SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1998
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BROOKDALE LIVING COMMUNITIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-22253 36-4103821
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 977-3700.
NOT APPLICABLE
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
Brookdale Living Communities of New Mexico-SF, Inc. ("BLC-New
Mexico-SF"), a subsidiary of Brookdale Living Communities, Inc. (the "Company"),
and The PDL Business Trust, S.T., an unaffiliated third party (the "Lessor"),
entered into an operating lease (the "Lease"), dated October 14, 1998, pursuant
to which BLC-New Mexico-SF leases from the Lessor a 145-unit senior living
facility located in Santa Fe, New Mexico, known as The Ponce de Leon (the
"Facility"). The initial term of the Lease commenced on October 21, 1998 and
expires on November 1, 2003. BLC-New Mexico-SF has the option to renew the Lease
for up to five (5) one-year periods through November 1, 2008. Under the initial
term of the Lease, BLC-New Mexico-SF is obligated to make monthly rent payments
in the amount of $81,994, variable quarterly rent payments, the amount of which
varies based on LIBOR and is estimated to be approximately $28,000, and monthly
payments ranging between $8,333 and $9,637 to satisfy Lessor's obligation to
make payments under a ground lease. During the term of the Lease, BLC-New
Mexico-SF is responsible for the payment of all operating expenses related to
the Facility. BLC-New Mexico-SF's obligations under the Lease are secured by a
pledge by BLC-New Mexico-SF of securities currently valued at approximately
$4,750,000. The Lease grants BLC-New Mexico-SF the option to purchase the
Facility from the Lessor. The Lessor financed the acquisition of the Facility,
in part, with the proceeds of a loan (the "Loan") made to the Lessor by Heller
Financial, Inc. ("HFI") in the principal amount of $12,250,000. Interest accrues
on the outstanding principal balance of the Loan at the rate of 7.06% per annum.
Principal on the Loan and accrued interest thereon are payable monthly, in
arrears, based on a 30-year amortization schedule. The Loan matures on November
1, 2008. BLC-New Mexico-SF has guaranteed the Lessor's obligations under the
Loan, which guaranty is secured by a leasehold mortgage issued by BLC-New
Mexico-SF in favor of HFI, pursuant to which BLC-New Mexico-SF grants to HFI a
security interest in BLC-New Mexico-SF's interests under the Lease.
This current report on Form 8-K contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. When
used in this report, the words "believes," "expects," "anticipates," "estimates"
and similar words and expressions are generally intended to identify
forward-looking statements. Statements that describe the Company's future
strategic plans, goals, objectives or expectations are also forward-looking
statements. Readers of this report are cautioned that any forward-looking
statements, including those regarding the intent, belief, or current
expectations of the Company or management, are not guarantees of future
performance, results or events and involve risks and uncertainties, and that
actual results and events may differ materially from those in the
forward-looking statements as a result of various factors, including, but not
limited to (i) general economic conditions in the markets in which the Company
operates, (ii) competitive pressures within the industry and/or the markets in
which the Company operates, (iii) the effect of future legislation or regulatory
changes on the Company's operations and (iv) other factors described from time
to time in the Company's filings with the Securities and Exchange Commission.
The forward-looking statements included in this report are made only as of the
date hereof. The Company undertakes no obligation to update such forward-looking
statements to reflect subsequent events or circumstances.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
c) Exhibits
Exhibit
Number Description
10.1 Lease, dated as of October 14, 1998, by and between Brookdale
Living Communities of New Mexico-SF, Inc., as lessee, and The
PDL Business Trust, S.T., as lessor-owner
10.2 Fixed Rate Program Promissory Note Secured by Mortgage, dated
October 14, 1998, from The PDL Business Trust, S.T., as maker,
payable to the order of Heller Financial, Inc.
10.3 Guaranty, dated as of October 14, 1998, issued by Brookdale
Living Communities of New Mexico-SF, Inc. in favor of Heller
Financial, Inc.
10.4 Certificate A Pledge Agreement, dated as of October 14, 1998, by
Brookdale Living Communities of New Mexico-SF, Inc. in favor of
The PDL Business Trust, S.T., Wilmington Trust Company, as
valuation agent, and LaSalle National Bank, as collateral
account bank
10.5 Certificate B Pledge Agreement, dated as of October 14, 1998, by
Brookdale Living Communities of New Mexico-SF, Inc. in favor of
The PDL Business Trust, S.T., Wilmington Trust Company, as
valuation agent, and LaSalle National Bank, as collateral
account bank
10.6 Hazardous Substance Indemnification Agreement, dated as of
October 14, 1998, from Brookdale Living Communities of New
Mexico-SF, Inc. and Brookdale Living Communities, Inc. in favor
of Heller Financial, Inc.
10.7 Indemnity Agreement, dated as of October 14, 1998, from
Brookdale Living Communities, Inc. in favor of Wilmington Trust
Company, SELCO Service Corporation and Bank Hapoalim B.M.
10.8 Letter Agreement regarding liability for carve-outs to
non-recourse provisions, dated October 14, 1998, issued by
Brookdale Living Communities, Inc. in favor of Heller Financial,
Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROOKDALE LIVING COMMUNITIES, INC.
Registrant
Dated: November 2, 1998 By: /s/ Robert J. Rudnik
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Robert J. Rudnik
Executive Vice President/
General Counsel
LEASE
Dated as of October 14, 1998
between
BROOKDALE LIVING COMMUNITIES OF NEW MEXICO - SF, INC.,
as the Lessee
and
THE PDL BUSINESS TRUST,
as the Lessor
Acquisition of Independent Living Facility
in Santa Fe, New Mexico
This Lease has been executed in several counterparts. To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart containing the receipt therefor executed by
Heller Financial, Inc. and its successors and assigns, as Lender.
<PAGE>
LEASE
THIS LEASE (together with the Lease Supplement (as defined in Appendix
1 hereto), this "Lease"), dated as of October 14, 1998, between THE PDL BUSINESS
TRUST, a Delaware business trust, having its principal office at Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, and BROOKDALE LIVING COMMUNITIES OF NEW MEXICO - SF, INC.,
a Delaware corporation, having its principal office at c/o Brookdale Living
Communities, Inc., 77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601.
W I T N E S S E T H:
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee
desires to lease from the Lessor, the Property; and
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
Appendix 1 to this Lease; and the rules of interpretation set forth in Appendix
1 to this Lease shall apply to this Lease; provided, however, that capitalized
terms used but not otherwise defined in this Lease and Appendix 1 to this Lease
shall have the respective meanings specified in the Heller Loan Documents.
ARTICLE II
PURCHASE AND LEASE
2.1. Acceptance and Lease of Property. Subject to the terms and
conditions of this Lease, on the Acquisition Date (i) the Seller shall convey to
the Lessor, and the Lessor shall accept delivery of, the Property pursuant to
the terms hereof (and subject to the conditions set forth herein) and (ii) the
Lessor shall demise and lease to the Lessee hereunder for the Term the Lessor's
interest in the Property, subject to the Heller Loan Documents and the Lessee
hereby agrees, expressly for the direct benefit of the Lessor, to lease from the
Lessor for the Term, the Lessor's interest in the Property.
2.2. Acceptance Procedure. The Lessee hereby agrees that the execution
and delivery by the Lessee on the Acquisition Date of an appropriately completed
Lease Supplement in the form of Exhibit B hereto covering the Property thereon
shall, without further act, constitute the irrevocable acceptance by the Lessee
of the Property for all purposes of this Lease and the other Operative Documents
on the terms set forth therein and herein, and that the Property, shall be
deemed to be
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included in the leasehold estate of this Lease and shall be subject to the terms
and conditions of this Lease as of the Acquisition Date.
2.3. Lease Term. The term of this Lease (the "Term") shall commence on
(and include) the Acquisition Date and end on (but exclude) the Expiration Date,
as such Expiration Date may be extended from time to time in accordance with
Article XXIII.
2.4. Title. The Property is leased to the Lessee without any
representation or warranty, express or implied, by the Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, Permitted Liens other than Lessor Liens) and all applicable
Requirements of Law. The Lessee shall in no event have any recourse against the
Lessor for any defect in or exception to title to the Property other than to the
extent resulting from Lessor Liens.
ARTICLE III
FUNDING OF THE ADVANCE
3.1. Lessor Commitment. Subject to the conditions and terms hereof, the
Lessor shall, upon the written request of the Lessee, make the Advance on the
Acquisition Date up to the amount of the Commitment for the purpose of financing
the acquisition of the Property.
3.2. Procedures for Advance.
(a) The Lessee shall give the Lessor prior written notice not
later than 9:00 a.m., New York City time, two (2) Business Days prior
to the Acquisition Date, pursuant to a Funding Request substantially in
the form of Exhibit A (the "Funding Request"), specifying the proposed
Acquisition Date and the amount of Advance requested. Except as the
parties may otherwise agree in writing, the Advance shall be made
solely to provide the Lessee with funds with which to pay or reimburse
itself for amounts paid or payable to third parties as Property Cost
and Transaction Expenses paid or payable by the Lessee in connection
with the preparation, execution and delivery of the Operative
Documents, and all fees paid or payable by the Lessee to the Lessor in
connection with the Operative Documents and any amounts paid or payable
by Lessee pursuant to Section 31.2 hereof. If the Eurodollar Rate is
unavailable on the Acquisition Date because less than two (2) Business
Days' notice has been provided to the Lessor pursuant to this Section
3.2(a), the Advance shall bear interest at the Alternate Base Rate
until such time as the Eurodollar Rate can be obtained.
(b) The Advance shall be made on the Acquisition Date in
immediately available federal funds by wire transfer to the account
designated by the Lessee, except that a portion of the Advance shall be
made (in accordance with instructions to be included in the Funding
Request) by wire transfer directly to an account designated by Lessee
to pay the Seller and/or to reimburse the Lessee for Transaction
Expenses.
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ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date. The Documentation Date (the "Documentation
Date") shall occur on the earliest date on which the following conditions
precedent shall have been satisfied:
(a) Lease. This Lease shall have been duly authorized,
executed and delivered by the parties thereto.
(b) Lessee's Resolutions and Incumbency Certificate. The
Lessee shall have delivered to the Lessor a certificate of its
Secretary or an Assistant Secretary attaching and certifying as to the
incumbency and signature of persons authorized to execute and deliver
on its behalf the Operative Documents to which it is a party.
(c) Opinion of Counsel to the Lessee. On or prior to the
Documentation Date, the Lessor shall have received an opinion of
internal counsel for the Lessee in form and substance satisfactory to
the Lessor.
(d) Certain Transaction Expenses. Counsel for the Lessor shall
have received, to the extent then invoiced, payment in full in cash of
all Transaction Expenses payable to such counsel pursuant to Section
31.1(a).
(e) BH Indemnity. The BH Indemnity shall have been duly
authorized, executed and delivered by the Parent.
(f) Opinion of Counsel to Lessor. On or prior to the
Documentation Date, the Lessee shall have received an opinion of
counsel to the Lessor in form and substance reasonably satisfactory to
the Lessee.
(g) Assignment of Ground Lease. The Assignment of the Ground
Lease shall have been duly authorized, executed and delivered by the
parties thereto.
(h) Lessor Loan Agreement. The Lessor Loan Agreement shall
have been duly authorized, executed and delivered by the parties
thereto.
4.2. Acquisition Date. The closing date with respect to the acquisition
of the Property (the "Acquisition Date") shall occur on the earliest date after
the Documentation Date, on which all the conditions precedent thereto set forth
in Section 4.3 with respect to such acquisition of the Property shall have been
satisfied or waived by the applicable parties as set forth therein. The
Acquisition Date for the Property shall be the date the Advance is made.
4.3. Conditions Precedent to the Acquisition Date and the Advance. The
occurrence of the Acquisition Date and the obligation of the Lessor to make the
Advance are subject to the satisfaction or waiver of the following conditions
precedent:
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(a) Operative Documents; No Default. Each of the Operative
Documents shall have been duly authorized, executed and delivered by
the parties thereto, in form and substance satisfactory to the parties
hereto, and shall be in full force and effect. No Default or Event of
Default shall exist under any of the Operative Documents (either before
or after giving effect to the transactions contemplated by the
Operative Documents), and the Lessor shall have received a fully
executed copy of each of such Operative Documents (other than this
Lease, of which the Lessor shall receive the original). The Operative
Documents (or memoranda thereof), any supplements thereto and any
financing statements in connection therewith required under the Uniform
Commercial Code shall have been recorded, registered and filed, if
necessary, in such
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manner as to enable counsel to render the opinions referred to in
clause (c) below and to enable the title company to issue the title
insurance policies referred to in clause (j) below.
(b) Taxes. All taxes, fees and other charges in connection
with the execution, delivery, recording, filing and registration of the
Operative Documents shall have been paid or provisions for such payment
shall have been made to the satisfaction of the Lessor.
(c) Opinions of Counsel. Counsel to the Lessee in the
jurisdiction in which the Property is located shall have issued to the
Lessor their opinions, all in form and substance satisfactory to the
Lessor.
(d) Governmental Approvals. All necessary (or, in the
reasonable opinion of the Lessor, advisable) Governmental Actions, in
each case required by any Requirement of Law, shall have been obtained
or made and be in full force and effect.
(e) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before
any Governmental Authority, nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority
(i) to set aside, restrain, enjoin or prevent the full performance of
this Lease, any other Operative Document or any transaction
contemplated hereby or thereby or (ii) which is reasonably likely to
materially and adversely affect the Lessee.
(f) Requirements of Law. The transactions contemplated by the
Operative Documents do not and will not violate any Material
Requirement of Law and do not and will not subject the Lessor to any
Material adverse regulatory prohibitions or constraints.
(g) Responsible Employee's Certificates. The Lessor shall have
received a Responsible Employee's Certificate of the Lessee, in
substantially the form of Exhibit C, dated as of the Acquisition Date,
stating that for the Lessee (i) each and every representation and
warranty of the Lessee contained in each Operative Document to which it
is a party is true and correct in all Material respects on and as of
the Acquisition Date; (ii) no Default or Event of Default has occurred
and is continuing under any Operative Document with respect to the
Lessee; (iii) each Operative Document to which the Lessee is a party is
in full force and effect with respect to it; and (iv) the Lessee has
duly performed and complied in all Material respects with all
covenants, agreements and conditions contained herein or in any
Operative Document required to be performed or complied with by it on
or prior to the Acquisition Date.
(h) Environmental Audit. The Lessor shall have received an
Environmental Audit for the Property in form and substance acceptable
to the Lessor, provided, Lessor shall not deem an Environmental Audit
unacceptable solely because a Phase Two environmental site assessment
is called for.
(i) Appraisal. The Lessor shall have received an Appraisal of
the Property.
(j) Survey and Title Insurance. The Lessee shall have
delivered to the Lessor an ALTA/1992 (Urban) Survey of the Property
(other than the Equipment located therein) prepared by a licensed
surveyor and meeting the Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys as adopted by the American Land Title
Association/American
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Society and American Congress on Surveying and Mapping in 1992
certified to the Lessor and the title company and otherwise in form
reasonably acceptable to the Lessor and an ALTA leasehold owner's title
insurance policy covering the Property (other than any Equipment) in
favor of the Lessor, and, at the option of Lessee, a leasehold owner's
title insurance policy in favor of the Lessee evidencing the Lessee's
equitable ownership in the Property, each such policy to be dated as of
the Acquisition Date and in an amount not less than the Property Cost
and to be reasonably satisfactory to the Lessor with, to the extent
available, comprehensive, zoning and mechanics liens' endorsements and
such other endorsements reasonably requested by the Lessor.
(k) Recordation. The Lessor shall have received evidence
reasonably satisfactory to it that each of the Assignment of Ground
Lease and the Lease Supplement shall have been delivered to the title
company in escrow for recordation with the appropriate Governmental
Authorities (and the issuance of the title insurance policies in clause
(j) above shall be satisfactory evidence of the foregoing).
(l) Evidence of Property Insurance. The Lessor shall have
received evidence of insurance with respect to the Property required to
be maintained pursuant to this Lease, setting forth the respective
coverages, limits of liability, carrier, policy number and period of
coverage, and otherwise satisfying the requirements set forth in
Article XVII.
(m) Lease Supplement. On or prior to the Acquisition Date, the
Lessee shall have delivered to the Lessor the Lease Supplement executed
by the Lessee.
(n) Heller Loan Documents Conditions Precedent. The conditions
precedent to the funding by Heller to Lessor of the loan subject to the
Heller Note shall have been satisfied or waived.
(o) Funding Request. The Lessor shall have received no later
than five (5) Business Days prior to the Acquisition Date a fully
executed counterpart of the applicable Funding Request, executed by the
Lessee.
(p) Delivery of the Certificate A and Certificate B. The
Lessee shall have delivered the Certificate A and Certificate B to the
Lessor in accordance with the Pledge Agreements.
All documents and instruments required to be delivered on the Acquisition Date
shall be delivered at the offices of Mayer, Brown & Platt, 1675 Broadway, New
York, New York 10019, or at such other location as may be determined by the
Lessor and the Lessee.
ARTICLE V
[INTENTIONALLY OMITTED]
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ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor. The Lessor represents and warrants
to the Lessee that:
(a) ERISA. The Lessor is not and will not be funding the
Advance hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA,
or "plan" (as defined in Section 4975(e)(1) of the Code).
(b) Status. The Lessor is a duly organized and validly
existing Delaware business trust and has all requisite power and
authority to own its property and to conduct the business in which it
is currently engaged.
(c) Corporate Power and Authority. The Lessor has the
requisite power and authority to execute, deliver and carry out the
terms and provisions of the Operative Documents to which it is or will
be a party and has taken all necessary action to authorize the
execution, delivery and performance of the Operative Documents to which
it is a party and has duly executed and delivered each Operative
Document required to be executed and delivered by it and, assuming the
due authorization, execution and delivery thereof on the part of each
other party thereto, each such Operative Document constitutes a legal,
valid and binding obligation enforceable against it in accordance with
its terms, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement
of creditors' rights generally and by equitable principles whether
enforcement is sought by proceedings in equity or at law and except as
the same may be limited by certain circumstances under law or court
decisions in respect of provisions providing for indemnification of a
party with respect to liability where such indemnification is contrary
to public policy.
(d) No Legal Bar. Neither the execution, delivery and
performance by the Lessor of the Operative Documents to which it is or
will be a party nor compliance with the terms and provisions thereof,
nor the consummation by the Lessor of the transactions contemplated
therein (i) will result in a violation by the Lessor of any provision
of any Applicable Law that would Materially adversely affect (x) the
validity or enforceability of the Operative Documents to which the
Lessor is a party, or the title to, or value or condition of, the
Property, or (y) the financial position, business or results of
operations of the Lessor or the ability of the Lessor to perform its
obligations under the Operative Documents (ii) will conflict with or
result in any breach which would constitute a default under, or (other
than pursuant to the Operative Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any
of the property or assets of the Lessor pursuant to the terms of any
indenture, loan agreement or other agreement for borrowed money to
which the Lessor is a party or by which it or any of its property or
assets is bound or to which it may be subject (other than Permitted
Liens), or (iii) will violate any provision of the Trust Agreement.
(e) Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Lessor, threatened (i) against the
Property, (ii) that are reasonably likely to have a Materially adverse
effect on the ability of the Lessor to perform its obligations under
the Operative Documents or (iii) that question the validity of the
Operative Documents or the rights or remedies of the Lessor with
respect to the Lessor or the Property under the Operative Documents.
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(f) Governmental Approvals. No Governmental Action by any
Governmental Authority having jurisdiction over the Lessor which has
not been taken on or prior to the Acquisition Date is required to
authorize or is required in connection with (i) the execution, delivery
and performance by the Lessor of any Operative Document to which it is
a party, or (ii) the legality, validity, binding effect or
enforceability against the Lessor of any Operative Document to which it
is a party.
(g) Investment Company Act. The Lessor is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act.
(h) Public Utility Holding Company Act. The Lessor is not a
"holding company" or a "subsidiary company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
6.2. Representations of Lessee. The Lessee represents and warrants to
the Lessor that:
(a) Corporate Status. The Lessee (i) is a duly organized and
validly existing corporation in good standing under the laws of the
State of Delaware and (ii) has the corporate power and authority to own
its properties and to conduct the business in which it is currently
engaged.
(b) Corporate Power and Authority. The Lessee has the
corporate power and authority to execute, deliver and carry out the
terms and provisions of the Operative Documents to which it is or will
be a party and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Operative Documents to
which it is a party and has duly executed and delivered each Operative
Document required to be executed and delivered by it and, assuming the
due authorization, execution and delivery thereof on the part of each
other party thereto, each such Operative Document constitutes a legal,
valid and binding obligation enforceable against it in accordance with
its terms, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement
of creditors' rights generally and by equitable principles whether
enforcement is sought by proceedings in equity or at law and except as
the same may be limited by certain circumstances under law or court
decisions in respect of provisions providing for indemnification of a
party with respect to liability where such indemnification is contrary
to public policy.
(c) No Legal Bar. Neither the execution, delivery and
performance by the Lessee of the Operative Documents to which it is or
will be a party nor compliance with the terms and provisions thereof,
nor the consummation by the Lessee of the transactions contemplated
therein (i) will result in a violation by the Lessee of any provision
of any Applicable Law that would Materially adversely affect (x) the
validity or enforceability of the Operative Documents to which the
Lessee is a party, or the title to, or value or condition of, the
Property, or (y) the consolidated financial position, business or
consolidated results of operations of the Lessee or the ability of the
Lessee to perform its obligations under the Operative Documents, (ii)
will conflict with or result in any breach which would constitute a
default under, or (other than pursuant to the Operative Documents)
result in the creation or imposition of (or the obligation to create or
impose) any Lien upon any of the property or assets of the Lessee
pursuant to the terms of any indenture, loan agreement or other
agreement for borrowed money to which the Lessee is a party or by which
it or any of its property or assets is bound or to which it may be
subject (other than Permitted
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Liens), or (iii) will violate any provision of the certificate of
incorporation or by-laws of the Lessee.
(d) Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Lessee, threatened (i) against the
Property, (ii) that are reasonably likely to have a Materially adverse
effect on the ability of the Lessee to perform its obligations under
the Operative Documents or (iii) that question the validity of the
Operative Documents or the rights or remedies of the Lessor with
respect to the Lessee or the Property under the Operative Documents.
(e) Governmental Approvals. No Governmental Action by any
Governmental Authority having jurisdiction over the Lessee or the
Property which has not been taken on or prior to the Acquisition Date
is required to authorize or is required in connection with (i) the
execution, delivery and performance by the Lessee of any Operative
Document to which it is a party, or (ii) the legality, validity,
binding effect or enforceability against the Lessee of any Operative
Document to which it is a party.
(f) Investment Company Act. The Lessee is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act.
(g) Public Utility Holding Company Act. The Lessee is not a
"holding company" or a "subsidiary company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(h) Offer of Securities, etc. Neither the Lessee nor any
Person authorized to act on the Lessee's behalf has, directly or
indirectly, offered any interest in the Property or any other interest
similar thereto (the sale or offer of which would be integrated with
the sale or offer of such interest in the Property), for sale to, or
solicited any offer to acquire any of the same from, any Person other
than the Lessor and other "accredited investors" (as defined in
Regulation D of the Securities and Exchange Commission).
(i) Lessee's Representations and Warranties in Heller
Subleasehold Mortgage. The Lessee's representations and warranties set
forth in the Heller Subleasehold Mortgage are true and correct.
(j) Use of Property. The Property and the contemplated use
thereof by the Lessee and its agents, assignees, employees, lessees,
licensees and tenants will comply with all Material Requirements of Law
(including, without limitation, all zoning and land use laws and
Environmental Laws) and Material Insurance Requirements, except for
such Requirements of Law as the Lessee shall be contesting in good
faith by appropriate proceedings. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent domain
or under any Environmental Law) pending or, to the best of the Lessee's
knowledge, threatened with respect to the Lessee, its Affiliates or the
Property which adversely Materially affects the title to, or the use,
operation or value of, the Property.
(k) Condition of Property. The Property has all utilities
required to adequately service it for its intended use pursuant to
adequate permits (including any that may be required under
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applicable Environmental Laws). No fire or other casualty with respect
to the Property has occurred which fire or other casualty has had a
Material adverse effect on the Property. The Property has available all
Material services of public facilities and other utilities necessary
for use and operation of the Property as an independent living
facility, including required public utilities and means of access
between the Property and public highways for pedestrians and motor
vehicles. All utilities proposed to serve the Property are located in,
and vehicular access to the Property is provided by, either public
rights-of-way abutting the Property or Appurtenant Rights.
(l) Title. The Assignment of Ground Lease will be in form and
substance sufficient to assign to the Lessor leasehold title to the
Land and fee simple title to the Improvements, subject only to
Permitted Liens. The Lessor will at all times during the Term have good
title to all Equipment located on the Property and in any Improvements,
subject only to Permitted Liens and Lessor Liens, if any.
(m) Insurance. The Lessee has obtained insurance coverage
covering the Property or self insures in a manner which satisfies the
terms of this Lease, and any such coverage is in full force and effect.
The Lessee carries insurance with reputable insurers in respect of its
Material Assets, in such manner, in such amounts and against such risks
as is customarily maintained by other Persons of similar size engaged
in similar business.
(n) Flood Hazard Areas. No portion of the Property is located
in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, except as
identified on a survey delivered to the Lessor.
(o) Defaults. No Event of Default or similar event which with
the lapse of time or notice or both would constitute an "Event of
Default" or similar event has occurred and is continuing hereunder or
under any Material bond, debenture, note or other evidence of
indebtedness or Material mortgage, deed of trust, indenture or loan
agreement or other instrument to which the Lessee is a party or is
subject to or bound.
(p) Use of Advance. No part of the Advance will be used
directly or indirectly for the purpose of purchasing or carrying, or
for payment in full or in part of Debt that was incurred for the
purposes of purchasing or carrying, any margin security as such term is
defined in Section 207.2 of Regulation G of the Board of Governors of
the Federal Reserve System (12 C.F.R., Chapter II, Part 207).
6.3. Representations of the Lessee with Respect to the
Advance. The Lessee represents and warrants to the Lessor as of the
Acquisition Date as follows:
(a) Representations. The representations and warranties of the
Lessee set forth in the Operative Documents (including the
representations and warranties set forth in Section 6.2) are true and
correct in all Material respects on and as of the Acquisition Date,
except to the extent such representations or warranties relate solely
to an earlier date, in which case such representations and warranties
shall have been true and correct in all Material respects on and as of
such earlier date. The Lessee is in compliance in all Material respects
with its respective obligations under the Operative Documents and there
exists no Default or Event of Default under this Lease or any other
Operative Document to which the Lessee is a party. No Default or Event
of Default under this Lease or any other Operative Document to which
the Lessee is a party will
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occur as a result of, or by giving effect to, the Advance requested by
the Funding Request on such date.
(b) Liens. The Lessee has not permitted Liens to be placed
against the Property other than Permitted Liens.
(c) Advance. The Advance requested represents amounts owed by,
or previously paid by, the Lessee to third parties in respect of
Property Cost. The conditions precedent to the Advance set forth in
Article IV have been satisfied.
ARTICLE VII
PAYMENT OF RENT
7.1. Rent.
(a) The Lessee shall pay BH Basic Rent and Lessor Basic Rent
on the Acquisition Date. Thereafter the Lessee shall pay Basic Rent (to
the extent such Basic Rent (or any component thereof) is then due and
owing) on (x) each Payment Date during the Term, (y) the date required
under Section 24.1(i) in connection with the Lessee's exercise of the
Remarketing Option, and (z) any date on which this Lease shall
terminate.
(b) Rent shall be due and payable in lawful money of the
United States and shall be paid by wire transfer of immediately
available funds on the due date therefor as follows: (i) Lessor Basic
Rent, BH Basic Rent, Break Costs and indemnity payments and any
Supplemental Rent with respect to which the Lessor is entitled to
reimbursement shall be payable as the Lessor shall designate in writing
to the Lessee (ii) Ground Rent shall be payable to the Lockbox Account
and (iii) the remainder of Rent payable to Lessor shall be paid to the
Lockbox Account. The Lessor shall provide written notice to the Lender
and the Lessee of the amount of Basic Rent due at least two (2)
Business Days prior to each due date therefor; provided, however, that
the failure of the Lessor to provide such notice shall not affect
Lessee's obligations hereunder or impose liability on Lessor. Lessee
shall deposit all security deposits received by it with respect to the
Property into the Security Deposit Account and shall cause all relevant
checks to be made payable to the name of the Security Deposit Account.
(c) Neither the Lessee's inability or failure to take
possession of all or any portion of the Property when delivered by the
Lessor, whether or not attributable to any act or omission of the
Lessee, or for any other reason whatsoever, shall delay or otherwise
affect the Lessee's obligation to pay Rent for the Property in
accordance with the terms of this Lease.
7.2. Payment of Rent. Rent shall be paid absolutely net to the Lessor,
so that this Lease shall yield to the Lessor the full amount thereof, without
setoff, deduction or reduction.
7.3. Supplemental Rent. The Lessee shall pay promptly Supplemental Rent
to the party entitled thereto in accordance with Section 7.1(b) as it becomes
due and payable. If the Lessee fails to pay any Supplemental Rent, the Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Basic Rent. The Lessee shall
pay as Supplemental Rent, among other things, within ten (10) days following
demand (or such shorter period that such payment is
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required to be made under the Heller Loan Documents or the Ground Lease) to the
extent permitted by applicable Requirements of Law, interest at the applicable
Overdue Rate on any installment of Basic Rent not paid when due for the period
for which the same shall be overdue and on any payment of Supplemental Rent not
paid when due or demanded by the Lessor for the period from the due date or the
date of any such demand, as the case may be, until the same shall be paid. The
expiration or other termination of the Lessee's obligations to pay Basic Rent
hereunder shall not limit or modify the obligations of the Lessee with respect
to Supplemental Rent. Unless expressly provided otherwise in this Lease, in the
event of any failure on the part of the Lessee to pay and discharge any
Supplemental Rent as and when due, the Lessee shall also promptly pay and
discharge any fine, penalty, interest or cost which may be assessed or added
under any agreement with a third party for nonpayment or late payment of such
Supplemental Rent, all of which shall also constitute Supplemental Rent.
7.4. Method of Payment. Except as otherwise set forth in the Heller
Loan Documents with respect to payments due on the Heller Note and the Ground
Lease with respect to Ground Rent, each payment of Rent or any other amount due
hereunder shall be made by the Lessee to the applicable party prior to 12:00
noon., New York City time at the place of payment designated in writing by the
Lessor or such applicable party in funds consisting of lawful currency of the
United States of America which shall be in federal or other immediately
available funds to an account specified by Lender (with respect to payments to
Lender) and, with respect to all other payees, to such accounts as specified by
such payees. If any payment is due on a date which is not a Business Day, such
payment shall be made on the next succeeding Business Day. Payments received
after 12:00 noon, New York City time on the date due shall for all purposes
hereof be deemed to have been paid on the next succeeding Business Day.
ARTICLE VIII
QUIET ENJOYMENT; RIGHT TO INSPECT
8.1. Quiet Enjoyment. Subject to Sections 2.4 and 8.2, and subject to
the rights of the Lessor contained herein and the other terms of the Operative
Documents to which the Lessee is a party, the Lessee shall peaceably and quietly
have, hold and enjoy the Property for the Term, free of any claim or other
action by the Lessor or anyone claiming by, through or under the Lessor (other
than the Lessee) with respect to any matters arising from and after the
Acquisition Date. Such right of quiet enjoyment is independent of, and shall not
affect the Lessor's rights otherwise to initiate legal action to enforce, the
obligations of the Lessee under this Lease.
8.2. Right to Inspect. During the Term, the Lessee shall, upon
reasonable prior written notice from the Lessor (except that no notice shall be
required if an Event of Default under this Lease has occurred and is
continuing), and subject to the rights of permitted sublessees permit the Lessor
and its authorized representatives to inspect the Property during normal
business hours, provided that such inspections shall not unreasonably interfere
with the Lessee's business operations at the Property.
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease. This Lease shall constitute a net lease. Any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall the Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
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obligations of the Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (i) any defect in the condition, merchantability, design,
construction, quality or fitness for use of the Property or any part thereof, or
the failure of the Property to comply with all Requirements of Law, including
any inability to occupy or use the Property by reason of such non-compliance;
(ii) any damage to, removal, abandonment, salvage, loss, contamination of or
Release from, scrapping or destruction of or any requisition or taking of the
Property or any part thereof; (iii) any restriction, prevention or curtailment
of or interference with any use of the Property or any part thereof including
eviction; (iv) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property (other than Lessor Liens); (v) any
change, waiver, extension, indulgence or other action or omission or breach in
respect of any obligation or liability of or by the Lessor; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceedings relating to the Lessee or any other Person, or any action
taken with respect to this Lease by any trustee or receiver of the Lessee or any
other Person, or by any court, in any such proceeding; (vii) any claim that the
Lessee has or might have against any Person, including without limitation the
Lessor and any vendor, manufacturer, contractor of or for any portion of the
Property; (viii) any failure on the part of the Lessor to perform or comply with
any of the terms of this Lease (other than performance by Lessor of its
obligations set forth in Sections 2.1 and 33.11 hereof), of any other Operative
Document or of any other agreement; (ix) any invalidity or unenforceability or
illegality or disaffirmance of this Lease against or by the Lessee or any
provision hereof or any of the other Operative Documents or any provision of any
thereof; (x) the impossibility or illegality of performance by the Lessee, the
Lessor or both; (xi) any action by any court, administrative agency or other
Governmental Authority; (xii) any restriction, prevention or curtailment of or
interference with the construction on or any use of the Property or any part
thereof; or (xiii) any other cause or circumstances, whether or not the Lessee
shall have notice or knowledge of any of the foregoing. The parties intend that
the obligations of the Lessee hereunder shall be covenants and agreements that
are separate and independent from any obligations of the Lessor hereunder or
under any other Operative Documents and the obligations of the Lessee shall
continue unaffected unless such obligations shall have been modified or
terminated in accordance with an express provision of this Lease. Nothing
contained herein is intended to obviate or otherwise diminish any right the
Lessee may have to bring an action, either at law or in equity, to remedy any
breach by the Lessor of the Lessor's obligations hereunder.
9.2. No Termination or Abatement. The Lessee shall remain obligated
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting the Lessor, or any action with respect to this Lease which
may be taken by any trustee, receiver or liquidator of the Lessor or by any
court with respect to the Lessor. The Lessee hereby waives all right (i) to
terminate or surrender this Lease (except as provided herein) or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. The Lessee shall remain obligated under
this Lease in accordance with its terms and the Lessee hereby waives any and all
rights now or hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Lease. Notwithstanding any
such statute or otherwise, the Lessee shall be bound by all of the terms and
conditions contained in this Lease. Notwithstanding anything contained in this
Article IX, this Lease may be terminated by Lessor pursuant to, inter alia,
Sections 19.1 and 20.2 hereof.
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ARTICLE X
SUBLEASES
10.1. Subletting. Subject to the Heller Loan Documents and the Ground
Lease, the Lessee may, without the consent of the Lessor, sublease the Property
or any portion thereof to any Person. No sublease or other relinquishment of
possession of the Property shall in any way discharge or diminish any of the
Lessee's obligations to the Lessor hereunder, and the Lessee shall remain
directly and primarily liable under this Lease, even if assigned, and as to the
Property or portion thereof so sublet. Any sublease of the Property shall have a
term of not longer than one year or if such sublease has a term of more than one
year, such term shall not extend beyond the Term or any Renewal Period. The
Lessor hereby expressly agrees that any obligations or covenants under this
Lease may be performed by any permitted sublessee directly, and the Lessor
agrees that any such performance will be accepted in satisfaction of the
obligations or covenants in this Lease.
ARTICLE XI
LESSEE ACKNOWLEDGMENTS
11.1. Condition of the Property. THE LESSEE ACKNOWLEDGES AND AGREES
THAT IT IS LEASING THE PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR AND SUBJECT TO (A) THE EXISTING
STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF, (C) ANY
STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, AND
(D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY EXIST ON THE DATE HEREOF OR ON
THE ACQUISITION DATE. THE LESSOR HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) AND SHALL NOT
BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE (OTHER THAN FOR
LESSOR LIENS), VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, OR
FITNESS FOR USE OF THE PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PROPERTY (OR ANY PART THEREOF) AND THE LESSOR SHALL NOT BE LIABLE
FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR LIENS)
OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
REQUIREMENT OF LAW.
11.2. Risk of Loss. During the Term the risk of loss of or decrease in
the enjoyment and beneficial use of the Property as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges. The Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on the Property during the
Term. The Lessee shall be entitled to receive any credit or refund with respect
to any utility
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charge paid by the Lessee and the amount of any credit or refund received by the
Lessor on account of any utility charges paid by the Lessee, net of the costs
and expenses reasonably incurred by the Lessor in obtaining such credit or
refund, shall be promptly paid over to the Lessee.
12.2. Possession and Use of the Property. The Property shall be used as
an independent living facility; provided, however, at the discretion of the
Lessee, the Lessee shall also have the right, subject to the Lessee's compliance
with all Requirements of Law with respect thereto, to provide or arrange for the
provision of congregate care and/or assisted living services to residents of the
Property. Such use of the Property shall be in a manner consistent with the
standards applicable to properties of a similar nature in the geographic area in
which the Property is located and in any event not less than the standards
applied by Affiliates of the Lessee for other comparable properties of the
Lessee or such Affiliates in such geographic area. The Lessee shall pay, or
cause to be paid, all charges and costs required in connection with the use of
the Property as contemplated by this Lease. The Lessee shall not intentionally
commit or permit any waste of the Property or any part thereof.
12.3. Compliance with Requirements of Law and Insurance Requirements.
Subject to the terms hereof relating to permitted contests, the Lessee, at its
sole cost and expense, shall (a) comply in all Material respects with all
Requirements of Law (including all Environmental Laws) and Insurance
Requirements relating to the Property, including the use, construction,
operation, maintenance, repair and restoration thereof and the remarketing
thereof pursuant to Article XXIV, whether or not compliance therewith shall
require structural or extraordinary changes in the applicable Improvements or
interfere with the use and enjoyment of the Property, and (b) procure, maintain
and comply with all Material licenses, permits, orders, approvals, consents and
other authorizations required for the construction, use, maintenance and
operation of the Property and for the use, operation, maintenance, repair and
restoration of the applicable Improvements.
12.4. Assignment by Lessee. Subject to the terms of the Heller Loan
Documents and the Ground Lease, the Lessee may, with the consent of the Lessor,
assign its rights hereunder, including the Purchase Option, to any other Person
so long as the Lessee remains fully liable for all of the obligations of the
"Lessee" hereunder and under the other Operative Documents.
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return.
(a) The Lessee, at its sole cost and expense, shall maintain
the Property in good condition (ordinary wear and tear excepted) and
make all necessary repairs thereto, of every kind and nature
whatsoever, whether interior or exterior, ordinary or extraordinary,
structural or nonstructural or foreseen or unforeseen, in each case as
required by all Requirements of Law and Insurance Requirements and on a
basis consistent with the operation and maintenance by the Lessee or
its Affiliates of properties of a similar nature owned or leased by the
Lessee or any of its Affiliates in the geographic area where the
Property is located.
(b) The Lessor shall under no circumstances be required to
build any improvements on the Property, make any repairs, replacements,
alterations or renewals of any nature or description to the Property,
make any expenditure whatsoever in connection with this Lease or
maintain the
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Property in any way. The Lessor shall not be required to maintain,
repair or rebuild all or any part of the Property, and the Lessee
waives any right to (i) require the Lessor to maintain, repair, or
rebuild all or any part of the Property, or (ii) make repairs at the
expense of the Lessor pursuant to any Requirement of Law, Insurance
Requirement, contract, agreement, or covenant, condition or restriction
in effect at any time during the Term.
(c) The Lessee shall, upon the expiration or earlier
termination of this Lease, vacate and surrender the Property to the
Lessor in its then-current, "AS IS" condition, subject to the Lessee's
obligations under Sections 12.3, 13.1(a), 14.1, 15.1, 18.1(d), 18.2 and
25.1, unless the Lessee has purchased the Property from the Lessor as
provided herein.
ARTICLE XIV
MODIFICATIONS, ETC.
14.1. Modifications, Substitutions and Replacements. The Lessee, at its
sole cost and expense, may at any time and from time to time make alterations,
renovations, improvements and additions to the Property or any part thereof and
substitutions and replacements therefor (collectively, "Modifications");
provided, however, that: (i) except for any Modification required to be made
pursuant to a Requirement of Law (a "Required Modification"), no Modification
shall impair the value, utility or useful life of the Property or any part
thereof from that which existed immediately prior to such Modification; (ii) the
Modification shall be done expeditiously and in a good and workmanlike manner;
(iii) the Lessee shall comply with all Requirements of Law (including all
Environmental Laws) and Insurance Requirements applicable to the Modification,
including the obtaining of all permits and certificates of occupancy, and the
structural integrity of the Property shall not be materially adversely affected;
(iv) subject to the terms of Article XVI relating to permitted contests, the
Lessee shall pay all costs and expenses and shall discharge (or cause to be
insured or bonded over) within sixty (60) days after the same shall be filed (or
otherwise become effective) any Liens arising with respect to the Modification;
and (v) such Modifications shall comply with Sections 12.3 and 13.1(a). All
Modifications shall remain part of the Property and shall be subject to this
Lease and title thereto shall immediately vest in the Lessor; provided, however,
that the Modifications that meet each of the following conditions shall not be
subject to this Lease: (x) such Modifications are not Required Modifications,
(y) such Modifications were not financed by the Lessor and (z) such
Modifications are readily removable without impairing the value, utility or
remaining useful life of the Property. The Lessee may place upon the Property
any trade fixtures, machinery, equipment or other property belonging to the
Lessee or third parties and may remove the same at any time during the Term,
subject, however, to the terms of Section 13.1(a), and Lessor hereby waives any
liens, to which it may be entitled pursuant to any statutory or common law, in
such trade fixtures, machinery, equipment or other property; provided that such
trade fixtures, machinery, equipment or other property do not Materially impair
the value, utility or remaining useful life of the Property; provided, further,
that the Lessee shall keep and maintain at the Property and shall not, without
the Lessor's prior consent, remove from the Property any Equipment financed or
otherwise paid for (directly or indirectly) by the Lessor pursuant to this
Lease. Notwithstanding the forgoing, the Lessee shall comply with all provisions
of the Heller Loan Documents and the Ground Lease with respect to Modifications
as if the Lessee were the Borrower thereunder, and to the extent the provisions
hereof are inconsistent with same, the provisions of the Heller Loan Documents
and the Ground Lease shall control.
