Restoration") of the Mortgaged Property
reasonably estimated by
21
Beneficiary shall not exceed the proceeds paid to
Beneficiary then such Award may be used for the
prosecution of the Restoration in the manner
hereinafter provided. If the cost of the
Restoration reasonably estimated by Beneficiary
shall exceed the Award, then unless Trustor
deposits with Beneficiary or causes to be
depo5lted with Beneficiary the difference between
the estimated cost of the Restoration and the
amount of the Award within ninety (90) days after
written demand therefor, Beneficiary, at its
option, shall be entitled to receive and retain
the Award, applying the same upon the
Indebtedness. Notwithstanding anything herein to
the contrary, if any Award is made (i) within one
( 1 ) year prior to the original stated maturity
date of the Note, unless said maturity date has
been extended by Trustor by giving notice in
accordance with the Note or is extended by Trustor
in accordance with the Note within thirty (30)
days after said taking, (ii) within one ( 1 ) year
prior to the extended maturity date of the Note,
if Trustor has extended such maturity date in
accordance with the Note, or (iii) at any time
when there shall exist an Event of Default
hereunder, Beneficiary shall be entitled to
receive and retain the Award and apply same upon
the Indebtedness. In the event Beneficiary elects
to make such Award available to Trustor for such
purpose, Trustor will promptly or will promptly
cause and at the sole cost and expense of Trustor
and regardless of whether the Award (if any) shall
be sufficient for the purpose, commence and
continue diligently to completion to restore,
repair, replace and rebuild the Mortgaged Property
as nearly as possible to its value, condition and
character immediately prior to such taking subject
to the conditions and restrictions applicable to
Trustor's use of insurance proceeds contained in
the second paragraph of sub paragraph 4.7 (a)
above. Trustor hereby irrevocably and
unconditionally waives all rights of a property
owner under the provisions of California Code of
Civil Procedure section 1265.225(a), or any successor
statute, providing for the allocation of
condemnation proceeds between a property owner and
a lienholder.
ARTICLE IX
SECURITY AGREEMENT.
9.1 Security Agreement and Fixture
Filing:
(a) Insofar as (i) any of the Mortgaged
Property and, (ii) all other Personal Mortgaged
Property either referred to or described in this
Deed of Trust, or in any way connected with the
use or enjoyment of the Mortgaged Property
(hereinafter collectively referred to as
"Collateral"), this Deed of Trust, in compliance
with the provisions of Article 9 of the UCC, as if
may be amended from time to time, is hereby made
and declared to be a security agreement,
encumbering the Collateral. Trustor does hereby
grant to Beneficiary a continuing lien and
security interest in and to all of said Collateral
and all replacements, substitutions, additions and
proceeds thereof and all after-acquired property
relating thereto. A financing statement or
statements affecting all of the Collateral
aforementioned, shall be executed by Trustor and
appropriately filed. Trustor covenants and agrees
that, prior to changing its name, identity or
structure, it will so notify Beneficiary and wit1
promptly execute any financing statements or other
instruments deemed necessary by Beneficiary to
prevent any tiled financing statement from
becoming seriously misleading or losing its
perfected status, and, failing to do so,
authorizes Beneficiary to file such financing
statements and irrevocably constitutes and
appoints Beneficiary, or any officer of
Beneficiary, as its true and lawful attorney-in-
fact to execute the same on behalf of Trustor. The
remedies for any violation of the covenants, terms
and conditions of the security agreement herein
contained shall be (i) as prescribed herein, (ii)
as prescribed by general law, or (iii) as
22
prescribed by the specific statutory consequences
now or hereafter enacted and specified in the UCC,
all at Beneficiary's sole election. Trustor and
Beneficiary agree that the filing of such
financing statement(s) in the records normally
having to do with personal property shall never be
construed in anywise derogating from or impairing
this declaration and hereby stated intention of
Trustor and Beneficiary that everything used in
connection with the production of income from the
Mortgaged Property, adapted for use therein,
and/or which is described in this Deed of Trust,
is, and at all times and for all purposes and in
all proceedings both legal or equitable shall be,
regarded as part of the real estate irrespective
of whether (a) any such item is physically
attached to the improvements, (b) serial numbers
are used for the better identification of certain
items capable of being thus identified in a
recital contained herein, or (c) any such item is
referred to or reflected in any such financing
