PREPARED BY:
JOHN A. GUPTON, III
BAKER, DONELSON, BEARMAN & CALDWELL
211 COMMERCE SUITE 1000
NASHVILLE, TN 37201
LEASEHOLD DEED OF TRUST WITH
SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
LOCATION: GREENSBORO, GUILFORD COUNTY, NORTH CAROLINA
THIS LEASEHOLD DEED OF TRUST WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS
("Deed of Trust"), shall be effective as of the first day of May, 2003 by
Emeritus Corporation, a Washington corporation whose address is 3131 Elliott
Avenue, Suite 500, Seattle, WA 98121 (hereinafter "Grantor"), in favor of
Lawyers Title Insurance Corporation, a whose mailing
address is (hereinafter "Trustee") for the benefit
of HR Acquisition I Corporation, a Maryland corporation, whose address is 3310
West End Avenue, Suite 700, Nashville, Tennessee 37203 (hereinafter
"Beneficiary").
WITNESSETH THAT:
WHEREAS, pursuant to the terms of that Lease Agreement dated as of May 1, 2003
by and between Beneficiary, as Lessor, and Grantor, as Lessee (the "Lease
Agreement") Beneficiary agreed to make a loan to Grantor in the original
principal amount of Six Hundred Thousand and no/100 Dollars ($600,000); and
WHEREAS, on or about May 1, 2003, Beneficiary made the loan to Grantor
contemplated by the terms of the Lease Agreement and Grantor executed in favor
of Beneficiary its Term Note in the original principal amount of Six Hundred
Thousand and no/100 Dollars ($600,000) (the "Note"); and
WHEREAS, the Note, if not sooner due and payable in accordance with its terms,
is due and payable in full by April 1, 2013 (the "Maturity Date"), unless
modified, extended or renewed; and
WHEREAS, the Lease Agreement requires that the Grantor execute this Deed of
Trust as security for its obligations under the Note;
NOW, THEREFORE, in consideration of the loan made to the Borrower pursuant to
the Lease Agreement, as evidenced by the Note, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Grantor by these presents does grant, bargain, sell and convey unto Trustee and
Trustee's successors and assigns, for the benefit of Beneficiary, the following:
Grantor's leasehold estate created pursuant to the Lease Agreement and all
extensions, renewals, and new leasehold estates hereafter obtained by Grantor,
and all options and rights to purchase now or hereafter existing in favor of
Grantor, pertaining to those tracts, parcels of land, and lease spaces set out
in Exhibit A attached hereto and incorporated herein by this reference (the
"Land");
TOGETHER with all other right, title and interest Grantor may now or hereafter
have in the Land and Premises (as hereinafter defined) including any fee
interest the Grantor may now own or hereafter obtain therein (or in any part
thereof);
TOGETHER with all right, title and interest of Grantor in all buildings,
structures, and other improvements (the buildings, structures and other
improvements being collectively referred to herein as the "Improvements") now or
hereafter located on the Land or any portion thereof;
TOGETHER WITH all right, title and interest of Grantor, now owned or hereafter
acquired, in all easements, rights-of-way and rights (including without
limitation parking and riparian rights) used in connection with the Land or the
Improvements or as a means of access thereto, and all tenements, hereditaments,
and appurtenances thereof and thereto whether now or hereafter existing;
TOGETHER WITH all right, title and interest of Grantor, now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open
or proposed, relating to or adjoining the Land and the Improvements, and in any
and all sidewalks, parking lots, alleys, strips and gores of land adjacent to
and/or used in connection with the Land and the Improvements;
TOGETHER with all right, title and interest of Grantor in all machinery,
apparatus, equipment, fittings, fixtures, and other property of every kind and
nature whatsoever (hereinafter collectively referred to as the "Equipment") now
or hereafter located in, upon or under the Land and the Improvements or any part
thereof and/or used or usable in connection with any present or future operation
of the Land or Improvements, all whether now owned or hereafter acquired by
Grantor, and including, but without limiting the generality of the foregoing,
all heating, air-conditioning, plumbing, lighting, water heating, cooking,
refrigerating, incinerating, ventilating and similar equipment, furniture and
furnishings, cash registers, bars, brewing equipment and other trade fixtures
and equipment, freezers, coolers and related equipment, and all building
materials and equipment now or hereafter delivered to the Land and the
Improvements and intended to be installed therein or thereon, and all additions
thereto and replacements thereof;
TOGETHER with all of Grantor's interest and rights as lessor in and to all
leases, subleases, warehouse agreements and other storage agreements (written or
oral) now or hereafter affecting the Premises or any part thereof (herein
collectively called the "Leases") and any and all rents, issues, security
deposits, guarantees, proceeds and profits which are now due or may hereafter
become due by reason of the renting, leasing and bailment of the Premises or any
part thereof, and the storage of property on the Premises, whether payable
pursuant to a present or future Lease or otherwise growing out of any occupancy
or use of the Premises (the "Rents") and all other general intangibles and
accounts now or hereafter existing with respect to the Premises;
TOGETHER with all of Grantor's documents, instruments, contract rights,
accounts, general intangibles, and other intangible property now or hereafter
existing relating to the Premises including, but not limited to, any and all
construction contracts, development contracts, architectural contracts,
engineering contracts, plans, specifications, drawings, surveys, bonds,
licenses, permits, and other governmental approvals, and also including all
general intangibles and contract rights under all leases now or hereafter in
effect including all rights to return of security deposits and credits and
payments relating to tenant finish improvements;
TOGETHER with, to the extent permitted by the Lease Agreement, all the estates,
interests, rights, titles, other claims or demands, including claims or demands
with respect to the proceeds of, and refunds of premiums on, insurance in effect
with respect thereto, which Grantor now has or may hereafter acquire in or with
respect to the Premises, and any and all rights that Grantor now has or
hereafter may acquire in awards made for the taking by eminent domain or
condemnation, or by any proceeding or purchase in lieu thereof, of the whole or
any part of the Premises, including any awards resulting from a change of grade
of streets and awards for severance damages; and
TOGETHER with all other proceeds and products of any of the foregoing of any
nature or type.