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ARTICLE XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title.
(a) The Lessee agrees that except as otherwise provided herein
and subject to the terms of Article XVI relating to permitted contests,
the Lessee shall not directly or indirectly create or allow to remain,
and shall promptly discharge at its sole cost and expense, any Lien,
defect, attachment, levy, title retention agreement or claim upon the
Property or any Modifications or any Lien, attachment, levy or claim
with respect to the Rent, other than Permitted Liens and Liens on
machinery, equipment, general intangibles and other personal property
not financed by the Advance.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of the Lessor, expressed or
implied, to or for the performance by any contractor, mechanic,
laborer, materialman, supplier or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration,
addition, repair or demolition of or to the Property or any part
thereof. NOTICE IS HEREBY GIVEN THAT THE LESSOR IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE
FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING THE PROPERTY OR ANY PART
THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANIC'S OR OTHER
LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF THE LESSOR, IN AND TO THE PROPERTY.
15.2. Grants and Releases of Easements; Lessor's Waivers. (x) Provided
that no Event of Default shall have occurred and be continuing, (y) subject to
the obligations of the Lessee under the provisions of Articles XII, XIII and XIV
and (z) provided that the following is consistent with the terms of the Heller
Loan Documents and the Ground Lease, the Lessor hereby consents in each instance
to the following actions by the Lessee, in the name and stead of the Lessor, but
at the Lessee's sole cost and expense: (a) the granting of easements, licenses,
rights-of-way and other rights and privileges in the nature of easements
reasonably necessary or desirable for the use, repair, or maintenance of the
Property as herein provided; (b) the release of existing easements or other
rights in the nature of easements which are for the benefit of the Property; (c)
if required by applicable Governmental Authority for any purpose, including, but
not limited to, the dedication or transfer of unimproved portions of the
Property for road, highway or other public purposes; and (d) the execution of
amendments to any covenants and restrictions affecting the Property; provided,
however, that in each case (i) such grant, release, dedication, transfer or
amendment does not Materially impair the value, utility or remaining useful life
of the Property, (ii) such grant, release, dedication, transfer or amendment is
reasonably necessary in connection with the use, maintenance, alteration or
improvement of the Property, (iii) such grant, release, dedication, transfer or
amendment will not cause the Property or any portion thereof to fail to comply
in any Material respect with the provisions of this Lease or any other Operative
Documents and all Requirements of Law (including, without limitation, all
applicable zoning, planning, building and subdivision ordinances, all applicable
restrictive covenants and all applicable architectural approval requirements);
(iv) all governmental consents or approvals required prior to such grant,
release, dedication, transfer or amendment have been obtained, and all filings
required prior to such action have been made; (v) such grant, release,
dedication, transfer or amendment will not result in any down-zoning of the
Property or any portion thereof or a material reduction in the maximum density
or development rights available to the
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Property under all Requirements of Law; (vi) the Lessee shall remain obligated
under this Lease and under any instrument executed by the Lessee consenting to
the assignment of the Lessor's interest in this Lease as security for
indebtedness, in each such case in accordance with their terms, as though such
grant, release, dedication, transfer or amendment had not been effected and
(vii) the Lessee shall pay and perform any obligations of the Lessor under such
grant, release, dedication, transfer or amendment. Subject to any limitations
imposed by the Heller Loan Documents and the Ground Lease, the Lessor
acknowledges the Lessee's right to finance and to secure under the Uniform
Commercial Code, inventory, furnishings, furniture, equipment, machinery,
leasehold improvements and other personal property located at the Property other
than Equipment which has been purchased with funds provided by the Lessor, and
Lessor hereby disclaims and waives any interest therein and right thereto and
the Lessor shall, upon the request of the Lessee, and at the Lessee's sole cost
and expense, execute and deliver any instruments necessary or appropriate to
confirm any such grant, release, dedication, transfer, annexation, amendment,
disclaimer or waiver to any Person permitted under this Section 15.2 including
landlord waivers with respect to any of the foregoing.
ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted Contests in Respect of Applicable Law. Subject to the
terms of the Heller Loan Documents and the Ground Lease, if, to the extent and
for so long as (a) a test, challenge, appeal or proceeding for review of any
Applicable Law relating to the Property shall be prosecuted diligently and in
good faith in appropriate proceedings by the Lessee or (b) compliance with such
Applicable Law shall have been excused or exempted by a valid nonconforming use,
variance, permit, waiver, extension or forbearance, the Lessee shall not be
required to comply with such Applicable Law but only if and so long as any such
test, challenge, appeal, proceeding, waiver, extension, forbearance or
noncompliance shall not, in the reasonable opinion of the Lessor, involve (A)
any risk of criminal liability being imposed on the Lessor or the Property, or
(B) any risk of (1) foreclosure, forfeiture or loss of the Property, or any
Material part thereof, or (2) the nonpayment of Rent or (C) any substantial
danger of (1) the sale of, or the creation of any Lien (other than a Permitted
Lien) on, any part of the Property, (2) civil liability being imposed on the
Lessor, or the Property, or (3) enjoinment of, or interference with, the use,
possession or disposition of the Property in any Material respect.
The Lessor will not be required to join in any proceedings pursuant to
this Section 16.1 unless a provision of any Applicable Law requires that such
proceedings be brought by or in the name of the Lessor; and in that event the
Lessor will join in the proceedings or permit them or any part thereof to be
brought in its name if and so long as (i) no Default has occurred and is
continuing and (ii) the Lessee pays all related expenses and indemnifies the
Lessor to its reasonable satisfaction.
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance.
(a) During the Term the Lessee shall procure and carry, at the
Lessee's sole cost and expense, commercial general liability insurance
for claims for bodily injury or death sustained by persons or damage to
property while on the Property and such other public liability
coverages as
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are ordinarily procured by the Lessee or its Affiliates who own or
operate similar properties. Such insurance shall be on terms and in
amounts that are in accordance with normal industry practice. The
policy shall be endorsed to name the Lessor, the Trust Company and the
Lender as additional insureds. The policy shall also specifically
provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any
insurance which the Lessor may have in force.
(b) The Lessee shall, in the construction of any Improvements
(including in connection with any Modifications thereof) and the
operation of the Property, comply with, or cause the applicable
contractor to comply with, all applicable workers' compensation laws.
17.2. Hazard and Other Insurance. During the Term, the Lessee shall
keep, or cause to be kept, the Property insured against loss or damage by fire,
flood and other risks on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee or its
Affiliates and that are in accordance with normal industry practice and as
required in the Heller Loan Documents and the Ground Lease. During the
construction of any Improvements the Lessee shall also maintain or cause to be
maintained builders' risk insurance.
17.3. Insurance Coverage.
(a) The Lessee shall furnish the Lessor and Lender with
certificates showing the insurance required under Sections 17.1 and
17.2 to be in effect and naming the Lessor, Lender and, if required
under the Ground Lease, the Ground Lessor as additional insured with
respect to liability coverage (excluding worker's compensation
insurance), and naming the Lender as loss payee with respect to
property coverage and showing the mortgagee endorsement required by
Section 17.3(c) with respect to such coverage. All such insurance shall
be at the cost and expense of the Lessee. Such certificates shall
include a provision for no less than thirty (30) days' advance written
notice by the insurer to the Lessor and Lender in the event of
cancellation or reduction of such insurance.
(b) The Lessee agrees that the insurance policy or policies
required by Section 17.2 shall include an appropriate clause pursuant
to which such policy shall provide that it will not be invalidated
should the Lessee waive, in writing, prior to a loss, any or all rights
of recovery against any party for losses covered by such policy, and
that the insurance in favor of the Lessor and Lender and its rights
under and interests in said policies shall not be invalidated or
reduced by any act or omission or negligence of the Lessee or any other
Person having any interest in the Property. The Lessee hereby waives
any and all such rights against the Lessor and Lender to the extent of
payments made under such policies.
(c) All such insurance shall be written by reputable insurance
companies that are financially sound and solvent and otherwise
reasonably appropriate considering the amount and type of insurance
being provided by such companies. Any insurance company selected by the
Lessee which is rated in Best's Insurance Guide or any successor
thereto (or if there be none, an organization having a similar national
reputation) shall have a general policyholder rating of "A:VII" or
better or be otherwise acceptable to the Lessor. All insurance policies
required by Section 17.2 shall include a standard form mortgagee
endorsement in favor of the Lender.
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(d) The Lessor may carry separate liability insurance so long
as (i) the Lessee's insurance is designated as primary and in no event
excess or contributory to any insurance the Lessor may have in force
which would apply to a loss covered under the Lessee's policy and (ii)
each such insurance policy will not cause the Lessee's insurance
required under this Article XVII to be subject to a coinsurance
exception of any kind.
(e) The Lessee shall pay as they become due all premiums for
the insurance required by Section 17.1 and Section 17.2, and shall
renew or replace each policy prior to the expiration date thereof.
Throughout the Term, at the time each of the Lessee's insurance
policies is renewed (but in no event less frequently than once each
year), the Lessee shall deliver to the Lessor certificates of insurance
evidencing that all insurance required by this Article XVII is being
maintained by the Lessee and is in effect.
17.4. Insurance Proceeds. Except as otherwise provided in the Heller
Loan Documents and the Ground Lease, all insurance proceeds in respect of any
loss or occurrence shall be paid to the Lender and, if such proceeds are not
applied to indebtedness evidenced by the Heller Loan Documents, upon compliance
with the terms of the Heller Loan Documents, the Lender shall pay same to the
Lessee for application toward the reconstruction, repair or refurbishment of the
Property.
17.5. Insurance Requirements in Heller Loan Documents. Notwithstanding
the provisions of Sections 17.1, 17.2, 17.3 and 17.4, the Lessee shall comply
with all insurance requirements set forth in Section 5 of the Heller
Subleasehold Mortgage and Section 5 of the Heller Leasehold Mortgage and to the
extent the provisions hereof are inconsistent with same, the provisions of the
Heller Subleasehold Mortgage and Heller Leasehold Mortgage shall control. The
Lessor acknowledges that such aforementioned insurance requirements are
acceptable to it; provided, however, that notwithstanding the foregoing, the
Lessee must at all times during the Term have liability insurance complying with
Section 17.1.
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation.
(a) Subject to the provisions of this Article XVIII, if all or
a portion of the Property is damaged or destroyed in whole or in part
by a Casualty or if the use, access, occupancy, easement rights or
title to the Property or any part thereof, is the subject of a
Condemnation, then the Lessee shall (i) reconstruct, refurbish and
repair the Property upon submission to the Lessor of an architect's
certificate as to the cost of such restoration and to the effect that
the Property can be fully restored to the condition required under the
Operative Documents and as to the cost of such restoration or (ii) pay
the Lease Balance.
(b) The Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any award,
compensation or insurance payment on account of any such Casualty or
Condemnation and shall pay all expenses thereof. At the Lessee's
reasonable request, and at the Lessee's sole cost and expense, the
Lessor shall participate in any such proceeding, action, negotiation,
prosecution or adjustment. The Lessor and the Lessee agree that this
Lease
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shall control the rights of the Lessor and the Lessee in and to any
such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice of a
Casualty or of an actual, pending or threatened Condemnation of the
Property or any interest therein, the Lessor or the Lessee, as the case
may be, shall give notice thereof to the other and the Lender promptly
after the receipt of such notice.
(d) If pursuant to this Section 18.1 and Section 19.1 this
Lease shall continue in full force and effect following a Casualty or
Condemnation with respect to the Property, the Lessee shall, at its
sole cost and expense (and, without limitation, if any award,
compensation or insurance payment is not sufficient to restore the
Property in accordance with this paragraph, the Lessee shall pay the
shortfall), promptly and diligently repair any damage to the Property
caused by such Casualty or Condemnation in conformity with the
requirements of Sections 13.1 and 14.1 using the as-built plans and
specifications for the Property (as modified to give effect to any
subsequent Modifications, any Condemnation affecting the Property and
all applicable Requirements of Law) so as to restore the Property as
near as possible to the condition, operation, function and value as
existed immediately prior to such Casualty or Condemnation with such
Modification as the Lessee may elect in accordance with Section 14.1.
In such event, title to the Property shall remain with the Lessor. Upon
completion of such restoration, the Lessee shall furnish the Lessor an
architect's certificate of substantial completion and a Responsible
Employee's Certificate confirming that such restoration has been
completed pursuant to this Lease.
(e) In no event shall a Casualty or Condemnation affect the
Lessee's obligations to pay Rent pursuant to Section 7.1 or to perform
its obligations and pay any amounts due on the Expiration Date or
pursuant to Articles XXII and XXV.
(f) Any Excess Proceeds received by the Lessor in respect of a
Casualty or Condemnation shall be turned over to the Lessee.
(g) Notwithstanding the provisions of this Section 18.1, the
Lessee shall comply with and be entitled to the benefit of all
provisions in the Heller Loan Documents and the Ground Lease regarding
Casualty and Condemnation and to the extent the provisions hereof are
inconsistent with same, the provisions of the Heller Loan Documents and
the Ground Lease shall control.
18.2. Environmental Matters. Promptly upon the Lessee's knowledge of
the existence of an Environmental Violation, the Lessee shall notify the Lessor
in writing of such Environmental Violation. If the Lessor elects not to
terminate this Lease pursuant to Section 19.1, at the Lessee's sole cost and
expense, the Lessee shall promptly and diligently commence any response, clean
up, remedial or other action necessary to remove, clean up or remediate the
Environmental Violation in accordance with the terms of Section 12.3. If the
Lessor does not deliver a Termination Notice pursuant to Section 19.1, the
Lessee shall, upon completion of remedial action by the Lessee, cause to be
prepared by an environmental consultant reasonably acceptable to the Lessor a
report describing the Environmental Violation and the actions taken by the
Lessee (or its agents) in response to such Environmental Violation, and a
statement by the consultant that the Environmental Violation has been remedied
in compliance in all Material respects with applicable Environmental Law. Each
such Environmental Violation shall be remedied prior
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to the Expiration Date. Nothing in this Article XVIII shall reduce or limit the
Lessee's obligations under the indemnity provisions hereof.
18.3. Notice of Environmental Matters. Promptly, but in any event
within sixty (60) Business Days from the date the Lessee has actual knowledge
thereof, the Lessee shall provide to the Lessor written notice of any pending or
threatened claim, action or proceeding involving any Environmental Violation on
or in connection with the Property. All such notices shall describe in
reasonable detail the nature of the claim, action or proceeding and the Lessee's
proposed response thereto. In addition, the Lessee shall provide to the Lessor,
within sixty (60) Business Days of receipt, copies of all written communications
with any Governmental Authority relating to any Environmental Law or any Release
in connection with the Property. The Lessee shall also promptly provide such
detailed reports of any such environmental claims as may reasonably be requested
by the Lessor. In the event that the Lessor receives written notice of any
pending or threatened claim, action or proceeding involving any Environmental
Violation on or in connection with the Property, the Lessor shall promptly give
notice thereof to the Lessee.
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination Upon Certain Events. With respect to the Property, if
either:
(i) a Significant Condemnation occurs; or
(ii) an Environmental Violation occurs which (x) either causes
the Lender to accelerate the Principal Amount (as defined in the Heller
Note) or (y) is not being addressed by the Lessee or the Parent as
required hereby or by the BH Indemnity;
and the Lessor or the Lessee shall have given written notice to the other party
that this Lease is to be terminated as a consequence of the occurrence of such
an event (a "Termination Notice"), then, the Lessee shall be obligated to
purchase all or a portion of the Lessor's interest in the Property on a Payment
Date prior to the date occurring one hundred eighty (180) days after the date of
the notice of termination by paying the Lessor on such Payment Date an amount
equal to (a) the Equity Balance, in which case this Lease shall not terminate
but the Lease Balance shall be reduced by the amount of such payment of Equity
Balance or (b) the Lease Balance.
19.2. Termination Procedures. On the date of the payment by the Lessee
of the Lease Balance in accordance with the Termination Notice or in accordance
with Section 19.1 (such date, the "Termination Date"), this Lease shall
terminate and, concurrent with the Lessor's receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense a quitclaim
deed and assignment of the Ground Lease with respect to the Property, a
quitclaim bill of sale with respect to the applicable Equipment and an
assignment of the Lessor's entire interest in the Property (which shall
include an assignment of all of the Lessor's right, title and interest
in and to any Net Proceeds not previously received by the Lessor and
existing subleases and security deposits thereunder), in each case in
recordable form and
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otherwise in conformity with local custom and free and clear of any
Lessor Liens attributable to the Lessor;
(b) the Property shall be conveyed to such Person "AS IS" and
in its then present physical condition;
(c) in the case of a termination pursuant to clause (i) or
(ii) of Section 19.1, the Lessor shall convey to the Lessee any Net
Proceeds with respect to the Condemnation giving rise to the partial
termination of this Lease theretofore received by the Lessor or, at the
request of the Lessee, such amounts shall be applied against sums due
hereunder; and
(d) the Lessor shall execute and deliver to Lessee and the
Lessee's title insurance company an affidavit as to the absence of any
Lessor Liens and shall execute and deliver to the Lessee a statement of
termination of this Lease to the extent relating to the Property.
ARTICLE XX
EVENTS OF DEFAULT
20.1. Events of Default. The occurrence of any one or more of the
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute an "Event of Default":
(a) the Lessee shall fail to make payment of any Basic Rent,
including amounts due pursuant to Section 19.1 or Section 22.1 or
Article XXIV, Equity Balance or Lease Balance when due; provided,
however, the failure to pay those portions of Basic Rent consisting of
BH Basic Rent, Lessor Basic Rent, or principal and interest due under
the Heller Note or Ground Rent due on the due date therefor shall not
constitute an Event of Default if Lessee shall cure such failure within
five (5) days after the due date therefor: provided, further, however,
that the failure to pay that portion of Basic Rent consisting of Ground
Rent due on the due date therefor shall not constitute an Event of
Default unless such failure is not remedied within the applicable grace
period therefor set forth in the Ground Lease;
(b) the Lessee shall fail to make payment of any Supplemental
Rent (i) required to be made pursuant to the Heller Loan Documents on
the due date therefor and such failure is not remedied within any
applicable cure or grace period set forth in the Heller Loan Documents,
(ii) required to be paid under the Ground Lease on the due date
therefore and such failure is not remedied within any applicable cure
or grace period set forth in the Ground Lease and (iii) any other
component of Supplement Rent due and payable within five (5) Business
Days after receipt of notice thereof;
(c) the Lessee shall fail to maintain insurance as required by
Article XVII of this Lease;
(d) the Lessee shall fail in any Material respect to observe
or perform any term, covenant or condition of the Lessee under this
Lease or the Operative Documents to which it is party other than those
described in Section 20.1(a), (b), or (c) hereof, and such failure
shall have continued for thirty (30) days after the earlier of (i)
delivery to the Lessee of written notice thereof from the
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Lessor or (ii) a Responsible Employee of the Lessee shall have
knowledge of such failure; provided, however, that if such failure is
capable of cure but cannot be cured by payment of money or cannot be
cured by diligent efforts within such thirty (30) day period but such
diligent efforts shall be properly commenced within the cure period and
the Lessee is diligently pursuing, and shall continue to pursue
diligently, remedy of such failure, the cure period shall be extended
for an additional period of time as may be necessary to cure, not to
exceed an additional one hundred twenty (120) days or to extend beyond
the Expiration Date; provided further, that failure by the Lessee to
fully comply with the requirements of Section 24.1 hereof shall not be
subject to any cure period;
(e) to the extent the same causes an Event of Default under
the Heller Loan Documents, any representation or warranty made by the
Lessee in any of the Operative Documents to which it is a party shall
prove to have been inaccurate in any Material respect at the time made,
and if such inaccuracy can be cured, it shall not have been cured
within forty-five (45) days after the earlier of (i) delivery to the
Lessee of written notice thereof from the Lessor or (ii) a Responsible
Employee of the Lessee shall have knowledge of such inaccuracy;
(f) an "Event of Default" under any of the Heller Loan
Documents shall have occurred and be continuing (other than an
Uncurable Event of Default (as defined in the Heller Subleasehold
Mortgage) to the extent and so long as the Lender's remedies under
Paragraph 40 of the Heller Subleasehold Mortgage are abated);
(g) the Lessee or the Parent shall (i) admit in writing its
inability to pay its debts generally as they become due, (ii) file a
petition under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America or
any State or Commonwealth thereof, (iii) make a general assignment for
the benefit of its creditors, (iv) consent to the appointment of a
receiver of itself or the whole or any substantial part of its
property, (v) fail to cause the discharge of any custodian, trustee or
receiver appointed for the Lessee or the Parent, as applicable, or the
whole or a substantial part of the Lessee's or the Parent's property
within ninety (90) days after such appointment, (vi) file a petition or
answer seeking or consenting to reorganization under the United States
bankruptcy laws or any other applicable insolvency law or statute of
the United States of America or any State or Commonwealth thereof; or
(vii) be adjudicated as bankrupt or insolvent;
(h) dissolution, liquidation or insolvency proceedings or a
petition under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of America or
any State or Commonwealth thereof shall be filed against, consented to
or acquiesced by the Lessee or the Parent and not dismissed within
ninety (90) days from the date of its filing, or a court of competent
jurisdiction shall enter an order or decree appointing, without the
consent of the Lessee or the Parent, as applicable, a receiver,
liquidator or trustee of the Lessee or the Parent or the whole or a
substantial part of any of the Lessee's or the Parent's property and
such order or decree shall not be vacated or set aside within ninety
(90) days from the date of the entry thereof;
(i) an event of default, as defined in any agreement,
mortgage, indenture or instrument under which there may be issued, or
by which there may be secured or evidenced, any indebtedness of the
Lessee in a principal amount in excess of $5,000,000, whether such
indebtedness now exists or shall hereafter be created, shall happen, if
the effect of such default is
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to accelerate the maturity of such indebtedness, unless the Lessee is
diligently and in good faith contesting such default in appropriate
proceedings;
(j) any Lien granted by the Lessee under any Operative
Document shall, in whole or in part, terminate, cease to be effective
against, or cease to be the legal, valid, binding and enforceable
obligation of, the Lessee;
(k) the Lessee shall directly or indirectly contest the
validity of any Operative Document in any manner in any court of
competent jurisdiction or any Lien granted by the Lessee under any
Operative Document;
(l) the Lessee shall fail to satisfy any of its obligations
under the Certificate A Pledge Agreement or Certificate B Pledge
Agreement, including, without limitation, satisfying the Collateral
Requirement (as defined in such agreement) within the applicable cure
or grace period provided therefor, for which the exclusive remedy for
such Event of Default is provided in Section 20.2(k);
(m) the Lessor shall not have received all BH Basic Rent and
Lessor Basic Rent within five (5) days after any BH Payment Date; or
(n) a default under Section 17 of the Ground Lease shall have
occurred and be continuing after applicable cure periods therefor.
20.2. Remedies. Subject to Section 39(b) of the Heller Leasehold
Mortgage, upon the occurrence of any Event of Default and at any time
thereafter, the Lessor may, so long as such Event of Default is continuing, do
one or more of the following as the Lessor in its sole discretion shall
determine, without limiting any other right or remedy the Lessor may have on
account of such Event of Default:
(a) The Lessor may, by notice to the Lessee, rescind or
terminate this Lease as of the date specified in such notice; however,
(i) no reletting, reentry or taking of possession of the Property (or
any portion thereof) by the Lessor will be construed as an election on
the Lessor's part to terminate this Lease unless a written notice of
such intention is given to the Lessee, (ii) notwithstanding any
reletting, reentry or taking of possession, the Lessor may at any time
thereafter elect to terminate this Lease for a continuing Event of
Default and (iii) no act or thing done by the Lessor or any of its
agents, representatives or employees and no agreement accepting a
surrender of the Property shall be valid unless the same be made in
writing and executed by the Lessor.
(b) The Lessor may (i) demand that the Lessee, and the Lessee
shall upon the written demand of the Lessor, return the Property
promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with all of the provisions of, Articles XI and
XIII and Section 12.3 hereof as if the Property were being returned at
the end of the Term, and the Lessor shall not be liable for the
reimbursement of the Lessee for any costs and expenses incurred by the
Lessee in connection therewith and (ii) without prejudice to any other
remedy which the Lessor may have for possession of the Property, and to
the extent and in the manner permitted by Applicable Law, enter upon
the Property and take immediate possession of (to the exclusion of the
Lessee) the Property or any part thereof and expel or remove the Lessee
and any other Person who may be occupying the Property, by summary
proceedings or otherwise, all without liability
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to the Lessee for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such taking
or otherwise and, in addition to the Lessor's other damages, the Lessee
shall be responsible for all costs and expenses incurred by the Lessor
in connection with any reletting, including, without limitation,
reasonable brokers' fees and all costs of any alterations or repairs
made by the Lessor.
(c) The Lessor may (i) foreclose this Lease in the manner
provided for the foreclosure of mortgages in New Mexico, without any
duty to account to the Lessee with respect to such action or inaction
or any proceeds (except that Excess Proceeds are payable to and shall
be paid to the Lessee) with respect thereto (except to the extent
required by clause (ii) below if the Lessor shall elect to exercise its
rights thereunder) in which event the Lessee's obligation to pay Basic
Rent hereunder for periods commencing after the date of such sale shall
be terminated or proportionately reduced, as the case may be; and (ii)
if the Lessor shall so elect, demand that the Lessee pay to the Lessor,
and the Lessee shall pay to the Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (the
parties agreeing that the Lessor's actual damages would be difficult to
predict, but the aforementioned liquidated damages represent a
reasonable approximation of such amount) (in lieu of Basic Rent due for
periods commencing on or after the Payment Date coinciding with such
date of sale (or, if the sale date is not a Payment Date, the Payment
Date next preceding the date of such sale)), an amount equal to (A) the
excess, if any, of (1) the Lease Balance calculated as of such Payment
Date (including all Rent due and unpaid to and including such Payment
Date and), over (2) the net proceeds of such sale (that is, after
deducting all costs and expenses incurred by the Lessor incident to
such conveyance, including, without limitation, repossession costs,
brokerage commissions, prorations, transfer taxes, fees and expenses
for counsel, title insurance fees, survey costs, recording fees, and
any repair costs); plus (B) interest at the Overdue Rate on the
foregoing amount from such Payment Date until the date of payment.
(d) The Lessor may, at its option, elect not to terminate this
Lease and continue to collect all Basic Rent, Supplemental Rent, and
all other amounts due the Lessor (together with all costs of
collection) and enforce the Lessee's obligations under this Lease as
and when the same become due, or are to be performed, and at the option
of the Lessor, upon any abandonment of the Property by the Lessee or
re-entry of same by the Lessor, the Lessor may, in its sole and
absolute discretion, elect not to terminate this Lease and may make the
necessary repairs in order to relet the Property, and relet the
Property or any part thereof for such term or terms (which may be for a
long term extending beyond the Term of this Lease) and at such rental
or rentals and upon such other terms and conditions as the Lessor in
its reasonable discretion may deem advisable; and upon each such
reletting all rentals actually received by the Lessor from such
reletting shall be applied to the Lessee's obligations hereunder and
the other Operative Documents in such order, proportion and priority as
the Lessor may elect in the Lessor's sole and absolute discretion. If
such rentals received from such reletting during any period are less
than the Rent with respect to the Property to be paid during that
period by the Lessee hereunder, the Lessee shall pay any deficiency, as
calculated by the Lessor, to the Lessor on the next Payment Date.
(e) Unless the Property has been sold in its entirety, the
Lessor may, whether or not the Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under paragraph (b),
(c) or (d) of this Section 20.2 with respect to the Property or portion
thereof, demand, by written notice to the Lessee specifying a date (a
"Termination Date") not earlier than
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ten (10) days after the date of such notice, that the Lessee purchase,
on such Termination Date, the Property (or the remaining portion
thereof) in accordance with the provisions of Article XXII; provided,
however, that no such written notice shall be required upon the
occurrence of any Event of Default in clause (g) or (h) of Section
20.1.
(f) The Lessor may exercise any other right or remedy that may
be available to it under Applicable Law, or proceed by appropriate
court action (legal or equitable) to enforce the terms hereof or to
recover damages for the breach hereof. Separate suits may be brought to
collect any such damages for any period(s), and such suits shall not in
any manner prejudice the Lessor's right to collect any such damages for
any subsequent period(s), or the Lessor may defer any such suit until
after the expiration of the Term, in which event such suit shall be
deemed not to have accrued until the expiration of the Term.
(g) The Lessor may retain and apply against the Lessor's
damages all sums which the Lessor would, absent such Event of Default,
be required to pay to, or turn over to, the Lessee pursuant to the
terms of this Lease.
(h) If an Event of Default shall have occurred and so long as
same is continuing, the Lessor, as a matter of right and without notice
to the Lessee, and without regard to the value of the Property or the
solvency of the Lessee, shall have the right to apply to any court
having jurisdiction to appoint a receiver or receivers of the Property,
and the Lessee hereby irrevocably consents to any such appointment. Any
such receiver(s) shall have all of the usual powers and duties of
receivers in like or similar cases and all of the powers and duties of
the Lessor in case of entry, and shall continue as such and exercise
such powers until the date of confirmation of the sale of the Property
unless such receivership is sooner terminated.
(i) To the maximum extent permitted by law, the Lessee hereby
waives the benefit of any appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all
rights of marshaling in the event of any sale of any or all of the
Property or any interest therein.
(j) The Lessor shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of
the other Operative Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the obligations
secured hereby may now or hereafter be otherwise secured, whether by
mortgage, security agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this instrument nor its enforcement, shall
prejudice or in any manner affect the Lessor's right to realize upon or
enforce any other security now or hereafter held by the Lessor, it
being agreed that the Lessor shall be entitled to enforce this
instrument and any other security now or hereafter held by the Lessor
in such order and manner as the Lessor may determine in its absolute
discretion. No remedy herein conferred upon or reserved to the Lessor
is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given
by any of the Operative Documents to the Lessor or to which it may
otherwise be entitled, may be exercised, concurrently or independently,
from time to time and as often as may be deemed expedient by the
Lessor.
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(k) The Lessor may exercise any and all rights under (a) the
Certificate A Pledge Agreement against the Certificate A and/or (b) the
Certificate B Pledge Agreement against the Certificate B.
In no event shall the Lessor, in the exercise of the remedies provided in this
instrument (including, without limitation, in connection with the assignment of
rents to Lessor, or the appointment of a receiver and the entry of such receiver
on to all or any part of the Property), be deemed a "mortgagee in possession,"
and the Lessor shall not in any way be made liable for any act, either of
commission or omission, in connection with the exercise of such remedies.
If, pursuant to the exercise by the Lessor of its remedies pursuant to
this Section 20.2, the Lease Balance, all other amounts due and owing from the
Lessee under this Lease and the other Operative Documents have been paid in
full, then the Lessor shall remit to the Lessee any excess amounts received by
the Lessor.
20.3. Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 20.2, the Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt or limiting the Lessor with respect
to the election of remedies; and (d) any other rights which might otherwise
limit or modify any of the Lessor's rights or remedies under this Article XX.
ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment. The Lessee hereby consents to the Lessor's assignment
of this Lease to the Lender and the Lender and the Lessor and Lessee acknowledge
that the Lender is a third party beneficiary of this Lease.
ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option. Provided that the Lessee shall not have given
notice of its intention to exercise the Remarketing Option, the Lessee shall
have the option on any Payment Date (exercisable by giving the Lessor
irrevocable written notice (the "Purchase Notice") of the Lessee's election to
exercise such option) (a) to purchase all, and not less than all, of the
Property on the date specified in such Purchase Notice at a price equal to the
Lease Balance theretofore accruing or (b) to pay the Lessor the Equity Balance
and reduce the amount of the Lease Balance by the amount paid. The Lessee shall
deliver the Purchase Notice to the Lessor not less than thirty (30) days prior
to such purchase or payment of the Equity Balance. If the Lessee exercises its
option to pay to the Lessor the Equity Balance pursuant to clause (b) of this
Section 22.1 the Lessee shall comply with Section 33.12. If the Lessee exercises
its option to purchase the Property pursuant to clause (a) of this Section 22.1
(the "Purchase Option"), the Lessor shall transfer to the Lessee or its designee
all of the Lessor's right, title and interest in and to the Property as of the
date specified in the Purchase Notice upon receipt of the Lease Balance in
accordance with Section 25.1. Subject to Section 12.4 and with the consent of
the Lessor, which consent shall not be unreasonably withheld, the Lessee may
assign the Purchase Option to any Person. The Lessee may
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designate, in a notice given to the Lessor not less than five (5) Business Days
prior to the closing of such purchase (time being of the essence), the
transferee or transferees to whom the conveyance shall be made (if other than to
the Lessee), in which case such conveyance shall (subject to the terms and
conditions set forth herein) be made to such designee; provided, however, that
such designation of a transferee or transferees shall not cause the Lessee to be
released, fully or partially, from any of its obligations under this Lease,
including, without limitation, the obligation to pay the Lessor the Lease
Balance on the Expiration Date. All such transfers shall be subject to
compliance with the terms of Heller Loan Documents.
ARTICLE XXIII
RENEWAL PROCEDURES
23.1. Renewal. Subject to the conditions set forth herein, the Lessee
and the Lessor may agree to renew the Base Lease Term for the Property for up to
five one-year terms (each, a "Renewal Term"), with each such Renewal Term to
commence on the first day following the Expiration Date then in effect. The
effective extension of the Base Lease Term for the Property shall be subject to
the satisfaction of each of the following conditions:
(a) each renewal shall be subject to the written consent of
the Lessor (which may be withheld in its sole discretion) within thirty
(30) days of receipt by it on or before one hundred eighty (180) days
prior to the Expiration Date of written notice from the Lessee of the
Lessee's determination to extend the Base Lease Term for the Property;
(b) on the Expiration Date then in effect prior to any
renewal, no Event of Default shall have occurred and be continuing; and
(c) the Lessee shall not have given notice of its intention to
exercise the Remarketing Option.
If the Lessee delivers a notice of its intention to renew this Lease as provided
in Section 23.1 but the Lessor, in its sole discretion, does not consent to such
renewal, the Lessee may with written notice to the Lessor within fifteen (15)
days of receipt of the Lessor's notice of denial of renewal (a) exercise its
Purchase Option under Section 22.1(a), (b) pay to the Lessor the Equity Balance
and reduce the amount of the Lease Balance theretofore accruing pursuant to
Section 22.1(b) or (c) exercise the Remarketing Option pursuant to Section 24.1.
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket. Subject to the fulfillment of each of the
conditions set forth in this Section 24.1, the Lessee shall have the option (the
"Remarketing Option") to market and complete the sale of the Property for the
Lessor. The Lessee's effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions as to the Property as of the dates set forth below.
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(a) Except as provided in Section 23.1, not later than one
hundred eighty (180) days prior to the Expiration Date, the Lessee
shall give to the Lessor written notice of the Lessee's exercise of the
Remarketing Option, which exercise shall be irrevocable. If Lessee does
not deliver a notice of its intention to renew this Lease as provided
in Section 23.1 and fails to timely provide the Remarketing Notice,
then Lessee shall be deemed to have elected to exercise its Purchase
Option under Section 22.1.
(b) Not later than one hundred twenty (120) days prior to the
Expiration Date, the Lessee shall deliver to the Lessor an
Environmental Audit for the Property. Such Environmental Audit shall be
prepared by an environmental consultant selected by the Lessor in the
Lessor's reasonable discretion and shall contain conclusions reasonably
satisfactory to the Lessor as to the environmental status of the
Property. If any such Environmental Audit indicates any exceptions with
respect to which a Phase Two environmental assessment is recommended,
the Lessee shall also deliver (i) a Phase Two environmental assessment
by such environmental consultant within thirty (30) days prior to the
Expiration Date and (ii) a certificate of such environmental consultant
prior to the Expiration Date showing the completion of all remedial
action in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the
Lessee's exercise of the Remarketing Option, and on the Expiration
Date, no Event of Default shall exist.
(d) The Lessee shall have completed in all Material respects
all Modifications, restoration and rebuilding of the Property pursuant
to Sections 14.1 and 18.1 (as the case may be) and shall have fulfilled
in all Material respects all of the conditions and requirements in
connection therewith pursuant to said Sections, in each case by the
date on which the Lessor receives the Lessee's notice of the Lessee's
exercise of the Remarketing Option (time being of the essence),
regardless of whether the same shall be within the Lessee's control.
The Lessee shall have also paid the cost of all Modifications commenced
prior to the Expiration Date. The Lessee shall not have been excused
pursuant to Section 16.1 from complying with any Applicable Law that
involved the extension of the ultimate imposition of such Applicable
Law beyond the last day of the Term. Any Permitted Liens (other than
Lessor Liens) on the Property that were contested by the Lessee shall
have been removed.
(e) During the Marketing Period, the Lessee shall, as
nonexclusive agent for the Lessor, use best efforts to sell the
Lessor's interest in the Property and will attempt to obtain the
highest purchase price therefor and for not less than the Fair Market
Sales Value of the Property. The Lessee will be responsible for hiring
brokers and making the Property available for inspection by prospective
purchasers. The Lessee shall promptly upon request permit inspection of
the Property and any maintenance records relating to the Property by
the Lessor and any potential purchasers, and shall otherwise do all
things reasonably necessary to sell and deliver possession of the
Property to any purchaser. All such marketing of the Property shall be
at the Lessee's sole expense. The Lessee shall allow the Lessor and any
potential qualified purchaser reasonable access to the Property for the
purpose of inspecting the same.
(f) The Lessee shall submit all bids to the Lessor, and the
Lessor will have the right to submit any one or more bids. The Lessee
shall deliver to the Lessor, not less than thirty (30) days prior to
the Expiration Date, binding written unconditional (except as set forth
below), irrevocable offer or offers by such purchaser or purchasers
offering the highest bid to purchase
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the Property. No such purchaser shall be the Lessee or an Affiliate of
the Lessee. The written offer must specify the Expiration Date as the
closing date unless the Lessor shall otherwise agree in its reasonable
discretion. Any sale by the Lessee shall be for the highest cash bid
submitted to the Lessor. The determination of the highest bid shall be
made by the Lessor prior to the end of the Marketing Period, but in any
event, the Lessor shall have no obligation to approve any bid unless
the aggregate amount of the highest bid for the Property equals or
exceeds an amount equal to the Lease Balance minus the Contingent
Rental Adjustment determined as of the Expiration Date. All bids shall
be on an all-cash basis unless the Lessor shall otherwise agree in its
sole discretion.
(g) In connection with any such sale of the Property, the
Lessee will provide to each Purchaser all customary "seller's"
indemnities, representations and warranties regarding absence of Liens
(other than Lessor Liens) and the condition of the Property. The Lessee
shall have obtained, at its cost and expense, all required governmental
and regulatory consents and approvals and shall have made all filings
as required by Applicable Law in order to carry out and complete the
transfer of the Property. As to the Lessor, any such sale shall be made
on an "as is, with all faults" basis without representation or warranty
by the Lessor other than the absence of Lessor Liens. Any agreement as
to such sale shall be made subject to the Lessor's rights hereunder.
(h) The Lessee shall pay directly, and not from the sale
proceeds, all prorations, credits, costs and expenses of the sale of
the Property, whether incurred by the Lessor or the Lessee, including
without limitation, the cost of all title insurance, surveys,
environmental reports, appraisals, transfer taxes, the Lessor's
reasonable attorneys' fees, the Lessee's attorneys' fees, commissions,
escrow fees, recording fees, and all applicable documentary and other
transfer taxes.
(i) The Lessee shall pay to the Lessor on or prior to the
Expiration Date (or to such other Person as the Lessor shall notify the
Lessee in writing) an amount equal to the Contingent Rental Adjustment
for the Property plus all Basic Rent and all other amounts hereunder
which have accrued or will accrue prior to or as of the Expiration Date
or such other closing date approved by the parties, in the type of
funds specified in Section 7.4 hereof.
(j) The Lessee shall pay to the Lessor on or prior to the
Expiration Date the amounts, if any, required to be paid pursuant to
Section 26.2 hereof.
(k) If the Lessor approves any bid for the Property, the
purchase of the Property shall be consummated on or before the
Expiration Date and the gross proceeds (the "Gross Proceeds") of the
sale of the Property, less the documented expenses incurred by the
Lessee under clause (h) shall be paid directly to the Lessor; provided,
however, that if the sum of (x) the remaining Gross Proceeds from such
sale or sales plus (y) the Contingent Rental Adjustment received by the
Lessor pursuant to clause (i) plus (z) amounts received by the Lessor
pursuant to Section 26.2 hereof exceeds the Lease Balance as of such
date, then the excess shall be paid to the Lessee on the Expiration
Date or such other closing date approved by the parties.
(l) All reconstruction, refurbishment and repair to the
Property resulting from a Casualty or Condemnation shall have been
completed prior to the end of the Marketing Period.
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If one or more of the foregoing provisions shall not be fulfilled as of
the date set forth above with respect to the Property, then the Lessor shall
declare by written notice to the Lessee the Remarketing Option to be null and
void (whether or not it has been theretofore exercised by the Lessee), in which
event all of the Lessee's rights under this Section 24.1 shall immediately
terminate and the Lessee shall be obligated to purchase the Property pursuant to
Section 22.1 on the Expiration Date.