statement(s) so filed at any time. Similarly, the
mention in any such financing statement(s) of the
rights in and to (aa) the proceeds of any
insurance policy relating to the Mortgaged
Property, or (bb) any award in eminent domain
proceedings for a taking or for loss of value, or
(cc) Trustor's interest as lessor in any present
or future Lease, sublease, or rights to income
growing out of the use and/or occupancy of the
Mortgaged Property, or any business or other
activity conducted thereon, whether pursuant to
Lease, sublease, or otherwise, shall never be
construed as in anywise altering any of the rights
of Beneficiary as determined by this Deed of Trust
or impugning the priority of Beneficiary's lien
granted hereby or by any other recorded documents,
but such mention in such financing statement(s) is
declared to be for the protection of Beneficiary
in the event any court shall at any time hold with
respect to the foregoing (aa), (bb) or (cc), that
notice of Beneficiary's priority of interest to be
effective against a particular class of persons,
must be filed in the UCC records. The information
contained herein is provided in order that this
Deed of Trust shall comply with the requirements
of the UCC for instruments to be filed as
financing statements or fixture filings. For such
purposes, the "Debtor" is Trustor; the "Secured
Party" is Beneficiary, the principal place of
business of the "Debtor" is set forth on Page 1 of
this Deed of Trust, the mailing addresses of the
"Debtor" and "Secured Party" are as set forth on
Page 1 of this Deed of Trust and the types or
items of
collateral are as described hereinabove in this
paragraph.
(b) This Deed of Trust constitutes a
financing statement filed as a fixture filing
under UCC section 9402(6) in the official records
of the county in which the Mortgaged Property is
located with respect to any and all fixtures
included within the term "Mortgaged Property" and
with respect to any goods or other personal
property that may now be or hereafter become such
a fixture. PARTS OF THE COLLATERAL ARE, OR ARE TO
BECOME, FIXTURES ON THE MORTGAGED PROPERTY.
(c) Beneficiary has no responsibility
for, and does not assume any of, Trustor's
obligations or duties under any agreement or
obligation which is part of the Collateral or any
obligation relating to the acquisition,
preparation, custody, use, enforcement or
operation of any of the Mortgaged Property.
(d) It is understood and agreed that, in
order to protect Beneficiary from the effect of
UCC section 9313, as amended from time to time, in
the event that (A) Trustor intends to purchase any
goods which may become fixtures to the Mortgaged
Property, or any part thereof, and (B) such goods
will be subject to a security interest held by a
seller or any other party, Trustor shall, before
executing any security agreement
23
or other document evidencing such security
interest, obtain the prior written approval of
Beneficiary, and all requests for such written
approval shall be in writing and contain the
following information:
(1 ) A description of the Collateral to
be replaced, added to, installed or substituted;
(2) The address at which the Collateral
will be replaced, added to, installed or
substituted; and
(3) The name and address of the proposed
holder and proposed amount of the security
interest; and any failure of Trustor to obtain
such approval shall be a material breach of
Trustor's covenants under this Deed of Trust, and
shall, at the option of Beneficiary, entitle
Beneficiary to all rights and remedies provided
for herein upon an Event of Default. No consent by
Beneficiary pursuant to this section shall be
deemed to constitute an agreement to subordinate
any right of Beneficiary in fixtures or other
property covered by this Deed of Trust.
(e) Beneficiary shall have the right to
acquire by assignment
from the holder of such security interest any and
all contract rights, accounts receivable,
negotiable or non-negotiable instruments or other
evidence of Trustor's indebtedness for such
Collateral and, upon acquiring such interest b by
assignment, shall have the right to enforce the
security interest as assignee thereof, in
accordance with the terms and provisions of the
UCC then in effect and in accordance with any
other provisions of law.
ARTICLE X
CONCERNING THE TRUSTEE
I0.1 NO LIABILITY: Trustee shall not be
personally liable in case of entry by him or
anyone acting by virtue of the powers herein
granted him upon the Mortgaged Property for debts
contracted or liability or damages incurred in the
management or operation of the Mortgaged Property.
Trustee shall have the right to rely on any
instrument, document or signature authorizing or
supporting any action taken or proposed to be
taken by him hereunder or believed by him in good
faith to be genuine. Trustee shall be entitled to
reimbursement for expenses incurred by him in the
performance of his duties hereunder.
