DEAD OF TRUST, ASSIGNMENTS OF RENTS
SECURITY AGREEMENT AND FINANCING STATEMENT
(Construction Loan)
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AND FINANCING STATEMENT
("Deed of Trust") is made this 30th day of May, 1996, between EMERITUS
PROPERTIES II, INC., whose address is Market Place One, 2003 Western Avenue,
Suite 660, Seattle, Washington 98121 (hereinafter referred to as "Borrower" or
"Grantor"), and American Land Title Company, whose address is 1800 W Koch P.O.
Box 396 Bozeman, MT 59771, as "Trustee", and RMI CAPITAL MANAGEMENT CO., whose
address is 3773 Cherry Creek North Drive, Suite 640, Denver, Colorado 80209, as
"Beneficiary" or "Lender."
WITNESSETH:
THAT WHEREAS, the Borrower is justly indebted unto Lender in the aggregate
sum of Four Million Six Hundred Ninety-Five Thousand and no One-Hundredths
Dollars ($4,695,000.00) or so much thereof as may have been disbursed, as
evidenced by the Promissory Note of even date herewith (hereinafter sometimes
referred to as the "Note"), which Note is payable at the office of the Lender or
at such other place as the legal holder or holders thereof may designate in
writing, with interest thereon and payable as provided in said Note. If not
sooner paid, the final payment of principal and interest on said Note shall be
due thirty-six months from the date hereof.
AND WHEREAS, the Borrower is the owner in fee simple of the property (the
"Property") situate in the County of Gallatin and State of Montana as
specifically described in EXHIBIT A-1 attached hereto and by this reference
incorporated herein.
AND WHEREAS, the Borrower is desirous of securing the payment of the
principal and interest of said Note in whosoever hands said Note may be.
NOW, THEREFORE, the said Grantor, in consideration of the premises, and for
the purpose aforesaid, does hereby grant, bargain, sell and convey unto the
Trustee, in trust forever with power of sale, the Property situate in the County
of Gallatin and State of Montana, as more specifically described on EXHIBIT A-1
attached and by this reference incorporated herein and subject to the Permitted
Encumbrances (defined below), which, with the
property hereinafter described, is referred to herein as the "Mortgaged
Property.
TOGETHER WITH AND INCLUDING:
(1) All right, title and interest which Grantor now has or may
hereafter acquire in and to the Property and in and to all improvements,
tenements, easements, hereditaments and appurtenances thereunto belonging.
(2) All right, title and interest, if any, of Grantor, in and to the
land lying within any street or roadway adjoining the Property; and all right,
title and interest of Grantor in any vacated or hereafter vacated street or
alley adjoining the Property; and all right, title and interest, if any, of
Grantor in and to any strips and gores adjoining the Property.
(3) All and singular the passages, waters, water rights, water
courses, riparian rights, other rights, liberties and privileges thereof or in
any way now or hereafter appertaining to the Property, including homestead and
any other claim at law or in equity, as well as any after-acquired title,
franchise or license, and the reversion and reversions and remainder and
remainders thereof.
(4) All right, title and interest of Grantor in and to any and all
contracts and subcontracts for the construction and supplying and furnishing of
materials and equipment for use on the Property.
(5) All leases, rents, issues, proceeds and profits accruing and to
accrue from said Property, including but not limited to amounts payable under
residential occupancy agreements, whether deemed rents or accounts.
(6) All plans and specifications for the improvements now or
hereafter constructed on the Property; ALL contracts and subcontracts relating
to the Property, ALL deposits (including forfeited tenant's security deposits),
funds, accounts, contract rights, including management agreements for the
Property; instruments, documents, general intangibles (including trademarks,
service marks, trade name and symbols used in connection therewith), contracts
of sale relating to any of the Mortgaged Property (consent to same not granted
or to be implied hereby), and notes or chattel paper arising from the sale,
exchange or transfer (provided any such transaction is consented to by Lender as
required by this Deed of Trust) of any of the Mortgaged Property; all permits,
licenses, franchises, certificates, and other rights and privileges obtained in
connection with any of the Mortgaged Property; the books and records pertaining
to the Property; all
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proceeds arising from or by virtue of the sale, lease or other disposition of
all or any part of the Mortgaged Property (consent to same not granted or to be
implied hereby).
(7) All proceeds or sums payable in lieu of or as compensation for
the loss of or damage to any of the Mortgaged Property, and all rights in and to
all pertinent present and future fire and/or hazard insurance policies insuring
the Mortgaged Property; all awards made by any public body or decreed by any
Court of competent jurisdiction for a taking or for degradation of value in any
eminent domain proceeding of the Mortgaged Property or any part thereof.
(8) All buildings, structures, open parking areas and improvements of
every kind and description now or hereafter erected or placed on the Property
and all materials intended for construction, reconstruction, alteration and
repairs of such improvements now or hereafter erected thereon including, but not
limited to, lumber, plaster, cement, shingles, roofing, plumbing, fixtures,
pipe, lath, wallboard, cabinets, nails, sinks, toilets, furnaces, heaters,
brick, tile, water heaters, screens, window frames, glass, doors, flooring,
paint, lighting fixtures and unattached refrigerating, cooking, heating and
ventilating appliances and equipment, all of which materials shall be deemed to
be included within the said Property immediately upon the delivery thereof to
the Property.
(9) All machinery, apparatus, equipment, fittings, fixtures, goods
and other articles of personal property now or hereafter owned by Grantor and
attached to or contained in and used in connection with any present or future
operation of the Property, including, but not limited to, all furniture, gas
ranges, mechanical equipment, tools, refrigerators, swimming pool equipment,
recreational equipment, awnings, shades, screens, equipment and other
furnishings and all plumbing, heating, air conditioning, lighting, cooking,
laundry, ventilating, refrigerating, incinerating, and sprinkling equipment and
fixtures and appurtenances thereto; and the property, if any, described in
EXHIBIT A-2, attached hereto and incorporated by this reference; and all
renewals or replacements thereof or articles in substitution therefor, whether
or not the same are or shall be attached to said building or buildings in any
manner.
(10) All inventory used in the operation of the Property.
(11) (a) All of Grantor's rights to further encumber the Property by
debt, except for such encumbrance, which, by its actual terms and specifically
expressed intent, shall be and at all times remain subject and subordinate to
any tenancies thereafter
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created. Grantor hereby represents as a special inducement to the Lender to
make this loan, that as of the date hereof there are no encumbrances to secure
debt junior to this Deed of Trust and covenants that there are to be none as of
the date when this Deed of Trust becomes of record, except in either case
encumbrances having the prior written approval of the Lender herein; and
(b) All of Grantor's rights to enter into any lease agreement
which would create a tenancy that is or may become subordinate in any respect to
any mortgage or deed of trust encumbering the Property other than this Deed of
Trust.
(12) All other interest of every kind and character which Debtor now
has or at any time hereafter acquires in and to the Mortgaged Property and all
property which is used or useful in connection therewith, including rights of
ingress and egress, easements, licenses, and all reversionary rights or
interests of Debtor with respect to the Mortgaged Property, together with all
additions, accessions, accessories, and the proceeds thereof.
It is specifically understood that the enumeration of any specific
articles of property shall in no wise exclude or be held to exclude any items of
property not specifically mentioned. All of the land, estate and property
hereinabove-described, real, personal and mixed, whether affixed or annexed or
not, and all rights hereby conveyed and mortgaged are intended to be as a unit
and are hereby understood and agreed and declared to be appropriated to the use
of the real estate, and shall for the purposes of this Deed of Trust be deemed
to be real estate and conveyed and mortgaged hereby. The real estate conveyed
by this Deed of Trust does not exceed 30 acres.
