LEASEHOLD MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, FINANCING STATEMENT
AND FIXTURE FILING
THIS LEASEHOLD MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS, FINANCING STATEMENT AND FIXTURE FILING ("Mortgage") is made and entered
into effective as the 28th day of August, 2003 (the "Effective Date") by
EMERITUS CORPORATION, a corporation organized under the laws of the State of
Washington ("Mortgagor"), having its chief executive office at 3131 Elliott
Avenue, Suite 500, Seattle, Washington 98121, in favor of HEALTH CARE REIT,
INC., a corporation organized under the laws of the State of Delaware
("Mortgagee"), having its principal office at One SeaGate, Suite 1500, P.O. Box
1475, Toledo, Ohio 43603-1475.
A. Mortgagor is the owner of a leasehold interest in the Real Property
(defined below). Mortgagor intends to operate, directly or through its
subsidiaries, an assisted living facility, as described on Exhibit C, attached
hereto and made a part hereof, at the Real Property (the "Facility") and is the
tenant of the Facility pursuant to a Lease Agreement between HCRI Eddy Pond
Properties Trust, a Massachusetts Trust, as assignee of LM Auburn Assisted
Living, LLC ("Landlord"), and Mortgagor dated as of February 26, 1996, as
amended time to time ("Lease"), which Lease is evidenced with respect to the
Facility by the recording of a Memorandum of Lease recorded as shown on Exhibit
C, attached hereto and made a part hereof.
B. As of the Effective Date, Mortgagee extended a loan in the amount of
$3,100,000.00 ("Loan") to Mortgagor. In order for Mortgagee to extend the Loan
to Mortgagor, Mortgagee requires that Mortgagor enter into this Mortgage to
grant a lien on Mortgagor's leasehold interest and all government authorizations
and personal property used in the operation of the Facility and owned by
Mortgagor.
In consideration of the loan advances described in Article 2 made or
to be made by Mortgagee to Mortgagor and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Mortgagor has
executed and delivered this Mortgage and by these presents does mortgage,
warrant, grant, transfer and convey to Mortgagee and to its successors and
assigns, forever all of Mortgagor's right, title, and interest to and under the
following property which Mortgagor now owns or may hereafter acquire
("Property"):
1. The leasehold estate of Mortgagor arising under the Lease in the real
property described on Exhibit A attached hereto ("Real Property"), including
without limiting the completeness of the foregoing grant Mortgagor's interest in
the following:
(a) all tenements, hereditaments, and easements, rights of way, licenses,
rights, privileges, and appurtenances pertaining to the Real Property presently
owned or hereafter acquired by Mortgagor, including, without limitation,
easements, rights of way, streets, ways, alleys, gores, or strips of land,
whether or not adjoining the Real Property;
(b) all buildings and any other improvements ("Improvements") now or
hereafter erected or placed upon the Real Property and all fixtures ("Fixtures")
of every kind and nature whatsoever now or hereafter affixed to the Real
Property or Improvements (without limiting the generality of what may be a
Fixture, all heating, ventilating, air conditioning, air cooling, lighting,
incinerating, plumbing, cleaning, communications and power equipment, screens,
storm doors, storm windows, shades, awnings, floor coverings, and carpeting,
shall be deemed to be Fixtures and to be a part of the Real Property, whether or
not physically attached to the Real Property); and
(c) all rents, income, issues, profits, royalties, and other benefits
derived or to be derived from the Real Property, Improvements, and Fixtures (all
of which are called "Rents") and all of Mortgagor's interest in any lease,
sublease license or other agreement pursuant to which any Rents are payable and
the Lease (all of which are called "Leases").
2. All the right, title, interest, claims, or demands, including, without
limitation, claims to the proceeds of any insurance which Mortgagor now has or
may hereafter acquire with respect to any Property and all awards made for the
taking of the whole or any part of the Property by eminent domain or by any
proceeding or the proceeds of any purchase or transfer in lieu thereof,
including, without limitation, any awards resulting from a change of grade or
streets or for severance damages.
3. The Real Property, if ever acquired by Mortgagor, and all real property
hereafter acquired by Mortgagor which is made a part of the lot(s) or parcel(s)
which presently constitute(s) the Real Property on the tax maps of the county
auditor for so long as such after-acquired real property shall be a part of such
lot(s) or parcel(s) (Mortgagor shall execute and deliver to Mortgagee such
instruments as Mortgagee may require to confirm the lien of this Mortgage on the
Real Property or the additional property covered by this clause. This clause is
intended to insure that the lien of this Mortgage shall always encumber one or
more complete lots or parcels on the tax maps in the office of the auditor of
the county in which the Real Property is located so that the ability to transfer
the Real Property under Article 6 shall not be defeated or hindered by any
alteration of the lot(s) or parcel(s) which presently constitute(s) the Real
Property on such tax maps.)
AND Mortgagor grants to Mortgagee a security interest in and to Mortgagor's
right, title and interest in the following described property:
4. All machinery, furniture, equipment, trade fixtures, appliances,
inventory and all other goods (as "equipment," "inventory" and "goods" are
defined for purposes of Article 9 ("Article 9") of the Uniform Commercial Code
as adopted in the State where the Real Property is located ("State")) and any
leasehold interest of Mortgagor in any of the foregoing, now or hereafter
located in or on or used or usable in connection with the Real Property,
Improvements, or Fixtures and replacements, additions, and accessions thereto,
including, without limitation, those items which are to become fixtures or which
are building supplies and materials to be incorporated into an Improvement
or Fixture.
5. All accounts, general intangibles, instruments, documents, and chattel
paper [as "accounts", "contract rights", "general intangibles", "instruments",
"documents", and "chattel paper", are defined for purposes of Article 9] now or
hereafter arising in connection with the business located in or on or used or
usable in connection with the Real Property, Improvements, or Fixtures, and
replacements, additions, and accessions thereto.
6. All franchises, permits, licenses, operating rights, certifications,
approvals, consents, authorizations and other general intangibles regarding the
use, occupancy or operation of the Improvements, or any part thereof, including,
without limitation, certificates of need, state health care facility
licenses, and Medicare and Medicaid provider agreements, to the extent permitted
by law.
7. Unless expressly prohibited by the terms thereof, all contracts,
agreements, contract rights and materials relating to the design, construction,
renovation, operation and management of the Improvements, management agreements,
plans, specifications, drawings, blueprints, models, mock-ups, brochures,
flyers, advertising and promotional materials and mailing lists.
8. All ledger sheets, files, records, computer programs, tapes, other
electronic data processing materials, and other documentation relating to the
preceding listed property or otherwise used or usable in connection with the
Real Property and Improvements.
9. The products and proceeds of the preceding listed property, including,
without limitation, cash and non-cash proceeds, proceeds of proceeds, and
insurance proceeds.
TO HAVE AND TO HOLD the same with all of the rights, privileges and
appurtenances thereto belonging unto Mortgagee, its successors and assigns
forever in accordance with the terms and conditions set forth herein.
ARTICLE 1: WARRANTIES
1.1 Mortgagor covenants with Mortgagee and its successors and assigns that:
the Lease is in all respects valid and in full force and effect, Mortgagor is
not in default under the terms and provisions thereof, that Mortgagor has no
knowledge of, nor has received any notice from the Landlord of any default under
the Lease, no controversy exists involving any claim of default under the Lease;
Mortgagor holds an unencumbered leasehold interest in the Property; to the best
of Mortgagor's knowledge the Property is free from all mortgages, liens,
charges, claims, security interests, pledges, collateral assignments, leases,
attachments, levies, encroachments, rights of way, restrictions, assessments,
and all other encumbrances and title matters of every kind or nature whatsoever,
except for the exceptions listed on Exhibit B attached hereto and liens
permitted or granted under the terms of the Lease (the "Permitted Exceptions");
with the consent of the Landlord under the Lease, which consent has been granted
as of the date hereof, Mortgagor has good right to mortgage, sell and convey the
same.
ARTICLE 2: PURPOSES
2.1 Secured Obligations. This Mortgage secures performance of the following
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obligations (the "Secured Obligations") of Mortgagor:
2.1.1 Payment of Credit Extended. The payment of the indebtedness of
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Mortgagor to Mortgagee in the original principal amount of $3,100,000.00 plus
interest on the unpaid balance thereof, which indebtedness is evidenced by a
promissory note ("Note") made by Mortgagor and delivered to Mortgagee on this
date, and any extensions, modifications, substitutions or renewals of the
indebtedness or Note, and which is due and payable on the Maturity Date set
forth in the Note, which shall be no later than the date three years after the
Commencement Date. "Commencement Date" means the Effective Date if the
Effective Date occurs on the first day of a month, otherwise means the first day
of the month after the Effective Date.
2.1.2 Obligations Under Loan Documents. The performance of all obligations
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of Mortgagor under the Note, this Mortgage and all other documents executed by
Mortgagor in connection therewith, any extensions, modifications or renewals
thereof, and any documents executed in substitution therefor (collectively, the
"Loan Documents").
2.1.3 Advances to Protect Property. The payment of unpaid balances of all
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advances made by Mortgagee for the payment of taxes, assessments, insurance
premiums, or costs incurred for the protection of the Property.
2.1.4 Future Advances. The payment of any unpaid balances of loan advances
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which Mortgagee may make or may be obligated to make under this Mortgage at any
time after this Mortgage is delivered to the recorder in the County in which the
Real Property is located for record to the extent that the total unpaid loan
indebtedness, exclusive of interest thereon, does not exceed the maximum amount
of $3,100,000.00 which may be outstanding at any time and from time to time.
2.1.5 Other Future Advances. With respect to items of Property in which no
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interest arises under real estate law and with respect to all items of Property
which are or are to become Fixtures as defined for purposes of Article 9, the
repayment of all advances made and value extended hereafter by Mortgagee to or
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on behalf of Mortgagor, whether or not made or extended pursuant to an existing
commitment provided said amount shall not exceed $3,100,000.00.
2.1.6 [Reserved]
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2.1.7 Mortgagor's Obligations. As used herein, "Mortgagor's Obligations"
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means, collectively, all of the Secured Obligations required to be paid or
performed by Mortgagor.
2.2 Combination of Instruments. This Mortgage combines a real estate
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mortgage, an assignment of rents and leases, a security agreement, a fixture
filing, and a financing statement into one document and shall be construed
accordingly.
2.3 Open-End Mortgage. For all items of the Property in which an interest
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arises under real estate law, this is an open-end mortgage which secures payment
of future advances.