10.2 RETENTION OF MONIES: All monies
received by Trustee shall, until used or applied
as herein provided, be held in trust for the
purposes for which they were received, but need
not be segregated in any manner from any other
monies (except to the extent required by law), and
Trustee shall be under no liability for interest
on any monies received by him hereunder.
10.3 ACTIONS OF TRUSTEE: At any time
upon written request of Beneficiary, payment of
its fees and presentation of this Deed of Trust
and the Note for endorsement (in case of full
reconveyance, for cancellation and retention)
without affecting the liability of any person for
the payment of the Indebtedness, Trustee may (a)
24
consent to the making of any map or plat of the
Mortgaged Property, (b) join in granting any
easement or creating any restriction thereon, (c)
join in any subordination or other agreement
affecting this Deed of Trust or the lien or charge
thereof, and (d) reconvey, without warranty, all
or any part of the Mortgaged Property. The grantee
in any reconveyance may be described as the
"person or persons legally entitled thereto," and
the recitals therein of any matters of facts shall
be conclusive proof of the truthfulness thereof.
Trustor agrees to pay a reasonable Trustee's fee
for full or partial reconveyance, together with a
recording fee if Trustee, at its option, elects to
record said reconveyance.
10.4 SUBSTITUTE TRUSTEE: Beneficiary may
substitute Trustee hereunder in any manner now or
hereafter provided by law or, in lieu thereof,
Beneficiary may from time to time, by an
instrument in writing, substitute a successor or
successors to any Trustee named herein or acting
hereunder, which instrument, executed and
acknowledged by Beneficiary and recorded in the
office of the recorder of the county or counties
in which the Land and Improvements are situated,
shall be conclusive proof of proper substitution
of such successor Trustee, who shall thereupon and
without conveyance from the predecessor Trustee,
succeed to all its title, estate, rights, powers
and duties.
10.5 SUCCESSION INSTRUMENTS: Any new
Trustee appointed pursuant to any of the
provisions hereof shall, without any further act,
deed or conveyance, become vested with all the
estates, properties, rights; powers and trusts of
its or his predecessor in the rights hereunder
with like effect as if originally named as Trustee
herein; but, nevertheless, upon the written
request of Beneficiary or his successor trustee,
Trustee ceasing to act shall execute and deliver
an instrument transferring to such successor
trustee, upon the trust herein expressed, all the
estates, properties, rights, powers and trusts of
Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and
monies held by Trustee to the successor trustee so
appointed in its or his place.
10.6 PERFORMANCE OF DUTIES BY AGENTS:
Trustee may authorize one or more parties to act
on his behalf to perform the ministerial functions
required of him hereunder, including, without
limitation, the transmittal and posting of any
notices.
ARTICLE XI
MISCELLANEOUS
11.1 SURVIVAL OF OBLIGATIONS: Each and
all of the Obligations shall survive the execution
and delivery of the Security Documents and the
consummation of the loan called for therein and
shall continue in full force and effect until the
Indebtedness shall have been paid in full.
11.2 FURTHER ASSURANCES: Trustor, upon
the request of Trustee or Beneficiary, will
execute, acknowledge, deliver and record and/or
file such further instruments and do such further
acts as may reasonably be necessary, desirable or
proper to carry out more effectively the purposes
of the Security Documents, to subject to the liens
and security interests thereof any property
intended by the terms thereof to be covered
thereby, including, specifically, without
limitation, any renewals, additions,
substitutions, replacements or appurtenances to
the Mortgaged Property, and to
25
complete, execute, record and file any document or
instrument necessary to place third parties on
notice of the liens and security interests granted
under the Security Documents. Trustor hereby
irrevocably appoints Trustee and Beneficiary as
its agents to execute and deliver all such
instruments and additionally to record and file
any of the same as may be necessary.
11.3 RECORDING AND FILING: Trustor will
cause the Security Documents and all amendments
and supplements thereto and substitutions therefor
to be recorded, filed, re-recorded and refiled in
such manner and in such places as Trustee or
Beneficiary shall reasonably request and will pay
all such recording, filing, re-recording and
refiling taxes, fees and other charges.
