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): December 22, 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)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Brookdale Living Communities of California-RC, Inc.
("BLC-California-RC"), a subsidiary of Brookdale Living Communities, Inc. (the
"Company"), and The Woodside Business Trust, an unaffiliated third party (the
"Lessor"), entered into an operating lease (the "Lease"), dated as of December
18, 1998, pursuant to which BLC-California-RC leases from the Lessor a 274-unit
senior living facility located in Redwood City, California, known as The
Woodside Terrace (the "Facility"). As the lessee, BLC-California-RC has full use
of the Facility, including the revenue producing activity at the Facility, and
has retained the existing employee base at the Facility and the trade name and
other operating rights of the Facility. The Lease transaction, therefore, was a
"business" acquisition pursuant to Rule 11-01(d) of Regulation S-X. The Lease
constitutes an operating lease for financial reporting purposes. The initial
term of the Lease commenced on December 22, 1998 and expires on January 1, 2004.
BLC-California-RC has the option to renew the Lease for up to five (5) one-year
periods through January 1, 2009. Under the initial term of the Lease,
BLC-California-RC is obligated to make monthly rent payments in the amount of
$202,010, variable quarterly rent payments, the amount of which varies based on
LIBOR and is estimated to be approximately $70,000 per quarter. During the term
of the Lease, BLC-California-RC is responsible for the payment of all operating
expenses related to the Facility. BLC-California-RC's obligations under the
Lease are secured by a pledge by BLC-California-RC of securities currently
valued at approximately $10,500,000. The Lessor financed the acquisition of the
Facility, in part, with the proceeds of a loan (the "Loan") in the principal
amount of $31,500,000 made to the Lessor by Glaser Financial Group, Inc.
("GFGI"), which expects to sell the Loan to Federal Home Loan Mortgage
Corporation (Freddie Mac). Interest accrues on the outstanding principal balance
of the Loan at the rate of 6.64% 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 January 1, 2009. BLC-California-RC
has guaranteed the Lessor's obligations under the Loan, which guaranty is
secured by a leasehold mortgage issued by BLC-California-RC in favor of GFGI,
pursuant to which BLC-California-RC grants to GFGI a security interest in
BLC-California-RC'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
a) Financial statements of businesses acquired
The financial statements required by Item 7(a) are presently being
prepared and have not been included in this Form 8-K. The required financial
statements will be filed by an amendment as soon as practical and, in any event,
within 60 days from the date of this filing.
b) Pro forma financial information
The pro forma financial information required by Item 7(b) is presently
being prepared and has not been included in this Form 8-K. The required pro
forma financial information will be filed by an amendment as soon as practical
and, in any event, within 60 days from the date of this filing.
c) Exhibits
Exhibit
Number Description
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10.1 Lease, dated as of December 18, 1998, by and between
Brookdale Living Communities of California-RC, Inc., as
lessee, and The Woodside Business Trust, as lessor-owner
10.2 Multifamily Note, dated December 18, 1998, from The Woodside
Business Trust, as maker, payable to the order of Glaser
Financial Group, Inc.
10.3 Multifamily Guaranty Agreement, dated as of December 18,
1998, issued by Brookdale Living Communitiesof California-RC,
Inc. in favor of Glaser Financial Group, Inc.
10.4 Multifamily Leasehold Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing, dated as of December
18, 1998, issued by Brookdale Living Communities of
California-RC, Inc. in favor of Chicago Title Company, as
trustee, for the benefit of Glaser Financial Group, Inc.
10.5 Certificate A Pledge Agreement, dated as of December 22,
1998, by Brookdale Living Communities of California-RC, Inc.
in favor of The Woodside Business Trust, Wilmington Trust
Company, as valuation agent, and LaSalle National Bank, as
collateral account bank.
10.6 Certificate B Pledge Agreement, dated as of December 22,
1998, by Brookdale Living Communities of California-RC, Inc.
in favor of The Woodside Business Trust, Wilmington Trust
Company, as valuation agent, and LaSalle National Bank, as
collateral account bank.
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Exhibit
Number Description
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10.7 Exceptions to Non-Recourse Guaranty, dated as of December 18,
1998, from Brookdale Living Communities, Inc. in favor of
Glaser Financial Group, Inc.
10.8 Indemnity Agreement, dated as of December 22, 1998, from
Brookdale Living Communities, Inc. in favor of Wilmington
Trust Company and SELCO Service Corporation.
<PAGE>
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.
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Registrant
Dated: January 6, 1999 By: /s/ Robert J. Rudnik
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Robert J. Rudnik
Executive Vice President/
General Counsel
[EXECUTION COPY]
LEASE
Dated as of December 18, 1998
between
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC.,
as the Lessee
and
THE WOODSIDE BUSINESS TRUST,
as the Lessor
Acquisition of Independent and Assisted Living Facility
in Redwood City, California
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
Glaser Financial Group, Inc. and its successors and assigns, as Lender.
<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............................................................ 12
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.................................... 13
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...................................................... 15
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 Glaser 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....................................... 20
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.............................................. 26
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............................................................... 27
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............ 31
ARTICLE XXVI
INDEMNIFICATION
26.1. General Indemnification............................................... 32
26.2. End of Term Indemnity................................................. 33
26.3. Environmental Indemnity............................................... 34
26.4. Proceedings in Respect of Claims...................................... 35
26.5. General Tax Indemnity................................................. 37
26.6. Funding Losses........................................................ 41
26.7. Regulation D Compensation............................................. 41
26.8. Deposits Unavailable.................................................. 42
26.9. Illegality............................................................ 42
26.10. Increased Cost and Reduced Return.................................... 42
ARTICLE XXVII
ESTOPPEL CERTIFICATES
27.1. Estoppel Certificates................................................. 44
ARTICLE XXVIII
ACCEPTANCE OF SURRENDER
28.1. Acceptance of Surrender............................................... 44
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ARTICLE XXIX
NO MERGER OF TITLE
29.1. No Merger of Title.................................................... 44
ARTICLE XXX
INTENT OF THE PARTIES
30.1. Ownership of the Property............................................. 45
ARTICLE XXXI
PAYMENT OF CERTAIN EXPENSES
31.1. Transaction Expenses.................................................. 45
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............................................................. 48
33.4. Notices............................................................... 48
33.5. Successors and Assigns................................................ 48
33.6. Headings and Table of Contents........................................ 48
33.7. Counterparts.......................................................... 48
33.8. GOVERNING LAW......................................................... 48
33.9. Original Lease........................................................ 49
33.10. Waiver of Jury Trial................................................. 49
33.11. Compliance with Glaser Loan Documents................................ 49
33.12. Payment of Equity Balance; Transfer of Beneficial Interest in Lessor. 49
33.13. Concerning the Lessor................................................ 49
33.14. Owner's Insurance Policy Proceeds.................................... 50
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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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LEASE
THIS LEASE (together with the Lease Supplement (as defined in Appendix
1 hereto), this "Lease"), dated as of December 18, 1998, between THE WOODSIDE
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 CALIFORNIA
- - RC, 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 Glaser 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 Glaser 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 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.
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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.
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:
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(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) Parent Indemnity. The Parent 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) 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 IV.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:
(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 manner as to enable
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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/1997 (Urban) Survey of the Property
(other than the Equipment located therein) prepared by a licensed
surveyor and meeting the Minimum Standard Detail Requirements for
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ALTA/ACSM Land Title Surveys as adopted by the American Land Title
Association/American Society and American Congress on Surveying and
Mapping in 1997 certified to the Lessor and the title company and
otherwise in form reasonably acceptable to the Lessor and an ALTA
owner's title insurance policy covering the Property (other than any
Equipment) in favor of the Lessor, and, at the option of Lessee, an
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 Deed 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) Glaser Loan Documents Conditions Precedent. The conditions
precedent to the funding by Lender to Lessor of the loan subject to the
Glaser 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
Lesor 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]
ARTICLE VI
REPRESENTATIONS
6.1. Representations of the Lessor. The Lessor represents and warrants
to the Lessee that:
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(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 Lessee with
respect to the Lessor or the Property under the Operative Documents.
(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
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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 Liens), or (iii) will violate any
provision of the certificate of incorporation or by-laws of the Lessee.
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(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 Glaser
Leasehold Mortgage. The Lessee's representations and warranties set
forth in the Glaser Leasehold 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 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
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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 Deed will be in form and substance sufficient
to convey to Lessor good and marketable title to the Property in fee
simple, 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).
VI.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 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.
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(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 B Loan 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 the Lessor shall designate
in writing to the Lessee. 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.
(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 required to be made under
the Glaser Loan Documents) 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
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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 Glaser
Loan Documents with respect to payments due on the Glaser Note, 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
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
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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.
ARTICLE X
SUBLEASES
10.1. Subletting. Subject to the Glaser Loan Documents, 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
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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 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 and assisted 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.
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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 Glaser Loan
Documents, 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 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.
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(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 Glaser Loan Documents 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 Glaser Loan Documents shall
control.
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
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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 Glaser
Loan Documents, 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 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 Glaser Loan Documents, the Lessor acknowledges
the Lessee's right to finance and to secure under the Uniform Commercial Code,
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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 Glaser Loan Documents, 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 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.
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(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 Glaser Loan Documents. 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 and Lender 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.
(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.
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(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 Glaser
Loan Documents, 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 Glaser Loan Documents, upon compliance with the
terms of the Glaser 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 Glaser 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 19 of the Glaser Leasehold
Mortgage and Section 19 of the Glaser Fee Mortgage and to the extent the
provisions hereof are inconsistent with same, the provisions of the Glaser
Leasehold Mortgage and Glaser Fee 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 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
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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 Glaser Loan Documents regarding Casualty and
Condemnation and to the extent the provisions hereof are inconsistent
with same, the provisions of the Glaser Loan Documents 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 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
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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 Indebtedness (as defined in the Glaser
Note) or (y) is not being addressed by the Lessee or the Parent as
required hereby or by the Parent 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, subject to compliance with the terms of
the Glaser Loan Documents, 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 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
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) of
Section 19.1, the Lessor shall convey to the Lessee any Net Proceeds
with respect to the Condemnation giving rise to the partial
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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
B Loan Basic Rent, Lessor Basic Rent, or principal and interest due
under the Glaser Note 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;
(b) the Lessee shall fail to make payment of any Supplemental
Rent (i) required to be made pursuant to the Glaser Loan Documents on
the due date therefor and such failure is not remedied within any
applicable cure or grace period set forth in the Glaser Loan Documents,
(ii) 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 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 Glaser Loan Documents, any representation or warranty made by the
Lessee in any of the Operative Documents to which it
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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 Glaser Loan
Documents shall have occurred and be continuing (other than an
Uncurable Event of Default (as defined in the Glaser Leasehold
Mortgage) to the extent and so long as the Lender's remedies under
Paragraph 65 of the Glaser Leasehold 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 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 other than pursuant to the Glaser Loan Documents 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; or
(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
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Collateral Requirement (as defined in either of such agreements) 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).
The Lessor agrees to provide the Lender with notice of an Event of Default
described in Sections 20.1(a), (b), (c), (d), (i), (j) or (k) within ten (10)
Business Days of the Lessor's knowledge of same; provided, however, that the
Lessor's failure to provide such notice shall not affect its right to exercise
remedies pursuant to Section 20.2.
20.2. Remedies. 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 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) in accordance with Applicable Law, sell
all or any part of the Property at public sale free and clear of any
rights of the Lessee and 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
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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
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 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.
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(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.
(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
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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 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 Glaser Loan
Documents.
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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 and the
satisfaction of the transfer provisions applicable thereto set forth in the
Glaser Loan Documents.
(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
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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 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.
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(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.
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:
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(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.
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.
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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 (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 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,
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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; or
(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;
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
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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
(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
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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,
(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.
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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 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
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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.
(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.
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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 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
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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 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
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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.
(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
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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, 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
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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 SELCO) 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.
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.
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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.
(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
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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 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).
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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
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.
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<PAGE>
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.
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
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<PAGE>
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.
(b) Obligations under Glaser Loan Documents. Absent prior
written notice from the Lessor to the contrary, the Lessee shall comply
with all requirements of the Lessor, as Borrower, under the Glaser Loan
Documents relating to the use, maintenance, preservation, management
and operation of the Property, including, without limitation,
furnishing the Lender with notices, documents, reports, budgets, data
and all other information relating to the Property.
(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
Glaser Loan Documents, the Lessee may
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<PAGE>
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.
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
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<PAGE>
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 CALIFORNIA. 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
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, 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 Glaser Loan Documents. 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
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Lessor Pledge Agreement or the Glaser Loan Documents to which it is a party and
(b) comply with the terms of the Lessor Loan Agreement, the Lessor Pledge
Agreement and the Glaser 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 Glaser 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 Glaser Loan Documents.
33.13. Concerning the Trustee. 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 is an intended
beneficiary of the benefits running to it hereunder and such waiver shall not
affect its liability in its individual capacity for its own gross negligence or
willful misconduct to the extent expressly provided in the Trust Agreement. If a
successor Trustee is appointed in accordance with the terms of the 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 Glaser Loan Documents.
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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 CALIFORNIA
- RC, INC., a Delaware corporation
By ---------------------------------
Name:
Title:
S-1
<PAGE>
Commitment: THE WOODSIDE BUSINESS TRUST
By Wilmington Trust Company, not in its individual capacity
but solely as trustee under the Trust Agreement
$42,000,000
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.
GLASER FINANCIAL GROUP, INC.
By: ---------------------------------
Name:
Title:
S-3
<PAGE>
SCHEDULE I
Notice Information
Lessee
Brookdale Living Communities of California - RC, 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 California - RC, 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 California - RC, 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
36343008.3 121898 1314E 98505928
<PAGE>
Lessor
The Woodside 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
36343008.3 121898 1314E 98505928
<PAGE>
EXHIBIT A
FORM OF FUNDING REQUEST
TO: THE WOODSIDE 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 California - RC, Inc. (the "Company") and The Woodside 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;
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<PAGE>
(d) To the knowledge of the Company, there have been no Liens
against the Property since the recordation of the Deed 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
CALIFORNIA - RC, 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 CALIFORNIA - RC, 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 CALIFORNIA - RC, INC. (the "Company"), and is
familiar with the terms and provisions of the Lease, dated as of December --,
1998 (the "Lease"), between the Company, as the Lessee and --------------, 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 December, 1998.
BROOKDALE LIVING COMMUNITIES OF
CALIFORNIA - RC, INC.
-----------------------------
Name:
Title:
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<PAGE>
Woodside Appendix 1
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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Woodside Appendix 1
(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
Glaser 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 Glaser 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 Glaser 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.
"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
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Woodside Appendix 1
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 B Loan Payment Date to the subsequent B Loan 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 2%.
"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 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.
"B Loan" means the loan made by SELCO, as lender, to the Lessor, as
borrower, pursuant to the Lessor Loan Agreement.
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Woodside Appendix 1
"B Loan Basic Rent" means an amount payable quarterly in advance
beginning on the Acquisition Date in the amount of $68,521.50 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 B Loan Payment Date to the next subsequent B Loan Payment Date over a
year of 360 days, exceeds (b) interest to be accreted/compounded on the
Certificate A from the current B Loan Payment Date to the next subsequent B Loan
Payment Date; provided, however, that to the extent that on a B Loan 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") B Loan Basic Rent shall be payable in the amount, if any, that B
Loan Basic Rent otherwise payable equals the Deficiency, if at all.
"B Loan Payment Date" means initially, the Acquisition Date, secondly,
April 1, 1999 and thereafter, each third Payment Date and the Expiration Date.
"Basic Rent" means principal and interest payable under the Glaser
Note, B Loan Basic Rent and Lessor Basic Rent.
"Board" means the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"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 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.
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<PAGE>
Woodside Appendix 1
"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 $9,230,000 issued initially by KeyBank National
Association 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 compounding investment certificate in the
original principal amount of $1,270,000 issued initially by KeyBank National
Association 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.
"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
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<PAGE>
Woodside Appendix 1
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 (a) all amounts due and owing
under the Glaser Loan Documents and (b) any additional amount required to prepay
the Glaser Loan including, but not limited to, any prepayment premium payable
under the Glaser Loan Documents 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 each of 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
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.
"Deed" means a grant deed with respect to the real property comprising
the Property, in conformity with Applicable Law and appropriate for recording
with the applicable Governmental
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<PAGE>
Woodside Appendix 1
Authorities, conveying fee simple title to such real property to the Lessor,
subject only to Permitted Liens.
"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 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
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Woodside Appendix 1
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) $1,270,000 and (c) all due and unpaid B Loan 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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Woodside Appendix 1
"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 B Loan Payment Date to the subsequent
B Loan Payment Date.
"Event of Default" is defined in Section 20.1 of the Lease.
"Exceptions to Non-Recourse Guaranty" means the Exceptions to
Non-Recourse Guaranty dated on or about the date hereof between the Parent and
the Lender.
"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, January 1, 2004, 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 January 1, 2009.
"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
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Woodside Appendix 1
of repair required under Section 13.1 of the Lease and the Lessee is in
compliance with the other requirements of the Operative Documents.
"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.
"Glaser Fee Mortgage" means the Multifamily Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing (California), dated on or about
the date hereof, by Lessor to the Lender, together with all amendments,
modifications and supplements thereto.
"Glaser Leasehold Mortgage" means the Multifamily Leasehold Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing (California),
dated on or about the date hereof, by the Lessee to the Lender, together with
all amendments, modifications and supplements thereto.
"Glaser Loan Documents" means the Glaser Note, Glaser Fee Mortgage,
Glaser Leasehold Mortgage, the Lessee Guaranty, the Replacement Reserve
Agreement, the Exceptions to Non-Recourse Guaranty and all documents executed
and delivered in connection with the foregoing.
"Glaser Note" means the Multifamily Note (California) dated on or about
the date hereof made by Lessor to the Lender in the original principal amount of
$31,500,000.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees,
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Woodside Appendix 1
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.
"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.
"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,
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Woodside Appendix 1
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);
(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;
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Woodside Appendix 1
(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 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
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Woodside Appendix 1
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;
(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
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<PAGE>
Woodside Appendix 1
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 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.
"Insurance Requirements" means all terms and conditions of any
insurance policy either required by the Lease or the Glaser Loan Documents to be
maintained by the Lessee or the Lessor, and all reasonable and appropriate
requirements of the issuer of any such policy.
"Interest Period" means:
(i) initially, the period commencing on the Acquisition Date
and ending on the next succeeding B Loan 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:
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<PAGE>
Woodside Appendix 1
(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 the Glaser
Loan Documents, including, without limitation, any additional amount required to
prepay the Glaser Loan in accordance with the terms thereof, including, without
limitation, any prepayment premium, 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 Glaser Financial Group, Inc., together with its
successors and assigns.
"Lessee" means Brookdale Living Communities of California - RC, Inc.,
as lessee, and its successors and assigns expressly permitted under the
Operative Documents.
"Lessee Guaranty" means the Brookdale Living Communities of California
- - RC Multifamily Guaranty Agreement 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 Woodside Business Trust, a Delaware statutory
business trust.
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<PAGE>
Woodside Appendix 1
"Lessor Basic Rent" means an amount payable quarterly in advance
beginning on the Acquisition Date in the amount of $25,747.00 and on each B Loan
Payment Date in an amount equal to the product of the Eurodollar Lease Rate and
$1,270,000, calculated for the number of days to elapse from the current B Loan
Payment Date to the next subsequent B Loan 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 Glaser 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 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 SELCO, as lender.
"Lessor Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, between the Lessor and SELCO, pursuant to which the Lessor pledged
to SELCO the Certificate A, as security for its obligations to SELCO under the
Lessor Loan Agreement.
"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.
"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.
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Woodside Appendix 1
"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.
"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 sum of (i) the Lease Balance and (ii) 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 Deed;
(c) the Lease Supplement;
(d) the Glaser Loan Documents;
(e) the Certificate A Pledge Agreement;
(f) the Parent Indemnity;
(g) the Trust Agreement;
(h) the Certificate B Pledge Agreement;
(i) the Lessor Pledge Agreement; and
(j) the Lessor Loan Agreement.
"Overdue Rate" shall means the then current interest rate plus 5%.
"Parent" means Brookdale Living Communities, Inc.
"Parent Indemnity" means the Indemnity Agreement dated as of the date
hereof from the Parent to the Trust Company and SELCO.
"Payment Date" means the date of the Glaser Note and the first day of
each calendar month commencing on February 1, 1999.
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Woodside Appendix 1
"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 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
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Woodside Appendix 1
(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) a fee interest in the Land 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 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.
"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.
"Replacement Reserve Agreement" means the Replacement Reserve Agreement
dated on or about the date hereof between the Lessor and the Lender.
"Requesting Party" is defined in Section 27.1 of the Lease.