2.4 Security Agreement. For all Fixtures and all items of Property in which
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no interest arises under real estate law, this Mortgage is also a security
agreement under Article 9. To the extent that this Mortgage is a security
agreement, it secures all future advances made and value hereafter extended to
or on behalf of Mortgagor.
2.5 Financing Statement and Fixture Filing. This Mortgage, a carbon copy, a
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photographic copy, or other reproduction of it or a financing statement is
sufficient as a financing statement and may be filed as such. As a financing
statement, this Mortgage covers items of collateral which are or which may
become fixtures in addition to personal property. If this Mortgage or any
reproduction of it is filed as a financing statement: Mortgagor is the debtor;
Mortgagee is the secured party; an address of Mortgagee from which information
concerning the security interest may be obtained is Mortgagee's address set
forth at the beginning; and a mailing address of Mortgagor is Mortgagor's
address at the beginning.
2.6 Interpretation. This Mortgage form is and shall be construed
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accordingly to reflect the fact that the credit giving rise to the Secured
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Obligations would not have been extended by Mortgagee but for the security
provided by this Mortgage. Where the sense requires it, the singular may be
read as the plural or the reverse and any gender may be read as any other
gender.
ARTICLE 3: COVENANTS
3.1 Obligations. Mortgagor shall pay and perform all of Mortgagor's Secured
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Obligations when due and required.
3.2 Impositions.
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3.2.1 Except as otherwise set forth in the Lease, Mortgagor shall pay, not
later than one day prior to the date such Impositions become delinquent, all
real estate taxes, personal property taxes, general and special assessments,
water and sewer rents and charges, license fees, all charges which may be
imposed for the use of vaults, chutes, areas and other space beyond the lot line
and abutting the public sidewalks in front of or adjoining the Property, and all
other governmental levies and charges (collectively, the "Impositions") of every
kind and nature whatsoever, general and special, ordinary and extraordinary,
foreseen and unforeseen, which shall be assessed, levied, confirmed, imposed or
become a lien upon or against the Property or any part thereof, or which shall
become due and payable with respect thereto, unless contested in good faith as
permitted by the Lease. Mortgagor shall deliver to Mortgagee [i] not more than
five days after the delinquency date of each Imposition, a copy of the invoice
for such Imposition and the check delivered for payment thereof; and [ii] not
more than 30 days after the delinquency date of each Imposition, a copy of the
official receipt evidencing such payment or other proof of payment satisfactory
to Mortgagee. If any law of any government having jurisdiction over the
Property is enacted after this date [i] deducting from the value of land for the
purpose of taxation any lien thereon; [ii] imposing upon Mortgagee the payment
of the whole or any part of the Imposition which is required to be paid by
Mortgagor hereunder; or [iii] changing in any way laws relating to the taxation
of deeds of trust or debts secured by deeds of trust or mortgage interests in
the Property, or the manner of collection of taxes, in any such case, so as to
affect this Mortgage or the Secured Obligations, then Mortgagor, upon 30 days'
notice from Mortgagee, shall pay such Imposition or reimburse Mortgagee
therefor.
3.2.2 Mortgagor shall pay, or reimburse Mortgagee for, all sales taxes,
intangible taxes, mortgage taxes, gross receipts taxes, documentary stamp taxes,
mortgage assignment taxes, transfer taxes and similar taxes imposed on Mortgagee
relating to the Secured Obligations, Note, this Mortgage, or the indebtedness
secured by this Mortgage. At the direction of Mortgagee, Mortgagor shall pay or
reimburse Mortgagee for such taxes 30 days after Mortgagee gives notice to
Mortgagor.
3.3 Insurance.
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3.3.1 Except as otherwise set forth in the Lease, Mortgagor shall maintain
in full force and effect an extended coverage "Special Form" policy ("Policy")
of insurance in a nonreporting form insuring against physical loss or damage to
the Improvements and personal property, including but not limited to risk of
loss from fire and other hazards, collapse, transit coverage, vandalism,
malicious mischief, theft, earthquake (if Property is in earthquake zone 1 or 2)
and sinkholes (if usually recommended in the area of the Property). The Policy
shall be in the amount of the full replacement value of the Improvements and
personal property and shall contain a deductible amount acceptable to Mortgagee.
Mortgagee shall be named as mortgagee and loss payee under a standard
non-contributing lender's loss payable clause.
3.3.2 The Policy shall include the following coverage:
[i] A stipulated value endorsement or agreed amount endorsement and
endorsements for contingent liability for operations of building laws,
demolition costs, and increased cost of construction.
[ii] If applicable, loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed on the Property, in
commercially reasonable amounts acceptable to Mortgagee.
[iii] Consequential loss of rents and income coverage insuring against all
"Special Form" risk of physical loss or damage with limits and deductible
amounts acceptable to Mortgagee covering risk of loss during the first nine
months of reconstruction, and containing an endorsement for extended period of
indemnity of at least six months, and shall be written with a stipulated amount
coverage if available at a reasonable premium.
[iv] Loss or damage caused by the breakage of plate glass in commercially
reasonable amounts acceptable to Mortgagee.
[v] Effective when the Facility commences operations, loss or damage
commonly covered by blanket crime insurance including employee dishonesty, loss
of money orders or paper currency, depositor's forgery, and loss of property of
patients accepted by Mortgagor for safekeeping, in commercially reasonable
amounts acceptable to Mortgagee.
3.3.3 If the Property is located, in whole or in part, in a federally
designated 100-year flood plain area, Mortgagor shall maintain in full force and
effect flood insurance for the Improvements in an amount equal to the lesser of
[i] the full replacement value of the Improvements; or [ii] the maximum amount
of insurance available for the Improvements under all federal and private flood
insurance programs.
3.3.4 In connection with any construction on the Property, Mortgagor shall
maintain in full force and effect a builder's completed value risk policy
("Builder's Risk Policy") of insurance in a nonreporting form insuring against
all "Special Form" risk of physical loss or damage to the Improvements,
including but not limited to, risk of loss from fire and other hazards,
collapse, transit coverage, vandalism, malicious mischief, theft, earthquake (if
property is in earthquake zone 1 or 2) and sinkholes (if usually recommended in
the area of the Property). The Builder's Risk Policy shall include endorsements
providing coverage for building materials and supplies and temporary premises.
The Builder's Risk Policy shall be in the amount of the full replacement value
of the Improvements and shall contain a deductible amount acceptable to
Mortgagee. Mortgagee shall be named under a standard noncontributing lender's
loss payee clause. The Builder's Risk Policy shall include an endorsement
permitting initial occupancy.
3.3.5 Mortgagor shall maintain in full force and effect liability insurance
against the following:
[i] Claims for personal injury or property damage commonly covered by
commercial general liability insurance with endorsements for incidental
malpractice, blanket contractual, personal injury, owner's protective liability,
voluntary medical payments, products and completed operations, broad form
property damage, and extended bodily injury, with a combined single limit of not
less than $5,000,000.00 per occurrence for bodily injury, death and property
damage.
[ii] Claims for personal injury and property damage commonly covered by
commercial automobile liability insurance, covering all owned and non-owned
automobiles, with a combined single limit of not less than $5,000,000.00 per
occurrence for bodily injury, death and property damage.
[iii] Claims commonly covered by worker's compensation insurance for all
persons employed by Mortgagor on the Property. Such worker's compensation
insurance shall be in accordance with the requirements of all applicable local,
state, and federal law.
3.3.6 Mortgagor shall comply with the following insurance requirements
throughout the term of the loan:
[i] The form and substance of all policies shall be subject to the approval
of Mortgagee, which approval will not be unreasonably withheld.
[ii] The carriers of all policies shall have a Best's Rating of "A" or
better and a Best's Financial Category of IX or larger and shall be authorized
to do insurance business in the State.
[iii] Mortgagor shall be the "named insured" and Mortgagee shall be the
"additional insured" on each liability policy.
[iv] Mortgagor shall deliver to Mortgagee policies or other satisfactory
evidence showing the required coverages and endorsements. The policies of
insurance shall provide that no cancellation, reduction in amount or material
change in coverage shall be effective until at least 30 days after written
notice to Mortgagee.
[v] Mortgagor shall notify Mortgagee of any loss or damage to the Property
in excess of $150,000.00 which is or may be covered by any insurance immediately
after the occurrence thereof. Mortgagor shall promptly adjust and
compromise any insurance claims and, if Mortgagor fails (in Mortgagee's good
faith judgment) to promptly adjust and compromise such claims, Mortgagee shall
have the right, but not the obligation, on behalf of Mortgagor, to adjust and
compromise any claims under such insurance, collect and receive the proceeds
thereof and execute and deliver all proofs of loss, receipts, vouchers and
releases in connection with such claims. Except as provided herein, Mortgagor
shall not adjust or compromise any claims under such insurance, or collect and
receive the proceeds thereof, without the written consent of Mortgagee.
Mortgagee is hereby irrevocably appointed attorney-in-fact for Mortgagor for
such purposes, and Mortgagor shall, upon request of Mortgagee, execute any
proofs of loss, vouchers and releases in connection with such claims.
[vi] Mortgagor may carry the insurance required hereunder under a blanket
policy of insurance, provided that the coverage afforded Mortgagee will not be
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all of the requirements of this Mortgage.
[vii] Mortgagor shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required in this section or increase
the amounts of any then existing policy by securing an additional policy or
policies unless all parties having an insurable interest in the subject matter
or the insurance, including Mortgagee, are included therein as an additional
insured and the losses payable under said insurance in the same manner as losses
are payable under this Agreement. Mortgagor shall immediately notify Mortgagee
of the taking out of any such separate insurance or the increasing of any of the
amounts of the then existing insurance by securing an additional policy or
additional policies.
[viii] Mortgagor acknowledges that Mortgagee may collaterally assign the
loan as security for any loan or loans to Mortgagee. Mortgagor shall, within
seven days after a request from Mortgagee, deliver to Mortgagee certificates of
insurance naming any such lender as an additional insured.
[ix] Mortgagor hereby assigns to Mortgagee all unearned premiums as further
security for the Secured Obligations and the transfer of title to the Property
by any means, including, without limitation, sale pursuant to any remedy
permitted by this Mortgage, shall constitute an assignment to Mortgagee or other
purchaser of all right, title, and interest of Mortgagor in and to proceeds
from such policy attributable to loss or damage occurring prior to the transfer
of title to the Property.