11.4 NOTICES: Any notice, request or
other communication required or permitted to be
given hereunder may be given and shall
conclusively be deemed and considered to have been
given and received upon the deposit thereof, in
writing, in the U.S. Mail, certified mail, return
receipt requested, postage prepaid, and addressed
to the party to receive such notice at the address
set forth below or such address elected in writing
by the party to receive such notice; but actual
notice however given or received, shall always be
effective. The last preceding sentence shall not
be construed in anywise to effect or impair the
waiver of notice or demand to or upon Trustor in
any situation or for any reason (except as
otherwise specifically provided).
If to Trustor: TDC/Emeritus Paso
▇▇▇▇▇▇ Associates
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
With Copy to: Emeritus Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TDC Convalescent, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
The ▇▇▇▇▇▇▇▇▇ Group
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Beneficiary: FINOVA Capital
Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
with copy to: FINOVA Capital
Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President -
Group Counsel
26
11.5 NO WAIVER: Any failure by Trustee
or Beneficiary to insist, or any election by
Trustee or Beneficiary not to insist, upon strict
performance by Trustor of any of the terms,
provisions or conditions of the Security Documents
shall not be deemed to be a waiver of the same or
of any other term, provision or condition thereof,
and Trustee or Beneficiary shall have the right at
any time or times thereafter to insist upon strict
performance by Trustor of any and all of such
terms, provisions and conditions.
11.6 BENEFICIARY'S RIGHT TO PAY
INDEBTEDNESS AND PAY OBLIGATIONS: If Trustor shall
default under any of the Security Documents, then
at any time thereafter and without further notice
to or demand upon Trustor or any other party,
without waiving or releasing any other right,
remedy or recourse Beneficiary may have because of
the same, Beneficiary may (but shall not be
obligated to) make such payment or perform such
act for the account of and at the expense of
Trustor and shall have the right to enter upon the
Mortgaged Property for such purpose and to take
all such action thereon with respect to the
Mortgaged Property as it may deem necessary or
appropriate. Trustor shall be obligated to repay
Beneficiary for all sums advanced by it pursuant
to this paragraph 11.6 and shall indemnify and
hold Beneficiary harmless from and against any and
all loss, cost, expense, liability, damage and
claims and causes of action, including reasonable
attorney's fees, incurred or accruing by any acts
performed by Beneficiary pursuant to the
provisions of this paragraph 11.6 or by reason of
any other provision of the Security Documents. All
sums paid by Beneficiary pursuant to this
paragraph 11.6 and all other sums expended by
Beneficiary to which it shall be entitled to be
indemnified, together with interest thereon at the
"Default Rate" as defined in the Loan Agreement
from the date of such payment or expenditure,
shall constitute additions to the Indebtedness and
Obligations, shall be secured by the Security
Documents and shall be paid by Trustor to
Beneficiary upon demand.
11.7 COVENANTS RUNNING WITH THE LAND:
All obligations contained in the Security
Documents are intended by the parties to be and
shall be construed as covenants running with the
Mortgaged Property.
11.8 SUCCESSORS AND ASSIGNS: All of the
terms of the Security Documents shall apply to, be
binding upon and inure to the benefit of the
parties
thereto, their respective successors, assigns,
heirs and legal representatives and all Other
persons claiming by, through or under them.
11.9 SEVERABILITY: The Security
Documents are intended to be performed in
accordance with, and only to the extent permitted
by, all applicable Legal Requirements. If any
provision of any of the Security Documents or the
application thereof to any person or circumstance
shall, for any reason and to any extent, be
invalid or unenforceable, neither the remainder of
the instrument in which such provision is
contained nor the application of such provision to
other persons or circumstances or other
instruments referred to hereinabove shall be
affected thereby, but rather the same shall be
enforced to the greatest extent permitted by law.
11.10 USURY: It is the intention of
Trustor and Beneficiary to comply with the
applicable law governing the rate of interest or
maximum amount of interest payable on or in
connection with the Note and the loan transaction
evidenced thereby, therefore (i) in the event that
the Indebtedness is prepaid or the maturity of the
27
Indebtedness and Obligations is accelerated by
reason of an election by Beneficiary, unearned
interest shall be canceled and, if theretofore
paid, shall either be refunded to Trustor or
credited on the Indebtedness, as Beneficiary may
elect; (ii) the aggregate of all interest and
other charges constituting interest under
applicable laws and contracted for, chargeable or
receivable under the Note, the Indebtedness (if
unpaid), the other Security Documents or otherwise
in connection with the loan transaction
contemplated thereby shall never exceed the
maximum amount of interest, nor produce a rate in
excess of the maximum contract rate of interest
that Beneficiary is authorized to charge Trustor
under applicable law; and (iii) if any excess
interest is provided for, it shall be deemed a
mistake, and the same shall, at the option of
Beneficiary, either be refunded to Trustor or
credited on the unpaid principal amount (if any),
and the Indebtedness shall be automatically
reformed as to permit only the collection of the
maximum legal contract rate.