TO HAVE AND TO HOLD all of Grantor's right, title and interest in and to the
aforesaid Land, Improvements, Equipment, Rents, property, property rights, and
other interests (all of which are collectively referred to herein as the
"Premises") to the use and benefit of the Trustee and Trustee's successors and
assigns.
Grantor covenants that it is the lawful leasehold owner of the Premises being
conveyed hereby, has a good right to convey it, and the same is unencumbered,
except for the liens granted in favor of Beneficiary under the terms of the
Lease Agreement. Grantor further represents and covenants that as of the date
hereof: (i) the Lease Agreement, a memorandum of which is recorded in the Office
of the Recorder of Deeds in Guilford County, North Carolina is in full force and
effect, (ii) there are no conditions or events that exist or that, with the
passage of time or notice or both, would exist, that would entitle Beneficiary,
in its capacity as the lessor under the Lease Agreement, to terminate the Lease
Agreement and that all rents and other amounts due and payable under the Lease
Agreement have been paid in full to the extent they were payable before the date
of this Deed of Trust; (iii) neither Grantor, in its capacity as the lessee
under the Lease Agreement, nor Beneficiary, in its capacity as the lessor under
the Lease Agreement has commenced any action or given or received any notice for
the purpose of terminating the Lease Agreement; (iv) the interest of the tenant
under the Lease Agreement is vested in the Grantor; and (v) the quiet and
peaceful possession of the Premises is vested in the Grantor under the Lease
Agreement. Grantor further covenants and binds itself, its heirs, successors,
and assigns, to warrant and defend the title to the Premises to Trustee and
Trustee's successors and assigns forever against the lawful claims of all
persons whomsoever.
THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST, that if Grantor shall:
(a) Pay the indebtedness, obligations (including, without
limitation, reimbursement obligations relating to letters of credit) and
liabilities of Grantor with interest thereon (including, without limitation,
interest that, but for the filing of a petition in bankruptcy with respect to a
Borrower, would accrue) now or hereafter evidenced by or outstanding under the
Note, which is incorporated herein by reference, including all future advances
thereunder regardless of class, which such indebtedness, obligations and
liabilities if not sooner due and payable are due and payable in full on the
Maturity Date and any and all modifications, extensions, renewals and
replacements of any of the foregoing;
(b) Perform all obligations of Borrower now or hereafter contained
in this Deed of Trust, the Note and in any other instrument now or hereafter
given to evidence or further secure the payment and performance of any
obligations secured hereby, and any and all modifications, extensions, renewals
and replacements thereof (hereinafter collectively referred to as the "Credit
Documents").
(c) Pay all sums advanced by Trustee or Beneficiary to protect the
Premises or this Deed of Trust, with interest thereon at the Default Rate
provided in the Note (all of the foregoing being collectively referred to herein
as the "Secured Indebtedness"); provided, however, that upon payment in full of
the portion of the Secured Indebtedness required to be paid in accordance with
the terms of the Note, this conveyance shall be cancelled of record at the
request and at the cost of Grantor. This conveyance is made to secure the
payment and performance of all of the Secured Indebtedness.
(d) Nothing in this Deed of Trust or any other Credit Document
shall constitute the agreement by Beneficiary to assume any obligations of
Grantor with respect to the Premises including, without limitation, any
obligations under the Lease Agreement, and Grantor shall defend, indemnify and
hold Beneficiary harmless against any claims, demands, damages, losses,
liabilities, costs, expenses, or other obligations incurred with respect to the
Premises as a result of this Deed of Trust or the Note, or any of the
transactions described herein or therein (this covenant to survive the repayment
of the Secured Indebtedness, the termination of this Deed of Trust, the exercise
of any rights hereunder and the acceptance of any deeds in lieu of foreclosure
or similar documents, and shall continue until the expiration of any applicable
periods of limitation with respect to any of the foregoing matters).