If the Lessee effectively elects the Remarketing Option and no sale of
the Property is consummated prior to the end of the Marketing Period, the Lessee
shall, in addition to making the payment required pursuant to Section 24.1
above, return the Property to the Lessor (or to any other Person specified by
the Lessor). In connection with any such return of the Property, the Lessee
shall, at its own cost and expense, do each of the following:
(i) the Lessee shall, on or prior to the Expiration Date,
execute and deliver to the Lessor (or to the Lessor's designee) (A) a
deed with respect to the Property containing representations and
warranties of grantor to the Lessor (or such other Person) regarding
the absence of Liens (other than Permitted Liens of the type described
in clauses (i), (ii), (iii) (but only with respect to taxes not yet due
and payable), (vii), (viii), (ix) and (x) of the definition thereof),
(B) a bill of sale with respect to any Equipment then located on the
Property and (C) an assignment of the Lessee's entire interest in the
Property (which shall include an assignment of all of the Lessee's
right, title and interest in and to any Net Proceeds with respect to
the Property not previously received by the Lessee and an assignment of
leases of the Property), in each case in recordable form and otherwise
in conformity with local custom and free and clear of any Liens
attributable to the Lessee;
(ii) the Lessee shall execute and deliver to Lessor and the
Lessor's title insurance company an affidavit as to the absence of any
Liens (other than Permitted Liens of the type described in clauses (i),
(ii), (iii) (but only with respect to taxes not yet due and payable),
(vii), (viii), (ix) and (x) of the definition thereof) and shall
execute and deliver to the Lessor a statement of termination of this
Lease to the extent relating to the Property;
(iii) the Lessee shall, on the Expiration Date, transfer
possession of the Property to the Lessor or any Person designated by
the Lessor, by surrendering the same into the possession of the Lessor
or such Person, as the case may be, in the condition required by this
Section 24.1 and in compliance with Applicable Law;
(iv) the Lessee shall, for a period of up to one year after
the Expiration Date, cooperate reasonably with the Lessor and/or any
Person designated by the Lessor to receive the Property, which
cooperation shall include reasonable efforts with respect to the
following, all of which the Lessee shall do on or before the Expiration
Date or as soon thereafter as is reasonably practicable: providing
copies of all books and records regarding the maintenance and ownership
of the Property and all know-how, data and technical information
relating thereto, granting or assigning all licenses necessary for the
operation and maintenance of the Property and cooperating reasonably in
seeking and obtaining all necessary Governmental Action. The
obligations of the Lessee under this paragraph shall survive the
expiration or termination of this Lease; and
(v) no subleases with respect to the Property or any portion
thereof shall be in effect on the Expiration Date.
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Except as expressly set forth herein, the Lessee shall have no right,
power or authority to bind the Lessor in connection with any proposed sale or
sales of the Property.
24.2. Certain Obligations Continue. During the Marketing Period, the
obligation of the Lessee to pay Rent shall continue undiminished until payment
in full to the Lessor of the Contingent Rental Adjustment and all other amounts
due to the Lessor by Lessee under the Operative Documents to which the Lessee is
a party. The Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of the Lessee to obtain bids or otherwise to
take action in connection with any such sale, other than as expressly provided
in this Article XXIV.
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase Option and
Conveyance Upon Remarketing and Conveyance Upon Certain Other Events. In
connection with the Lessee's exercise of its Purchase Option, upon the
Expiration Date or the purchase of the Property under Article XIX or Section
20.2(e) or 24.1 hereof and upon tender by the Lessee of the amounts set forth in
Section 22.1, Article XIX, Section 20.2(e), or 24.1 hereof, as applicable:
(i) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense a limited
warranty deed and assignment of the Ground Lease (with covenants
against grantor acts) with respect to the Property, a limited warranty
bill of sale (with covenants against grantor acts) with respect to any
Equipment and an assignment of the Lessor's entire interest in the
Property (which shall include an assignment of all of the Lessor's
right, title and interest in and to any Net Proceeds not previously
received by the Lessor, and an assignment of leases of the Property and
any security deposits collected by the Lessor), in each case in
recordable form and otherwise in conformity with local custom and free
and clear of any Lessor Liens attributable to the Lessor;
(ii) the Property shall be conveyed to the Lessee "AS IS" and
in its then present physical condition;
(iii) the Lessor shall execute and deliver to Lessee and the
Lessee's title insurance company an affidavit as to the Lessor's title
and the absence of Lessor Liens; and
(iv) the Lessor shall execute such other documents reasonably
requested by the Lessee, or otherwise required under local law, to
effect a transfer of the Property and title thereto and any owner's
title insurance policy issued in the name of the Lessor.
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification. The Lessee agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and to indemnify, protect, defend, save and keep harmless each Indemnitee,
on an After Tax Basis, from and against, any and all Claims that may be imposed
on, incurred by or asserted against such Indemnitee (whether because of action
or
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omission by such Indemnitee or otherwise), whether or not such Indemnitee shall
also be indemnified as to any such Claim by any other Person and whether or not
such Claim arises or accrues prior to the Documentation Date or after the
Expiration Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in
respect thereof;
(b) the Property or any part thereof or interest therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance,
rejection, ownership, management, possession, operation, rental, lease,
sublease, repossession, maintenance, repair, alteration, modification,
addition or substitution, storage, transfer of title, redelivery, use,
financing, refinancing, disposition, operation, condition, sale
(including, without limitation, any sale pursuant to any provision
hereof), return or other disposition of all or any part or any interest
in the Property or the imposition of any Lien other than a Lessor Lien
(or incurring of any liability to refund or pay over any amount as a
result of any Lien other than a Lessor Lien) thereon, including,
without limitation: (1) Claims or penalties arising from any violation
of law or in tort (strict liability or otherwise), (2) latent or other
defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction,
easement, condition or covenant or other matter affecting title to the
Property, (4) the making of any Modifications in violation of any
standards imposed by any insurance policies required to be maintained
by the Lessee pursuant to this Lease which are in effect at any time
with respect to the Property or any part thereof, (5) any Claim for
patent, trademark or copyright infringement, and (6) Claims arising
from any public improvements with respect to the Property resulting in
any change or special assessments being levied against the Property or
any plans to widen, modify or realign any street or highway adjacent to
the Property, or any Claim for utility "tap-in" fees;
(d) the breach by the Lessee of any covenant, representation
or warranty made by it or deemed made by it in any Operative Document
or any certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or
financial advisor by the Lessee to act on its behalf in connection with
the transactions contemplated hereby;
(f) the existence of any Lien on or with respect to the
Property, any Improvements, or Basic Rent or Supplemental Rent, title
thereto, or any interest therein including any Liens which arise out of
the possession, use, occupancy, construction, repair or rebuilding of
the Property or by reason of labor or materials furnished or claimed to
have been furnished to the Lessee, or any of its contractors or agents
or by reason of the financing of any personalty or equipment purchased
or leased by the Lessee or Modifications constructed by the Lessee,
except with respect to any of the foregoing Lessor Liens and Liens in
favor of the Lessor;
(g) subject to the accuracy of Lessor's representation set
forth in Section 6.1(a), the transactions contemplated by this Lease or
by any other Operative Document, in respect of the application of Parts
4 and 5 of Subtitle B of Title I of ERISA and any prohibited
transaction described in Section 4975(c) of the Code; or
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(h) the Bonds (as defined in Section 33.15) and any agreement
to which the Lessor is a party relating to the Bonds, including,
without limitation, that certain Escrow Agreement dated on or about the
date hereof between the Lessor and The First National Bank of Santa Fe,
that certain Current Assumption and Current/Delayed Termination and
Release of Regulatory Agreement dated on or about the date hereof among
The First National Bank of Santa Fe, the City of San Fe, New Mexico and
the Lessor and that certain Regulatory Agreement dated as of March 1,
1995 among The First National Bank of Santa Fe, the City of San Fe, New
Mexico and the Lessor, as successor by assignment from Ponce De Leon
Limited Partnership (the "Regulatory Agreement");
provided, however, the Lessee shall not be required to indemnify any Indemnitee
under this Section 26.1 for any of the following: (1) any Claim to the extent
resulting from the willful misconduct or gross negligence of such Indemnitee (it
being understood that the Lessee shall be required to indemnify an Indemnitee
even if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or the breach of any representation, warranty or
covenant of such Indemnitee set forth in any Operative Document, (2) any Claim
resulting from Lessor Liens which the Lessor is responsible for discharging
under the Operative Documents, (3) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents, and (4) any Claim
arising from a breach or alleged breach by the Lessor of any agreement entered
into in connection with the assignment or participation of Rent. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document. Without limiting the
express rights of any Indemnitee under this Section 26.1, this Section 26.1
shall be construed as an indemnity only and not a guaranty of residual value of
the Property.
26.2. End of Term Indemnity.
(a) If the Lessee elects the Remarketing Option and there
would, after giving effect, to the proposed remarketing transactions,
be a Shortfall Amount, then prior to the Expiration Date and as a
condition to the Lessee's right to complete the remarketing of the
Property pursuant to Section 24.1, the Lessee shall cause to be
delivered to the Lessor at least thirty (30) days prior to the
Expiration Date, at the Lessee's sole cost and expense, a report from
an appraiser selected by the Lessor and reasonably satisfactory to the
Lessee in form and substance satisfactory to the Lessor (the "End of
the Term Report") which shall state the appraiser's conclusions as to
the reason for any decline in the Fair Market Sales Value of the
Property from that anticipated for such date in the Appraisal delivered
on the Acquisition Date.
(b) If the Lessee elects the Remarketing Option, then on or
prior to the Expiration Date, the Lessee shall pay to the Lessor an
amount (not to exceed the Shortfall Amount) equal to the portion of the
Shortfall Amount that the End of the Term Report demonstrates was the
result of a decline in the Fair Market Sales Value of the Property due
to
(i) extraordinary use, failure to maintain, to
repair, to restore, to rebuild or to replace, failure to
comply with all applicable laws, failure to use, workmanship,
method of installation or removal or maintenance, repair,
rebuilding or replacement, (excepting in each case ordinary
wear and tear), or
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(ii) with respect to the Property, any Modification
made to, or any rebuilding of, the Property or any part
thereof by the Lessee, or
(iii) the existence of any Environmental Violations,
or
(iv) any restoration or rebuilding carried out by the
Lessee, or
(v) any use of the Property or any part thereof by
the Lessee other than as permitted under this Lease, or
(vi) any grant, release, dedication, transfer or
amendment made pursuant to Section 15.2, or
(vii) the failure of the Lessor to have title to the
Property free and clear of all Liens (excluding Permitted
Liens).
26.3. Environmental Indemnity. Without limitation of the other
provisions of this Article XXVI, the Lessee hereby agrees to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to, to the extent
the Lease Balance has not been fully paid, any loss of value of the Property),
damages, liabilities, fines, penalties, charges, administrative and judicial
proceedings (including informal proceedings) and orders, judgments, remedial
action, requirements, enforcement actions of any kind, and all reasonable and
documented costs and expenses incurred in connection therewith (including but
not limited to reasonable and documented attorneys' and/or paralegals' fees and
expenses), including, but not limited to, all costs incurred in connection with
any investigation or monitoring of site conditions or any clean-up, remedial,
removal or restoration work by any federal, state or local government agency,
arising in whole or in part, out of
(a) the presence on or under the Property of any Hazardous
Substance in violation of Environmental Law, or any releases or
discharges of any Hazardous Substance on, under, from or onto the
Property in violation of Environmental Law,
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the
Lessee or any predecessor in title or any employees, agents,
contractors or subcontractors of the Lessee or any predecessor in
title, or any other Persons (including such Indemnitee), in connection
with the handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Substances in
violation of Environmental Law that at any time are located or present
on or under or that at any time migrate, flow, percolate, diffuse or in
any way move onto or under the Property,
(c) loss of or damage to any property or the environment
(including, without limitation, clean-up costs, response costs,
remediation and removal costs, cost of corrective action, costs of
financial assurance, fines and penalties and natural resource damages),
or death or injury to any Person, and all expenses associated with the
protection of wildlife, aquatic species, vegetation, flora and fauna,
and any mitigative action required by or under Environmental Laws,
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(d) any claim concerning lack of compliance with Environmental
Laws, or any act or omission causing an environmental condition that
requires remediation or would allow any Governmental Authority to
record a Lien on the land records, or
(e) any residual contamination on or under the Land, or
affecting any natural resources, and to any contamination of any
property or natural resources arising in connection with the
generation, use, handling, storage, transport or disposal of any such
Hazardous Substances, and irrespective of whether any of such
activities were or will be undertaken in accordance with applicable
laws, regulations, codes and ordinances;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
under this Section 26.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee (it being understood
that, unless the applicable Indemnitee was in possession of the Property and
caused the Claim, the Lessee shall be required to indemnify an Indemnitee even
if the ordinary (but not gross) negligence of such Indemnitee caused or
contributed to such Claim) or (2) any Claim to the extent attributable to acts
or events occurring after the expiration of the Term or the return or
remarketing of the Property so long as the Lessor is not exercising remedies
against the Lessee in respect of the Operative Documents. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under this Lease or any other Operative Document.
26.4. Proceedings in Respect of Claims. With respect to any amount that
the Lessee is requested by an Indemnitee to pay by reason of Section 26.1 or
26.3, such Indemnitee shall, if so requested by the Lessee and prior to any
payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall promptly notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate in,
and, to the extent that the Lessee desires to, assume and control the defense
thereof; provided, however, that the Lessee shall not have any increased
liability as a direct result of an Indemnitee's failure to provide such notice
promptly; provided, further, that the Lessee shall have acknowledged in writing
its obligation to fully indemnify such Indemnitee in respect of such action,
suit or proceeding, and, the Lessee shall keep such Indemnitee fully apprised of
the status of such action, suit or proceeding and shall provide such Indemnitee
with all information with respect to such action, suit or proceeding as such
Indemnitee shall reasonably request, and provided, further, that the Lessee
shall not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of imposition
of criminal liability or any risk of imposition of material civil liability on
such Indemnitee or will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien or Lessor Lien) on
the Property or any part thereof unless, in the case of civil liability, the
Lessee shall have posted a bond or other security reasonably satisfactory to the
relevant Indemnitee in respect to such risk or (y) the control of such action,
suit or proceeding would involve an actual or potential conflict of interest,
(B) such proceeding involves Claims not fully indemnified by the Lessee which
the Lessee and the Indemnitee have been unable to sever from the indemnified
claim(s), or (C) an Event of Default has occurred and is continuing. The
Indemnitee may participate in a reasonable manner at its own expense and with
its own counsel in any proceeding conducted by the Lessee in accordance with the
foregoing. The Lessee shall not enter into any settlement or other compromise
with respect to
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any Claim which is entitled to be indemnified under Section 26.1 or 26.3 without
the prior written consent of the Indemnitee which consent shall not be
unreasonably withheld in the case of a money settlement not involving an
admission of liability of such Indemnitee; provided, however, that in the event
that such Indemnitee withholds consent to any settlement or other compromise,
the Lessee shall not be required to indemnify such Indemnitee under Section 26.1
or 26.3 to the extent that the applicable Claim (x) is for legal fees and
expenses incurred after the date of the proposed settlement or (y) results in a
judgment in excess of such offered money settlement.
Each Indemnitee shall at the expense of the Lessee supply the Lessee
with such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by Section 26.1 or 26.3. Unless an Event of
Default shall have occurred and be continuing, no Indemnitee shall enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 26.1 or 26.3 without the prior written consent
of the Lessee, which consent shall not be unreasonably withheld, unless such
Indemnitee waives its right to be indemnified under Section 26.1 or 26.3 with
respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section
26.1 or 26.3 to or on behalf of an Indemnitee, the Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 26.1 or 26.3
shall be paid to such Indemnitee within ten (10) Business Days after receipt of
a written demand therefor from such Indemnitee, accompanied by a written
statement describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable and, if requested by the Lessee, such
determination shall be verified by a nationally recognized independent
accounting firm mutually acceptable to the Lessee and the Indemnitee at the
expense of the Lessee; provided, however, that if the Lessee has assumed the
defense of the related Claim or is paying the costs of the Indemnitee's defense
of the related claim on an ongoing basis, the Lessee shall not be required to
pay such amount to the applicable Indemnitee until such time as a judgment is
entered with respect to such Claim, the enforcement of which is not stayed or
which judgment is not bonded over, or the Claim is otherwise settled or lost. To
the extent the Lessee suffers any losses or damages as a result of an
Indemnitee's failure to provide the Lessee with prompt notice of the
commencement of any action, suit or proceeding against any Indemnitee in
accordance with the first sentence of the second paragraph of this Section 26.4,
the amounts of such losses or damages may be offset against the Lessee's
indemnification obligation to such Indemnitee.
26.5. General Tax Indemnity.
(a) Indemnification. The Lessee shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend the
Property and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
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(b) Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax
Indemnitee (including a written notice of such proceeding) for any
Imposition as to which the Lessee may have an indemnity obligation
pursuant to this Section 26.5, or if any Tax Indemnitee shall determine
that any Imposition to which the Lessee may have an indemnity
obligation pursuant to this Section 26.5 may be payable, such Tax
Indemnitee shall promptly (and in any event, within 30 days) notify the
Lessee in writing (provided that failure to so notify the Lessee within
30 days shall not alter such Tax Indemnitee's rights under this Section
26.5 except to the extent such failure precludes or materially
adversely affects the ability to conduct a contest of any indemnified
Taxes) and shall not take any action with respect to such claim,
proceeding or Imposition without the written consent of the Lessee
(such consent not to be unreasonably withheld or unreasonably delayed)
for 30 days after the receipt of such notice by the Lessee; provided,
however, that in the case of any such claim or proceeding, if such Tax
Indemnitee shall be required by law or regulation to take action prior
to the end of such 30-day period, such Tax Indemnitee shall in such
notice to the Lessee, so inform the Lessee, and such Tax Indemnitee
shall not take any action with respect to such claim, proceeding or
Imposition without the consent of the Lessee (such consent not to be
unreasonably withheld or unreasonably delayed) for 10 days after the
receipt of such notice by the Lessee unless the Tax Indemnitee shall be
required by law or regulation to take action prior to the end of such
10-day period.
The Lessee shall be entitled for a period of 30 days from
receipt of such notice from the Tax Indemnitee (or such shorter period
as the Tax Indemnitee has notified the Lessee is required by law or
regulation for the Tax Indemnitee to commence such contest), to request
in writing that such Tax Indemnitee contest the imposition of such Tax,
at the Lessee's expense. If (x) such contest can be pursued in the name
of the Lessee and independently from any other proceeding involving a
Tax liability of such Tax Indemnitee for which the Lessee has not
agreed to indemnify such Tax Indemnitee, (y) such contest must be
pursued in the name of the Tax Indemnitee, but can be pursued
independently from any other proceeding involving a Tax liability of
such Tax Indemnitee for which the Lessee has not agreed to indemnify
such Tax Indemnitee or (z) the Tax Indemnitee so requests, then the
Lessee shall be permitted to control the contest of such claim,
provided that in the case of a contest described in clause (y), if the
Tax Indemnitee determines in good faith that such contest by the Lessee
could have a material adverse impact on the business or operations of
the Tax Indemnitee and provides a written explanation to the Lessee of
such determination, the Tax Indemnitee may elect to control or reassert
control of the contest, and provided, that by taking control of the
contest, Lessee acknowledges that it is responsible for the Imposition
ultimately determined to be due by reason of such claim, and provided,
further, that in determining the application of clauses (x) and (y)
this sentence, each Tax Indemnitee shall take any and all reasonable
steps to segregate claims for any Taxes for which the Lessee
indemnifies hereunder from Taxes for which the Lessee is not obligated
to indemnify hereunder, so that the Lessee can control the contest of
the former. In all other claims requested to be contested by the
Lessee, the Tax Indemnitee shall control the contest of such claim,
acting through counsel reasonably acceptable to the Lessee. In no event
shall the Lessee be permitted to contest (or the Tax Indemnitee
required to contest) any claim, (A) if such Tax Indemnitee provides the
Lessee with a legal opinion of counsel reasonably acceptable to the
Lessee that such action, suit or proceeding involves a risk of
imposition of criminal liability or will involve a material risk of the
sale, forfeiture or loss of, or the creation of any Lien (other than a
Permitted Lien or Lessor Lien) on the Property or any part of any
thereof unless the Lessee shall have posted and maintained a bond or
other security reasonably satisfactory to the relevant Tax
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Indemnitee in respect to such risk, (B) if an Event of Default has
occurred and is continuing unless the Lessee shall have posted and
maintained a bond or other security reasonably satisfactory to the
relevant Tax Indemnitee in respect of the Taxes subject to such claim
and any and all expenses for which the Lessee is responsible hereunder
reasonably foreseeable in connection with the contest of such claim,
(C) unless the Lessee shall have agreed to pay and shall pay, to such
Tax Indemnitee within ten (10) Business Days after demand all
reasonable out-of-pocket costs, losses and expenses that such Tax
Indemnitee may incur in connection with contesting such Imposition
including all reasonable legal, accounting and investigatory fees and
disbursements, or (D) if such contest shall involve the payment of the
Tax prior to the contest, unless the Lessee shall provide to the Tax
Indemnitee an interest-free advance in an amount equal to the
Imposition that the Indemnitee is required to pay (with no additional
net after-tax costs to such Tax Indemnitee). In addition for Tax
Indemnitee controlled contests and claims contested in the name of the
Tax Indemnitee in a public forum, no contest shall be required: (A)
unless the amount of the potential indemnity (taking into account all
similar or logically related claims that have been or could be raised
in any audit involving such Tax Indemnitee for which the Lessee may be
liable to pay an indemnity under this Section 26.5(b)) exceeds $500,000
and (B) unless, if requested by the Tax Indemnitee, the Lessee shall
have provided to the Tax Indemnitee an opinion of counsel selected by
the Lessee (which may be in-house counsel) (except, in the case of
income taxes indemnified hereunder which shall be an opinion of
independent tax counsel selected by the Tax Indemnitee and reasonably
acceptable to the Lessee) that a reasonable basis exists to contest
such claim. In no event shall a Tax Indemnitee be required to appeal an
adverse judicial determination to the United States Supreme Court.
The party conducting the contest shall consult in good faith
with the other party and its counsel with respect to the contest of
such claim for Taxes (or claim for refund) but the decisions regarding
what actions to be taken shall be made by the controlling party in its
sole judgement, provided, however, that if the Tax Indemnitee is the
controlling party and the Lessee recommends the acceptance of a
settlement offer made by the relevant Governmental Authority and such
Tax Indemnitee rejects such settlement offer then the amount for which
the Lessee will be required to indemnify such Tax Indemnitee with
respect to the Taxes subject to such offer shall not exceed the amount
which it would have owed if such settlement offer had been accepted. In
addition, the controlling party shall keep the noncontrolling party
reasonably informed as to the progress of the contest, and shall
provide the noncontrolling party with a copy of (or appropriate
excerpts from) any reports or claims issued by the relevant auditing
agents or taxing authority to the controlling party thereof, in
connection with such claim or the contest thereof.
Each Tax Indemnitee shall at the Lessee's expense supply the
Lessee with such information and documents reasonably requested by the
Lessee as are necessary or advisable for the Lessee to participate in
any action, suit or proceeding to the extent permitted by this Section
26.5(b). No Tax Indemnitee shall enter into any settlement or other
compromise or fail to appeal an adverse ruling with respect to any
claim which is entitled to be indemnified under this Section 26.5 (and
with respect to which contest is required under this Section 26.5(b))
without the prior written consent of the Lessee, unless such Tax
Indemnitee waives its right to be indemnified under this Section 26.5
with respect to such claim.
Notwithstanding anything contained herein to the contrary, a
Tax Indemnitee will not be required to contest (and the Lessee shall
not be permitted to contest) a claim with respect to the imposition of
any Tax if such Tax Indemnitee shall waive its right to indemnification
under this
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Section 26.5 with respect to such claim (and any claim with respect to
such year or any other taxable year the contest of which is materially
adversely affected as a result of such waiver).
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee or
any Affiliate thereof realizes a deduction, offset, credit or refund of
any Taxes or any other savings or benefit as a result of any indemnity
paid by the Lessee pursuant to this Section 26.5 or (y) by reason of
the incurrence or imposition of any Tax (or the circumstances or event
giving rise thereto) for which a Tax Indemnitee is indemnified
hereunder or any payment made to or for the account of such Tax
Indemnitee by the Lessee pursuant to this Section 26.5 or any payment
made by a Tax Indemnitee to the Lessee by reason of this Section
26.5(c), such Tax Indemnitee at any time actually realizes a reduction
in any Taxes for which the Lessee is not required to indemnify such Tax
Indemnitee pursuant to this Section 26.5 which reduction in Taxes was
not taken into account in computing such payment by the Lessee to or
for the account of such Tax Indemnitee or by the Tax Indemnitee to the
Lessee, then such Tax Indemnitee shall promptly pay to the Lessee (xx)
the amount of such deduction, offset, credit, refund, or other savings
or benefit together with the amount of any interest received by such
Tax Indemnitee on account of such deduction, offset, credit, refund or
other savings or benefit or (yy) an amount equal to such reduction in
Taxes, as the case may be, in either case together with an amount equal
to any reduced Taxes payable by such Tax Indemnitee as a result of such
payment; provided that no such payment shall be made so long as a
Default or Event of Default shall have occurred and be continuing but
shall be paid promptly after cure of such Default or Event of Default.
Each Tax Indemnitee agrees to take such actions as the Lessee may
reasonably request (provided in the good faith judgment of the Tax
Indemnitee, such actions would not result in a material adverse effect
on the Tax Indemnitee for which the Tax Indemnitee is not entitled to
indemnification from the Lessee) and to otherwise act in good faith to
claim such refunds and other available Tax benefits, and take such
other actions as may be reasonable to minimize any payment due from the
Lessee pursuant to this Section 26.5 and to maximize the amount of any
Tax savings available to it. The disallowance or reduction of any
credit, refund or other tax savings with respect to which a Tax
Indemnitee has made a payment to the Lessee under this Section 26.5(c)
shall be treated as a Tax for which the Lessee is obligated to
indemnify such Tax Indemnitee hereunder without regard to the
exclusions set forth in the definition of Impositions except the
exclusions set forth in (iv), (v), (vi), (vii), (ix), (x), (xi), (xiv)
and (xvi) of such definition.
(d) Payments. Any Imposition indemnifiable under this Section
26.5 shall be paid directly when due to the applicable taxing authority
if direct payment is practicable and permitted. If direct payment to
the applicable taxing authority is not permitted or is otherwise not
made, any amount payable to a Tax Indemnitee pursuant to Section 26.5
shall be paid within thirty (30) days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement
describing in reasonable detail the amount so payable, but not later
than two Business Days prior to the date that the relevant Taxes are
due. Any payments made pursuant to this Section 26.5 shall be made
directly to the Tax Indemnitee entitled thereto or the Lessee, as the
case may be, in immediately available funds at such bank or to such
account as specified by the payee in written directions to the payor,
or, if no such direction shall have been given, by check of the payor
payable to the order of the payee by certified mail, postage prepaid at
its address as set forth in Schedule I hereto. Upon the request of any
Tax Indemnitee with respect to a Tax that the Lessee is required to
pay, the Lessee shall furnish to such Tax Indemnitee the original or a
certified copy of a receipt for the Lessee's payment of such Tax or
such other evidence of payment as is reasonably acceptable to such Tax
Indemnitee.
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(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 26.5 and of which the Lessee has
knowledge, the Lessee shall promptly notify the Tax Indemnitee of such
requirement and, at the Lessee's expense (i) if the Lessee is permitted
(unless otherwise requested by the Tax Indemnitee) by Applicable Law,
timely file such report, return or statement in its own name or (ii) if
such report, return or statement is required to be in the name of or
filed by such Tax Indemnitee or the Tax Indemnitee otherwise requests
that such report, return or statement for filing by such Tax Indemnitee
in such manner as shall be reasonably satisfactory to such Tax
Indemnitee and send the same to the Tax Indemnitee for filing no later
than 15 days prior to the due date therefor. In any case in which the
Tax Indemnitee will file any such report, return or statement, the
Lessee shall, upon written request of such Tax Indemnitee, provide such
Tax Indemnitee with such information as is reasonably necessary to
allow the Tax Indemnitee to file such report, return or statement.
(f) Verification. At the Lessee's request, the amount of any
indemnity payment by the Lessee or any payment by a Tax Indemnitee to
the Lessee pursuant to this Section 26.5 shall be verified and
certified by an independent public accounting firm mutually acceptable
to the Lessee and the Tax Indemnitee. The costs of such verification
shall be borne by the Lessee unless such verification shall result in
an adjustment in the Lessee's favor of the lesser of (i) $10,000, and
(ii) five (5%) percent of the payment as computed by the Tax
Indemnitee, in which case such fee shall be paid by the Tax Indemnitee.
In no event shall the Lessee have the right to review the Tax
Indemnitee's tax returns or receive any other confidential information
from the Tax Indemnitee in connection with such verification. Any
information provided to such accountants by any Person shall be and
remain the exclusive property of such Person and shall be deemed by the
parties to be (and the accountants will confirm in writing that they
will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than such
Person and the accountants shall be entitled thereto and all such
materials shall be returned to such Person. Such accounting firm shall
be requested to make its determination within 30 days of the Lessee's
request for verifications and the computations of the accounting firm
shall be final, binding and conclusive upon the Lessee and the Tax
Indemnitee. The parties agree that the sole responsibility of the
independent public accounting firm shall be to verify the amount of a
payment pursuant to this Lease and that matters of interpretation of
this Lease are not within the scope of the independent accounting
firm's responsibilities.
(g) Tax Ownership. The Lessor represents and warrants that it
will not, prior to the termination of this Lease, claim ownership of
(or any tax benefits, including depreciation, with respect to) the
Property for any income tax purposes, it being understood that the
Lessee is and will remain the owner of the Property for such income tax
purposes until the termination of this Lease. If, notwithstanding the
income tax intentions of the parties as set forth herein, the Lessor
actually receives any income tax deductions, reductions in income tax
or other income tax benefit as a result of any claim for, or
recharacterization requiring such party to take, any tax benefits
attributable to ownership of the Property for income tax purposes, the
Lessor shall pay to the Lessee, together with an amount equal to any
reduced Taxes payable by such Tax Indemnitee as a result of such
payment, the amount of such income tax savings actually realized by the
Lessor (less the amount of any anticipated increase in income tax which
the Lessor determines is currently payable as a result of such claim or
recharacterization), provided that the Lessee shall agree to reimburse
the Lessor for any subsequent increase in the Lessor's income taxes
resulting from such claim or recharacterization not taken into account
in the payment made to the Lessee,
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up to the amount paid to the Lessee by the Lessor. The parties agree
that this Section 26.5(g) is intended to require a payment to the
Lessee if and only if the Lessor shall have actually received an
unanticipated tax savings with respect to the Property that would not
have been received if the Lessor had advanced funds to the Lessee in
the form of a loan secured by the Property in an amount equal to the
Lease Balance. Nothing in this Section 26.5(g) shall be construed to
require the Lessor to take any affirmative action to realize any tax
savings if in its good faith judgment such action may have a material
adverse affect on the Lessor.
26.6. Funding Losses. If any payment of Rent or the Lease Balance,
including pursuant to the Lessee's exercise of the Purchase Option under Section
22.1, is made on any day other than the last day of an Interest Period
applicable thereto, the Lessee shall reimburse the Lessor within fifteen (15)
days after demand for any actual resulting loss or expense incurred by it,
including any loss incurred in obtaining, liquidating or employing deposits from
third parties, swaps, hedges or similar transactions entered into in connection
with or in contemplation of transactions relating to the Property, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow or prepay, provided that the Lessor shall have delivered to the Lessee a
certificate signed by an officer of the Lessor as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest error,
and provided, further, that such loss shall in no event exceed the then
effective Lease Rate which would have been payable for the balance of such
Interest Period. The Lessor will, at the request of the Lessee, furnish such
additional information concerning the determination of such loss as the Lessee
may reasonably request.
26.7. Regulation D Compensation. During the Term, for so long as the
Lessor (or Bank Hapoalim B.M.) is required to maintain reserves against
"Eurocurrency Liabilities" (or any other category of liabilities which include
deposits by reference to which the Lease Rate is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of the Lessor to United States residents), and, as a result, the cost to
the Lessor (or its Funding Office) of making or maintaining its Advances is
increased, then the Lessor may require the Lessee to pay, contemporaneously with
each payment of Rent, an additional amount at a rate per annum up to but not
exceeding the excess of (i) (A) the applicable Eurodollar Rate divided by (B)
one minus the Eurocurrency Reserve Requirements and (ii) the applicable
Eurodollar Rate. In the event that the Lessor wishes to require payment of such
additional amount, the Lessor (x) shall so notify the Lessee, in which case such
additional Rent shall be payable to the Lessor at the place indicated in such
notice with respect to each Interest Period commencing at least three Business
Days after the giving of such notice and (y) shall furnish to the Lessee at
least five Business Days prior to each date on which Rent is payable a
certificate setting forth the amount to which it is then entitled under this
Section (which shall be consistent with its good faith estimate of the level at
which the related reserves are maintained by it). Each such certificate shall be
accompanied by such information as the Lessee may reasonably request as to the
computation set forth therein.
26.8. Deposits Unavailable. If the Eurodollar Rate is unavailable on or
prior to the day that the Eurodollar Rate is established, the Lessor shall
forthwith give notice thereof to the Lessee, whereupon until the Lessor notifies
the Lessee that the circumstances giving rise to such suspension no longer
exist, the portion of the Advance subject to the Eurodollar Rate shall begin to
bear interest at the Alternate Base Rate on the first day of the subsequent
Interest Period applicable thereto. The Lessor shall provide to the Lessee a
statement in writing of the Alternate Base Rate as calculated hereunder.
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26.9. Illegality. If, on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lessor (or its Funding Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lessor (or its Funding Office) to make, maintain or fund the Advance, and the
Lessor shall so notify the Lessee, whereupon until the Lessor notifies the
Lessee that the circumstances giving rise to such suspension no longer exist,
the obligation to make the Advance shall be suspended. The Lessor, with the
consent of the Lessee (which consent shall not unreasonably be withheld), will
designate a different Funding Office if such designation will avoid the need for
giving such notice and will not, in the judgment of the Lessor, be otherwise
disadvantageous to the Lessor. If such notice is given (i) the Lessee shall be
entitled upon its request to a reasonable explanation of the factors underlying
such notice and (ii) the Advance shall begin to bear interest at the Alternate
Base Rate either (a) on the last day of the then current Interest Period
applicable thereto, if the Lessor may lawfully continue to maintain and fund the
Advance to such day or (b) immediately, if the Lessor shall determine that it
may not lawfully continue to maintain and fund the Advance to such day. The
Lessor shall provide to the Lessee a statement in writing of the Alternate Base
Rate as calculated hereunder.
26.10. Increased Cost and Reduced Return.
(a) In the event that the adoption of any applicable law, rule
or regulation, or any change therein or in the interpretation or
application thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof or compliance by the Lessor with any request or directive after
the date hereof (whether or not having the force of law) of any such
authority, central bank or comparable agency:
(i) does or shall subject the Lessor to any
additional tax of any kind whatsoever with respect to the
Operative Documents or the Advance made by it, or change the
basis or the applicable rate of taxation of payments to the
Lessor of principal, interest or any other amount payable
hereunder (except for the imposition of or change in any tax
on or measured by the overall net income of the Lessor (other
than any such tax imposed by means of withholding));
(ii) does or shall impose, modify or hold applicable
any reserve, special deposit, insurance assessment, compulsory
loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Lessor which
are not otherwise included in determination of the rate of
interest on the Advance; or
(iii) does or shall impose on the Lessor any other
condition; and the result of any of the foregoing is to
increase the cost to the Lessor of making or maintaining the
Advance or to reduce any amount receivable hereunder;
then in any such case, the Lessee shall promptly pay to the
Lessor, upon demand, any additional amounts necessary to
compensate the Lessor for such increased cost or reduced
amount receivable which the Lessor deems to be material as
determined by the Lessor with respect to the Advance.
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(b) If the Lessor shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of the Lessor (or any
entity directly or indirectly controlling the Lessor) as a consequence
of the Lessor's obligations under the Operative Documents to a level
below that which the Lessor (or any entity directly or indirectly
controlling the Lessor) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies
with respect to capital adequacy) by an amount deemed by the Lessor to
be material, then from time to time, within fifteen (15) days after
demand by the Lessor, the Lessee shall pay to the Lessor such
additional amount or amounts as will compensate the Lessor for such
reduction.
(c) The Lessor will promptly notify the Lessee of any event of
which it has knowledge, occurring after the date hereof, which will
entitle the Lessor to compensation pursuant to this Section and will,
if practicable, with the consent of the Lessee (which consent shall not
unreasonably be withheld), designate a different Funding Office or take
any other reasonable action if such designation or action will avoid
the need for, or reduce the amount of, such compensation and will not,
in the judgment of the Lessor, be otherwise disadvantageous to the
Lessor. A certificate signed by an officer of the Lessor claiming
compensation under this Section and setting forth in reasonable detail
its computation of the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Lessor may use any reasonable averaging
and attribution methods.
(d) Notwithstanding the foregoing clauses (a) and (b) of this
Section 26.10, the Lessee shall only be obligated to compensate the
Lessor for any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in
the case of subsection (a), not earlier than the first day of
any Interest Period in effect on the date which, and (y) in
the case of subsection (b), not earlier than the date on
which, the Lessor notifies the Lessee that it proposes to
demand such compensation and identifies to the Lessee the
statute, regulation or other basis upon which the claimed
compensation is or will be based and (B) any time or period
during which, because of the retroactive application of such
statute, regulation or other basis, the Lessor did not know
that such amount would arise or accrue; and
(ii) within six months prior to any demand therefor,
accompanied by a certificate of the Lessor claiming
compensation and setting forth in reasonable detail its
computation of the additional amount or amounts to be paid to
it hereunder.
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates. At any time and from time to time upon not
less than fifteen (15) days' prior request by the Lessor or the Lessee (the
"Requesting Party"), the other party (whichever party shall have received such
request, the "Certifying Party") shall furnish to the Requesting Party (but in
the
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case of the Lessor, as Certifying Party, not more than four times per year
unless required to satisfy the requirements of any subleases and only to the
extent that the required information has been provided to the Lessor by the
Lessee) a certificate signed by an individual having the office of vice
president or higher in the Certifying Party certifying that this Lease is in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications); the dates to which the Basic Rent
and Supplemental Rent have been paid; to the best knowledge of the signer of
such certificate, whether or not the Requesting Party is in default under any of
its obligations hereunder (and, if so, the nature of such alleged default); and
such other matters under this Lease as the Requesting Party may reasonably
request. Any such certificate furnished pursuant to this Article XXVII may be
relied upon by the Requesting Party, and any existing or prospective mortgagee,
purchaser or lender, and any accountant or auditor, of, from or to the
Requesting Party (or any Affiliate thereof).
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender. No surrender to the Lessor of this Lease
or of all or any portion of the Property or of any interest therein shall be
valid or effective unless agreed to and accepted in writing by the Lessor, and
no act by the Lessor or any representative or agent of the Lessor, other than a
written acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) the fee or groundleasehold estate in the Property,
except as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person or (c) a beneficial interest in the Lessor.
ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property.
(a) It is the intent of the parties hereto that for financial
accounting purposes the Lease constitutes an "operating lease" pursuant
to Statement of Financial Accounting Standards No. 13, as amended, and
for purposes of commercial, real estate, bankruptcy and federal, state
and local income tax law, the transaction contemplated hereby is a
financing arrangement. The parties further intend that Lessee shall be
treated as owner of the Property for income tax purposes and shall be
entitled to all deductions for depreciation thereof. Lessor shall take
no action inconsistent with such treatment.
(b) It is the intent of the parties hereto that the
obligations of the Lessee under this Lease to pay Basic Rent and
Supplemental Rent or Lease Balance in connection with any purchase of
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the Property pursuant to this Lease shall be treated as payments of
interest on and principal of, respectively, loans from the Lessor to
the Lessee.
(c) Specifically, without limiting the generality of
subsection (b) of this Section 30.1, the Lessor and the Lessee intend
and agree that with respect to the nature of the transactions evidenced
by this Lease in the context of the exercise of remedies under the
Operative Documents, including, without limitation, in the case of any
insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or
statute of the United States of America or any State or Commonwealth
thereof affecting the Lessee and the Lessor, or any enforcement or
collection actions, the transactions evidenced by this Lease are loans
made by the Lessor as unrelated third party lender to the Lessee.
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses.
(a) The Lessee shall pay, or cause to be paid, from time to
time all Transaction Expenses in respect of the transactions taking
place on the Documentation Date and on Acquisition Date on such
respected date; provided, however, that, if the Lessee has not received
written invoices therefor prior to such date, such Transaction Expenses
shall be paid within ten (10) Business Days after the Lessee has
received written invoices therefor.
(b) The Lessee shall pay or cause to be paid (i) all
Transaction Expenses incurred by the Lessor in entering into any future
amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are ultimately
entered into, or giving or withholding of waivers of consents hereto or
thereto, in each case which have been requested by or approved by the
Lessee, (ii) all Transaction Expenses incurred by the Lessor in
connection with any purchase of the Property by the Lessee or other
Person pursuant to this Lease and (iii) all Transaction Expenses
incurred by the Lessor in respect of enforcement of any of its rights
or remedies against the Lessee in respect of the Operative Documents.
31.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or cause to
be paid any brokers' fees and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the transactions contemplated by this Lease and the
other Operative Documents.
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<PAGE>
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1. Covenants. The Lessee hereby agrees that so long as this Lease is
in effect:
(a) Information. The Lessee will deliver to the Lessor:
(i) promptly upon the request of the Lessor, the
publicly available consolidated and consolidating statements
of financial position of the Parent and its consolidated
Subsidiaries (including the Lessee) as of the end of each of
the Parent's fiscal years and the related consolidated and
consolidating statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, with such
consolidated financial statements reported on by Ernst & Young
or other independent public accountants of nationally
recognized standing reasonably acceptable to the Lessor; and
with respect to each of the first three quarters of each
fiscal year of the Parent and the Lessee, the publicly
available unaudited consolidated statement of financial
position of the Parent and the Lessee as of the end of such
quarter and the related unaudited consolidated statements of
income and cash flows for such quarter and for the portion of
the Parent's and the Lessee's fiscal year ended at the end of
such quarter;
(ii) as soon as possible and in any event within ten
(10) days after a Responsible Employee of the Lessee obtains
knowledge of the occurrence of each Event of Default or each
event that, with the giving of notice or time elapse, or both,
would constitute an Event of Default continuing on the date of
such statement, a statement of the authorized officer setting
forth details of such Event of Default or event and the action
that the Lessee proposes to take with respect thereto;
provided that the Lessee shall not be obligated to give notice
of any Event of Default which is remedied within ten (10) days
after such Responsible Employee first obtains knowledge;
(iii) promptly upon becoming aware thereof, written
notice of the commencement or existence of any proceeding
against the Lessee or any Affiliate of the Lessee by or before
any court or governmental agency that might, in the reasonable
judgment of the Lessee, result in a Material adverse effect on
the business, operations or financial conditions of the Lessee
or the ability of the Lessee to perform its obligations under
the Operative Documents;
(iv) as soon as possible and in any event within ten
(10) days after a Responsible Employee of the Lessee obtains
knowledge of the occurrence of any violation or alleged
violation of an Environmental Law by Lessee, a statement of an
authorized officer setting forth the details of such violation
and the action which the Lessee proposes to take with respect
thereto; and
(v) from time to time such additional information
regarding the business, properties, condition or operations,
financial or otherwise, of the Lessee, or regarding the
Property or the status of any construction thereon, if any, as
the Lessor may reasonably request in connection with the
Property.