11. 11 ENTIRE AGREEMENT AND
MODIFICATION: The Security Documents contain the
entire agreements between the parties relating to
the subject matter hereof and thereof, and all
prior agreements relative thereto which are not
contained herein or therein are terminated. The
Security Documents may be amended, revised,
waived, discharged, released or terminated only by
a written instrument or instruments executed by
the party against which enforcement of the
amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment,
revision, waiver, discharge, release or
termination which is not so documented shall not
be effective as to any party.
11.12 COUNTERPARTS: This Deed of Trust
may be executed in any number of counterparts,
each of which shall be an original, but all of
which together shall constitute but one
instrument.
11.13 UNIFORM COMMERCIAL CODE: All terms
used herein which are defined in the CICC shall be
used with the definition therefor in said Code.
11.14 IMPOSITIONS AND INSURANCE ESCROW:
To implement the provisions of paragraphs 4.4 and
4.6 hereof, upon the occurrence of an Event of
Default, Trustor, at Beneficiary's request, shall
pay to Beneficiary in advance, as and when
directed by ▇▇▇▇▇▇▇▇▇▇▇ and as escrowed sums, an
amount equal to the sums of: (a) the annual
Impositions (estimated wherever necessary) to
become due for the tax year during which such
payment is so directed; and (b) the insurance
premiums for the same year for those insurance
policies as are required hereunder. If Beneficiary
determines that any amounts theretofore paid by
Trustor are insufficient for the payment in full
of such Impositions and insurance premiums,
Beneficiary shall notify Trustor of the increased
amounts required to provide a sufficient fund,
whereupon Trustor shall pay to Beneficiary within
thirty (30) days thereafter the additional amount
so stated in Beneficiary's notice. The escrowed
sums may be held by Beneficiary in non-interest
bearing accounts and may be commingled with
Beneficiary's other funds. Upon assignment of this
Deed of Trust, Beneficiary shall have the right to
pay over the balance of the escrowed sums then in
its possession to its assignee, whereupon
Beneficiary and its Trustee shall then become
completely released from all liability with
respect thereto. Upon payment of the Indebtedness
and Obligations, or at such earlier time that
Beneficiary may elect, the balance of the escrowed
sums in its possession may be paid
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over to Trustor, and no other party shall have any
right or claim thereto. If no Event of Default
shall have occurred or be continuing hereunder,
the escrowed sums may, at the option of
Beneficiary, be repaid to Trustor in sufficient
time to allow Trustor to satisfy Trustor's
obligations under the Security Documents to pay
the Impositions and the required insurance
premiums or may be paid by Beneficiary directly to
the Governmental Authority and the insurance
company entitled thereto. If an Event of Default
shall have occurred or be continuing hereunder,
however, Beneficiary shall have the additional
option of crediting the full amount of the
escrowed sums against the Indebtedness.
Notwithstanding anything to the contrary contained
in this paragraph 11.14 or elsewhere in this Deed
of Trust, Beneficiary hereby reserves the right to
waive the payment by Trustor to Beneficiary of the
escrowed sums and, in the event Beneficiary does
so waive such payment, it shall be without
prejudice- to Beneficiary's right to insist, at
any subsequent time or times, that such payments
be made in accordance herewith.
11.15 HEADINGS AND GENERAL APPLICATION:
The article, paragraph and subparagraph
entitlements hereof are inserted for convenience
or reference only and shall in no way affect,
modify or define, or be used in construing, the
text of such article, paragraph or subparagraph.
If the context requires, words used in the
singular shall be read as including the plural,
and pronouns of any gender shall include all
genders.
11.16 SOLE BENEFIT: This instrument and
the other Security Documents have been executed
for the sole benefit of Trustor and Beneficiary
and the heirs, successors, assigns and legal
representatives of Beneficiary. No other party
shall have rights thereunder nor be entitled to
assume that the parities thereto will insist upon
strict performance of their mutual obligations
hereunder, any of which may be waived from time to
time. Trustor shall have no right to assign any of
its rights under the Security Documents to any
party whatsoever, including the right to receive
advances under the Note or otherwise.