[x] At least 30 days prior to the expiration of each insurance policy,
Mortgagor shall deliver to Mortgagee a certificate showing renewal of such
policy and payment of the annual premium therefor and a current Certificate of
Compliance (in the form delivered at the time of Closing) completed and signed
by Mortgagor's insurance agent.
3.4 Funds for Impositions and Insurance. Except as otherwise set forth in
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the Lease:
3.4.1 After an Event of Default, Mortgagor shall pay to Mortgagee a sum
(called "Funds") equal to one-twelfth of the yearly payments for Impositions and
insurance on the Property, as may be reasonably estimated by Mortgagee, together
with the monthly payments to be made under the Note. The Funds paid to
Mortgagee shall be used to make the specified payments and as additional
security for the Secured Obligations.
3.4.2 The Funds shall be deposited by Mortgagee with an institution the
deposits or accounts of which are insured or guaranteed by federal or state
agency, and shall not be deemed to be funds held in trust, and may be held with
the general funds of such depository. The funds shall be placed in an
interest-bearing account. All interest thereon shall be considered "Funds".
3.4.3 If the amount of the Funds held by Mortgagee together with future
monthly installments of Funds payable prior to the due dates of the Impositions
and the insurance on the Property shall not be sufficient to make payments as
they fall due, Mortgagor shall pay to Mortgagee the amount necessary to pay the
deficiency within 10 days after the date from which Mortgagee gives notice
requesting payment thereof.
3.4.4 Upon performance in full of the Secured Obligations, Mortgagee shall
promptly refund to Mortgagor any Funds held by Mortgagee.
3.4.5 If the Property is sold or acquired by Mortgagee, Mortgagee shall
apply any Funds then held by Mortgagee as a credit against the Secured
Obligations.
3.4.6 Mortgagee has the right to make payments for which it is holding
Funds, and at its election, to make other payments required to be made by
Mortgagor.
3.5 Application of Payments. All payments and proceeds of sale received by
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Mortgagee under this Mortgage shall be credited as set forth in the Note.
3.6 Charges and Liens. Except to the extent Mortgagor makes payments
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therefor under 3.4 and except for Permitted Liens (as hereinafter defined),
Mortgagor shall promptly pay before delinquent taxes, assessments, levies, and
any other charges which have or may become a lien on any of the Property. For
purposes hereof, Permitted Liens means [i] liens granted to Mortgagee; [ii]
liens customarily incurred by Mortgagor in the ordinary course of business for
items not delinquent, including mechanic's liens and deposits and charges under
worker's compensation laws; [iii] liens for taxes and assessments not yet due
and payable; [iv] any lien, charge or encumbrance which is being contested in
good faith pursuant to this Lease; [v] the Permitted Exceptions; and [vi]
purchase money financing and capitalized equipment leases for the acquisition of
personal property provided, however, that Mortgagee obtains a nondisturbance
agreement from the purchase money lender or equipment lessor in form and
substance as may be satisfactory to Mortgagee if the original cost of the
equipment exceeds $250,000.00.
3.7 Preservation of Property. Mortgagor shall keep the Property in good
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repair, and shall neither commit waste nor permit impairment or deterioration of
the Property.
3.8 Protection of Security. If Mortgagor fails to perform Mortgagor's
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agreements under this Mortgage or if any action or proceeding is commenced which
materially affects Mortgagee's interest in the Property, including, without
limitation, any proceeding concerning eminent domain, insolvency or enforcement
of any ordinance, legislation, or regulation, then Mortgagee is authorized to
make such appearances, disburse such sums, and take such action that Mortgagee
reasonably determines is necessary or desirable to protect the Property and
Mortgagee's interest therein, including, without limitation, the disbursement of
sums for payment of reasonable attorneys' fees, taxes, assessments, insurance
premiums, costs incurred for the protection of the Property, and the entry upon
the Property to make repairs.
3.9 Inspection. After reasonable notice to Mortgagor, Mortgagee or any
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person authorized by Mortgagee may enter upon and inspect any of the Real
Property at all reasonable times.
3.10 Eminent Domain. If the Real Property or any part thereof becomes the
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subject of any proceeding ("Condemnation") for the taking of property or any
conveyance in lieu thereof, the following provisions shall apply.
3.10.1 Notice of Condemnation. Mortgagor shall give written notice of the
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Condemnation to Mortgagee within one business day after Mortgagor is notified of
the Condemnation. Within 15 days after Mortgagor is notified of the
Condemnation, Mortgagor shall provide the following information to Mortgagee:
[i] the date of the Condemnation; [ii] the nature of the Condemnation; [iii] a
description of the portion of the Real Property affected by the Condemnation;
[iv] a preliminary estimate of the cost to repair, rebuild, restore or replace
the Real Property; [v] a preliminary estimate of the schedule to complete the
repair, rebuilding, restoration or replacement of the Real Property; and [vi] a
description of the anticipated settlement amount and the expected settlement
date. Within five days after request from Mortgagee, Mortgagor will provide
Mortgagee with copies of all correspondence relating to the Condemnation and any
other information reasonably requested by Mortgagee.
3.10.2 Proceeds. Mortgagor shall pay or cause to be paid to Mortgagee so
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much of the award or compensation resulting therefrom ("Proceeds") as is
attributable to the Real Property, up to the outstanding amount of Mortgagor's
Obligations, and Mortgagor hereby directs such payments to be made directly to
Mortgagee and hereby assigns to Mortgagee Mortgagor's rights thereto. Mortgagee
may apply all or any part of the Proceeds, after deducting all costs and
expenses (regardless of the nature thereof and whether incurred with or without
suit, including, without limitation, reasonable attorneys' fees) incurred by
Mortgagee in connection with the Proceeds, either to the payment of Mortgagor's
Obligations or to the restoration of the Real Property upon such conditions as
Mortgagee may require. Notwithstanding the foregoing, if the amount of Proceeds
does not exceed $250,000.00 and there is no existing uncured Event of Default
hereunder, Mortgagor shall have the right to require that the Proceeds be
applied to the restoration of the Real Property which shall be upon such
conditions as Mortgagee may require.
3.10.3 Intervention by Mortgagee. Mortgagee is hereby authorized, but not
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required, to intervene at any time in any such proceedings, settlement thereof,
or conveyance in lieu thereof, to prosecute or to settle any such proceedings or
conveyance; and to collect the Proceeds resulting therefrom; all on behalf of
and in the name of Mortgagor and Mortgagee and according to Mortgagee's sole
discretion.
3.10.4 Defense by Mortgagor. If Mortgagee does not do so under 3.10.3,
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Mortgagor shall defend, protect, and uphold the value of the Real Property and
Mortgagee's rights to receive any portion of the Proceeds attributable to the
value of the Real Property; however, Mortgagor shall consult with Mortgagee
throughout such proceedings and prior settlement thereof or any conveyance in
lieu thereof and abide by Mortgagee's directions concerning such proceedings,
settlement, or conveyance.
3.10.5 Mortgagor's Obligations. Mortgagor's obligation to make payment on
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Mortgagor's Obligations shall not abate pending any repair or restoration of the
Real Property due to the Condemnation. In addition, Mortgagor shall reimburse
Mortgagee, within 10 days after demand, for all costs, expenses, and fees
(including architect and engineer fees) incurred by Mortgagee in connection with
any repair or restoration of the Real Property due to the Condemnation.
3.10.6 Condemnation Proceeds Not Trust Funds. Notwithstanding anything in
---------------------------------------
this Mortgage or at law or equity to the contrary, none of the Proceeds paid to
Mortgagee shall be deemed trust funds, and Mortgagee shall be entitled to
dispose of such proceeds as provided in this 3.10. Mortgagor expressly assumes
all risk of loss, including a decrease in the use, enjoyment, or value, of the
Real Property from any Condemnation.
3.11 Other Mortgages and Liens.
----------------------------
3.11.1 Prior Mortgages. If any of the Property is subject or becomes
----------------
subject to a lien prior to the lien of this Mortgage, the following provisions
shall apply:
[i] Mortgagor shall pay when due all amounts required to be paid under any
obligation secured by a prior lien and shall otherwise perform all of the
obligations of Mortgagor thereunder.
[ii] Mortgagor shall not request, accept, or permit payment to Mortgagor of
any loan amount or disbursement the repayment of which is secured by any prior
mortgage without prior express written consent from Mortgagee.
[iii] Mortgagor shall be in compliance with 3.3 and 3.4 if Mortgagor pays
the Impositions and maintains the insurance coverage required under any prior
mortgage to which Mortgagee has expressly consented.
[iv] A default in any prior mortgage shall be a default under this Mortgage.
[v] Mortgagee may cure any defaults of Mortgagor under any prior mortgage or
pay, in whole or in part, any prior lien, and, to the extent of such
payments, Mortgagee shall be subrogated to the rights and lien of the prior
lien; however, any prior lien rights to which Mortgagee may become subrogated
shall not merge with the lien of this Mortgage.
3.11.2 No Merger of Liens. Mortgagee may at any time during the term of
---------------------
this Mortgage hold more than one lien against the Property or any part thereof.
All such liens held by Mortgagee shall remain separate and distinct from each
other and each shall retain its individual priority and shall not merge with any
other lien held by Mortgagee, unless and until Mortgagee executes and records an
instrument expressly merging any such liens. If a default in this Mortgage
occurs, Mortgagee may foreclose upon any lien against the Property held by it in
such order and at such times as Mortgagee may elect. If Mortgagee acquires
title to the Property other than through foreclosure of this Mortgage, the lien
of this Mortgage shall continue and shall not merge with Mortgagee's title to
the Property or interest in the Lease.
3.11.3 Subordination. (a) The lien of this Mortgage will be subordinate to
-------------
a mortgage on the Mortgagee's fee simple interest in the Real Property only to
the extent that [i] the mortgagee of such fee mortgage is an Institutional
Lender, as defined below, or the mortgage is a Purchase Money Mortgage, as
defined below, [ii] the fee mortgagee has delivered a non-disturbance agreement
in favor of Mortgagor and Mortgagee in a form acceptable to them, and [iii] such
fee mortgage shall be subject to the rights of Mortgagee with respect to the
decision to restore the Facility after a casualty and the use of insurance
proceeds and condemnation awards as set forth in 3.10.2 and 3.13.2. For
purposes hereof, "Institutional Lender" means a commercial bank, savings bank,
insurance company, real estate investment trust, pension fund or any other
commercial lending institution with assets of not less than $100,000,000,
organized under the laws of the United States or any state thereof and "Purchase
Money Mortgage" means any mortgage given as security in connection with the
purchase of the Property.