TO HAVE AND TO HOLD IN TRUST NEVERTHELESS, that in case of an Event of
Default defined below, the Lender or the legal holder of the indebtedness
secured hereby may declare a violation of any of the covenants herein contained
and elect to demand foreclosure sale. Trustee shall sell the Property in
accordance with the laws of the State of Montana and the Uniform Commercial Code
of the State of Montana, where applicable, at public or private sale as allowed
by law to the highest bidder. Any person (except Trustee) may bid at the
Trustee I s sale. Trustee shall apply the proceeds of the sale as follows: (1)
to the expense of the sale, including a reasonable Trustee's fee and attorney's
fee; (2) to the obligations secured by this Deed of Trust; and (3) the surplus,
if any, shall be distributed in accordance with the laws of Montana. Trustee
shall deliver to the purchaser at the sale a Trustee's deed, without warranty,
which shall convey to the purchaser such interest in the Property which Grantor
had or had the power to convey at the time of the execution of this Deed of
Trust, and such interest as Trustee may have acquired thereafter.
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The Trustee's deed shall recite the facts showing that the sale was conducted in
compliance with all requirements of law and of this Deed of Trust, which recital
shall be prima facie evidence of such compliance and conclusive evidence thereof
in favor of bona fide purchasers and encumbrancers for value. The power of sale
conferred by this Deed of Trust and by the laws of Montana is not an exclusive
remedy and when not exercised, Beneficiary may foreclose this Deed of Trust
under the laws of Montana as a mortgage and in that event, obtain a deficiency
to the extent allowed by law. At any time Beneficiary may appoint in writing a
successor trustee, or discharge and appoint a new Trustee in the place of any
Trustee named herein, and upon the recording of such appointment in the records
of the county in which this Deed of Trust is recorded, the successor Trustee
shall be vested with all powers of the Original Trustee, Grantor agrees to
surrender possession of the Property to the Purchaser at the aforesaid sale on
or before the tenth day following the sale, in the event such possession has
not previously been delivered.
And the said Grantor, for itself and for its successors and assigns,
covenants and agrees to and with the said Trustee, that at the time of the
ensealing of and delivery of these presents, it is well seized of the Mortgaged
Property in fee simple, and has good right, full power and lawful authority to
grant, bargain sell and convey the same in the manner and form as aforesaid;
thereby fully and absolutely waiving and releasing all rights and claims it may
have in or to said lands, tenements and property as a Homestead Exemption, or
other exemption, under and by virtue of any act of the General Assembly of the
State of Montana, now existing or which may hereafter be passed in relation
thereto; and that the same are free and clear of all liens and encumbrances
whatever, except the lien of general taxes not yet due and payable and the
Permitted Encumbrances set forth on Exhibit A-3, and the above-bargained
Mortgaged Property in the quiet and peaceable possession of the said Trustee,
his successors and assigns against all and every person or persons lawfully
claiming or to claim the whole or any part thereof, the Grantor shall and will
warrant and forever defend.
IT IS FURTHER UNDERSTOOD AND AGREED THAT:
MAINTENANCE, REPAIR AND RESTORATION OF IMPROVEMENTS, PAYMENT OF PRIOR LIENS,
ETC.
1. Borrower shall pay each item of indebtedness secured by this Deed
of Trust when due according to the terms hereof or of the Note and shall (a)
promptly repair, restore or rebuild any buildings or improvements now or
hereafter on the Property which may become damaged or be destroyed subject to
casualty/condemnation clauses in this Deed of Trust; (b) keep the Property in
good
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condition and repair, without waste, and free from mechanics' liens or claims
for lien not expressly subordinated to the lien hereof; (c) pay when due any
indebtedness which may be secured by a lien or charge on the Property superior
to the lien hereof, and upon request exhibit satisfactory evidence of the
discharge of such prior lien to Lender; (d) pay when due all utility charges
which are incurred for the benefit of the Property or which may become a charge
or lien against the Property for energy, fuel, gas, electricity, water or sewer
services furnished to the Property and all other assessments or charges of a
similar nature, whether public or private, affecting the Property, or any
portion thereof, whether or not such assessments or charges are liens thereon;
(e) complete within a reasonable time, any building or buildings now or at any
time in process of erection upon the Property; (f) comply with all requirements
of law, municipal ordinances, or restrictions of record with respect to the
Property and the use thereof; (g) operate the Property as a first class assisted
living center; (h) make no material alterations to the Property or any of the
buildings, improvements, fixtures, apparatus, machinery and equipment now or
hereafter erected or located upon said Property, except as required by law or
municipal ordinance, without Lender's written consent; (i) suffer or permit no
change in the general nature of the occupancy of the Property, without Lender's
written consent; (j) initiate or acquiesce in no zoning reclassification without
Lender's written consent; (k) not make-any purchase or conditional sale, lease
or agreement under which title is reserved in the vendor of any such fixtures,
apparatus, machinery, equipment or personal property to be placed in or upon any
of the buildings or improvements on the Property; and (1) not voluntarily create
or otherwise permit to be created or filed against the Mortgaged Property, any
other Deed of Trust or any mortgage lien or other lien or liens or statements of
lien, inferior or superior to this Deed of Trust, without the prior written
consent of Lender. Upon the failure of the Grantor to perform or comply with
these covenants contained in this subsection (1) , or any part hereof, or upon
failure to cause the release of a mechanic's lien or the posting of a bond and
the obtaining of a certificate of release from the Clerk of the District Court
releasing such mechanic's lien within sixty (60) days after the recordation of a
statement of lien, the principal and all accrued interest shall, at the option
of the holder of the Note, become due and payable and this Deed of Trust shall
be subject to foreclosure as herein provided.
PAYMENT OF TAXES
2. Grantor shall pay before any penalty attaches all general taxes,
and shall pay special taxes, special assessments, water charges, sewer service
charges, and other charges against the Property when due and payable, and shall
furnish to Lender receipts evidencing payment of same within thirty (30) days
following their
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respective due dates. To prevent default hereunder, Grantor shall pay in full
under protest, or provide an indemnity bond or other security reasonably
satisfactory to Lender and in the manner provided by statute, as to any tax or
assessment which Grantor may desire to contest.
TAX DEPOSITS
3. Following an Event of Default, Grantor shall deposit monthly with
Lender or at such place as Lender may from time to time designate, a sum equal
to one-twelfth of the last total annual taxes on the Property (unless said taxes
were based upon assessments which excluded the current improvements or any
portions thereof, in which event the amount of such deposits shall be based upon
the Lender's reasonable estimate as to the total amount of taxes to be levied
and assessed). Borrower, concurrently with the payment of the first deposit
under this paragraph, will also deposit with Lender an amount based upon the
taxes and assessments so ascertainable or so estimated by the Lender, as the
case may be, for taxes and assessments on the Property, on an accrual basis for
the period from March 1, succeeding the year for which all taxes and assessments
have been paid, to and including the date of the first deposit in this paragraph
hereinabove mentioned. Such deposits are to be held without any allowance of
interest and are to be used for the payment of taxes and assessments (general
and special) on the Property next due and payable when they become due. If the
funds so deposited are insufficient to pay any such taxes and assessments
(general and special) for any year when the same shall become due and payable,
the Grantor shall, within ten (10) days after receipt of demand therefor,
deposit such additional funds as may be necessary to pay such taxes and
assessments (general and special) in full.