11.17 SUBROGATION: If any or all of the
proceeds of the Indebtedness or the Obligations
have been used to extinguish, extend or renew any
indebtedness heretofore existing against the
Mortgaged Property or to satisfy any indebtedness
or obligation secured by a lien or encumbrance of
any kind (including liens securing the payment of
any Impositions), such proceeds have been advanced
by Beneficiary at Trustor's request, and, to the
extent of such funds so used, the Indebtedness and
Obligations in this Deed of Trust shall be
subrogated to and extend to all of the rights,
claims, liens, titles and interests heretofore
existing against the Mortgaged Property to secure
the indebtedness or obligation so extinguished,
paid, extended or renewed, and the former rights,
claims, liens, title and interest, if any, shall
not be waived, but rather shall be continued in
full force and effect and in favor of Beneficiary
and shall be merged with the lien and security for
the repayment of the Indebtedness and satisfaction
of the Obligations; but, in no event shall the
foregoing provision result in Beneficiary
recovering more than the full amount of the
Indebtedness.
11.18 BUSINESS OR COMMERCIAL PURPOSE:
Trustor warrants that the extension of credit
evidenced by the Note secured hereby is solely for
business or commercial purposes, other than
agricultural purposes. Trustor further warrants
that the credit transaction evidenced by the Note
is specifically exempted under Regulation Z
29
issued by the Board of Governors of the Federal
Reserve System and Title I (Consumer Credit Cost
Disclosure) of the Consumer Credit Protection Act
and that no disclosures are required to be given
under such regulations and federal laws in
connection with the above transaction.
11.19 STATEMENT OF CONDITION:
Beneficiary shall furnish any statement required
by law regarding the Indebtedness and the
Obligations secured hereby or regarding the
amounts held in any trust or reserve fund
hereunder. For any such statement, Beneficiary may
charge a reasonable fee, not to exceed the maximum
amount permitted by law at the time of the request
therefor.
11.20 NO OFFSET: Under no circumstances
shall Trustor fail or delay to perform (or resist
the enforcement of) any of its obligations in
connection with any of
the Security Documents because of any alleged
offsetting claim or cause of action against
Beneficiary or any indebtedness or obligation of
Beneficiary) which has not been confirmed in a
final judgment of a court of competent
jurisdiction (sustained on appeal, if any) against
Beneficiary and Trustor hereby waives any such
rights of, setoff (or offset) which it might
otherwise have with respect to any such claims or
causes of action against Beneficiary (or any such
obligations or indebtedness of Beneficiary),
unless and until such right of setoff is confirmed
and liquidated by such final judgment.
11.21 NO PARTNERSHIP OR JOINT VENTURE:
Nothing contained herein or in the Note or any
Security Documents, nor the acts or omissions of
the parties hereto, shall be construed to create a
partnership or joint venture between Trustor and
Beneficiary. The relationship between Trustor and
Beneficiary is the relationship of
"debtor" and "creditor." Trustor shall indemnify
and hold Beneficiary harmless from and against any
and all suits, actions, claims, proceedings
(including third party proceedings), damages,
losses, liabilities and expenses (including,
without limitation, reasonable attorneys' fees)
which may be incurred by or asserted against
Beneficiary with respect to any claim or assertion
which, if true, would be inconsistent with or
contradict the statements made in the preceding
two sentences. The provisions of this paragraph
11.21 shall survive the repayment of the
Indebtedness.