(b) This Mortgage is executed upon condition that (unless this condition
is released or waived by Landlord or its successors in interest by an instrument
in writing) no purchaser or transferee of the Lease at any foreclosure sale, or
other transfer in lieu of foreclosure, shall, as a result of such sale or
transfer, acquire any right, title, or interest in or to the leasehold estate in
which a lien is hereby created, unless Landlord shall be given notice of such
sale or transfer of the Lease, and the effective date of such sale or transfer
of the Lease, the instrument used to effect such sale or transfer shall be
promptly recorded, a duplicate original or certified copy thereof together with
the recording data shall be served upon Landlord within 10 days after the return
thereof from the office of recording and such instrument otherwise complies with
3.11.3(d).
(c) This Mortgage and all rights hereunder (except with respect to payment
and use of insurance proceeds and condemnation awards to restore the
improvements after casualty or condemnation) are and shall be subject and
subordinate to the lien of any fee mortgage held by an Institutional Lender or
any Purchase Money Mortgage to which the Lease is or may be subordinate on the
express condition, however, that the holder of the fee mortgage and Landlord
shall have complied with all requirements of the Lease with respect to such
subordination. The holder hereof shall, within 30 days after receipt of a
request therefor, at any time, execute, acknowledge, and deliver to Landlord, at
the expense of Mortgagor but without expense to Landlord, any instrument that
may be necessary or proper to confirm the subordination of this instrument and
certain rights hereunder (subject to the limitations and conditions set forth
above) to the lien of any such fee mortgage and any renewal, modification,
consolidation, replacement, or extension thereof, or of any future mortgage,
and, if the holder hereof shall fail at any time to execute, acknowledge, and
deliver any such subordination instrument within 30 days after receipt of the
request therefor, Landlord, in addition to any other remedies available to it in
consequence thereof, may execute, acknowledge, and deliver the same as the
attorney-in-fact of the holder thereof and in his name, place, and stead, and
the holder hereof appoints Landlord such attorney-in-fact for that purpose
subject to the limitations and conditions set forth above and in the Lease.
Such appointment is irrevocable as coupled with an interest.
(d) This Mortgage is executed and delivered upon the condition that no
party shall acquire any interest in the Lease in which a lien is hereby granted
unless: [i] the provisions of 3.11.3(b) have been complied with; [ii] the
instrument transferring such interest obligates such party to perform and
observe the covenants and conditions in the Lease required to be performed by
Mortgagor; [iii] such instrument is executed by such party in the manner
required to entitle a deed to recordation; and [iv] before such party shall take
possession of the leased property an executed copy of such transfer and
assumption shall be delivered to Landlord. If this Mortgage shall be held by an
Institutional Lender (as defined in 3.11.3(a)) and such Institutional Lender
shall acquire Mortgagor's interest in the Lease as a result of a sale under this
Mortgage pursuant to a judgment of foreclosure and sale, or through any transfer
in lieu of foreclosure, or through settlement of or arising out of any pending
or contemplated foreclosure action, such Institutional Lender shall have the
privilege of transferring its interest in the Lease to a nominee or a wholly
owned subsidiary corporation without the prior consent of Landlord, provided,
however, such transferee shall comply with [i], [ii], [iii] and [iv]above, and
such Institutional Lender shall be relieved of any further liability under the
Lease from and after such transfer. Such Institutional Lender or the nominee or
wholly owned subsidiary corporation to which it may have transferred the Lease,
or any other Institutional Lender which may at any time acquire the Lease, shall
be relieved of any further liability under the Lease from and after a transfer
by it of the Lease.
3.11.4 No Consent. Nothing in this 3.11 shall be construed to mean that
-----------
Mortgagee consents to any lien prior to the lien of this Mortgage. Mortgagee
consents only to the Permitted Exceptions.
3.12 Advances and Default Rate. Any payment made by Mortgagee that
----------------------------
Mortgagee has the right to make under any term of this Mortgage (except for
payments from Funds for which Funds have been deposited by Mortgagor) and
expenses incurred and payments made by Mortgagee in taking action authorized by
this Mortgage shall be indebtedness of Mortgagor secured by this Mortgage, shall
be payable upon demand, shall bear interest at the Default Rate (as defined in
the Note) from the date of disbursement, and shall be deemed advances under
subsections 2.1.3, 2.1.4 and 2.1.5.
3.13 Damage, Destruction and Rebuilding. The following provisions shall
-------------------------------------
apply except as otherwise set forth in the Lease:
3.13.1 Notice of Casualty. If the Real Property shall be destroyed, in
--------------------
whole or in part, or damaged by fire, flood, windstorm or other casualty the
cost of repair of which exceeds $100,000.00 (a "Casualty"), Mortgagor shall give
written notice thereof to Mortgagee within three business days after the
occurrence of the Casualty. Within 15 days after the occurrence of the Casualty
or as soon thereafter as such information is reasonably available, Mortgagor
shall provide the following information to Mortgagee: [i] the date of the
Casualty; [ii] the nature of the Casualty; [iii] a description of the damage or
destruction caused by the Casualty including the type of property damaged and
the area of the Improvements damaged; [iv] a preliminary estimate of the cost to
repair, rebuild, restore or replace the property or the Improvements; [v] a
preliminary estimate of the schedule to complete the repair, rebuilding,
restoration or replacement of the property or the Improvements; [vi] a
description of the anticipated property insurance claim including the name of
the insurer, the insurance coverage limits, the deductible amount, the expected
settlement amount, and the expected settlement date; and [vii] a description of
the business interruption claim including the name of the insurer, the insurance
coverage limits, the deductible amount, the expected settlement amount, and the
expected settlement date. Within five business days after request from
Mortgagee, Mortgagor will provide Mortgagee with copies of all correspondence to
the insurer and any other information reasonably requested by Mortgagee.
3.13.2 Application of Insurance Proceeds. Mortgagee may elect either to [i]
---------------------------------
require the Mortgagor to rebuild or repair the property or the Improvements
according to plans and specifications approved in writing by Mortgagee and upon
such conditions as Mortgagee may reasonably require; or [ii] apply the net
proceeds of insurance against the Mortgagor's Obligations to be credited as set
forth in the Note. Notwithstanding the foregoing, if the amount of insurance
proceeds does not exceed $250,000.00 and there is no existing uncured Event of
Default hereunder, Mortgagor shall have the right to require that the proceeds
be applied to the restoration of the property or the Improvements which shall be
upon such conditions as Mortgagee may require. All net proceeds of insurance
policies resulting from claims for casualty to the Real Property, Improvements
or any element thereof shall be paid to and held by Mortgagee subject to the
provisions of this Mortgage.
3.13.3 Repair. In the event Mortgagee elects to have the property or the
------
Improvements rebuilt or repaired [i] the Mortgagor shall promptly repair or
rebuild the property or the Improvements in a good and workmanlike manner, in
compliance with all laws and regulations, and in accordance with plans and
specifications, construction budget and construction schedule approved by
Mortgagee; and [ii] Mortgagee shall apply so much of the net proceeds of such
insurance as may be necessary to pay or reimburse the costs of such repair or
rebuilding, either on completion thereof or as the work progresses.
3.13.4 Insufficient Proceeds. If the proceeds of any insurance settlement
----------------------
are not sufficient to pay the costs of such repair, rebuilding or restoration in
full, Mortgagor shall deposit with Mortgagee at Mortgagee's option, and within
10 days of Mortgagee's request, an amount sufficient in Mortgagee's judgment to
complete such repair, rebuilding or restoration. Mortgagor shall not, by reason
of the deposit or payment, be entitled to any reimbursement from Mortgagee or
diminution in or postponement of the payments to Mortgagee on the Note.
3.13.5 No Abatement; Expenses. Mortgagor's obligation to make payments on
------------------------
Mortgagor's Obligations shall not abate pending the repairs or rebuilding of the
property or the Improvements. Mortgagor shall pay the costs, expenses and fees
of any architect or engineer employed by Mortgagee to review any plans and
specifications and to supervise and approve the repairs or rebuilding of the
property or the Improvements.
3.13.6 Not Trust Funds. Notwithstanding anything herein or at law or equity
---------------
to the contrary, none of the insurance proceeds paid to Mortgagee as herein
provided shall be deemed trust funds, and Mortgagee shall be entitled to dispose
of such proceeds as provided in this 3.13. Mortgagor expressly assumes all
risk of loss, including a decrease in the use, enjoyment or value, of the
Project from any casualty whatsoever, whether or not insurable or insured
against.
3.14 Existence. Mortgagor shall maintain its existence, unless, in the case
---------
of a merger or consolidation by Mortgagor, the surviving entity in such merger
has a net worth immediately after the merger or consolidation at least equal to
that of the Mortgagor immediately prior thereto.
ARTICLE 4: TRANSFER OF THE PROPERTY; ASSUMPTION
4.1 Mortgagor's Successors. This Mortgage shall be binding upon Mortgagor's
----------------------
successors and assigns and shall be binding upon and inure to the benefit of
Mortgagee and its successors and assigns; however, Mortgagor may neither assign
Mortgagor's rights under this Mortgage nor delegate Mortgagor's duties under
this Mortgage without the express written consent of Mortgagee.
4.2 No Transfer. Mortgagor shall not sell, lease, grant a lien on or
------------
security interest in, or otherwise transfer or encumber all or any part of the
Property or any legal or equitable interests therein without the prior written
consent of Mortgagee, or transfers made in accordance with the terms of the
Lease, if any.
4.3 No Release of Mortgagor. No sale, transfer, or encumbrance of the
--------------------------
Property or of Mortgagor's rights under this Mortgage and the Note and no
delegation of Mortgagor's obligations under this Mortgage or any other
Mortgagor's Obligations shall release Mortgagor from liability for any
Mortgagor's Obligations unless: [i] Mortgagee and such transferee or delegee
agree in writing that such transferee or delegee is satisfactory to Mortgagee
and that such transferee or delegee shall perform Mortgagor's Obligations and
pay such interest thereon as Mortgagee may request, and [ii] Mortgagee delivers
to Mortgagor a written release.