INSURANCE
4. Borrower shall keep all buildings and improvements now or
hereafter situated on the Property insured against loss or damage by fire,
lightning and risks customarily covered by standard extended coverage
endorsement. The insurance policies shall include a standard extended coverage
endorsement, a vandalism and malicious mischief endorsement or an all perils
endorsement, all in amounts not less than the full replacement costs of all
improvements including the cost of debris removal, but excluding foundations and
footings. Unless modified by Lender in writing, Borrower shall also provide:
Comprehensive General Public Liability Insurance in limits satisfactory to
Lender; if there are pressure fired vessels within the Property, Broad Form
Boiler and Machinery Insurance on all equipment and objects customarily covered
by such insurance and providing for full repair and replacement cost coverage;
Rent and Rental Value Insurance in the
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sum of (a) rental for a full year period, (b) real estate taxes, special
assessments and utility charges and (c) the premiums for all insurance required
to be paid whether by the Lessor or by the tenants under each lease of the
Property; during the making of any alterations or improvements to the Property,
(a) owner's contingent liability covering claims not covered by the general
comprehensive insurance referred to above, and (b) Worker's Compensation
Insurance covering all persons engaged in making such alterations or
improvements; if the Property is in a 'If flood plain area" as defined by the
Federal Insurance Administration pursuant to the Federal Flood Disaster
Protection Act of 1973, then Federal Flood Insurance in the maximum obtainable
amount up to the loan amount; and such other coverage as may reasonably be
required by Lender.
All policies for such insurance to be furnished hereunder shall be in
forms, companies and amounts satisfactory to Lender, with first mortgagee
clauses and loss payable clauses attached to all policies in favor of and in
form satisfactory to Lender, including a provision requiring that the coverage
evidenced thereby shall not be terminated or materially modified without ten
(10) days' prior written notice to the Lender and shall contain endorsements
that no act or negligence of the insured or any occupant, and no occupancy or
use of the property for purposes more hazardous than permitted by the terms of
the policy will affect the validity or enforceability of such insurance as
against Lender; shall be in full force and effect on the date hereof. Said
insurance policies shall be written in amounts sufficient to prevent Borrower
from becoming a co-insurer under the applicable policies. Borrower shall
deliver all said policies, including additional and renewal policies, to Lender,
and, in the case of insurance about to expire, shall deliver renewal policies
not less than ten (10) days prior to their respective dates of expiration.
INSURANCE DEPOSITS
5. Following an Event of Default, Grantor shall deposit monthly with
Lender or at such place as Lender may from time to time designate, sufficient
funds, as estimated by Lender in its sole discretion, to permit payment of
annual insurance premiums on the Property next due and payable when they become
due. Concurrently with the payment of the first deposit under this paragraph,
Borrower shall also deposit an amount equal to one-twelfth (1/12th) of the next
maturing annual insurance premiums for each month that has elapsed since the
last date to which such premiums were paid. Such deposits are to be held
without any allowance of interest and are to be used for the payment of
insurance premiums on the Property when they become due and payable. Grantor
shall, within ten (10) days after receipt of demand therefor, deposit such
additional funds as are necessary to
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make up any deficiencies in amounts necessary to pay such premiums when due.
LENDER'S INTEREST IN AND USE OF DEPOSITS
6. Following an Event of Default, the Lender may at its option,
without being required to do so, apply any moneys at the time on deposit
pursuant to paragraphs entitled "Tax Deposits" and "Insurance Deposits" hereof,
as any one or more of the same may be applicable, on any of Grantor's
obligations herein or in the Note contained, in such order and manner as Lender
may elect. When the indebtedness secured hereby has been fully paid, any
remaining deposits shall be paid to Borrower or to the then owner or owners of
the Property. Such deposits are hereby pledged as additional security for the
Note and shall be held in trust to be irrevocably applied for the purposes for
which made hereunder and shall not be subject to the direction or control of the
Grantor; provided, however, that neither the Lender nor said depositary shall be
liable for any failure to apply the deposits or any portion thereof to the
payment of taxes or insurance premiums unless Grantor shall have requested in
writing the application of such funds to the payment of the particular charge
for which they were deposited, accompanied by the bills for such charge.
In the event of a sale or foreclosure of this Deed of Trust or deed in
lieu of foreclosure or other transfer of title to the Property in
extinguishment, in whole or in part, of the indebtedness secured hereby, all
right, title and interest of Grantor in and to all policies of insurance on the
Property, including any right to unearned premiums, are hereby assigned to and
shall inure to the benefit of Lender or purchaser of the Property. Grantor
shall not take out separate insurance concurrent in form or contributing in the
event of loss with that required to be maintained hereunder unless Lender is
included thereon under a standard mortgage clause acceptable to Lender. Grantor
shall immediately notify Lender whenever any such separate insurance is taken
out and shall promptly deliver to Lender the policy or policies of such
insurance.
PAYMENT OF NOTE
7. Borrower shall promptly and punctually pay all principal and
interest, as the rate thereof may be adjusted as provided in the Note (together
with any legal, title insurance or other expenses incurred by Lender in
connection with such rate adjustment), prepayment charge, and all other sums to
become due in respect to the Note, according to the true intent and meaning
thereof. Borrower shall also pay to Lender, together with and in addition to
the monthly payments of principal and interest payable under the terms of the
Note secured hereby, on the date set forth
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therein for the making of monthly payments, until said Note is fully paid, a
sum, as estimated by Lender, equal to the ground rents under Ground Leases which
have not been subordinated to this Deed of Trust, if any.
ADJUSTMENT OF LOSSES WITH INSURER AND APPLICATION OF PROCEEDS OF INSURANCE
8. In case of loss which exceeds $100,000 as determined by Lender's
insurance consultant, the Lender, or after foreclosure, the holder of the
certificate or certificates of purchase, is hereby authorized either (a) to
settle and adjust any claim under such insurance policies with the consent of
Grantor not to be unreasonably withheld, or (b) to allow Grantor to agree with
the insurance company or companies on the amount to be paid upon the loss. In
either case, Lender is authorized to collect and receipt for any such insurance
money. Such insurance proceeds shall be held by the Lender and used to
reimburse Grantor for the cost of rebuilding or restoration of buildings or
improvements on the Property. Such proceeds shall be made available, from
time to time, upon the Lender being furnished with satisfactory evidence of
the estimated cost of completion thereof and with such architect's
certificates, waivers of lien, contractors' sworn statements and other
evidence of costs and of payments as the Lender may reasonably require and
approve. No payment made prior to the final completion of the work shall
exceed ninety percent (90%) of the value of the work performed, from time to
time. At all times, the undisbursed balance of said proceeds remaining in the
hands of the Lender shall be at least sufficient to pay for the cost of
completion of the work free and clear of liens, or Grantor shall have provided
Lender with reasonable evidence that it has arranged for sufficient funds to
pay the difference.
Notwithstanding the foregoing, in case of loss after foreclosure
proceedings have been instituted, or loss which occurs during the last three
months prior to the maturity date of the Note, Lender is authorized to collect
and receipt for any such insurance money. Said insurance proceeds may, at the
option of Lender, either be applied in reduction of the indebtedness secured
hereby in the inverse order of maturity, whether due or not, or be held by the
Lender and used to rebuild or restore the buildings or improvements located on
the Property and the balance, if any, shall be paid to the Borrower, or if
applicable, to the owner of the equity of redemption if he shall then be
entitled to the same. In case of a judicial foreclosure of this Deed of Trust,
the court in its decree may provide that the mortgagee's clause attached to each
of said insurance policies may be canceled and that the decree creditor may
cause a new loss clause to be attached to each of said policies making the loss
thereunder payable to said decree creditor; and any such foreclosure decree may
further provide that
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in case of one or more redemptions under said decree, pursuant to the statute in
such case made and provided, then and in every such case, each successive
redemptor may cause the preceding loss clause attached to each insurance policy
to be canceled and a new loss clause to be attached thereto, making the loss
thereunder payable to such redemptor. In the event of foreclosure sale, Lender
is hereby authorized, without the consent of Grantor, to assign any and all
insurance policies to the purchaser at the sale, or to take such other steps as
Lender may deem advisable, to cause the interest of such purchaser to be
protected by any of the said insurance policies.