1122 WAIVER OF JURY TRIAL: FOR AND IN
CONSIDERATION OF BENEFICIARY'S ADVANCEMENT TO
TRUSTOR OF THE PRINCIPAL SUMS IN THE AMOUNT OF UP
TO SIX MILLION AND NO/100 DOLLARS ($6,000,000.00),
TRUSTOR, BEING AN EXPERIENCED OWNER AND OPERATOR
OF REAL ESTATE AND PARTICIPANT IN SOPHISTICATED
REAL ESTATE VENTURES, AND HAVING CONSULTED WITH
COUNSEL OF ITS CHOOSING, HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR
PROCEEDING (1) BROUGHT BY TRUSTOR, BENEFICIARY OR
ANY OTHER PERSONS RELATING TO (A) THE LOAN OR (B)
THE SECURITY DOCUMENTS OR (2) TO WHICH BENEFICIARY
IS A PARTY. TRUSTOR HERBBY AGR.EES THAT THIS DEED
OF TRUST CONSTITUTES A WRITTEN CONSENT TO WAIVER
OF TRIAL BY JURY, AND TRUSTOR DOES HEREBY
CONSTITUTE AND APPOINT BENEFICIARY ITS TRUE AND
LAWFUL ATTORNEY IN FACT, WHICH APPOINTMENT IS
COUPLED WITH AN INTEREST AND IRREVOCABLE, AND
TRUSTOR DOES HEREBY AUTHORIZE AND EMPOWER
BENEFICIARY, IN THE NAME, PLACE, AND STEAD OF
30
TRUSTOR, TO FILE THIS DEED OF TRUST WITH THE CLERK
OR JUDGE OF ANY COURT OF COMPETENT JURISDICTION AS
A WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY.
TRUSTOR ACKNOWLEDGES THAT ITS WAIVER OF TRIAL BY
JURY HAS BEEN MADE KNOWINGLY, INTENTIONALLY AND
WILLINGLY BY TRUSTOR AS PART OF A BARGAINED FOR
LOAN TRANSACTION. TRUSTOR WILL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL
HAS BEEN WAIVED, WITH ANY OTHER ACTlON IN WHICH A
JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.
11.23 JURISDICTION AND VENUE: TRUSTOR
▇▇▇▇▇▇ AGREES THAT ALL ACTIONS OR PROCEEDINGS
INlTIATED BY TRUSTOR AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THIS DEED OF TRUST OR THE OTHER
SECURITY DOCUMENTS SHALL BE LITIGATED IN THE
SUPERIOR COURT OF ARIZONA, MARICOPA COUNTY
DIVISION, OR THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF ARIZONA OR, IF BENEFICIARY
INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS ANY COURT IN WHICH BENEFICIARY
SHALL INITIATE SUCH ACTION, TO THE EXTENT SUCH
COURT HAS JURISDICTION; PROVIDED, HOWEVER, THAT
THE EXTENT THAT THE FOREGOING ARIZONA COURTS DO
NOT HAVE JURISDICTION OVER THE LAND FOR PURPOSES
OF A JUDICIAL FORECLOSURE OF THE LAND, SUCH
FORECLOSURE SHALL BE LITIGATED IN THE APPROPRIATE
COURT FOR THE COUNTY OF SAN LUIS OBISPO,
CALIFORNIA. TRUSTOR HEREBY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR PROCEEDING COMMENCED BY BENEFICIARY IN
ANY OF SUCH COURTS AND HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT
SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY ACTUAL DELIVERY
OR REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO TRUSTOR AT THE ADDRESS TO
WHICH NOTICES ARE TO BE SENT HEREIN. TRUSTOR
WAIVES ANY CLAIM THAT PHOENIX, ARIZONA OR THE
DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN
IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD
TRUSTOR, AFTER BEING SO SERVED, FAIL TO APPEAR OR
ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR
PAPERS SO SERVED WITHIN THE NUMBER OF DAYS
PRESCRIBED BY LAW AFTER THE MAILING THEREOF,
TRUSTOR SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY BENEFICIARY
AGAINST TRUSTOR AS DEMANDED OR PRAYED FOR IN SUCH
SUNWIONS, COMPLAINT, PROCESS OR PAPERS, PROVIDED,
HOWEVER, BENEFICIARY MAY NOT SEEK A DEFAULT
JUDGMENT FOR AT LEAST THIRTY (30) DAYS AFTER THE
DATE OF PROOF OF SERVICE. THE EXCLUSIVE CHOICE OF
FORUM FOR TRUSTOR SET FORTH HEREIN SHALL NOT BE
DEEMED TO PRECLUDE THE ENFORCEMENT, BY
BENEFICIARY, OF ANY JUDGMENT OBTAINED IN ANY OTHER
FORUM OR THE TAKING, BY BENEFICIARY, OF ANY ACTION
TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION, AND TRUSTOR HEREBY WAIVES THE RIGHT
TO COLLATERALLY ATTACK ANY SUCH IUDGMENT OR
ACTION.