ARTICLE 5: LEASES AND RENTS
5.1 Assignment of Rents. Mortgagor hereby authorizes Mortgagee or
---------------------
Mortgagee's agents to collect the Rents and hereby directs each tenant of the
-
Property to pay the Rents to Mortgagee or Mortgagee's agents; provided, however,
that prior to the occurrence and continuance of an Event of Default under this
Mortgage, Mortgagor shall collect and receive all Rents as trustee for the
benefit of Mortgagee and Mortgagor, shall apply the Rents so collected to the
amount then due and payable under this Mortgage with a balance, so long as no
Event of Default has occurred and is continuing, to the account of Mortgagor, it
being intended by Mortgagor and Mortgagee that this assignment of Rents
constitutes an absolute assignment and not an assignment for additional security
only. Upon the occurrence of an Event of Default and during the continuance and
without the necessity of Mortgagee entering upon and taking and maintaining full
control of the Property in person, by agent or by a receiver, Mortgagee shall
immediately be entitled to possession of all Rents as the same become due and
payable, including but not limited to, Rents then due and unpaid, and all such
Rents shall immediately upon delivery be held by Mortgagor as trustee for the
benefit of Mortgagee only. Mortgagor agrees that after an Event of Default has
occurred, each tenant of the Property shall pay such Rents to Mortgagee or
Mortgagee's agent on Mortgagee's written demand to each tenant therefor,
delivered to each tenant personally or by mail, without any liability on the
part of said tenant to inquire further as to the existence of a default by
Mortgagor. Mortgagor hereby covenants that Mortgagor has not executed any prior
assignment of Rents, that Mortgagor has not performed, and will not perform any
acts which would prevent Mortgagee from exercising its rights under this
section. Mortgagor covenants that Mortgagor will not hereafter collect or
accept payment of any Rents more than one month prior to the due dates of such
Rents nor (excepting payment of arrears) in an amount referable to a period
exceeding one month. Mortgagor further covenants that Mortgagor will execute
and deliver to Mortgagee such further assignments of Rents as Mortgagee may from
time to time request.
5.2 Compliance with Leases. Mortgagor shall comply with all Leases and
------------------------
shall notify Mortgagee if Mortgagor is unable to do so or determines that it
will be unable to do so for any significant terms. Mortgagee may do whatever it
determines is necessary to insure that all Leases continue in effect whenever
Mortgagee determines that Mortgagor is or may be unable to perform any
significant term of the Leases.
5.3 Modification of Leases. Mortgagor shall not materially amend, modify or
----------------------
cancel the Lease nor significantly change the terms of any other Lease and shall
not materially reduce any rent (other than rent payable by Mortgagor under the
Lease) without the prior written consent of Mortgagee. Without limiting the
foregoing, if a petition in bankruptcy is filed by or against Landlord and the
Lease is rejected by Landlord pursuant to such bankruptcy proceeding, Mortgagor
shall have no right to treat the Lease as terminated pursuant to such rejection
without the prior written consent of Mortgagee.
5.4 No Delegation of Mortgagor's Duties and Indemnity. Mortgagor does not
---------------------------------------------------
hereby delegate to Mortgagee Mortgagor's duties under the Leases and Mortgagee
shall not be obligated to discharge such duties. Mortgagor shall indemnify
Mortgagee and hold it harmless from all claims, regardless of merit, in any way
arising out of the Leases and the assignment to Mortgagee of the Leases and
Rents and any expenses related to such claims, including, without limitation,
reasonable attorneys' fees. Mortgagor shall reimburse Mortgagee for any claims
paid or reasonable expenses incurred by Mortgagee which fall within the
preceding indemnity immediately upon demand.
5.5 Subordination of Leases. All Leases and the rights of tenants
-------------------------
thereunder shall be subordinate to the lien of this Mortgage and to all terms,
-
conditions and provisions hereof, and to any renewal, consolidation, extension,
modification or replacement hereof, and every Lease shall provide for such
subordination therein.
5.6 Attornment. The tenant of any Lease shall attorn to anyone, including
----------
Mortgagee, who acquires the lessor's interest in the Lease and the Property
("Purchaser"), whether by foreclosure sale or otherwise. The tenant's
attornment shall be effective immediately upon the Purchaser's succession to the
lessor's interest and the Lease shall continue in effect between Purchaser as
lessor and the tenant without any further act of Purchaser, Mortgagee or the
tenant. Purchaser shall have no liability for any act, omission or obligation
of the previous lessor. Except as otherwise set forth in the Lease, every Lease
shall provide for such attornment therein.
5.7 Notice of Lease Default. If at any time Mortgagor receives notice of a
------------------------
default, breach, termination or claim of eviction (actual or constructive) from
Landlord under the Lease or from any tenant under any other Lease, Mortgagor
shall deliver a copy of such notice to Mortgagee within two business days after
Mortgagor's receipt of such notice; provided, however, this 5.7 shall not apply
at any time that Mortgagee and Landlord are the same party.
ARTICLE 6: DEFAULT, ACCELERATION AND REMEDIES
6.1 Event of Default. Any one or more of the following events shall
------------------
constitute an "Event of Default" hereunder:
6.1.1 Mortgagor fails to pay any installment on the Note or any other
monetary obligation payable by Mortgagor under the Loan Documents within 10 days
after such payment is due.
6.1.2 Mortgagor fails to comply with any covenant set forth in 3.14 hereof.
6.1.3 Mortgagor fails to observe and perform any other covenant, condition
or agreement under the Loan Documents to be performed by Mortgagor and [i] such
failure continues for a period of 30 days after written notice thereof is given
to the Mortgagor by the Mortgagee; or [ii] if, by reason of the nature of such
default the same cannot be remedied within the said 30 days, Mortgagor fails to
proceed with diligence reasonably satisfactory to Mortgagee after receipt of the
notice to cure the same or, in any event, fails to cure such default within 60
days after receipt of the notice. The foregoing notice and cure provisions do
not apply to any Event of Default otherwise specifically described in any other
subsection of 6.1.1.
6.1.4 [i] The filing by Mortgagor of a petition under 11 U.S.C. or the
commencement of a bankruptcy or similar proceeding by Mortgagor: [ii] the
failure by Mortgagor within 60 days to dismiss an involuntary bankruptcy
petition or other commencement of a bankruptcy, reorganization or similar
proceeding against Mortgagor, or to lift or stay any execution, garnishment or
attachment of such consequences as will impair its ability to carry on its
operation at a Facility; [iii] the entry of an order for relief under 11 U.S.C.
in respect of Mortgagor; [iv] any assignment by Mortgagor for the benefit of its
creditors; [v] the entry by Mortgagor into an agreement of composition with its
creditors; [vi] the approval by a court of competent jurisdiction of a petition
applicable to Mortgagor in any proceeding for its reorganization instituted
under the provisions of any state or federal bankruptcy, insolvency or similar
laws; or [vii] appointment by final order, judgment or decree of a court of
competent jurisdiction of a receiver of the whole or any substantial part of the
properties of Mortgagor (provided such receiver shall not have been removed or
discharged within 60 days of the date of his qualification).
6.1.5 [i] Any receiver, administrator, custodian or other person takes
possession or control of all or part of any Facility and continues in possession
for 60 days; [ii] any writ against all or part of any Facility is not released
within 60 days; [iii] any final judgment is rendered against all or part of any
Facility or Mortgagor which affects all or part of a Facility for the payment of
money in excess of $250,000.00 (exclusive of judgment amounts covered by
insurance) which is undismissed for 60 days (except as otherwise provided in
this Agreement) or such longer period during which execution of the same shall
have been stayed, appealed therefrom and cause the execution thereof to be
stayed during such appeal; [iv] all or a substantial part of the assets of
Mortgagor are attached, seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors and are not released within 60 days; [v]
Mortgagor is enjoined, restrained or in any way prevented by court order or any
proceeding is filed or commenced seeking to enjoin, restrain or in any way
prevent Mortgagor from conducting all or a substantial part of its business or
affairs; or [vi] except as otherwise permitted hereunder, a final notice of
lien, levy or assessment is filed of record with respect to all or any part of a
Facility and is not dismissed within 30 days.
6.1.6 Any material representation or warranty made by Mortgagor in the Loan
Documents, any security for the Loan, or any report, certificate, application,
financial statement or other instrument furnished by Mortgagor pursuant hereto
or thereto shall prove to be false, misleading or incorrect in any material
respect as of the date made.
6.1.7 Mortgagor defaults on any indebtedness or obligation to Mortgagee or
Landlord including, but not limited to the Leases, any agreement with Mortgagee
or Landlord, which is not cured within any applicable cure period. This
provision applies to all such indebtedness, obligations and agreements as they
may be amended, modified, extended or renewed from time to time.
6.1.8 An Event of Default under any loan shown as a Permitted Exception.
6.2 Rights and Remedies Upon Default. Whenever any Event of Default occurs,
--------------------------------
Mortgagee may take any one or more of the following remedial steps concurrently
or successively in addition to any other remedies under the Loan Documents, at
law or in equity, to the extent permitted by applicable law.
6.2.1 The Secured Obligations shall be immediately due and payable, without
presentment of any kind, demand, notice of dishonor, protest, notice of default,
notice of intention to accelerate maturity, notice of acceleration of maturity
or other notice of any kind, all of which Mortgagor hereby waives.
6.2.2 Mortgagee may enter and take possession of the Real Property without
terminating this Mortgage, and complete construction of the Improvements (or any
part thereof) and perform the obligations of Mortgagor under the Loan Documents.
6.2.3 To the extent permitted by law and in accordance with all applicable
law, Mortgagee may exercise its power of sale.
6.2.4 Mortgagee may foreclose this Mortgage or accept delivery of a deed in
lieu of foreclosure. In any foreclosure or sale, Mortgagee shall be under no
obligation either to marshal any assets of the Mortgagor or to marshal any
portions of the Property.
6.2.5 Mortgagee may sue Mortgagor directly to collect any monies then due
and may take any action at law or equity (including bringing an action for a
mandatory injunction, restraining order or specific performance) to enforce
performance of Mortgagor's Obligations.
6.2.6 For any security in which no interest arises under real estate law,
Mortgagee may exercise its rights as a secured party under Article 9. Mortgagor
agrees that a commercially reasonable manner of disposition of the Property
subject to security interests under Article 9 shall include, without limitation
and at the option of Mortgagee, the sale of the Property in whole or in part,
concurrently with the foreclosure sale of the Property in accordance with the
provisions of this Mortgage.
6.2.7 Mortgagee may terminate its obligation to disburse loan proceeds.
6.2.8 Mortgagee may, and is hereby authorized by Mortgagor, at any time or
from time to time, to the fullest extent permitted by law, without advance
notice to Mortgagor (any such notice being expressly waived by Mortgagor) to
set-off and apply any and all sums held by Mortgagee, any indebtedness of
Mortgagee to Mortgagor, any and all claims by Mortgagor against Mortgagee,
against any obligations of Mortgagor hereunder, and against claims by Mortgagee
against Mortgagor, whether or not such obligations or claims of Mortgagor are
matured and whether or not Mortgagee has exercised any other remedies hereunder.