"Required Modification" is defined in Section 14.1 of the Lease.
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Woodside Appendix 1
"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.
"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.
"SELCO" means SELCO Service Corporation, an Ohio corporation and its
successors and assigns.
"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 Indebtedness (as defined in the Glaser Note).
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Woodside Appendix 1
"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 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 Glaser Loan Documents,
including, without limitation, payments of the tax escrows required pursuant to
Section 7(a) of each of the Glaser Leasehold Mortgage and Glaser Fee Mortgage,
Impositions, fees thereunder and any prepayment premium.
"Tax Indemnitee" means the Lessor, the Trust Company, SELCO 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 Sections 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
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<PAGE>
Woodside Appendix 1
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, 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
Glaser Loan Documents; and
(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.
"Trust" means the Lessor.
"Trust Agreement" means the Trust Agreement, dated December 16, 1998,
between the Trust Company and SELCO.
"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 December 16, 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.
-23-
Freddie Mac Loan No. 981222048
MULTIFAMILY NOTE
(CALIFORNIA)
US $31,500,000.00 December 18, 1998
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally
(if more than one) promises to pay to the order of GLASER FINANCIAL GROUP, INC.,
a Minnesota corporation, the principal sum of Thirty One Million Five Hundred
Thousand and no/00 Dollars (US $31,500,000.00), with interest on the unpaid
principal balance at the annual rate of Six and Sixty-Four Hundredths Percent
(6.64%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be
payable at 2550 University Avenue West Court, International Suite 310N, St.
Paul, MN 55114, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on
the first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Two Hundred Two Thousand Ten and 48/100 Dollars (US $202,010.48),
shall be payable on the first day of each month beginning on February 1, 1999,
until the entire unpaid principal balance evidenced by this Note is fully paid.
Any accrued interest remaining past due for 30 days or more shall be added to
and become part of the unpaid principal balance and shall bear interest at the
rate or rates specified in this Note, and any reference below to "accrued
interest" shall refer to accrued interest which has not become part of the
unpaid principal balance. Any remaining principal and interest shall be due and
payable on January 1, 2009 or on any earlier date on which the unpaid principal
balance of this Note becomes due and payable, by acceleration or otherwise (the
"Maturity Date"). The unpaid principal balance shall continue to bear interest
after the
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Maturity Date at the Default Rate set forth in this Note until and including the
date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and
interest that is received by Lender before the date it is due shall be deemed to
have been received on the due date solely for the purpose of calculating
interest due.
4. Application of Payments. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Borrower agrees that neither Lender's acceptance
of a payment from Borrower in an amount that is less than all amounts then due
and payable nor Lender's application of such payment shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. If Lender accepts a guaranty of only a portion of the
Indebtedness, Borrower hereby waives its right under California Civil Code
Section 2822(a) to designate the portion of the Indebtedness which shall be
satisfied by any guarantor's partial payment.
5. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within ten (10) days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to five percent
(5%) of such amount. Borrower acknowledges that its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the loan evidenced by this Note (the "Loan"), and that it is
extremely difficult and impractical to determine those additional expenses.
Borrower agrees that the late charge payable pursuant to this Paragraph
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional expenses Lender will incur
by reason of such late payment. The late charge is payable in addition to, and
not in lieu of, any interest payable at the Default Rate pursuant to Paragraph
8.
8. Default Rate. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as
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applicable, at a rate (the "Default Rate") equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment under this Note is delinquent for more than 30 days, Lender
will incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than 30 days or any other
Event of Default has occurred and is continuing, Lender's risk of nonpayment of
this Note will be materially increased and Lender is entitled to be compensated
for such increased risk. Borrower agrees that the increase in the rate of
interest payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional costs and expenses Lender will incur by reason
of the Borrower's delinquent payment and the additional compensation Lender is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall
have no personal liability under this Note, the Security Instrument or any other
Loan Document for the repayment of the Indebtedness or for the performance of
any other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of
a portion of the Indebtedness equal to zero percent (0%) of the unpaid principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to
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comply with Section 14(d) or (e) of the Security Instrument relating to the
delivery of books and records, statements, schedules and reports.
(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.
(e) Borrower shall become personally liable to Lender for the repayment
of all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness,
Borrower shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
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10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid
principal balance of this Note on the last Business Day of a calendar month if
Borrower has given Lender at least 30 days prior notice of its intention to make
such prepayment. Such prepayment shall be made by paying (A) the amount of
principal being prepaid, (B) all accrued interest, (C) all other sums due Lender
at the time of such prepayment, and (D) the prepayment premium calculated
pursuant to Schedule A. For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Borrower shall not have the option to voluntarily prepay less than all of the
unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under
this Note, Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the acceleration, (A)
all accrued interest and all other sums due Lender, and (B) the prepayment
premium calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other
security to the repayment of any portion of the unpaid principal balance of this
Note prior to the Maturity Date and in the absence of acceleration shall be
deemed to be a partial prepayment by Borrower, requiring the payment to Lender
by Borrower of a prepayment premium. The amount of any such partial prepayment
shall be computed so as to provide to Lender a prepayment premium computed
pursuant to Schedule A without Borrower having to pay out-of-pocket any
additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than
ninety (90) days before the Maturity Date, or (B) any prepayment occurring as a
result of the application of any insurance proceeds or condemnation award under
the Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid
principal balance of this Note shall not extend or postpone the due date of any
subsequent monthly installments or change the amount of such installments,
unless Lender agrees otherwise in writing.
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(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the Loan,
and acknowledges that the terms of this Note are in other respects more
favorable to Borrower as a result of the Borrower's voluntary agreement to the
prepayment premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice
of acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that
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<PAGE>
law, and Borrower is entitled to the benefit of that law, that interest or
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the unpaid principal balance of
this Note. For the purpose of determining whether any applicable law limiting
the amount of interest or other charges permitted to be collected from Borrower
has been violated, all Indebtedness that constitutes interest, as well as all
other charges made in connection with the Indebtedness that constitute interest,
shall be deemed to be allocated and spread ratably over the stated term of the
Note. Unless otherwise required by applicable law, such allocation and spreading
shall be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
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21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X | Schedule A Prepayment Premium (required)
|X | Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
THE WOODSIDE BUSINESS TRUST,
a Delaware statutory business trust
By: WILMINGTON TRUST
COMPANY, a Delaware banking
corporation, not in its
individual capacity but
solely as Trustee under the
Trust Agreement dated
December -----, 1998.
By -------------------------------
Name ------------------------------
Title -----------------------------
---------------------------------------
Borrower's Social Security/Employer ID Number
PAGE 8
<PAGE>
PAY TO THE ORDER OF
- ------------------------------ WITHOUT RECOURSE THIS 18TH DAY OF DECEMBER, 1998.
GLASER FINANCIAL GROUP, INC.,
a Minnesota corporation
By: -----------------------------------
David A. Williams
Its: Vice President
PAGE 9
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the
date that is 114 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the prepayment
premium shall be the greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions
shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest
rate of the Note, expressed as a decimal calculated to five
digits.
Prepayment Date: in the case of a voluntary prepayment, the
date on which the prepayment is made; in any other case, the
date on which Lender accelerates the unpaid principal balance
of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield
rate as of the date 5 Business Days before the Prepayment
Date, on the 4.750% U.S. Treasury Security due November, 2008,
as reported in The Wall Street Journal, expressed as a decimal
calculated to five digits. In the event that no yield is
PAGE A-1
<PAGE>
published on the applicable date for the Treasury Security
used to determine the Assumed Reinvestment Rate, Lender, in
its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security
specified above with the lowest yield published in The Wall
Street Journal as of the applicable date. If the publication
of such yield rates in The Wall Street Journal is discontinued
for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to
determine the Assumed Reinvestment Rate. The selection of an
alternate security pursuant to this Paragraph shall be made in
Lender's discretion.
Present Value Factor: the factor that discounts to present
value the costs resulting to Lender from the difference in
interest rates during the months remaining in the Yield
Maintenance Period, using the Assumed Reinvestment Rate as the
discount rate, with monthly compounding, expressed numerically
as follows:
[1-(1/1+ARR)^n]/ARR
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than ninety (90) days before the Maturity Date, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
PAGE A-2
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
This Note shall be amended as follows:
1. Paragraph 9(c) is amended to add after the words "then in residence"
and before the semicolon in line 6 thereof the following: "provided that so long
as Borrower is not in possession of and operating the Mortgaged Property, such
failure shall only apply to Rents and security deposits in Borrower's
possession."
2. Paragraph 9(c) is amended to add after the words "the Security
Instrument" and before the semicolon in line 7 thereof the following: "provided
that so long as Borrower is not in possession of and operating the Mortgaged
Property, such failure shall only apply to proceeds in Borrower's possession."
3. Paragraph 9(e) is amended to add the word "intentional" after the
words "fraud or" and before the words "written material" in line 7 thereof;
4. Paragraph 9(g) is amended to delete the period after the words
"applicable law" in line 5 thereof and to insert the following: ", provided
however, that any personal liability of the Borrower shall in no event apply or
extend to Certificate A or Certificate B as defined in that certain Lease
entered into by and between Borrower, as lessor and Brookdale Living Communities
of California-RC, Inc., a Delaware corporation, as lessee dated on or about the
date hereof."
5. There is added to this Note an additional paragraph number 22 as
follows: "Limitation of Liability". This Note has been executed on behalf of a
Delaware statutory business trust by Wilmington Trust Company solely in its
capacity as trustee of such trust, and not in its individual capacity. In no
case shall Wilmington Trust Company (or any entity acting as successor or
additional trustee) be personally liable for or on account of any of the
statements, representations, warranties, covenants or obligations of such trust
hereunder, any right to assert any such liabilities against Wilmington Trust
Company (or any entity acting as successor or additional trustee) being hereby
waived by the other parties hereto; provided, however, that such waiver shall
not affect the liability of Wilmington Trust Company (or any entity acting as
successor or additional trustee) to any person under any other agreement to the
extent expressly agreed to in its individual capacity thereunder."
PAGE B-1
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC
MULTIFAMILY GUARANTY AGREEMENT
THIS MULTIFAMILY GUARANTY AGREEMENT (this "Brookdale California-RC
Guaranty") is made as of this 18th day of December, 1998 by Brookdale Living
Communities of Calif. - RC, Inc., a corporation (the "Guarantor"), to Glaser
Financial Group, Inc., a corporation organized and existing under the laws of
the state of Minnesota (the "Lender").
RECITALS
a. Woodside Business Trust, a Delaware business trust, (the "Borrower")
has requested that the Lender make a loan to the Borrower in the sum of Thirty
One Million Five Hundred Thousand Dollars ($31,500,000) (the "Loan"). The Loan
will be evidenced by that certain Multifamily Note from Borrower to Lender in
the original principal amount of the Loan of even date herewith (the "Note"),
the terms and conditions of the Loan being set forth in the Note, and will be
secured by the Multifamily Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing executed by the Borrower for the benefit of Lender
(the "Borrower Security Instrument"). The Note, the Borrower Security Instrument
and any other such documents and agreements executed by the Borrower are herein
collectively referred to as the "Loan Documents")
B. As a condition precedent to making the Loan available to Borrower,
Lender has required that Guarantor guarantee payment and performance of
Borrower's obligations under the Note in a manner satisfactory to Lender.
Guarantor has offered, and Lender has agreed to accept, the execution and
delivery of this Brookdale Calif. - RC Guaranty and the obligations arising
hereunder to be secured pursuant to that certain Brookdale Living Communities of
Calif.-RC, Inc. Leasehold Multifamily Deed of Trust, Security Agreement and
Assignment of Rents and Fixture Filing of even date herewith from Guarantor for
the benefit of Lender (the "Brookdale Calif.-RC Security Instrument").
C. Borrower has agreed to acquire the Property described in the
Borrower Security Instrument with the proceeds of the Loan and to enter into an
Operating Lease with Guarantor as described in the Brookdale Calif. - RC
Security Instrument, as a result of which Guarantor will derive substantial
benefits from the Loan.
NOW, THEREFORE, in consideration of the above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor agrees as follows:
1. Incorporation of Recitals. The recitals of fact as set forth above
are hereby agreed to be true and are incorporated into the body of this
Brookdale Calif. - RC Guaranty by reference.
2. Guaranty of Payment.
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2.1 Guarantor hereby unconditionally and irrevocably
guarantees to Lender the due and punctual performance and full and
prompt payment (and not merely the collectibility) of any and all of
the following (collectively hereinafter referred to as the
"Indebtedness"); PROVIDED, HOWEVER, that the Lender's right to collect
from Guarantor amounts due under the Note shall be contingent upon
Borrower's failure to pay such amounts when due under the Note (but in
no event shall the foregoing contingency affect the Lender's right to
enforce against the Guarantor or any other party to the Loan Documents,
any other obligation thereunder in accordance with the terms thereof);
2.1.1. the principal sum of the Loan and all interest
accruing thereon, and all other amounts, sums, indebtedness,
and charges payable under the Note or other Loan Documents,
including prepayment premiums, if any, and late charges, in
each case when due and payable, whether on any installment
payment date or at the stated or accelerated maturity of the
Loan, all in accordance with the provisions of the Note and
the other Loan Documents;
2.1.2. each and every other sum or charge which at
any time becomes due and payable in accordance with the
provisions of the Note or any of the other Loan Documents, or
both;
2.1.3. any and all additional advances made by Lender
necessary to protect or preserve the Property (as the same are
more completely defined and described in the Borrower Security
Instrument) or any other collateral in which a security
interest has been created by the Borrower Security Instrument,
or for taxes, assessments, or insurance premiums as provided
by the Borrower Security Instrument or for the performance of
any of Borrower's other obligations under the Borrower
Security Instrument or for any other purpose provided for
therein (whether or not Borrower remains the owner of the Land
at the time of such advances);
2.1.4. any and all future advances, if applicable, as
provided for by the Borrower Security Instrument; and
2.1.5. any and all losses, damages or expenses
incurred by Lender and arising out of any default by Borrower
or Guarantor or any other party, except Lender, in performing
any of their respective obligations under the Note, this
Brookdale Calif. - RC Guaranty, or any of the other Loan
Documents.
2.2 This Brookdale Calif. - RC Guaranty is an absolute,
primary, present, continuing and unconditional guaranty of payment and
not of collectibility and is in no way conditioned or contingent upon
any action or omission by Lender or upon any other action, occurrence,
or circumstance whatsoever other than the occurrence of an Event of
Default (as the same is more completely defined and described in the
Borrower Security Instrument). Upon an Event of Default, Guarantor
hereby agrees to cause any such payment of the Indebtedness to be made
to Lender at the address specified in Section 18 of this Brookdale
Calif. - RC Guaranty, such payment to include overdue interest or late
charges, if any, payable under the Note or the other Loan Documents.
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<PAGE>
2.3 The obligation of Guarantor under this Brookdale Calif. -
RC Guaranty shall not be subject to any counterclaim, set-off,
deduction or defense based upon any claim Guarantor may have against
Borrower either hereunder or otherwise.
2.4 This Brookdale Calif. - RC Guaranty shall be continuing
and shall not be discharged, impaired or affected by (a) the power or
authority or lack thereof of Borrower to issue the Note, or to execute,
acknowledge or deliver the Note, or any other Loan Document; (b) the
regularity, validity or invalidity, or enforceability or
unenforceability of the Note, or any other Loan Document; (c) the
existence or non-existence of Borrower as a legal entity; (d) the
transfer by Borrower of all or any part of the property securing this
Brookdale Calif. - RC Guaranty or the Loan evidenced by the Note; or
(e) any right of set off, counterclaim or defense that Guarantor may or
might have to its respective undertakings, liabilities and obligations
hereunder; or (f) any other event or circumstance which might otherwise
constitute a legal or equitable discharge, release or defense of a
guaranty, each and every such defense to the fullest extent legally
permitted being hereby waived by Guarantor.
3. Benefit. This Brookdale Calif.- RC Guaranty may be assigned or
transferred in whole or in part by Lender, and the benefit of this Brookdale
Calif. - RC Guaranty shall automatically pass with a transfer or assignment of
any portion of the Note to any subsequent owner or holder. All references to
Lender herein shall be deemed to include any successors or assignees or any
subsequent owners or holders of the Note or any of them. This Brookdale Calif. -
RC Guaranty is also given for the benefit of any person claiming by, through or
under Lender, including any purchaser of the security given for the Loan or any
portion thereof at foreclosure or as a result of the exercise of any right or
remedy provided under the Note or the other Loan Documents as permitted by law.
4. Actions by Lender. No action which Lender may take or omit to take
in connection with the Note or the Loan Documents or with respect to the
administration of the Loan, shall release, discharge or in any way affect
Guarantor's obligations hereunder, or afford Guarantor any recourse against
Lender. By way of example, but not in limitation of the foregoing, Guarantor
hereby expressly agrees that Lender may, from time to time, and without notice
to Guarantor:
(a) amend, change or modify, in whole or in part, the Note or
any other Loan Document;
(b) increase the amount of the Loan or otherwise change the
terms of the Indebtedness or any part thereof, including the increase
or decrease of the rate of interest thereon;
(c) accelerate, change, extend or renew the time for any
payment under the Note or for the performance of any obligation under
the Note or the other Loan Documents;
(d) waive any terms, conditions or covenants of the Note or
any of the other Loan
PAGE 3
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Documents, or grant any extension of time or forbearance for
performance of the same;
(e) compromise or settle any amount due or owing, or claimed
to be due or owing, under the Note;
(f) surrender, release, subordinate, or otherwise alter any or
all security for the repayment of the indebtedness evidenced by the
Note or accept additional or substituted security therefor;
(g) release, substitute or add any guarantor or any new
guarantors and/or endorsers;
(h) take any other action or not take any action, either of
which would otherwise constitute a legal or equitable discharge or
defense of a guarantor;
(i) assign or otherwise transfer the Note, the Borrower
Security Instrument or any of the other Loan Documents or any other
security documents;
(j) Consent to a sale, assignment or transfer of any or all of
the Mortgaged Property (as defined in the Borrower Security Instrument)
or any other property secured by the Loan Documents; and
(k) may advance any sum if Lender deems it necessary or
advisable to perform any term or covenant, or satisfy any condition,
set forth in the provisions of any of the Loan Documents in accordance
with the terms thereof.
The provisions of this Brookdale Calif. - RC Guaranty shall extend and
be applicable to all renewals, amendments, extensions and modifications of the
Note or the other Loan Documents, and all references to the Note or any other
Loan Document shall be deemed to include any renewal, extension, amendment or
modification thereof.
5. Waivers. Guarantor hereby waives presentment, protest and demand,
notice of protest, demand and dishonor and non-payment of the Note and any
installment of principal and/or interest and/or any other sum due thereunder,
and notice of acceptance of this Brookdale Calif. - RC Guaranty.
Guarantor's liability and obligations hereunder shall in no way be
affected by any forbearance, waiver, consent, indulgence or other action or
inaction which Lender may hereafter accord, grant, or take with respect to
Borrower or by any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of this Brookdale Calif. - RC Guaranty or any
other such instrument, or by any impairment, modification, release or limitation
of liability of Borrower or its estate in bankruptcy, or of any remedy for the
enforcement of such liability, resulting from the operation of any present or
future provision of the Federal Bankruptcy Act or other statute, or from the
decision of any court, or by any other circumstance which might otherwise
constitute a legal or
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equitable discharge or defense of a guarantor.
Guarantor hereby unconditionally to the fullest extent permitted by
law: (a) except for notices provided for in the Guaranty and the Brookdale
Security Instrument, waives notice of any matter relating to Borrower or the
Property or any other property securing the Loan or this Brookdale Calif. - RC
Guaranty or any other information regarding any matter which indicates that the
risk that Guarantor may be required to perform hereunder has or may be
increased, and agrees to assume full responsibility for being and keeping
informed of all such matters; (b) except for notices provided for in the Loan
Documents, waives all notices which may be required by statute, rule or law or
otherwise to preserve any rights of any holder of the Note against Guarantor;
and (c) waives notice of any requirement of diligence on the part of any holder
of the Note.
6. Independent Obligation. The obligations of any one or more Guarantor
hereunder are independent of the obligations of Borrower or of any other
guarantor.