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, GRANTOR HEREBY COVENANTS AND
AGREES UNTO TRUSTEE AND BENEFICIARY AS FOLLOWS:
Payment of Secured Indebtedness. Grantor shall pay and perform when due the
Secured Indebtedness in accordance with the terms of the Note and the other
Credit Documents.
Compliance with Lease Agreement.
Grantor shall: (i) pay all rents and other amounts required to be paid by
Grantor, as a tenant under and pursuant to the provisions of the Lease
Agreement, as and when those rents and other amounts are payable or within any
applicable cure period provided for in the Lease Agreement; (ii) diligently
perform and observe all of the terms, covenants and conditions of the Lease
Agreement when due or within any applicable cure periods provided for in the
Lease Agreement; and (iii) in the event Beneficiary is not also the lessor under
the Lease Agreement, promptly notify Beneficiary of the giving of any
notice by Grantor or the landlord under the Lease Agreement of any default of
the other in the performance or observance of any of the terms, covenants or
conditions of the Lease Agreement and promptly provide Beneficiary a copy of any
such notices or any other requests or other materials at any time provided by
the Grantor to such lessor or by such lessor to the Grantor. Grantor shall not
surrender the leasehold estate created by the Lease Agreement except upon the
expiration of the term provided for therein or terminate or cancel the Lease
Agreement prior to the expiration of the term provided for therein or, at
anytime that Beneficiary is not also the lessor under the Lease Agreement,
modify, change, supplement, alter or amend the Lease Agreement, in any respect,
either orally or in writing, without the consent of Beneficiary, and Grantor
hereby assigns to Beneficiary as further security for the payment and
performance of the Secured Indebtedness, the right to exercise on behalf of
Grantor from and after the occurrence of an Event of Default hereunder or under
any of the other Credit Documents, all of the rights, privileges and
prerogatives of Grantor, as tenant under the Lease Agreement, to surrender the
leasehold estate created by the Lease Agreement or to terminate, cancel, modify,
change, supplement, alter, or amend the Lease Agreement, and any such surrender
of the leasehold estate or termination, cancellation, modification, change,
supplement, alteration or amendment of the Lease Agreement without the prior
written consent of Beneficiary at a time when Beneficiary is not also the lessor
under the Lease Agreement shall be null and void and of no force and effect. At
any time that Beneficiary is not also the lessor under the Lease Agreement,
Grantor shall not waive any material default by the lessor under the Lease
Agreement without the prior written consent of Beneficiary. If the Grantor shall
default in the performance or observance of any term, covenant or condition in
the Lease Agreement and shall fail to cure such default within any applicable
cure period set forth in the Lease, then without limiting the generality of the
other provision of this Deed of Trust, and without waiving or releasing Grantor
from any of its obligations hereunder, Beneficiary shall have the right, but
shall be under no obligation, to pay any sums and to perform any act or take any
action as may be appropriate to cause all the terms, covenants and conditions of
the Lease Agreement on the part of Grantor to be performed or observed to be
promptly performed or observed on behalf of Grantor to the end that the rights
of Grantor in, to and under the Lease Agreement shall be kept unimpaired and
free from default, even if the existence of such Event of Default or its nature
is questioned or denied by Grantor or by any party on behalf of Grantor. If
Beneficiary shall make any payment or perform any act or take any action in
accordance with the preceding provisions, then the payment, performance or
action shall not remove or waive, as between Grantor and Beneficiary, the Event
of Default hereunder, and Grantor shall immediately reimburse Beneficiary for
all amounts paid with interest thereon at the Default Rate provided in the Note,
which amount shall be secured by this Deed of Trust. Upon request by Beneficiary
or as otherwise required, in the event that Beneficiary is not also the lessor
under the Lease Agreement, then Grantor shall provide Beneficiary with receipts
and other evidence of payment of the rents and other sums payable under the
Lease Agreement. At any time that Beneficiary is not also the lessor under the
Lease Agreement, Grantor will not subordinate or consent to the subordination of
the Lease Agreement to any mortgage, deed of trust, lease or other interest on
or in the landlord's interest in all or any part of the Premises unless, in each
such case, the written consent of Beneficiary shall have been first had and
obtained. Grantor shall not knowingly take any other action which would have a
material effect on the terms of the Lease Agreement or otherwise affect
Grantor's rights in and to the Premises.
Beneficiary and any persons authorized by Beneficiary shall have the right
to enter and inspect the Premises on reasonable advance notice and at all
reasonable times and access thereto shall be permitted for that purpose.
Possession of Premises; No Assignments or Liens. Grantor shall not sell,
exchange, assign, loan, deliver, lease, transfer, mortgage or otherwise dispose
of or encumber all or any portion of the Premises, other than sales or other
dispositions of the personal property or fixtures located thereat in the
ordinary course of business, assignments of the Lease or any portion thereof or
subletting of the Premises or any portion thereof in accordance with the terms
of the Lease Agreement and encumbrances of the Premises or any portion thereof
permitted by the terms of the Lease Agreement. Without limiting the generality
of the foregoing, Grantor agrees not to assign the Lease Agreement or any of its
rights or obligations thereunder or sublet the Premises or any part thereof
without the concurrent payment in full of the portion of the Secured
Indebtedness required to be prepaid upon such assignment in accordance with the
terms of the Note. Grantor further agrees not to create, incur, assume or
permit to exist any mortgage, pledge, hypothecation, assignment, security
interest, encumbrance, lien (statutory or otherwise), preference, priority or
charge of any kind on Grantor's rights and interests in the Premises or any part
thereof (other than liens allowed pursuant to the Lease Agreement).