In the case of a casualty which does not occur during the last three
months prior to the maturity date of the Note and which results in a loss which
is $100,000 or less as determined by Lender's insurance consultant, then the
Grantor is authorized to settle and adjust the claim under the insurance
policies, such proceeds may be paid directly to Grantor and Grantor covenants
and agrees to use such proceeds solely for the repair or restoration of
buildings and improvements on the Property.
OBSERVANCE OF LEASE ASSIGNMENT
9. In the event Borrower, as additional security for the payment of
the indebtedness described in and secured by this Deed of Trust, has sold,
transferred and assigned to Lender, its successors and assigns, any interest of
Borrower in any Lease or Leases demising all or a portion of the Property
together with the rents secured thereby, Borrower expressly covenants and agrees
that if Borrower, as Lessor under said Lease or Leases so assigned, fails to
faithfully perform and fulfill any term, covenant, condition or provision in
said Lease or Leases, or any of them, on its part to be performed or fulfilled,
at the times and in the manner in said Lease or Leases provided, resulting in or
making possible forfeiture or termination of any such Lease, without the written
consent of Lender, or if Borrower suffers or permits to occur any breach or
default under the provisions of any Assignment of Lessor's Interest in any Lease
or Leases of the Property given as additional security for the payment of the
indebtedness secured hereby, or if Borrower fails to fully protect, insure,
preserve and cause continued performance or fulfillment of the terms, covenants
or provisions in said Lease or Leases required to be performed or fulfilled by
the Lessee or any of the Lessees therein or if the Borrower, without Lender's
prior agreement, permits or approves an assignment by Lessee of said Lease or
Leases, upon becoming an Event of Default under such assignment, then in any
such event, at the option of Lender, or of the then holder of the Note secured
hereby, such breach or default shall constitute an Event of Default hereunder.
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In the event the Grantor, as the Lessor in said Lease or Leases, shall
neglect or refuse to perform, observe and keep all of the covenants, provisions
and agreements contained in said Lease or Leases, the Lender may, but shall not
be obligated to, perform and comply with any such Lease covenants, agreements
and provisions, in which event all costs and expenses incurred by Lender in
complying with such covenants, agreements and provisions, shall become a part of
the principal indebtedness secured by this Deed of Trust and recoverable as such
in all respects.
COVENANTS WITH RESPECT TO LEASE
10. Intentionally omitted.
EFFECT OF EXTENSIONS OF TIME
11. If the payment of the Note or any part thereof be extended or
varied or if any part of the security be released, all persons now or at any
time hereafter liable therefor, or interested in the Property, shall be held to
assent to such extension, variation or release, and their liability and the lien
and all provisions hereof shall continue in full force, the right of recourse
against all such persons being expressly reserved by the Lender, notwithstanding
such extension, variation or release.
EFFECT OF CHANGES IN LAWS REGARDING TAXATION
12. In the event of the enactment after this date of any law of the
United States or of the state in which the Property is located deducting from
the value of land for the purpose of the taxation of any lien thereon, or
imposing upon the Lender the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Grantor, or
changing the laws relating to the taxation of deeds of trust or mortgages or
debts secured by deeds of trust or mortgages or the Lender's interest in the
Property, or the manner of collection of taxes, so as to affect materially and
adversely this Deed of Trust or the Lender's interest in the Mortgaged Property,
or the debt secured hereby or the holder thereof, then, and in any event, the
Grantor, upon demand by the Lender, shall pay such taxes or assessments, or
reimburse the Lender therefor; provided, however, that if in the opinion of
counsel for the Lender (a) it might be unlawful to require Grantor to make such
payment or (b) the making of such payment might result in the imposition of
interest beyond the maximum amount permitted by law, then and in such event, the
Lender may elect, by notice in writing given to the Grantor, to declare all of
the indebtedness secured hereby to be and become due and payable sixty (60) days
from the giving of such notice. Notwithstanding the foregoing, it is understood
and agreed that Borrower shall not be obligated to pay any portion of Lender's
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federal, state, or municipal income tax or any franchise, estate, inheritance,
excess profits or similar tax levied on Lender or the obligations secured
hereby.
LENDER'S PERFORMANCE OF DEFAULTED ACTS
13. Lender may, but need not, make full or partial payments of
principal, interest and other charges due on prior' encumbrances, if any, and
purchase, discharge, compromise or settle any tax lien or other lien or title or
claim thereof; redeem from any tax sale or forfeiture affecting the Property or
contest any tax or assessment; pay any premium on insurance required to be
carried hereunder; or advance funds for the protection of the Property, or for
the purpose of curing any default hereunder. All moneys paid for any of the
purposes herein authorized and all expenses paid or incurred in connection
therewith, including reasonable attorneys' fees, and any other moneys advanced
by Lender to protect the Property and the lien hereof, shall be so much
additional indebtedness secured hereby, and shall become immediately due and
payable without notice and with interest thereon at the Default Rate, as more
particularly defined in the Note. Inaction of Lender shall never be considered
as a waiver of any right accruing to it on account of any default on the part of
Grantor.
LENDER'S RELIANCE ON TAX BILLS, ETC.
14. Lender in making any payment hereby authorized: (a) relating to
taxes and assessments, may do so according to any bill, statement or estimate
procured from the appropriate public office without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax, assessment,
lien or title or claim thereof; or (b) for the purchase, discharge, compromise
or settlement of any other prior lien, may do so only upon reasonable inquiry as
to the validity, priority, or amount of any claim for lien which may be asserted
and following 10 days' prior notice to Grantor.
ACCELERATION OF INDEBTEDNESS IN CASE OF DEFAULT
15. The occurrence of any of the following shall constitute an Event
of Default: (a) Grantor shall fail to pay the Note when due, or any installment
due in accordance with the terms thereof, either of principal or interest or any
other monetary obligations due and owing under this Deed of Trust or any other
document securing the Note and such monetary default is not cured within 10 days
after notice thereof; or (b) Grantor shall sell, transfer or convey all or any
part of the Mortgaged Property or any interest therein (except the sale of
inventory in the ordinary course of business) without complying with the
provisions of the section entitled "Sale of Property or Change in Borrower
Entity;"
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in the case of real estate, or without complying with subsection (5) below in
the case of other personal property except as further limited by Grantor's
reserved rights in Section 41; or (c) any nonmonetary default shall be made in
the due observance or performance of any other covenants, agreements or
conditions hereinbefore or hereinafter contained, required to be kept or
performed or observed by the Grantor, and if curable, not cured by Grantor
within the specific cure period, if any, stated herein, or if none shall remain
uncured for a period of fifteen (15) days after the date of written notice
thereof from Lender to Grantor. In the event that such failure, refusal or
neglect, is susceptible of cure but is not cured within said fifteen (15) days,
so long as Grantor is diligently and continuously pursuing such cure, Lender
shall permit Grantor an additional thirty (30) days to effectuate such cure;
provided, that prior to Completion of Improvements, such additional thirty (30)
days shall not apply where such failure, refusal or neglect results, in Lender's
reasonable determination, in a matter which is of an emergency nature.