7. Lender's Remedies; Guarantor's Waivers. Lender may, at its option
and to the fullest extent permitted by law, upon an Event of Default (as defined
in the Borrower Security Instrument) (a) proceed directly and at once, without
notice to Guarantor of such Event of Default, against Guarantor singly,
successively, concurrently or jointly to collect and recover the full amount of
the Indebtedness guaranteed hereby or any portion thereof without proceeding
against Borrower or any other person, or endorser, surety or guarantor, or
foreclosing upon, selling, or otherwise disposing of, or enforcing, or
collecting or applying any property, real or personal, Lender may then have as
security for the Note, and without enforcing or proceeding under any other
guaranty; or (b) exercise the rights and remedies granted to Lender in the
Borrower Security Instrument, or other Loan Documents. Guarantor expressly
waives any right to plead or assert any election of remedies if Lender should
sell the Property under the power of sale provisions contained in the Borrower
Security Instrument. Guarantor also waives any right to require or compel Lender
to (i) proceed against Borrower or any other guarantor; (ii) proceed against or
exhaust any security held by Borrower or Grantor; (iii) proceed pursuant to the
Note or any Loan Document or with respect to the real or personal property
securing the Note or this Brookdale Calif. - RC Guaranty before pursuing its
remedies under any other agreement or instrument; and (iv) pursue any other
remedy in Lender's power whatsoever. Until the full amount of the Indebtedness
guaranteed hereby has been paid in full, even though such Indebtedness is or may
be in excess of Guarantor's liability hereunder, Guarantor shall have no right
to subrogation, and waives any right to enforce any remedy which Lender now has
or may hereafter have against Borrower, and waives any benefit of, and any right
to participate in, any security now or hereafter held by Lender.
Nothing herein shall prohibit Lender from exercising its rights against
Guarantor, any other guarantor, endorser, or surety, the security, if any, for
the Loan, and Borrower simultaneously, jointly and/or severally.
Neither the declaration of an Event of Default nor the exercise of any
remedies against Borrower, nor the sale, enforcement or realization of any
security for the repayment of the indebtedness evidenced by the Note shall in
any way affect Guarantor's obligations hereunder, even though any rights which
Guarantor may have against Borrower or others may be destroyed,
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<PAGE>
diminished or otherwise affected by such action.
8. Bankruptcy or Insolvency/Subordination. If at any time any payment,
or portion thereof, made by, or for the account of Guarantor on account of any
of the Indebtedness is set aside by any court or trustee having jurisdiction as
a voidable preference or fraudulent conveyance or must otherwise be restored or
returned by Lender to Guarantor under any insolvency, bankruptcy or other
federal and/or state laws or as a result of, any dissolution, liquidation or
reorganization of Borrower or upon, or as a result of any dissolution,
liquidation or reorganization of Borrower or upon, or as a result of, the
appointment of any receiver, intervenor or conservator of, or trustee or similar
officer for, Borrower or any substantial part of its properties or assets,
Guarantor hereby agrees that this Brookdale Calif. - RC Guaranty shall continue
and remain in full force and effect or be reinstated, as the case may be, all as
though such payment(s) had not been made.
Guarantor hereby subordinates any and all indebtedness of Borrower now
or hereafter owed to Guarantor, to all indebtedness of Borrower to Lender and
shall not claim any offset or other reduction of any of Guarantor's obligations
hereunder because of such indebtedness and shall not take any action which will
in any way impair Lender's ability to receive full payment of the Note and other
sums guaranteed hereunder. Notwithstanding anything contained herein to the
contrary, Guarantor shall remain liable to Lender for any and all Indebtedness
paid by any person or entity, including Guarantor, which is later set aside for
any reason, including a finding by any federal or state bankruptcy court having
jurisdiction that any such payment by any person or entity, including Guarantor,
was a preferential transfer.
9. Lender's Waivers. Lender shall not by any act or omission or
commission be deemed to release Guarantor or to waive any of its rights or
remedies hereunder or under the Note or any other Loan Document unless such
waiver be in writing and signed by Lender, and then only to the extent
specifically set forth therein; a waiver on one event shall not be construed as
continuing or as a bar to or waiver of such right or remedy on a subsequent
event.
10. Delegation. Guarantor's obligations hereunder shall not be assigned
or delegated.
11. Statute of Limitations. To the extent permitted by law, Guarantor
expressly waives the defense of the statute of limitations in any action to
enforce this Brookdale Calif. - RC Guaranty.
12. Costs of Enforcement. Guarantor shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Brookdale Calif. - RC Guaranty or the Loan or in connection with efforts to
collect any amount due under this Brookdale Calif. - RC Guaranty or the other
Loan Documents, including those incurred in post-judgment collection efforts and
in any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding. Any reference to "attorney fees" in this document includes but is
not limited to both the fees, charges and costs incurred by Lender
PAGE 6
<PAGE>
through its retention of outside legal counsel and the allocable fees, costs and
charges for services rendered by Lender's in-house counsel. Any reference to
"attorney fees" shall also include but not be limited to those attorneys or
legal fees, costs and charges incurred by Lender in the collection of any
indebtedness, including, without limitation, the Indebtedness, the enforcement
of any obligations hereunder, the protection of the Security, the foreclosure of
the Borrower Security Instrument, the sale of the Security, the defense of
actions arising hereunder and the collection, protection or set off of any claim
the Lender may have in a proceeding under Title 11, United States Code.
Attorneys fees provided for hereunder shall accrue whether or not Lender has
provided notice of an Event of Default or of an intention to exercise its
remedies for such Event of Default.
13. Governing Law and Consent to Jurisdiction. Guarantor agrees that
any controversy arising under or in relation to this Brookdale Calif. - RC
Guaranty shall be litigated exclusively in the jurisdiction where the Land is
located (the "Property Jurisdiction"). The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to
this Brookdale Calif. - RC Guaranty, the Note, the Borrower Security Instrument
or any other Loan Document. Guarantor irrevocably consents to service,
jurisdiction, and venue of such courts for any such litigation and waives any
other venue to which it might be entitled by virtue of domicile, habitual
residence or otherwise.
14. GUARANTOR AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP
BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE
EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH
THE BENEFIT OF COMPETENT LEGAL COUNSEL.
15. Invalidity of Particular Provisions. If any term or provision of
this Brookdale Calif. - RC Guaranty shall be determined to be illegal or
unenforceable, all other terms and provisions hereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted by law.
16. Headings. The headings used herein are for purposes of convenience
only and should not be used in construing the provisions hereof.
17. Subrogation. In the event that Guarantor shall perform any
obligation or pay any or all of the Loan, any right of subrogation it may have
shall be suspended and shall not be effective until all of the obligations and
the Loan to Lender on the part of Borrower shall be fully discharged to Lender's
satisfaction.
18. Notices. Any notice, demand, request, statement or consent made
hereunder shall
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be in writing, signed by the party giving such notice, request, demand,
statement, or consent, and shall be deemed to have been properly given when
either delivered personally, delivered to a reputable overnight delivery service
providing a receipt or deposited in the United States mail, postage prepaid and
registered or certified return receipt requested, at the address set forth
below, or at such other address within the continental United States of America
as may theretofore have been designated in writing. The effective date of any
notice given as aforesaid shall be the date of personal service, one (1)
Business Day (as defined in the Borrower Security Instrument) after delivery to
such overnight delivery service, or three (3) Business Days after being
deposited in the United States mail, whichever is applicable. For purposes
hereof, the addresses are as follows:
If to Lender: Glaser Financial Group, Inc.
2550 University Avenue West, #310N
St. Paul, Minnesota 55114
Attn: Mortgage servicing
to Guarantor: Brookdale Living Communities of California -RC, Inc.
c/o Brookdale Living Communities, Inc
777 W. Wacker Drive
Suite 4400
Chicago, Illinois 60601\
Attn.: Darryl W. Copeland, Jr.
With a copy to: Brookdale Living Communities of California -RC, Inc.
c/o Brookdale Living Communities, Inc
777 W. Wacker Drive
Suite 4400
Chicago, Illinois 60601
Attn.: Robert J. Rudnik
19. No Exoneration. The initiation of foreclosure proceedings by Lender
or the exercise of any other rights or remedies by Lender under the Borrower
Security Instrument or the other Loan Documents (exclusive of the right to elect
not to enforce this Brookdale Calif. - RC Guaranty as provided herein) shall not
exonerate Guarantor in any respect and notwithstanding such action by Lender,
Guarantor shall remain fully responsible to perform under the terms of this
Brookdale Calif. - RC Guaranty.
20. Subordination. Any lien or charge on the Property or any other
property now or
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<PAGE>
hereafter securing this Brookdale Calif. - RC Guaranty or the Loan and all
rights therein and thereto or on or in the revenue and income to be realized
therefrom which Guarantor may now have or may in the future obtain as security
for any loans or advances to Borrower shall be and are expressly subordinate to
the lien or charge of the Borrower Security Instrument and the other Loan
Documents; and any indebtedness of Borrower to Guarantor, if Lender so requests,
shall be collected, enforced and received by Guarantor, as trustee for Lender,
and be paid over to Lender on account of the Indebtedness but without reducing
or affecting in any manner the liability of Guarantor under the provisions of
this Brookdale Calif. - RC Guaranty.
21. Successors and Assigns. All undertakings, covenants and agreements
in this Brookdale Calif. - RC Guaranty contained shall bind the successors and
assigns of Guarantor, including any corporation with or into which Guarantor may
be consolidated or merged or to which Guarantor may sell or otherwise dispose of
its properties substantially as an entirety.
22. Termination. Subject to the terms of the next Section, this
Brookdale Calif. - RC Guaranty shall remain in full force and effect, without
abatement, until the Indebtedness (as defined in the Borrower Security
Instrument) is paid in full and upon such payment in full of the Indebtedness,
this Brookdale Calif. - RC Guaranty shall terminate.
23. Scope of Liability. The terms and provisions of Section 6 (Limits
on Personal Liability) of the Brookdale Calif. - RC Security Instrument are
hereby incorporated by reference herein.
24. Joint and Several Liability. Subject to the provisions of Section
24 hereinabove, if there is more than one Guarantor, each Guarantor hereby
acknowledges and agrees that each and every one of Guarantor's obligations under
this Brookdale Calif. - RC Guaranty is and shall be joint and several and Lender
may obtain satisfaction of Guarantor's obligations from any one or more of
Guarantor independently, successively, simultaneously or concurrently.
25. Amendment. This Brookdale Calif. - RC Guaranty may be amended or
supplemented by and only by an instrument executed and delivered by the Grantor
and Lender.
26. Time of essence. Time shall be of the essence with respect to the
intent, meaning and construction of each and every provision of this Brookdale
Calif. - RC Guaranty.
27. Construction. As used herein,
(a) the term "person" means a natural person, a trustees, a
corporation, a partnership and any other form of legal entity;
(b) all references made (i) in the neuter, masculine or
feminine gender shall be deemed to have been made in all such genders;
(ii) in the singular or plural number shall be deemed to have been
made, respectively, in the plural or singular number as well; (iii) to
any Section,
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subsection, paragraph or subparagraph shall, unless therein expressly
indicated to the contrary, be deemed to have been made to such Section,
subsection, paragraph or subparagraph of this Brookdale Calif. - RC
Guaranty; and (iv) to Guarantor, Lender or Borrower shall be deemed to
refer to each person hereinabove so named, and their respective heirs,
personal representatives, successors and assigns.
28. Complete Understanding. This Brookdale Calif - RC Guaranty
represents the complete understanding between the parties hereto as to the
subject matter hereof, and supersedes all prior negotiations, representation,
warranties, statements or agreements, either written or oral, between or among
the parties hereto as to the same.
ATTACHED EXHIBIT. The following Exhibit is attached to this Brookdale
Calif - RC Guaranty:
|_X_| Exhibit A Modifications to Brookdale Calif - RC Guaranty]
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<PAGE>
IN WITNESS WHEREOF, this Brookdale Calif - RC Guaranty has been
executed under seal as of the day and year first above written.
WITNESS: GUARANTOR:
-------------------------------, a
-------------------------------
- -------------------------------- By:----------------------------------(SEAL)
Name:
Title:
PAGE 11
<PAGE>
Exhibit A
The following additional provisions shall apply to this Brookdale Living
Communities of Calif.-RC Guaranty:
1. Guarantor hereby waives any and all benefits and defenses under Calif. Civil
Code Section 2810 and agrees that by doing so Guarantor shall be liable even if
Borrower had no liability at the time of execution of the Note, Brookdale
Calif-RC Security Instrument or any other Loan Document, or thereafter ceases to
be liable. Guarantor hereby waives any and all benefits and defenses under
Calif. Civil Code Section 2809 and agrees that by doing so Guarantor's liability
may be larger in amount and more burdensome than that of Borrower. Guarantor
hereby waives the benefit of all principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Brookdale
Calif.-RC Guaranty and agrees that Guarantor's obligations shall not be affected
by any circumstances, whether or not referred to in this Brookdale Calif.-RC
Guaranty, which might otherwise constitute a legal or equitable discharge of a
surety or a guarantor. Guarantor hereby waives the benefits of any right of
discharge under any and all statutes or other laws relating to guarantors or
sureties and any other rights of sureties and guarantors thereunder. Without
limiting the generality of the foregoing, Guarantor hereby waives, to the
fullest extent permitted by law, diligence in collecting the Indebtedness,
presentment, demand for payment, protest, all notices with respect to the Note
and this Brookdale Calif.-RC Guaranty which may be required by statute, rule of
law or otherwise to preserve Lender's rights against Guarantor under this
Brookdale Calif.-RC Guaranty, including, but not limited to, notice of
acceptance, notice of any amendment of the Loan Documents, notice of the
occurrence of any default or Event of Default, notice of intent to accelerate,
notice of acceleration, notice of dishonor, notice of foreclosure, notice of
protest, and notice of the incurring by Borrower of any obligation or
indebtedness. Guarantor also waives, to the fullest extent permitted by law, all
rights to require Lender to (a) proceed against Borrower or any other guarantor
with respect to the Indebtedness (an "Other Guarantor") (b) if Borrower or any
Other Guarantor is a partnership, proceed against any general partner of
Borrower or the Other Guarantor, (c) proceed against or exhaust any collateral
held by Lender to secure the repayment of the Indebtedness, or (d) pursue any
other remedy it may now or hereafter have against Borrower, or, if Borrower is a
partnership, any general partner of Borrower, including any and all benefits
under California Civil Code Sections 2845, 2849 and 2850.
2. Guarantor understands that the exercise by Lender of certain rights
and remedies contained in the Borrower Security Instrument (such as a
nonjudicial foreclosure sale) may affect or eliminate Guarantor's right of
subrogation against Borrower and that Guarantor may therefore incur a partially
or totally nonreimburseable liability under this Brookdale Calif.-RC Guaranty.
Nevertheless, Guarantor hereby authorizes and empowers Lender to exercise, in
its sole and absolute discretion, any right or remedy, or any combination
thereof, which may then be available, since it is the intent and purpose of
Guarantor that the obligations under this Brookdale
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Calif.-RC Guaranty shall be absolute, independent and unconditional under any
and all circumstances. Guarantor expressly waives any defense (which defense, if
Guarantor had not given this waiver, Guarantor might otherwise have) to a
judgment against Guarantor by reason of a nonjudicial foreclosure. Without
limiting the generality of the foregoing, Guarantor hereby expressly waives any
and all benefits under (i) California Code of Civil Procedure Section 580a
(which Section, if Guarantor had not given this waiver, would otherwise limit
Guarantor's liability after a nonjudicial foreclosure sale to the difference
between the obligations of Guarantor under this Brookdale Calif.-RC Guaranty and
the fair market value of the property or interests sold a such nonjudicial
foreclosure sale), (ii) California Code of Civil Procedure Sections 580b and
580d (which Sections, if Guarantor had not given this waiver, would otherwise
limit Lender's right to recover a deficiency judgment with respect to purchase
money obligations and after a nonjudicial foreclosure sale, respectively), and
(iii) California Code of Civil Procedure Section 726 (which Section, if
Guarantor had not given this waiver, among other things, would otherwise require
Lender to exhaust all of its security before a personal judgment could be
obtained for a deficiency). Notwithstanding any foreclosure of the lien of the
Brookdale Calif.-RC Security Instrument or the Borrower Security Instrument,
whether by the exercise of the power of sale contained in the Brookdale
Calif.-RC Security Instrument or the Borrower Security Instrument, by an action
for judicial foreclosure or by Lender's acceptance of a deed in lieu of
foreclosure, Guarantor shall remain bound under this Brookdale Calif.-RC
Guaranty.
3. In accordance with Section 2856 of the California Civil Code,
Guarantor also waives any right or defense based upon an election of remedies by
Lender, even though such election (e.g., nonjudicial foreclosure with respect to
any collateral held by Lender to secure repayment of the Indebtedness) destroys
or otherwise impairs the subrogation rights of Guarantor or the right of
Guarantor (after payment of the obligations guaranteed by Guarantor under this
Brookdale Calif.-RC Guaranty) to proceed against Borrower for reimbursement, or
both, by operation of Section 580d of the Code of Civil Procedure or otherwise.
4. In accordance with Section 2856 of the California Civil Code,
Guarantor waives any and all other rights and defenses available to Guarantor by
reason of Sections 2787 through 2855, inclusive, of the California Civil Code,
including any and all rights or defenses Guarantor may have by reason of
protection afforded to Borrower with respect to any of the obligations of
Guarantor under this Brookdale Calif.-RC Guaranty pursuant to the antideficiency
or other laws of the State of California limiting or discharging Borrower's
Indebtedness, including Sections 580a, 580b, 580d, and 726 of the California
Code of Civil Procedure.
5. In accordance with Section 2856 of the California Civil Code,
Guarantor agrees to withhold the exercise of any and all subrogation and
reimbursement rights against Borrower, against any other person, and against any
collateral or security for the Indebtedness, including any such rights pursuant
to Sections 2847 and 2848 of the California Civil Code, until the Indebtedness
has been indefeasibly paid and satisfied in full, all obligations owed to Lender
under the Loan Documents have been fully performed, and Lender has released,
transferred or
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disposed of all of its right, title and interest in such collateral or security.
PAGE 14
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
OPPENHEIMER WOLFF &
DONNELLY LLP (JJS)
Plaza VII
45 South Seventh Street
Suite 3400
Minneapolis, MN 55402-1609
================================================================================
<PAGE>
Freddie Mac Loan No. 981222048
BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC.
MULTIFAMILY LEASEHOLD DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(CALIFORNIA)
ATTENTION COUNTY RECORDER: THIS INSTRUMENT IS INTENDED TO BE EFFECTIVE
AS A FINANCING STATEMENT FILED AS A FIXTURE FILING PURSUANT TO SECTION
9402 OF THE CALIFORNIA COMMERCIAL CODE. PORTIONS OF THE GOODS
COMPRISING A PART OF THE MORTGAGED PROPERTY ARE OR ARE TO BECOME
FIXTURES RELATED TO THE LAND DESCRIBED IN EXHIBIT A HERETO. THIS
INSTRUMENT IS TO BE FILED FOR RECORD IN THE RECORDS OF THE COUNTY WHERE
DEEDS OF TRUST ON REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED AS
BOTH A DEED OF TRUST AND AS A FINANCING STATEMENT COVERING FIXTURES.
THE ADDRESSES OF GRANTOR (DEBTOR) AND LENDER (SECURED PARTY) ARE
SPECIFIED IN THE FIRST PARAGRAPH ON PAGE 1 OF THIS INSTRUMENT.
<PAGE>
BROOKDALE LIVING COMMUMITIES OF CALIFORNIA - RC, INC.
LEASEHOLD
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND
FIXTURE FILING
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (the "Instrument") is made as of this 18th day of December,
1998, by BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC., a corporation
organized and existing under the laws of Delaware, whose address is 77 West
Wacker Drive, Suite 3900, Chicago, Illinois 60601, as trustor ("Grantor"), to
CHICAGO TITLE COMPANY, as trustee ("Trustee"), for the benefit of GLASER
FINANCIAL GROUP, INC., a corporation organized and existing under the laws of
Minnesota, whose address is 2550 University Avenue West, #310N, St. Paul,
Minnesota 55114, as beneficiary ("Lender").
The Woodside Business Trust, a Delaware business trust ("Borrower") is
justly indebted to the Lender in the principal sum of thirty one million five
hundred thousand dollars ($31,500,000) for money loaned ("Loan") to Borrower by
Lender, as evidenced by that certain Multifamily Note of even date herewith,
issued by Borrower and made payable to the order of Lender (the "Note") and
secured by the Multifamily Deed of Trust, Assignment of Rents and Security
Agreement executed by the Borrower (the "Borrower Mortgage"). Grantor has
guaranteed to Lender the payment and performance of Borrower's obligations under
the Note pursuant to a certain Brookdale California - RC Multifamily Guaranty
Agreement of even date herewith from Grantor to Lender (the "Brookdale Calif -
RC Guaranty"). The Brookdale Calif - RC Guaranty is a valid, binding and legally
enforceable obligation of Grantor, and this Instrument is a valid, binding and
legally enforceable Instrument.