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<PAGE>
(b) Obligations under Heller Loan Documents and the Ground
Lease. Absent prior written notice from the Lessor to the contrary, the
Lessee shall (i) comply with all requirements in the Heller Loan
Documents that the Lessor, as Borrower, furnish the Lender with
notices, documents, reports, budgets, data and all other information
relating to the Property, including, without limitation, the
requirements in connection with a defeasance of the loan pursuant to
the Heller Note (ii) comply with all the terms of the Ground Lease as
if it were the lessee thereunder and (iii) comply with all terms of the
Regulatory Agreement as if it were the "Company" as defined therein and
all terms of the Defeasance Escrow as if it were the "Depositor" as
defined therein.
(c) Compliance with Laws. The Lessee will comply in all
Material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) with respect to its Material Assets, including
the Property, except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
(d) Further Assurances. The Lessee shall take or cause to be
taken from time to time all action necessary to assure that the intent
of the parties pursuant to the Operative Documents is given effect as
contemplated by this Lease. The Lessee shall execute and deliver, or
cause to be executed and delivered, to the Lessor from time to time,
promptly upon request therefor, any and all other and further
instruments that may be reasonably requested by the Lessor to cure any
deficiency in the execution and delivery of this Lease or any Operative
Document to which it is a party.
(e) Preservation of Existence, Etc. The Lessee will preserve
and maintain its existence and all rights, privileges and franchises
necessary and desirable in the normal conduct of its business and the
performance of its obligations hereunder and under the Operative
Documents; provided that, subject to the restrictions contained in the
Heller Loan Documents, the Lessee may consolidate with or merge with or
into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, if either the Lessee
shall be the continuing corporation, or the corporation (if other than
the Lessee) formed by such consolidation or into which the Lessee is
merged or the Person which acquires by conveyance or transfer the
properties and assets of the Lessee substantially as an entirety shall
expressly assume, by an assumption agreement executed and delivered to
the Lessor, the performance of the Lessee's obligations under each of
the Operative Documents.
(f) Nonpetition Covenants. Lessee shall not during the Term of
the Lease acquiesce, petition or otherwise invoke or cause the Lessor
to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Lessor under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Lessor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of
the Lessor. Lessor shall not during the Term of the Lease acquiesce,
petition or otherwise invoke or cause the Lessee to invoke the process
of any court or government authority for the purpose of commencing or
sustaining a case against the Lessee under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Lessee or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Lessee.
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ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc. Anything contained in this Lease to
the contrary notwithstanding, all claims against and liabilities of the Lessee
or the Lessor arising from events commencing prior to the expiration or earlier
termination of this Lease shall survive such expiration or earlier termination
for a period of one year except as to indemnification which shall continue to
survive. If any term or provision of this Lease or any application thereof shall
be declared invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. If any
right or option of the Lessee provided in this Lease would, in the absence of
the limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end twenty-one (21) years after the date of death of the last
survivor of the descendants of Franklin D. Roosevelt, the former President of
the United States, Henry Ford, the deceased automobile manufacturer, and John D.
Rockefeller, the founder of the Standard Oil Company, known to be alive on the
date of the execution, acknowledgment and delivery of this Lease.
33.2. Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing in recordable form signed by the Lessor and the Lessee.
33.3. No Waiver. No failure by the Lessor or the Lessee to insist upon
the strict performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or partial payment of
Rent during the continuance of any such default, shall constitute a waiver of
any such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
33.4. Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing (including by facsimile), and
directed to the address of the appropriate party as set forth in Schedule I
hereto.
33.5. Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
33.6. Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
33.7. Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
33.8. GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW MEXICO. WITHOUT
LIMITING THE FOREGOING, IN THE EVENT THAT THIS LEASE IS DEEMED TO CONSTITUTE A
FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE STATE OF NEW
MEXICO, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
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SHALL GOVERN THE CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS
EVIDENCED HEREBY.
33.9. Original Lease. The single executed original of this Lease marked
"THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature page
thereof and containing the receipt of the Lessor therefor on or following the
signature page thereof shall be the Original Executed Counterpart of this Lease
(the "Original Executed Counterpart"). To the extent that this Lease constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Lease may be
created through the transfer or possession of any counterpart other than the
Original Executed Counterpart.
33.10. Waiver of Jury Trial. THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS LEASE AND/OR ANY OF THE OTHER OPERATIVE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF SUCH PARTIES. THE PARTIES
HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE LEASE AND EACH SUCH OTHER OPERATIVE
DOCUMENT.
33.11. Compliance with Heller Loan Documents and Ground Lease. Lessor
covenants and agrees with Lessee that Lessor shall (a) not without the express
written consent of the Lessee, which consent shall not be unreasonably withheld,
enter into any amendments or modifications of the Lessor Loan Agreement, the
Lessor Pledge Agreement, the Ground Lease or the Heller Loan Documents to which
it is a party and (b) comply with the terms of the Lessor Loan Agreement, the
Lessor Pledge Agreement, the Ground Lease and the Heller Loan Documents to which
it is a party.
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in
Lessor. In the event the Lessee exercises its right or is obligated to pay the
Equity Balance to the Lessor as set forth in this Lease, the Lessee shall not
pay such Equity Balance without complying with the provisions of the Heller Loan
Documents. The parties further agree that as soon as possible (time being of the
essence) after the payment by the Lessee to the Lessor of the Equity Balance or
upon the Lessor's exercise of all its rights under the Pledge Agreements,
including, without limitation, its rights to possess the Certificate A and
Certificate B, the Lessee shall accept a transfer requested of it by the
beneficial owner of the Lessor of all of the beneficial interests in the Lessor
free and clear of all Liens. The Lessee and Lessor agree to execute all
documents reasonably necessary to effectuate such transfer. The acquisition by
the Lessee of the beneficial interests in the Lessor shall comply with the
provisions of the Heller Loan Documents.
33.13. Concerning the Lessor. This Lease has been executed by
Wilmington Trust Company solely in its capacity as Trustee under the Trust
Agreement and not in its individual capacity and in no case shall the Trust
Company (or any entity acting as successor or additional Trustee under the Trust
Agreement) be personally liable for or on account of any of the statements,
representations, warranties, covenants or obligations of the Trust, the Trustee
or the Lessor hereunder, any such liabilities being hereby waived by the other
parties hereto provided, that Wilmington Trust Company accepts the benefits
running to it hereunder and agrees that it shall be liable in its individual
capacity for its own gross negligence or willful misconduct. If a successor
Trustee is appointed in accordance with the terms of the
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Trust Agreement, such successor Trustee shall, without any further act, succeed
to all the rights, duties, immunities and obligations of the Lessor hereunder
and the predecessor Trustee shall be released from all further duties and
obligations hereunder arising after such successor Trustee will have been
appointed.
33.14. Owner's Insurance Policy Proceeds. After such time as the Lessor
is paid the Equity Balance, the Lessor agrees to promptly provide the Lessee
with any proceeds of the Lessor's owner's insurance policy covering the Property
which the Lessor has received, unless the Lessor is required to pay such
proceeds to the Lender pursuant to the Heller Loan Documents.
33.15. Escrow Agreement; Regulatory Agreement. Lessor is a party to
certain Escrow Agreement with First National Bank of Santa Fe, as escrowee (the
"Defeasance Escrow"), pursuant to which the Lessor has deposited cash and the
"Defeasance Obligations" (as such term is defined therein) in connection with
the defeasance of the liens and obligations in respect of those certain
Industrial Revenue Housing Refunding Bonds (Ponce de Leon Project), Series 1995
(the "Bonds") issued by the City of Santa Fe, New Mexico. Under the terms of the
Defeasance Escrow, the Lessor may be required to deposit additional funds
therein or may receive funds therefrom. In the event that any funds are required
to be deposited in the Defeasance Escrow, such amount shall be Supplemental Rent
and shall be paid by the Lessee as herein provided. In the event the Lessor
receives any sums from the Defeasance Escrow, the Lessor shall promptly remit or
direct the escrowee to remit such sums to the Lessee. The Lessor and the Lessee
further agree that upon termination of this Lease, the Lessee shall accept an
assignment of and assume the Lessor's interests in and obligations under the
Regulatory Agreement (to the extent same is in effect at such time) and any
other agreement which the Lessor shall request which is related thereto,
pursuant to documentation reasonably satisfactory to each party.
33.16. New Mexico Indemnitification Law. To the extent, if at all, N.M.
Stat. Annot. ss. 56- 7-1 (1978) applicable to this Lease, the applicable
indemnification provisions of this Lease shall not extend to the liability,
claims, damages, losses, or expenses, including attorney fees arising out of,
with respect to the Property (a) the preparation or approval of maps, drawings,
opinions, reports, surveys, change orders, designs or specifications by the
Lessor, or the agents or employees of the Lessor or (b) the giving of or the
failure to give directions or instructions by the Lessor, or the agents or
employees of the Lessor, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to
property.
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IN WITNESS WHEREOF, the parties have caused this Lease be duly executed
and delivered as of the date first above written.
BROOKDALE LIVING COMMUNITIES OF NEW
MEXICO- SF, INC.,
By
Name:
Title:
S-1
<PAGE>
Commitment:
THE PDL BUSINESS TRUST By Wilmington Trust
Company, not in its individual capacity but
solely as trustee under the Trust Agreement
$17,000,000
By
Name:
Title:
S-2
<PAGE>
THIS COUNTERPART IS NOT THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
HELLER FINANCIAL, INC.
By:
Name:
Title:
S-3
<PAGE>
SCHEDULE I
Notice Information
Lessee
Brookdale Living Communities of New Mexico - SF, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attention: Mark J. Schulte
Telephone No.: (312) 977-3690
Facsimile No.: (312) 977-3699
with copies delivered concurrently to:
Brookdale Living Communities of New Mexico - SF, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attention: Darryl W. Copeland, Jr.
Telephone No.: (312) 977-3692
Facsimile No.: (312) 977-3699
Brookdale Living Communities of New Mexico - SF, Inc.
c/o Brookdale Living Communities, Inc.
77 West Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attention: Robert J. Rudnik, Esquire
Telephone No.: (312) 977-3760
Facsimile No.: (312) 977-3769
Burke, Warren, Mackay & Serritella, P.C.
330 North Wabash Avenue
22nd Floor IBM Plaza
Chicago, Illinois 60611-3607
Attention: Douglas E. Wambach
Telephone No.: (312) 840-7019
Facsimile No.: (312) 840-7900
<PAGE>
Lessor
THE PDL BUSINESS TRUST
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone No.: (302) 651-8882
Facsimile No.: (302) 651-1000
<PAGE>
EXHIBIT A
FORM OF FUNDING REQUEST
TO: THE PDL BUSINESS TRUST
=======================
Reference is hereby made to the Lease dated as of _____ __, 1998, as it
may be amended from time to time (the "Lease"), between Brookdale Living
Communities of New Mexico - SF, Inc. (the "Company") and THE PDL BUSINESS TRUST
Capitalized terms not otherwise defined herein are used herein as defined in
Appendix 1 to the Lease.
The Company hereby requests the making of an Advance in the amount of
$____________ on _____________, 199_ (the "Requested Funding Date").
In connection with such requested Advance, the Company hereby
represents and warrants to you as follows:
(a) The Advance will be allocated as follows:
(i) $___________ of the Advance shall be used solely
to provide the Company with funds with which to pay or
reimburse itself for Property Cost.
(ii) $___________ of the Advance shall be used to pay
or reimburse the Company for Transaction Expenses paid or
payable by the Company in connection with the Operative
Documents and fees paid or payable by the Company to the
Lessor in connection with the Operative Documents and any
amounts paid or payable by the Company pursuant to Section
31.1 of the Lease, and
(b) On and as of the Requested Funding Date the
representations and warranties of the Company contained in the Lease
and in each of the other Operative Documents are true and correct in
all Material respects as though made on and as of such date, except to
the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties were
true and correct in all Material respects on and as of such earlier
date;
(c) On and as of the Requested Funding Date there are no
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened (i) that are reasonably likely to have a Material
adverse effect on the Property or (ii) that question the validity of
the Operative Documents or the rights or remedies of the Lessor with
respect to the Company or the Property under the Operative Documents;
-1-
<PAGE>
(d) To the knowledge of the Company, there have been no Liens
against the Property since the recordation of the Assignment of Ground
Lease other than Permitted Liens;
(e) On and as of the Requested Funding Date no Default or
Event or Default under the Lease has occurred and is continuing, and no
Default or Event of Default under the Lease will have occurred after
giving effect to the making of the Advance requested hereby; and
(f) All of the applicable conditions precedent to this Advance
under Article IV of the Lease have been satisfied.
Please wire transfer the proceeds of the Advance requested hereby
(other than proceeds described in paragraph (a)(iv) of this Funding Request) to
____________.
The Company has caused this Funding Request to be executed and
delivered by its duly authorized Responsible Employee this */_______ day of
__________, 199_.
BROOKDALE LIVING COMMUNITIES OF NEW
MEXICO - SF, INC.
By__________________________
Name:
Title:
- --------
*/ Funding Request must be delivered not later than 9:00 A.M., New York
City time, two (2) Business Days prior to the Requested Funding Date.
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<PAGE>
EXHIBIT C
BROOKDALE LIVING COMMUNITIES OF NEW MEXICO - SF, INC.
Responsible Employee's Certificate
Pursuant to Section 4.3(g) of the Lease
-----------------------
The undersigned certifies that he is the duly appointed and acting [ ]
of BROOKDALE LIVING COMMUNITIES OF NEW MEXICO - SF, INC. (the "Company"), and is
familiar with the terms and provisions of the Lease, dated as of ______ __, 1998
(the "Lease"), between the Company, as the Lessee and THE PDL BUSINESS TRUST, as
the Lessor, and the transactions and documents contemplated thereby. Capitalized
terms used herein but not defined shall have the meanings ascribed to them in
Appendix 1 to the Lease.
Pursuant to Section 4.3(g) of the Lease, the undersigned, as [ ] of the
Company, further certifies that: (i) each and every representation and warranty
of the Company contained in each Operative Document to which is a party is true
and correct in all Material respects on and as of the Acquisition Date; (ii) to
the best of the undersigned's knowledge, no Default or Event of Default has
occurred and is continuing under any Operative Document to which the Company is
a party with respect to the Company; (iii) each Operative Document to which the
Company is a party is in full force and effect with respect to the Company; and
(iv) the Company has duly performed and complied in all Material respects with
all covenants, agreements and conditions contained in the Lease or in any other
Operative Document required to be performed or complied with by it on or prior
to such Acquisition Closing Date.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this ____ day of __________, 199__.
BROOKDALE LIVING COMMUNITIES OF NEW
MEXICO - SF, INC.
-----------------------------
Name:
Title:
-3-
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1. Definitions; Interpretation..............................................1
ARTICLE II
PURCHASE AND LEASE
2.1. Acceptance and Lease of Property.........................................1
2.2. Acceptance Procedure.....................................................1
2.3. Lease Term...............................................................2
2.4. Title....................................................................2
ARTICLE III
FUNDING OF THE ADVANCE
3.1. Lessor Commitment........................................................2
3.2. Procedures for Advance...................................................2
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Documentation Date.......................................................2
4.2. Acquisition Date.........................................................3
4.3. Conditions Precedent to the Acquisition Date and the Advance.............3
ARTICLE V
[INTENTIONALLY OMITTED]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor............................................6
6.2. Representations of Lessee................................................7
6.3. Representations of the Lessee with Respect to the Advance................9
ARTICLE VII
PAYMENT OF RENT
7.1. Rent....................................................................10
7.2. Payment of Rent.........................................................10
7.3. Supplemental Rent.......................................................10
7.4. Method of Payment.......................................................11
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ARTICLE VIII
QUIET ENJOYMENT; RIGHT TO INSPECT
8.1. Quiet Enjoyment.........................................................11
8.2. Right to Inspect........................................................11
ARTICLE IX
NET LEASE, ETC.
9.1. Net Lease...............................................................11
9.2. No Termination or Abatement.............................................12
ARTICLE X
SUBLEASES
10.1. Subletting.............................................................13
ARTICLE XI
LESSEE ACKNOWLEDGMENTS
11.1. Condition of the Property..............................................13
11.2. Risk of Loss...........................................................13
ARTICLE XII
POSSESSION AND USE OF THE PROPERTY, ETC.
12.1. Utility Charges........................................................13
12.2. Possession and Use of the Property.....................................14
12.3. Compliance with Requirements of Law and Insurance Requirements.........14
12.4. Assignment by Lessee...................................................14
ARTICLE XIII
MAINTENANCE AND REPAIR; RETURN
13.1. Maintenance and Repair; Return.........................................14
ARTICLE XIV
MODIFICATIONS, ETC.
14.1. Modifications, Substitutions and Replacements..........................15
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ARTICLE XV
WARRANT OF TITLE; EASEMENTS
15.1. Warrant of Title.......................................................16
15.2. Grants and Releases of Easements; Lessor's Waivers.....................16
ARTICLE XVI
PERMITTED CONTESTS
16.1. Permitted Contests in Respect of Applicable Law........................17
ARTICLE XVII
INSURANCE
17.1. Public Liability and Workers' Compensation Insurance...................17
17.2. Hazard and Other Insurance.............................................18
17.3. Insurance Coverage.....................................................18
17.4. Insurance Proceeds.....................................................19
17.5. Insurance Requirements in Heller Loan Documents........................19
ARTICLE XVIII
CASUALTY AND CONDEMNATION;
ENVIRONMENTAL MATTERS
18.1. Casualty and Condemnation..............................................19
18.2. Environmental Matters..................................................20
18.3. Notice of Environmental Matters........................................21
ARTICLE XIX
TERMINATION OF LEASE
19.1. Termination Upon Certain Events........................................21
19.2. Termination Procedures.................................................21
ARTICLE XX
EVENTS OF DEFAULT
20.1. Events of Default......................................................22
20.2. Remedies...............................................................24
20.3. Waiver of Certain Rights...............................................27
ARTICLE XXI
LESSOR ASSIGNMENT
21.1. Assignment.............................................................27
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ARTICLE XXII
PURCHASE PROVISIONS
22.1. Purchase Option........................................................27
ARTICLE XXIII
RENEWAL PROCEDURES
23.1. Renewal................................................................28
ARTICLE XXIV
REMARKETING OPTION
24.1. Option to Remarket.....................................................28
24.2. Certain Obligations Continue...........................................31
ARTICLE XXV
PROCEDURES RELATING TO PURCHASE OR REMARKETING
25.1. Provisions Relating to the Exercise of Purchase
Option and Conveyance Upon Remarketing
and Conveyance Upon Certain Other Events...............................32
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification................................................32
26.2. End of Term Indemnity..................................................34
26.3. Environmental Indemnity................................................35
26.4. Proceedings in Respect of Claims.......................................36
26.5. General Tax Indemnity..................................................37
26.6. Funding Losses.........................................................41
26.7. Regulation D Compensation..............................................42
26.8. Deposits Unavailable...................................................42
26.9. Illegality.............................................................42
26.10. Increased Cost and Reduced Return.....................................43
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates..................................................44
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender................................................45
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ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title.....................................................45
ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property..............................................45
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses...................................................46
31.2. Brokers' Fees and Stamp Taxes..........................................46
ARTICLE XXXII
OTHER COVENANTS AND AGREEMENTS OF LESSEE
32.1. Covenants..............................................................46
ARTICLE XXXIII
MISCELLANEOUS
33.1. Survival; Severability; Etc............................................48
33.2. Amendments and Modifications...........................................48
33.3. No Waiver..............................................................49
33.4. Notices................................................................49
33.5. Successors and Assigns.................................................49
33.6. Headings and Table of Contents.........................................49
33.7. Counterparts...........................................................49
33.8. GOVERNING LAW..........................................................49
33.9. Original Lease.........................................................49
33.10. Waiver of Jury Trial..................................................49
33.11. Compliance with Heller Loan Documents and Ground Lease................50
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in Lessor..50
33.13. Concerning the Lessor.................................................50
33.14. Owner's Insurance Policy Proceeds.....................................50
33.15. Escrow Agreement; Regulatory Agreement................................50
33.16. Nevada Indemnitification Law..........................................51
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Schedules
SCHEDULE I Notice Information
Exhibits
EXHIBIT A Funding Request
EXHIBIT B Lease Supplement
EXHIBIT C Responsible Employee's Certificate
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APPENDIX 1
to
Lease
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by the Operative Documents, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative
Document), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms of the
other Operative Documents and reference to any promissory note includes
any promissory note which is an extension or renewal thereof or a
substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law
as amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision
of any Applicable Law means that provision of such Applicable Law from
time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section
or other provision;
(vi) reference in any Operative Document to any Article,
Section, Appendix, Schedule or Exhibit means such Article or Section
thereof or Appendix, Schedule or Exhibit thereto;
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(vii) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to an Operative Document as a whole
and not to any particular Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term;
(ix) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(x) terms used herein or in the Lease but not otherwise
defined therein shall have the meanings specified therefor in the
Heller Loan Documents.
B. Accounting Terms. In each Operative Document, unless expressly
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. Conflict in Operative Documents. If there is any conflict between
any Operative Documents, such Operative Document shall be interpreted and
construed, if possible, so as to avoid or minimize such conflict but, to the
extent (and only to the extent) of such conflict, the Heller Loan Documents
shall prevail and control.
D. Legal Representation of the Parties. The Operative Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Defined Terms. Unless a clear contrary intention appears, terms
defined herein have the respective indicated meanings when used in each
Operative Document. Terms used herein and in the Lease but not defined herein or
in the Lease shall have the meanings ascribed to them in the Heller Loan
Documents.
"Acquisition Date" is defined in Section 4.2 of the Lease.
"Advance" means the advance of funds by the Lessor pursuant to Article
III of the Lease.
"Affiliate" means, when used with respect to any Person, any other
Person directly or indirectly Controlling or Controlled by or under direct or
indirect common control with such Person.
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"After Tax Basis" means, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient (less any tax savings realized
and the present value of any tax savings projected to be realized by the
recipient as a result of the payment of the indemnified amount) with respect to
the receipt by the recipient of such amounts, such increased payment (as so
reduced) is equal to the payment otherwise required to be made.
"Alternate Base Rate" means, for any period, an interest rate per annum
equal to the sum of (i) the Federal Funds Effective Rate most recently
determined by the Lessor and (ii) 1%. The Alternate Base Rate shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days from a BH Payment Date to the subsequent BH Payment Date.
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including Environmental Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction
(including those pertaining to health, safety or the environment (including,
without limitation, wetlands) and those pertaining to the construction, use or
occupancy of the Property) and any restrictive covenant or deed restriction or
easement of record affecting the Property or any other Material Assets.
"Applicable Margin" means at any time .70%.
"Appraisal" means an appraisal of the Property, which Appraisal
complies in all material respects (as determined by the reasonable judgment of
counsel for the Lessor) with the requirements of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended, the rules and
regulations adopted pursuant thereto, and all other applicable Requirements of
law, and will appraise the Fair Market Sales Value of such Property, in form and
substance reasonably satisfactory to the Lessor, prepared by American Appraisal
Associates or another reputable appraiser selected by the Lessor.
"Appurtenant Rights" means (i) all agreements, easements, rights of way
or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land or the Improvements, including, without limitation, the use of any
streets, ways, alleys, vaults or strips of land adjoining, abutting, adjacent or
contiguous to the Land and (ii) all permits, licenses and rights, whether or not
of record, appurtenant to the Land.
"Architect" means, with respect to the Property, the architect acting
in such capacity. Any requirement in any Operative Document that a certificate
of the Architect be delivered shall
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be satisfied by delivery of certificate(s) from one or more of the foregoing so
long as such certificates collectively satisfy the requirements set forth in
such Operative Documents.
"Assignment of Ground Lease" means that certain Assignment and
Assumption of Ground Lease and Special Warranty Deed to Improvement dated as of
on or about the date hereof between The Board of Education of the Santa Fe
Schools, Ponce De Leon Limited Partnership and the Lessor.
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"B Loan" means the loan made by Bank Hapoalim B.M., as lender, to the
Lessor, as borrower, pursuant to the Lessor Loan Agreement.
"Basic Rent" means principal and interest payable under the Heller
Note, Ground Rent, BH Basic Rent and Lessor Basic Rent.
"BH" means Bank Hapoalim B.M., a bank chartered under the laws of
Israel, acting through its San Francisco Branch and its successors and assigns.
"BH Basic Rent" means an amount payable quarterly in advance beginning
on the Acquisition Date in the amount of $19,839.98 and on each third Payment
Date in an amount, if any, that (a) the product of the Eurodollar Lease Rate and
the then outstanding balance (including principal and Capitalized Interest) of
the B Loan, calculated for the number of days to elapse from the current BH
Payment Date to the subsequent BH Payment Date over a year of 360 days, exceeds
(b) interest accreted/compounded on the Certificate A from the current BH
Payment Date to the subsequent BH Payment Date; provided, however, that to the
extent that on a BH Payment Date, the amount of the B Loan (inclusive of
principal and Capitalized Interest) is less than the amount of the Certificate A
(inclusive of principal and accreted/compounded interest) (such differential
being referred to herein as the "Deficiency") BH Basic Rent shall be payable in
the amount, if any, that BH Basic Rent otherwise payable exceeds the Deficiency,
if at all.
"BH Indemnity" means the Indemnity Agreement dated as of the date
hereof from the Parent to Wilmington Trust Company, SELCO and BH.
"BH Payment Date" means initially, the Acquisition Date, secondly,
February 1, 1999 and thereafter, each third Payment Date and the Expiration
Date.
"Board" means the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Bonds" is defined in Section 33.15 of the Lease.
"Break Costs" means an amount equal to the amount, if any, required to
compensate the Lessor for any additional losses (including, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
funds acquired by the Lessor to fund its obligations hereunder, swaps, hedges or
similar transactions entered into in connection with or in contemplation of
transactions relating to the Property) it may reasonably incur as a result of
(x) the Lessee's payment of Rent or Lease Balance other than on a Payment Date,
(y) the Advance not being made on the date specified therefore in the Funding
Request (other than as a result of a breach by the Lessor if its obligation
under Section 3.1 of the Lease to make the Advance), or (z) as a result of any
conversion of the Eurodollar Rate in accordance with Section 26.8 or 26.9 of
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the Lease. A statement as to the amount of such loss, cost of expense, prepared
in good faith and in reasonable detail and submitted by the Lessor to the
Lessee, shall be conclusive and binding for all purposes absent manifest error.
"Business Day" means each day which is not a day on which banks in
Chicago, Illinois are generally authorized or obligated, by law or executive
order, to close and is also a day on which dealings in Dollars are carried on in
the London interbank eurodollar market.
"Capitalized Interest" is defined in Section 2.5 of the Lessor Loan
Agreement.
"Casualty" means any damage or destruction of all or any portion of the
Property as a result of a fire or other casualty.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986.
"Certificate A" means the compounding investment certificate, in the
original principal amount of $4,226,000 issued by Fleet National Bank and
pledged to the Lessor pursuant to the Certificate A Pledge Agreement and any
replacement certificate therefor.
"Certificate A Pledge Agreement" means the Certificate A Pledge
Agreement, dated as of the date hereof, among the Lessee, Lessor, Wilmington
Trust Company, as Valuation Agent and LaSalle National Bank, as Custodian,
pursuant to which the Lessee pledged Certificate A to the Lessor.
"Certificate B" means the investment certificate in the original
principal amount of $524,000 issued by Fleet National Bank and pledged to the
Lessor pursuant to the Certificate B Pledge Agreement and any replacement
certificate therefor.
"Certificate B Pledge Agreement" means the Certificate B Pledge
Agreement, dated as of the date hereof, among the Lessee, the Lessor, Wilmington
Trust Company, as Valuation Agent and LaSalle National Bank, as Custodian,
pursuant to which the Lessee pledged the Certificate B to the Lessor.
"Certifying Party" is defined in Section 27.1 of the Lease.
"Claims" means any and all obligations, liabilities, losses, actions,
suits, judgments, penalties, fines, claims, demands, settlements, costs and
expenses (including, without limitation, reasonable legal fees and expenses) of
any nature whatsoever.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute thereto.
"Commitment" means the obligation of the Lessor to make the Advance to
the Lessee in an aggregate principal amount not to exceed the amount set forth
opposite the Lessor's name on its signature page to the Lease.
"Condemnation" means any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy, easement rights
or title to the Property or any part thereof, wholly or partially (temporarily
or permanently), by or on account of any actual or threatened eminent domain
proceeding or other taking of action by any Person having the power of eminent
domain, including an action by a Governmental Authority to change the grade of,
or widen the streets adjacent to, the Property or alter the pedestrian or
vehicular traffic flow to the Property so as to result in change in access to
the Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, occupancy or
title vests in the condemning authority.
"Contingent Rental Adjustment" means the sum of (a) the maximum amount
(calculated as a percentage of the Fair Market Sales Value of the Property as
set forth in the Appraisal) that when present valued with the minimum Basic Rent
payments to be made during the Term permits the Lease to be characterized as an
"operating lease" in accordance with the Statement of Financial Accounting
Standards No. 13 as in effect on the Acquisition Date and permits recourse to
the Lessee , which in no event shall be less than all amounts due and owing
under the Heller Loan Documents and (b) any additional amount required to prepay
the Heller Loan or defease the Heller Loan pursuant to the Heller Loan Documents
including, but not limited to, the Defeasance Deposit or the Yield Maintenance
Amount, as applicable, and all costs and fees payable in connection therewith.
"Control" means (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or other beneficial interests or by contract or
otherwise.
"Custodian" means LaSalle National Bank, as custodian under the
Certificate A Pledge Agreement and the Certificate B Pledge Agreement.
"Debt" means, for any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services, (ii)
all obligations of such Person under any conditional sale or other title
retention agreement relating to property purchased by such Person, (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
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or services secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, and (iv) all obligations of such Person as lessee under leases that
have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Defeasance Escrow" is defined in Section 33.15 of the Lease.
"Documentation Date" is defined in Section 4.1 of the Lease.
"Dollars" and "$" mean dollars in lawful currency of the United States
of America.
"End of the Term Report" is defined in Section 26.2(a) of the Lease.
"Environmental Audit" means a Phase One environmental site assessment
(the scope and performance of which meets or exceeds ASTM Standard Practice
E1527-93 Standard Practice for Environmental Site Assessments: Phase One
Environmental Site Assessment Process) of the Property, and, if called for by
the Phase One assessment, a Phase Two environmental site assessment.
"Environmental Law" means, whenever enacted or promulgated, any
applicable Federal, state, county or local law, statute, ordinance, rule,
regulation, license, permit, authorization, approval, covenant, criteria,
administrative or court order, judgment, decree, injunction, code or requirement
or any agreement with a Governmental Authority:
(x) relating to pollution (or the cleanup, removal,
remediation or encapsulation thereof, or any other response thereto),
or the regulation or protection of human health, safety or the
environment, including air, water, vapor, surface water, groundwater,
drinking water, land (including surface or subsurface), plant, aquatic
and animal life, or
(y) concerning exposure to, or the use, containment, storage,
recycling, treatment, generation, discharge, emission, Release or
threatened Release, transportation, processing, handling, labeling,
containment, production, disposal or remediation of any Hazardous
Substance,
in each case as amended and as now or hereafter in effect. Applicable laws
include, but are not limited to, CERCLA; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. ss. 6901 et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et seq.; the Clean Air Act, 42
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U.S.C. ss.ss. 7401 et seq.; the National Environmental Policy Act, 42 U.S.C. ss.
4321; the Refuse Act, 33 U.S.C. ss.ss. 401 et seq.; the Hazardous Materials
Transportation Act of 1975, 49 U.S.C. ss.ss. 1801-1812; the Toxic Substances
Control Act, 15 U.S.C. ss.ss. 2601 et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. ss.ss. 136 et seq.; the Safe Drinking Water Act,
42 U.S.C. ss.ss. 300f et seq., each as amended and as now or hereafter in
effect, and their state and local counterparts or equivalents, including any
regulations promulgated thereunder.
"Environmental Violation" means any activity, occurrence or condition
that violates or results in non-compliance with any Environmental Law in any
Material respect.
"Equipment" means all of Lessee's "equipment," as such term is defined
in the UCC, and, to the extent not included in such definition, all fixtures,
appliances, machinery, furniture, furnishings, decorations, tools and supplies,
now owned or hereafter acquired by Lessee using the proceeds of the Advance or
other funds from the Lessor, including but not limited to, all beds, linens,
radios, televisions, carpeting, telephones, cash registers, computers, lamps,
glassware, restaurant and kitchen equipment, all medical, dental,
rehabilitation, therapeutic and paramedic equipment and supplies, any building
equipment, including but not limited to, all heating, lighting, incinerating,
waste removal and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, security and alarm systems, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigeration, washing machines, dryers, stoves,
refrigerators, ventilating, and communications apparatus, air cooling and air
conditioning apparatus, escalators, elevators, ducts, and compressors, materials
and supplies, and all other machinery, apparatus, equipment, fixtures and
fittings now owned or hereafter acquired by Lessee using proceeds of the Advance
or other funds from the Lessor, wherever located, any portion thereof or any
appurtenances thereto, together with all additions, replacements, parts,
fittings, accessions, attachments, accessories, modifications and alterations of
any of the foregoing.
"Equity Balance" means an amount equal to the sum of (a) the aggregate
amount of the balance (inclusive of principal and Capitalized Interest) of the B
Loan, (b) $510,000 and (c) all due and unpaid BH Basic Rent, Lessor Basic Rent
and Supplemental Rent to which the Lessor is entitled.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time or any successor Federal statute.
"Eurocurrency Reserve Requirements" means, for any day as applied to a
payment of Rent, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
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"Eurodollar Lease Rate" means, during any Interest Period, the rate per
annum equal to the sum of the Eurodollar Rate for such Interest Period plus the
Applicable Margin.
"Eurodollar Rate", subject to Section 26.8 of the Lease, means the rate
per annum at which deposits in Dollars appear with respect to a three (3) month
period (or a shorter period with respect to the first Interest Period) on the
Telerate Page 3750 (or any successor page), in each case as of 11:00 a.m.
(London time) two Business Days prior to the beginning of such Interest Period,
or if such rate is not available, then the average (rounded upward, if
necessary, to the nearest multiple of one-sixteenth of one percent) of the rates
offered for Dollar deposits to the prime banks by leading banks in the London
interbank market at or about 11:00 a.m. (London time) two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar market for
delivery on the first day of such Interest Period for a three (3) month period
in an amount comparable to the amount of the Advance to be outstanding during
such period. The Eurodollar Rate shall be calculated on the basis of a 360-day
year for the actual number of days from a BH Payment Date to the subsequent BH
Payment Date.
"Event of Default" is defined in Section 20.1 of the Lease.
"Excess Proceeds" means the excess, if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a Casualty
or Condemnation over the sum of the Lease Balance paid by the Lessee pursuant to
Articles XVII, XVIII and XIX of the Lease with respect to such Casualty or
Condemnation and all the excess proceeds over the Lease Balance, if any,
received by the Lessor in connection with any sale of the Property pursuant to
the Lessor's exercise of remedies under Section 20.2 of the Lease or the
Lessee's exercise of the Remarketing Option under Article XXIV of the Lease.
"Expiration Date" means, unless the Lease shall have been earlier
terminated in accordance with the provisions of the Lease or the other Operative
Documents, November 1, 2003, or if the Term has been extended in accordance with
Article XXIII of the Lease, the last day of the most recent Renewal Term,
provided, however, the Expiration Date for the final potential Renewal Term
under the Lease shall be November 1, 2008.
"Fair Market Sales Value" means the amounts, which in any event shall
not be less than zero, that would be paid in cash in an arm's-length transaction
between an informed and willing purchaser and an informed and willing seller,
neither of whom is under any compulsion to purchase or sell, respectively, for
the ownership of all of the Property. The Fair Market Sales Value of the
Property shall be determined based on the assumption that, except for purposes
of Article XX of the Lease and Section 26.2 of the Lease, the Property is in the
condition and state of repair required under Section 13.1 of the Lease and the
Lessee is in compliance with the other requirements of the Operative Documents.
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"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of quotations for such day on such transaction received by the
Lessor from three Federal funds brokers of recognized standing selected by it.
"Fixtures" means all fixtures relating to the Improvements, including
all components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.
"Funding Office" means the office of the Lessor, if any, identified on
its signature page to the Lease as its Funding Office.
"Funding Request" is defined in Section 3.2(a) of the Lease.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use, occupancy, zoning and operation of the Property.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" means that certain Lease Agreement between the Ground
Lessor as Lessor, and Ponce De Leon Limited Partnership, as Lessee, dated as of
November 1, 1985, the Lessee's interest in which has been assigned to Lessor
pursuant to the Assignment of Ground Lease.
"Ground Lease Guaranty" means the Guaranty Agreement made by the Parent
and the Lessee in favor of the Ground Lessor, guarantying the payment and
performance of the obligations of the Lessor, as lessee under the Ground Lease,
during the term of the Lease.
"Ground Lessor" means the Board of Education of the Santa Fe Public
Schools, or any successor owner or fee simple to the land subject to the Ground
Lease.
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"Ground Rent" means all rent and other charges payable under the Ground
Lease.
"Gross Proceeds" is defined in Section 24.1(k) of the Lease.
"Hazardous Substance" means, collectively, (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in
drinking water, and lead-based paint, the presence, generation, use,
transportation, storage or disposal of or exposure to which (x) is regulated or
could lead to liability under any Environmental Law or (y) is subject to notice
or reporting requirements under any Environmental Law, (ii) any chemicals or
other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants" or
words of similar import under any Environmental Law and (iii) any other chemical
or any other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Heller Leasehold Mortgage" means the Ground Leasehold Mortgage,
Assignment of Rents and Security Agreement and Fixture Filing, dated on or about
the date hereof, by the Lessor to the Lender, together with all amendments,
modifications and supplements thereto.
"Heller/Lessee Indemnification" means the Hazardous Substance
Indemnification Agreement dated on or about the date hereof by the Lessee and
Parent in favor of the Lender, together with all amendments, modification and
supplements thereto.
"Heller/Lessor Indemnification" means the Hazardous Substance
Indemnification Agreement dated on or about the date hereof by the Lessor in
favor of the Lender, together with all amendments, modification and supplements
thereto.
"Heller Loan Documents" means the Heller Note, Heller Subleasehold
Mortgage, Heller Leasehold Mortgage, Heller/Lessee Indemnification,
Heller/Lessor Indemnification, Subordination and Attornment Agreement, Lessee
Assignment of Leases, Lessor Assignment of Leases, the Lessee Guaranty, the
Security Deposit Account Agreement, the Lockbox Account Agreement and all
documents executed and delivered in connection with the foregoing.
"Heller Note" means the Fixed Rate Program Promissory Note Secured by
Mortgage dated on or about the date hereof by a Lessor to the Lender in the
original principal amount of $12,250,000.
"Heller Subleasehold Mortgage" means the Subleasehold Mortgage,
Assignment of Rents and Security Agreement and Fixture Filing dated on or about
the date hereof, by the Lessee to the Lender, together with all amendments,
modifications and supplements thereto.
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"Impositions" means any and all liabilities, losses, expenses and costs
of any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever ("Taxes"), including,
without limitation, (i) real and personal property taxes, including personal
property taxes on the Property covered by the Lease that is classified by
Governmental Authorities as personal property, and real estate or ad valorem
taxes in the nature of property taxes; (ii) sales taxes, use taxes and other
similar taxes (including rent taxes and intangibles taxes); (iii) any excise
taxes; (iv) real estate transfer taxes, conveyance taxes, mortgage taxes,
intangible taxes, stamp taxes and documentary recording taxes and fees; (v)
taxes that are or are in the nature of franchise, income, value added, gross
receipts, privilege and doing business taxes, license and registration fees; and
(vi) assessments on the Property, including all assessments for public
improvements or benefits, whether or not such improvements are commenced or
completed within the Term, and in each case all interest, additions to tax and
penalties thereon, which at any time may be levied, assessed or imposed by any
Federal, state or local authority upon or with respect to (a) any Tax
Indemnitee, the Property or any part thereof or interest therein, or the Lessee
or any sublessee or user of the Property; (b) the financing, refinancing,
demolition, construction, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
purchase, rental, lease, activity conducted on, delivery, insuring, use,
operation, improvement, transfer, return or other disposition of the Property or
any part thereof or interest therein; (c) the rentals, receipts or earnings
arising from the Property or any part thereof or interest therein; (d) the
Operative Documents or any payment made or accrued pursuant thereto; (e) the
income or other proceeds received with respect to the Property or any part
thereof or interest therein upon the sale or disposition thereof; (f) any
contract relating to the construction, acquisition or delivery of the
Improvements or any part thereof or interest therein; or (g) otherwise in
connection with the transactions contemplated by the Operative Documents.