Upon the occurrence of an Event of Default, the whole of said
principal sum hereby secured shall, at once, at the option of the Lender, become
immediately due and payable, together with accrued interest thereon. In
addition to the aforedescribed events of default, the term "Event of Default"
shall also mean any one or more of the following events:
(1) The Borrower or any guarantor of the Borrower's obligations
hereunder shall generally not pay its debts as they become due or shall admit in
writing its inability to pay its debts, or shall make a general assignment for
the benefit of creditors; or
(2) The Borrower or any such guarantor shall commence any case,
proceeding or other action seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property; or
(3) The Borrower or any such guarantor shall take any action to
authorize any of the actions set forth above in paragraphs (1) or (2); or
(4) A third party shall bring any case, proceeding or other
action against the Borrower or any guarantor of the Borrower's obligations
hereunder, seeking to have an order for relief entered against it as debtor, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of
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it or its debts under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, or seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
property, and such case, proceeding or other action (i) results in the entry of
an order for relief against it which is not fully stayed within 14 business days
after the entry thereof or (ii) remains undismissed for a period of 60 days
after its commencement.
(5) Grantor shall sell, lease, convey or in any manner transfer
any of the personal property which is part of the Mortgaged Property without
replacing the property with new or substantially the same property.
SALE OF PROPERTY OR CHANGE IN BORROW
16. As an inducement to Lender to make the loan evidenced by the Note
which this Deed of Trust secures, Borrower covenants and agrees that during the
term of the loan, title to the Borrower's interest in the Property shall be
vested solely in Borrower. If at any time during the term all or any part of
the Borrower's interest in said real estate or any interest therein (except
residential occupancy agreements in the ordinary course of business on forms
approved by Lender or Leases of less than 10% of the total rentable floor area
of the improvements), without the prior written consent of Lender, shall be
conveyed or transferred or is further encumbered (whether voluntary or by
operation of law or otherwise), the indebtedness secured hereby shall, at the
option of Lender, become immediately due and payable.
If Borrower or its permitted successor is a partnership, a change in a
general partner shall be considered a change of ownership for purposes of this
paragraph. If Borrower or its permitted successor is a corporation, a change in
the aggregate stock ownership affecting more that 50% of the ownership interest
shall be considered a change of ownership for purposes of this paragraph. If
Borrower or its permitted successor is a limited liability company, a change in
manager or change in the aggregate membership affecting more than 50% of the
ownership interest shall be considered a change in ownership for purposes of
this paragraph. Notwithstanding the foregoing, Borrower may convey all, of the
Mortgaged Property to a successor entity or assignee in which Emeritus
Corporation and/or Daniel R. Baty hold more than 50% of the total ownership
interest ("Permitted Assignee") and so long as the Permitted Assignee agrees to
assume the Note and obligations hereunder.
Lender agrees not to withhold its consent to a change in ownership if the
new owner or owners have a satisfactory credit standing and qualified management
ability to operate the Property
15
in Lender's sole judgment as a prudent lender. Notwithstanding the foregoing,
Lender may withhold consent to a change in ownership if the principals (or
beneficiaries) of such new owner are undisclosed or unavailable for service of
process within the United States. Borrower shall give Lender 30 days' prior
written notice of any proposed transaction which requires Lender's consent and
shall furnish to Lender such information as Lender may reasonably require.
Consent to any one transaction shall not be deemed to be consent to any other.
Upon a sale, conveyance or transfer of the Property requiring Lender's
consent, Lender may: (a) charge Borrower a fee for processing a request for
approval, (b) require the payment of reasonable attorneys' fees in connection
with such transfer, (c) require the express assumption of payment of the Note
and performance of the obligations by the new owner or owners without the
release of Grantor from liability for such Note and obligations), (d) require
the execution of Assumption Agreements, Modification Agreements, Supplemental
Security Documents and Financing Statements satisfactory in form and substance
to Lender, and (e) require endorsements (to the extent available under
applicable law) to any existing mortgage title insurance policies insuring
Lender's liens and security interests covering the Property.
FORECLOSURE; EXPENSE OF LITIGATION
17. Upon an Event of Default, Lender shall have the right to
foreclose the lien hereof. If foreclosure be made by the Trustee, a reasonable
attorneys' fee for services in the supervision of said foreclosure proceedings
shall be allowed by the Trustee as part of the foreclosure costs. If
foreclosure be made through the Court, a reasonable attorneys' fee shall be
allowed as part of the foreclosure costs. In the event of foreclosure of the
lien hereof, whether through the Trustee or through the Court, there shall be
allowed and included as additional indebtedness all reasonable expenditures and
expenses which may be paid or incurred by or on behalf of Lender for attorneys'
fees, appraisers' fees, outlays for documentary and expert evidence,
stenographers' charges, publication costs, and costs (which may be estimated as
to items to be expended after foreclosure sale or entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title
insurance policies, and similar data and assurances with respect to title as
Lender may deem reasonably necessary either to prosecute such suit or to
evidence to bidders at any sale which may be had pursuant to such decree the
true condition of the title to or the value of the Property. All expenditures
and expenses of the nature in this paragraph mentioned, and such expenses and
fees as may be incurred in the protection of the Mortgaged Property, and the
maintenance of the
16
lien of this Deed of Trust, and charges permitted by law, including the
reasonable fees of any attorney employed by Lender in any litigation or
proceeding affecting this Deed of Trust, the Note or the Mortgaged Property,
including probate, bankruptcy proceedings, proceedings to obtain a receiver, or
in preparation for the commencement or defense of any proceeding or threatened
suit or proceeding, shall be immediately due and payable by Borrower, with
interest thereon at the Default Rate, as more particularly defined in the Note
and shall be secured by this Deed of Trust.
HAZARDOUS WASTE
18. Grantor shall keep and maintain the Property in compliance with,
and shall not cause or permit the Property to be in violation of any federal,
state or local laws, ordinances, or regulations relating to industrial hygiene
or to the environmental conditions on, under or about the Property including,
but not limited to, soil and ground water conditions. Grantor shall not use,
generate, manufacture, store or dispose of on, under or about the Property or
transport to or from the Property any flammable explosives, radioactive
materials, hazardous wastes, toxic substances or related materials, including,
without limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," or "toxic substances" under any
applicable federal or state laws or regulations, excepting from the term
Hazardous Substance materials and/or substances used in the normal course of
business provided said materials an/or substances are kept in approved
containers, at or within approved locations, and in accordance with all
applicable laws, rules and regulations and, if applicable, that all appropriate
licenses are obtained. (collectively referred to hereinafter as "Hazardous
Materials").
Grantor shall immediately advise Lender in writing of (i) any and all
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened pursuant to any applicable federal, state or
local laws, ordinances, or regulations relating to any Hazardous Materials
affecting the Property ("Hazardous Materials Laws") ; (ii) all claims made or
threatened by any third party against Grantor or the Property relating to
damage, contribution, cost recovery compensation, loss or injury resulting from
any Hazardous Materials (the matters set forth in clauses (i) and (ii) above
are hereinafter referred to as "Hazardous Materials Claims"); and (iii)
Grantor's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that would cause the Property to be
subject to any restrictions on the ownership, occupancy, transferability or use
of the Property under any Hazardous Materials Laws.
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Lender shall have the right to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated in connection with any
Hazardous Materials Claims and to have its reasonable attorneys' fees in
connection therewith paid by Grantor. Grantor shall be solely responsible for,
and shall indemnify and hold harmless Lender, its directors, officers,
employees, agents, successors and assigns (the "Indemnified Parties") from and
against, any loss, damage, cost, expense or liability directly or indirectly
arising out of or attributable to the use, generation, storage, release,
threatened release, discharge, disposal, or presence of Hazardous Materials on,
under or about the Property, including, without limitation: (a) all foreseeable
consequential damages; (b) the costs of any required or necessary repair,
cleanup or detoxification of the Property; and the preparation and
implementation of any closure, remedial or other required plans; and (c) all
reasonable costs and expenses incurred by Lender in connection with clauses (a)
and (b), including but not limited to reasonable attorneys' fees; but not
including (a) - (c) to the extent arising out of the negligence or willful
misconduct of the Indemnified Parties.