31
11.24 APPLICABLE LAW. THIS DEED OF TRUST
AND THE OTHER SECURITY DOCUMENTS SHALL BE DEEMED
TO HAVE BEEN DELIVERED AND ACCEPTED IN, AND THIS
DEED OF TRUST, AND THE OTHER SECURITY DOCUMENTS
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS AND DECISIONS OF, THE STATE
OF ARIZONA (WITHOUT REGARD FOR ITS CONFLICTS OF
LAW PRINCIPLES), THE STATE IN WHICH BENEFICIARY'S
PRINCIPAL PLACE OF BUSINESS IS LOCATED, AND BY
EXECUTION HEREOF TRUSTOR AND BY ACCEPTANCE HEREOF,
BENEFICIARY, EACH AGREE THAT SUCH LAWS AND
DECISIONS OF THE STATE OF ARIZONA SHALL GOVERN
THIS DEED OF TRUST AND THE OTHER SECURITY
DOCUMENTS, NOTWITHSTANDING THE FACT THAT THERE MAY
BE OTHER JURISDICTIONS WHICH MAY BEAR A REASONABLE
RELATIONSHIP TO THE TRANSACTIONS CONTEMPLATED
HEREBY; PROVIDED, HOWEVER, THAT WITH RESPECT TO
THE PROCEDURAL AND SUBSTANTIVE MATTERS RELATING
ONLY TO THE CREATION, VALIDITY, PERFECTION AND
ENFORCEMENT BY BENEFICIARY OF ITS RIGHTS AND
REMEDIES AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL LOCATED IN ANY STATE OTHER THAN
ARIZONA, SUCH MATTERS SHALL BE GOVERNED BY THE
LAWS OF THE STATE IN WHICH SUCH PROPERTY IS
LOCATED.
IN WITNESS WHEREOF, this Deed of Trust
has been duly executed and acknowledged by Trustor
as of the day and year first above written.
TRUSTOR PLEASE NOTE: UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT (AS DEFINED IN ARTICLE VI
HEREIN), CALIFORNIA PROCEDURE PERMITS THE TRUSTEE
TO SELL THE MORTGAGED PROPERTY AT A SALE HELD
WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION
OF A PERIOD PRESCRIBED BY LAW. UNLESS YOU PROVIDE
AN ADDRESS FOR THE GIVING OF NOTICE, YOU MAY NOT
BE ENTITLED TO NOTICE OF THE COMMENCEMENT OF SALE
PROCEEDINGS. BY EXECUTION OF THIS DEED OF TRUST,
YOU CONSENT TO SUCH PROCEDURE. BENEFICIARY URGES
YOU TO GIVE PROMPT NOTICE OF ANY CHANGE IN YOUR
ADDRESS SO THAT YOU MAY RECEIVE PROMPTLY ANY
NOTICE GIVEN PURSUANT TO THIS DEED OF TRUST.
TDC/EMERITUS PASO ▇▇▇▇▇▇
ASSOCIATES,
a Washington general partnership
WITNESS:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇
---------------------------- -------------
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
By: TDC Convalescent, Inc., a
California
corporation, Its General
Partner
32
WITNESS :
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- -----
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
THE STATE OF WASHINGTON )
)
COUNTY OF KING )
On this 18th day of February, 1997, before
me, ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the undersigned notary
public, duly commissioned and sworn, personally
appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, personally known
to me (or proved to me on the basis of
satisfactory evidence) to be the person that
executed the within instrument and acknowledged to
me that he or she executed the same in his or her
authorized capacity and that by his or her
signature in the instrument.
In witness whereof, I have hereunto set my
hand and affixed my official seal the day and year
in this certificate first above written.
[SEAL] /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
NOTARY
PUBLIC
THE STATE OF CALIFORNIA )
)
COUNTY OF PLACER )
On this 19th day of February , 1997,
before me, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇, the undersigned
notary public, duly commissioned and sworn,
personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ , personally
known to me (or proved to me on the basis of
satisfactory evidence) to be the person that
executed the within instrument and acknowledged to
me that he or she executed the same in his or her
authorized capacity and that by his or her
signature in the instrument the person, or the
entity upon behalf of which the person acted,
executed the instrument.
In witness whereof, I have hereunto set
my hand and affixed my official seal the day and
year in this certificate first above written.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
------------
------------------------
NOTARY
PUBLIC
[SEAL]
33