Notwithstanding anything in the first paragraph of this definition
(except as provided in the final paragraph of this definition) the term
"Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are
in the nature of, sales, use, rental, transfer or property taxes) that
are imposed by any Governmental Authority and that are based upon or
measured by the gross or net income or gross or net receipts (including
any minimum taxes, withholding taxes or taxes on, measured by or in the
nature of capital, net worth, excess profits, items of tax preference,
capital stock, franchise, business privilege or doing business taxes);
provided that this clause (i) shall not be interpreted to prevent a
payment from being made on an After Tax Basis if such payment is
otherwise required to be so made;
(ii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs, or
relates to a period, after the termination of the Lease (but not any
Tax or imposition that relates to any period prior to the termination
of the Lease);
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(iii) any Tax or imposition for so long as, but only for so
long as, it is being contested in accordance with the provisions of
Section 26.5(b) of the Lease, provided that the foregoing shall not
limit the Lessee's obligation under Section 26.5(b) of the Lease to
advance to such Tax Indemnitee amounts with respect to Taxes that are
being contested in accordance with Section 26.5(b) of the Lease or any
expenses incurred by such Tax Indemnitee in connection with such
contest;
(iv) any interest or penalties imposed on a Tax Indemnitee as
a result of a breach by such Tax Indemnitee of its obligations under
Section 26.5(e) of the Lease or otherwise as a result of a Tax
Indemnitee's failure to file any return or other documents timely and
as prescribed by applicable law; provided that this clause (iv) shall
not apply (x) if such interest or penalties arise as a result of a
position taken (or requested to be taken) by the Lessee in a contest
controlled by the Lessee under Section 26.5(b) of the Lease or (y) if
such failure is attributable to a failure by the Lessee to fulfill its
obligations under the Lease with respect to any such return;
(v) any Taxes or impositions imposed upon a Tax Indemnitee
with respect to any voluntary transfer, sale, financing or other
voluntary disposition of any interest in the Property or any part
thereof, or any interest therein or any interest or obligation under
the Operative Documents, or from any sale, assignment, transfer or
other disposition of any interest in a Tax Indemnitee or any Affiliate
thereof, (other than any transfer in connection with (1) the exercise
by the Lessee of its Purchase Option or any termination option or other
purchase of the Property by the Lessee, (2) the occurrence of an Event
of Default, (3) a Casualty or Condemnation affecting the Property, or
(4) any sublease, modification or addition to the Property by the
Lessee);
(vi) any Taxes or impositions imposed on a Tax Indemnitee, to
the extent such Tax Indemnitee actually receives a credit (or otherwise
has a reduction in a liability for Taxes) in respect thereof against
Taxes that are not indemnified under the Lease (but only to the extent
such credit is not taken into account in calculating the indemnity
payment on an After Tax Basis);
(vii) Taxes imposed on or with respect to or payable by any
Tax Indemnitee based on, measured by or imposed with respect to any
fees received by such Tax Indemnitee;
(viii) any Taxes imposed against or payable by a Tax
Indemnitee resulting from, or that would not have been imposed but for,
the gross negligence or willful misconduct of such Tax Indemnitee;
(ix) Taxes imposed on or payable by a Tax Indemnitee to the
extent such Taxes would not have been imposed but for a breach by the
Tax Indemnitee or any Affiliate
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thereof of any representations, warranties or covenants set forth in
the Operative Documents (unless such breach is caused by the Lessee's
breach of its representations, warranties or covenants set forth in the
Operative Documents);
(x) Taxes to the extent resulting from such Tax Indemnitee's
failure to comply with the provisions of Section 26.5(b) of the Lease,
which failure precludes or materially adversely affects the ability to
conduct a contest pursuant to Section 26.5(b) of the Lease (unless such
failure is caused by the Lessee's breach of its obligations);
(xi) Taxes which are included in Property Cost if and to the
extent actually paid;
(xii) Taxes that would have been imposed in the absence of the
transactions contemplated by the Operative Documents and Taxes imposed
on or with respect to or payable as a result of activities of a Tax
Indemnitee or Affiliate thereof unrelated to the transactions
contemplated by the Operative Documents;
(xiii) Taxes imposed on or with respect to or payable by a Tax
Indemnitee resulting from, or that would not have been imposed but for
the existence of, any Lessor Lien created by or through such Tax
Indemnitee or an Affiliate thereof and not caused by acts or omissions
of the Lessee, unless required to be removed by the Lessee;
(xiv) Any Tax imposed against or payable by a Tax Indemnitee
to the extent that the amount of such Tax exceeds the amount of such
Tax that would have been imposed against or payable by such Tax
Indemnitee (or, if less, that would have been subject to
indemnification under Section 26.5 of the Lease) if such Tax Indemnitee
were not a direct or indirect successor, transferee or assign of one of
the original Tax Indemnitees; provided, however, that this exclusion
(xiv) shall not apply if such direct or indirect successor, transferee
or assign acquired its interest as a result of a transfer while an
Event of Default shall have occurred and is continuing;
(xv) Taxes imposed on or with respect to or payable by a Tax
Indemnitee that would not have been imposed but for an amendment,
supplement, modification, consent or waiver to any Operative Document
not initiated, requested or consented to by the Lessee unless such
amendment, supplement, modification, consent or waiver (A) arises due
to, or in connection with there having occurred, an Event of Default or
(B) is required by the terms of the Operative Documents or is executed
in connection with any amendment to the Operative Documents required by
law;
(xvi) Taxes in the nature of intangibles, stamp, documentary
or similar Taxes;
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(xvii) Taxes imposed on or with respect to or payable by a Tax
Indemnitee or any Affiliate because such Tax Indemnitee or any
Affiliate thereof is not a United States person within the meaning of
Section 7701(a)(30) of the Code; and
(xviii) Any tax imposed by its express terms in lieu of or in
substitution for a Tax not subject to indemnity pursuant to the
provisions of Section 26.5 of the Lease.
Notwithstanding the foregoing, the exclusions from the definition of Impositions
set forth in clauses (i), (ii), (v), (vii), (xii), (xvi) and (xviii) (to the
extent that any such tax is imposed by its express terms in lieu of or in
substitution for a Tax set forth in clauses (i), (ii), (v), (vii), (xii), (xvi)
and (xviii)) above shall not apply (but the other exclusions shall apply) to any
Taxes or any increase in Taxes imposed on a Tax Indemnitee net of any decrease
in taxes realized by such Tax Indemnitee, to the extent that such tax increase
or decrease would not have occurred if on the Acquisition Date the Lessor had
advanced funds to the Lessee in the form of a loan secured by the Property in an
amount equal to the Property Cost funded on the Acquisition Date, with debt
service for such loan equal to the Basic Rent payable on each Payment Date and a
principal balance at the maturity of such loan in an amount equal to the then
outstanding amount of the Advance at the end of the term of the Lease.
"Improvements" means, all buildings, structures, Fixtures, Equipment,
and other improvements of every kind existing at any time and from time to time
(including those purchased with amounts advanced by the Lessor pursuant to the
Lease) on or under the Land, together with any and all appurtenances to such
buildings, structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways, and including all Modifications
and other additions to or changes in the Improvements at any time and including
all gas and electric fixtures, radiators, heaters, washing machines, dryers,
refrigerators, ovens, engines and machinery, boilers, ranges, elevators and
motors, plumbing and heating fixtures, antennas, carpeting and other floor
coverings, water heaters, awnings and storm sashes, and cleaning apparatus which
are or shall be attached to the Land or said buildings, structures or
improvements.
"Indemnitee" means the Lessor, the Trust Company, SELCO, BH and their
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.
"Institutional Lender" means an insurance company, bank, savings and
loan association, trust company, commercial credit corporation, pension plan,
pension fund or pension fund advisory firm, mutual fund or other investment
company, or an institution substantially similar to any of the foregoing, in
each case having at least $250 million in capital/statutory surplus or
shareholders' equity and at least $1 billion in total assets, or any entity
wholly owned by any of the institutions meeting the foregoing criteria.
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"Insurance Requirements" means all terms and conditions of any
insurance policy either required by the Lease or the Heller Loan Documents to be
maintained by the Lessee or the Lessor, and all reasonable and appropriate
requirements of the issuer of any such policy.
"Intercreditor Agreement" means the Intercreditor Agreement dated on or
about the date hereof between BH and the Lender, together with all amendments,
modification and supplements thereto.
"Interest Period" means:
(i) initially, the period commencing on the Acquisition Date
and ending on the next succeeding BH Payment Date; and
(ii) thereafter, each period commencing the day after the last
Business Day of the next preceding Interest Period and ending on the
day preceding three months thereafter;
and provided that, the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day; and
(ii) any Interest Period that would otherwise extend beyond
the Expiration Date shall end on the Expiration Date.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"Land" means the parcel of real property described on Annex 1 to the
Lease Supplement and all Appurtenant Rights attached thereto.
"Lease" means the Lease , dated as of the Documentation Date, between
the Lessor and the Lessee.
"Lease Balance" means, as of any date of determination, the sum of (a)
the Equity Balance (if same has not been paid as of such date), (b) all other
amounts owing to the Lessor and by the Lessor and Lessee under the Operative
Documents (including all due and unpaid Basic Rent and Supplemental Rent) and
(c) all amounts (but not duplicative of those described in clause (b) above) due
and owing or otherwise payable to the Lender pursuant to the terms of
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the Heller Loan Documents, including, without limitation, any additional amount
required to prepay the Heller Loan or defease the Heller Loan in accordance with
the terms thereof, including, without limitation, the Defeasance Deposit or
Yield Maintenance Amount, as applicable, and all costs and fees payable in
connection therewith.
"Lease Supplement" means the Memorandum of Lease substantially in the
form of Exhibit B to the Lease, executed and delivered by the Lessor and the
Lessee and dated as of the Acquisition Date for the Property.
"Lender" means Heller Financial, Inc., together with its successor and
assigns.
"Lessee" means Brookdale Living Communities of New Mexico - SF, Inc.,
as lessee, and its successors and assigns expressly permitted under the
Operative Documents.
"Lessee Assignment of Leases" means the Assignment of Leases and Rents
dated on or about the date hereof by the Lessee in favor of the Lender, together
with all amendments, modification and supplements thereto.
"Lessee Guaranty" means the Guaranty dated on or about the date hereof
by the Lessee in favor of the Lender, together with all amendments, modification
and supplements thereto.
"Lessor" means The PDL Business Trust, a Delaware business trust.
"Lessor Assignment of Leases" means the Assignment of Leases and Rents
dated on or about the date hereof by the Lessor in favor of the Lender, together
with all amendments, modification and supplements thereto.
"Lessor Basic Rent" means an amount payable quarterly in advance
beginning on the Acquisition Date in the amount of $10,899.20 and on each BH
Payment Date in an amount equal to the product of the Eurodollar Lease Rate plus
1.3% and $524,000, calculated for the number of days to elapse from the current
BH Payment Date to the subsequent BH Payment Date over a year of 360 days.
"Lessor Lien" means any Lien, true lease or sublease or disposition of
title arising as a result of (a) any claim against the Lessor not resulting from
the transactions contemplated by the Operative Documents (all Liens created or
existing under the Heller Loan Documents are expressly made part of the
transactions contemplated by the Operative Documents), (b) any act or omission
of the Lessor which is not required by the Operative Documents or is in
violation of any of the terms of the Operative Documents, (c) any claim against
the Lessor with respect to Taxes or Transaction Expenses against which Lessee is
not required to indemnify Lessor pursuant to the Lease or (d) any claim against
the Lessor arising out of any transfer by the Lessor of all or any portion of
the interest of the Lessor in the Property or the Operative Documents
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other than the transfer of title to or possession of the Property by the Lessor
pursuant to and in accordance with the Lease or pursuant to the exercise of the
remedies set forth in Article XX of the Lease.
"Lessor Loan Agreement" means the Loan Agreement, dated as of the date
hereof, between the Lessor, as borrower, and BH, as lender.
"Lessor Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, between the Lessor and BH, pursuant to which the Lessor pledged to
BH the Certificate A.
"Lien" means any mortgage, deed of trust, pledge, security interest,
encumbrance, lien, easement, servitude or charge of any kind, including, without
limitation, any irrevocable license, conditional sale or other title retention
agreement, any lease in the nature thereof, or any other right of or arrangement
with any creditor to have its claim satisfied out of any specified property or
asset with the proceeds therefrom prior to the satisfaction of the claims of the
general creditors of the owner thereof, whether or not filed or recorded, or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any Environmental Law.
"Lockbox Account" has the meaning ascribed to it in the Lockbox Account
Agreement.
"Lockbox Account Agreement" means the Lockbox Account Agreement dated
on or about the date hereof among the First National Bank of Chicago (or such
other bank designated by the Lender), the Lessor, the Lessee and the Lender,
together with all amendments, modifications and supplements thereto.
"Marketing Period" means the period commencing upon the Lessee's
election to exercise the Remarketing Option pursuant to Section 24.1(a) of the
Lease and ending on the Expiration Date.
"Material" and "Materially" mean material to (i) as to any Person, the
consolidated financial position, business or consolidated results of operations
of such Person, (ii) as to any Person, the ability of such Person to perform in
any material respect its respective obligations under the Operative Documents to
which it is a party, or (iii) the value or condition of the Property.
"Material Assets" means with respect to any Person all Material
interests in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible.
"Modifications" is defined in Section 14.1 of the Lease.
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"Net Proceeds" means all amounts paid in connection with any Casualty
or Condemnation or any sale of the Property pursuant to Lessor's exercise of
remedies under Section 20.2 of the Lease or the Lessee's exercise of the
Remarketing Option under Article XXIV of the Lease, and all interest earned
thereon, less the expense of claiming and collecting such amounts, including all
costs and expenses in connection therewith for which the Lessor is entitled to
be reimbursed pursuant to the Lease.
"Operative Documents" means the following:
(a) the Lease;
(b) the Lease Supplement;
(c) the Assignment of Ground Lease;
(d) the Heller Loan Documents;
(e) the Certificate A Pledge Agreement;
(f) the Ground Lease;
(g) the BH Indemnity;
(h) the Trust Agreement;
(i) the Certificate B Pledge Agreement;
(j) the Lessor Pledge Agreement;
(k) the Lessor Loan Agreement; and
(l) the Intercreditor Agreement.
"Overdue Rate" shall have the meaning set forth in the Heller Note for
"Default Rate."
"Parent" means Brookdale Living Communities, Inc.
"Payment Date" means the Initial Payment Date (as defined in the Heller
Note) and the first day of each calendar month thereafter.
"Permitted Liens" means with respect to the Property:
(i) the respective rights and interests of the parties to the
Operative Documents as provided in the Operative Documents;
(ii) the rights of any sublessee or assignee under a sublease
or an assignment expressly permitted by the terms of the Lease;
(iii) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 16.1 of the
Lease.
(iv) Liens arising by operation of law, materialmen's,
mechanics', workers', repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the
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construction of the Improvements or in connection with any
Modifications or arising in the ordinary course of business for amounts
that either are not more than 60 days past due or are being diligently
contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of proceedings
to contest Taxes set forth in Section 16.1 of the Lease;
(v) Liens of any of the types referred to in clause (iv) above
that have been bonded for not less than the full amount in dispute (or
as to which other security arrangements satisfactory to the Lessor have
been made), which bonding (or arrangements) shall comply with
applicable Requirements of Law, and has effectively stayed any
execution or enforcement of such Liens;
(vi) Liens arising out of judgments or awards with respect to
which appeals or other proceedings for review are being prosecuted in
good faith and for the payment of which adequate reserves have been
provided as required by GAAP or other appropriate provisions have been
made, so long as such proceedings have the effect of staying the
execution of such judgments or awards and satisfy the conditions for
the continuation of proceedings to contest set forth in Section 16.1 of
the Lease;
(vii) easements, rights of way and other encumbrances on title
to real property pursuant to Section 15.2 of the Lease;
(viii) Lessor Liens;
(ix) Liens created by the Lessee with the consent of the
Lessor; and
(x) Liens described on the title insurance policy delivered
pursuant to the Lease other than Liens described in clause (iv) or (vi)
above that are not removed within 40 days of their origination.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental authority or any other entity.
"Pledge Agreements" means the Certificate A Pledge Agreement, the
Certificate B Pledge Agreement and the Lessor Pledge Agreement.
"Property" means (a) the Lessor's leasehold interest in the Land
pursuant to the Ground Lease and (b) all of the Improvements at any time located
on or under the Land.
"Property Cost" means the amount of the Advance funded to the Lessee
for the purpose of acquiring the Property and paying Transaction Expenses
relating to such funding and
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acquisition, as such amount is set forth in the Funding Request
relating to the acquisition of the Property.
"Purchase Notice" is defined in Section 22.1 of the Lease.
"Purchase Option" is defined in Section 22.1 of the Lease.
"Regulatory Agreement" is defined in Section 26.1(h) of the Lease.
"Release" means any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of a Hazardous Substance in violation of Environmental Law.
"Remarketing Option" is defined in Section 24.1 of the Lease.
"Renewal Term" is defined in Section 23.1 of the Lease.
"Rent" means, collectively, Basic Rent and Supplemental Rent, in each
case payable under the Lease.
"Requesting Party" is defined in Section 27.1 of the Lease.
"Required Modification" is defined in Section 14.1 of the Lease.
"Requirement of Law" means all Federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions affecting the Property, the Improvements or
the demolition, construction, use or alteration thereof, whether now or
hereafter enacted and in force, including any that require repairs,
modifications or alterations in or to the Property or in any way limit the use
and enjoyment thereof (including all building, zoning and fire codes and the
Americans with Disabilities Act of 1990, 42 U.S.C. ss.ss. 1201 et seq. and any
other similar Federal, state or local laws or ordinances and the regulations
promulgated thereunder) and any that may relate to environmental requirements
(including all Environmental Laws), and all permits, certificates of occupancy,
licenses, authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments which are
either of record or known to the Lessee affecting the Property, the Appurtenant
Rights and any easements, licenses or other agreements entered into pursuant to
Section 15.2 of the Lease.
"Responsible Employee" means, with respect to the Lessee, its Chairman,
President, any of its corporate Vice Presidents, its corporate Controller, its
corporate Treasurer, its corporate Assistant Treasurers or others duly
authorized by such Person to execute documents pursuant to Section 4.3(g) of the
Lease.
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"Responsible Employee's Certificate" means a certificate signed by any
Responsible Employee, which certificate shall certify as true and correct the
subject matter being certified to in such certificate.
"Security Deposit Account" has the meaning ascribed to it in the
Security Deposit Account Agreement.
"Security Deposit Account Agreement" means the Security Deposit Account
Agreement dated on or about the date hereof between the Lessor, the Lessee, the
Lender and State Street Bank and Trust Company of Connecticut, N.A., together
with all amendments, modifications and supplements thereto.
"SELCO" means SELCO Service Corporation, an Ohio corporation.
"Seller" means the Person conveying the Property to the Lessor.
"Shortfall Amount" means, as of the Expiration Date, an amount equal to
(i) the Lease Balance, minus (ii) the Contingent Rental Adjustment received by
the Lessor from the Lessee pursuant to Section 24.1(i) of the Lease, minus (iii)
the amount of the highest binding, written, unconditional, irrevocable offer to
purchase the Property obtained by the Lessee pursuant to Section 24.1(f) of the
Lease; provided, however, that if the sale of the Property to the Person
submitting such offer is not consummated on or prior to the Expiration Date,
then the term "Shortfall Amount" shall mean an amount equal to (i) the Lease
Balance, minus (ii) the Contingent Rental Adjustment received by the Lessor from
the Lessee pursuant to Section 24.1(i) of the Lease.
"Significant Condemnation" means a Condemnation which causes the Lender
to accelerate the Principal Amount (as defined in the Heller Note).
"Subordination and Attornment Agreement" means the Subordination and
Attornment Agreement dated on or about the date hereof by the Lessee in favor of
the Lender, together with all amendments, modification and supplements thereto.
"Subsidiary" of any Person means a corporation or other entity of which
securities or other ownership interests having ordinary voting power (other than
securities or other ownership interests having such power by reason of the
happening of a contingency) to elect the majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries or by one or more of such Person's Subsidiaries.
"Supplemental Rent" means all amounts, liabilities and obligations
(other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or any
other Person under the Lease or
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<PAGE>
under any of the other Operative Documents, and all amounts, liabilities and
obligations (other than as described in the definition of Basic Rent) payable by
Lessor under the Heller Loan Documents, including, without limitation, payments
of the Defeasance Deposit, tax escrows required pursuant to Section 3(a) of each
of the Heller Leasehold Mortgage and Heller Subleasehold Mortgage, Replacement
Reserve (as defined in the Heller Leasehold Mortgage and Heller Subleasehold
Mortgage), Impositions, fees thereunder and any Yield Maintenance Amount and any
amounts payable under the Defeasance Escrow.
"Tax Indemnitee" means the Lessor, the Trust Company, BH and their
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.
"Taxes" is defined in the definition of Impositions.
"Term" means the period commencing on the Acquisition Date and ending
on the Expiration Date.
"Termination Date" is defined in Section 19.2 and 20.2(e) of the Lease.
"Termination Notice" is defined in Section 19.1 of the Lease.
"Transaction Expenses" means all costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Documents and the transactions contemplated by the Operative Documents including
without limitation:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel for each of the Lessor and the Lessee in
negotiating the terms of the Operative Documents and the other
transaction documents, preparing for the closing under, and rendering
opinions in connection with, such transactions and in rendering other
services customary for counsel representing parties to transactions of
the types involved in the transactions contemplated by the Operative
Documents;
(b) the reasonable fees, out-of-pocket expenses and
disbursements of any law firm or other external counsel of the Lessor
in connection with (1) any amendment, supplement, waiver or consent
with respect to any Operative Documents requested or approved by the
Lessee and (2) any enforcement of any rights or remedies against the
Lessee in respect of the Operative Documents;
(c) any other reasonable fees, out-of-pocket expenses,
disbursements or cost of the Lessor to the Operative Documents or any
of the other transaction documents;
(d) any and all Taxes and fees incurred in recording,
registering or filing any Operative Document or any other transaction
document, any deed, declaration, mortgage,
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<PAGE>
security agreement, notice or financing statement with any public
office, registry or governmental agency in connection with the
transactions contemplated by the Operative Documents;
(e) any title fees, and escrow costs and other expenses
relating to title insurance and the closings contemplated by the
Operative Documents;
(f) all expenses relating to all Environmental Audits and
other due diligence and other costs and expenses incurred in connection
with the negotiation of the purchase of the Property and in connection
with the investigation and purchase of the Property;
(g) all transaction costs incurred in connection with the
Heller Loan Documents;
(h) all reasonable fees, out-of-pocket expenses, disbursements
or costs (including counsel fees and expenses) of the Trustee and the
Custodian incurred in connection with the Operative Document;
(i) all transaction costs incurred in connection with the
Assignment of the Ground Lease; and
(j) all fees, costs and expenses incurred in connection with
the Defeasance Escrow and the costs of the "Defeasance Obligation" as
defined therein.
"Trust Agreement" means the Trust Agreement, dated October 13, 1998,
between the Trust Company and BH.
"Trust Company" means Wilmington Trust Company, a Delaware banking
corporation, in its individual capacity.
"Trustee Fee Agreement" means the Fee Agreement, dated as of on or
about October 14, 1998, among the Trust Company, SELCO, and the Lessee.
"Uniform Commercial Code" and "UCC" mean the Uniform Commercial Code as
in effect in any applicable jurisdiction.
"Yield Maintenance Amount" has the meaning set forth in the Heller
Note.
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<PAGE>
FIXED RATE PROGRAM
PROMISSORY NOTE SECURED BY MORTGAGE
LOAN NO. 98-674 October 14, 1998
Chicago, Illinois
MAKER: THE PDL BUSINESS TRUST a Delaware business trust
MAKER'S ADDRESS: c/o Wilmington Trust Company, as Trustee Rodney Square North
1100 North Market Avenue Wilmington, Delaware 19890-001
PRINCIPAL AMOUNT: Twelve Million Two Hundred Fifty Thousand
and no/100 Dollars ($12,250,000.00), together with all other
amounts added thereto pursuant to this Note or otherwise in
accordance with the Loan Documents. PAYEE AND HOLDER: Heller
Financial, Inc., a Delaware corporation, and its successors
and assigns. PAYMENT ADDRESS: 500 West Monroe Street, 30th
Floor Chicago, Illinois 60661
or such other address as Holder may hereafter designate in
writing to Maker.
PRINCIPAL(S): Brookdale Living Communities of New Mexico - SF, Inc. and
Brookdale Living Communities, Inc., collectively, and for
purposes of Paragraph 10 jointly and severally
INITIAL PAYMENT DATE: December 1, 1998.
MATURITY DATE: November 1, 2008, or any earlier date on which the entire
unpaid Principal Amount shall be paid or required to be paid
in full, whether by prepayment, acceleration or otherwise.
AMORTIZATION PERIOD: 30 Years.
AMORTIZATION SCHEDULE: The amortization schedule attached hereto as Exhibit A.
CONTRACT RATE: A rate of interest equal to 7 and 6/100 percent (7.06%) per
annum.
DEFAULT RATE: The Contract Rate plus 500 basis points per annum.
LATE CHARGE: Five percent (5%) of each delinquent payment.
PROPERTY: Ponce de Leon 640 Alta Vista Santa Fe, New Mexico 87501
MORTGAGE: The mortgage or deed of trust, assignment of rents and
security agreement and fixture filing of even date herewith
(and any modification, renewal or extension thereof)
securing repayment of the Loan and encumbering, among other
things, the Property.
LOAN: The loan from Holder to Maker evidenced by this Note and
secured by the other Loan Documents.
LOAN DOCUMENTS: This Note, the Mortgage and any other documents evidencing
or securing the Loan or executed in connection therewith,
and any modification, renewal or extension thereof.
NOTE: This Fixed Rate Program Promissory Note Secured by Mortgage
and any modifications, renewals or extensions hereof and any
substitutions therefor.
[Intentionally left blank]
1.
<PAGE>
Promise to Pay.
FOR VALUE RECEIVED, Maker promises to pay to the order of Holder at the
Payment Address the Principal Amount (or so much thereof as may from time to
time be outstanding) on or before the Maturity Date, together with interest
thereon as hereinafter set forth, payable in lawful money of the United States
of America.
2. Principal and Interest.
So long as no Event of Default exists, interest shall accrue on the
Principal Amount from time to time outstanding at the Contract Rate based on the
actual number of days in each given month and a 360 day year. Principal and
interest shall be paid to the Holder hereof as follows: (a) on the Initial
Payment Date and on the first day of each month thereafter, Maker shall pay to
Holder monthly payments of principal and interest due for such period based upon
the Amortization Schedule; and (b) the outstanding Principal Amount of this
Note, together with all accrued and unpaid interest, shall be due and payable in
full on the Maturity Date. Whenever any payment is stated to be due or a
computation is to be made on a day which is not a business day, such payment or
computation will be made on the next succeeding business day, and such extension
of time will be included in the computation of interest.
3. Prepayment and Defeasance.
3.1. Prepayments.
This Note may not be prepaid in whole or in part during the
term hereof, except as otherwise specifically provided herein.
3.2. Prepayment Fee.
In the event the principal amount of this Note is paid prior
to November 1, 2008 as a result of Holder's exercise of its rights upon
Maker's default and acceleration of the Maturity Date of this Note
(irrespective of whether foreclosure proceedings have been commenced),
Holder shall be entitled to collect and Maker shall pay to Holder, in
addition to any other sums due hereunder or under any of the other Loan
Documents, a prepayment fee in an amount equal to the Yield Maintenance
Amount.
"Yield Maintenance Amount" means an amount, never less than zero, equal
to the present value of a series of "Monthly Amounts", assumed to be
paid at the end of each month remaining from the date of prepayment
through November 1, 2008, discounted at the U.S. Securities Rate.
"Monthly Amount" shall mean the following:
(A) The Contract Rate,
MINUS
(B) The yield ("U.S. Securities Rate"), as of the date of such
prepayment, as published by the Federal Reserve System in its
"Statistical Release H.15(519), Selected Interest Rates" under
the caption "U.S. Government Securities/Treasury Constant
Maturities", for a U.S. Government Security with a term equal
to that remaining on this Note on the date of such prepayment
(which term may be obtained by interpolating between the
yields published for specific whole years),
DIVIDED BY TWELVE (12) AND THE
QUOTIENT THEREOF THEN MULTIPLIED BY
(C) The amount prepaid on the date of such prepayment.
All percentages shall be rounded to the nearest one hundred
thousandth percent and dollar amounts to the nearest whole dollar.
3.3. End of Term.
Notwithstanding the foregoing, the Loan may be paid without a
prepayment fee or premium during the last ninety (90) days of the loan
term. If the Loan has been defeased pursuant to Subparagraph 3.4, it
may not be prepaid prior to November 1, 2008.
3.4. Defeasance.
Notwithstanding any provision of this Paragraph 3 to the
contrary, at any time after the later of (a) three (3) years after the
closing of the Loan or (b) if Holder securitizes the Loan within three
(3) years after the closing of the Loan, two (2) years after the
"startup day," within the meaning of Section 860G(a)(9) of the Internal
Revenue Code of 1986, as amended from time to time or any successor
statute (the "Code"), of a "real estate mortgage investment conduit"
("REMIC"), within the meaning of Section 860D of the Code, that holds
this Note, and provided no Event of Default has occurred and is
continuing hereunder or under any of the other Loan Documents, Maker
may cause the release of the Property from the lien of the Mortgage and
the other Loan Documents upon the satisfaction of the following
conditions (the "Defeasance"):
(i) Not less than thirty (30) days prior written notice shall be given to
Holder specifying a date (the "Release Date") on which the Defeasance
Deposit (as hereinafter defined) is to be made, such date being a day
on which a regularly scheduled monthly installment of principal and
interest is required to be paid pursuant to Paragraph 2 above (a "Debt
Service Payment Date");
(ii) All accrued and unpaid interest and all other sums due under this Note
and under the other Loan Documents up to and including the Release
Date, including, without limitation, all costs and expenses incurred by
Holder or its agents in connection with the Defeasance (including,
without limitation, the purchase of the Defeasance Collateral (as
hereinafter defined) and the preparation of the Defeasance Security
Agreement (as hereinafter defined) and related documentation, including
reasonable attorneys' fees and expenses), shall be paid in full on or
prior to the Release Date;
(iii) Maker shall deliver to Holder on or prior to the Release Date:
a. The estimated amount necessary to purchase the Defeasance
Collateral (the "Defeasance Deposit");
b. A pledge and security agreement, in form and substance
satisfactory to Holder in its sole discretion, creating a
first priority security interest in favor of Holder in the
Defeasance Deposit and the Defeasance Collateral (the
"Defeasance Security Agreement");
c. A certificate of Maker certifying that it is requesting the
lien against the Property be released to facilitate a
disposition or refinancing of, or other customary commercial
transaction involving, the Property and that all of the other
requirements set forth in this Paragraph 3.4 have been
satisfied;
d. An opinion of counsel for Maker in form and substance and
delivered by counsel satisfactory to Holder in its sole
discretion stating, among other things, that (i) the
Defeasance Deposit has been duly and validly assigned and
delivered to Holder; (ii) the posting of the Defeasance
Deposit will not adversely affect the tax status of the REMIC
under the Code; and (iii) Holder has a perfected first
priority security interest in the Defeasance Collateral and
that the Defeasance Security Agreement is enforceable against
Maker in accordance with its terms; and
e. Such other certificates, documents or instruments as Holder
may reasonably require; and
(iv) Holder receives reasonable assurances that the securities of the REMIC
("Securities") that directly or indirectly holds this Note will not
have a downgrade, withdrawal or qualification of the credit rating then
assigned to the Securities by any rating agencies ("Applicable Rating
Agencies") as a result of the Defeasance; and
(v) The holder of the Defeasance Collateral, which shall be Maker or a
designee of Maker, shall be a single purpose entity, which shall not
own any other assets or have any other liabilities or operate any other
property.
Notwithstanding anything that may be contained herein to the
contrary, the Loan may not be defeased during the last ninety (90) days
of the loan term if the Loan has not previously been defeased.
3.5. Defeasance Collateral.
Upon compliance with the requirements of Subparagraph 3.4
above:
(i) Holder shall use the Defeasance Deposit in accordance with Maker's
express written instructions to purchase direct, non-callable
obligations of the United States of America that provide, without
reinvestment, for payments not later than the due dates of all
successive monthly Debt Service Payment Dates occurring after the
Release Date, with each such payment being equal to or greater than the
amount of the corresponding installment of principal and interest
required to be paid under this Note (including all amounts due on
November 1, 2008) for the balance of the term hereof (the "Defeasance
Collateral") as certified by an independent accountant satisfactory to
Holder, each of which shall be duly endorsed as directed by Holder or
accompanied by a written instrument of transfer in form and substance
wholly satisfactory to Holder (including, without limitation, such
instruments as may be required by the depository institution holding
such securities to effectuate book-entry transfers and pledges through
the book-entry facilities of such institution) in order to create a
first priority security interest therein in favor of Holder in
conformity with all applicable state and federal laws governing
granting of such security interests. In connection with the conditions
set forth above, Maker hereby appoints Holder as its agent and
attorney-in-fact for the purpose of purchasing the Defeasance
Collateral with the Defeasance Deposit. Maker, pursuant to the
Defeasance Security Agreement, shall authorize and direct the payments
received from the direct, non-callable obligations of the United States
of America to be made directly to Holder and applied to satisfy the
obligations of Maker under this Note. Any portion of the Defeasance
Deposit in excess of the amount necessary to purchase the Defeasance
Collateral and satisfy all of Maker's obligations to Holder shall be
returned to Maker without interest.
(ii) The Property shall be released from the lien of the Mortgage and the
other Loan Documents, and the Defeasance Collateral shall constitute
collateral which shall secure this Note and all other obligations under
the Loan Documents.
3.6. Assignment.
Upon the release of the Property in accordance with this
Paragraph 3, Maker may assign all its obligations and rights under this
Note, together with the pledged Defeasance Collateral, to a successor
entity designated by Maker and approved by Holder in its sole
discretion. Such successor entity shall be a single purpose entity
owning no assets other than the Defeasance Collateral, and shall
execute an assumption agreement in form and substance satisfactory to
Holder in its sole discretion pursuant to which it shall assume Maker's
obligations under this Note and the Defeasance Security Agreement. As
conditions to such assignments and assumption, Maker shall (i) deliver
to Holder an opinion of counsel in form and substance and delivered by
counsel satisfactory to Holder in its sole discretion stating, among
other things, that such assumption agreement is enforceable against
Maker and such successor entity in accordance with its terms and that
this Note, the Defeasance Security Agreement and the other Loan
Documents, as so assumed, are enforceable against such successor entity
in accordance with their respective terms, (ii) if required by the
Applicable Rating Agencies, pay the reasonable legal expenses of
Holder's counsel incurred in connection with the delivery of a
non-consolidation opinion with respect to the successor entity, if any,
in form and substance satisfactory to the Applicable Rating Agencies,
and (iii) pay all costs and expenses incurred by Holder or its agents
in connection with such assignment and assumption (including, without
limitation, the review of the proposed transferee and the preparation
of the assumption agreement and related documentation). Upon such
assumption, Maker shall be relieved of its obligations hereunder, under
the other Loan Documents and under the Defeasance Security Agreement.
3.7. No Further Rights.
Upon the release of the Property in accordance with this
Paragraph 3, Maker shall have no further right to prepay this Note
pursuant to the other provisions of this Paragraph 3 or otherwise.
Notwithstanding the foregoing, the application of any
insurance proceeds or condemnation awards to the Indebtedness in
accordance with Paragraph 5 of the Mortgage shall not result in the
payment of any prepayment fee, or Yield Maintenance Amount.
4. Default.
4.1. Events of Default.
The following shall constitute an "Event of Default" under
this Note: (i) failure to pay any amounts owed pursuant to this Note
within five (5) calendar days after such payment is due; or (ii) the
occurrence of any Event of Default under any of the other Loan
Documents.
4.2. Remedies.
So long as an Event of Default remains outstanding: (a)
interest shall accrue at the Default Rate and, to the extent not paid
when due, shall be added to the Principal Amount; (b) Holder may, at
its option and without notice (such notice being expressly waived),
declare the unpaid Principal Amount immediately due and payable.
Holder's rights, remedies and powers, as provided in this Note and the
other Loan Documents, are cumulative and concurrent, and may be pursued
singly, successively or together against Maker, the security described
in the other Loan Documents, any guarantor(s) hereof and any other
security given at any time to secure the payment hereof, all at the
sole discretion of Holder. Additionally, Holder may resort to every
other right or remedy available at law or in equity without first
exhausting the rights and remedies contained herein, all in Holder's
sole discretion. Failure of Holder, for any period of time or on more
than one occasion, to exercise its option to accelerate the Maturity
Date shall not constitute a waiver of the right to exercise the same at
any time during the continued existence of any Event of Default or any
subsequent Event of Default.
5. Late Charge.
If payments of principal and/or interest, or any other amounts under
the other Loan Documents are not timely made and remain overdue for a period of
five days, Maker, without notice or demand by Holder, promptly shall pay the
Late Charge computed on such past due amounts. Until paid, the Late Charge shall
be added to the Principal Amount. Nothing in this Note shall be construed as an
obligation on the part of Holder to accept, at any time, less than the full
amount then due hereunder, or as a waiver or limitation of Holder's right to
compel prompt performance.
6. Jury Trial Waiver.
MAKER, AND HOLDER BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS NOTE AND THE BUSINESS RELATIONSHIP THAT
IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY
MADE BY MAKER AND HOLDER, AND MAKER AND HOLDER ACKNOWLEDGE THAT NEITHER OF THEM
NOR ANY PERSON ACTING ON BEHALF OF EITHER OF THEM HAS MADE ANY REPRESENTATIONS
OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. MAKER AND HOLDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
MAKER AND HOLDER HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS NOTE
AND THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS. MAKER AND HOLDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN
REPRESENTED (OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
7. Waiver.
Maker, for itself and all endorsers, guarantors and sureties of this
Note, and each of them, and their heirs, legal representatives, successors and
assigns, respectively hereby waives presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of protest and
protest of this Note, and, except as specifically required by the Loan
Documents, all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Note, and agrees that
its liability shall be unconditional and without regard to the liability of any
other party and shall not be in any manner affected by any indulgence, extension
of time, renewal, waiver or modification granted or consented to by the Holder.
Maker, for itself and all endorsers, guarantors and sureties of this Note, and
each of them, and their heirs, legal representatives, successors and assigns,
respectively hereby consents to every extension of time, renewal, waiver or
modification that may be granted by Holder with respect to the payment or other
provisions of this Note, and to the release of any makers, endorsers, guarantors
or sureties, or of any collateral given to secure the payment hereof, or any
part hereof, with or without substitution, and agrees that additional makers or
guarantors or endorsers may become parties hereto without notice to Maker and
without affecting the liability of Maker hereunder.
8. Security, Application of Payments.
This Note is secured by the liens, encumbrances, and obligations
created hereby and by the other Loan Documents and the terms and provisions of
the other Loan Documents are hereby incorporated herein. Each payment on the
Loan is to be applied when received first to the payment of any fees, expenses
or other costs Maker is obligated to pay hereunder or under the terms of the
other Loan Documents, second to the payment of any accrued and unpaid Late
Charge, third to the payment of interest on the Principal Amount from time to
time remaining unpaid, and the remainder of such payment shall be used to reduce
the Principal Amount.
9. Miscellaneous.
9.1. Amendments.
This Note may not be terminated or amended orally, but only by
a termination in writing signed by Holder or an amendment in writing
signed by Maker and Holder.
9.2. Lawful Rate of Interest.
In no event whatsoever shall the amount of interest paid or
agreed to be paid to Holder pursuant to this Note exceed the highest
lawful rate of interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision of this Note and
the other Loan Documents shall involve exceeding the lawful rate of
interest which a court of competent jurisdiction may deem applicable
hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the highest lawful rate of interest permissible under such
law and if, for any reason whatsoever, Holder shall receive, as
interest, an amount which would be deemed unlawful under such
applicable law, such interest shall be applied to the Principal Amount
(whether or not due and payable), and not to the payment of interest,
or refunded to Maker if such Principal Amount has been paid in full.
9.3. Captions; Definitions.
The captions of the Paragraphs of this Note are for
convenience only and shall not be deemed to modify, explain, enlarge or
restrict any of the provisions hereof. Each of the terms defined before
Paragraph 1 hereof shall have the meaning set forth following such term
when used throughout this Note.
9.4. Severable Provisions.
Every provision of this Note is intended to be severable. If
any term or provision hereof is declared by a court of competent
jurisdiction to be illegal, invalid or unenforceable for any reason
whatsoever, such illegality, invalidity or unenforceability shall not
affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable.
9.5. Notices.
Notices shall be given under this Note in conformity with the
terms and conditions of the Mortgage.
9.6. [Intentionally Omitted]
9.7. Time of Essence.
Time is of the essence of this Note and the performance of
each of the covenants and agreements contained herein.
9.8. Governing Law.
This Note shall be governed by the laws of the State of
Illinois.
9.9. Effect of Event of Default.
Provisions in the Loan Documents relating to the rights and
remedies of Payee and Holder or Lender or the consequences which will or may
result "upon," "following" or "after" an Event of Default shall be deemed to
further provide that if such Event of Default is waived in writing by Lender,
then, unless otherwise expressly provided in such waiver, such rights and
remedies of Payee and Holder or Lender or such consequences shall abate
(prospectively and not retroactively unless Lender otherwise agrees in writing)
solely with respect to such waived Event of Default from and after the effective
date of such waiver.
10. Exculpation.
Except as set forth below, neither Maker nor any Principal shall be
personally liable to pay the Principal Amount, or any other amount due, or to
perform any obligation, under the Loan Documents, and Holder agrees to look
solely to the Property and any other collateral heretofore, now, or hereafter
pledged by any party to secure the Loan. Maker and each Principal, jointly and
severally, shall be personally liable for:
(a) all losses, damages, costs and expenses including reasonable attorneys'
fees and expenses incurred by Holder as a result of:
(i) the collection and receipt of proceeds and income from the
Property and the other assets and obligations securing the
Loan by or for the benefit of Maker or any Principal following
an Event of Default which are not paid to Holder or applied to
the Property in the ordinary course of business;
(ii) fraud;
(iii) material misrepresentation;
(iv) misapplication or misappropriation of funds which come into
the possession of Maker or any Principal;
(v) intentional and material waste to the Property;
(vi) the breach of the obligations set forth in the Hazardous
Substance Indemnification Agreement from Maker and Principals
to Holder of even date herewith, as hereafter amended, if at
all;
(vii) the breach of the provisions contained in Paragraph 15
(transfers of the property or beneficial interest in Maker;
assumption) of the Mortgage;
(viii) the breach of the provisions contained in Paragraph 16 (no
additional liens) of the Mortgage; or
(ix) the breach of the provisions contained in Paragraph 17 (single
asset entity) of the Mortgage; and
(b) any claim for any commissions or brokerage fees relating to the loan.