Grantor, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the leasehold estate (the
"Leasehold Estate") acquired by the Grantor pursuant to that certain lease dated
December 18, 1998, entered into by and between Borrower and Grantor (the
"Operator Lease") and described in Exhibit C attached to this Instrument for the
Leasehold Estate on the Land located in San Mateo County, State of California
and described in Exhibit A attached to this Instrument.
TO SECURE TO LENDER the payment of the Indebtedness, the payment of all
sums advanced by or on behalf of Lender to protect the security of this
Instrument under Section 12, and the performance of the covenants and agreements
of Grantor contained in the Loan Documents.
Grantor represents and warrants that Grantor is lawfully seized of the
Mortgaged Property and has the right, power and authority to grant, convey and
assign the Mortgaged Property, and that the Mortgaged Property is unencumbered.
Grantor covenants that Grantor will warrant and defend generally the title to
the Mortgaged Property against all claims and demands, subject to
<PAGE>
any easements and restrictions listed in a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously with the execution
and recordation of this Instrument and insuring Lender's interest in the
Mortgaged Property pursuant to this Instrument. Covenants. Grantor and Lender
covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following meanings:
(a) "Borrower" and "Grantor" mean the entities identified as "Borrower"
and "Grantor" on the first page of this Instrument, together with all their
respective successors and assigns.
(b) "Collateral Agreement" means any separate agreement between Grantor
and Lender for the purpose of establishing replacement reserves for the
Mortgaged Property, establishing a fund to assure the completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Grantor and Lender which
provide for the establishment of any other fund, reserve or account.
(c) "Controlling Entity" means an entity which owns, directly or
indirectly through one or more intermediaries, (A) a general partnership
interest or more than 50% of the limited partnership interests in Grantor (if
Grantor is a partnership or joint venture), (B) a manager's interest in Grantor
or more than 50% of the ownership or membership interests in Grantor (if Grantor
is a limited liability company), or (C) more than 50% of any class of voting
stock of Grantor (if Grantor is a corporation).
(d) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.
(e) "Event of Default" means the occurrence of any event listed in
Section 22. "Fixtures" means all property which is so attached to the Land or
the Improvements as to constitute a fixture under applicable law, including:
machinery, equipment, engines, boilers, incinerators, installed building
materials; systems and equipment for the purpose of supplying or distributing
heating, cooling, electricity, gas, water, air, or light; antennas, cable,
wiring and conduits used in connection with radio, television, security, fire
prevention, or fire detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related machinery and equipment;
fire detection, prevention and extinguishing systems and apparatus; security and
access control systems and apparatus; plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,
dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants;
swimming pools; and exercise equipment.
(g) "Governmental Authority" means any board, commission, department or
body of any municipal, county, state or federal governmental unit, or any
subdivision of any of them, that has or acquires jurisdiction over the Mortgaged
Property or the use, operation or improvement of the Mortgaged Property.
(h) "Hazardous Materials" means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives;
flammable
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materials; radioactive materials; polychlorinated biphenyls ("PCBs") and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(i) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Grantor or to the Mortgaged Property.
Hazardous Materials Laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the
Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, and their state analogs.
(j) "Impositions" and "Imposition Deposits" are defined in Section
7(a).
(k) "Improvements" means the buildings, structures, improvements, and
alterations now constructed or at any time in the future constructed or placed
upon the Land, including any future replacements and additions.
(l) "Indebtedness" means the principal of, interest on, and all other
amounts due at any time under, the Brookdale Calif - RC Guaranty, this
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances as provided in Section 12 to protect the
security of this Instrument.
(m) "Initial Owners" means, with respect to Grantor, the persons or
entities who on the date of the Note own in the aggregate 100% of the ownership
interests in Grantor.
(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all of Grantor's interest in present and future
leases, residential agreements, subleases, licenses, concessions or grants or
other possessory interests now or hereafter in force, whether oral or written,
covering or affecting the Mortgaged Property, or any portion of the Mortgaged
Property (including proprietary leases or occupancy agreements if Grantor is a
cooperative housing corporation), and all modifications, extensions or renewals.
The term "Leases" shall not include the Grantor's interest in the Operator Lease
or the Leasehold Estate.
(p) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument, or any subsequent holder of the Note.
(q) "Loan Documents" means the Brookdale Calif - RC Guaranty, this
Instrument, all guaranties, all indemnity agreements, all Collateral Agreements,
O&M Programs, and any other documents now or in the future executed by Grantor
or any guarantor in connection with the Indebtedness.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices under
the Note, this Instrument and any
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other Loan Document, and otherwise to service the loan evidenced by the Note for
the benefit of Lender. Unless Grantor receives notice to the contrary, the Loan
Servicer is the entity identified as "Lender" in the first paragraph of this
Instrument.
(s) "Mortgaged Property" means all of Grantor's present and future
right, title and interest in and to all of the following:
(1) Operator Lease and Leasehold Estate; provided, however,
the Grantor's rights in the certificates of deposit identified as
Certificate A and Certificate B in the Operator Lease shall not be
deemed to be a part of the Mortgaged Property;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights,
development rights, zoning rights and other similar rights or
interests, easements, tenements, rights-of-way, strips and gores of
land, streets, alleys, roads, sewer rights, waters, watercourses, and
appurtenances related to or benefitting the Land or the Improvements,
or both, and all rights-of-way, streets, alleys and roads which may
have been or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the
Land, the Improvements, the Fixtures, the Personalty or any other part
of the Mortgaged Property, whether or not Grantor obtained the
insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be
made by any municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any other part
of the Mortgaged Property, including any awards or settlements
resulting from condemnation proceedings or the total or partial taking
of the Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property under the power of eminent domain
or otherwise and including any conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale
of the Leasehold Estate, the Improvements, the Fixtures, the Personalty
or any other part of the Mortgaged Property entered into by Grantor now
or in the future, including cash or securities deposited to secure
performance by parties of their obligations;
(9) all proceeds from the conversion, voluntary or
involuntary, of any of the above into cash or liquidated claims, and
the right to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of the
Mortgaged Property, and all undisbursed proceeds of the loan secured by
this Instrument and, if Grantor is a cooperative housing corporation,
maintenance charges or assessments payable by shareholders or
residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any municipal,
state or federal authority or insurance company (other than refunds
applicable to periods before the real property tax year in which this
Instrument is dated);
(14) all tenant or resident's security deposits which have not
been forfeited by any tenant under any Lease; and
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(15) all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade names, and
goodwill relating to any of the Mortgaged Property.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda, as such
Multifamily Note may be amended from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment (hardware
and software) and other tangible personal property (other than Fixtures) which
are used now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements and all other intangible property and rights relating to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or
non-residential space), service fees and charges, revenues and other income of
the Land or the Improvements, including parking fees, laundry and vending
machine income and fees and charges for food, health care and other services
provided at the Mortgaged Property, whether now due, past due, or to become due,
and deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are levied,
assessed or imposed by any public authority or quasi-public authority, and
which, if not paid, will become a lien, on the Land or the Improvements.
(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law); (B) the
granting, creating or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary or by operation of law); (C) the issuance or
other creation of an ownership interest in a legal entity, including a
partnership interest, interest in a limited liability company or corporate
stock; (D) the withdrawal, retirement, removal or involuntary resignation of a
partner in a partnership or a member or manager in a limited liability company;
or (E) the merger, dissolution, liquidation, or consolidation of a legal entity
or the reconstitution of one type of legal entity into another type of legal
entity. "Transfer" does not include (i) a conveyance of the Mortgaged Property
at a judicial or non-judicial foreclosure sale under this Instrument or (ii) the
Mortgaged Property becoming part of a bankruptcy estate by operation of law
under the United States Bankruptcy Code. For purposes of defining the term
"Transfer," the term "partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability partnership, and the term
"partner" shall mean a general partner, a limited partner and a joint venturer.
Notwithstanding anything in this paragraph to the contrary, a Transfer will not
include a transfer of the Mortgaged
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Property to the Borrower under the terms of the Operator Lease so long as the
Borrower satisfies the conditions set forth in section 17(e) hereof.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is also
a security agreement under the Uniform Commercial Code for any of the Mortgaged
Property which, under applicable law, may be subject to a security interest
under the Uniform Commercial Code, whether acquired now or in the future, and
all products and cash and non-cash proceeds thereof (collectively, "UCC
Collateral"), and Grantor hereby grants to Lender a security interest in the UCC
Collateral. Grantor shall execute and deliver to Lender, upon Lender's request,
financing statements, continuation statements and amendments, in such form as
Lender may require to perfect or continue the perfection of this security
interest. Grantor shall pay all filing costs and all costs and expenses of any
record searches for financing statements that Lender may require. Without the
prior written consent of Lender, Grantor shall not create or permit to exist any
other lien or security interest in any of the UCC Collateral. If an Event of
Default has occurred and is continuing, Lender shall have the remedies of a
secured party under the Uniform Commercial Code, in addition to all remedies
provided by this Instrument or existing under applicable law. In exercising any
remedies, Lender may exercise its remedies against the UCC Collateral separately
or together, and in any order, without in any way affecting the availability of
Lender's other remedies. This Instrument constitutes a financing statement with
respect to any part of the Mortgaged Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.
(a) As part of the consideration for the Indebtedness, Grantor absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention
of Grantor to establish a present, absolute and irrevocable transfer and
assignment to Lender of all Rents and to authorize and empower Lender to collect
and receive all Rents without the necessity of further action on the part of
Grantor. Promptly upon request by Lender, Grantor agrees to execute and deliver
such further assignments as Lender may from time to time require. Grantor and
Lender intend this assignment of Rents to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute assignment of
Rents, and for no other purpose, Rents shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if this
present, absolute and unconditional assignment of Rents is not enforceable by
its terms under the laws of the Property Jurisdiction, then the Rents shall be
included as a part of the Mortgaged Property and it is the intention of the
Grantor that in this circumstance this Instrument create and perfect a lien on
Rents in favor of Lender, which lien shall be effective as of the date of this
Instrument.
(b) After the occurrence of an Event of Default, Grantor authorizes
Lender to collect, sue for and compromise Rents and directs each tenant of the
Mortgaged Property to pay all Rents to, or as directed by, Lender. However,
until the occurrence of an Event of Default, Lender hereby grants to Grantor a
revocable license to collect and receive all Rents, to hold all Rents in trust
for the benefit of Lender and to apply all Rents to pay the amounts due under
the Operator Lease including the "Basic Rent" as defined in the Operator Lease
and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and expenses of
managing, operating and maintaining the Mortgaged Property,
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including utilities, Taxes and insurance premiums (to the extent not included in
Imposition Deposits), tenant improvements and other capital expenditures. So
long as no Event of Default has occurred and is continuing, the Rents remaining
after application pursuant to the preceding sentence may be retained by Grantor
free and clear of, and released from, Lender's rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of Default, and
without the necessity of Lender entering upon and taking and maintaining control
of the Mortgaged Property directly, or by a receiver, Grantor's license to
collect Rents shall automatically terminate and Lender shall without notice be
entitled to all Rents as they become due and payable, including Rents then due
and unpaid. Grantor shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender's demand for Rents, Lender
may give, and Grantor hereby irrevocably authorizes Lender to give, notice to
all tenants of the Mortgaged Property instructing them to pay all Rents to
Lender, no tenant shall be obligated to inquire further as to the occurrence or
continuance of an Event of Default, and no tenant shall be obligated to pay to
Grantor any amounts which are actually paid to Lender in response to such a
notice. Any such notice by Lender shall be delivered to each tenant personally,
by mail or by delivering such demand to each rental unit. Grantor shall not
interfere with and shall cooperate with Lender's collection of such Rents.
(c) Grantor represents and warrants to Lender that Grantor has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the proceeds of
the loan evidenced by the Note), that Grantor has not performed, and Grantor
covenants and agrees that it will not perform, any acts and has not executed,
and shall not execute, any instrument which would prevent Lender from exercising
its rights under this Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any Rents for more
than two months prior to the due dates of such Rents. Grantor shall not collect
or accept payment of any Rents more than two months prior to the due dates of
such Rents.
(d) If an Event of Default has occurred and is continuing, Lender may,
regardless of the adequacy of Lender's security or the solvency of Grantor and
even in the absence of waste, enter upon and take and maintain full control of
the Mortgaged Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the operation and
maintenance of the Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of repairs to
the Mortgaged Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged Property, for the
purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for
such other purposes as Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender's security, without regard to Grantor's solvency and
without the necessity of giving prior notice (oral or written) to Grantor,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set forth
in the preceding sentence. If Lender elects to seek the appointment of a
receiver for the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Grantor, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the
appointment of a receiver ex parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender's entering upon and taking possession and control of
the Mortgaged Property, Grantor shall surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the
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case may be, all documents, records (including records on electronic or magnetic
media), accounts, surveys, plans, and specifications relating to the Mortgaged
Property and all security deposits and prepaid Rents. In the event Lender takes
possession and control of the Mortgaged Property, Lender may exclude Grantor and
its representatives from the Mortgaged Property. Grantor acknowledges and agrees
that the exercise by Lender of any of the rights conferred under this Section 3
shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged
Property so long as Lender has not itself entered into actual possession of the
Land and Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be liable to
account only to Grantor and only for those Rents actually received. Lender shall
not be liable to Grantor, anyone claiming under or through Grantor or anyone
having an interest in the Mortgaged Property, by reason of any act or omission
of Lender under this Section 3, and Grantor hereby releases and discharges
Lender from any such liability to the fullest extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of taking control
of and managing the Mortgaged Property and collecting the Rents, any funds
expended by Lender for such purposes shall become an additional part of the
Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged Property
by Lender or the receiver, as the case may be, and any application of Rents as
provided in this Instrument shall not cure or waive any Event of Default or
invalidate any other right or remedy of Lender under applicable law or provided
for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY. (a)
As part of the consideration for the Indebtedness, Grantor absolutely and
unconditionally assigns and transfers to Lender all of Grantor's right, title
and interest in, to and under the Leases, including Grantor's right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease. It is the intention of Grantor to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Grantor's right, title
and interest in, to and under the Leases. Grantor and Lender intend this
assignment of the Leases to be immediately effective and to constitute an
absolute present assignment and not an assignment for additional security only.
For purposes of giving effect to this absolute assignment of the Leases, and for
no other purpose, the Leases shall not be deemed to be a part of the "Mortgaged
Property" as that term is defined in Section 1(s). However, if this present,
absolute and unconditional assignment of the Leases is not enforceable by its
terms under the laws of the Property Jurisdiction, then the Leases shall be
included as a part of the Mortgaged Property and it is the intention of the
Grantor that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.
(b) Until Lender gives notice to Grantor of Lender's exercise of its
rights under this Section 4, Grantor shall have all rights, power and authority
granted to Grantor under any Lease (except as otherwise limited by this Section
or any other provision of this Instrument), including the right, power and
authority to modify the terms of any Lease or extend or terminate any Lease.
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Upon the occurrence of an Event of Default, the permission given to Grantor
pursuant to the preceding sentence to exercise all rights, power and authority
under Leases shall automatically terminate. Grantor shall comply with and
observe Grantor's obligations under all Leases, including Grantor's obligations
pertaining to the maintenance and disposition of tenant security deposits.
(c) Grantor acknowledges and agrees that the exercise by Lender, either
directly or by a receiver, of any of the rights conferred under this Section 4
shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged
Property so long as Lender has not itself entered into actual possession of the
Land and the Improvements. The acceptance by Lender of the assignment of the
Leases pursuant to Section 4(a) shall not at any time or in any event obligate
Lender to take any action under this Instrument or to expend any money or to
incur any expenses. Lender shall not be liable in any way for any injury or
damage to person or property sustained by any person or persons, firm or
corporation in or about the Mortgaged Property. Prior to Lender's actual entry
into and taking possession of the Mortgaged Property, Lender shall not (i) be
obligated to perform any of the terms, covenants and conditions contained in any
Lease (or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the Lease
or the Mortgaged Property; or (iii) be responsible for the operation, control,
care, management or repair of the Mortgaged Property or any portion of the
Mortgaged Property. The execution of this Instrument by Grantor shall constitute
conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Mortgaged Property is and shall be that of Grantor,
prior to such actual entry and taking of possession.
(d) Upon delivery of notice by Lender to Grantor of Lender's exercise
of Lender's rights under this Section 4 at any time after the occurrence of an
Event of Default, and without the necessity of Lender entering upon and taking
and maintaining control of the Mortgaged Property directly, by a receiver, or by
any other manner or proceeding permitted by the laws of the Property
Jurisdiction, Lender immediately shall have all rights, powers and authority
granted to Grantor under any Lease, including the right, power and authority to
modify the terms of any such Lease, or extend or terminate any such Lease.
(e) Grantor shall, promptly upon Lender's request, deliver to Lender an
executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be for
initial terms of at least thirty days and not more than two years, and shall not
include options to purchase.
(f) Grantor shall not lease any portion of the Mortgaged Property for
non-residential use except with the prior written consent of Lender and Lender's
prior written approval of the Lease agreement. Grantor shall not modify the
terms of, or extend or terminate, any Lease for non-residential use (including
any Lease in existence on the date of this Instrument) without the prior written
consent of Lender. Grantor shall, without request by Lender, deliver an executed
copy of each non-residential Lease to Lender promptly after such Lease is
signed. All non-residential Leases, including renewals or extensions of existing
Leases, shall specifically provide that (1) such Leases are subordinate to the
lien of this Instrument; (2) the tenant shall attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
sale or by Lender in any manner; (3) the tenant agrees to execute such further
evidences of attornment as
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Lender or any purchaser at a foreclosure sale may from time to time request; (4)
the Lease shall not be terminated by foreclosure or any other transfer of the
Mortgaged Property; (5) after a foreclosure sale of the Mortgaged Property,
Lender or any other purchaser at such foreclosure sale may, at Lender's or such
purchaser's option, accept or terminate such Lease; and (6) the tenant shall,
upon receipt after the occurrence of an Event of Default of a written request
from Lender, pay all Rents payable under the Lease to Lender.
(g) Grantor shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Grantor shall pay the Indebtedness when due in accordance
with the terms of the Brookdale Calif - RC Guaranty and the other Loan Documents
and shall perform, observe and comply with all other provisions of the Brookdale
Calif - RC Guaranty and the other Loan Documents. Grantor shall pay a prepayment
premium in connection with certain prepayments of the Indebtedness, including a
payment made after Lender's exercise of any right of acceleration of the
Indebtedness, as provided in the Brookdale Calif - RC Guaranty.
6. LIMITS ON PERSONAL LIABILITY. (a) Except as otherwise provided in
this Section 6, Grantor shall have no personal liability under the Brookdale
Calif - RC Guaranty, this Instrument or any other Loan Document for the
repayment of the Indebtedness or for the performance of any other obligations of
Grantor under the Loan Documents, and Lender's only recourse for the
satisfaction of the Indebtedness and the performance of such obligations shall
be Lender's exercise of its rights and remedies with respect to the Mortgaged
Property and any other collateral held by Lender as security for the
Indebtedness. This limitation on Grantor's liability shall not limit or impair
Lender's enforcement of its rights against Grantor , Borrower, any other
guarantor of the Indebtedness or any guarantor of any obligations of Borrower or
Grantor.
(b) Grantor shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to ZERO percent (0%) of the principal balance
of the Note, plus any other amounts for which Grantor has personal liability
under the Brookdale Calif - RC Guaranty or this Instrument.
(c) In addition to Grantor's personal liability under Section 6 (b),
Grantor shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (i) failure of Grantor to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of this
Instrument and the amount of all security deposits collected by Grantor from
tenants then in residence; (ii) failure of Grantor to apply all insurance
proceeds and condemnation proceeds as required by this Instrument, or (iii)
failure of Grantor or Borrower to comply with Section 14(d) or (e) of this
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Grantor's personal liability under
Section 6(b) and (c), all payments made by Borrower, Grantor or any guarantor of
the Note with respect to the Indebtedness and all amounts received by Lender
from the enforcement of its rights under this Instrument shall be applied first
to the portion of the Indebtedness for which Grantor has no personal liability.
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(e) Grantor shall become personally liable to Lender for the repayment
of all of the Indebtedness upon the occurrence of any of the following Events of
Default: (i) Grantor's or Borrower's acquisition of any property or operation of
any business not permitted by Section 33 of this Instrument, (ii) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Sections 16 or Section 21 of this Instrument, other than a
Transfer consisting solely of the involuntary removal or involuntary withdrawal
of a general partner in a limited partnership or a manager in a limited
liability company; or (iii) fraud or written intentional material
misrepresentation by Grantor, or any officer, director, partner, member or
employee of Grantor in connection with the application for or creation of the
Indebtedness or any request for any action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Grantor
shall be personally liable to Lender for (i) the performance of all of Grantor's
obligations under Section 18 of this Instrument (relating to environmental
matters); (ii) the costs of any audit under Section 14(d) of this Instrument,
and (iii) any costs and expenses incurred by Lender in connection with the
collection of any amount for which Grantor is personally liable under this
Section 6, including fees and out of pocket expenses of attorneys and expert
witnesses and the costs of conducting any independent audit of Grantor's books
and records to determine the amount for which Grantor has personal liability.