Environmental Matters.
Grantor shall indemnify and hold Trustee and Beneficiary harmless from and
against any and all losses, costs, damages, claims, liabilities and expenses,
including attorneys' fees, incurred by either Beneficiary or Trustee arising out
of or relating to (i) the presence as a result of the acts or omissions of
Grantor of any Hazardous Materials on the Premises or on any other real property
now or hereafter securing payment of the Secured Indebtedness and (ii) any
violation or alleged violation of Applicable Law attributable to events
occurring from and after Grantor's acquisition of any interest in the Premises
(including Grantor's leasehold interest or the exacerbation of prior existing
conditions by the acts, omissions or negligence of Grantor). Grantor understands
and agrees that the indemnity provided herein shall survive the payment and
performance of the Secured Indebtedness, the termination of this Deed of Trust,
the exercise of any rights hereunder and the acceptance of any deeds in lieu of
foreclosure or similar documents, and shall continue in full force and effect
until the expiration of any applicable periods of limitation with respect to any
loss or liability covered by such indemnity.
As used in this Deed of Trust, the term "Hazardous Materials" shall mean
all materials defined as a hazardous or toxic waste or substance under any
Applicable Law, and petroleum, petroleum products, oil and asbestos.
The representations, covenants and indemnities contained in this Section 7
are to be in addition to and not in lieu of any similar representations,
covenants or indemnities contained in any other Credit Document.
Default. Each of the following events shall constitute an "Event of Default"
under this Deed of Trust:
should Grantor fail to pay or perform the Secured Indebtedness or any part
thereof when and as the same shall become due and payable (subject to any
applicable cure periods provided in the Credit Documents);
should any warranty or representation of Grantor contained herein or in any
of the other Credit Documents prove untrue in any material aspect; or
should Grantor fail to keep, observe, perform, carry out and execute the
covenants, agreements, obligations and conditions set out herein or in any other
Credit Document when due or within any applicable cure period.
Remedies Upon Default; Power of Sale. Upon the occurrence of any Event of
Default, Trustee or Beneficiary may declare all Secured Indebtedness to be due
and payable and the same shall thereupon become due any payable without any
presentment, demand, protest or notice of any kind. Thereafter, Trustee and
Beneficiary may:
Either in person or by agent, with or without bringing any action or
proceeding, enter upon and take possession of the Premises, or any part thereof,
in its own name, and do any acts which it deems necessary or desirable to
preserve the value, marketability or rentability of the Premises, or part
thereof or interest therein, increase the income therefrom or protect the
security hereof and, with or without taking possession of the Premises, sue for
or otherwise collect the Rents, including those past due and unpaid. The
entering upon and taking possession of the Premises, the collection of such
Rents, and the application thereof as aforesaid, shall not cure or waive any
Event of Default or invalidate any act done in response to such Event of Default
and, notwithstanding the continuance in possession of the Premises or the
collection, receipt and application of Rents, Beneficiary shall be entitled to
exercise every right provided for in any of the Credit Documents or by law or
equity upon occurrence of any Event of Default, including the right to exercise
the power of sale herein provided.
Proceed to foreclose this leasehold Deed of Trust by judicial proceedings
or may, at the option of Trustee or Beneficiary, proceed to advertise the sale
of the Premises in the way and manner required by law in the State of North
Carolina for foreclosure sales under power of sale, giving the time, terms and
place of sale, and dispose of the Premises at public auction in front of the
Courthouse of the County in which the Premises or any part are located, to the
highest and best bidder for cash in hand or for such other consideration as
Trustee or Beneficiary may elect to accept. Trustee need not personally attend
or conduct such sale and may, at its option, cause the sale to be conducted by
an agent or attorney selected by it. Trustee, Beneficiary may bid at such sale.
Trustee is hereby authorized to make to the purchaser at such sale all necessary
title papers and place the purchaser in peaceable possession of the Premises.
Trustee shall collect the proceeds of such sale, applying such proceeds as
provided in Section 14. Grantor agrees that possession of the Premises during
the existence of the Secured Indebtedness by Grantor, or any person claiming
under Grantor, shall be that of tenant under Trustee, and, in case of a sale, as
herein provided, Grantor or any person in possession under Grantor shall then
become and be tenants holding over, and shall forthwith deliver possession to
the purchaser at such sale, or be summarily dispossessed in accordance with the
provisions of law applicable to tenants holding over. The power and agency
hereby granted are coupled with an interest and are irrevocable and are in
addition to any and all other remedies which Trustee or Beneficiary may have at
law or in equity.