The foregoing shall in no way limit or impair the enforcement against
the Property or any other security granted by the Loan Documents of any of the
Holder's rights and remedies pursuant to the Loan Documents, provided that with
respect to any of the acts or circumstances described in (a) or (b) above, such
personal liability of Maker shall not apply or extend to the CD as defined in
the Mortgage) or any earnings therefrom or proceeds thereof, unless such act or
circumstance is the result of the gross negligence or wilful misconduct of
Maker.
11. Limitation of Liability of Wilmington Trust Company.
It is expressly understood and agreed by the parties hereto
that (a) this Note is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Maker, in the exercise
of the powers and authority conferred and vested in it under the Trust Agreement
dated October 13, 1998, (b) each of the representations, undertakings and
agreements herein made on the part of the Maker is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose of binding only the Maker and
(c) under no circumstances shall Wilmington Trust Company be personally liable
for the payment of any indebtedness or expenses of the Maker or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Maker under this Note or the other Loan Documents.
Limitation of Liability of Beneficiaries of Borrower.
Notwithstanding the provisions of Paragraph 10, no beneficiary
or certificateholder of Maker shall be personally liable to Lender for any
amount due under the Loan Documents except for (i) distributions of rent or
other proceeds of the Property, including insurance or condemnation proceeds
actually received (and only to the extent received) by such beneficiary or
certificateholder after an Event of Default occurs or otherwise in violation of
the Loan Documents and (ii) Lender's costs of collection of such amount,
including reasonable attorneys' fees and costs.
13. Limitation of Liability of Brookdale Living Communities, Inc.
Notwithstanding the provisions hereof to the contrary, the
liability of Brookdale Living Communities, Inc. ("Parent") under the Loan
Documents is limited by the letter agreement and the Hazardous Substance
Indemnification Agreement, each of even date herewith, executed by Parent and no
shareholder, officer, director, employee, agent or representative of Parent
shall be personally liable to Payee or Holder for any amount due under this Note
or the other Loan Documents except for (i) distributions of rent or other
proceeds of the Property, including insurance or condemnation proceeds actually
received (and only to the extent received) by such person, after an Event of
Default (as defined in the Mortgage) occurs or otherwise in violation of the
Loan Documents or the Guaranty Documents (as defined in the Mortgage) and (ii)
Lender's costs of collection of such amount, including reasonable attorneys'
fees and costs.
[signature on following page]
<PAGE>
IN WITNESS WHEREOF, Maker does execute this Note as of the date set
forth above.
MAKER:
THE PDL BUSINESS TRUST, a Delaware business trust
By: Wilmington Trust Company, not in its
individual capacity but solely as trustee
under that certain Trust Agreement dated
October 13, 1998
By____________________________________________
Name__________________________________________
Title_________________________________________
<PAGE>
EXHIBIT A
AMORTIZATION SCHEDULE
Loan No. 98-674
GUARANTY
THIS GUARANTY (this "Guaranty") is made this 14th day of
October, 1998, by Brookdale Living Communities of New Mexico - SF, Inc., a
Delaware corporation ("Guarantor") in favor of Heller Financial, Inc., a
Delaware corporation ("Lender").
RECITALS
A. Substantially contemporaneously herewith, Lender is
entering into a financing transaction ("Loan") to The PDL Business Trust, a
Delaware business trust ("Borrower"), which Loan is evidenced by a certain Fixed
Rate Program Promissory Note Secured by Mortgage (the "Note") in the principal
amount of TWELVE MILLION TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS
($12,250,000) of even date herewith executed and delivered by Borrower, as
maker, to the order of Lender, as payee, secured by, inter alia, a Ground
Leasehold Mortgage, Assignment of Rents and Security Agreement and Fixture
Filing of even date herewith ("Mortgage") encumbering certain real property
located in Santa Fe, New Mexico and more fully described on Exhibit A attached
hereto and incorporated herein ("Land") (the Note, the Mortgage, this Guaranty,
and any other documents evidencing or securing the Loan or executed in
connection therewith, and any modification, renewal, or extension thereof are
hereinafter collectively referred to as the "Borrower Loan Documents").
Substantially contemporaneously herewith, Borrower and Guarantor are entering
into a lease (the "Operator Lease") of the Property (as defined in the Mortgage)
pursuant to which Guarantor will operate, manage and maintain the Property. As a
condition to disbursing the Loan, Lender has required Guarantor to execute this
Guaranty, which Guaranty is secured by a Sub-Leasehold Mortgage, Assignment of
Rents and Security Agreement and Fixture Filing ("Leasehold Mortgage") against
Guarantor's interest in the Property under the Operator Lease. This Guaranty and
all other documents executed by Guarantor which evidence or secure the
Guaranteed Obligations (as defined herein) are collectively referred to as the
"Guaranty Documents".
In consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby agrees as follows:
1. DEFINED TERMS
Unless otherwise indicated, all capitalized terms used herein
shall have the meanings assigned to such terms in the Leasehold Mortgage.
2. THE GUARANTY
2.1 Guaranty of Obligations. Guarantor unconditionally and absolutely guarantees
(a) the full and prompt payment of all indebtedness evidenced by the Note or
arising under the Borrower Loan Documents (the "Indebtedness") when due, whether
at maturity or earlier, by reason of acceleration or otherwise, and (b) the
performance by Borrower when due of all of Borrower's other obligations under
the Borrower Loan Documents, but only as the same relate to the maintenance or
operation of the Property. The obligation to pay the Indebtedness and perform
the obligations described in clause (b) of the preceding sentence are
collectively referred to as the "Guaranteed Obligations". Without limitation of
the foregoing, the Guaranteed Obligations shall include (a) all reasonable
attorneys' and paralegals' fees, including the cost of inside attorneys and
paralegals, costs and expenses and all court costs and costs of appeal incurred
by Lender in collecting any amount due Lender under this Guaranty or in
prosecuting any action against Borrower, Guarantor or any other guarantor with
respect to all or any part of the Guaranteed Obligations (collectively, the
"Enforcement Costs"), and (b) all interest, fees, costs and expenses due Lender
after the filing of a bankruptcy petition by or against Borrower regardless of
whether such amounts can be collected during the pendency of the bankruptcy
proceedings.
2.2 Continuing Guaranty; Guaranty of Payment, Cancellation.
This Guaranty is a continuing guaranty of the Guaranteed Obligations, and
Guarantor agrees that the obligations of Guarantor to Lender hereunder shall be
primary obligations and shall be a guaranty of payment and not of collection,
shall not be subject to any counterclaim, set-off, abatement, deferment or
defense (other than actual payment) based upon any claim that Guarantor may have
against Lender, Borrower or any other person or entity. This Guaranty and all
obligations and liabilities of Guarantor hereunder will be canceled when the
Indebtedness has been paid in full or has been totally defeased as provided in
the Note; provided, however, that this Guaranty shall remain in full force and
effect for so long as such payment may be voided or rescinded in bankruptcy
proceedings as a preference or for any other reason.
2.3 Liability of Guarantor Not Affected. This Guaranty shall
remain in full force and effect without regard to, and shall not be released,
discharged or affected in any way by, any circumstances or condition, including,
without limitation:
(a) the attempt or the absence of any attempt by Lender to obtain payment
or performance by Borrower or any other guarantor (this being a
guaranty of payment and performance and not of collection);
(b) Lender's delay in enforcing Guarantor's obligations hereunder or of any
other party under the Borrower Loan Documents, or any prior partial
exercise by Lender of any right or remedy hereunder or under any of the
Borrower Loan Documents;
(c) any renewal, extension, substitution, modification, replacement of or
indulgence with respect to, the Guaranteed Obligations, all of which
Lender is hereby authorized to make;
(d) the fact that Borrower is not liable for the payment or performance of
the Guaranteed Obligations, or any portion thereof, for any reason
whatsoever, Guarantor being liable for the Guaranteed Obligations
notwithstanding that Borrower may not be;
(e) any sale, exchange, release, surrender or other disposition of, or
realization upon, any collateral securing the Guaranteed Obligations,
or any settlement or compromise of any guaranties of the Guaranteed
Obligations, or any other obligation of any person or entity with
respect to the Borrower Loan Documents;
(f) the acceptance by Lender of any additional security for the Guaranteed
Obligations;
(g) the lack of validity or enforceability of, or Lender's waiver or
consent with respect to, any provision of any instrument evidencing,
securing or otherwise relating to the Guaranteed Obligations, or any
part thereof, including without limitation the Borrower Loan Documents;
(h) the failure by Lender to take any steps to perfect, maintain, or
enforce its security interests or remedies under the Borrower Loan
Documents or the Guaranty Documents, or to preserve its rights to or
protect any security or collateral, for the Guaranteed Obligations;
(i) any voluntary or involuntary bankruptcy, insolvency, reorganization,
arrangement, readjustment, assignment for the benefit of creditors,
composition, receivership, liquidation, marshalling of assets and
liabilities or similar event or proceedings with respect to Borrower or
Guarantor, as applicable, or any of their respective properties (each,
an "Insolvency Proceeding"), or any action taken by Lender, any trustee
or receiver or by any court in any such proceeding;
(j) the failure by Lender to file or enforce a claim against the estate
(either in an Insolvency Proceeding or other proceeding) of Borrower or
Guarantor;
(k) in any proceeding under Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended (the "Bankruptcy Code"): (i) any
election by Lender under Section 1111(b)(2) of the Bankruptcy Code,
(ii) any borrowing or grant of a security interest by Borrower as
debtor-in-possession under Section 364 of the Bankruptcy Code, (iii)
the inability of Lender to enforce the Guaranteed Obligations against
Borrower by application of the automatic stay provisions of Section 362
of the Bankruptcy Code, or (iv) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of Lender's claim(s) against
Borrower for repayment of the Guaranteed Obligations;
(l) except as specifically required by the Borrower Loan Documents or the
Guaranty Documents, the failure of Guarantor to receive notice of any
intended disposition of the collateral for the Guaranteed Obligations;
(m) any merger or consolidation of Borrower into or with any other entity,
or any sale, lease or transfer of any of the assets of Borrower or
Guarantor to any other person or entity;
(n) any change in the ownership of Borrower or any change in the
relationship between Borrower and Guarantor, or any termination of any
such relationship including, without limitation, the termination of the
Operator Lease, any breach thereof by Borrower or the continued
effectiveness thereof;
(o) the incapacity, dissolution or other change in status of Borrower or
Guarantor;
(p) the making of additional loans to Borrower, the increase or reduction
of the maximum principal amount of the Guaranteed Obligations, the
increase or reduction in the interest rate provided in the Note, or any
other modification, amendment, release or waiver of the terms of the
Borrower Loan Documents;
(q) the absence, impairment or loss of any right of reimbursement or
subrogation or other right or remedy of Guarantor; and
(r) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of Borrower, Guarantor or any other
guarantor.
Guarantor hereby expressly waives and surrenders any defense
to its liability under this Guaranty based upon any of the foregoing acts,
omissions, agreements, waivers or matters, whether or not Guarantor had notice
or knowledge of same. It is the purpose and intent of this Guaranty that the
obligations of Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.
2.4 Rights of Lender. Lender is hereby authorized, without
notice (except as otherwise required herein or in the other Guaranty Documents)
to or demand of Guarantor and without affecting the liability of Guarantor
hereunder, to take any of the following actions from time to time: (a) increase
or decrease the amount of, or renew, extend, accelerate or otherwise change the
time for payment of, or other terms relating to, the Guaranteed Obligations, or
otherwise modify, amend or change the terms of any promissory note or other
agreement evidencing, securing or otherwise relating to any of the Guaranteed
Obligations, including, without limitation, the making of additional advances
thereunder; (b) accept and apply any payments on or recoveries against the
Guaranteed Obligations from any source, and any proceeds of any security
therefor, to the Guaranteed Obligations in such manner, order and priority as
Lender may elect in its sole discretion; (c) take, hold, sell, release or
otherwise dispose of all or any security for the Guaranteed Obligations or the
payment of this Guaranty; (d) settle, release, compromise, collect or otherwise
liquidate the Guaranteed Obligations or any portion thereof; (e) accept, hold,
substitute, add or release any other guaranty or endorsements of the Guaranteed
Obligations; and (f) at any time after maturity of the Guaranteed Obligations,
appropriate and apply toward payment of the Guaranteed Obligations (i) any
indebtedness due or to become due from Lender to Guarantor, and (ii) any moneys,
credits, or other property belonging to Guarantor at any time held by or coming
into the possession of Lender or any affiliates thereof, whether for deposit or
otherwise.
2.5 Subordination. All indebtedness now or hereafter owing by
Borrower to Guarantor for borrowed money or otherwise is hereby subordinated to
the payment of the Guaranteed Obligations, and, during any period in which an
Event of Default hereunder or under any of the Borrower Loan Documents exists,
Guarantor shall not accept payment of all or any portion of such subordinated
indebtedness until this Guaranty is cancelled. All security interests, liens and
encumbrances which Guarantor now or hereafter may have upon any of the assets of
Borrower are hereby subordinated to all security interests, liens and
encumbrances heretofore, now or hereafter granted to Lender pursuant to the
Borrower Loan Documents.
3. GUARANTOR'S WAIVERS
3.1 Statues of Limitation. Guarantor irrevocably waives all statutes of
limitation as a defense to any action or proceeding brought against Guarantor by
Lender, to the fullest extent permitted by law.
3.2 Election of Remedies. Guarantor irrevocably waives any defense based upon an
election of remedies made by Lender or any other election afforded to Lender
pursuant to applicable law, including, without limitation, (a) any election to
proceed by judicial or nonjudicial foreclosure or by Uniform Commercial Code
sale or by deed or assignment in lieu thereof, or any election of remedies which
destroys or otherwise impairs the subrogation rights of the Guarantor or the
rights of the Guarantor to proceed against Borrower for reimbursement, or both,
(b) the waiver by Lender, either by action or inaction of Lender or by operation
of law, of a deficiency judgment against Borrower, and (c) any election pursuant
to an Insolvency Proceeding.
3.3 Rights of Subrogation and Other Rights. Guarantor irrevocably waives until
this Guaranty is cancelled (a) all rights at law or in equity to seek
subrogation, contribution, indemnification or any other form of reimbursement or
repayment from Borrower or any other person or entity now or hereafter primarily
or secondarily liable for any of the Guaranteed Obligations for any
disbursements made by Guarantor under or in connection with this Guaranty, (b)
all claims of any kind or type against Borrower as a result of any payment made
by Guarantor to Lender, and (c) any right to participate in any security now or
hereafter held by Lender. In furtherance, and not in limitation, of the
foregoing, Guarantor agrees that any payment to Lender pursuant to this Guaranty
shall be deemed a contribution to the capital of Borrower or other obligated
party and shall not constitute Guarantor a creditor of Borrower or such other
party. Guarantor further agrees that to the extent the waiver of its rights of
subrogation as set forth herein is found by a court of competent jurisdiction to
be void or voidable for any reason, any rights of subrogation Guarantor may have
against Borrower or against any collateral or security for any of the Guaranteed
Obligations shall be junior and subordinate to any rights Lender may have
against Borrower and to all right, title and interest Lender may have in such
collateral or security.
3.4 Demands and Notices. Guarantor irrevocably waives all presentments, demands
for performance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation or incurring of new
or additional Guaranteed Obligations, except as specifically required by the
Guaranty Documents or the Borrower Loan Documents, notices of defaults by
Borrower or any other person liable for the Guaranteed Obligations and demands
and notices of every kind that may be required to be given by any statute or
rule or law.
3.5 Borrower Information. Guarantor irrevocably waives (a) any duty of Lender to
advise Guarantor of any information known to Lender regarding the financial
condition of Borrower (it being the obligation of Guarantor to keep informed
regarding such condition), and (b) any defense based on any claim that
Guarantor's obligations exceed or are more burdensome than those of Borrower.
3.6 Limitation of Liability. Guarantor irrevocably waives any impairment,
modification, change, release or limitation of the liability of, or stay of
actions or lien enforcement proceedings against, Borrower or Guarantor, their
property, or their estate in bankruptcy, resulting from the operation of any
provision of the state or federal bankruptcy laws, or from the decision of any
court.
3.7 Lack of Diligence. Guarantor irrevocably waives any and all claims or
defenses based upon lack of diligence in: (a) collection of any Guaranteed
Obligations; (b) protection of any collateral or other security for the
Guaranteed Obligations; or (c) realization upon the other Borrower Loan
Documents.
3.8 Other Defenses. Guarantor irrevocably waives any other defenses, set-offs or
counterclaims which may be available to Borrower or any other guarantor if there
are more than one, and any and all other defenses now or at any time hereafter
available to Guarantor (including without limitation those given to sureties) at
law or in equity.
4. EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each an
"Event of Default"), Lender may, without further notice to Borrower or
Guarantor, declare any or all of the Guaranteed Obligations, whether or not then
due, immediately due and payable by Guarantor under this Guaranty, and Lender
shall be entitled to enforce the obligations of Guarantor hereunder.
4.1 Default by Borrower. An Event of Default as defined in any of the Borrower
Loan Documents shall occur.
4.2 Failure to Perform. An Event of Default as defined in the Leasehold Mortgage
occurs.
4.3 Dissolution. Guarantor dissolves or liquidates, or the business of Guarantor
is suspended or terminated for any reason.
By its acceptance of this Guaranty, Lender acknowledges that,
with respect to the Events of Default referred to in 4.1 and 4.2 above, if any
such Event of Default is waived in writing by Lender, then, unless otherwise
expressly provided in such waiver, the rights and remedies of Lender under this
Section 4 and the other Guaranty Documents and the consequences of such Event of
Default shall abate (prospectively and not retroactively, unless Lender
otherwise agrees in writing) solely with respect to such waived Event of Default
from and after the effective date of such waiver.
5. MISCELLANEOUS
5.1 Revival and Reinstatement. If at any time all or any part of any payment
theretofore applied by Lender to any of the Guaranteed Obligations is or must be
rescinded or returned by Lender for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Borrower), such
Guaranteed Obligations shall, for the purposes of this Guaranty, to the extent
such payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by Lender, and this Guaranty shall
continue to be effective or be reinstated, as the case may be, as to such
Guaranteed Obligations, and Guarantor shall be fully liable therefore, all as
though such application by Lender had not been made.
5.2 No Marshaling. Lender has no obligation to marshal any assets in favor of
Guarantor, or against or in payment of (a) any of the Guaranteed Obligations, or
(b) any other obligation owed to Lender by Guarantor, Borrower, or any other
person.
5.3 No Modification, Waiver or Release Without Writing. Except as may otherwise
be expressly set forth herein, this Guaranty may not be modified, amended,
revised, revoked, terminated, changed or varied in any way whatsoever, nor shall
any waiver of any of the provisions of this Guaranty be binding upon Lender,
except as expressly set forth in a writing duly executed by Lender. No waiver by
Lender of any default shall operate as a waiver of any other default or the same
default on a future occasion, and no action by Lender permitted hereunder shall
in any way affect or impair Lender's rights or the obligations of Guarantor
under this Guaranty.
5.4 Assignment; Successors and Assigns. Guarantor may not assign Guarantor's
obligations or liability under this Guaranty. Subject to the preceding sentence,
this Guaranty shall be binding upon the parties hereto and their respective
heirs, executors, successors, representatives and assigns and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Lender may, without notice to anyone, sell or assign the Guaranteed Obligations,
or any part thereof, the Note, the Borrower Loan Documents or the Guaranty
Documents or grant participations therein, and in the event of a sale or
assignment each and every assignee or holder of, all or any of the Guaranteed
Obligations shall have the right to enforce this Guaranty, by suit or otherwise
for the benefit of such assignee, holder, or participant, as fully as if herein
by name specifically given such right.
5.5 Integration. This Guaranty is the entire agreement of Guarantor with respect
to the subject matter of this Guaranty, provided that this Guaranty shall not in
any way limit or abrogate the obligations of Guarantor under the other Guaranty
Documents, including, without limitation, the Hazardous Materials Indemnity
Agreement, of even date herewith.
5.6 Rights Cumulative. All of Lender's rights under this Guaranty, the Borrower
Loan Documents and the other Guaranty Documents are cumulative. The exercise of
any one right does not exclude the exercise of any other right given in this
Guaranty, the Borrower Loan Documents or the other Guaranty Documents or any
other right of Lender not set forth in this Guaranty.
5.7 Severability. Whenever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
5.8 Material Inducement; Consideration. Guarantor acknowledges and agrees that
Lender is specifically relying upon the agreements and waivers contained herein
and that such agreements and waivers constitute a material inducement to Lender
to accept this Guaranty and to make the Loan. Guarantor further acknowledges
that it expects to benefit from Lender's extension of financing accommodations
to Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.
5.9 Indemnification. Guarantor agrees to indemnify, pay and hold Lender and its
officers, directors, employees, agents, and attorneys (collectively called the
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may be
imposed on, incurred by, or asserted against that Indemnitee, in any manner
relating to or arising out of this Guaranty or the exercise of any right or
remedy hereunder or under the other documents pertaining to the Guaranteed
Obligations (the "Indemnified Liabilities"); provided that Guarantor shall have
no obligation to an Indemnitee under this subsection with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Guarantor shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. As long as necessary, and only to the extent necessary for the
indemnification herein contained to be effective and enforceable, this agreement
to indemnify Lender shall not extend to liability, claims, damages, losses or
expenses arising out of: (a) the preparation or approval of maps, drawings,
opinions, reports, surveys, change orders, designs or specifications by the
Lender or the agents or employees of the Lender; or (b) the giving of or the
failure to give directions or instructions by the Lender or the agents or
employees of the Lender, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to
property.
5.10 Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without regard to
conflicts of law provisions.
5.11 Waiver of Jury Trial. GUARANTOR, AND BY ITS ACCEPTANCE OF THIS GUARANTY,
LENDER, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS GUARANTY AND
THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR, AND BY LENDER'S ACCEPTANCE OF
THIS GUARANTY, LENDER AND GUARANTOR EACH ACKNOWLEDGE THAT NEITHER LENDER NOR ANY
PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR
NULLIFY ITS EFFECT.
5.12 Waivers. THE WAIVERS SET FORTH IN THIS GUARANTY (INCLUDING, WITHOUT
LIMITATION, SECTIONS 2 AND 3 ABOVE) ARE KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT NEITHER LENDER
NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT
TO INDUCE THESE WAIVERS OR IN ANY WAY TO MODIFY OR NULLIFY THEIR EFFECT.
GUARANTOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING
OF THESE WAIVERS BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL,
AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THESE WAIVERS WITH COUNSEL.
5.13 Exculpation. Except as set forth below, Guarantor shall not be personally
liable to pay any obligation, under this Guaranty or the other Guaranty
Documents, and Lender agrees to look solely to the Property (as defined in the
Leasehold Mortgage) and any other collateral heretofore, now, or hereafter
pledged by any party to secure the Guaranteed Obligations. Notwithstanding the
foregoing, Guarantor shall be personally liable for:
(a) all losses, damages, costs and expenses including reasonable attorneys'
fees and expenses incurred by Lender as a result of:
(i) the collection and receipt of proceeds and income from the
Property and the other assets and obligations securing the
Guaranteed Obligations by or for the benefit of Borrower,
Guarantor or Brookdale Living Communities, Inc. ("Parent")
following an Event of Default which are not paid to Lender or
applied to the Property in the ordinary course of business;
(ii) fraud;
(iii) material misrepresentation;
(iv) misapplication or misappropriation of funds which come into
the possession of Maker or any Principal;
(v) intentional and material waste to the Property;
(vi) the breach of the obligations set forth in the Hazardous
Substance Indemnification Agreement from Guarantor and Parent
to Lender of even date herewith, as hereafter amended, if at
all;
(vii) the breach of the provisions contained in Paragraph 15 of the
Leasehold Mortgage;
(viii) the breach of the provisions contained in Paragraph 16 of the
Leasehold Mortgage; and
(ix) the breach of the provisions contained in Paragraph 17 of the
Leasehold Mortgage; and
(b) any claim for any commissions or brokerage fees relating to the Loan.
The foregoing shall in no way limit or impair the enforcement
against the Property or any other security granted by the Guaranty Documents or
any of the Lender's rights and remedies pursuant to the Guaranty Documents.
By its acceptance hereof, Lender, acknowledges and agrees that
except for the liability of Parent under the letter agreement and the Hazardous
Substance Indemnification Agreement, each of even date herewith, executed by
Parent in favor of Lender, no shareholder, officer, director, employee, agent or
representative of Guarantor or Parent shall be personally liable to Lender for
any of the Guaranteed Obligations except for (i) distributions of rent or other
proceeds of the Property, including insurance or condemnation proceeds actually
received (and only to the extent received) by such person, after an Event of
Default (as defined in the Leasehold Mortgage) occurs or otherwise in violation
of the Borrower Loan Documents or the Guaranty Documents and (ii) Lender's costs
of collection of such amount, including reasonable attorneys' fees and costs.
5.14 Notices. All notices hereunder shall be given in the manner provided in the
Leasehold Mortgage.
[signature on following page]
<PAGE>
The undersigned has duly executed this Guaranty as of the date
and year first above written.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES OF
NEW MEXICO - SF, INC., a Delaware
corporation
By___________________________________________
Name_________________________________________
Title________________________________________
CERTIFICATE A PLEDGE AGREEMENT
THIS CERTIFICATE A PLEDGE AGREEMENT (together with all amendments,
supplements and other modifications made from time to time, this "Pledge
Agreement"), dated as of October 14, 1998, made by BROOKDALE LIVING COMMUNITIES
OF NEW MEXICO -SF, INC., a Delaware corporation (the "Pledgor"), in favor of THE
PDL BUSINESS TRUST, a Delaware business trust (the "Pledgee"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as valuation agent (in such capacity,
the "Valuation Agent") and LASALLE NATIONAL BANK, a national banking
association, as collateral account bank (the "Custodian").
W I T N E S S E T H:
WHEREAS, as a condition to the occurrence of the Acquisition Date under
the Lease dated as of October 14, 1998 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Lease"),
between the Pledgor, as Lessee and the Pledgee, as Lessor, the Pledgor is
required to execute and deliver this Pledge Agreement;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance ofthis Pledge Agreement;
WHEREAS, it is in the best interests of the Pledgor to execute this
Pledge Agreement inasmuch as the Pledgor will derive substantial benefits from
the transactions contemplated by the Lease; and
WHEREAS, the Valuation Agent and the Custodian have agreed to perform
certain services on behalf of the Pledgor and the Pledgee;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
-1-
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. Capitalized terms used but not otherwise
defined in this Pledge Agreement have the respective meanings specified in
Appendix 1 to the Lease and the rules of interpretation set forth in Appendix 1
to the Lease shall apply to this Pledge Agreement.
ARTICLE II
PLEDGE
SECTION 2.1 Grant of Security Interest.
(a) The Pledgor hereby pledges, hypothecates, assigns,
charges, mortgages, delivers, and transfers to the Pledgee and hereby
grants to the Pledgee a continuing security interest in, all of its
right, title and interest in, to and under the following property (the
"Certificate Collateral"):
(i) Certificate A, a copy of which is annexed hereto
as Schedule I, and any replacement Certificate A to be
provided pursuant to Section 7.13 hereof; and
(ii) all payments made with respect to and all
interest and proceeds (as such term is defined in the Uniform
Commercial Code as in effect in the State of California (the
"U.C.C.")) of any of the foregoing.
(b) The Pledgor hereby further pledges, hypothecates, assigns,
charges, mortgages, delivers, and transfers to the Pledgee and the
Custodian on behalf of the Pledgee and hereby grants to the Pledgee and
the Custodian a continuing security interest, pursuant to the Uniform
Commercial Code as in effect in the State of Illinois (including
Section 9-302 thereof), in all of its right, title and interest in, to
and under the Collateral Account (as hereinafter defined) and all
moneys and funds from time to time credited to or on deposit in the
Collateral Account (the foregoing being referred to herein as the
"Account Funds"). The Certificate Collateral and the Account Funds are
hereinafter collectively referred to as the "Collateral".
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SECTION 2.2 Security for Obligations. The security interest granted by
the Pledgor hereunder secures the satisfaction in full of all the Pledgor's
payment and non-payment obligations to Pledgee under the Operative Documents,
including, without limitation, the obligation to pay BH Basic Rent, Lessor Basic
Rent, Equity Balance and Supplemental Rent (to the extent the Lessor is entitled
to receive Supplemental Rent) (collectively, the "Obligations").
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SECTION 2.3 Delivery of Certificate Collateral. All certificates or
instruments representing or evidencing any Certificate Collateral, shall be
delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be
in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank, all in
form and substance satisfactory to the Pledgee.
SECTION 2.4 Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Certificate Collateral and the
Account Funds and shall
(a) remain in full force and effect until payment in full of
all Obligations, payment in full of the Equity Balance or the Pledgee
realizes on the Certificate Collateral and the Account Funds in
accordance with Section 6.1,
(b) be binding upon the Pledgor and its successors,
transferees and assigns, and
(c) inure to the benefit of the Pledgee.
Upon the payment in full of all Obligations or payment in full of the Equity
Balance, the security interest granted herein shall terminate and all rights to
the Collateral (including all interest or income paid in respect thereto) shall
revert to the Pledgor. Upon any such termination, (i) the Pledgee will, at the
sole expense of the Pledgor, and upon written instruction of the Pledgor,
deliver to the Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Certificate Collateral pledged by the Pledgor hereunder (including all such
interest or income), together with all other Collateral held by the Pledgee
hereunder and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination and (ii) direct the
Custodian to remit to the Pledgor all funds in the Collateral Account.
SECTION 2.5 Security Interest Absolute. All rights of the Pledgee and
the security interests granted hereunder to the Pledgee and the Custodian on the
Pledgee's behalf, and all obligations of the Pledgor hereunder, shall be
absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Pledge
Agreement or any other Operative Document,
(b) the failure of the Pledgee to assert any claim or demand
or to enforce any right or remedy against the Pledgor or any other
Person under the provisions of any Operative Document or otherwise,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of obligations the Obligations or any
other extension, compromise or renewal of any Obligation,
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(d) any reduction, limitation, impairment or termination of
any Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
the Pledgor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the
Pledgee or otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the any Operative Document,
(f) any addition, exchange, release, surrender or
non-perfection of any Collateral, or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty,
for any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Pledgor
or Pledgee or any other Person.
SECTION 2.6 Waiver of Subrogation. The Pledgor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Pledgee or any other Person that arise from the existence, payment,
performance or enforcement of the Pledgor's obligations under this Pledge
Agreement or any other Operative Document, including any right of subrogation,
reimbursement, exoneration, or indemnification, any right to participate in any
claim or remedy against the Pledgee or any other Person or any collateral which
the Pledgee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including the
right to take or receive from the Pledgee or any other Person, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to the Pledgor in violation of the preceding sentence and the Obligations shall
not have been paid in cash in full, such amount shall be deemed to have been
paid to the Pledgor for the benefit of, and held in trust for, the Pledgee, and
shall forthwith be paid to the Pledgee to be credited and applied upon the
Obligations, whether matured or unmatured. The Pledgor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Pledge Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
SECTION 2.7 Valuation of Collateral.
(a) The Valuation Agent shall determine on the first Wednesday
of each month (or if such day is not a Business Day, the following
Business Day) (the date of such valuation being a "Valuation Date") (i)
the amount of the Certificate A (inclusive of principal and
accreted/compounded interest) as of the Valuation Date (the
"Certificate Value"), (ii) by obtaining values from the issuer of the
Certificate A and at least one
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reputable broker of certificates of deposit, the fair market sales
value of the Certificate A if sold as of the Valuation Date which fair
market sales value shall be equal to the higher of the two values
received (the "Sales Value") and (iii) the rating of the provider of
the Certificate A from a source the Valuation Agent deems appropriate.
Each such valuation by the Valuation Agent shall be binding on the
Pledgor and the Pledgee, absent manifest error. On any Valuation Date,
in the event that the Sales Value plus any Account Funds in the
Collateral Account is less than the Certificate Value (a "Deficiency"),
the Valuation Agent shall give written notice in such form as the
Valuation Agent deems appropriate of such Deficiency within two (2)
Business Days after the Valuation Date via (i) overnight mail or hand
delivery and (ii) facsimile transmission, to each of the Pledgee, the
Custodian and the Pledgor (a "Deficiency Notice"). Notice in accordance
with the previous sentence shall be provided by the Valuation Agent in
such form as the Valuation Agent deems appropriate in the event that
the rating of the provider of the Certificate A is less than "A" (or an
equivalent thereto) (a "Rating Notice"). Upon the written request of
the Valuation Agent, approved in writing by the Pledgee and Bank
Hapoalim B.M., San Francisco Branch ("BH"), the frequency of the
Valuation Date may be modified from time to time.
(b) The Pledgor shall promptly, but in any event within five
(5) Business Days after receipt of a Deficiency Notice (facsimile
confirmation receipt by the Valuation Agent being deemed receipt of
notice by the Pledgor, the Pledgee and the Custodian), wire transfer
additional Account Funds in U.S. Dollars to the Collateral Account in
an amount equal to or exceeding the Deficiency. The Pledgor's
obligation to deposit such Account Funds in the Collateral Account is
hereinafter referred to as the "Collateral Requirement." The Valuation
Agent agrees to contact the Custodian (and the Custodian agrees to
promptly furnish such information) on the last day that each Collateral
Requirement is required to be satisfied to verify the satisfaction of
same by the Pledgor and to immediately notify the Pledgor and the
Pledgee in the manner described in Section 2.7(a) of the Pledgor's
failure to satisfy the Collateral Requirement. The Pledgor's failure to
satisfy the Collateral Requirement shall result in the Pledgee having
the immediate right to the Certificate Collateral and Account Funds in
accordance with Section 6.1.
(c) On any Valuation Date, in the event that the Sales Value
plus the Account Funds then held in the Collateral Account, equals or
exceeds the Certificate Value (such excess being referred to herein as
the "Excess") and no Event of Default described in Section 6.1 or
Default relating thereto shall have occurred and be continuing, the
Valuation Agent shall provide written notice of such Excess in such
form as the Valuation Agent deems appropriate (the "Excess Notice")
within two (2) Business Days after the Valuation Date in the manner
described in Section 2.7(a) to each of the Pledgor, the Pledgee and the
Custodian. The Custodian shall remit to the Pledgor (to an account
designated by Pledgor from time to time) within three (3) Business Days
after its receipt
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of the Excess Notice (facsimile confirmation receipt by the Valuation
Agent being deemed receipt of notice by the Pledgor, Pledgee and the
Custodian) funds in the Collateral Account equal to the Excess, so that
after distributing such funds the sum of the Sales Value plus the
Account Funds in the Collateral Account will equal the Certificate
Value.
SECTION 2.8 Collateral Account.
(a) The Custodian shall establish a trust account at its
branch located at 135 S. LaSalle Street, Chicago, Illinois, 60603, in
the name of the Pledgee for the benefit of the Pledgee (the "Collateral
Account") and invest any Account Funds in the Custodian's ABN AMRO
Treasury Money Market Fund or in any other fund or investment with a
rating of "A" or better which is available through the Custodian. If an
Event of Default described in Section 6.1 exists or the Pledgor has
failed to comply with the Collateral Requirement in accordance with
Section 2.7, the Pledgee may provide written notice to the Custodian
instructing the Custodian to withdraw and release all Account Funds to
BH pursuant to the terms of the Lessor Pledge Agreement as instructed
by the Pledgee. Until the Obligations are paid in full, the Pledgor
shall have no right to make withdrawals from the Collateral Account or
to otherwise exercise any control with respect to any property from
time to time on deposit in or credited to the Collateral Account. The
Custodian agrees to respond to reasonable inquiries no more frequently
than once every two weeks of the Pledgor, the Pledgee and the Valuation
Agent as to the balance of the Collateral Account.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Warranties, etc. The Pledgor represents and warrants for
itself unto the Pledgee as at the date of each pledge and delivery hereunder by
the Pledgor to the Pledgee of any Certificate Collateral and Account Funds
pledged by the Pledgor pursuant to this Pledge Agreement as follows:
(a) Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full
right and authority to pledge and assign) the Collateral, free and
clear of all Liens, security interests, options, or other charges or
encumbrances, except any Lien or security interest granted pursuant
hereto in favor of the Pledgee.
(b) Valid Security Interest. The delivery of the Certificate
Collateral to the Pledgee and the Account Funds to the Custodian are
each effective to create a valid,
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perfected, first priority security interest in such Certificate
Collateral and Account Funds and all proceeds thereof, securing the
Obligations. No filing or other action will be necessary to perfect or
protect such security interest.
(c) Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(i) for the pledge by the Pledgor of the Certificate
Collateral or Account Funds pursuant to this Pledge Agreement
or for the execution, delivery, and performance of this Pledge
Agreement by the Pledgor, or
(ii) for the exercise by the Pledgee of any of the
rights provided for in this Pledge Agreement, or, except as
may be required in connection with a disposition of any
Certificate Collateral by laws affecting the offering and sale
of securities generally, the remedies in respect of the
Certificate Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Certain Covenants.
(a) The Pledgor covenants and agrees that, so long as any
portion of the Obligations shall remain unpaid or unfulfilled:
(i) except as permitted by the Operative Documents,
it will not sell, assign, transfer, pledge, or encumber in any
other manner the Collateral owned by it (except in favor of
the Pledgee hereunder);
(ii) the Pledgor will warrant and defend the right
and title herein granted unto the Pledgee and the Custodian in
and to the Certificate Collateral and the Account Funds,
respectively (and all right, title, and interest represented
by the Certificate Collateral and the Account Funds) against
the claims and demands of all Persons whomsoever;
(iii) at any time, and from time to time, at the
expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments, and take all further action,
that the Pledgee may reasonably request, in order to perfect
and protect any security interest granted or purported to be
granted hereby or to
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enable the Pledgee to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
(b) Each of the Pledgee and the Pledgor covenants to the
Valuation Agent and the Custodian that it will provide the Valuation
Agent and the Custodian with prompt written notice of an Event of
Default that occurs during the term of this Pledge Agreement and of any
cure of any such Event of Default and notice of a failure of the
Pledgor to satisfy the Collateral Requirement.
ARTICLE V
THE PLEDGEE
SECTION 5.1 Pledgee Appointed Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Pledgee the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time upon the occurrence and during the continuance
of any Event of Default described in Section 6.1 or upon the Pledgor's failure
to comply with the Collateral Requirement, to take any action and to execute any
instrument which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement with respect to the Collateral, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Pledgee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Pledgee with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2 Pledgee May Perform. If the Pledgor fails to perform any
agreement contained herein, the Pledgee may itself perform, or cause performance
of, such agreement, and the expenses of the Pledgee incurred in connection
therewith shall be payable by the Pledgor pursuant to Section 6.3.
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ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default exists (other
than an Uncurable Event of Default (as defined in the Heller Subleasehold
Mortgage)) or if the Pledgor has failed to comply with the Collateral
Requirement in accordance with Section 2.7 or if the Pledgor fails to pay the
Custodian its fees in accordance with Section 6.4 within sixty (60) days of the
date same is due or if a successor provider of the Certificate A is not obtained
in accordance with Section 9.13 within ten (10) Business Days of the receipt by
the Pledgee of the Rating Notice:
(a) The Pledgee may exercise in respect of the Certificate
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Certificate Collateral) and also may, without
notice except as specified below, sell or redeem, as applicable, the
Certificate Collateral or any part thereof (to the extent the
Certificate Collateral can be used to satisfy the obligations of the
Pledgor pursuant to Section 2.2 of this Pledge Agreement), for cash, on
credit or for future delivery, and upon such other terms as the Pledgee
may deem commercially reasonable. Further, the Pledgee may distribute
the Certificate Collateral in any manner it deems appropriate upon
seizing the Certificate Collateral.
(b) The Pledgee may (to the extent the Collateral is necessary
to satisfy the Pledgor's Obligations pursuant to Section 2.2 hereof):
(i) transfer all or any part of the Collateral into
the name of its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Pledgee of any amount due or
to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other writings in
the Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral,
and
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(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, instruments of conveyance
or transfer with respect to all or any of the Collateral.
(c) The Pledgee may exercise in respect of the Account Funds,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in the
State of Illinois (whether or not same applies to the Account Funds).
SECTION 6.2 Securities Laws. If the Pledgee shall exercise its right to
sell all or any of the Certificate Collateral pursuant to Section 6.1, the
Pledgor agrees that, upon request of the Pledgee, the Pledgor will, at its own
expense do or cause to be done all such acts and things as may be necessary to
make such sale of the Certificate Collateral owned by the Pledgor or any part
thereof valid and binding and in compliance with applicable law.
SECTION 6.3 Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Pledgee, the Valuation Agent and the Custodian from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Pledge Agreement (including enforcement of this Pledge Agreement)
except claims, issues or liabilities of the Custodian and the Valuation Agent
resulting from the Custodian's or the Valuation Agent's gross negligence or
wilful misconduct. Upon demand, the Pledgor will pay to the Pledgee, the
Valuation Agent and Custodian the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and agents, which the Pledgee, the Valuation Agent or Custodian may
incur in connection with:
(a) the administration of this Pledge Agreement;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of its rights
hereunder; or
(d) the failure by the Pledgor to perform or observe any of
the provisions hereof.
SECTION 6.4 Fees of Custodian and Valuation Agent. The Pledgor agrees
to pay the Valuation Agent fees in accordance with the terms of the Trustee Fee
Agreement and the fees of the Custodian in the amount of $1,500 per annum during
the term of this Pledge Agreement, payable annually in advance commencing on the
effective date of this Pledge Agreement.
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ARTICLE VII
THE CUSTODIAN
SECTION 7.1 Custodian Appointed Attorney-in-Fact and Agent.