Without Lender's prior written consent, which shall not be
unreasonably withheld, Grantor shall not take any remedial action in response to
the presence of any Hazardous Materials on, under, or about the Property, nor
enter into any settlement agreement, consent decree, or other compromise in
respect to any Hazardous Material Claims, which remedial action, settlement,
consent or compromise might, in Lender's reasonable judgment, impair the value
of the Lender's security hereunder; provided, however, that Lender's prior
consent shall not be necessary in the event that the presence of Hazardous
Materials on, under, or about the Property either poses an immediate threat to
the health, safety or welfare of any individual or is of such a nature that an
immediate remedial response is necessary and it is not possible to obtain
Lender's consent before taking such action, provided that in such event Grantor
shall notify Lender as soon as practicable of any action so taken. Lender
agrees not to withhold its consent, where such consent is required hereunder, if
either (i) a particular remedial action is ordered by a court of competent
jurisdiction, or (ii) Grantor establishes to the reasonable satisfaction of
Lender that there is no reasonable alternative to such remedial action which
would result in less impairment of Lender's security hereunder.
APPOINTMENT OF RECEIVER
19. In addition to any other rights and powers conferred on the
Lender hereunder, upon an Event of Default Lender shall have the right to apply
for the appointment of a receiver of rents and profits of any part or the whole
of the above Property, EX PARTE
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and without notice, and the Lender shall be entitled, as a matter of right,
without regard to the value of the Property as security for the amount due or to
the solvency of the Borrower or any other party or parties liable for the
payment of such amount, to the appointment of such a receiver of rents and
profits with power to lease the Property, or such part thereof as may not then
be under lease, and with such other powers as may be deemed necessary, who,
after deducting all proper charges and expenses attending the execution of his
trust as receiver, including the fees of the receiver, and attorney's fees of
the receiver's attorney, shall apply the residue of the said rents and profits
to the payment and satisfaction of the amount remaining secured hereby, or to
any deficiency which may exist after applying the proceeds of the sale of said
Property to the payment of the amount due, including interest and the costs of
any reasonable attorneys' fees for the foreclosure and sale in such order of
priority as Lender shall elect.
ASSIGNMENT OF RENTS AND LEASES
20. To further secure the indebtedness secured hereby, Grantor does
hereby sell, assign and transfer unto the Lender all rents, issues and profits
now due and which may hereafter become due under or by virtue of any lease,
whether written or verbal, or any letting of, or of any agreement for the use or
occupancy of the Mortgaged Property or any part thereof, and all benefits and
advantages to be derived therefrom, which may have been heretofore or may be
hereafter made or agreed to or which may be made or agreed to by the Lender
under the powers herein granted, it being the intention hereby to establish an
absolute transfer and assignment of all such avails, rents, issues and profits
unto the Lender, and the Grantor does hereby appoint irrevocably the Lender its
true and lawful attorney in its name and stead (with or without taking
possession of the Property as provided in the paragraph entitled "Lender's Right
of Possession In Case of Default") following an Event of Default to rent, lease
or let all or any portion of the Mortgaged Property to any party or parties at
such rental and upon such terms as said Lender shall, in its discretion,
determine, and to collect all of said avails, rents, issues and profits arising
from or accruing at any time hereafter, and all now due or that may hereafter
become due under each and every of the leases and agreements, written or verbal,
or other tenancy agreements existing, or which may hereafter exist on the
Mortgaged Property, with the same rights and powers and subject to the same
immunities, exoneration of liability and rights of recourse and indemnity as the
Lender would have upon taking possession pursuant to the provisions of the
paragraph entitled "Lender's Right of Possession In Case of Default" hereof.
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Grantor represents and agrees that no rent has been or will be paid by
any person in possession of any portion of the Property for more than one
installment in advance, and that the payment of none of the rents to accrue for
any portion of the Property has been or will be waived, released, reduced,
discounted or otherwise discharged or compromised by the Grantor. The Grantor
waives any rights of setoff against any person in possession of any portion of
the Mortgaged Property. If any lease provides for the abatement of the rent
during repair of the Property demised thereunder by reason of fire or other
casualty, the Grantor shall furnish to the Lender rental insurance, the policies
to be in amount and form and written by such insurance companies as shall be
satisfactory to the Lender. Grantor agrees that it will not assign any of the
rents or profits of the Mortgaged Property, except to a purchaser or grantee of
the Mortgaged Property, and then only upon condition that said grantee agrees,
in writing, to assume and pay the debt secured hereby.
Nothing herein contained shall be construed as constituting the Lender
a mortgagee in possession in the absence of the taking of actual possession of
the Mortgaged Property by the Lender. In the exercise of the powers herein
granted to the Lender, no liability shall be asserted or enforced against the
Lender, all such liability being expressly waived and released by Grantor.
The Grantor further agrees to further assign and transfer to the
Lender all future leases upon all or any part of the Mortgaged Property and to
execute and deliver, at the request of the Lender, all such further assurances
and assignments in the Mortgaged Property as, the Lender shall from time to time
require.
Although it is the intention of the parties that the assignment
contained in this paragraph entitled "Assignment of Rents and Leases" shall be a
present assignment, it is expressly understood and agreed, anything herein
contained to the contrary notwithstanding, that the Lender shall not exercise
any of the rights or powers conferred upon it by this paragraph until and unless
an Event of Default occurs. Until an Event of Default occurs, Lender grants to
Grantor a revocable license to collect rental and occupancy charges.
LENDER'S RIGHT OF POSSESSION IN CASE OF DEFAULT
21. In any case in which under the provision of this Deed of Trust,
the Lender has a right to institute foreclosure proceedings, whether before or
after the whole principal sum secured hereby is declared to be immediately due
as aforesaid, or whether before or after the institution of legal proceedings to
foreclose the lien hereof or before or after sale thereunder,
20
forthwith upon demand of Lender, Grantor shall surrender to Lender and Lender
shall be entitled to take actual possession of the Property or any part thereof
personally, or by its agents or attorneys, as for condition broken, and Lender
in its discretion may, with or without force and with or without process of law,
enter upon and take and maintain possession of all or any part of the Mortgaged
Property, together with all documents, books, records, papers and accounts of
the Grantor or then owners of the Mortgaged Property relating thereto, and may
exclude the Grantor, its agents or servants, wholly therefrom and may, as
attorney-in-fact or agent of the Grantor, or in its own name as Lender and under
the powers herein granted, hold, operate, manage and control the Mortgaged
Property and conduct the business, if any, thereof, either personally or by its
agents, and with full power to use such measures, legal or equitable, as in its
discretion or in the discretion of its successors or assigns may be deemed
proper or necessary to enforce the payment or security of the avails, rents,
issues, and profits of the Mortgaged Property, including actions for the
recovery of rent, actions in forcible detainer and actions in distress for rent,
hereby granting full power and authority to exercise each and every of the
rights, privileges and powers herein granted at any and all times hereafter,
without notice to the Grantor, and with full power to cancel or terminate any
lease or sublease for any cause or on any ground which would entitle Grantor to
cancel the same, to elect to disaffirm any lease or sublease made subsequent to
this mortgage or subordinated to the lien hereof, to make all necessary or
proper repairs, betterments and improvements to the Mortgaged Property as to it
may seem judicious, insure and reinsure the same and all risks incidental to
Lender's possession, operation and management thereof and to receive all of such
avails, rents, issues and profits.