6.2.9 In any action or proceeding to foreclose this Mortgage, or upon actual
or threatened waste to any part of the Property, Mortgagee may apply, without
notice to Mortgagor, for the appointment of a receiver ("Receiver") of the
business conducted by Mortgagor on the Real Property. Unless prohibited by law,
such appointment may be made either before or after sale, without notice,
without regard to the solvency or insolvency of Mortgagor at the time of
application for such Receiver and without regard to the then value of the
Property, and Mortgagee may be appointed as Receiver. The Receiver shall have
the power to collect the rents, issues and profits of the business conducted by
Mortgagor on the Real Property during the pendency of the foreclosure and, in
case of a sale and deficiency during the full statutory period of redemption,
whether there be redemption or not, as well as during any future times, if any,
when Mortgagor, except for the intervention of such Receiver, would be entitled
to collect such rents, issues and profits, and all other powers which may be
necessary or are usual in such cases for the protection, possession, control,
management and operation of the business conducted by Mortgagor on the Real
Property during the whole of said proceeding. All sums of money received by the
Receiver from such rents and income, after deducting therefrom the reasonable
charges and expenses paid or incurred in connection with the collection and
disbursement thereof, shall be applied to the payment of the Secured Obligations
or applied to remedy any default hereunder as Mortgagee may direct. Mortgagor,
if requested to do so, will consent to the appointment of any such Receiver as
aforesaid.
6.2.10 Mortgagee may obtain control over and collect all accounts, contract
rights, instruments, documents, or chattel paper of Mortgagor now owned or
existing or hereafter arising or acquired (the "Receivables") and apply the
proceeds of the collections to satisfaction of the Secured Obligations unless
prohibited by law. Mortgagor appoints Mortgagee or its designee as attorney for
Mortgagor with powers [i] to receive, to indorse, to sign and/or to deliver, in
Mortgagor's name or Mortgagee's name, any and all checks, drafts, and other
instruments for the payment of money relating to the Receivables, and to waive
demand, presentment, notice of dishonor, protest, and any other notice with
respect to any such instrument; [ii] to sign Mortgagor's name on any invoice or
bill of lading relating to any Receivable, drafts against account debtors,
assignments and verifications of Receivables, and notices to account debtors;
[iii] to send verifications of Receivables to any account debtor; and [iv] to do
all other acts and things necessary to carry out this Mortgage. Mortgagee shall
not be liable for any omissions, commis-sions, errors of judgment, or mistakes
in fact or law made in the exercise of any such powers. At Mortgagee's option,
Mortgagor shall [i] provide Mortgagee a full accounting of all amounts received
on account of Receivables with such frequency and in such form as Mortgagee may
require, either with or without applying all collections on Receivables in
payment of Mortgagor's Obligations secured hereby or [ii] deliver to Mortgagee
on the day of receipt all such collections in the form received and duly
indorsed by Mortgagor. At Mortgagee's request, Mortgagor shall institute any
action or enter into any settlement determined by Mortgagee to be necessary to
obtain recovery or redress from any account debtor in default of Receivables.
Mortgagee may give notice of its security interest in the Receivables to any or
all account debtors with instructions to make all payments on Receivables
directly to Mortgagee, thereby terminating Mortgagor's authority to collect
Receivables. After terminating Mortgagor's authority to enforce or collect
Receivables, Mortgagee shall have the right to take possession of any or all
Receivables and records thereof and is hereby authorized to do so, and only
Mortgagee shall have the right to collect and enforce the Receivables. Prior to
the occurrence of an Event of Default, at Mortgagor's cost and expense, but on
behalf of Mortgagee and for Mortgagee's account, Mortgagor shall collect or
otherwise enforce all amounts unpaid on Receivables and hold all such
collections in trust for Mortgagee, but Mortgagor may commingle such collections
with Mortgagor's own funds, until Mortgagor's authority to do so has been
terminated, which may be done only after an Event of Default. Notwithstanding
any other provision hereof, Mortgagee does not assume any of Mortgagor's
obligations under any Receivable, and Mortgagee shall not be responsible in any
way for the performance of any of the terms and conditions thereof by Mortgagor.
6.2.11 Mortgagee may take any other action which Mortgagee is entitled to
take under any law, equity, or the Loan Documents
6.2.12 Mortgagee may, at its option, but without any obligation so to do,
and without waiving or releasing Mortgagor from any of the agreements and
covenants in the Loan Documents, pay any sum or perform any act or take such
action as Mortgagee may deem necessary or desirable in order to protect the lien
of this Mortgage, the Property or otherwise in the sole discretion of Mortgagee.
Mortgagor hereby grants to Mortgagee, and agrees that Mortgagee shall have,
after the occurrence of one or more Events of Default, the absolute and
immediate right to enter in and upon the Real Property or any part thereof to
such extent and as often as Mortgagee, in its sole discretion, deems necessary
or desirable for such purpose. Mortgagee may pay and expend such sums of money
as it may, in its sole discretion, deem necessary for the purposes stated
herein. Mortgagor hereby agrees to pay to Mortgagee, on demand, all such sums
so paid or expended by Mortgagee, together with interest thereon from the date
of each such payment or expenditure at the default rate specified in the Note.
6.3 Sale of Property. The following provisions apply to any sale of the
------------------
Property pursuant to this Article 6 or pursuant to any judicial proceeding.
6.3.1 Receipt Sufficient Discharge for Purchaser. The receipt of the court
-------------------------------------------
officer or other person conducting any such sale for the purchase money paid at
any such sale shall be sufficient discharge thereof to any purchaser of the
Property, or any part thereof, sold as aforesaid. No such purchaser or his
representatives, grantees or assigns, after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money upon or for purpose of this Mortgage, or shall be answerable in
any matter whatsoever for any loss, misapplication or non-application of any
such purchase money or any part thereof, nor shall any such purchaser be bound
to inquire as to the necessity or expediency of any such sale.
6.3.2 Mortgagee's Purchase of Property. Mortgagee or any holder of the Note
--------------------------------
may bid for and purchase the Property being sold, and upon compliance with the
terms of sale, Mortgagee or any holder of the Note may hold, retain, possess and
dispose of such Property in its own absolute right without further
accountability.
6.3.3 Application of Proceeds of Sale. Unless Mortgagee elects otherwise,
---------------------------------
the purchase money or proceeds of any such sale shall be applied: first, to all
charges, expenses and fees payable by Mortgagor under the Loan Documents,
including all attorney's fees, Receiver's fees and other costs and expenses
incurred by Mortgagee, with interest thereon at the default rate specified in
the Note; second, to all unpaid interest accrued on any of the Secured
Obligations; third, to the principal amount outstanding of the Secured
Obligations; and the balance, if any, to Mortgagor.
6.3.4 No Defense; Waiver. Failure to join or to provide notice to tenants
--------------------
under any Leases as defendants in any foreclosure action or suit shall not [i]
constitute a defense to such foreclosure; [ii] preclude Mortgagee from obtaining
a deficiency judgment or otherwise reduce or diminish the amount of any such
judgment in any manner whatsoever; or [iii] give rise to any claims by
Mortgagor, or any person claiming through or under Mortgagor, against Mortgagee.
Upon the request of Mortgagee and to the extent not prohibited by applicable
law, Mortgagor shall execute and file with the clerk of the court a legally
sufficient waiver of any statutory waiting period with respect to the execution
of a judgment obtained by Mortgagee in connection with any foreclosure
proceedings. The obligations of Mortgagor to so execute and file such waiver
shall survive the termination of this Mortgage.
6.3.5 Value of Property. At any judicial or other sale of the Property, the
-----------------
purchase price paid for the Property by Mortgagee or any other purchaser shall
be conclusive evidence of the value of the Property and Mortgagee shall have an
absolute right to obtain a deficiency judgment of all amounts due under the
Secured Obligations in excess of the amount of such purchase price. Mortgagor
waives the right to contest the value of the Property through appraisals or
otherwise.
ARTICLE 7: MISCELLANEOUS
7.1 Advances by Mortgagee. At any time and from time to time during the
-----------------------
term of this Mortgage, Mortgagee may incur and/or pay and/or advance costs or
expenses: [i] incurred or advanced by Mortgagee which Mortgagee is authorized
or has the right (but not necessarily the obligation) to incur or may incur
under any term of any Loan Document or any law; [ii] of whatever nature incurred
or advanced by Mortgagee in exercising any right or remedy provided by any term
of any Loan Document or in taking any action which Mortgagee is authorized to
take by any term of any Loan Document; [iii] required to be paid by Mortgagor by
any term of any Loan Document, but which Mortgagor fails to pay upon demand; or
[iv] any and all costs and expenses from which Mortgagor is required to hold
Mortgagee harmless by any term of any Loan Document, but from which Mortgagor
fails to hold Mortgagee harmless. Any reasonable costs, expenses, or advances
incurred or paid by Mortgagee shall become part of the loan and, upon demand,
shall be paid to Mortgagee together with interest thereon at the default rate
specified in the Note from the date of disbursement by Mortgagee. Payment of
such costs, expenses, or advances shall be secured by this Mortgage.
7.2 Power of Attorney. Except as otherwise set forth in the Lease,
-------------------
Mortgagor hereby irrevocably and unconditionally appoints Mortgagee, or
Mortgagee's authorized officer, agent, employee or designee, as Mortgagor's true
and lawful attorney-in-fact, to act for Mortgagor in Mortgagor's name, place,
and stead, to execute, deliver and file [i] all applications and any and all
other necessary documents and instruments in order to convey the Property in fee
simple to any purchaser upon foreclosure sale of the Property, to effect the
issuance, transfer, reinstatement, renewal and/or extension of any and all
certificates of need, licenses, and other governmental authorizations issued to
Mortgagor in connection with Mortgagor's operation of the Property to permit any
transferee to operate the Property under such governmental authorizations; [ii]
financing statements and continuation statements with such filing offices as
Mortgagee deems necessary or desirable to further evidence and perfect
Mortgagee's security interest in the personal property collateral granted
pursuant to this Mortgage Instrument; and [iii] to do any and all other acts
incidental to any of the foregoing. Mortgagor irrevocably and unconditionally
grants to Mortgagee as its attorney-in-fact full power and authority to do and
perform every act necessary and proper to be done in the exercise of any of the
foregoing powers as fully as Mortgagor might or could do if personally present
or acting, with full power of substitution, hereby ratifying and confirming all
that said attorney shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and is irrevocable prior to the
full performance of Mortgagor's Obligations. Except in the case of an
emergency, Mortgagee shall give Mortgagor three business days prior written
notice before acting on behalf of Mortgagor pursuant to this power of attorney.