(a) The Pledgor hereby irrevocably appoints the Custodian the
Pledgor's attorney-in-fact, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor or otherwise, from time
to time during which an Event of Default described in Section 6.1
exists (the Custodian being entitled to rely upon a notice from Pledgee
that such Event of Default exists) or upon the Pledgor's failure to
comply with the Collateral Requirement in accordance with the terms
hereof, to take any action and to execute any instrument as directed by
the Pledgee to accomplish the purposes of this Pledge Agreement with
respect to the Account Funds, including without limitation:
(i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of the
Account Funds;
(ii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in connection
with clause (a) above; and
(iii) to file any claims or take any action or
institute any proceedings as directed by the Pledgee for the
collection of any of the Account Funds or otherwise to enforce
the rights of the Custodian with respect to any of the Account
Funds.
The Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
(b) The Pledgee hereby appoints the Custodian as the Pledgee's
agent for retaining physical possession of the Account Funds in
accordance with the terms of this Pledge Agreement. All Account Funds
shall be segregated from all other property, including, without
limitation, that of the Pledgor and the Pledgee.
SECTION 7.2 Custodian May Perform. If the Pledgor fails to perform any
agreement contained herein with respect to the Account Funds, the Custodian may
itself perform, or cause performance of, such agreement, and the expenses of the
Custodian incurred in connection therewith shall be payable by the Pledgor
pursuant to Section 6.3.
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SECTION 7.3 No Duty.
(a) The powers conferred on the Custodian hereunder are solely
to protect the interests of the Pledgee in the Account Funds, and shall
not impose any duty on it to exercise any such powers. Except for
reasonable care of any Account Funds in its possession by the Custodian
and the accounting by the Custodian for moneys actually received by it
hereunder, the Custodian shall not have any duty as to any Account
Funds or responsibility for taking any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Account Funds.
(b) Notwithstanding anything to the contrary, the Custodian
shall have no duties, obligations or responsibilities except as
expressly set forth in this Pledge Agreement. Except as set forth in
this Pledge Agreement, the Custodian shall have no fiduciary duty,
obligation or responsibility in respect of any party hereto or any
indirect beneficiary of this Pledge Agreement or the Account Funds.
SECTION 7.4 Reasonable Care. The Custodian is required to exercise
reasonable care in the custody and preservation of any of the Account Funds in
its possession; provided, however, the Custodian shall be deemed to have
exercised reasonable care in the custody and preservation of any of the Account
Funds, if it takes such action for that purpose as the Pledgor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Event of Default described in Section 6.1, but failure of the
Custodian to comply with any such request at any time shall not in itself be
deemed a failure to have exercised reasonable care but shall be used as a factor
in determining whether the Custodian has exercised reasonable care. The
Custodian agrees to exercise the same degree of care as customarily exercised by
the Custodian generally when acting in such capacity for similar property in
exercising its duties under this Pledge Agreement.
SECTION 7.5 Successor Custodian. At any time, the Pledgor shall have
the right to appoint a successor custodian to replace LaSalle National Bank (or
any successor Custodian) as the Custodian hereunder, so long as such successor
custodian is approved by the Pledgee and BH, each of which approval shall not be
unreasonably withheld. The Pledgor shall give the Custodian at least 30 days'
prior written notice of the appointment and approval of a successor custodian.
At any time, the Custodian shall have the right to resign as Custodian by giving
the Pledgor and the Pledgee at least 30 days' prior written notice. Prior to the
date of the Custodian's resignation, the Pledgor shall notify the Custodian of
the successor custodian appointed by the Pledgor and approved by the Pledgee and
BH. Upon such appointment of a successor custodian, such custodian shall succeed
to the rights, powers and duties of the Custodian, and the term "Custodian"
shall mean successor custodian effective upon such appointment and approval, and
the former Custodian's rights, powers and duties as the Custodian shall be
terminated, without any other or further act or deed on the part of such former
Custodian or any of the parties to this Pledge Agreement.
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ARTICLE VIII
THE VALUATION AGENT
SECTION 8.1 Successor Valuation Agent. At any time, the Pledgor shall
have the right to appoint a successor valuation agent to replace Wilmington
Trust Company (or any successor Valuation Agent) as the Valuation Agent
hereunder, so long as such successor valuation agent is approved by the Pledgee
and BH, each of which approval shall not be unreasonably withheld. The Pledgor
shall give the Valuation Agent at least 30 days' prior written notice of the
appointment and approval of a successor valuation agent. At any time, the
Valuation Agent shall have the right to resign as Valuation Agent by giving the
Pledgor and the Pledgee at least 30 days' prior written notice. Prior to the
date of the Valuation Agent's resignation, the Pledgor shall notify the
Valuation Agent of the successor valuation agent appointed by the Pledgor and
approved by the Pledgee and BH. Upon such appointment of a successor valuation
agent, such valuation agent shall succeed to the rights, powers and duties of
the Valuation Agent, and the term "Valuation Agent" shall mean successor
valuation agent effective upon such appointment and approval, and the former
Valuation Agent's rights, powers and duties as the Valuation Agent shall be
terminated, without any other or further act or deed on the part of such former
Valuation Agent or any of the parties to this Pledge Agreement.
SECTION 8.2 No Duty. Notwithstanding anything to the contrary, the
Valuation Agent shall have no duties, obligations or responsibilities except as
expressly set forth in this Pledge Agreement. Except as set forth in this Pledge
Agreement the Valuation Agent shall have no fiduciary duty, obligation or
responsibility in respect of any party hereto or any indirect beneficiary of
this Pledge Agreement or the Collateral.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Operative Document. This Pledge Agreement is an Operative
Document executed pursuant to the Lease and shall (unless expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Lease.
SECTION 9.2 Successors, Transferees and Assigns. This Pledge Agreement
shall be binding upon the Pledgor and its successors, transferees and assigns
and shall inure to the benefit of and be enforceable by the Pledgee and its
successors and permitted assigns. Except as provided in the Lessor Pledge
Agreement, without the express written consent of the Pledgor, which shall not
be unreasonably withheld, the Pledgee shall not have the right to assign this
Pledge Agreement to any person or entity which is not the Lessor under the
Lease.
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SECTION 9.3 Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement, nor consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that
any such amendment or waiver shall be consented to by the Pledgee and BH, which
consent shall not be unreasonably withheld.
SECTION 9.4 Protection of Collateral. The Pledgee may from time to
time, at its option, perform any act which the Pledgor agrees hereunder to
perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default described
in Section 6.1) and the Pledgee may from time to time take any other action
which the Pledgee reasonably deems necessary for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.
SECTION 9.5 Addresses for Notices. All notices, demands, requests,
consents, approvals and other communications hereunder shall be in writing
(including by facsimile) and directed (a) in the case of the Pledgee and the
Pledgor, to the respective address or facsimile number described in, and deemed
received in accordance with the provisions of, Section 33.4 of the Lease, (b) in
the case of the Valuation Agent, to Wilmington Trust Company, 1100 North Market
Street, Wilmington, Delaware 19890-0001, facsimile number (302) 427-4605,
telephone number (302) 651-1913, Attention: Custody Department and (c) in the
case of the Custodian, to LaSalle National Bank, 135 S. LaSalle Street, Suite
1960, Chicago, Illinois, 60603, facsimile number (312) 904-2236, telephone
number (312) 904-2970, Attention: Erik Benson, Corporate Trust Officer;
provided, however, that all such notices and other communications given by one
by party hereto to another in connection with this Pledge Agreement shall be
given to all other parties hereto.
SECTION 9.6 No Waiver; Remedies. No failure on the part of the Pledgee
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.7 Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 9.8 Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
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SECTION 9.9 Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. FOR
PURPOSES OF THE CREATION AND PERFECTION OF THE SECURITY INTEREST GRANTED UNDER
THIS PLEDGE AGREEMENT WITH RESPECT TO THE COLLATERAL AND ACCOUNT FUNDS, SUCH
MATTERS SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA AND THE STATE OF ILLINOIS, RESPECTIVELY.
SECTION 9.10 Waiver of Jury Trial. THE PLEDGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS PLEDGE AGREEMENT. THE PLEDGOR ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PLEDGEE ENTERING INTO THE LEASE.
SECTION 9.11 Execution in Counterparts. This Pledge Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 9.12 Pledge of Interest in Certificate Collateral and Account
Funds. The Pledgor hereby consents to the terms of the Pledge Agreement, dated
as of the date hereof, between the Pledgee and BH, pursuant to which the Pledgee
pledged and granted a security interest to BH in all the Pledgee's rights, title
and, interest in and to the Certificate Collateral and all payments and proceeds
with respect thereto and the Account Funds.
SECTION 9.13 Replacement of Issuing Bank; Replacement of Certificate A.
(a) The parties hereto hereby agree that if, at any time, (a)
Fleet National Bank or a successor provider of the Certificate A cannot
continue to provide the Certificate A or fails to maintain a rating of
"A" (or an equivalent thereto) or better with a nationally recognized
rating agency, or (b) the Pledgor and the Pledgee agree that another
provider of the Certificate A would be more satisfactory to their
needs, the parties shall, at Pledgor's cost and expense, arrange for a
substitute financial institution with a rating meeting such standard to
issue an investment certificate bearing interest at a rate no less than
that of the Certificate A and having the same maturity date of the
Certificate A.
(b) The Pledgor shall provide to the Pledgee at the time of
delivery of any replacement Certificate A a Responsible Employee's
Certificate whereby a Responsible Employee shall certify that the
Pledgor is solvent as of such date. Upon receipt by the
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Pledgee of the aforementioned Responsible Employee's Certificate and
the replacement Certificate A, the Pledgee shall transfer to the
Pledgor the original Certificate A (or a replacement provided pursuant
to Section 9.13(a)) in the manner so instructed by the Pledgor . The
parties hereto agree that all references in this Pledge Agreement to
the Certificate A shall include any replacement thereof in accordance
with the terms hereof and all security interests and rights granted
hereunder with respect to the original Certificate A shall apply to any
replacement Certificate A.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
BROOKDALE LIVING COMMUNITIES
OF NEW MEXICO - SF, INC.,
as Pledgor
By: _____________________________
Name:
Title:
THE PDL BUSINESS TRUST, as Pledgee
By Wilmington Trust Company, not in its
individual capacity but solely as trustee
under the Trust Agreement
By: _____________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Valuation Agent
By: _____________________________
Name:
Title:
LASALLE NATIONAL BANK, as
Custodian
By: _____________________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO BY:
BANK HAPOALIM B.M.,
SAN FRANCISCO BRANCH
By: ________________________________
Name:
Title:
<PAGE>
Certificate A Pledge Agreement
SCHEDULE I
TO PLEDGE AGREEMENT
[Copy of Certificate A]
CERTIFICATE B PLEDGE AGREEMENT
THIS CERTIFICATE B PLEDGE AGREEMENT (together with all amendments,
supplements and other modifications made from time to time, this "Pledge
Agreement"), dated as of October 14, 1998, made by BROOKDALE LIVING COMMUNITIES
OF NEW MEXICO -SF, INC., a Delaware corporation (the "Pledgor"), in favor of THE
PDL BUSINESS TRUST, a Delaware business trust (the "Pledgee"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as valuation agent (in such capacity,
the "Valuation Agent") and LASALLE NATIONAL BANK, a national banking
association, as collateral account bank (the "Custodian").
W I T N E S S E T H:
WHEREAS, as a condition to the occurrence of the Acquisition Date under
the Lease dated as of October 14, 1998 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Lease"),
between the Pledgor, as Lessee and the Pledgee, as Lessor, the Pledgor is
required to execute and deliver this Pledge Agreement;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
WHEREAS, it is in the best interests of the Pledgor to execute this
Pledge Agreement inasmuch as the Pledgor will derive substantial benefits from
the transactions contemplated by the Lease; and
WHEREAS, the Valuation Agent and the Custodian have agreed to perform
certain services on behalf of the Pledgor and the Pledgee;
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. Capitalized terms used but not otherwise
defined in this Pledge Agreement have the respective meanings specified in
Appendix 1 to the Lease and the rules of interpretation set forth in Appendix 1
to the Lease shall apply to this Pledge Agreement.
ARTICLE II
PLEDGE
SECTION 2.1 Grant of Security Interest.
(a) The Pledgor hereby pledges, hypothecates, assigns,
charges, mortgages, delivers, and transfers to the Pledgee and hereby
grants to the Pledgee a continuing security interest in, all of its
right, title and interest in, to and under the Certificate B, a copy of
which is annexed hereto as Schedule I, and any replacement Certificate
B to be provided pursuant to Section 7.13 hereof (the "Certificate
Collateral").
(b) The Pledgor hereby further pledges, hypothecates, assigns,
charges, mortgages, delivers, and transfers to the Pledgee and the
Custodian on behalf of the Pledgee and hereby grants to the Pledgee and
the Custodian a continuing security interest, pursuant to the Uniform
Commercial Code as in effect in the State of Illinois (including
Section 9-302 thereof), in all of its right, title and interest in, to
and under the Collateral Account (as hereinafter defined) and all
moneys and funds from time to time credited to or on deposit in the
Collateral Account (the foregoing being referred to herein as the
"Account Funds"). The Certificate Collateral and the Account Funds are
hereinafter collectively referred to as the "Collateral".
Notwithstanding the foregoing, the Pledgor and Pledgee agree that the
Pledgor shall be entitled to receive any and all proceeds, interest, or profits
paid in respect of the Certificate Collateral ("Earnings"). The Pledgee agrees
to release all such Earnings to the Pledgor upon each Payment Date on which
Lessor Basic Rent is due; provided, however, that the Pledgor shall not have
rights to Earnings during the continuance of an Event of Default or the failure
by the Pledgor to satisfy the Collateral Requirement in accordance with Section
2.7. The Pledgee hereby agrees to distribute any Earnings in its possession to
the Pledgor in accordance with the preceding sentence.
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SECTION 2.2 Security for Obligations. The security interest granted by
the Pledgor hereunder secures the satisfaction in full of all the Pledgor's
payment and non-payment obligations to Pledgee under the Operative Documents,
including, without limitation, the obligation to pay SELCO Basic Rent, Lessor
Basic Rent, Equity Balance and Supplemental Rent (to the extent the Lessor is
entitled to receive Supplement Rent) (collectively, the "Obligations").
SECTION 2.3 Delivery of Certificate Collateral. All certificates or
instruments representing or evidencing any Certificate Collateral, shall be
delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be
in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank, all in
form and substance satisfactory to the Pledgee.
SECTION 2.4 Continuing Security Interest. This Pledge Agreement shall
create a continuing security interest in the Certificate Collateral and the
Account Funds and shall
(a) remain in full force and effect until payment in full of
all Obligations, payment in full of the Equity Balance or the Pledgee
realizes on the Certificate Collateral and the Account Funds in
accordance with Section 6.1,
(b) be binding upon the Pledgor and its successors,
transferees and assigns, and
(c) inure to the benefit of the Pledgee.
Upon the payment in full of all Obligations or payment in full of the Equity
Balance, the security interest granted herein shall terminate and all rights to
the Collateral (including all interest or income paid in respect thereto) shall
revert to the Pledgor. Upon any such termination, (i) the Pledgee will, at the
sole expense of the Pledgor, and upon written instruction of the Pledgor,
deliver to the Pledgor, without any representations, warranties or recourse of
any kind whatsoever, all certificates and instruments representing or evidencing
all Certificate Collateral pledged by the Pledgor hereunder (including all such
interest or income), together with all other Collateral held by the Pledgee
hereunder and execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination and (ii) direct the
Custodian to remit to the Pledgor all funds in the Collateral Account.
SECTION 2.5 Security Interest Absolute. All rights of the Pledgee and
the security interests granted hereunder to the Pledgee and the Custodian on the
Pledgee's behalf, and all obligations of the Pledgor hereunder, shall be
absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Pledge
Agreement or any other Operative Document,
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(b) the failure of the Pledgee to assert any claim or demand
or to enforce any right or remedy against the Pledgor or any other
Person under the provisions of any Operative Document or otherwise,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of obligations the Obligations or any
other extension, compromise or renewal of any Obligation,
(d) any reduction, limitation, impairment or termination of
any Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
the Pledgor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the
Pledgee or otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the any Operative Document,
(f) any addition, exchange, release, surrender or
non-perfection of any Collateral, or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty,
for any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Pledgor
or Pledgee or any other Person.
SECTION 2.6 Waiver of Subrogation. The Pledgor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Pledgee or any other Person that arise from the existence, payment,
performance or enforcement of the Pledgor's obligations under this Pledge
Agreement or any other Operative Document, including any right of subrogation,
reimbursement, exoneration, or indemnification, any right to participate in any
claim or remedy against the Pledgee or any other Person or any collateral which
the Pledgee now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including the
right to take or receive from the Pledgee or any other Person, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to the Pledgor in violation of the preceding sentence and the Obligations shall
not have been paid in cash in full, such amount shall be deemed to have been
paid to the Pledgor for the benefit of, and held in trust for, the Pledgee, and
shall forthwith be paid to the Pledgee to be credited and applied upon the
Obligations, whether matured or unmatured. The Pledgor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Pledge
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Agreement and that the waiver set forth in this Section is knowingly made in
contemplation of such benefits.
SECTION 2.7 Valuation of Collateral.
(a) The Valuation Agent shall determine on the first Wednesday
of each month (or if such day is not a Business Day, the following
Business Day) (the date of such valuation being a "Valuation Date") (i)
the amount of the Certificate B (inclusive of principal and exclusive
of undistributed Earnings) as of the Valuation Date (the "Certificate
Value"), (ii) by obtaining values from the issuer of the Certificate B
and at least one reputable broker of certificates of deposit, the fair
market sales value of the Certificate B if sold as of the Valuation
Date which fair market sales value shall be equal to the higher of the
two values received (the "Sales Value") and (iii) the rating of the
provider of the Certificate B from a source the Valuation Agent deems
appropriate. Each such valuation of Certificate B by the Valuation
Agent shall be binding on the Pledgor and the Pledgee, absent manifest
error. On any Valuation Date, in the event that the Sales Value plus
any Account Funds in the Collateral Account is less than the
Certificate Value (a "Deficiency"), the Valuation Agent shall give
written notice in such form as the Valuation Agent deems appropriate of
such Deficiency within two (2) Business Days after the Valuation Date
via (i) overnight mail or hand delivery and (ii) facsimile
transmission, to each of the Pledgee, the Custodian and the Pledgor (a
"Deficiency Notice"). Notice in accordance with the previous sentence
shall be provided by the Valuation Agent in such form as the Valuation
Agent deems appropriate in the event that the rating of the provider of
the Certificate B is less than "A" (or an equivalent thereto) (a
"Rating Notice"). Upon the written request of the Valuation Agent,
approved in writing by the Pledgee and SELCO Service Corporation
("SELCO"), the frequency of the Valuation Date may be modified from
time to time.
(b) The Pledgor shall promptly, but in any event within five
(5) Business Days after receipt of a Deficiency Notice (facsimile
confirmation receipt by the Valuation Agent being deemed receipt of
notice by the Pledgor, the Pledgee and the Custodian), wire transfer
additional Account Funds in U.S. Dollars to the Collateral Account in
an amount equal to or exceeding the Deficiency. The Pledgor's
obligation to deposit such Account Funds in the Collateral Account is
hereinafter referred to as the "Collateral Requirement." The Valuation
Agent agrees to contact the Custodian (and the Custodian agrees to
promptly furnish such information) on the last day that each Collateral
Requirement is required to be satisfied to verify the satisfaction of
same by the Pledgor and to immediately notify the Pledgor and the
Pledgee in the manner described in Section 2.7(a) of the Pledgor's
failure to satisfy the Collateral Requirement. The Pledgor's failure to
satisfy the Collateral Requirement shall result in the Pledgee having
the immediate right to the Certificate Collateral and Account Funds in
accordance with Section 6.1.
(c) On any Valuation Date, in the event that the Sales Value
plus the Account Funds then held in the Collateral Account, equals or
exceeds the Certificate Value (such
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excess being referred to herein as the "Excess") and no Event of
Default described in Section 6.1 or Default relating thereto shall have
occurred and be continuing, the Valuation Agent shall provide written
notice of such Excess in such form as the Valuation Agent deems
appropriate (the "Excess Notice") within two (2) Business Days after
the Valuation Date in the manner described in Section 2.7(a) to each of
the Pledgor, the Pledgee and the Custodian. The Custodian shall remit
to the Pledgor (to an account designated by Pledgor from time to time)
within three (3) Business Days after its receipt of the Excess Notice
(facsimile confirmation receipt by the Valuation Agent being deemed
receipt of notice by the Pledgor, Pledgee and the Custodian) funds in
the Collateral Account equal to the Excess, so that after distributing
such funds the sum of the Sales Value plus the Account Funds in the
Collateral Account will equal the Certificate Value.
SECTION 2.8 Collateral Account.
(a) The Custodian shall establish a trust account at its
branch located at 135 S. LaSalle Street, Chicago, Illinois, 60603, in
the name of the Pledgee for the benefit of the Pledgee (the "Collateral
Account") and invest any Account Funds in the Custodian's ABN AMRO
Treasury Money Market Fund or in any other fund or investment with a
rating of "A" or better which is available through the Custodian. If an
Event of Default described in Section 6.1 exists or the Pledgor has
failed to comply with the Collateral Requirement in accordance with
Section 2.7, the Pledgee may provide written notice to the Custodian
instructing the Custodian to withdraw and release all Account Funds to
the Pledgee. Until the Obligations are paid in full, the Pledgor shall
have no right to make withdrawals from the Collateral Account or to
otherwise exercise any control with respect to any property from time
to time on deposit in or credited to the Collateral Account. The
Custodian agrees to respond to reasonable inquiries no more frequently
than once every two weeks of the Pledgor, the Pledgee and the Valuation
Agent as to the balance of the Collateral Account.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Warranties, etc. The Pledgor represents and warrants for
itself unto the Pledgee as at the date of each pledge and delivery hereunder by
the Pledgor to the Pledgee of any Certificate Collateral and Account Funds
pledged by the Pledgor pursuant to this Pledge Agreement as follows:
(a) Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and valid title to (and has full
right and authority to pledge and assign) the
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Collateral, free and clear of all Liens, security interests, options,
or other charges or encumbrances, except any Lien or security interest
granted pursuant hereto in favor of the Pledgee.
(b) Valid Security Interest. The delivery of the Certificate
Collateral to the Pledgee and the Account Funds to the Custodian are
each effective to create a valid, perfected, first priority security
interest in such Certificate Collateral and Account Funds and all
proceeds thereof, securing the Obligations. No filing or other action
will be necessary to perfect or protect such security interest.
(c) Authorization, Approval, etc. No authorization, approval,
or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(i) for the pledge by the Pledgor of the Certificate
Collateral or Account Funds pursuant to this Pledge Agreement
or for the execution, delivery, and performance of this Pledge
Agreement by the Pledgor, or
(ii) for the exercise by the Pledgee of any of the
rights provided for in this Pledge Agreement, or, except as
may be required in connection with a disposition of any
Certificate Collateral by laws affecting the offering and sale
of securities generally, the remedies in respect of the
Certificate Collateral pursuant to this Pledge Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Certain Covenants.
(a) The Pledgor covenants and agrees that, so long as any
portion of the Obligations shall remain unpaid or unfulfilled:
(i) except as permitted by the Operative Documents,
it will not sell, assign, transfer, pledge, or encumber in any
other manner the Collateral owned by it (except in favor of
the Pledgee hereunder);
(ii) the Pledgor will warrant and defend the right
and title herein granted unto the Pledgee and the Custodian in
and to the Certificate Collateral and the Account Funds,
respectively (and all right, title, and interest represented
by the
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Certificate Collateral and the Account Funds) against the
claims and demands of all Persons whomsoever;
(iii) at any time, and from time to time, at the
expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments, and take all further action,
that the Pledgee may reasonably request, in order to perfect
and protect any security interest granted or purported to be
granted hereby or to enable the Pledgee to exercise and
enforce its rights and remedies hereunder with respect to any
Collateral.
(b) Each of the Pledgee and the Pledgor covenants to the
Valuation Agent and the Custodian that it will provide the Valuation
Agent and the Custodian with prompt written notice of an Event of
Default that occurs during the term of this Pledge Agreement and of any
cure of any such Event of Default and notice of a failure of the
Pledgor to satisfy the Collateral Requirement.
ARTICLE V
THE PLEDGEE
SECTION 5.1 Pledgee Appointed Attorney-in-Fact. The Pledgor hereby
irrevocably appoints the Pledgee the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time upon the occurrence and during the continuance
of any Event of Default described in Section 6.1 or upon the Pledgor's failure
to comply with the Collateral Requirement, to take any action and to execute any
instrument which the Pledgee may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement with respect to the Collateral, including
without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above; and
(c) to file any claims or take any action or institute any
proceedings which the Pledgee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Pledgee with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
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SECTION 5.2 Pledgee May Perform. If the Pledgor fails to perform any
agreement contained herein, the Pledgee may itself perform, or cause performance
of, such agreement, and the expenses of the Pledgee incurred in connection
therewith shall be payable by the Pledgor pursuant to Section 6.3.
ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default exists (other
than an Uncurable Event of Default (as defined in the Heller Leasehold
Mortgage)) or if the Pledgor has failed to comply with the Collateral
Requirement in accordance with Section 2.7 or if the Pledgor fails to pay the
Custodian its fees in accordance with Section 6.4 within sixty (60) days of the
date same is due or if a successor provider of the Certificate B is not obtained
in accordance with Section 9.13 within ten (10) Business Days of the receipt by
the Pledgee of the Rating Notice:
(a) The Pledgee may exercise in respect of the Certificate
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Certificate Collateral) and also may, without
notice except as specified below, sell or redeem, as applicable, the
Certificate Collateral or any part thereof (to the extent the
Certificate Collateral can be used to satisfy the obligations of the
Pledgor pursuant to Section 2.2 of this Pledge Agreement), for cash, on
credit or for future delivery, and upon such other terms as the Pledgee
may deem commercially reasonable. Further, the Pledgee may distribute
the Certificate Collateral in any manner it deems appropriate upon
seizing the Certificate Collateral.
(b) The Pledgee may (to the extent the Collateral is necessary
to satisfy the Pledgor's Obligations pursuant to Section 2.2 hereof):
(i) transfer all or any part of the Collateral into
the name of its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Pledgee of any amount due or
to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or
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renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with
respect thereto,
(iv) endorse any checks, drafts, or other writings in
the Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral,
and
(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, instruments of conveyance
or transfer with respect to all or any of the Collateral.
(c) The Pledgee may exercise in respect of the Account Funds,
in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in the
State of Illinois (whether or not same applies to the Account Funds).
SECTION 6.2 Securities Laws. If the Pledgee shall exercise its right to
sell all or any of the Certificate Collateral pursuant to Section 6.1, the
Pledgor agrees that, upon request of the Pledgee, the Pledgor will, at its own
expense do or cause to be done all such acts and things as may be necessary to
make such sale of the Certificate Collateral owned by the Pledgor or any part
thereof valid and binding and in compliance with applicable law.
SECTION 6.3 Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Pledgee, the Valuation Agent and the Custodian from and
against any and all claims, losses, and liabilities arising out of or resulting
from this Pledge Agreement (including enforcement of this Pledge Agreement)
except claims, issues or liabilities of the Custodian and the Valuation Agent
resulting from the Custodian's or the Valuation Agent's gross negligence or
wilful misconduct. Upon demand, the Pledgor will pay to the Pledgee, the
Valuation Agent and Custodian the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and agents, which the Pledgee, the Valuation Agent or Custodian may
incur in connection with:
(a) the administration of this Pledge Agreement;
(b) the custody, preservation, use, or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral;
(c) the exercise or enforcement of any of its rights
hereunder; or
(d) the failure by the Pledgor to perform or observe any of
the provisions hereof.
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SECTION 6.4 Fees of Custodian and Valuation Agent. The Pledgor agrees
to pay the Valuation Agent fees in accordance with the terms of the Trustee Fee
Agreement and the fees of the Custodian in the amount of $1,500 per annum during
the term of this Pledge Agreement, payable annually in advance commencing on the
effective date of this Pledge Agreement.
ARTICLE VII
THE CUSTODIAN
SECTION 7.1 Custodian Appointed Attorney-in-Fact and Agent.
(a) The Pledgor hereby irrevocably appoints the Custodian the
Pledgor's attorney-in-fact, with full authority in the place and stead
of the Pledgor and in the name of the Pledgor or otherwise, from time
to time during which an Event of Default described in Section 6.1
exists (the Custodian being entitled to rely upon a notice from Pledgee
that such Event of Default exists) or upon the Pledgor's failure to
comply with the Collateral Requirement in accordance with the terms
hereof, to take any action and to execute any instrument as directed by
the Pledgee to accomplish the purposes of this Pledge Agreement with
respect to the Account Funds, including without limitation:
(i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of the
Account Funds;
(ii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in connection
with clause (a) above; and
(iii) to file any claims or take any action or
institute any proceedings as directed by the Pledgee for the
collection of any of the Account Funds or otherwise to enforce
the rights of the Custodian with respect to any of the Account
Funds.
The Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.
(b) The Pledgee hereby appoints the Custodian as the Pledgee's
agent for retaining physical possession of the Account Funds in
accordance with the terms of this Pledge Agreement. All Account Funds
shall be segregated from all other property, including, without
limitation, that of the Pledgor and the Pledgee.
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SECTION 7.2 Custodian May Perform. If the Pledgor fails to perform any
agreement contained herein with respect to the Account Funds, the Custodian may
itself perform, or cause performance of, such agreement, and the expenses of the
Custodian incurred in connection therewith shall be payable by the Pledgor
pursuant to Section 6.3.
SECTION 7.3 No Duty.
(a) The powers conferred on the Custodian hereunder are solely
to protect the interests of the Pledgee in the Account Funds, and shall
not impose any duty on it to exercise any such powers. Except for
reasonable care of any Account Funds in its possession by the Custodian
and the accounting by the Custodian for moneys actually received by it
hereunder, the Custodian shall not have any duty as to any Account
Funds or responsibility for taking any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Account Funds.
(b) Notwithstanding anything to the contrary, the Custodian
shall have no duties, obligations or responsibilities except as
expressly set forth in this Pledge Agreement. Except as set forth in
this Pledge Agreement, the Custodian shall have no fiduciary duty,
obligation or responsibility in respect of any party hereto or any
indirect beneficiary of this Pledge Agreement or the Account Funds.
SECTION 7.4 Reasonable Care. The Custodian is required to exercise
reasonable care in the custody and preservation of any of the Account Funds in
its possession; provided, however, the Custodian shall be deemed to have
exercised reasonable care in the custody and preservation of any of the Account
Funds, if it takes such action for that purpose as the Pledgor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Event of Default described in Section 6.1, but failure of the
Custodian to comply with any such request at any time shall not in itself be
deemed a failure to have exercised reasonable care but shall be used as a factor
in determining whether the Custodian has exercised reasonable care. The
Custodian agrees to exercise the same degree of care as customarily exercised by
the Custodian generally when acting in such capacity for similar property in
exercising its duties under this Pledge Agreement.
SECTION 7.5 Successor Custodian. At any time, the Pledgor shall have
the right to appoint a successor custodian to replace LaSalle National Bank (or
any successor Custodian) as the Custodian hereunder, so long as such successor
custodian is approved by the Pledgee and SELCO, each of which approval shall not
be unreasonably withheld. The Pledgor shall give the Custodian at least 30 days'
prior written notice of the appointment and approval of a successor custodian.
At any time, the Custodian shall have the right to resign as Custodian by giving
the Pledgor and the Pledgee at least 30 days' prior written notice. Prior to the
date of the Custodian's resignation, the Pledgor shall notify the Custodian of
the successor custodian appointed by the Pledgor and approved by the Pledgee and
SELCO. Upon such appointment of
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a successor custodian, such custodian shall succeed to the rights, powers and
duties of the Custodian, and the term "Custodian" shall mean successor custodian
effective upon such appointment and approval, and the former Custodian's rights,
powers and duties as the Custodian shall be terminated, without any other or
further act or deed on the part of such former Custodian or any of the parties
to this Pledge Agreement.
ARTICLE VIII
THE VALUATION AGENT
SECTION 8.1 Successor Valuation Agent. At any time, the Pledgor shall
have the right to appoint a successor valuation agent to replace Wilmington
Trust Company (or any successor Valuation Agent) as the Valuation Agent
hereunder, so long as such successor valuation agent is approved by the Pledgee
and SELCO, each of which approval shall not be unreasonably withheld. The
Pledgor shall give the Valuation Agent at least 30 days' prior written notice of
the appointment and approval of a successor valuation agent. At any time, the
Valuation Agent shall have the right to resign as Valuation Agent by giving the
Pledgor and the Pledgee at least 30 days' prior written notice. Prior to the
date of the Valuation Agent's resignation, the Pledgor shall notify the
Valuation Agent of the successor valuation agent appointed by the Pledgor and
approved by the Pledgee and SELCO. Upon such appointment of a successor
valuation agent, such valuation agent shall succeed to the rights, powers and
duties of the Valuation Agent, and the term "Valuation Agent" shall mean
successor valuation agent effective upon such appointment and approval, and the
former Valuation Agent's rights, powers and duties as the Valuation Agent shall
be terminated, without any other or further act or deed on the part of such
former Valuation Agent or any of the parties to this Pledge Agreement.
SECTION 8.2 No Duty. Notwithstanding anything to the contrary, the
Valuation Agent shall have no duties, obligations or responsibilities except as
expressly set forth in this Pledge Agreement. Except as set forth in this Pledge
Agreement the Valuation Agent shall have no fiduciary duty, obligation or
responsibility in respect of any party hereto or any indirect beneficiary of
this Pledge Agreement or the Collateral.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Operative Document. This Pledge Agreement is an Operative
Document executed pursuant to the Lease and shall (unless expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions of the Lease.
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SECTION 9.2 Successors, Transferees and Assigns. This Pledge Agreement
shall be binding upon the Pledgor and its successors, transferees and assigns
and shall inure to the benefit of and be enforceable by the Pledgee and its
successors and permitted assigns. Except as provided in the Lessor Pledge
Agreement, without the express written consent of the Pledgor, which shall not
be unreasonably withheld, the Pledgee shall not have the right to assign this
Pledge Agreement to any person or entity which is not the Lessor under the
Lease.
SECTION 9.3 Amendments, etc. No amendment to or waiver of any provision
of this Pledge Agreement, nor consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that
any such amendment or waiver shall be consented to by SELCO, which consent shall
not be unreasonably withheld.
SECTION 9.4 Protection of Collateral. The Pledgee may from time to
time, at its option, perform any act which the Pledgor agrees hereunder to
perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default described
in Section 6.1) and the Pledgee may from time to time take any other action
which the Pledgee reasonably deems necessary for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.
SECTION 9.5 Addresses for Notices. All notices, demands, requests,
consents, approvals and other communications hereunder shall be in writing
(including by facsimile) and directed (a) in the case of the Pledgee or the
Pledgor, to the respective address or facsimile number described in, and deemed
received in accordance with the provisions of, Section 33.4 of the Lease, (b) in
the case of the Valuation Agent, to Wilmington Trust Company, 1100 North Market
Street, Wilmington, Delaware 19890-0001, facsimile number (302) 427-4605,
telephone number (302) 651-1913, Attention: Custody Department and (c) in the
case of the Custodian, to LaSalle National Bank, 135 S. LaSalle Street, Suite
1960, Chicago, Illinois, 60603, facsimile number (312) 904-2236, telephone
number (312) 904-2970, Attention: Erik Benson, Corporate Trust Officer;
provided, however, that all such notices and other communications given by one
by party hereto to another in connection with this Pledge Agreement shall be
given to all other parties hereto.
SECTION 9.6 No Waiver; Remedies. No failure on the part of the Pledgee
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
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SECTION 9.7 Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 9.8 Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 9.9 Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. FOR
PURPOSES OF THE CREATION AND PERFECTION OF THE SECURITY INTEREST GRANTED UNDER
THIS PLEDGE AGREEMENT WITH RESPECT TO THE COLLATERAL AND ACCOUNT FUNDS, SUCH
MATTERS SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF DELAWARE AND THE STATE OF ILLINOIS, RESPECTIVELY.
SECTION 9.10 Waiver of Jury Trial. THE PLEDGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS PLEDGE AGREEMENT. THE PLEDGOR ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PLEDGEE ENTERING INTO THE LEASE.
SECTION 9.11 Execution in Counterparts. This Pledge Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 9.12 [Intentionally omitted].
SECTION 9.13 Replacement of Issuing Bank; Replacement of Certificate B.
(a) The parties hereto hereby agree that if, at any time, (a)
Fleet National Bank or a successor provider of the Certificate B cannot
continue to provide the Certificate B or fails to maintain a rating of
"A" (or an equivalent thereto) or better with a nationally recognized
rating agency, or (b) the Pledgor and the Pledgee agree that another
provider of the Certificate B would be more satisfactory to their
needs, the parties shall, at Pledgor's cost and expense, arrange for a
substitute financial institution with a rating
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meeting such standard to issue an investment certificate bearing
interest at a rate no less than that of the Certificate B and having
the same maturity date of the Certificate B.
(b) The Pledgor shall provide to the Pledgee at the time of
delivery of any replacement Certificate B a Responsible Employee's
Certificate whereby a Responsible Employee shall certify that the
Pledgor is solvent as of such date. Upon receipt by the Pledgee of the
aforementioned Responsible Employee's Certificate and the replacement
Certificate B, the Pledgee shall transfer to the Pledgor the original
Certificate B (or a replacement provided pursuant to Section 9.13(a))
in the manner so instructed by the Pledgor . The parties hereto agree
that all references in this Pledge Agreement to the Certificate B shall
include any replacement thereof in accordance with the terms hereof and
all security interests and rights granted hereunder with respect to the
original Certificate B shall apply to any replacement Certificate B.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
BROOKDALE LIVING COMMUNITIES
OF NEW MEXICO - SF, INC.,
as Pledgor
By:
Name:
Title:
THE PDL BUSINESS TRUST, as Pledgee
By Wilmington Trust Company, not in its
individual capacity but solely as trustee
under the Trust Agreement
By:
Name:
Title:
WILMINGTON TRUST COMPANY,
as Valuation Agent
By:
Name:
Title:
<PAGE>
LASALLE NATIONAL BANK, as
Custodian
By:
Name:
Title:
ACKNOWLEDGED AND AGREED TO BY:
SELCO SERVICE CORPORATION
By: ________________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO PLEDGE AGREEMENT
[Copy of Certificate B]
Loan No. 98-674
HAZARDOUS SUBSTANCE
INDEMNIFICATION AGREEMENT
This HAZARDOUS SUBSTANCE INDEMNIFICATION AGREEMENT ("Indemnity") is
made as of the 14th day of October, 1998, by Brookdale Living Communities of New
Mexico-SF, Inc., a corporation organized and existing under the laws of
Delaware, whose address is c/o Brookdale Living Communities, Inc., 77 West
Wacker Drive, Suite 4400, Chicago, Illinois 60601 ("Operator"), and Brookdale
Living Communities, Inc., a corporation organized and existing under the laws of
Delaware whose address is 77 West Wacker Drive, Suite 4400, Chicago, Illinois
60601, Attention: Darryl W. Copeland, Jr. ("Parent"). Operator and Parent are
hereinafter collectively referred to as "Indemnitors" and each individually as
an "Indemnitor") to and in favor of HELLER FINANCIAL, INC., a Delaware
corporation, with a mailing address at 500 West Monroe Street, 30th Floor,
Chicago, Illinois 60661 (HELLER FINANCIAL, INC. and its successors and assigns
are hereinafter collectively referred to as "Lender").
RECITALS
A. Substantially contemporaneously herewith, Lender is entering into a
financing transaction ("Loan") with The PDL Business Trust, a Delaware business
trust ("Borrower"), which Loan is evidenced by a certain Fixed Rate Program
Promissory Note Secured by Mortgage ("Note") in the principal amount of TWELVE
MILLION TWO HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($12,250,000) of even
date herewith executed and delivered by Borrower, as maker, to the order of
Lender, as payee, secured by, inter alia, a Ground Leasehold Mortgage,
Assignment of Rents and Security Agreement and Fixture Filing of even date
herewith ("Ground Lease Mortgage") encumbering certain real property located in
Santa Fe, New Mexico and more fully described on Exhibit A attached hereto and
incorporated herein ("Land") (the Note, the Ground Lease Mortgage, and any other
documents evidencing or securing the Loan or executed in connection therewith,
and any modification, renewal, or extension thereof are hereinafter collectively
referred to as the "Borrower Loan Documents"). Substantially contemporaneously
herewith, Borrower and Operator are entering into a lease (the "Operator Lease")
of the Property (as defined in the Ground Lease Mortgage) pursuant to which
Operator will operate, manage and maintain the Property. In connection
therewith, Operator has executed a guaranty of certain obligations of Borrower
under the Borrower Loan Documents ("Guaranty") which Guaranty is secured by a
Sub-Leasehold Mortgage, Assignment of Rents and Security Agreement and Fixture
Filing ("Sub-Leasehold Mortgage") against Operator's interest in the Property
under the Operator Lease. The Guaranty, this Indemnity and all other documents
executed by Operator which evidence or secure the Guaranteed Obligations (as
defined in the Guaranty) are collectively referred to as the "Guaranty
Documents".
B. Lender has required this Indemnity as a condition of Lender's
disbursing the Loan and accepting the Guaranty.
C. Parent owns all of the outstanding stock of Operator, and it is in
each of Parent's and Operator's direct financial interest and benefit to induce
Lender to make the Loan by executing and delivering this Indemnity.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Indemnity.
Each Indemnitor hereby agrees, jointly and severally, unconditionally,
absolutely and irrevocably, to indemnify, defend (with counsel reasonably
acceptable to Lender and at Indemnitor's sole cost) and hold harmless Lender and
its officers, directors, employees, shareholders, agents and affiliates
(collectively the "Lender's Group"), against and in respect of any and all
liabilities, obligations, deficiencies, demands, claims, actions, or causes of
action, assessments, losses, costs, expenses (including, without limitation,
court costs and reasonable attorneys' fees and expenses), interest, fines,
penalties, actual and punitive damages, and all costs and expenses of any and
all investigations, remedial measures, proceedings, arbitrations, mediations,
judgments, settlements, and compromises whatsoever (collectively the
"Liabilities") sustained or incurred by Lender's Group resulting from or arising
out of or by virtue of a claim made by any party resulting from:
(a) The presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, disposal (whether arranged or otherwise) or
release from, the Land into or upon any land, the atmosphere, or any
watercourse, body of water or wetland, of any "Hazardous Materials" (as
hereinafter defined).