Assignment of Leases and Rents. The assignment of Leases and Rents contained in
this Deed of Trust, shall constitute an absolute assignment of such Leases and
Rents to Trustee for the benefit of Beneficiary and to Beneficiary, and Grantor
hereby assigns and transfers to Trustee and to Beneficiary all of such Leases
and Rents as security for the prompt payment and performance of all of the
Secured Indebtedness. Notwithstanding the assignment of Leases and Rents
contained in this Deed of Trust, so long as no Event of Default has occurred,
Grantor shall have a license (such license to be deemed revoked upon the
occurrence of an Event of Default) to collect, retain and enjoy all Rents
(provided such are paid no more than 30 days in advance), provided that the
existence or exercise of any such right of Grantor shall not operate to
subordinate the assignment of Leases and Rents contained in this Deed of Trust
to any subsequent assignment, in whole or in part, by Grantor, and any
subsequent assignment by Grantor shall be subject to the rights of Trustee and
Beneficiary hereunder. The assignment of Leases and Rents contained in this Deed
of Trust shall not be deemed or construed to constitute Trustee or Beneficiary
as a mortgagee in possession nor obligate Trustee or Beneficiary to take any
action or to incur any expenses or perform or discharge any obligation, duty or
liability or to permit Grantor to enter into any Leases except in accordance
with the terms of this Deed of Trust.
Uniform Commercial Code. For the purpose of noting the names and addresses of
the debtor and the secured party under the Uniform Commercial Code of the State
of North Carolina, it is hereby acknowledged and agreed that the Grantor's
(debtor's) name is Emeritus Corporation and the Beneficiary's (secured party's)
--------------------
name is HR Acquisition I Corporation, and the addresses of the Grantor (debtor)
and Beneficiary (secured party) are set forth above. In addition to all other
remedies set forth in this Deed of Trust, the parties expressly agree that with
respect to the portion of the Premises constituting fixtures and personal
property (tangible and intangible) which are the property of Grantor, this Deed
of Trust is hereby made and declared to be a security agreement in compliance
with the provisions of Uniform Commercial Code as enacted in the State of North
Carolina, and Grantor hereby grants to Beneficiary a continuing security
interest in the Premises as security for the prompt payment and performance of
all of the Secured Indebtedness. Upon the occurrence of any Event of Default
hereunder, in addition to all other remedies contained in this Deed of Trust,
Beneficiary shall have all remedies available to a secured party pursuant to the
Uniform Commercial Code as enacted in North Carolina.
Payment of Costs of Exercising Remedies. Grantor covenants and agrees to pay
Trustee and Beneficiary all reasonable expenditures and expenses which may be
paid or incurred by or on behalf of Trustee or Beneficiary for attorneys' fees,
appraiser's fees, outlays for documentary and expert evidence, stenographers'
charges, publication costs, costs (which may be estimated as to items to be
expanded after entry of the decree) of procuring all such abstracts of title,
title searches and examinations, title insurance policies, certificates of
title, and similar data and assurances with respect to title, environmental
audits and other items as Trustee or Beneficiary may deem reasonably necessary
either to prosecute such suit or to evidence to bidders at any sale the true
condition of the title to or the value of the Premises and other reasonable
expenditures and expenses incurred by or on behalf of Beneficiary in connection
with the exercise of any remedy under this Deed of Trust. All expenditures and
expenses of the nature in this paragraph mentioned, and such expenses and fees
as may be reasonably incurred in the protection of the Premises and the
maintenance of the interest of this Deed of Trust, including the fees of any
attorney employed by Trustee or Beneficiary in any litigation or proceeding
affecting this Deed of Trust or the Premises, including probate and bankruptcy
proceedings, or in preparations for the commencement or defense of any
proceeding or threatened suit or proceeding, shall be immediately due and
payable by Grantor, with interest thereon at the Default Rate provided in the
Note and shall be secured by this Deed of Trust.
Grantor's Waiver of Certain Rights. Grantor waives the benefit of all laws now
existing or that hereafter may be enacted providing for (i) any appraisement
before sale of any portion of the Premises, and (ii) in any way extending the
time for the enforcement of the collection under the Note or the debt evidenced
thereby or any other Secured Indebtedness or creating or extending a period of
redemption from any sale made in collecting said Secured Indebtedness. To the
full extent Grantor may do so, Grantor agrees that Grantor will 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 appraisement, valuation, stay, extension or
redemption, and Grantor, for Grantor, Grantor's representatives, successors and
assigns, and for any and all persons ever claiming any interest in the Premises,
to the extent permitted by law, hereby waives and releases all rights of
redemption (including, without limitation, the statutory rights of redemption
and the equity of redemption) homestead, dower, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the Secured
Indebtedness, and marshalling in the event of foreclosure of the liens hereby
created.