(g) To the extent that Grantor has personal liability under this
Section 6, Lender may exercise its rights against Grantor personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against Borrower or any guarantor,
or pursued any other rights available to Lender under the Note, the Brookdale
Calif - RC Guaranty, this Instrument, any other Loan Document or applicable law.
For purposes of this Section 6, the term "Mortgaged Property" shall not include
any funds that (i) have been applied by Grantor as required or permitted by this
Instrument prior to the occurrence of an Event of Default or (ii) Grantor was
unable to apply as required or permitted by this Instrument because of a
bankruptcy, receivership, or similar judicial proceeding.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Grantor shall deposit with Lender on the day monthly installments
of principal or interest, or both, are due under the Note (or on another day
designated in writing by Lender), until the Indebtedness is paid in full, an
additional amount sufficient to accumulate with Lender the entire sum required
to pay, when due (1) any water and sewer charges which, if not paid, may result
in a lien on all or any part of the Mortgaged Property, (2) the premiums for
fire and other hazard insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4) amounts for other
charges and expenses which Lender at any time reasonably deems necessary to
protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender's interests, all as
reasonably estimated from time to time by Lender, plus one-sixth of such
estimate. The amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the "Imposition Deposits". The obligations of
Grantor for which the Imposition Deposits are required are collectively referred
to in this Instrument as "Impositions". The amount of the Imposition Deposits
shall be sufficient to enable Lender to pay each Imposition before the last date
upon which such payment may be made without any penalty or interest charge being
added. Lender shall maintain records indicating how much of the monthly
Imposition Deposits and how much of the aggregate
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Imposition Deposits held by Lender are held for the purpose of paying Taxes,
insurance premiums and each other obligation of Grantor for which Imposition
Deposits are required. Any waiver by Lender of the requirement that Grantor
remit Imposition Deposits to Lender may be revoked by Lender, in Lender's
discretion, at any time upon notice to Grantor.
(b) Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency. Lender shall not be obligated to open
additional accounts or deposit Imposition Deposits in additional institutions
when the amount of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Lender shall apply the Imposition
Deposits to pay Impositions so long as no Event of Default has occurred and is
continuing. Unless applicable law requires, Lender shall not be required to pay
Grantor any interest, earnings or profits on the Imposition Deposits. Grantor
hereby pledges and grants to Lender a security interest in the Imposition
Deposits as additional security for all of Grantor's obligations under this
Instrument and the other Loan Documents. Any amounts deposited with Lender under
this Section 7 shall not be trust funds, nor shall they operate to reduce the
Indebtedness, unless applied by Lender for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by Lender. Lender
shall have no obligation to pay any Imposition to the extent it exceeds
Imposition Deposits then held by Lender. Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.
(d) If at any time the amount of the Imposition Deposits held by Lender
for payment of a specific Imposition exceeds the amount reasonably deemed
necessary by Lender plus one-sixth of such estimate, the excess shall be
credited against future installments of Imposition Deposits. If at any time the
amount of the Imposition Deposits held by Lender for payment of a specific
Imposition is less than the amount reasonably estimated by Lender to be
necessary plus one-sixth of such estimate, Grantor shall pay to Lender the
amount of the deficiency within 15 days after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender may
apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in Lender's discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender shall
refund to Grantor any Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Grantor shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform all
other obligations of Grantor under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Grantor or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither Lender's acceptance of an
amount which is less than all amounts then due and payable nor Lender's
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the
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application of any such amount to the Indebtedness, Grantor's obligations under
this Instrument and the Brookdale Calif - RC Guaranty shall remain unchanged.
10. COMPLIANCE WITH LAWS. Grantor shall comply in all material respects
with all laws, ordinances, regulations and requirements of any Governmental
Authority and all recorded lawful covenants and agreements relating to or
affecting the Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety, construction of
improvements on the Mortgaged Property, fair housing, zoning and land use, and
Leases. Grantor also shall comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits. Grantor shall at all
times maintain records sufficient to demonstrate compliance with the provisions
of this Section 10. Grantor shall take appropriate measures to prevent, and
shall not engage in or knowingly permit, any illegal activities at the Mortgaged
Property that could endanger tenants or visitors, result in damage to the
Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise
materially impair the lien created by this Instrument or Lender's interest in
the Mortgaged Property. Grantor represents and warrants to Lender that no
portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Grantor shall
not (a) except for any change in use approved by Lender, allow changes in the
use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in the
zoning classification of the Mortgaged Property, or (d) establish any
condominium or cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY. (a) If Grantor fails to perform
any of its obligations under this Instrument or any other Loan Document, or if
any action or proceeding is commenced which purports to affect the Mortgaged
Property, Lender's security or Lender's rights under this Instrument, including
eminent domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then Lender at
Lender's option may make such appearances, disburse such sums and take such
actions as Lender reasonably deems necessary to perform such obligations of
Grantor and to protect Lender's interest, including (1) payment of fees and out
of pocket expenses of attorneys, accountants, inspectors and consultants, (2)
entry upon the Mortgaged Property to make repairs or secure the Mortgaged
Property, (3) procurement of the insurance required by Section 19, and (4)
payment of amounts which Grantor has failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or under any
other provision of this Instrument that treats such disbursement as being made
under this Section 12, shall be added to, and become part of, the principal
component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the "Default Rate", as
defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged Property
(including
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environmental inspections and tests) during normal business hours, or at any
other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Grantor shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon Lender's request shall make
available at the Mortgaged Property, complete and accurate books of account and
records (including copies of supporting bills and invoices) adequate to reflect
correctly the operation of the Mortgaged Property, and copies of all written
contracts, Leases, and other instruments which affect the Mortgaged Property.
The books, records, contracts, Leases and other instruments shall be subject to
examination and inspection at any reasonable time by Lender.
(b) Grantor shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of
Grantor, a statement of income and expenses for Grantor's operation of
the Mortgaged Property for that fiscal year, a statement of changes in
financial position of Grantor relating to the Mortgaged Property for
that fiscal year and, when requested by Lender, a balance sheet showing
all assets and liabilities of Grantor relating to the Mortgaged
Property as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon Lender's request, a rent schedule
for the Mortgaged Property showing the name of each tenant, and for
each tenant, the space occupied, the lease expiration date, the rent
payable for the current month, the date through which rent has been
paid, and any related information requested by Lender;
(3) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon Lender's request, an accounting of
all security deposits held pursuant to all Leases, including the name
of the institution (if any) and the names and identification numbers of
the accounts (if any) in which such security deposits are held and the
name of the person to contact at such financial institution, along with
any authority or release necessary for Lender to access information
regarding such accounts;
(4) within 120 days after the end of each fiscal year of
Grantor, and at any other time upon Lender's request, a statement that
identifies all owners of any interest in Grantor and any Controlling
Entity and the interest held by each, if Grantor or a Controlling
Entity is a corporation, all officers and directors of Grantor and the
Controlling Entity, and if Grantor or a Controlling Entity is a limited
liability company, all managers who are not members;
(5) upon Lender's request, quarterly income and expense
statements for the Mortgaged Property;
(6) upon Lender's request at any time when an Event of Default
has occurred and is continuing, monthly income and expense statements
for the Mortgaged Property;
(7) upon Lender's request, a monthly property management
report for the Mortgaged Property, showing the number of inquiries made
and rental applications received from tenants or prospective tenants
and deposits received from tenants and any other information requested
by Lender; and
(8) upon Lender's request, a balance sheet, a statement of
income and expenses for Grantor and a statement of changes in financial
position of Grantor for Grantor's most recent fiscal year.
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(c) Each of the statements, schedules and reports required by Section
14(b) shall be certified to be complete and accurate by an individual having
authority to bind Grantor, and shall be in such form and contain such detail as
Lender may reasonably require. Lender also may require that any statements,
schedules or reports be audited at Grantor's expense by independent certified
public accountants acceptable to Lender.
(d) If Grantor fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), Lender shall have the right to
have Grantor's books and records audited, at Grantor's expense, by independent
certified public accountants selected by Lender in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender
shall become immediately due and payable and shall become an additional part of
the Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing, Grantor
shall deliver to Lender upon written demand all books and records relating to
the Mortgaged Property or its operation.
(f) Grantor authorizes Lender to obtain a credit report on Grantor at
any time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Grantor shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Grantor shall pay the
expenses of operating, managing, maintaining and repairing the Mortgaged
Property (including insurance premiums, utilities, repairs and replacements)
before the last date upon which each such payment may be made without any
penalty or interest charge being added.
(c) As long as no Event of Default exists and Grantor has timely
delivered to Lender any bills or premium notices that it has received, Grantor
shall not be obligated to pay Taxes, insurance premiums or any other individual
Imposition to the extent that sufficient Imposition Deposits are held by Lender
for the purpose of paying that specific Imposition. If an Event of Default
exists, Lender may exercise any rights Lender may have with respect to
Imposition Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Grantor for failing to pay any
Impositions to the extent that any Event of Default has occurred and is
continuing, insufficient Imposition Deposits are held by Lender at the time an
Imposition becomes due and payable or Grantor has failed to provide Lender with
bills and premium notices as provided above.
(d) Grantor, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity of
any Imposition other than insurance premiums, if (1) Grantor notifies Lender of
the commencement or expected commencement of such proceedings, (2) the Mortgaged
Property is not in danger of being sold or forfeited, (3) Grantor deposits with
Lender reserves sufficient to pay the contested Imposition, if requested by
Lender, and (4) Grantor furnishes whatever additional security is required in
the proceedings or is reasonably requested by Lender, which may include the
delivery to Lender of the reserves established by Grantor to pay the contested
Imposition.
(e) Grantor shall promptly deliver to Lender a copy of all notices of,
and invoices for, Impositions, and if Grantor pays any Imposition directly,
Grantor shall promptly furnish to Lender receipts evidencing such payments.
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16. LIENS; ENCUMBRANCES. Grantor acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
"Lien") on the Mortgaged Property (other than the lien of this Instrument) or on
certain ownership interests in Grantor, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over the lien of
this Instrument, is a "Transfer" which constitutes an Event of Default and
subjects Grantor to personal liability under the Brookdale Calif - RC Guaranty.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
Grantor (a) shall not commit waste or permit impairment or deterioration of the
Mortgaged Property, (b) shall not abandon the Mortgaged Property, (c) shall
restore or repair promptly, in a good and workmanlike manner, any damaged part
of the Mortgaged Property to the equivalent of its original condition, or such
other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair, (d) shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with items of equal or
better function and quality, (e) shall provide for professional third party
management of the Mortgaged Property by a residential rental property manager
familiar with senior housing, satisfactory to Lender under a contract approved
by Lender in writing if the Mortgaged Property is not operated by Grantor under
the terms of the Operator Lease, and (f) shall give notice to Lender of and,
unless otherwise directed in writing by Lender, shall appear in and defend any
action or proceeding purporting to affect the Mortgaged Property, Lender's
security or Lender's rights under this Instrument. Grantor shall not (and shall
not permit any tenant or other person to) remove, demolish or alter the
Mortgaged Property or any part of the Mortgaged Property except in connection
with the replacement of tangible Personalty.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations and
maintenance approved in writing by Lender (an "O&M Program") or matters
described in Section 18(b), Grantor shall not cause or permit any of the
following:
(1) the presence, use, generation, release, treatment,
processing, storage (including storage in above ground and underground
storage tanks), handling, or disposal of any Hazardous Materials on or
under the Mortgaged Property or any other property of Grantor that is
adjacent to the Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or
any other property of Grantor that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in violation of
Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or any
property of Grantor that is adjacent to the Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the safe and
lawful use and storage of quantities of (1) pre-packaged supplies, cleaning
materials and petroleum products
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customarily used in the operation and maintenance of comparable multifamily
properties, (2) cleaning materials, personal grooming items and other items sold
in pre-packaged containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (3) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Mortgaged Property's parking areas, so long as all of the
foregoing are used, stored, handled, transported and disposed of in compliance
with Hazardous Materials Laws.
(c) Grantor shall take all commercially reasonable actions (including
the inclusion of appropriate provisions in any Leases executed after the date of
this Instrument) to prevent its employees, agents, and contractors, and all
tenants and other occupants from causing or permitting any Prohibited Activities
or Conditions. Grantor shall not lease or allow the sublease or use of all or
any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.
(d) If an O&M Program has been established with respect to Hazardous
Materials, Grantor shall comply in a timely manner with, and cause all
employees, agents, and contractors of Grantor and any other persons present on
the Mortgaged Property to comply with the O&M Program. All costs of performance
of Grantor's obligations under any O&M Program shall be paid by Grantor, and
Lender's out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and Grantor's performance shall be paid by Grantor
upon demand by Lender. Any such out-of-pocket costs of Lender which Grantor
fails to pay promptly shall become an additional part of the Indebtedness as
provided in Section 12.
(e) Grantor represents and warrants to Lender that, except as
previously disclosed by Grantor to Lender in writing:
(1) Grantor has not at any time engaged in, caused or
permitted any Prohibited Activities or Conditions;
(2) to the best of Grantor's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist or have
existed;
(3) except to the extent previously disclosed by Grantor to
Lender in writing, the Mortgaged Property does not now contain any
underground storage tanks, and, to the best of Grantor's knowledge
after reasonable and diligent inquiry, the Mortgaged Property has not
contained any underground storage tanks in the past. If there is an
underground storage tank located on the Property which has been
previously disclosed by Grantor to Lender in writing, that tank
complies with all requirements of Hazardous Materials Laws;
(4) Grantor has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of
Hazardous Materials. Without limiting the generality of the foregoing,
Grantor has obtained all Environmental Permits required for the
operation of the Mortgaged Property in accordance with Hazardous
Materials Laws now in effect and all such Environmental Permits are in
full force and effect;
(5) no event has occurred with respect to the Mortgaged
Property that constitutes, or with the passing of time or the giving of
notice would constitute, noncompliance with the terms of any
Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending
or, to the best of Grantor's knowledge after reasonable and diligent
inquiry, threatened that involve the
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Mortgaged Property and allege, arise out of, or relate to any
Prohibited Activity or Condition; and
(7) Grantor has not received any complaint, order, notice of
violation or other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions or Hazardous
Materials, or any other environmental, health or safety matters
affecting the Mortgaged Property or any other property of Grantor that
is adjacent to the Mortgaged Property. The representations and
warranties in this Section 18 shall be continuing representations and
warranties that shall be deemed to be made by Grantor throughout the
term of the loan evidenced by the Note, until the Indebtedness has been
paid in full.
(f) Grantor shall promptly notify Lender in writing upon the occurrence
of any of the following events:
(1) Grantor's discovery of any Prohibited Activity or
Condition;
(2) Grantor's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any Governmental
Authority or other person with regard to present or future alleged
Prohibited Activities or Conditions or any other environmental, health
or safety matters affecting the Mortgaged Property or any other
property of Grantor that is adjacent to the Mortgaged Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement. Any such notice given by
Grantor shall not relieve Grantor of, or result in a waiver of, any
obligation under this Instrument, the Brookdale Calif - RC Guaranty, or
any other Loan Document.
(g) Grantor shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required by Lender in
connection with any foreclosure or deed in lieu of foreclosure, or as a
condition of Lender's consent to any Transfer under Section 21, or required by
Lender following a reasonable determination by Lender that Prohibited Activities
or Conditions may exist. Any such costs incurred by Lender (including the fees
and out-of-pocket costs of attorneys and technical consultants whether incurred
in connection with any judicial or administrative process or otherwise) which
Grantor fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of Lender and
Lender shall have no obligation to disclose or otherwise make available to
Grantor or any other party such results or any other information obtained by
Lender in connection with its Environmental Inspections. Lender hereby reserves
the right, and Grantor hereby expressly authorizes Lender, to make available to
any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by Lender
with respect to the Mortgaged Property. Grantor consents to Lender notifying any
party (either as part of a notice of sale or otherwise) of the results of any of
Lender's Environmental Inspections. Grantor acknowledges that Lender cannot
control or otherwise assure the truthfulness or accuracy of the results of any
of its Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may have a
material and adverse effect upon the amount which a party may bid at such sale.
Grantor agrees that Lender shall have no liability whatsoever as a result of
delivering the results
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of any of its Environmental Inspections to any third party, and Grantor hereby
releases and forever discharges Lender from any and all claims, damages, or
causes of action, arising out of, connected with or incidental to the results
of, the delivery of any of Lender's Environmental Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("Remedial Work") is necessary to comply with
any Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property under any Hazardous Materials Law, Grantor
shall, by the earlier of (1) the applicable deadline required by Hazardous
Materials Law or (2) 30 days after notice from Lender demanding such action,
begin performing the Remedial Work, and thereafter diligently prosecute it to
completion, and shall in any event complete the work by the time required by
applicable Hazardous Materials Law. If Grantor fails to begin on a timely basis
or diligently prosecute any required Remedial Work, Lender may, at its option,
cause the Remedial Work to be completed, in which case Grantor shall reimburse
Lender on demand for the cost of doing so. Any reimbursement due from Grantor to
Lender shall become part of the Indebtedness as provided in Section 12.
(i) Grantor shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial order which arises
from any alleged Prohibited Activity or Condition.
(j) Grantor shall indemnify, hold harmless and defend (i) Lender, (ii)
any prior owner or holder of the Note, (iii) the Loan Servicer, (iv) any prior
Loan Servicer, (v) the officers, directors, shareholders, partners, employees
and trustees of any of the foregoing, and (vi) the heirs, legal representatives,
successors and assigns of each of the foregoing (collectively, the
"Indemnitees") from and against all proceedings, claims, damages, penalties and
costs (whether initiated or sought by Governmental Authorities or private
parties), including fees and out of pocket expenses of attorneys and expert
witnesses, investigatory fees, and remediation costs, whether incurred in
connection with any judicial or administrative process or otherwise, arising
directly or indirectly from any of the following:
(1) any breach of any representation or warranty of Grantor in
this Section 18;
(2) any failure by Grantor to perform any of its obligations
under this Section 18;
(3) the existence or alleged existence of any Prohibited
Activity or Condition;
(4) the presence or alleged presence of Hazardous Materials on
or under the Mortgaged Property or any property of Grantor that is
adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials
Law.
(k) Counsel selected by Grantor to defend Indemnitees shall be subject
to the approval of those Indemnitees. However, any Indemnitee may elect to
defend any claim or legal or administrative proceeding at the Grantor's expense.
(l) Grantor shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim"), settle or compromise the Claim if the settlement (1)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender; or (2) may
materially and adversely affect Lender, as determined by Lender in its
discretion.
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(m) Grantor's obligation to indemnify the Indemnitees shall not be
limited or impaired by any of the following, or by any failure of Grantor or any
guarantor to receive notice of or consideration for any of the following:
(1) any amendment or modification of any Loan Document;
(2) any extensions of time for performance required by any
Loan Document;
(3) any provision in any of the Loan Documents limiting
Lender's recourse to property securing the Indebtedness, or limiting
the personal liability of Grantor or any other party for payment of all
or any part of the Indebtedness;
(4) the accuracy or inaccuracy of any representations and
warranties made by Grantor under this Instrument or any other Loan
Document;
(5) the release of Grantor or any other person, by Lender or
by operation of law, from performance of any obligation under any Loan
Document;
(6) the release or substitution in whole or in part of any
security for the Indebtedness; and
(7) Lender's failure to properly perfect any lien or security
interest given as security for the Indebtedness.
(n) Grantor shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or administrative
proceeding incident to any matters against which Indemnitees are
entitled to be indemnified under this Section 18;
(2) reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are entitled to
be indemnified under this Section 18; and
(3) reimburse Indemnitees for any and all expenses, including
fees and out of pocket expenses of attorneys and expert witnesses, paid
or incurred in connection with the enforcement by Indemnitees of their
rights under this Section 18, or in monitoring and participating in any
legal or administrative proceeding.