The Lender shall not be obligated to perform or discharge, nor does it
hereby undertake to perform or discharge, any obligation, duty or liability
under any leases, and the Grantor shall and does hereby agree to indemnify and
hold the Lender harmless of and from any and all liability, loss or damage which
it may or might incur under said leases or under or by reason of the assignment
thereof and of and from any and all claims and demands whatsoever which may be
asserted against it by reason of any alleged obligations or undertakings on its
part to perform or discharge any of the terms, covenants or agreements contained
in said leases. Should the Lender incur any such liability, loss or damage,
under said leases or under or by reason of the assignment thereof, or in the
defense of any claims or demands (except claims arising out of Lender's
negligence or willful misconduct), the amount thereof, including costs, expenses
and reasonable attorneys' fees shall be secured hereby, and the Borrower shall
reimburse the Lender therefor immediately upon demand.
21
APPLICATION OF INCOME RECEIVED BY LENDER
22. The Lender in the exercise of the rights and powers hereinabove
conferred upon it by the paragraphs entitled "Assignment of Rents and Leases"
and "Lender's Right of Possession in Case of Default" hereof shall have full
power to use and apply the avails, rents, issues and profits of the Mortgaged
Property to the payment of or on account of the following, in such order as
Lender may determine:
(a) To the payment of the operating expenses of the Mortgaged
Property, including cost of management and leasing thereof (which shall include
reasonable compensation to the Lender and its agent or agents, if management be
delegated to an agent or agents, and shall also include lease commissions and
other compensation and expenses of seeking and procuring tenants and entering
into leases), established claims for damages, if any, and premiums on insurance
hereinabove authorized;
(b) To the payment of taxes, special assessments or insurance
premiums now due or which may hereafter become due on the Mortgaged Property;
(c) To the payment of all repairs, decorating, renewals,
replacements, alterations, additions, betterments, and improvements reasonably
necessary for the continued operation of the Mortgaged Property;
(d) To the payment of any indebtedness secured hereby or any
deficiency which may result from any foreclosure sale.
LENDER'S RIGHT OF INSPECTION
23. Lender or its duly appointed agent shall have the right to
inspect the Mortgaged Property at all reasonable times and access thereto shall
be permitted for that purpose.
SECURITY DEPOSITS
24. If any security deposit or advance payments received from tenants
in lieu of security deposits are received by Borrower, said security deposits
shall be kept and maintained in a separate bank account and upon request of
Borrower by Lender, Borrower shall verify the bank account and bank number and
sign such documentation as may reasonably be required by Lender in order to
obtain confirmation of the bank account. Upon Lender's request, Lender shall be
named on the bank account and no funds shall be withdrawn therefrom without the
prior written consent of the Lender, except payment of security deposits to
tenants entitled thereto. Failure
22
to comply with the provisions herein shall be deemed an Event of Default
hereunder.
CONDEMNATION
25. Grantor hereby assigns, transfers and sets over unto Lender the
entire proceeds of any award or any claim for damages for any of the Mortgaged
Property taken or damaged under the power of eminent domain or by condemnation.
If the payment of award proceeds occurs during the last three months prior to
the maturity date of the Note, then Lender may elect to apply the proceeds of
the award upon or in reduction of the indebtedness secured hereby, whether due
or not, or to require Grantor to restore or rebuild, in which event the proceeds
shall be held by Lender and used to reimburse Grantor for the cost of rebuilding
or restoring of buildings or improvements on the Property, in accordance with
plans and specifications to be submitted to and approved by Lender. If the
award proceeds exceed $100,000 and are paid prior to the last three months of
the term of the Note, then the proceeds shall be held by Lender and used to
reimburse Grantor for the cost of rebuilding or restoring buildings and
improvements on the Property. In the even that the award proceeds are $100,000
or less and are not paid during the last three months prior to the maturity date
of the Note, then such proceeds may be paid directly to Grantor, and Grantor
covenants and agrees to use such proceeds solely for the restoration and
replacement of buildings and improvements on the Property.
If the Grantor is obligated to restore or replace the damaged or
destroyed building or improvements under the terms of any lease or leases which
are or may be prior to the lien of this Deed of Trust and if such taking does
not result in cancellation or termination of such lease, the award shall be used
to reimburse Grantor for the cost of the rebuilding or restoring of buildings or
improvements on the Property, provided Grantor has not been in default under
this Deed of Trust. In the event Grantor is required or authorized, either by
Lender's election as aforesaid or by virtue of any such lease, to rebuild or
restore, the proceeds of the award shall be paid out in the same manner as is
provided in the paragraph entitled "Adjustment of Losses With Insurer and
Application of Proceeds of Insurance" hereof for the payment of insurance
proceeds toward the cost of rebuilding or restoration. If the amount of such
award is insufficient to cover the cost of rebuilding or restoration, Grantor
shall pay such cost in excess of the award, before being entitled to
reimbursement out of the award. Any surplus which may remain out of said award
after payment of such cost of rebuilding or restoration shall, at the option of
Lender, be applied on account of the indebtedness secured hereby.
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GIVING NOTICE
26. Any notice which Grantor or Lender may desire or be required to
give to the other party shall be in writing, and the mailing thereof by
certified mail addressed to the Grantor or to the Lender at the address stated
above, or at such place as either party hereto may by notice in writing
designate as a place for service of notice, shall constitute service of notice
hereunder and shall be deemed delivered three business days after its deposit in
the United States mail, postage prepaid or one business day after its deposit
with a national overnight air courier, prepaid.
WAIVER OF RIGHTS
27. As to any action brought by Lender prior to any foreclosure sale
by the Trustee held pursuant to this Deed of Trust, Grantor hereby waives the
right to any notice and to any hearing other than as provided herein and by the
statutes and rules of Civil Procedure of the State of Montana now in existence.
Grantor shall not and will not apply for nor avail itself of any appraisement,
valuation, stay, extension or exemption laws, or any so-called "Moratorium
Laws", now existing or hereafter enacted, in order to prevent or hinder the
enforcement or foreclosure of this mortgage, and hereby waives the benefit of
such laws. Grantor for itself and for all who may claim through or under it
waives (a) the right to trial by jury on any issues between Grantor and Lender
and to any issues pertaining to the Note, this Deed of Trust or any other
document securing the Note and as to matters pertaining to the acts of the
Holder of the Note prior to the date hereof; and (b) any and all right to have
the property and estates comprising the Mortgaged Property marshalled upon any
foreclosure of the lien hereof and agrees that any court having jurisdiction to
foreclose such lien may order the property sold as an entirety.
MANAGEMENT
28. So long as any part of the Note secured hereby remains unpaid,
the Grantor will provide and maintain good and efficient management of the
Mortgaged Property satisfactory to Lender.
FINANCIAL STATEMENTS
29. Borrower covenants and agrees to furnish Lender, within one
hundred twenty (120) days after the close of each fiscal year of Borrower, an
annual operating statement setting forth in such detail as Lender may reasonably
require, the income and expenses derived from and attributable to the Mortgaged
Property during the preceding year, certified by Borrower.
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APPROVAL OF CONSTRUCTION PLANS FOR PROPERTY AND CONTIGUOUS LAND
30. Grantor covenants and agrees that there shall be no construction
on the Property or on any adjoining land at any time owned or controlled by the
Borrower, or any related business entities, unless complete plans and
specifications for same shall have first been approved by the Lender as, in its
judgment, entailing no prejudice to the loan secured hereby.
PARKING REQUIREMENTS
31. Grantor covenants and agrees to maintain at all times sufficient
parking spaces to comply with the parking requirements of all tenant leases,
zoning and other regulations affecting the Property.