Proceeds of Foreclosure. The proceeds of any foreclosure sale of the Premises or
from the exercise of other rights hereunder shall be distributed and applied in
the following order of priority: First, on account of all costs and expenses
incident to the execution of this trust and incident to the foreclosure
proceedings, including all such items as are mentioned in Section 12 hereof;
Second, all other items which under the terms hereof constitute Secured
Indebtedness additional to the principal amount evidenced by the Note or under
any other Secured Indebtedness, with interest thereon as herein provided; Third,
all principal and interest remaining unpaid on the Note and the other Secured
Indebtedness in such manner as Beneficiary may elect in its sole discretion (and
subject to the provisions of the Note); Fourth, any overage to the order of
Grantor, its successors or assigns, as their rights may appear or to such other
persons that may lawfully be entitled thereto.
Appointment of Receiver. Trustee and Beneficiary in any action to foreclose this
Deed of Trust, or upon any Event of Default, shall be at liberty to apply for
appointment of a receiver of the Premises. Such appointment may be made without
notice, without regard to the solvency or insolvency of Grantor at the time of
application for such receiver and without regard to the then value of the
Premises or whether the same shall be then occupied as a homestead or not, and
Beneficiary may be appointed as such receiver. Such receiver shall have power:
(a) to collect the Rents subject, however, to the rights of the lessor under the
Lease Agreement (in the event Beneficiary is not also the lessor under the Lease
Agreement); (b) to extend or modify any then existing leases (including the
Lease Agreement) and to make new leases, which extensions, modifications and new
leases may provide for terms to expire, or for options to lessees or lessors to
extend or renew terms to expire, beyond the maturity date of the Secured
Indebtedness and beyond the date of the issuance of a deed or deeds to a
purchaser or purchasers at a foreclosure sale; provided, however, that any such
leases, and the options or other such provisions to be contained therein, shall
only be binding upon Grantor and all persons whose interests in the Premises are
subject to this Deed of Trust to the extent that they do not increase or extend
the obligations imposed on Grantor under the Lease Agreement at the time of the
appointment of the receiver; and (c) all other powers which may be necessary or
are usual in such cases for the protection, possession, control, management and
operation of the Premises. The court from time to time may authorize the
receiver to apply the net income in its hands in payment in whole or part of:
(i) the Secured Indebtedness, or any tax, special assessment or other lien which
may be or become superior to this Deed of Trust or of such decree, provided such
application is made prior to foreclosure sale; and (ii) the deficiency in case
of a sale and deficiency.
Rights of Enforcement.
Trustee and Beneficiary shall be entitled to enforce payment and
performance of any Secured Indebtedness and to exercise all rights and powers
under this Deed of Trust or under any other Credit Document or any laws now or
hereafter in force, notwithstanding some or all of the Secured Indebtedness, may
now or hereafter be otherwise secured, whether by deed to secure debt,
mortgage, pledge, lien, assignment or otherwise. Neither the acceptance of this
Deed of Trust nor its enforcement whether by court action or other powers herein
contained, shall prejudice or in any manner affect the right of Trustee or
Beneficiary to realize upon or enforce any other security now or hereafter held
by Trustee or Beneficiary, it being agreed that Trustee and Beneficiary shall be
entitled to enforce this Deed of Trust and any other security now or hereafter
held by Trustee or Beneficiary in such order and manner as it may in its
absolute discretion determine. No remedy herein conferred upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other remedy herein or
by law provided or permitted, but each shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity. Every
power or remedy given by any of the other Credit Documents to Trustee or
Beneficiary or to which it may be otherwise entitled, may be exercised,
concurrently or independently, from time to time and as often as it may be
deemed expedient by Trustee and Beneficiary and Trustee and Beneficiary may
pursue inconsistent remedies. No delay by Trustee or Beneficiary in exercising
any right or remedy hereunder or under any other Credit Document, or otherwise
afforded by law, shall operate as a waiver thereof or preclude the exercise
thereof upon the occurrence of an Event of Default. No failure by Trustee or
Beneficiary to insist upon the strict performance by Grantor under the Note,
this Deed of Trust or any other Credit Document shall constitute a waiver of any
such covenant or agreement, and no waiver by Trustee or Beneficiary of any Event
of Default shall constitute a waiver of or consent to any subsequent Event of
Default. No failure of Trustee or Beneficiary to exercise the option herein
granted to accelerate the maturity of the Secured Indebtedness, nor any
forbearance by Trustee or Beneficiary before or after the exercise of such
option, nor any withdrawal or abandonment by Trustee or Beneficiary of the
exercise of the power of sale herein granted or any of Trustee's or
Beneficiary's rights under such power, shall be construed as a waiver of any
option, power or right of Trustee or Beneficiary hereunder.
In case of any sale under this Deed of Trust by virtue of the exercise of
the power herein granted, or pursuant to any order in any judicial proceedings
or otherwise, at the election of Trustee or Beneficiary, the Premises or any
part thereof may be sold in one parcel and as an entirety, or in such parcels,
manner or order as Trustee or Beneficiary in its sole discretion may elect, and
one or more exercises of the powers herein granted shall not extinguish or
exhaust the power unless the entire Premises are sold or the Secured
Indebtedness paid in full.
No Merger of Fee and Leasehold Estates; Rejection of Lease Agreement.