(o) In any circumstances in which the indemnity under this Section 18
applies, Lender may employ its own legal counsel and consultants to prosecute,
defend or negotiate any claim or legal or administrative proceeding and Lender,
with the prior written consent of Grantor (which shall not be unreasonably
withheld, delayed or conditioned) may settle or compromise any action or legal
or administrative proceeding. Grantor shall reimburse Lender upon demand for all
costs and expenses incurred by Lender, including all costs of settlements
entered into in good faith, and the fees and out of pocket expenses of such
attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any and
all other obligations and liabilities that Grantor may have under applicable law
or under other Loan Documents, and each Indemnitee shall be entitled to
indemnification under this Section 18 without regard to whether Lender or that
Indemnitee has exercised any rights against the Mortgaged Property or any other
security, pursued any rights against any guarantor, or pursued any other rights
available under the Loan Documents or applicable law. If Grantor consists of
more than one person or entity, the obligation of those persons or entities to
indemnify the Indemnitees under this Section 18 shall be joint and several. The
obligation of Grantor to indemnify the Indemnitees under this Section 18 shall
survive any repayment or discharge of the
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Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of
any deed in lieu of foreclosure, and any release of record of the lien of this
Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Grantor shall keep the Improvements insured at all times against
such hazards as Lender may from time to time require, which insurance shall
include but not be limited to coverage against loss by fire and allied perils,
general boiler and machinery coverage, and business income coverage. Lender's
insurance requirements may change from time to time throughout the term of the
Indebtedness. If Lender so requires, such insurance shall also include sinkhole
insurance, mine subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage. If any of the Improvements is located in an
area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is
available in that area, Grantor shall insure such Improvements against loss by
flood.
(b) All premiums on insurance policies required under Section 19(a)
shall be paid in the manner provided in Section 7, unless Lender has designated
in writing another method of payment. All such policies shall also be in a form
approved by Lender. All policies of property damage insurance shall include a
non-contributing, non-reporting mortgage clause in favor of, and in a form
approved by, Lender. Lender shall have the right to hold the original policies
or duplicate original policies of all insurance required by Section 19(a).
Grantor shall promptly deliver to Lender a copy of all renewal and other notices
received by Grantor with respect to the policies and all receipts for paid
premiums. At least 30 days prior to the expiration date of a policy, Grantor
shall deliver to Lender the original (or a duplicate original) of a renewal
policy in form satisfactory to Lender.
(c) Grantor shall maintain at all times commercial general liability
insurance, workers' compensation insurance and such other liability, errors and
omissions and fidelity insurance coverages as Lender may from time to time
require.
(d) All insurance policies and renewals of insurance policies required
by this Section 19 shall be in such amounts and for such periods as Lender may
from time to time require, and shall be issued by insurance companies
satisfactory to Lender.
(e) Grantor shall comply with all insurance requirements and shall not
permit any condition to exist on the Mortgaged Property that would invalidate
any part of any insurance coverage that this Instrument requires Grantor to
maintain.
(f) In the event of loss, Grantor shall give immediate written notice
to the insurance carrier and to Lender. Grantor hereby authorizes and appoints
Lender as attorney-in-fact for Grantor to make proof of loss, to adjust and
compromise any claims under policies of property damage insurance, to appear in
and prosecute any action arising from such property damage insurance policies,
to collect and receive the proceeds of property damage insurance, and to deduct
from such proceeds Lender's expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and therefore is
irrevocable. However, nothing contained in this Section 19 shall require Lender
to incur any expense or take any action. Lender may, at Lender's option, (1)
hold the balance of such proceeds to be used to reimburse Grantor for the cost
of restoring and repairing the Mortgaged Property to the equivalent of its
original condition or to a condition approved by Lender (the "Restoration"), or
(2) apply the balance of
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such proceeds to the payment of the Indebtedness, whether or not then due. To
the extent Lender determines to apply insurance proceeds to Restoration, Lender
shall do so in accordance with Lender's then-current policies relating to the
restoration of casualty damage on similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds to
the payment of the Indebtedness if all of the following conditions are met: (1)
no Event of Default (or any event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default) has occurred and
is continuing; (2) Lender determines, in its discretion, that there will be
sufficient funds to complete the Restoration; (3) Lender determines, in its
discretion, that the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating costs and other
expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; and (4) Lender determines, in
its discretion, that the Restoration will be completed before the earlier of (A)
one year before the maturity date of the Note or (B) one year after the date of
the loss or casualty.
(h) If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically succeed to
all rights of Grantor in and to any insurance policies and unearned insurance
premiums and in and to the proceeds resulting from any damage to the Mortgaged
Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Grantor shall promptly notify Lender of any action or proceeding
relating to any condemnation or other taking, or conveyance in lieu thereof, of
all or any part of the Mortgaged Property, whether direct or indirect (a
"Condemnation"). Grantor shall appear in and prosecute or defend any action or
proceeding relating to any Condemnation unless otherwise directed by Lender in
writing. Grantor authorizes and appoints Lender as attorney-in-fact for Grantor
to commence, appear in and prosecute, in Lender's or Grantor's name, any action
or proceeding relating to any Condemnation and to settle or compromise any claim
in connection with any Condemnation. This power of attorney is coupled with an
interest and therefore is irrevocable. However, nothing contained in this
Section 20 shall require Lender to incur any expense or take any action. Grantor
hereby transfers and assigns to Lender all right, title and interest of Grantor
in and to any award or payment with respect to (i) any Condemnation, or any
conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged
Property caused by governmental action that does not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts, at Lender's
option, to the restoration or repair of the Mortgaged Property or to the payment
of the Indebtedness, with the balance, if any, to Grantor. Unless Lender
otherwise agrees in writing, any application of any awards or proceeds to the
Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments. Grantor agrees
to execute such further evidence of assignment of any awards or proceeds as
Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN GRANTOR. [RIGHT
TO UNLIMITED TRANSFERS -- WITH LENDER APPROVAL]
(a) The occurrence of any of the following events shall constitute an
Event of Default under this Instrument:
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(1) a Transfer of all or any part of the Mortgaged Property or any interest in
the Mortgaged Property;
(2) if Grantor is a limited partnership, a Transfer of (A) any general
partnership interest, or (B) limited partnership interests in Grantor that would
cause the Initial Owners of Grantor to own less than 51% of all limited
partnership interests in Grantor;
(3) if Grantor is a general partnership or a joint venture, a Transfer of any
general partnership or joint venture interest in Grantor;
(4) if Grantor is a limited liability company, a Transfer of (A) any membership
interest in Grantor which would cause the Initial Owners to own less than 51% of
all the membership interests in Grantor, or (B) any membership or other interest
of a manager in Grantor;
(5) if Grantor is a corporation, (A) the Transfer of any voting stock in Grantor
which would cause the Initial Owners to own less than 51% of any class of voting
stock in Grantor or (B) if the outstanding voting stock in Grantor is held by
100 or more shareholders, one or more transfers by a single transferor within a
12-month period affecting an aggregate of 5% or more of that stock; and
(6) if Grantor is a trust, (A) a Transfer of any beneficial interest in Grantor
which would cause the Initial Owners to own less than 51% of all the beneficial
interests in Grantor, or (B) the termination or revocation of the trust, or (C)
the removal, appointment or substitution of a trustee of Grantor.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not constitute
an Event of Default under this Instrument, notwithstanding any provision of
Section 21(a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation of law upon the
death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling unit for a term
of two years or less not containing an option to purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and quality,
which are free of liens, encumbrances and security interests other than those
created by the Loan Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender determines that the
easement will not materially affect the operation or value of the Mortgaged
Property or Lender's interest in the Mortgaged Property, and Grantor pays to
Lender, upon demand, all costs and expenses incurred by Lender in connection
with reviewing Grantor's request; and
(6) the creation of a mechanic's, materialman's, or judgment lien against the
Mortgaged Property which is released of record or otherwise remedied to Lender's
satisfaction within 30 days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at which
the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness, to a Transfer that would otherwise violate
this Section 21 if, prior to the Transfer, Grantor has satisfied each of the
following requirements:
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(1) the submission to Lender of all information required by Lender to make the
determination required by this Section 21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit, management and other
standards (including but not limited to any standards with respect to previous
relationships between Lender and the transferee and the organization of the
transferee) customarily applied by Lender at the time of the proposed Transfer
to the approval of Borrowers in connection with the origination or purchase of
similar mortgages on multifamily properties;
(4) the Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition that are customarily applied by Lender at
the time of the proposed Transfer to the approval of properties in connection
with the origination or purchase of similar mortgages on multifamily properties;
(5) in the case of a Transfer of all or any part of the Mortgaged Property, (A)
the execution by the transferee of an assumption agreement that is acceptable to
Lender and that, among other things, requires the transferee to perform all
obligations of Grantor set forth in the Note, this Instrument and any other Loan
Documents, and may require that the transferee comply with any provisions of
this Instrument or any other Loan Document which previously may have been waived
by Lender, and (B) if a guaranty has been executed and delivered in connection
with the Note, this Instrument or any of the other Loan Documents, the
transferee causes one or more individuals or entities acceptable to Lender to
execute and deliver to Lender a guaranty in a form acceptable to Lender;
(6) in the case of a Transfer of any interest in a Controlling Entity, if a
guaranty has been executed and delivered in connection with the Guaranty, this
Instrument or any of the other Loan Documents, the Grantor causes one or more
individuals or entities acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender; and
(7) Lender's receipt of all of the following:
(A) a review fee in the amount of $2000;
(B) a transfer fee in an amount equal to 1.0% of the unpaid principal balance of
the Indebtedness immediately before the applicable Transfer; and
(C) the amount of Lender's out-of-pocket costs (including reasonable attorneys'
fees) incurred in reviewing the Transfer request.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Grantor to pay or deposit when due any amount
required by the Brookdale Calif - RC Guaranty, this Instrument or any other Loan
Document;
(b) any failure by Grantor to maintain the insurance coverage required
by Section 19;
(c) any failure by Grantor to comply with the provisions of Section 33;
(d) fraud or material intentional misrepresentation or material
omission by Grantor, any of its officers, directors, trustees, general partners
or managers or any guarantor in connection with (A) the application for or
creation of the Indebtedness, (B) any financial statement, rent roll, or other
report or information provided to Lender during the term of the Indebtedness, or
(C) any request for Lender's consent to any proposed action, including a request
for disbursement of funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
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(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender's reasonable judgment, could result in a
forfeiture of the Mortgaged Property or otherwise materially impair the lien
created by this Instrument or Lender's interest in the Mortgaged Property;
(g) any failure by Grantor to perform any of its obligations under this
Instrument (other than those specified in Sections 22(a) through (f) ,as and
when required, which continues for a period of 30 days after notice of such
failure by Lender to Grantor. However, no such notice or grace period shall
apply in the case of any such failure which could, in Lender's judgment, absent
immediate exercise by Lender of a right or remedy under this Instrument, result
in harm to Lender, impairment of the Note or this Instrument or any other
security given under any other Loan Document;
(h) any failure by Grantor to perform any of its obligations as and
when required under any Loan Document other than this Instrument which continues
beyond the applicable cure period, if any, specified in that Loan Document;
(i) any exercise by the holder of any debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of a
right to declare all amounts due under that debt instrument immediately due and
payable; Grantor voluntarily files for bankruptcy protection under the United
States Bankruptcy Code or voluntarily becomes subject to any reorganization,
receivership, insolvency proceeding or other similar proceeding pursuant to any
other federal or state law affecting debtor and creditor rights, or an
involuntary case is commenced against Grantor by any creditor (other than
Lender) of Grantor pursuant to the United States Bankruptcy Code or other
federal or state law affecting debtor and creditor rights and is not dismissed
or discharged within 60 days after filing; any Event of Default shall occur
under the Borrower Mortgage or under any document or instrument executed and
delivered in connection therewith.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order.
24. FORBEARANCE. (a) Lender may (but shall not be obligated to) agree
with Grantor, from time to time, and without giving notice to, or obtaining the
consent of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions: extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan Document; release anyone liable for
the payment of any amounts under this Instrument, the Brookdale Calif-RC
Guaranty, or any other Loan Document; accept a renewal of the Note; modify the
terms and time of payment of the Indebtedness; join in any extension or
subordination agreement; release any Mortgaged Property; take or release other
or additional security; modify the rate of interest or period of amortization of
the Note or change the amount of the monthly installments payable under the
Note; and otherwise modify this Instrument, the Brookdale Calif-RC Guaranty, the
Note, or any other Loan Document.
(b) Any forbearance by Lender in exercising any right or remedy under
the Note, this Instrument, the Brookdale Calif-RC Guaranty or any other Loan
Document or otherwise afforded
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by applicable law, shall not be a waiver of or preclude the exercise of any
right or remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender's right to require
prompt payment when due of all other payments on account of the Indebtedness or
to exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Indebtedness shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right available
to Lender. Lender's receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Grantor is interpreted so that
any charge provided for in any Loan Document, whether considered separately or
together with other charges levied in connection with any other Loan Document,
violates that law, and Grantor is entitled to the benefit of that law, that
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the principal of the Indebtedness.
For the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Grantor has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Grantor hereby waives the right
to assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, the Brookdale Calif - RC Guaranty, any other Loan Document
or applicable law. Lender shall have the right to determine the order in which
any or all portions of the Indebtedness are satisfied from the proceeds realized
upon the exercise of such remedies. Grantor and any party who now or in the
future acquires a security interest in the Mortgaged Property and who has actual
or constructive notice of this Instrument waives any and all right to require
the marshalling of assets or to require that any of the Mortgaged Property be
sold in the inverse order of alienation or that any of the Mortgaged Property be
sold in parcels or as an entirety in connection with the exercise of any of the
remedies permitted by applicable law or provided in this Instrument.
28. FURTHER ASSURANCES. Grantor shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to better assure,
grant, and convey to Lender the rights intended to be granted, now or in the
future, to Lender under this Instrument and the Loan Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Grantor shall deliver to Lender a written statement, signed and acknowledged by
Grantor,
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certifying to Lender or any person designated by Lender, as of the date of such
statement, (i) that the Loan Documents are unmodified and in full force and
effect (or, if there have been modifications, that the Loan Documents are in
full force and effect as modified and setting forth such modifications); (ii)
the unpaid principal balance of the Note; (iii) the date to which interest under
the Note has been paid; (iv) that Grantor is not in default in paying the
Indebtedness or in performing or observing any of the covenants or agreements
contained in this Instrument or any of the other Loan Documents (or, if the
Grantor is in default, describing such default in reasonable detail); (v)
whether or not there are then existing any setoffs or defenses known to Grantor
against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the laws
of the jurisdiction in which the Land is located (the "Property Jurisdiction").
(b) Grantor agrees that any controversy arising under or in relation to
the Note, the Brookdale Calif - RC Guaranty, this Instrument, or any other Loan
Document shall be litigated exclusively in the Property Jurisdiction. The state
and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to the Note, the Brookdale Calif - RC Guaranty,
any security for the Indebtedness, or any other Loan Document. Grantor
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice") under or
concerning this Instrument shall be in writing. Each notice shall be addressed
to the intended recipient at its address set forth in this Instrument, and shall
be deemed given on the earliest to occur of (1) the date when the notice is
received by the addressee; (2) the first Business Day after the notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third Business Day
after the notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested. As used in this Section 31, the term
"Business Day" means any day other than a Saturday, a Sunday or any other day on
which Lender is not open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice given to the other
party in accordance with this Section 31. Each party agrees that it will not
refuse or reject delivery of any notice given in accordance with this Section
31, that it will acknowledge, in writing, the receipt of any notice upon request
by the other party and that any notice rejected or refused by it shall be deemed
for purposes of this Section 31 to have been received by the rejecting party on
the date so refused or rejected, as conclusively established by the records of
the U.S. Postal Service or the courier service.
(c) Any notice under the Note, the Brookdale Calif - RC Guaranty and
any other Loan Document which does not specify how notices are to be given shall
be given in accordance with this Section 31.
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32. SALE OF NOTE; CHANGE IN SERVICER. The Note and the Brookdale Calif
- - RC Guaranty or a partial interest in the Note and the Brookdale Calif - RC
Guaranty (together with this Instrument and the other Loan Documents) may be
sold one or more times without prior notice to Grantor. A sale may result in a
change of the Loan Servicer. There also may be one or more changes of the Loan
Servicer unrelated to a sale of the Note and the Brookdale Calif - RC Guaranty.
If there is a change of the Loan Servicer, Grantor will be given notice of the
change.
33. SINGLE ASSET GRANTOR. Until the Indebtedness is paid in full,
Grantor (a) shall not acquire any real or personal property other than the
Mortgaged Property, personal property related to the operation and maintenance
of the Mortgaged Property and Certificate A and Certificate B acquired pursuant
to the terms of the Operator Lease; (b) shall not operate any business other
than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify. Provided,
however, the acquisition by the Grantor of the Borrower's interest in the
Property shall not be a violation of this Section so long as Grantor has assumed
the obligations of Borrower under the Note and Borrower Mortgage.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors and
assigns of Lender and Grantor. However, a Transfer not permitted by Section 21
shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Grantor, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Grantor shall be solely that of
creditor and debtor, respectively, and nothing contained in this Instrument
shall create any other relationship between Lender and Grantor.
(b) No creditor of any party to this Instrument and no other person
shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (1) any
arrangement (a "Servicing Arrangement") between the Lender and any Loan Servicer
for loss sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Grantor for the payment of the Indebtedness, (2) Grantor shall not be a third
party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the parties as to
the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of this
Instrument are for convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an "Exhibit" or a "Section"
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are
incorporated by
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reference into this Instrument. Any reference in this Instrument to a statute or
regulation shall be construed as referring to that statute or regulation as
amended from time to time. Use of the singular in this Agreement includes the
plural and use of the plural includes the singular. As used in this Instrument,
the term "including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the Loan
Servicer unless Grantor receives notice to the contrary. If Grantor receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding
Grantor or the Mortgaged Property to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including but not limited to
trustees, master servicers, special servicers, rating agencies, and
organizations maintaining databases on the underwriting and performance of
multifamily mortgage loans. Grantor irrevocably waives any and all rights it may
have under applicable law to prohibit such disclosure, including but not limited
to any right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan Application") and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects. There has been no material adverse change in any fact or
circumstance that would make any such information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation of
Grantor for the payment of money that is secured by a pre-existing mortgage,
deed of trust or other lien encumbering the Mortgaged Property (a "Prior Lien"),
such loan proceeds shall be deemed to have been advanced by Lender at Grantor's
request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of
the obligation secured by the Prior Lien, whether or not the Prior Lien is
released.
43. ACCELERATION; REMEDIES. If an Event of Default has occurred and is
continuing, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the power of
sale and any other remedies permitted by California law or provided in this
Instrument or in any other Loan Document. Grantor acknowledges that the power of
sale granted in this Instrument may be exercised by Lender without prior
judicial hearing. Lender shall be entitled to collect all costs and expenses
incurred in pursuing such remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title reports.
If the power of sale is invoked, Lender shall execute a written notice
of the occurrence of an Event of Default and of Lender's election to cause the
Mortgaged Property to be sold and shall cause the notice to be recorded in each
county in which the Mortgaged Property or some part of the Mortgaged Property is
located. Trustee shall give notice of default and notice of sale and shall sell
the Mortgaged Property according to California law. Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in the
notice of sale in
PAGE 29
<PAGE>
one or more parcels and in such order as Trustee may determine. Trustee may
postpone the sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled sale. Lender or
Lender's designee may purchase the Mortgaged Property at any sale.
Trustee shall deliver to the purchaser at the sale, within a reasonable
time after the sale, a deed conveying the Mortgaged Property so sold without any
express or implied covenant or warranty. The recitals in Trustee's deed shall be
prima facie evidence of the truth of the statements made in those recitals.
Trustee shall apply the proceeds of the sale in the following order: (a) to all
costs and expenses of the sale, including Trustee's fees not to exceed 5% of the
gross sales price, attorneys' fees and costs of title evidence; (b) to the
Indebtedness in such order as Lender, in Lender's discretion, directs; and (c)
the excess, if any, to the person or persons legally entitled to the excess.
44. RECONVEYANCE. Upon payment of the Indebtedness, Lender shall
request Trustee to reconvey the Mortgaged Property and shall surrender this
Instrument and the Note and the Brookdale Calif - RC Guaranty to Trustee.
Trustee shall reconvey the Mortgaged Property without warranty to the person or
persons legally entitled to the Mortgaged Property. Such person or persons shall
pay Trustee's reasonable costs incurred in so reconveying the Mortgaged
Property.
45. SUBSTITUTE TRUSTEE. Lender, at Lender's option, may from time to
time, by a written instrument, appoint a successor trustee, which instrument,
when executed and acknowledged by Lender and recorded in the office of the
Recorder of the county or counties where the Mortgaged Property is situated,
shall be conclusive proof of proper substitution of the successor trustee. The
successor trustee shall, without conveyance of the Mortgaged Property, succeed
to all the title, power and duties conferred upon the Trustee in this Instrument
and by California law. The instrument of substitution shall contain the name of
the original Lender, Trustee and Grantor under this Instrument, the book and
page where this Instrument is recorded, and the name and address of the
successor trustee. If notice of default has been recorded, this power of
substitution cannot be exercised until after the costs, fees and expenses of the
then acting Trustee have been paid to such Trustee, who shall endorse receipt of
those costs, fees and expenses upon the instrument of substitution. The
procedure provided for substitution of trustee in this Instrument shall govern
to the exclusion of all other provisions for substitution, statutory or
otherwise.