SECURITY AGREEMENT AND FINANCING STATEMENT UNDER UNIFORM COMMERCIAL CODE
32. To the extent any property covered by this Deed of Trust consists
of rights in action or personal property covered by the Uniform Commercial Code,
this Deed of Trust constitutes a security agreement and financing statement as
defined in the Montana Uniform Commercial Code. Grantor hereby grants to Lender
a security interest in all of the collateral described in this Deed of Trust.
This Deed of Trust shall be self-operative with respect to such property, but
Grantor agrees to execute and deliver on demand a security agreement, financing
statement or other instrument as Lender may request to impose the lien hereof
more specifically upon any of such property and to pay the recording and/or
filing fees associated therewith. The remedies for any violation of the
covenants, terms and conditions of the agreements herein contained shall be (i)
as prescribed herein, or (ii) by general law, or (iii) as to such part of the
security which is covered by the Uniform Commercial Code by the specific
statutory consequences now or hereafter enacted and specified in said Uniform
Commercial Code, all at Lender's sole election. Grantor and Lender agree that
nothing herein contained shall be construed as in anywise derogating from or
impairing this declaration and hereby stated intention of the parties hereto,
that everything used in connection with the production of income from the
Property and/or adapted for the use therein and/or which is described or
reflected in this Deed of Trust is, and at all times and for all purposes and in
all proceedings, both legal or equitable, shall be regarded as part of the real
estate irrespective of whether (i) any such item is physically attached to the
improvements, (ii) serial numbers are used for the better identification of
certain equipment items capable of being thus identified in a recital contained
therein or in any list filed with the Lender, (iii) any such item is referred to
or reflected in any Financing Statement filed at any time.
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Similarly, the mention in any Financing Statement of (1) the rights in or the
proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent
domain proceedings for a taking or for loss of value, or (3) the Grantor's
interest as lessor in any present or future lease or rights to income growing
out of the use and/or occupancy of the Property, whether pursuant to lease or
otherwise shall never be construed as in anywise altering any of the rights of
Lender as determined by this instrument or impugning the priority of Lender's
lien granted hereby or by any other recorded document, but such mention in said
Financing Statement is declared to be for the protection of Lender in the event
any Court shall at any time hold with respect to (1), (2) and (3) that notice of
Lender's priority of interest to be effective against a particular class of
person, including, but not limited to, the Federal Government, must be filed in
the Commercial Code Records. For purposes of treating this Deed of Trust as a
security agreement and financing statement, Lender shall be deemed to be the
Secured Party and Grantor shall be deemed to be the Debtor.
THIS IS A CONSTRUCTION MORTGAGE UNDER THE UNIFORM COMMERCIAL CODE,
GIVEN TO SECURE AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF AN IMPROVEMENT OF
LAND, INCLUDING THE ACQUISITION COST OF THE LAND.
GOVERNING LAW
33. This Deed of Trust has been executed and delivered in the State
of Montana and is to be construed and enforced according to and governed by the
Laws of the State of Montana.
DISBURSEMENT OF LOAN PROCEEDS FOR CONSTRUCTION OF IMPROVEMENTS
34. The proceeds of the loan secured hereby are to be disbursed by
Lender to Borrower in accordance with the provisions contained in the
Construction Loan Agreement. The Construction Loan Agreement is fully
incorporated in this Deed of Trust by reference. The occurrence of any Event of
Default under said Construction Loan Agreement shall constitute a default under
this Deed of Trust entitling Lender to all of the rights and remedies conferred
upon the Lender by the terms of this Deed of Trust as in the case of any other
Event of Default. If, following an Event of Default, Lender completes the
construction of improvements, then all moneys so expended shall be so much
additional indebtedness secured by this Deed of Trust, and any moneys expended
in excess of the face amount of the Note shall be payable on demand, with
interest thereon at the Default Rate, as more particularly described in the Note
secured hereby.
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BINDING ON SUCCESSORS AND ASSIGNS
35. This Deed of Trust and all provisions hereof, shall extend to and
be binding upon Grantor and/or the Borrower and all persons claiming under or
through Grantor or Borrower, and the words "Grantor" or "Borrower" when used
herein shall include all such persons and all persons liable for the payment of
the indebtedness or any part thereof, whether or not such persons shall have
executed the Note or this Deed of Trust. The word "Lender" when used herein
shall include the successors and assigns of the Lender named herein, and the
holder or holders, from time to time, of the Note secured hereby.
CAPTIONS
36. The captions and headings of various paragraphs of this mortgage
are for convenience only and are not to be construed as defining or limiting, in
any way, the scope or intent of the provisions hereof.
REMEDIES CUMULATIVE.
37. No remedy herein conferred upon or reserved to the Trustee or
Beneficiary is intended to be exclusive of any other remedy provided hereby or
by law or provided or allowed by the Promissory Note or any other loan
agreements, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or existing at law or in equity. Every power or remedy
given by this Deed of Trust to Trustee or Beneficiary, or to which either of
them may be otherwise entitled, may be exercised from time to time and as often
as may be deemed expedient by Trustee or Beneficiary.
RELEASES, EXTENSION, RECONVEYANCES; TRUSTEE FEES.
38. Without affecting the liability of any person, including Grantor,
for the payment of any indebtedness secured hereby or the lien of this Deed of
Trust on the remainder of the Mortgaged Property for the full amount of any
indebtedness unpaid, Beneficiary and Trustee are respectively empowered as
follows:
Beneficiary may from time to time and without notice:
(a) Release any person liable for payment of any of the
indebtedness;
(b) Extend the time or otherwise alter the terms of payment of
any of the indebtedness; or
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(c) alter, substitute or release any property securing the
indebtedness.
Trustee may at any time and from time to time, upon the written
request of Beneficiary:
(a) consent to the making of any map or plat of the Property;
(b) Join in granting any easement or creating any restriction
thereon;
(c) Join in any subordination or other agreement affecting this
Deed of Trust or lien or charge thereof; or
(d) Reconvey, without warranty, all or any part of the Mortgaged
Property.
Trustee shall be entitled to reasonable compensation for all services
rendered or expenses incurred in the administration or execution of the trust
hereby created, and Grantor hereby agrees to pay same.
SEVERABILITY.
39. If any of the provisions hereof shall be determined to contravene
or be invalid under the laws of the State of Montana, such contravention or
invalidity shall not invalidate any other provisions of this Deed of Trust, but
it shall be construed as if not containing the particular provision or
provisions held to be invalid, and all rights and obligations of the parties
shall be construed and enforced accordingly.
SPECIAL PROVISIONS CONCERNING PERSONAL PROPERTY.
40. Notwithstanding any terms of this Deed of Trust to the contrary,
Grantor reserves the right to lease, finance, substitute and replace personal
property and to sell inventory in the ordinary course of business without
consent from Lender. In addition, Grantor may permit its personal property to
be subject to equipment financing and security interests in connection
therewith. None of Grantor's reserved rights described in this Section 41 shall
constitute an Event of Default.
IN WITNESS WHEREOF, the Grantor has caused these presents to be executed
the day and year first above written.
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EMERITUS PROPERTIES II, INC.
By: /s/ Raymond R. Brandstrom
-------------------------
Title: President
-------------------------
STATE OF Washington)
)ss.
COUNTY OF King )
The foregoing instrument was acknowledged before me this 30th day of May,
1996, by Raymond R. Brandstrom as President of Emeritus Properties II, Inc.,
Debtor.
Witness my hand and official seal.
[SEAL]
My commission expires: 11-20-98.
/s/ Sarah Deines
--------------------------
Notary Public
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