(b) Any failure of the Land, any improvements located thereon or activities
thereon to comply with all applicable "Environmental Laws" (as
hereinafter defined).
(c) Any personal injury relating to the presence of any Hazardous Materials
on or from the Land or the improvements located thereon.
The term "Environmental Laws" shall include any federal, state or local
laws or regulations relating to health, safety or protection of the environment.
The term "Hazardous Materials" shall include Hazardous Substances, as defined by
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.9601 et seq., any petroleum or petroleum products, asbestos or
asbestos containing material, or any other hazardous substances, hazardous
wastes or hazardous materials as defined by other Environmental Laws.
Notwithstanding anything contained herein to the contrary, the
Indemnitors shall not be responsible for indemnifying or holding Lender harmless
from and against Liabilities incurred in connection with or as a result of, any
of the matters described in clauses (a) through (c) above inclusive to the
extent: (A) that such Liabilities result from Hazardous Materials being placed
on, above or under, or emitted from, the Land and/or improvements located
thereon, (i) by Lender or its agents or (ii) subsequent to (and not resulting
from any condition existing prior to) Indemnitors vacating, and relinquishing
possession and control of, the Property and Lender or any successor in title to
Borrower (other than Indemnitors or any of their respective affiliates) as a
foreclosure purchaser or designee of Lender taking actual possession of, or
title to, the Property; or (B) as long as necessary, and only to the extent
necessary for the indemnification herein contained to be effective and
enforceable, this agreement to indemnify Lender shall not extend to liability,
claims, damages, losses or expenses arising out of: (1) the preparation or
approval of maps, drawings, opinions, reports, surveys, change orders, designs
or specifications by the Lender or the agents or employees of the Lender; or (2)
the giving of or the failure to give directions or instructions by the Lender or
the agents or employees of the Lender, where such giving or failure to give
directions or instructions is the primary cause of bodily injury to persons or
damage to property. As used herein, the term "Property" shall mean "Property" as
defined in the Ground Lease Mortgage.
2. Indemnification Procedure.
(a) Notice. Each Indemnitor shall notify Lender promptly (and in any event
within 10 business days) upon receipt of any inquiry, notice, claim,
charge, cause of action or demand pertaining to the matters indemnified
under Paragraph 1 above, including, without limitation, any notice of
inspection, abatement or noncompliance, stating the nature and basis of
such inquiry or notification. For identical notices from different
Indemnitors, only one such notice needs to be provided to Lender. Each
Indemnitor shall promptly deliver to Lender any and all documentation
or records as Lender may reasonably request in connection with such
notice or inquiry and shall keep Lender advised of any subsequent
developments. If any person or entity entitled to indemnification under
this Indemnity ("Indemnified Party") asserts a claim for
indemnification or receives notice of the assertion of any claim or of
the commencement of any action or proceeding against such Indemnified
Party, Indemnified Party shall give written notice together with a
statement of any available information regarding such claim to
Indemnitors within 30 days after learning of such claim or within such
shorter time as may be necessary to give Indemnitors a reasonable
opportunity to respond to such claim. Indemnitors shall have the right,
upon written notice to Indemnified Party within 30 days after receipt
from Indemnified Party of notice of such claim, to conduct at
Indemnitors' expense the defense against such claim in Indemnitors' own
name, or if necessary in the name of Indemnified Party with counsel
acceptable to Indemnified Party.
(b) Effect of Failure to Give Notice. If Indemnitors shall fail to give
such notice to defend set forth in Paragraph 2.(a), Indemnitors shall
be deemed to have elected not to conduct the defense of the subject
claim, and in such event, Indemnified Party shall have the right to
conduct such defense in good faith and to compromise and settle the
claim without the prior consent of Indemnitors, and Indemnitors will be
liable for all costs, expenses, settlement amounts or other Liabilities
paid or incurred in connection therewith.
(c) Parties to Cooperate. If Indemnitors elect to conduct the defense of
the subject claim, Indemnified Party will cooperate with and make
available to Indemnitors such assistance and materials as may be
reasonably requested by Indemnitors, all at the expense of Indemnitors,
and Indemnified Party shall have the right at Indemnitors' expense to
participate in the defense assisted by counsel provided in accordance
with Paragraph 2(a), provided that Indemnified Party shall have the
right to compromise and settle the claim only with the prior consent of
Indemnitors, which consent shall not be unreasonably withheld or
delayed. Without the prior written consent of Indemnified Party,
Indemnitors will not enter into any settlement of any claim or cease to
defend against a claim, if pursuant to or as a result of such
settlement or cessation, (i) injunctive or other equitable relief would
be imposed against Indemnified Party, or (ii) such settlement or
cessation would lead to liability or create any financial or other
obligation on the part of the Indemnified Party for which Indemnified
Party is not entitled to indemnification hereunder. Indemnitors shall
not be entitled to control, and Indemnified Party shall be entitled to
have sole control over, the defense or settlement of any claim to the
extent that claim seeks an order, injunction or other equitable relief
against Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of Indemnified Party (and the cost of such
defense shall constitute an amount for which Indemnified Party is
entitled to indemnification under this Indemnity). If a firm decision
is made to settle a claim, which offer Indemnitors are permitted to
settle under this Paragraph 2.(c), and Indemnitors desire to accept and
agree to such offer, Indemnitors will give written notice to
Indemnified Party to that effect. If Indemnified Party fails to consent
to such firm offer within 30 calendar days after such notice is given
as provided herein, Indemnified Party may continue to contest or defend
such claim and, in such event, the maximum liability of Indemnitors as
to such claim will not exceed the amount of such settlement offer, plus
costs and expenses paid or incurred by Indemnified Party through the
end of such 30 day period.
(d) Effect of Judgment. Any judgment entered or settlement agreed upon in
the manner provided herein shall be binding upon Indemnitors, and shall
conclusively be deemed to be an obligation with respect to which
Indemnified Party is entitled to prompt indemnification hereunder.
(e) Failure to Give Timely Notice. A failure by an Indemnified Party to
give timely, complete or accurate notice as provided in Paragraph 2.(c)
will not affect the rights or obligations of any party hereunder except
and only to the extent that, as a result of such failure, any party
entitled to receive such notice was deprived of its right to recover
any payment under its applicable insurance coverage or was otherwise
directly and materially damaged as a result of such failure to give
timely notice.
(f) Reduction of Loss. To the extent any Liabilities of an Indemnified
Party are reduced by receipt of payment (i) under insurance policies
which are not subject to retroactive adjustment or other reimbursement
to the insurer in respect of such payment, or (ii) from third parties
not affiliated with the Indemnified Party, such payments (net of the
expenses of the recovery thereof) (such net payment being referred to
herein as a "Reimbursement") shall be credited against such
Liabilities; provided, however, (y) the pendency of such payments shall
not delay or reduce the obligation of Indemnitors to make payment to
Indemnified Party in respect of such Liabilities, and (z) Indemnified
Party shall have no obligation, hereunder or otherwise, to pursue
payment under or from any insurer or third party in respect of such
Liabilities. If any Reimbursement is obtained subsequent to payment by
any Indemnitors in respect to any Liabilities, such Reimbursement shall
be promptly paid over to such Indemnitor.
(g) Subrogation. Indemnitors shall be subrogated to Indemnified Party's
rights of recovery to the extent of any Liabilities satisfied by
Indemnitors. Indemnified Party shall execute and deliver such
instruments and papers as are necessary to assign such rights and
assist in the exercise thereof.
3. Survival.
Subject to the provisions of the last paragraph of Paragraph 1 hereof,
the provisions of and undertakings and indemnification set out in this Indemnity
shall continue in full force and effect and shall survive the satisfaction,
termination, suspension or cancellation of the indebtedness evidenced by the
Note, the release of the Ground Lease Mortgage, the acceptance by Lender of a
deed in lieu of foreclosure with respect to the Land, a foreclosure of the Land
and/or the exercise by Lender of any of its rights under any Loan Document. This
Indemnity shall be continuing, irrevocable and binding on each of the
Indemnitors, jointly and severally, and their respective successors and assigns,
and shall inure to the benefit of Lender. Indemnitors' obligations hereunder may
not be assigned. The dissolution of an Indemnitor shall not affect this
Indemnity or any of Indemnitors' obligations hereunder.
4. Controlling Provisions.
The provisions of this Indemnity shall govern and control over any
inconsistent provision of any other Borrower Loan Document or Guaranty Document,
including, without limitation, Paragraph 10 of the Note, Section 5.13 of the
Guaranty and any other exculpatory or non-recourse provisions.
5. Waivers.
Each Indemnitor hereby waives notice of the following events or
occurrences: (a) Lender's acceptance of this Indemnity; (b) any Indemnitor's
heretofore, now or at any time or times hereafter, granting to Lender of
security interests, liens or encumbrances in any of such Indemnitor's assets or
Lender's heretofore, now or from time to time hereafter obtaining, amending,
substituting for, releasing, waiving or modifying any such security interests,
liens or encumbrances; (c) Lender's heretofore, now or at any time or times
hereafter, obtaining, releasing, waiving or modifying the Ground Lease Mortgage
or the Sub-Leasehold Mortgage or any other lien or encumbrance in any other
party's assets given to Lender to secure the Note, the Guaranty or this
Indemnity; (d) Lender's heretofore, now or at any time or times hereafter,
amending or modifying any of the Borrower Loan Documents or the Guaranty
Documents other than this Indemnity; and (e) presentment, demand, notices of
default, non-payment, partial payment and protest, and all other notices or
formalities to which any Indemnitor may be entitled except as otherwise provided
herein or in any of the other Guaranty Documents or the Borrower Loan Documents.
Indemnitors agree that Lender heretofore, now or at any time or times hereafter,
may do any or all of the foregoing in such manner, upon such terms and at such
times as Lender, in its sole and absolute discretion, deems advisable, without
in any way, manner or respect impairing, affecting, reducing or releasing
Indemnitor from its obligations hereunder and Indemnitors hereby consent to each
and all of the foregoing events or occurrences.
6. Notice.
Any notice to Parent or Operator provided for herein shall be given by
mailing such notice by Federal Express or any other overnight carrier addressed
to Parent and Operator at Parent's address stated above marked "Attention:
Darryl W. Copeland, Jr." or at such other address as Parent may designate by
notice to Lender as provided herein. A copy of any such notice to Operator or
Parent shall be delivered concurrently to each of the following by Federal
Express or any other overnight courier: Brookdale Living Communities, Inc., 77
West Wacker Drive, Suite 4400, Chicago, Illinois 60601, Attention: Robert J.
Rudnik, Esquire; and Douglas E. Wambach, Burke, Warren, MacKay & Serritella,
P.C., 330 North Wabash Avenue, 22nd Floor, Chicago, Illinois 60611. Any notice
provided for herein shall be deemed to have been given to Parent and Operator on
the first business day following such mailing in the manner designated herein.
Any notice to Lender shall be given as set forth in the Sub-Leasehold Mortgage.
7. Governing Law.
This Indemnity shall be governed by the internal laws of the State of
Illinois.
8. Jury Trial Waiver.
EACH INDEMNITOR, AND LENDER BY ITS ACCEPTANCE OF THIS INDEMNITY, HEREBY
WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS INDEMNITY AND THE BUSINESS
RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY MADE BY EACH INDEMNITOR AND BY LENDER, AND INDEMNITOR AND LENDER
EACH ACKNOWLEDGE THAT NEITHER OF THEM NOR ANY PERSON ACTING ON BEHALF OF EITHER
OF THEM HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.
EACH INDEMNITOR AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT
TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH INDEMNITOR AND LENDER HAVE
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS INDEMNITY AND THAT EACH OF
THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH
INDEMNITOR AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED (OR
HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS INDEMNITY AND
IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
9. Severability.
If any provision of this Indemnity or the application thereof to any
party or circumstance is held invalid or unenforceable, the remainder of this
Indemnity and the application of such provision or provisions to the other
parties and circumstances will not be affected thereby, the provisions of this
Indemnity being severable in any such instance.
10. Limitation of Liability.
No officer, director, shareholder, agent or representative of Parent
shall be personally liable for any amount due or claim made by any Indemnified
Party under this Indemnity.
[next page is signature page]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Hazardous
Substance Indemnification Agreement as of the date first written above.
PARENT:
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation
By____________________________
Name__________________________
Title_________________________
OPERATOR:
BROOKDALE LIVING COMMUNITIES OF NEW MEXICO-SF, INC., a Delaware corporation
By____________________________
Name__________________________
Title_________________________
Acknowledged and Accepted:
HELLER FINANCIAL, INC.
By:_________________________
Its:_______________________
<PAGE>
ACKNOWLEDGMENT
STATE OF ILLINOIS)
) SS
COUNTY OF COOK
I, ______________________________, a Notary Public in and for said
County, in the State aforesaid, DO HEREBY CERTIFY that
_____________________________, who is personally known to me to be the
____________ President and ___________ Secretary of Brookdale Living
Communities, Inc., a Delaware corporation, and the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person,
and acknowledged that he/she signed and delivered the said instrument as
____________ President and ___________ Secretary of said corporation and that
the said ___________ Secretary then and there caused the corporate seal of said
corporation to be affixed thereto, pursuant to authority given by the Board of
Directors of said corporation, as (his/her) own free and voluntary act and as
the free and voluntary act of said corporation, for the uses and purposes
therein set forth.
GIVEN under my hand and Notarial Seal this ____ day of October, 1998.
-------------------------------------
Notary Public
My Commission Expires:
- ----------------------
<PAGE>
ACKNOWLEDGMENT
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, ______________________________, a Notary Public in and for said
County, in the State aforesaid, DO HEREBY CERTIFY that
_____________________________ and _______________________________, who are
personally known to me to be the ____________ President and ___________
Secretary of Brookdale Living Communities of New Mexico-SF, Inc., a Delaware
corporation, and the same persons whose names are subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that they
signed and delivered the said instrument as ____________ President and
___________ Secretary of said corporation and that the said ___________
Secretary then and there caused the corporate seal of said corporation to be
affixed thereto, pursuant to authority given by the Board of Directors of said
corporation, as (his/her) own free and voluntary act and as the free and
voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and Notarial Seal this ____ day of _____________,
1998.
-----------------------------------
Notary Public
My Commission Expires:
- ----------------------
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
Parcel I
A tract of land within The City and County of Santa Fe, New Mexico, more
particularly described as follows:
Beginning at a cross in concrete on the southerly R.O.W. line of Alta Vista
Street, from whence the center of the sanitary sewer manhole No. C11a-5 bears
North 40 deg. 00' West, 10.36 feet; thence, from said point and place of
beginning, along said south R.O.W. line South 73 deg. 22' 25" East, 244.89 feet
to a cross in concrete; thence leaving said south R.O.W. line, South 16 deg. 35'
50" West, 571.58 feet to a capped rebar; thence, North 84 deg. 26' 50" West,
249.54 feet to a capped rebar; thence North 16 deg. 36" East, 619.41 feet to the
true point and place of beginning.
All as shown on plat of survey entitled "ALTA/ACSM land title survey prepared
for Ponce de Leon Limited Partnership 640 Alta Vista Street, City of Santa Fe,
Santa Fe County, New Mexico" recorded on July 31, 1998 as Document No. 1035,001
in Plat Book 392, page 11, and re-recorded in Plat Book 397, Page 009, as
Reception No. 1044,176, records of Santa Fe County, New Mexico.
Parcel II
Together with that certain non-exclusive 30 foot entrance easement for ingress
and egress as created by the dedication thereof and as shown on that certain
plat entitled Survey For Escuela Replat of Tract "A" Into Tract "A1" and Tract
"A2" For Ponce De Leon Project 610 Alta Vista, Santa Fe , New Mexico, filed
December 18, 1995, and recorded in Plat Book 160, Page 18, records of Santa Fe
County, New Mexico, (subject to all applicable terms, provisions and ordinances
relating thereto.)
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), made as of October 14,
1998, from BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation, having an
office at 77 West Wacker Drive, Suite 4400, Chicago, Illinois 60601, Attention:
Darryl W. Copeland, Jr., Telefax Number (312) 977-3699 (the "Guarantor") to
WILMINGTON TRUST COMPANY, a Delaware banking corporation (the "Trustee") having
an office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, SELCO SERVICE CORPORATION, an Ohio corporation ("SELCO") having an
office at c/o KeyCorp Leasing, 54 State Street, Albany, New York 12207,
Attention: John State, Telefax Number (303) 245-1452 and BANK HAPOALIM B.M., a
bank chartered under the laws of Israel, acting through its San Francisco Branch
("BH"), having an office at 250 Montgomery Street, Suite 700, San Francisco,
California, 94104, Attention: Dan Jozefov, Telefax Number (415) 989-9948
(together with its successors and assigns pursuant to Section 9 hereof).
RECITALS
WHEREAS, pursuant to a Trust Agreement dated as of October 13, 1998
between the Trustee and SELCO (as modified and supplemented and in effect from
time to time, the "Trust Agreement"), The PDL Business Trust (the "Trust") is
being formed with an initial capital contribution made by SELCO to the Trust
(the "Capital Contribution");
WHEREAS, the Trust and Brookdale Living Communities of New Mexico - SF,
Inc. (the "Operator") are entering into a certain lease dated the date herewith
(the "Lease"), pursuant to which Operator shall manage and operate the Property;
WHEREAS, BH, as lender and the Trust, as borrower, are parties to a
Loan Agreement, dated as of the date hereof, pursuant to which BH is making a
loan to the Trust (the "B Loan");
WHEREAS, SELCO is unwilling to make the Capital Contribution, BH is
unwilling to make the B Loan, and Trustee is unwilling to serve as such, unless
Guarantor indemnifies each Indemnitee against certain liabilities, including
those arising under Environmental Laws (as herein defined), relating to the
property being financed in connection with the transactions contemplated by the
Operative Documents, which property consists of the leasehold interest in the
land more particularly described in the Heller Leasehold Mortgage and all
buildings, structures and other improvements now or hereafter situated on such
land (the "Facility") and from claims that may be imposed upon any Indemnitee by
third parties in connection with the Facility; and
NOW, THEREFORE, in consideration of the making of the Capital
Contribution by SELCO, the B Loan by BH, the Trustee's acceptance of its duties
under the Trust Agreement,
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<PAGE>
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:
Section 1. Defined Terms. Unless the context otherwise requires,
capitalized terms used but not otherwise defined herein shall have the meanings
provided therefore in the Lease, dated as of the date hereof, between the
Operator and the Trust (the "Lease") and the following terms shall have the
following meanings:
"After Tax Basis" shall have the meaning as set forth in the Lease.
"BH" is defined in the first paragraph of this Agreement.
"Environmental Claim" means any written request for information by a
Governmental Authority, or any written notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment, demand or other
written communication by any Person or Governmental Authority requiring,
alleging or asserting liability with respect to any Indemnitee (solely with
respect to matters arising at or involving the Facility), Operator or the
Facility, whether for damages, contribution, indemnification, cost recovery,
compensation, injunctive relief, investigatory, response, remedial or cleanup
costs, damages to natural resources, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, Use, Release or
threatened Release into the environment of any Hazardous Substance in violation
of any Environmental Law originating at or from, or otherwise affecting, the
Facility, (ii) any fact, circumstance, condition or occurrence forming the basis
of any violation, or alleged violation, of any Environmental Law by any
Indemnitee (solely with respect to matters arising at or involving the
Facility), Operator or otherwise affecting the Facility or (iii) any alleged
injury or threat of injury to health, safety or the environment by any
Indemnitee (solely with respect to matters arising at or involving the
Facility), Operator or otherwise affecting the Facility from actions which are
in violation of Environmental Laws.
"Environmental Laws" means any and all applicable federal, state, local
and foreign laws, rules, regulations or municipal ordinances each as amended
from time to time, and any Permits, approvals, licenses, registrations, filings
and authorizations, in each case as in effect as of the relevant date, relating
to the environment, health or safety, or the Release or threatened Release of
Hazardous Substances into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata or otherwise relating to the presence or Use of Hazardous
Substances.
"Environmental Reports" means the environmental audit reports, with
respect to the Facility, delivered to Lender prior to the date hereof and in
connection with the Loan, and any amendments or supplements thereto delivered to
Lender prior to the date hereof.
"Guarantor" has the meaning provided in the first paragraph of this
Agreement.
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<PAGE>
"Governmental Authority" means any national or federal government, any
state, regional, local or other political subdivision thereof and any Person
with jurisdiction exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substance" means, collectively, (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBs"), lead in
drinking water, and lead based paint, the presence, generation, use,
transportation, storage or disposal of or exposure to which (x) is regulated or
could lead to liability under any Environmental Law or (y) is subject to notice
or reporting requirements under any Environmental Law, (ii) any chemicals or
other materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants," "pollutants" or
words of similar import under any Environmental Law and (iii) any other chemical
or any other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
"Indemnitee" means the Trustee, BH, SELCO and their respective
successors, permitted assigns, directors, shareholders, partners, officers,
employees and agents.
"Operative Documents" shall have the meaning as set forth in the Lease.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, or any
other entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Substances through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata.
"SELCO" has the meaning provided in the first paragraph of this
Agreement.
"Trust" has the meaning provided in the Recitals to this Agreement.
"Trust Agreement" has the meaning provided in the Recitals to this
Agreement.
"Trustee" has the meaning provided in the first paragraph of this
Agreement.
"Use" means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous
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<PAGE>
Substance in violation of Environmental Laws or transportation to or from the
property of such Person of such Hazardous Substance in violation of
Environmental Laws.
Section 2. Indemnification.
(a) The Guarantor agrees to indemnify each Indemnitee in the same
manner and to the same extent as the Lessee has agreed to indemnify each
Indemnitee (as defined in the Lease) in Article XXVI of the Lease except with
respect to (i) any Claims (as defined in the Lease) which arise with respect to
any Environmental Claims or other environmental matters, it being understood
that Guarantor's indemnification obligations with respect to Environmental
Claims and other environmental matters shall be limited to the provisions set
forth herein without regard to any indemnification of Environmental Claims or
other environmental matters set forth in Article XXVI of the Lease and (ii) any
Basic Rent, Supplemental Rent, Shortfall Amount or any Claims for amounts
arising under Sections 26.6, 26.7, 26.8 or 26.9 of the Lease, it being
understood that Guarantor shall have no indemnification obligations with respect
to any Claims related thereto (the matters set forth in clauses (i) and (ii)
above being herein called the "Excluded Claims"). For purposes of enforcing and
interpreting the indemnity provided in this Section 2(a), the capitalized terms
contained in Article XXVI of the Lease shall have the meanings as set forth in
Appendix 1 to the Lease or as defined in Article XXVI of the Lease, as
applicable. Further, the Guarantor agrees to indemnify SELCO for all Claims of
whatever kind or nature arising in connection with (a) SELCO's agreement to
indemnify the Trustee pursuant to Section 6.5 of the Trust Agreement and (b) the
Trust's indemnification of the Lender pursuant to the Heller/Lessor
Indemnification, but not including any Excluded Claims.
(b) Subject to the limitations set forth in Section 14 hereof,
Guarantor agrees to indemnify, reimburse, defend (with counsel satisfactory to
each Indemnitee in each Indemnitee's reasonable discretion), and hold harmless
each Indemnitee, on an After-Tax Basis, for, from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties,
consequential damages, reasonable attorneys' fees, reasonable disbursements and
expenses, and reasonable consultants' fees, disbursements and expenses,
including costs of Remedial Work (collectively, "Losses"), asserted against,
resulting to, imposed on, or incurred by any Indemnitee, directly or indirectly
in connection with any of the following:
(i) events, circumstances, or conditions which are alleged to,
or do, form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous Substances at,
on, in, under or from the Facility, which presence, use or release
requires or could reasonably require Remedial Work;
(iii) any Environmental Claim against any Person whose
liability for such Environmental Claim Guarantor has or may have
assumed or retained either contractually or by operation of law;
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<PAGE>
(iv) the breach of any representation, warranty or covenant
set forth in Section 11 of the Heller Subleasehold Mortgage and Section
11 of the Heller Leasehold Mortgage; or
(v) any failure of Guarantor to fulfill each and every
obligation undertaken pursuant to this Agreement.
(c) Nothing in this Agreement shall be deemed to deprive any Indemnitee
of any rights or remedies provided to it elsewhere in this Agreement or in the
other Operative Document or otherwise available to it under law. Guarantor
waives and releases each Indemnitee from any rights or defenses Guarantor may
have under common law or Environmental Laws for liability arising from or
resulting from the presence, Use or Release of Hazardous Substances except to
the extent directly caused by the gross negligence, fraud or willful misconduct
of any Indemnitee.
(d) With respect to those matters for which Guarantor has agreed to
indemnify each Indemnitee hereunder, and to the maximum extent permitted by
applicable law, Guarantor waives and releases each Indemnitee from any rights or
defenses Guarantor may have under common law or Environmental Laws for liability
arising from or resulting from the presence, Use or Release of Hazardous
Substances except to the extent directly caused by the fraud, gross negligence
or willful misconduct of any Indemnitee.
Section 3. Payment. All payments due to any Indemnitee under this
Agreement shall be payable to such Indemnitee within ten (10) days after written
demand therefor, and shall bear interest at the Overdue Rate from the date such
payment is due until the date of payment.
Section 4. Governing Law.
(a) The parties agree that the State of New Mexico has a substantial
relationship to the parties and to the underlying transaction embodied hereby,
and in all respects, including, without limitation, matters of construction,
validity and performance, this Agreement and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State of
New Mexico applicable to contracts made and performed in such State and any
applicable law of the United States of America. To the fullest extent permitted
by law, Guarantor hereby unconditionally and irrevocably waives any claim to
assert that the law of any other jurisdiction governs this Agreement, and this
Agreement shall be governed by and construed in accordance with the laws of the
State of New Mexico.
(b) Any legal suit, action or proceeding against any Indemnitee or
Guarantor arising out of or relating to this Agreement shall be instituted in
any federal or state court in New York, New York, pursuant to ss. 5-1402 of the
New York General Obligations Law, and Guarantor waives any objection which it
may now or hereafter have to the laying of venue of any such suit, action or
proceeding, and Guarantor hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding. Guarantor does hereby designate
and appoint CT
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<PAGE>
Corporation Systems, 1633 Broadway, New York, New York 10016, as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of process upon said
agent at said address (or at such other office in New York, New York as such
agent shall designate in writing in accordance with the terms hereof) with a
copy of same to Guarantor in the manner hereinafter described and written notice
of said service of Guarantor mailed or delivered to Guarantor in the manner
provided herein shall be deemed in every respect effective service of process
upon Guarantor in any such suit, action or proceeding in the State of New York.
Guarantor (i) shall give prompt notice to each Indemnitee of any changed address
of its authorized agent hereunder, (ii) may at any time and from time to time
designate a substitute authorized agent with an office in New York, New York
(which office shall be designated as the address for service of process), and
(iii) shall promptly designate such a substitute if its authorized agent ceases
to have an office in New York, New York or is dissolved without leaving a
successor.
Section 5. Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or consent to any departure by Guarantor therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to or demand on Guarantor shall
entitle Guarantor to any other or future notice or demand in the same, similar
or other circumstances.
Section 6. Delay Not a Waiver. Neither any failure nor any delay on the
part of any Indemnitee in insisting upon strict performance of any term,
condition, covenant or agreement or exercising any right, power, remedy or
privilege hereunder, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, neither Indemnitee shall be deemed to have waived
any right either to require prompt payment when due of all other amounts due
under this Agreement, or to declare a default for failure to effect prompt
payment of any such other amount.
Section 7. Notices. All notices, consents, approvals and requests
required or permitted hereunder shall be given in writing and shall be effective
for all purposes if hand delivered or sent by (a) hand delivery, with proof of
attempted delivery, (b) certified or registered United States mail, postage
prepaid, (c) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or (d) by telecopier
(with answerback acknowledged) provided that such telecopied notice must also be
delivered by one of the means set forth in (a), (b) or (c) above, addressed if
to SELCO or BH at their respective addresses set forth on the first page hereof,
and if to Guarantor at its designated address set forth on the first page
hereof, or at such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section 7. A copy of all
notices, consents, approvals and requests directed
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<PAGE>
to Guarantor shall be delivered concurrently to each of the following: Brookdale
Living Communities of New Mexico - SF, Inc., 77 West Wacker Drive, Suite 4400,
Chicago, Illinois 60601, Attention: Darryl W. Copeland, Jr., Telefax Number
(312) 977-3699; Brookdale Living Communities of New Mexico - SF, Inc., 77 West
Wacker Drive, Suite 4400, Chicago, Illinois 60601, Attention: Robert J. Rudnik,
Esquire, Telefax Number (312) 977-3699; and Douglas E. Wambach, Burke, Warren,
MacKay & Serritella, P.C., 330 North Wabash Avenue, 22nd Floor, Chicago,
Illinois 60611, Telefax Number (312) 840-7900. A notice shall be deemed to have
been given: (a) in the case of hand delivery, at the time of delivery; (b) in
the case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; (c) in the case of expedited prepaid delivery upon
the first attempted delivery on a Business Day; or (d) in the case of
telecopier, upon receipt of answerback confirmation received prior to 5:00 p.m.
local time on a Business Day or if confirmation received thereafter on the next
succeeding Business Day, provided that such telecopied notice was also delivered
as required in this Section 7. A party receiving a notice which does not comply
with the technical requirements for notice under this Section 7 may elect to
waive any deficiencies and treat the notice as having been properly given.
Section 8. Trial by Jury. GUARANTOR AND EACH INDEMNITEE, TO THE FULLEST
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS AGREEMENT.
Section 9. Assignment. SELCO and BH shall have the right to assign this
Agreement and the obligations hereunder to any Institutional Lender (as defined
in the Lease), at any time. The Trustee shall have the right to assign this
Agreement and the obligations hereunder to any successor trustee of the Trust.
All references to each "Indemnitee" hereunder shall be deemed to include the
successors and assigns of each Indemnitee, including any trustee or servicer.
Section 10. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 11. Heading and Recitals. The information set forth in the
heading and recitals hereof are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.
Section 12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 13. Estoppel Certificates. Guarantor and the Indemnities each
hereby agree at any time and from time to time upon not less than 15 days prior
written notice by Guarantor or
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<PAGE>
the Indemnitees to execute, acknowledge and deliver to the party specified in
such notice, a statement, in writing, certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications,
that the same, as modified, is in full force and effect and stating the
modifications hereto), and stating whether or not, to the best knowledge of such
certifying party, there exists any matter giving rise to a claim under Section
2, and, if so, specifying each such matter; provided, however, that it shall be
a condition precedent to the Indemnitees obligation to deliver the statement
pursuant to this Section 13, that each Indemnitee shall have received, together
with Guarantor's request for such statement, an officer's certificate signed by
an authorized officer of Guarantor stating that to the best of Guarantor's
knowledge, no matter which could give rise to a claim under Section 2 exists as
of the date of such certificate (or specifying each such matter).
Section 14. Survival. This Agreement shall survive (in perpetuity) the
closing and disbursement of funds evidenced by the B Loan, the termination of
the Lease, reconveyance, discharge or foreclosure of the Heller Leasehold
Mortgage, conveyance by deed in lieu of foreclosure, transfer, and any
subsequent conveyance of the Facility. Notwithstanding the foregoing, Guarantor
shall not indemnify any Indemnitee with respect to any Losses incurred in
connection with, or as a direct result of, any or all of the matters described
above in Section 2(b)(i) through 2(b)(iv) to the extent that Guarantor can
establish directly and solely that such Losses result from Hazardous Substances
being placed on, above or under the Facility (a) by the affirmative act or gross
negligence of any Indemnitee or any employees, agents or bailees of any
Indemnitee or (b) subsequent to the termination of the Lease and return of the
Facility to Borrower or conveyance of the Facility as provided in Article XXIV
of the Lease.
Section 15. Time of the Essence. Time is of the essence with respect to
each and every covenant, agreement and obligation of Guarantor under this
Agreement.
Section 16. Liability. The liability of Guarantor under this Agreement
shall in no way be limited or impaired by (a) any amendment or modification of
the Operative Documents made in accordance therewith, (b) any extensions of time
for performance required by any of the Operative Documents, or (c) the release
and substitution in whole or in part, of any security for the B Loan or other
evidence of debt issued pursuant to the Operative Documents, and in any of such
cases, whether with or without notice to Guarantor and with or without
consideration.
Section 17. New Mexico Indemnification Law. To the extent, if at all,
N.M. Stat. Annot. ss. 56-7-1 (1978) applicable to this Agreement, this Agreement
shall not extend to the liability, claims, damages, losses, or expenses,
including attorney fees arising out of, with respect to the Property (a) the
preparation or approval of maps, drawings, opinions, reports, surveys, change
orders, designs or specifications by any Indemnitee, or the agents or employees
of the any Indemnitee or (b) the giving of or the failure to give directions or
instructions by any Indemnitee, or the agents or employees of any Indemnitee,
where such giving or failure to give directions or instructions is the primary
cause of bodily injury to persons or damage to property.
[Signature on the following page]
- 8 -
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Indemnity Agreement
to be duly executed by its duly authorized representative, all as of the day and
year first above written.
GUARANTOR:
BROOKDALE LIVING COMMUNITIES, INC., a
Delaware corporation
By: ____________________________
Name:
Title:
- 9 -
Loan No. 98-674
October 14, 1998
Heller Financial, Inc.
500 West Monroe Street
30th Floor
Chicago, IL 60661
Re: $12,250,000 Loan ("Loan") from Heller Financial, Inc.
("Lender") to The PDL Business Trust, a Delaware business
trust ("Borrower")
Ladies and Gentlemen:
Reference is hereby made to the above-referenced Loan
evidenced by that certain Fixed Rate Program Promissory Note Secured by Mortgage
of even date herewith made by Borrower to the order of Lender ("Note") and
secured by, among other things, that certain Ground Leasehold Mortgage,
Assignment of Rents and Security Agreement and Fixture Filing of even date
herewith ("Mortgage"). All capitalized terms used herein and not otherwise
defined shall have the same meanings ascribed to them in the Note and/or the
Mortgage.
Brookdale Living Communities of New Mexico-SF, Inc.
("Operator") is concurrently herewith entering into a lease of the Property from
Borrower, pursuant to which Operator will operate, manage and maintain the
Property. Operator is a wholly-owned subsidiary of the undersigned and has
guaranteed repayment of the Loan pursuant to a certain Guaranty of even date
herewith (the "Guaranty"). Said Guaranty is secured by a mortgage against the
interest of Operator in the Property under the aforesaid lease (the
"Sub-Leasehold Mortgage"). It is in the direct financial interest and to the
benefit of Parent to execute and deliver this letter agreement ("Agreement") to
Lender so as to induce Lender to make the Loan. Accordingly, the undersigned,
Brookdale Living Communities, Inc. ("Parent"), hereby agrees that Parent shall,
together with Borrower and Operator, be jointly and severally personally liable
to pay the following (collectively the "Retained Liabilities"):
all losses, damages, costs and expenses including reasonable
attorneys' fees and expenses incurred by Lender as a result of:
(i) the collection and receipt of proceeds and income from the Property and
the other assets and obligations securing the Loan by or for the
benefit of Borrower, Operator or Parent following an Event of Default
which are not paid to Lender or applied to the Property in the ordinary
course of business;
(ii) fraud;
(iii) material misrepresentation;
(iv) misapplication or misappropriation of funds which come into the
possession of Borrower, Operator or Parent;
(v) intentional and material waste to the Property;
(vi) the breach of the obligations set forth in the Hazardous Substance
Indemnification Agreement from Operator and Parent to Lender of even
date herewith, as hereafter amended, if at all;
(vii) the breach of the provisions contained in Paragraph 15 (transfers of
the property or beneficial interest in Borrower; assumption) of the
Mortgage or Paragraph 15 of the Leasehold Mortgage;
(viii) the breach of the provisions contained in Paragraph 16 (no additional
liens) of the Mortgage or the provisions of Paragraph 16 of the
Leasehold Mortgage; or
(ix) the breach of the provisions contained in Paragraph 17 (single asset
entity) of the Mortgage or the provisions of Paragraph 17 of the
Leasehold Mortgage; and
(b) any claim for any commissions on brokerage fees relating to the Loan.
The foregoing shall in no way limit or impair the enforcement
against the Property or any other security granted by the Loan Documents or the
Guaranty Documents as defined in the Leasehold Mortgage of any of the Lender's
rights and remedies pursuant to the Loan Documents or the Guaranty Documents as
defined in the Leasehold Mortgage.
Parent agrees that the liability of Parent shall be direct and
immediate as a primary and not a secondary obligation or liability, and is not
conditional or contingent upon the pursuit of any remedies against Borrower,
Operator or any other person, or against any collateral or liens held by Lender.
Parent waives any rights which it may have to require that (a) Lender first
proceed against Borrower, Operator or any other person or entity with respect to
the Retained Liabilities or (b) Lender first proceed against any collateral held
by Lender or (c) any party to be joined in any proceeding to enforce the
Retained Liabilities.
Parent hereby subordinates to Lender and agrees not to take
any action, until the Guaranty is cancelled by Lender, with respect to any
rights to enforce any remedy which Lender may have against Borrower or Operator,
any rights to participate in any security for the Loan and any rights of
indemnity, reimbursement, contribution or subrogation which Parent may have
against Borrower or Operator with respect to the Retained Liabilities.
Parent consents and agrees that Lender may at any time, and
from time to time, without notice to or further consent from any other person or
entity and either with or without consideration do any one or more of the
following, all without affecting the agreements contained herein or the
liability of any person or entity for the Retained Liabilities: (a) surrender
without substitution any property or other collateral of any kind or nature
whatsoever held by Lender, or by any person, firm or corporation on Lender's
behalf or for Lender's account, securing the Loan or the Guaranteed Obligations
or the Retained Liabilities; (b) modify the terms of any document evidencing,
securing or setting forth the terms of the Loan; (c) grant releases, compromises
and indulgences with respect to the Loan or the Retained Liabilities to
Borrower, Operator or Parent; or (d) take or fail to take any action of any type
whatsoever with respect to the Loan or the Retained Liabilities.
Parent hereby waives and agrees not to assert or take
advantage of any defense based upon:
The incapacity, lack of authority or disability of Borrower,
Operator or any other person or entity;
(b) The failure of Lender to commence an action against Borrower or
Operator to proceed against or exhaust any security held by Lender at
any time or to pursue any other remedy whatsoever at any time;
(c) Any duty on the part of Lender to disclose to Parent any facts Lender
may now or hereafter know regarding Borrower or Operator regardless of
whether Lender has reason to believe that any such facts materially
increase the risk beyond that which Parent intends to assume or has
reason to believe that such facts are unknown to Parent, Parent
acknowledging that it is fully responsible for being and keeping
informed of the financial condition and affairs of Borrower and
Operator;
(d) Except as specifically required by the Mortgage, the Guaranty or the
Leasehold Mortgage, lack of notice of default, demand of performance or
notice of acceleration to Borrower, Operator or any other party with
respect to the Loan or the Retained Liabilities;
(e) The consideration for this Agreement;
(f) Any acts or omissions of Lender which vary, increase or decrease the
risk on Parent;
(g) Any statute of limitations affecting the liability of Parent hereunder,
the liability of Borrower, Operator or any guarantor, if any, under the
Loan Documents, or the enforcement hereof, to the extent permitted by
law;
(h) The application by Borrower or Operator of the proceeds of the Loan for
purposes other than the purposes represented by Borrower or Operator to
Lender or intended or understood by Lender or Parent;
(i) An election of remedies by Lender, including any election to proceed
against any collateral by judicial or nonjudicial foreclosure, whether
real property or personal property, or by deed in lieu thereof, and
whether or not every aspect of any foreclosure sale is commercially
reasonable, and whether or not any such election of remedies destroys
or otherwise impairs the subrogation rights of Parent or the rights of
Parent to proceed against Borrower, Operator or any guarantor for
reimbursement, or both;
(j) Any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in any other aspects more
burdensome than that of a principal;
(k) Lender's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b) (2) of the
Federal Bankruptcy Code or any successor statute; and
(l) Any borrowing or any grant of a security interest under Section 364 of
the Federal Bankruptcy Code.
Parent covenants and agrees to provide to Lender a copy of its
financial statements prepared in accordance with generally accepted accounting
principles, certified by Parent to be a true and complete copy of such financial
statements and in form reasonably satisfactory to Lender, within sixty (60) days
of the end of each calendar year.
EACH OF PARENT AND LENDER BY ITS ACCEPTANCE OF THIS AGREEMENT,
HEREBY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT AND
THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY PARENT AND BY LENDER, AND EACH OF PARENT
AND LENDER ACKNOWLEDGE THAT NEITHER OF THEM NOR ANY PERSON ACTING ON BEHALF OF
EITHER OF THEM HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. EACH OF PARENT AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF PARENT AND LENDER
HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH OF PARENT AND LENDER FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT
AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL.
Parent further agrees that the provisions of this Agreement
shall bind each of Parent's successors and assigns, as the case may be.
Notwithstanding the provisions hereof to the contrary, by its
acceptance hereof, Lender, acknowledges and agrees that no shareholder, officer,
director, employee, agent or representative of Parent shall be personally liable
to Lender for any amount due under this Agreement except for (i) distributions
of rent or other proceeds of the Property, including insurance or condemnation
proceeds actually received (and only to the extent received) by such person,
after an Event of Default (as defined in the Leasehold Mortgage) occurs or
otherwise in violation of the Loan Documents or the Guaranty Documents (as
defined in the Mortgage) and (ii) Lender's costs of collection of such amount,
including reasonable attorneys' fees and costs.
[Signature on following page]
<PAGE>
Parent acknowledges that such Parent's execution and delivery
of this Agreement to Lender is a material inducement to Lender's making of the
Loan to Borrower.
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation
By____________________________________________________________
Name:_________________________________________________________
Title_________________________________________________________
Accepted this ____ day of
__________, 1998
Heller Financial, Inc.
By:_________________________
Name:_______________________
Title:________________________