So long as any portion of the Secured Indebtedness shall remain unpaid or
unperformed or any obligations of Grantor exist in connection therewith, and
unless Beneficiary shall otherwise consent, the fee title to the Premises and
the leasehold estate therein created by the provisions of the Lease Agreement or
other lease shall not merge but shall always be kept separate and distinct,
notwithstanding the union of such estate in Grantor, Trustee, Beneficiary, or
any other person by purchase, operation of law or otherwise. Beneficiary
reserves the right, at any time, to release portions of the Premises including,
but not limited to, the leasehold estate created by the Lease Agreement, with or
without consideration, at Beneficiary's election, without waiving or affecting
any of its rights hereunder or under any of the other Credit Documents, and any
such release shall not affect Beneficiary's rights in connection with the
portion of the Premises not so released. If Grantor should become the owner and
holder of the fee title to the Premises and the Secured Indebtedness related
thereto shall not have been prepaid in accordance with the terms of the Note,
the lien of this Deed of Trust shall spread to cover Grantor's fee title to the
Premises and the fee title shall be deemed to be included in the Premises.
if the Lease Agreement is terminated for any reason in the event of the
rejection or disaffirmance of the Lease Agreement pursuant to the United States
Bankruptcy Code, 11 U.S.C. 101 et seq. ~ as the same may be amended (the
"Code") or any other law affecting creditors' rights: (i) Grantor, immediately
after obtaining notice thereof, shall give notice thereof to Beneficiary; (ii)
Grantor, without the prior written consent of Beneficiary, shall not elect to
treat the Lease Agreement as terminated pursuant to Section 365(h) of the Code
or any comparable federal or state statute or law, and any election by Grantor
made without such consent shall be void; and (iii) this Deed of Trust and all of
the liens, terms, covenants and conditions of this Deed of Trust shall extend to
and cover Grantor's possessory rights under Section 365(h) of the Code and to
any claim for damages due to the rejection of the Lease Agreement or other
termination of the Lease Agreement. In addition, Grantor hereby assigns
irrevocably to Beneficiary Grantor's rights to treat the Lease Agreement as
terminated under Section 365(h) of the Code and to offset rents under the Lease
Agreement in the event that any case, proceeding or other action is commenced by
or against the landlord under the Code or any comparable federal or state
statute or law, provided that Beneficiary shall not exercise such rights and
shall permit Grantor to exercise such rights with the prior written consent of
Beneficiary, not to be unreasonably withheld or delayed, unless an Event of
Default shall have occurred and be continuing. Grantor hereby assigns to
Beneficiary Grantor's right to reject the Lease Agreement under Section 365 of
the Code or any comparable federal or state statute or law with respect to any
case, proceeding or other action commenced by or against Grantor under the Code
or comparable federal or state statute or law, provided that Beneficiary shall
not exercise such right, and shall permit Grantor to exercise such right with
the prior written consent of Beneficiary, not to be unreasonably withheld or
delayed, unless an Event of Default shall have occurred and be continuing.
Grantor hereby assigns to Beneficiary, Grantor's right to seek an extension of
the 60-day period within which Grantor must accept or reject the Lease Agreement
under Section 365 of the Code or any comparable federal or state statute or law
with respect to any case, proceeding or other action commenced by or against
Grantor under the Code or comparable federal or state statute or law, provided
the Beneficiary shall not exercise such right, and shall permit Grantor to
exercise such right with the prior written consent of Beneficiary, not to be
unreasonably withheld or delayed, unless an Event of Default shall have occurred
and be continuing; and provided, further, that the assignment provided for
herein shall only be effective at such time, if any, as Beneficiary is not also
the lessor under the Lease Agreement. Further, if Grantor shall desire to so
reject the Lease Agreement at a time when Beneficiary is not also the lessor
under the Lease Agreement, at the Beneficiary's request, Grantor shall assign
its interest in the Lease Agreement to Beneficiary in lieu of rejecting the
Lease Agreement as described above. Grantor hereby agrees that if the Lease
Agreement is terminated for any reason in the event of the rejection or
disaffirmance of the Lease Agreement under the Code or any other law affecting
creditor's rights, any property not removed by Grantor as permitted or required
by the Lease Agreement shall, at the option of Beneficiary and subject to any
rights thereunder granted to lessor under the Lease Agreement, be deemed
abandoned by Grantor, provided that Beneficiary may remove any such property
required to be removed by Grantor pursuant to the Lease Agreement, and all
reasonable expenses and costs associated with such removal shall be paid by
Grantor within five days of receipt by Grantor of an invoice for such expenses
and costs associated with such removal together with interest thereon until paid
at the Default Rate provided in the Note.
Periodic Enforcement. Beneficiary shall have the right from time to time to sue
for any sums, whether interest, principal or any installment of either or both,
taxes, penalties, or any other sums required to be paid under the terms of this
Deed of Trust, as the same become due, without regard to whether or not all of
the Secured Indebtedness shall be due on demand, and without prejudice to the
right of Beneficiary thereafter to enforce any appropriate remedy against the
Grantor, including an action of foreclosure, or any other action, for a default
or defaults by Grantor existing at the time such earlier action was commenced.