7.3 Attorney's Fees and Expenses. Mortgagor shall pay all reasonable costs
-----------------------------
and expenses incurred by Mortgagee in administering the Secured Obligations and
all collateral for the Secured Obligations, enforcing or preserving Mortgagee's
rights under the Note, this Mortgage, any guaranty of Mortgagor's Obligations,
and all other Loan Documents, and in all matters of collection, whether or not
an Event of Default has actually occurred or has been declared and thereafter
cured, including but not limited to, [i] the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency or other
similar proceeding; [ii] attorney and paralegal fees and disbursements; [iii]
the expenses of Mortgagee and its employees, agents, attorneys, and witnesses in
preparing for litigation, administrative, bankruptcy, insolvency or other
proceedings and for lodging, travel and attendance at meetings, hearings,
depositions, and trials in connection therewith; [iv] court costs; and [v]
consulting and witness fees and expenses incurred by Mortgagee in connection
with any such proceedings. All such costs, charges and fees as incurred shall
be deemed to be secured by this Mortgage and collectible out of the proceeds of
this Mortgage in any manner permitted by law or by this Mortgage.
7.4 Construction of Rights and Remedies and Waiver of Notice and Consent.
-----------------------------------------------------------------------
7.4.1 The provisions of this part 7.4 shall apply to all rights and
remedies provided by this Mortgage or any Loan Document or by law or equity.
7.4.2 Waiver of Notices and Consent to Remedies. Unless otherwise expressly
------------------------------------------
provided herein or in the other Loan Documents, any right or remedy may be
pursued without notice to or further consent of Mortgagor, both of which
Mortgagor waives.
7.4.3 Each right or remedy under the Loan Documents is distinct from but
cumulative to each other right or remedy and may be exercised independently of,
concurrently with, or successively to any other rights and remedies.
7.4.4 No extension of time for or modification of amortization of the loan
shall release the liability or bar the availability of any right or remedy
against Mortgagor or any successor in interest, and Mortgagee shall not be
required to commence proceedings against Mortgagor or any successor or to extend
time for payment or otherwise to modify amortization of the loan secured by this
Mortgage by reason of any demand by Mortgagor or any successor.
7.4.5 Mortgagee has the right to proceed at its election against all
security or against any item or items of such security from time to time, and no
action against any item or items of security shall bar subsequent actions
against any item or items of security.
7.4.6 No forbearance in exercising any right or remedy shall operate as a
waiver thereof; no forbearance in exercising any right or remedy on any one or
more occasion shall operate as a waiver thereof on any further occasion; and no
single or partial exercise of any right or remedy shall preclude any other
exercise thereof or the exercise of any other right or remedy.
7.4.7 Failure by Mortgagee to insist upon the strict performance of any of
the covenants and agreements herein set forth or to exercise any rights or
remedies upon default by Mortgagor hereunder shall not be considered or taken as
a waiver or relinquishment for the future of the right to insist upon and to
enforce by mandamus or other appropriate legal or equitable remedy strict
compliance by Mortgagor with all of the covenants and conditions hereof, or of
the rights to exercise any such rights or remedies, if such default by Mortgagor
is continued or repeated, or of the right to recover possession of the Property
by reason thereof. To the extent permitted by law, any two or more of such
rights or remedies may be exercised at the same time.
7.4.8 If any covenant or agreement contained in any Loan Document is
breached by Mortgagor and thereafter waived by Mortgagee, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder. No waiver shall be binding unless it is in writing and
signed by Mortgagee. No course of dealing between Mortgagee and Mortgagor, nor
any delay or omission on the part of Mortgagee in exercising any rights under
any of the Loan Documents, shall operate as a waiver.
7.4.9 Pursuant to this Mortgage, Mortgagor has granted to Mortgagee a
security interest in the personal property and Fixtures comprising a part of the
Property to further secure the Secured Obligations. Mortgagor hereby authorizes
Mortgagee to file financing and continuation statements with respect to such
collateral (including Fixtures) in which Mortgagor has an interest, without the
signature of Mortgagor whenever lawful, and upon request, Mortgagor shall
promptly execute financing and continuation statements in form satisfactory to
Mortgagee to perfect and maintain perfected Mortgagee's security interest in
such collateral, and shall pay all filing fees in connection therewith. If
Mortgagor fails to execute any such statement pursuant to Mortgagee's request,
Mortgagee may execute such statement as Mortgagor's attorney-in-fact pursuant to
the power of attorney made by Mortgagor under 7.2 hereof. In the event of the
occurrence of one or more Events of Default, Mortgagee, pursuant to the
applicable provision of Article 9, shall have the option of proceeding as to
both real and personal property in accordance with its rights and remedies in
respect of the Property, in which event the default provisions of Article 9
shall not apply. The parties agree that in the event Mortgagee elects to
proceed with respect to collateral constituting personal property or Fixtures
separately from the other Property, the giving of five days' notice by
Mortgagee, sent by an overnight mail service, postage prepaid, to Mortgagor at
its address referred to in the introductory paragraph herein, designating the
place and time of any public sale or the time after which any private sale or
other intended disposition of such collateral is to be made, shall be deemed to
be reasonable notice thereof and Mortgagor waives any other notice with respect
thereto.
7.4.10 Mortgagor and any other person now or hereafter obligated for the
payment or performance of all or any part of the Note shall not be released from
paying and performing under the Note, and the lien of this Mortgage shall not be
affected by reason of [i] the failure of Mortgagee to comply with any request of
Mortgagor (or of any other person so obligated), to take action to foreclose
this Mortgage or otherwise enforce any of the provisions of this Mortgage or of
any of the Secured Obligations, or [ii] the release, regardless of
consideration, of the obligations of any person liable for payment or
performance of the Note, or any part thereof, or [iii] any agreement or
stipulation extending the time of payment or modifying the terms of the Note,
and in the event of such agreement or stipulation, Mortgagor and all such other
persons shall continue to be liable under such documents, as amended by such
agreement or stipulation, unless expressly released and discharged in writing by
Mortgagee.
7.4.11 Mortgagor, for itself and its successors and assigns, hereby
irrevocably waives and releases, to the extent permitted by law, and whether now
or hereafter in force, [i] the benefit of any and all valuation and appraisement
laws, [ii] any right of redemption after the date of any sale of the Property
upon foreclosure, whether statutory or otherwise, in respect of the Property,
[iii] any applicable homestead or dower laws, and [iv] all exemption laws
whatsoever and all moratoriums, extensions or stay laws or rules, or orders of
court in the nature of any one or more of them.
7.4.12 Nothing contained in any of the Loan Documents shall constitute any
consent or request by Mortgagee, express or implied, for the performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof, or be construed to permit the
making of any claim against Mortgagee in respect of labor or services or the
furnishing of any materials or other property or any claim that any lien based
on the performance of such labor or services or the furnishing of any such
materials or other property is prior to the lien of this Mortgage.
7.5 Notices. All notices, demands, requests, and consents (hereinafter
-------
"notices") given pursuant to the terms of this Mortgage shall be in writing,
shall be addressed to the addresses set forth in the introductory paragraph of
this Mortgage and shall be served by [i] personal delivery; [ii] United States
mail, postage prepaid; or [iii] nationally recognized overnight courier. All
notices shall be deemed to be given upon the earlier of actual receipt or three
days after mailing or one business day after deposit with the overnight courier.
Any notices meeting the requirements of this section shall be effective,
regardless of whether or not actually received. Mortgagee and Mortgagor may
change their notice address at any time by giving the other party written notice
of such change.
7.6 Amendment. This Mortgage may only be amended by a writing signed by
---------
Mortgagee and Mortgagor. All references to this Mortgage, whether in this
Mortgage or in any other document or instrument, shall be deemed to incorporate
all amendments, modifications and renewals of this Mortgage made after the
Effective Date.
7.7 Waivers Relating to Financing.
--------------------------------
7.7.1 Mortgagor [i] acknowledges that Mortgagee would not have extended to
Mortgagor the credit giving rise to Secured Obligations (the "Credit") and will
not continue to extend Credit to Mortgagor but for this Mortgage; [ii] warrants
that Mortgagor has given this Mortgage to induce Mortgagee to extend and to
continue to extend Credit to Mortgagor; [iii] agrees that Mortgagee may rely on
this Mortgage in extending future Credit to Mortgagor; [iv] warrants that
Mortgagor has received good and valuable consideration for this Mortgage; [v]
waives acceptance of this Mortgage; [vi] warrants that Mortgagor has not given
this Mortgage in reliance upon the existence of any other security for or
guaranty of the Secured Obligations or anyone liable for performing the Secured
Obligations (collectively the "Security"); [vii] acknowledges receipt of notice
of all Credit extended before this date; [viii] waives notice of any Credit
extended after this date; and [ix] waives protest and any other notice of
failure to pay any Credit or to perform any agreement relating to any Credit or
security for or guaranty of the Secured Obligations.
7.7.2 Mortgagor [i] warrants that Mortgagor has not relied on any
information about the Security, any mortgagor, or the Credit provided directly
or indirectly by Mortgagee; [ii] warrants that Mortgagor is familiar with the
Security; [iii] warrants that Mortgagor has had ample opportunity to investigate
the Security, and the effect that the Credit will have; [iv] warrants that
Mortgagor has been provided all information concerning the Security that
Mortgagor has requested; [v] warrants that Mortgagor has had adequate
opportunity to seek and evaluate professional advice concerning the Security,
and this Mortgage from advisors of Mortgagor's choosing, including financial and
legal advice; [vi] agrees that Mortgagor shall not rely on any information
provided by Mortgagee about the Security, including any other mortgagor; [vii]
shall continue to investigate and evaluate the Security independently throughout
the term of this Mortgage; and [viii] acknowledges that Mortgagee has no
obligation to provide Mortgagor any information about the Security.