46. STATEMENT OF OBLIGATION. Lender may collect a fee not to exceed the
maximum allowed by applicable law for furnishing the statement of obligation as
provided in Section 2943 of the Civil Code of California.
47. SPOUSE'S SEPARATE PROPERTY. Each Grantor who is a married person
expressly agrees that recourse may be had against his or her separate property.
48. FIXTURE FILING. This Instrument is also a fixture filing under the
Uniform Commercial Code of California.
49. ADDITIONAL PROVISION REGARDING APPLICATION OF PAYMENTS. In addition
to the provisions of Section 9, Grantor further agrees that, if Lender accepts a
guaranty of only a portion of the Indebtedness, Grantor waives its right under
California Civil Code Section 2822(a), to designate the portion of the
Indebtedness which shall be satisfied by a guarantor's partial payment.
PAGE 30
<PAGE>
50. WAIVER OF MARSHALLING; OTHER WAIVERS. To the extent permitted by
law, Grantor waives (i) the benefit of all present or future laws providing for
any appraisement before sale of any portion of the Mortgaged Property, (ii) all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the Indebtedness and marshalling
in the event of foreclosure of the lien created by this Instrument, (iii) all
rights and remedies which Grantor may have or be able to assert by reason of the
laws of the State of California pertaining to the rights and remedies of
sureties, (iv) the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce
the Note, the Brookdale Calif - RC Guaranty or any other obligation secured by
this Instrument, and (v) any rights, legal or equitable, to require marshalling
of assets or to require upon foreclosure sales in a particular order, including
any rights under California Civil Code Sections 2899 and 3433. Lender shall have
the right to determine the order in which any or all of the Mortgaged Property
shall be subjected to the remedies provided by this Instrument. Lender shall
have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of the
remedies provided by this Instrument. By signing this Instrument, Grantor does
not waive its rights under Section 2924c of the California Civil Code.
51. ADDITIONAL PROVISIONS CONCERNING ENVIRONMENTAL HAZARDS. In addition
to the provisions of Section 18:
(a) Except for matters covered by an O&M Program or matters described
in Section 18(b), Grantor shall not cause or permit any lien (whether or not
such lien has priority over the lien created by this Instrument) upon the
Mortgaged Property imposed pursuant to any Hazardous Materials Laws. Any such
lien shall be considered a Prohibited Activity or Condition.
(b) Grantor represents and warrants to Lender that, except as
previously disclosed by Grantor to Lender in writing:
(1) at the time of acquiring the Mortgaged Property, Grantor
undertook all appropriate inquiry into the previous ownership and uses
of the Mortgaged Property consistent with good commercial or customary
practice and no evidence or indication came to light which would
suggest that the Mortgaged Property has been or is now being used for
any Prohibited Activities or Conditions; and
(2) the Mortgaged Property has not been designated as
"hazardous waste property" or "border zone property" pursuant to
Section 25220, et seq., of the California Health and Safety Code.
The representations and warranties in this Section 51(b) shall
be continuing representations and warranties that shall be deemed to be
made by Grantor throughout the term of the loan evidenced by the Note,
until the Indebtedness has been paid in full.
(c) Without limiting any of the remedies provided in this Instrument,
Grantor acknowledges and agrees that each of the provisions in Section 18 and in
this Section 51 is an environmental provision (as defined in Section 736(f)(2)
of the California Code of Civil Procedure) made by Grantor relating to the real
property security (the "Environmental Provisions"), and that Grantor's failure
to comply with any of the Environmental Provisions will be a breach of contract
that will entitle Lender to pursue the remedies provided by Section 736 of the
California Code of Civil Procedure ("Section 736") for the recovery of damages
and for the
PAGE 31
<PAGE>
enforcement of the Environmental Provisions. Pursuant to Section 736, Lender's
action for recovery of damages or enforcement of the Environmental Provisions
shall not constitute an action within the meaning of Section 726(a) of the
California Code of Civil Procedure or constitute a money judgment for a
deficiency or a deficiency judgment within the meaning of Sections 580a, 580b,
580d, or 726(b) of the California Code of Civil Procedure.
(d) Any reference in this Instrument or in any other Loan Document to
Section 18 of this Instrument shall be construed as referring together to
Section 18 and this Section 51.
52. WAIVER OF TRIAL BY JURY. GRANTOR AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS GRANTOR AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:
X Exhibit A Description of the Land (required).
X Exhibit B Modifications to Instrument
X Exhibit C Description of Operator Lease
X Exhibit D Description of Contracts
IN WITNESS WHEREOF, Grantor has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
PAGE 32
<PAGE>
EXHIBIT A
[DESCRIPTION OF THE LAND]
PARCEL 1 OF PARCEL MAP NO. 87-3 BEING RESUBDIVISION COMBINING PORTIONS OF LOTS
4, 5, 10, 11, 12, 13 AND ALL OF LOT 9 IN BLOCK "E" AND A PORTION OF ASH STREET
(FORMERLY IVY STREET) AS SAID LOTS AND STREET ARE SHOWN UPON THAT CERTAIN "MAP
OF BOYD AND KENTS ADDITION" RECORDED IN BOOK "D" OF MAPS AT PAGE 10 AND COPIED
INTO BOOK 3 OF MAPS AT PAGE 66 AND A PORTION OF LOT 1 AND ALL OF LOT 2 AS SHOWN
ON THE MAP OF "MURRAY TRACT" RECORDED IN BOOK 15 OF MAPS AT PAGES 19 AND 20 AND
THE LAND GRANTED TO THE HILLSIDE GROUP, A CALIFORNIA CORPORATION BY DEEDS
RECORDED UNDER SERIES NUMBERS 87029378 AND 87091420 (87091420 WAS CORRECTED PER
SERIES NUMBER (87096091) SAN MATEO COUNTY RECORDS, WHICH PARCEL MAP WAS FILED ON
JULY 2, 1987, IN BOOK 59 OF PARCEL MAPS PAGES 28 AND 29 RECORDS OF SAN MATEO
COUNTY.
<PAGE>
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that proceeds
this Exhibit:
1. The period at the end of Section 13 is deleted and there is added at
the end thereof the following: "and upon reasonable notice."
2. The period at the end of Section 14(a) is deleted and there is added at
the end thereof the following: "during normal business hours and upon
reasonable notice."
3. There is inserted in the first line of Section 17 after the word
"commit" and before the word "waste" the word "material."
4. There is inserted in line 7 of Section 17 after the word "fixtures" and
before the word "with" the words "when necessary".
5. The semicolon at the end of Section 18(a)(1) is deleted and there is
added at the end thereof the following: "in violation of any Hazardous
Material Laws;".
6. The semicolon at the end of Section 18(a)(2) is deleted and there is
added at the end thereof the following: "in violation of Hazardous
Material Laws;".
7. There is deleted from Section 18(a)(3) in line 3 thereof the following:
"or may be".
8. There is added to the third line of Section 18(b) after the word
"comparable" and before the words "multifamily properties" the
following: "senior housing or ".
9. There is added in Section 18(f)(3) after the words "untrue" and before
the word "after" the following: "in any material respect".
10. There is added at the end of line 5 of Section 18(h) after the words
"required by" the word "such".
11. There is added at the end of Section 18 a new paragraph (q) as follows:
"Notwithstanding anything herein to the contrary, this Section shall
not apply to the introduction and initial release of Hazardous
Materials on the Mortgaged Property from and after the date that the
Lender acquires title to the Mortgaged Property through foreclosure or
deed in lieu of foreclosure (the "Transfer Date"); provided, however,
the Grantor shall bear the burden of proof that the introduction and
initial release of Hazardous Materials (i) occurred subsequent to the
Transfer Date, and (ii) did not occur as a result of any action of the
Grantor, and (iii) did not occur as a result of any
PAGE B-1
<PAGE>
continuing migration or release of any Hazardous Materials introduced
prior to the Transfer Date in, on, under, or near the Mortgaged
Property."
12. Section 19(b) is modified to delete the fourth sentence thereof which
reads as follows: "Lender shall have the right to hold the original
policies or duplicate original policies of all insurance required by
Section 19(a).
13. The last sentence of Section 19(b) is modified in its entirety to read
as follows: "At least 30 days prior to the expiration date of a policy,
Grantor shall deliver or cause to be delivered to Lender a certificate
of insurance in form satisfactory to Lender."
14. The first sentence of Section 19(f) is modified in its entirety to read
as follows: "In the event of loss of any of the Mortgaged Property,
Grantor shall give prompt written notice to the insurance carrier and
to Lender."
15. The second sentence of Section 19(f) is modified to delete the period
at the end thereof and to add at the end thereof the following: ",
provided however, that the Grantor may itself make proof of loss,
adjust and compromise any claims under policies of property damage
insurance, appear in and prosecute any action arising out of such
property damage insurance policies and collect and receive the proceeds
of property damage insurance for any losses arising out of a single
occurrence aggregating no in excess of $100,000 and in the case of
losses arising out of a single occurrence aggregating not in excess of
$250,000 may make proof of loss, adjust and compromise any claims under
policies of property damage insurance, appear in and prosecute any
action arising from such property damage insurance policies but may not
collect and receive the proceeds of property damage insurance, the same
having been assigned to Lender hereunder."
16. Section 19(h) is amended to delete from the third line thereof the
following: "any insurance policies and unearned insurance premiums and
in and to".
17. Section 20(a) is amended to delete the period at the end of the third
sentence thereof and to add the following: ", provided however, that
the Grantor may itself appear in, prosecute any action or proceeding
relating to any condemnation and settle or compromise any claim
aggregating not in excess of $10,000 and may, itself appear in,
prosecute any action or proceeding relating to any condemnation and
settle and compromise any claim aggregating not in excess of $50,000
but may not collect and receive the proceeds of property damage
insurance, the same having been assigned to Lender hereunder."
18. Section 21(a) (6) is amended to delete the following: ", or (C) the
removal, appointment or substitution of a trustee of Borrower".
PAGE B-2
<PAGE>
19. Section 21(b)(3) is amended to read in its entirety to read as follows:
"The grant of a leasehold interest in an individual dwelling unit for
an initial term of two years or less not containing an option to
purchase;"
20. Section 21(b)(4) is amended to add in the second line thereof after the
word: "replaced" and before the word "buy" the following: "to the
extent necessary for operation of the Mortgaged Property."
21. Section 21(b)(5) is amended to add in the second line thereof after the
word: "materially" and before the word "affect" the words "and
adversely".
22. Section 21(b)(6) is amended to delete the period at the end thereof and
to add at the end thereof the following: " provided, however, that
Grantor shall not be required to release of record such lien as long as
the Grantor shall in good faith contest the same or the validity
thereof by appropriate legal proceedings which shall operate to prevent
the collection of the lien so contested and the sale of the Mortgaged
Property or any part thereof, to satisfy the same, and provided that
Grantor shall, prior to the date such lien is due and payable, have
given such reasonable security as may be demanded by the Lender to
insure such payments plus interest or penalties thereon and prevent any
sale or forfeiture of the Mortgaged Property by reason of such non
payment and such contest shall have been completed within 90 days. Any
such contest shall be prosecuted with due diligence and the Grantor
shall promptly after final determination thereof, pay the amount of any
such lien so determined, together with all interest and penalties which
may be payable in connection therewith. Notwithstanding these
provisions Grantor shall (and if Grantor shall fail so to do, Lender
may, but shall not be required to) pay any such lien notwithstanding
such contest if in the opinion of Lender the Mortgaged Property shall
be in jeopardy or in danger of being forfeited or foreclosed."
23. Section 21(c)(3) is amended to add in the last line thereof after the
words "mortgages on" and before the word "multifamily" the words
"senior housing".
24. Section 21(c)(4) is amended to add in the last line thereof before the
words "multifamily properties" the words "senior housing".
25. The first sentence of Section 22 (g) is amended in its entirety to read
as follows: "Any failure by Grantor to perform any of its obligations
under this Instrument (other than those specified in Sections 22(a)
through (f) (as and when required, which continues for a period of
thirty (30) days after notice of such failure by Lender to Grantor or,
if such failure cannot reasonably be cured within thirty (30) days,
such reasonable additional time as is necessary to cure the same not to
exceed 120 days provided that the Grantor commence to cure the failure
within such thirty (30) day period and diligently and a good faith
continues the same to completion."
PAGE B-3
<PAGE>
26. The words, "to the extent such statements are true and correct as of
the date made" are added after the words "such statement" in Line 3 of
Section 29.
27. Section 29 is amended to delete the words "(ii) the unpaid principal
balance of the Note; (iii) to date which interest under the Note has
been paid;" and the "(iv)" is changed to: "(ii)", and the "(v)" is
changed to "(iii)" and the "(vi)" is changed to "(iv)".
28. Section 31(a) is amended to add at the end thereof the following:
"Lender shall provide to Grantor upon delivery to Borrower copies of
any and all notices delivered to Borrower under or with respect to the
Note, Borrower Mortgage or the documents and instruments securing or
made in connection with the Note."
29. The following new sections are added at the end of the Instrument after
the last numbered Section, but there are no Sections between the last
numbered Section and Section 55:
"55. REPRESENTATIONS AND WARRANTIES REGARDING OPERATOR LEASE. Grantor
warrants and represents to Lender that, as of the date of this
Instrument: (i) the Operator Lease is in full force and effect in
accordance with its terms; (ii) Grantor has not waived, canceled or
surrendered any of its rights under the Operator Lease; (iii) Grantor
is the sole owner of, and has good and marketable title to, the
Leasehold Estate, subject to title exceptions permitted by Lender in
the Lender's policy of title insurance, (iv) the Mortgaged Property are
free and clear of all liens, encumbrances and other matters affecting
title, other than the lien of this Instrument and the easements and
restrictions listed in a schedule of exceptions to coverage in the
title insurance policy issued to Lender contemporaneously with the
execution and recordation of this Instrument and insuring Lender's
interest in the Mortgaged Property; (v) there is no existing Default
and no event has occurred which, with the passage of time or the giving
of notice, or both, would constitute a Operator Lease Default.
56. NOTICES UNDER OPERATOR LEASE. Grantor shall deliver to Lender,
within ten (10) days after Grantor's receipt, a true and correct copy
of each notice, demand, complaint or request from Borrower under, or
with respect to, the Operator Lease.
57. GRANTOR'S OBLIGATIONS TO COMPLY WITH OPERATOR LEASE. Subject to
Section 15, Grantor shall (i) pay all sums of money due and payable at
any time and from time to time under the Operator Lease as and when
such sums become due and payable, but in any event before the
expiration of any grace period provided in the Operator Lease for the
payment of any such sum, and (ii) at all times fully perform, observe
and comply with all other terms, covenants and conditions of the
Operator Lease to be performed, observed or complied with by Grantor as
lessee under the Operator Lease. If the Operator Lease does not provide
for a grace period for the payment of a
PAGE B-4
<PAGE>
sum of money, Grantor shall make the payment on or before the date on
which the payment becomes due and payable. Grantor shall deliver
evidence of the payment to Lender within ten (10) days after receipt of
a written request from Lender for evidence of the payment.
58. COVENANTS TO PROTECT LEASEHOLD ESTATE. Grantor shall not, without
the written consent of Lender (which may be given or withheld by Lender
in its discretion), (i) surrender the Leasehold Estate to Borrower or
terminate or cancel the Operator Lease, except as specifically provided
in the Operator Lease (ii) amend, modify or change the Operator Lease,
either orally or in writing, or waive any of Grantor's rights under the
Operator Lease, or (iii) subordinate the Operator Lease or the
Leasehold Estate other than to the Borrower Mortgage to any mortgage,
deed of trust or other lien on Borrower's fee title to the Land.
Grantor absolutely and unconditionally transfers and assigns to Lender
all of Grantor's rights to surrender, terminate, cancel, modify and
change the Operator Lease except as specifically provided in the
Operator Lease, and any such surrender, termination, cancellation,
modification or change made without the prior written consent of Lender
shall be void and have no legal effect.
59. OPTION TO RENEW OR EXTEND OPERATOR LEASE. Grantor shall give Lender
written notice of Grantor's intention to exercise each option to renew
or extend the term of the Operator Lease at least concurrently with the
exercise thereof under the Operator Lease. If Grantor intends to renew
or extend the term of the Operator Lease, it shall deliver to Lender,
together with the notice of such decision, a copy of the notice of
renewal or extension it delivers to Borrower.
60. EXHIBIT C. Exhibit C is attached to this Instrument."
61. SENIOR HOUSING.
(a) The Mortgaged Property will be used as an independent
and assisted living facility (the "Intended Use").
(b) Additional Definitions.
(1) The term "Mortgaged Property" shall also
include, where applicable, payments received
from occupants, payment of second party
charges added to base rental income, base
and/or additional meal sales, payments
received from commercial operations located
on the Mortgaged Property or provided as a
service to the occupants of the Mortgaged
Property, rental from guest suites, seasonal
lease charges, rental payment under
furniture leases, income from laundry
service, and fees from any and all other
PAGE B-5
<PAGE>
services provided to third parties in
connection with the Mortgaged Property,
together with the following items: licenses
and contracts, all rights to payments from
Medicare or Medicaid programs or similar
federal, state or local programs or agencies
and rights to payment from residents or
private insurers, arising from the operation
of the Mortgaged Property, whether as a
community residential, independent living,
adult congregate care, assisted living or
skilled nursing care facility, all personal
property acquired by Grantor after the date
of this Instrument in connection with the
ownership and operation of the Mortgaged
Property as such a facility, utility
deposits, unearned premiums, accrued,
accruing or to accrue under insurance
policies obtained by the Grantor now or in
the future and all proceeds of any
conversion of the Mortgaged Property or any
part of it including replacements and
additions thereto.
(2) The term "Lease" shall also include any
occupancy agreements pertaining to occupants
of the Mortgaged Property, including both
residential and commercial agreements and
patient admission or resident care
agreements.
(3) The term "Hazardous Materials" shall also
include any medical products or devices,
including, those materials defined as
"medical waste" or "biological waste" under
relevant statutes or regulations pertaining
to hazardous materials law.
(c) In addition to those representations and warranties
contained in the Instrument, Grantor hereby
represents and warrants to Lender as follows:
(1) Grantor has obtained (in its own name and/or
in the relevant operator's or manager's
name, if any, and in any event in the name
of the person(s) as required under all
applicable legal requirements) all licenses,
permits, certificates, approvals or
authorizations necessary to use and operate
the Mortgaged Property for its Intended Use
(collectively, the "Licenses"), and all such
Licenses are in full force and effect. The
use being made of the Mortgaged Property is
in conformity in all respects with the
certificate of occupancy and/or Licenses for
such property and any other restrictions,
covenants or conditions affecting such
property. The Mortgaged Property contains
all equipment necessary to use and operate
such property for its Intended Use.
PAGE B-6
<PAGE>
(2) Grantor and the Mortgaged Property (and its
operation) are in compliance in all material
respects with the applicable provisions of
all laws, statutes, regulations, ordinances,
orders, standards, restrictions and rules of
any federal, state or local government or
quasi-governmental body, agency, board or
authority having jurisdiction over the
operation of the Mortgaged Property,
including: (A) health care and fire safety
codes; (B) laws regulating the handling and
disposal of medical or biological waste; (C)
the applicable provisions of all laws,
rules, regulations and published
interpretations thereof to which the Grantor
or the Mortgaged Property is subject by
virtue of its Intended Use; and (D) all
criteria established to classify the
Mortgaged Property as housing for older
persons under Fair Housing Amendments Act of
1988.
(3) Grantor does not currently participate in
any Medicaid or Medicare programs or any
other third party payors' programs, or other
similar provider payment programs in
connection with the operation of the
Mortgaged Property.
(4) Grantor and the Mortgaged Property are not
subject to any proceeding, suit or
investigation by any federal, state or local
government or quasi-government body, or
agency or any other administrative or
investigative body, and Grantor has received
no notice from any such agency which may
result in the imposition of a fine, or
alternative, interim or final sanction,
would have a material adverse effect on
Grantor or the operation of the Mortgaged
Property, would result in the appointment of
a receiver or manager, would affect
Grantor's ability to accept and/or retain
residents, or would result in the
revocation, transfer, surrender, suspension
or other impairment of any License for the
Mortgaged Property.
(5) Neither the execution and delivery of the
Guaranty, the Instrument or any other loan
documents, Grantor's performance thereunder,
the recordation of the Instrument, nor the
exercise of any remedies by Lender, will
adversely affect the Licenses.
(6) Grantor is not a participant in any federal
program whereby any federal, state or local
government or quasi-governmental body or
agency may have the right to recover funds
by reason of the advance of federal funds.