Notice. Every provision for notice and demand or request shall be deemed
fulfilled if complied with as set forth in the Note.
Time of the Essence. Time is of the essence of this Deed of Trust and the other
Credit Documents.
Governing Law. The terms and provisions of this Deed of Trust shall be governed
by and construed in accordance with the laws of the State of Tennessee (other
than actions with respect to the enforcement of the rights and remedies set
forth in this Deed of Trust, which shall be governed by the laws of the State in
which the Premises are located notwithstanding any provisions to the contrary
contained in this Deed of Trust).
Captions; Convenience. The captions or headings at the beginning of each Section
hereof are for the convenience of the parties and are not a part of this Deed of
Trust.
Further Assurances. Grantor shall execute and deliver (and pay the costs of
preparation and recording thereof) to Beneficiary any further instrument or
instruments, including, but not limited to, security deeds, security agreements,
financing statements, assignments and renewal and substitution notes, so as to
reaffirm, to correct and to perfect the evidence of the obligation hereby
secured and the legal security title of Trustee for the benefit of Beneficiary
to all or any part of the Premises intended to be hereby conveyed, whether now
conveyed, later substituted for, or acquired subsequent to the date of this Deed
of Trust and extensions or modifications thereof.
Severability. If this Deed of Trust is invalid or unenforceable as to any part
of the Secured Indebtedness, or if the interest created hereby is invalid or
unenforceable as to any part of the Premises, the unsecured or partially secured
portion of the debt shall be completely paid prior to the payment of the
remaining and secured or partially secured portion of debt and all payments made
on the debt, whether voluntary or under foreclosure or other enforcement action
or procedure, shall be considered to have been first paid on and applied to the
full payment of that portion of the debt which is not secured or fully secured
by this Deed of Trust. In any action or proceeding involving bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if this Deed of Trust would otherwise be held or determined to be
void, invalid or unenforceable on account of the amount of the Secured
Indebtedness secured hereby, then notwithstanding any provision hereof to the
contrary, the amount of Secured Indebtedness secured hereby (for purposes of
this Deed of Trust only) shall be limited to the highest amount which is valid
and enforceable as determined in any such action or proceeding. If any provision
of this Deed of Trust or the application thereof to any person or circumstance
shall be invalid or unenforceable to any extent: (i) the validity and
enforceability of the remainder of this Deed of Trust, and the validity and
enforceability of that provision with respect to other persons and
circumstances, shall not be affected; (ii) such provision, as to such person or
circumstance shall be deemed modified to the minimum extent necessary to make
such provision consistent with applicable law; and (iii) such provision shall be
valid, enforceable and enforced in its modified form against such person or in
such circumstance.
Successors and Assigns. This Deed of Trust shall be binding upon and inures to
the benefit of and shall be enforceable by the successors and assigns of Grantor
and Beneficiary; provided that Grantor may not assign or transfer any of its
interests or obligations hereunder without the prior written consent of
Beneficiary. Without limiting the generality of the foregoing, Grantor expressly
acknowledges that this Deed of Trust is for the benefit of Beneficiary as the
holder of the Note and to any successor holder of the Note.
Acceptance of Trust. Trustee accepts this Trust when this Deed of Trust is made
public record as provided by law. Except as otherwise provided by law, Trustee
is not obligated to notify any party hereto of pending sale under this Deed of
Trust or of any action or proceeding in which Grantor, Beneficiary or Trustee
shall be a party, unless brought by Trustee. The necessity of Trustee herein
named or any successor in trust, making oath or giving bond, is expressly
waived. This Deed of Trust may be amended by written agreement between Grantor
and Beneficiary without joinder by Trustee.
Successor Trustee. Grantor agrees that Beneficiary may, from time to time,
without notice to Grantor and with or without cause, substitute a successor or
successors to any Trustee named herein or acting hereunder to execute this
Trust. Upon such appointment, and without conveyance to the successor Trustee,
the latter shall be vested with all title, powers and duties conferred upon any
Trustee herein named or acting hereunder. Each such appointment and substitution
shall be made by written Deed of Appointment executed by Beneficiary containing
reference to this Deed of Trust and its place of record, which, when duly filed
for record in the proper office of the county or counties in which the Land is
situated, shall be conclusive proof of proper appointment of the successor
Trustee.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Deed of Trust has been duly executed and delivered by
Grantor as of the date first above written.
GRANTOR:
EMERITUS CORPORATION
By:/s/ Raymond R. Brandstrom
----------------------------
Raymond R. Brandstrom
-----------------------
Its: Chief Financial Officer
-------------------------
STATE OF WASHINGTON
COUNTY OF KING
Before me, a Notary Public of the state and county
aforesaid, personally appeared , with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be the of
Emeritus Corporation, the within named bargainor, a corporation, and that he, as
such officer, executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation by himself as such officer.
Notary Public
My Commission Expires:
EXHIBIT "A"
PROPERTY DESCRIPTION