7.7.3 Without notice to or consent of Mortgagor, Mortgagee may do or refrain
from doing anything affecting any Credit or any Security including the
following: [i] granting or not granting any indulgences to anyone liable for
payment of any Credit or any Security; [ii] failing to get or to perfect any
Security; [iii] failing to get an enforceable agreement to repay any Credit;
[iv] releasing any Security or anyone or any property from liability for payment
of any Credit; [v] changing any agreement relating to any Credit or any
Security; [vi] extending the time for payment of any Credit including extending
the time beyond the term of the notes or other documents evidencing the Secured
Obligations; or [vii] delaying in enforcing or failing to enforce any rights to
payment of any Credit or rights against any Security.
7.7.4 Mortgagor's obligations under this Mortgage shall not be affected by
[i] any default in any document concerning any Secured Obligations or Security
when accepted by Mortgagee or arising anytime thereafter; [ii] the
unenforceability of or defect in any Security or document relating to any
Secured Obligations; [iii] any decline in the value of any Security; or, [iv]
the death, incompetence, insolvency, dissolution, liquidation, or winding up of
affairs of Mortgagor, or anyone liable for any Security or any Secured
Obligations or the start of insolvency proceedings by or against any such person
or entity.
7.7.5 WAIVER OF SURETY'S DEFENSES. MORTGAGOR WAIVES ALL SURETYSHIP AND
------------------------------
OTHER SIMILAR DEFENSES.
ARTICLE 8: INTERPRETATION
8.1 Captions. The captions and headings contained in this Mortgage are for
--------
convenient reference only and are not to be used to interpret or define the
provisions hereof.
8.2 Severability. If any provision of this Mortgage or the application
------------
thereof to any party or circumstance shall, to any extent, be adjudged to be
invalid or unenforceable, the remainder of this Mortgage and the application of
any such provision to other parties or circumstances shall not be affected
thereby, and each provision of this Mortgage shall be valid and enforceable to
the fullest extent permitted by law.
8.3 Governing Law. This Mortgage and the rights and obligations of the
--------------
parties hereunder shall be governed by and construed and interpreted in
accordance with the laws of the state where the Real Property is located.
8.4 Survival. All agreements, representations, and warranties contained in
--------
this Mortgage shall survive the execution and delivery of this Mortgage, and
shall be deemed to be effective continuously throughout the term of this
Mortgage Instrument.
ARTICLE 9: CONSTRUCTION
9.1 No Liability for Mortgagee. Mortgagor hereby acknowledges and agrees
-----------------------------
that the undertaking of Mortgagee under this Mortgage is limited as follows:
(a) Mortgagee is not and will not be in any way the agent for or trustee of
Mortgagor. Mortgagee's purpose in making the requirements set forth herein is
to protect the validity and priority of this Mortgage and the value of its
security.
(b) This Mortgage is not to be construed by Mortgagor or anyone furnishing
labor, materials, or any other work or product for improving the Property as an
agreement by Mortgagee to assure that anyone will be paid for furnishing such
labor, materials, or any other work or product. Mortgagor is and shall be
solely responsible for such payments.
9.2 Conflict with Lease. For so long as Emeritus Corporation is the tenant
--------------------
under the Lease, if there is any conflict between the terms and conditions set
forth herein and the Lease, the terms of the Lease shall govern.
NOW, THEREFORE, if Mortgagor shall pay Mortgagor's Obligations in full
and shall fully comply with this Mortgage, then this Mortgage and the estate
hereby granted shall cease, and Mortgagee shall thereupon release this Mortgage
at the cost and expense of Mortgagor (all claims for statutory penalties, in
case of Mortgagee's failure to release, being hereby waived); otherwise, this
Mortgage shall remain in full force and effect.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Mortgage has been duly executed as of (but
not necessarily on) the Effective Date.
Signed and acknowledged in the present of: EMERITUS CORPORATION
By: /s/ William Shorten
---------------------
Signature /s/_Scott Marshall By: William Shorten
--- --------------- ------------------
Print Name Scott Marshall
---------------
Title:
Signature /s/ Howard Kang
-----------------
Print Name Howard Kang
------------
STATE OF WASHINGTON )
) SS:
COUNTY OF KING )
The foregoing instrument was executed and acknowledged before me this
___ day of August, 2003 by _________________________, the
_________________________ of Emeritus Corporation, a Washington corporation, on
behalf of the corporation.
Notary Public
My Commission Expires: [SEAL]
EXHIBIT A: LEGAL DESCRIPTION
FACILITY NAME: THE WOODS AT EDDY POND
A certain parcel of land in the Commonwealth of Massachusetts, County of
Worcester, Town of Auburn, situated on the southerly side of Washington Street
(Route 20) and shown as Lot 2 on a plan entitled "Plan of Land in Auburn, MA
(Worcester County)," scale 1" - 50', dated August 15, 2002, prepared by Beals
and Thomas, Inc., recorded on August 28, 2002 in Plan Book 785 Plan No. 28,
being more particularly bounded and described as follows:
Beginning at a drill hole in a concrete bound at the most northwesterly corner
of the property herein described, thence running:
S 05 48 25 E 461.60 feet, to a point, said course by land now or formerly of
Richard Lundgren;
S 05 48 25 E 495.85 feet, to a point, said course by land now or formerly of
Ralph E. and Aileen M. Whiting, thence turning and running;
S 81 45 53 W 132 feet, to a point, thence turning and running;
N 05 48 25 W 113 feet, to a point, thence turning and running;
N 36 36 20 W 270.85 feet, to a point, thence turning and running;
N 75 01 44 W 144.12 feet, to a point, thence turning and running;
N 23 52 15 W 193.52 feet, to a point, thence turning and running;
N 20 04 51 E 330.52 feet, to a point, the previous five courses being by
land shown as Lot 1 on said plan, thence turning and running;
N 73 41 31 E 302.93 feet, to a point, thence turning and running;
N 16 18 29 W 25.00 feet, to a point, thence turning and running;
N 73 41 31 E 28.17 to the point of beginning, said last three courses being
by Washington Street.
Containing 285,817 square feet, more or less, or 6.561 acres, more or less.
Subject to and with the benefit of Drainage, Utility and Access Easement
Agreement by and between Auburn Land, LLC and LM Auburn Assisted Living, LLC,
dated April 26, 1996 and recorded May 1, 1996 at Book 17872, page 321.
Subject to and with the benefit of Deed of Easement from LM Auburn Assisted
Living, LLC and Auburn Land, LLC to Auburn Water District dated April 29, 1996
and recorded May 1, 1996 at Book 17872, page 398.
Subject to and with the benefit of a Confirmatory Gas Easement dated August 22,
2002 and recorded at the Worcester Registry of Deeds on August 28, 2002 as
Instrument No. 164439.
EXHIBIT B: PERMITTED EXCEPTIONS
FACILITY NAME: THE WOODS AT EDDY POND
1. Lien for taxes and municipal charges which become due and payable
subsequent to the date of said policy. NOTE: Real estate taxes are paid through
June 30, 2003. Taxes subsequent to said date are a lien but are not yet due and
payable.
2. Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement in the original principal sum of $16,500,000.00 to
Teachers Insurance and Annuity Association of America dated September 30, 1997
and recorded in Book 19222, page 69, as affected by an Assignment and Assumption
of Interest Under Mortgage and Assignment of Leases and Rents to Morgan Stanley
Dean Witter dated October 18, 2000 and recorded on December 21, 2000 in Book
23349, page 354, as further affected by an Assignment of Mortgage to Regency
Savings Bank, F.S.B. dated December 21, 2000 and recorded March 1, 2001 in Book
23614, page 128.
3. Assignment of Leases and Rents to Teachers Insurance and Annuity
Association of America dated September 25, 1997 and recorded October 1, 1997 in
Book 19222, page 129 as affected by an Assignment and Assumption of Interest
Under Mortgage and Assignment of Leases and Rents to Morgan Stanley Dean Witter
dated October 18, 2000 and recorded on December 21, 2000 in Book 23349, page
354.
4. UCC-1 Financing Statement to Teachers Insurance and Annuity Association
of America, recorded October 3, 1997 at Book 192226, page 245.
5. Memorandum of Lease Agreement between LM Auburn Assisted Living, LLC and
Emeritus Corporation dated February 26, 1996 and recorded May 1, 1996 at Book
17872, page 373 as affected by a Subordination, Non-Disturbance and Attornment
Agreement by Teachers Insurance and Annuity Association of America dated
September 30, 1997 and recorded October 1, 1997 in Book 19222, page 155.
6. Easements to Worcester Suburban Electric Company dated August 16, 1950
recorded at Book 3291, pages 384 and 405.
7. Drainage, Utility and Access Easement Agreement by and between Auburn
Land LLC and LM Auburn Assisted Living LLC, dated as of April 26, 1996 in Book
17872, page 321.
8. Deed of Easement from LM Auburn Assisted Living LLC and Auburn Land LLC
to Auburn Water District, dated April 29, 1996 and recorded May 1, 1996 at Book
17872, page 398.
9. Confirmatory Gas Easement dated August 22, 2002 and recorded at the
Worcester Registry of Deeds on August 28, 2002 as Instrument No. 164439.
10. Easement to Massachusetts Electric Company dated January 27, 1997 and
recorded in Book 18704, page 186.
11. Order of Taking by the Commonwealth of Massachusetts in Book 18953, page
1.
12. Twenty (20) foot wide water easement, water connection and line, and
shared drainage area shown or disclosed on the plan entitled "Plan of Land in
Auburn, MA (Worcester County): Scale 1" = 50' dated April 5, 1996, and recorded
on May 1, 1996 in Plan Book 703, page 64.
13. Notice of Decision on Special Permits by the Auburn Zoning Board of
Appeals to LMP Retirement Properties, Inc. on November 16, 1995 recorded May 1,
1996 at Book 17872, page 389.
14. Order of Conditions dated November 1, 1995 and recorded on May 1, 1996
at Book 17872, page 392, as affected by a Certificate of Compliance dated March
22, 2000 and recorded March 31, 2000 at Book 22449, page 119.
15. Notice of Decision on Variance by Auburn Zoning Board of Appeals to LMP
Retirement Properties, Inc. dated December 13, 1996 and recorded June 14, 1996
at Book 17991, page 339.
EXHIBIT C: FACILITY INFORMATION
FACILITY NAME STREET ADDRESS FACILITY TYPE (PER LICENSE)
LICENSED OPERATOR COUNTY BEDS/UNITS MEMORANDUM OF LEASE RECORDING
----------------- ------ ---------- -----------------------------
INFORMATION
-----------
The Woods at Eddy Pond
("Auburn Facility") 667 Washington Street Assisted Living
Auburn, MA 01501 ___ licensed beds
Emeritus Corporation County: Worcester 78 units
- --------------------- ------------------ ---------