Grantor has received no notice of, and is
not aware of, any violation of applicable
antitrust laws.
PAGE B-7
<PAGE>
(7) In the event any existing management
agreement is terminated or Lender acquires
the Mortgaged Property through foreclosure
or otherwise, neither Grantor, Lender, any
subsequent manager, nor any subsequent
purchaser (through foreclosure or otherwise)
must obtain a certificate of need from any
applicable state health care regulatory
authority or agency (other than giving such
notice required under the applicable state
law or regulation) prior to applying for any
applicabl License, provided that no service
or the unit compliment is changed.
(d) Grantor shall furnish to Lender, within ten (10) days
after receipt by Grantor, any operator or any
manager, any and all notices from any licensing
and/or certifying agency that any License is being
downgraded to a substandard category, revoked, or
suspended, or that action is pending or being
considered.
(e) Grantor shall furnish to Lender, within ten (10) days
after receipt, a copy of any licensing agency survey
or report and any statement of deficiencies, and
within the time period required by the particular
agency for furnishing a plan of correction, shall
furnish to Lender a copy of the plan of correction.
Grantor shall correct any deficiency, the curing of
which is a condition of continued licensure, by the
date required for cure by such agency.
(f) Upon Lender's request, Grantor shall furnish to
Lender true and correct copies of all residency and
resident care agreements.
(g) Grantor shall operate in a manner such that all
applicable Licenses shall remain in full force and
effect.
(h) Without the prior written consent of Lender, which
may be granted or withheld in its discretion, Grantor
shall not, and shall not permit any operator or
manager at the Mortgaged Property to, participate in
Medicare and Medicaid, or any provider agreement
under Medicare and Medicaid, or accept any residents
whose ability to reside in the Mortgaged Property
requires that Grantor, the Mortgaged Property or any
operator or manager participate in Medicare, Medicaid
or any similar provider program.
(i) Grantor shall not, and shall not allow any operator
or manager to: (A) transfer any License to any
location other than the Mortgaged Property, (B)
pledge any License as collateral security for any
other loan or
PAGE B-8
<PAGE>
indebtedness; (C) rescind, withdraw, modify, or
otherwise alter any License if doing so would have a
material affect on the Mortgaged Property; or (D)
pledge any receivables as collateral security for any
other loan or indebtedness.
62. ASSIGNMENT OF SERVICE CONTRACTS.
(a) In addition to the provisions of the Instrument,
Grantor hereby assigns to Lender all of its right,
title and interest in and to the contracts described
on Exhibit "D" attached hereto and made a part hereof
(together with any future contracts for services at
the Mortgaged Property, the "Contracts").
(b) If an Event of Default exists, Lender shall have the
right to exercise all the rights under the Contracts
that Grantor would have as owner of the Mortgaged
Property. Lender does not assume any obligations or
duties of the Grantor concerning the Contracts until
and unless Lender shall exercise its rights under
this subsection.
(c) Grantor irrevocably constitutes and appoints Lender
as the Grantor's attorney-in-fact to demand, receive
and enforce the Grantor's rights with respect to the
Contracts, to give appropriate receipts, releases and
satisfactions on Grantor's behalf and to do any and
all acts in Grantor's name or in the name of Lender
with the same force and effect as Grantor could do if
this assignment had not been made. This appointment
shall be deemed to be coupled with an interest and
irrevocable.
(d) Grantor represents and warrants to Lender that (1)
except as provided in the Contracts, the Contracts
are assignable and no previous assignment of
Grantor's interest in the Contracts has been made;
and (2) to Grantor's knowledge the Contracts are in
full force and effect in accordance with their
respective terms and there are no defaults under any
of the contracts. Grantor shall fully perform all of
its material obligations under the Contracts, and
Grantor shall not assign, pledge, or otherwise
encumber its interests in any of the Contracts so
long as this assignment is in effect, or consent to
any transfer, assignment or other disposition of its
interests in any Contract without the prior written
approval of Lender. A material default by Grantor
under any of the Contracts or a breach of this
assignment, which continues beyond the expiration of
any applicable cure period, shall constitute an Event
of Default.
(e) Each Contract entered into by Grantor, the average
annual consideration of which, directly or
indirectly, is at least $20,000, shall provide that
it shall
PAGE B-9
<PAGE>
be terminable, at Lender's option, upon the
occurrence of an Event of Default.
63. ADDITIONAL DEFAULTS. The following shall also constitute an Event
of Default under the Instrument:
(a) Grantor's failure within the time deadlines set by
any federal, state or local licensing or similar
agency, to correct any deficiency that may cause any
action by such agency with respect to the Mortgaged
Property that may have a material adverse affect on
the income or operation of the Mortgaged Property or
on Grantor's interest in the Mortgaged Property,
including, a termination, revocation or suspension of
any applicable License, or a ban on new resident
admissions.
(b) Grantor's failure to do any of the following without
the prior written consent of Lender, to be granted or
withheld in its discretion: (1) operate the Mortgaged
Property as its Intended Use; (2) provide facilities
and services normally associated with its Intended
Use; (3) provide or contract for skilled nursing care
for any of the units other than that level of care
which Grantor would be permitted to provide or
contract for at the Mortgaged Property given its
Intended Use, state or local statutes, regulations,
orders, standards, rules or restrictions.
(c) (1) non residential space in the Mortgaged Property
exceeds ten percent (10%) of the net rental area of
the Improvements; (2) the Mortgaged Property is no
longer classified as housing for older persons
pursuant to the Fair Housing Amendments Act of 1988;
(3) Grantor participates, or permits the manager or
operator at the Mortgaged Property to participate in
Medicare, Medicaid, or any similar or successor
payment provider plan; or (4) skilled nursing care
(A) is provided in a number of units exceeding
twenty-five percent (25%) of the total number of
units at the Mortgaged Property or (B) accounts for
more than twenty-five percent (25%) of the total
annual gross income of the Mortgaged Property.
64. PERFORMANCE OF CERTAIN COVENANTS. Lender acknowledges that Grantor
(under the Loan Documents) and Borrower (under those Loan Documents
executed by Borrower) are each obligated to perform certain covenants
which need only be performed by one of them. Accordingly with respect
to the covenants set forth in paragraphs 7, 10, 14(a), 14(b), 14(c),
15, 17, 18(d), 18(h) and 19 of this Instrument, the timely performance
thereof by either Borrower or Grantor (as required by the Operator
Lease) shall be accepted by Lender as performed by each of them.
PAGE B-10
<PAGE>
65. GRANTOR'S LIMITED RIGHT TO CURE. By acceptance of this Instrument
and the Borrower Mortgage, Lender agrees that notwithstanding anything
in this Instrument or any of the other Loan Documents to the contrary,
if an Uncurable Event of Default (as hereinafter defined) occurs and
Lender desires to exercise its rights hereunder or under any of the
other Loan Documents with respect to such Uncurable Event of Default
(individually and collectively the "Remedies"), provided no other Event
of Default then exists, Lender shall give Grantor written notice of
such Uncurable Event of Default and of Lender's intent to exercise its
Remedies and Lender shall abstain from exercising its Remedies until
the earliest to occur of (a) the date which is fifteen (15) days after
delivery of such written notice by Lender if Grantor does not advise
Lender within said fifteen (15) day period of Grantor's intention to
take the actions necessary to satisfy the terms and conditions
described in th next sentence and has commenced taking such actions (b)
the date which is forty-five (45) days after delivery of such written
notice by Lender and (c) the occurrence of an Event of Default other
than an Uncurable Event of Default, provided that Lender need not so
abstain if such abstention could reasonably be anticipated to prejudice
or impair its right to collect the Indebtedness or exercise its
remedies after the expiration of such abstention period. Except as
provided in the precedin sentence, Lender shall not exercise its
Remedies in connection with the Uncurable Event of Default identified
in the written notice delivered to Grantor if Grantor has given the
notice and taken the action described in clause (a) of the preceding
sentence and, prior to the dates or events described in clauses (b) and
(c) of the foregoing sentence, the following events and conditions
shall have occurred or be satisfied, as applicable, (i) the Grantor has
acquired the Mortgaged Property, a defined in the Borrower Mortgage, or
if the Uncurable Event of Default did not arise out of a violation of
Paragraph 21 of the Borrower Mortgage, Grantor has acquired 100% of the
beneficial interest in Borrower, has assumed in writing all of the
obligations of the Borrower under the Loan Documents and has executed
and delivered such other documentation as may be reasonably required by
Lender, (ii) to the extent feasible, Grantor shall have cured such
Uncurable Event of Default, (iii) Grantor pays all reasonable expenses
incurred by Lender in connection with such transfer, and (iv) if
Grantor shall have acquired the Mortgaged Property, as defined in the
Borrower Mortgage, Grantor shall have delivered to Lender an updated
Title Insurance Policy showing title to the Mortgaged Property in
Grantor and insuring that Lender has a valid first lien on Grantor's
interest in the Land and Improvements and the easements and
restrictions listed in the schedule of exceptions to coverage in the
title insurance policy accepted by Lender insuring the lien of the
Borrower Mortgage together with such modifications, amendments or
supplements to the Loan Documents as Lender may reasonably request.
Upon consummation of the transfer of the title to the Mortgaged
Property to Grantor and
PAGE B-11
<PAGE>
the assignment by Borrower and assumption by Grantor of Borrower's
obligations under the Loan Documents executed by Borrower, Grantor
shall be considered the "Borrower" under the Loan Documents made by
Borrower, as defined in the Borrower Mortgage, as well as the Grantor
under the Loan Documents made by Grantor and shall have all of the
obligations of "Borrower" under the Loan Documents as well as all of
the obligations of "Grantor" under the Loan Documents. If Grantor fails
to give the notice and take the action described in clause (a) of the
first sentence of this Paragraph or if the time period described in
clause (b) or any of the events described in (c) of the first sentence
of this Paragraph 65 expires or occurs, as applicable, or any of the
events or conditions described in the second sentence of this Paragraph
65 do not occur or are not satisfied prior to the occurrence or
expiration of any of the events or time periods described in clauses
(b) and (c) of the first sentence of this Paragraph 65, Lender shall be
entitled to exercise all of its Remedies. For purposes hereof,
"Uncurable Event of Default" means an Event of Default, as defined in
Paragraph 22(b), 22(c), 22(d), 22(e), 22(f), or 22(j) of the Borrower
Mortgage if such Event of Default is solely the result of the act or
omission of Borrower and cannot be cured by the payment of money or the
taking of any action by Grantor or Paragraph 22(i) of the Borrower
Mortgage if not caused by Grantor's failure to pay rent or to perform
any of its other obligations under the Operator Lease, provided that
each such Event of Default occurs without the consent, participation or
cooperation of Grantor or the owner of Grantor and is not the result of
any act or intentional omission of Grantor or the owner of Grantor.
PAGE B-12
<PAGE>
EXHIBIT C
[DESCRIPTION OF OPERATOR LEASE]
That certain Lease dated December ---, 1998, entered into by and between The
Woodside Business Trust, a Delaware business trust, as lessor and Brookdale
Living Communities of California - RC, Inc., a Delaware corporation, a
memorandum of which has been filed for record on December ---, 1998, in the
office of the ------- of San Mateo County, California as Document No. -----, in
Book -----, Page ------.
Note: The description of the Ground Lease should include the names of the
original lessor and original lessee, the date of the lease, the date on which
the lease (or a memorandum of the lease) was recorded among the applicable land
records, the book and page number (or other similar identifying information) of
the applicable land records in which the lease (or memorandum) is recorded. If
Grantor is not the original lessee, the description should also include the same
information with respect to the assignment(s) or other instrument(s) pursuant to
which Grantor acquired the lessee's interest in the lease.
PAGE B-13
Certificate A Pledge Agreement
[EXECUTION COPY]
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 December 18, 1998, made by BROOKDALE LIVING COMMUNITIES
OF CALIFORNIA - RC, a Delaware corporation (the "Pledgor"), in favor of THE
WOODSIDE BUSINESS TRUST, a Delaware statutory 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 December 18, 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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<PAGE>
Certificate A Pledge Agreement
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 New York (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".
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 B Loan Basic Rent, Lessor
Basic Rent, Equity Balance and Supplemental Rent
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<PAGE>
Certificate A Pledge Agreement
(to the extent the Lessor is entitled to receive Supplemental 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,
(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,
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<PAGE>
Certificate A Pledge Agreement
(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 Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
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<PAGE>
Certificate A Pledge Agreement
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"), and (ii) by obtaining values from the issuer of
the Certificate A and at least one 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"). 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"). Upon the written request of the
Valuation Agent, approved in writing by the Pledgee and 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 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
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<PAGE>
Certificate A Pledge Agreement
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
SELCO 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
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<PAGE>
Certificate A Pledge Agreement
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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<PAGE>
Certificate A Pledge Agreement
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.
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<PAGE>
Certificate A Pledge Agreement
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.
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 Glaser 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 the Pledgor fails to provide reasonably satisfactory
evidence that a replacement Certificate A will be timely provided to the Pledgee
in accordance with the second sentence of Section 9.13(a):
(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,
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Certificate A Pledge Agreement
(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
(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
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Certificate A Pledge Agreement
(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.
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
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Certificate A Pledge Agreement
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.
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
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Certificate A Pledge Agreement
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 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
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Certificate A Pledge Agreement
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.
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 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 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
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Certificate A Pledge Agreement
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.
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 NEW YORK 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 SELCO, pursuant to which the
Pledgee pledged and granted a security interest to SELCO 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.
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Certificate A Pledge Agreement
SECTION 9.13 Replacement of Issuing Bank; Replacement of Certificate A.
(a) The parties hereto hereby agree that if, at any time, (i)
KeyBank National Association or a successor provider of the Certificate
A cannot continue to provide the Certificate A or (ii) 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 to issue an
investment certificate accreting interest at a rate no less than that
of the Certificate A and having the same maturity date of the
Certificate A. Furthermore, the Pledgor agrees to provide the Pledgee
(x) prior to the maturity of the original Certificate A, a replacement
Certificate A having a maturity date no earlier than January 1, 2004,
and (y) reasonably satisfactory evidence within fifteen (15) days of
the original Certificate A's maturity that such replacement Certificate
A will be provided to the Pledgee in accordance with subsection (x)
above. In the event that the interests of SELCO under the Trust
Agreement are transferred to FBTC Leasing Corp., the parties agree to
use reasonable efforts to have The Fuji Bank Limited -- New York Branch
as the replacement provider 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 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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Certificate A Pledge Agreement
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 CALIFORNIA - RC, INC.,
as Pledgor
By: ------------------------------
Name:
Title:
THE WOODSIDE 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>
Certificate A Pledge Agreement
LASALLE NATIONAL BANK, as
Custodian
By: ------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED TO BY:
SELCO SERVICE CORPORATION
By: --------------------------------
Name:
Title:
<PAGE>
Certificate A Pledge Agreement
SCHEDULE I
TO PLEDGE AGREEMENT
[Copy of Certificate A]
Certificate B Pledge Agreement
[EXECUTION COPY]
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 December 18, 1998, made by BROOKDALE LIVING COMMUNITIES
OF CALIFORNIA - RC, INC., a Delaware corporation (the "Pledgor"), in favor of
THE WOODSIDE BUSINESS TRUST, a Delaware statutory 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 December 18, 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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Certificate B Pledge Agreement
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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Certificate B Pledge Agreement
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 B Loan 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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Certificate B Pledge Agreement
(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 Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
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Certificate B Pledge Agreement
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"), and (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"). 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"). Upon the written
request of the Valuation Agent, approved in writing by 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 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,
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Certificate B Pledge Agreement
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 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.
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Certificate B Pledge Agreement
(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 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
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Certificate B Pledge Agreement
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.
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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Certificate B Pledge Agreement
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 Glaser 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 the Pledgor fails to provide reasonably satisfactory
evidence that a replacement Certificate B will be timely provided to the Pledgee
in accordance with the second sentence of Section 9.13(a):
(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,
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Certificate B Pledge Agreement
(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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Certificate B Pledge Agreement
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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Certificate B Pledge Agreement
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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Certificate B Pledge Agreement
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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Certificate B Pledge Agreement
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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Certificate B Pledge Agreement
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)
KeyBank National Association or a successor provider of the Certificate
B cannot continue to provide the Certificate B, 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 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. Furthermore, the Pledgor agrees to provide the
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Certificate B Pledge Agreement
Pledgee (x) prior to the maturity of the original Certificate B, a
replacement Certificate B having a maturity date no earlier than
January 1, 2004, and (y) reasonably satisfactory evidence within
fifteen (15) days of the original Certificate B's maturity that such
replacement Certificate B will be provided to the Pledgee in accordance
with subsection (x) above. In the event that the interests of SELCO
under the Trust Agreement are transferred to FBTC Leasing Corp., the
parties agree to use reasonable efforts to have The Fuji Bank Limited
-- New York Branch as the replacement provider 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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Certificate B Pledge Agreement
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 CALIFORNIA - RC, INC.,
as Pledgor
By: --------------------------
Name:
Title:
THE WOODSIDE 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>
Certificate B Pledge Agreement
LASALLE NATIONAL BANK, as
Custodian
By: --------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED TO BY:
SELCO SERVICE CORPORATION
By: --------------------------------
Name:
Title:
<PAGE>
Certificate B Pledge Agreement
SCHEDULE I
TO PLEDGE AGREEMENT
[Copy of Certificate B]
Freddie Mac Loan No. 981222048
EXCEPTIONS TO NON-RECOURSE GUARANTY
-----------------------------------
(CALIFORNIA)
This Exceptions to Non-Recourse Guaranty ("Guaranty") is entered into
as of December 18, 1999, by the undersigned person(s) (the "Guarantor" whether
one or more), for the benefit of GLASER FINANCIAL GROUP, INC., a Minnesota
corporation, and/or any subsequent holder of the Note (the "Lender").
RECITALS
A. THE WOODSIDE BUSINESS TRUST, a Delaware statutory business trust
(the "Borrower") has requested that Lender make a loan to Borrower in the amount
of $31,500,000.00 (the "Loan"). The Loan will be evidenced by a Multifamily Note
from Borrower to Lender dated as of the date of this Guaranty (the "Note"). The
Note will be secured by a Multifamily Mortgage, Deed of Trust, or Deed to Secure
Debt dated the same date as the Note, executed and delivered by the Borrower to
the Lender encumbering the real property described therein (the "Property").
B. BROOKDALE LIVING COMMUNITIES OF CALIFORNIA - RC, INC., a Delaware
corporation ("Brookdale California - RC") is leasing the Property from Borrower,
as lessor pursuant to the terms of a certain Lease dated December 18, 1998,
entered into by and between Borrower and Brookdale California - RC ("Operator
Lease") and as further security for repayment of the Loan, Brookdale California
- - RC is executing and delivering to Lender its Multifamily Guaranty Agreement
dated as of the date hereof (" Multifamily Guaranty Agreement") and as security
for payment and performance of the Multifamily Guaranty Agreement, Brookdale
California - RC is executing and delivering to Lender a certain Multifamily Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of
the date hereof (the "Security Instrument") encumbering the leasehold interest
in the Property created by the Operator Lease.
C. Guarantor will materially benefit from the Loan and as a condition
to making the Loan to Borrower, Lender requires that the Guarantor execute this
Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower,
and in consideration thereof, Guarantor agrees as follows:
1. "Indebtedness" and other capitalized terms used but not defined in
this Guaranty shall have the meanings assigned to them in the Security
Instrument.
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<PAGE>
2. Section 2 of the Guaranty is amended in its entirety to read as
follows: "Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to Lender the full and prompt payment when due, whether at maturity
or earlier, by reason of acceleration or otherwise, and at all times thereafter,
and the full and prompt performance when due of all of the following:
(a) All amounts for which Brookdale California - RC is personally
liable under paragraphs 6 (c) through 6 (f) of the Security Instrument.
(b) The payment and performance of all of Brookdale California - RC's
obligations under Section 18 of the Security Instrument.
(c) The entire Indebtedness in the event that (i) Brookdale California
- RC voluntarily files for bankruptcy protection under the United
States Bankruptcy Code or voluntarily becomes subject to any
reorganization, receivership, insolvency proceeding or other similar
proceeding pursuant to any other federal or state law affecting debtor
and creditor rights, or (ii) any order for relief is entered against
Brookdale California - RC in any involuntary bankruptcy filing by any
creditor of Brookdale California - RC other than Lender pursuant to the
United States Bankruptcy Code or other federal or state law affecting
debtor and creditor rights.
(d) All costs and expenses, including reasonable fees and out-of-pocket
expenses of attorneys and expert witnesses, incurred by Lender in
enforcing its rights under this Guaranty."
For purposes of determining Guarantor's liability under this Guaranty, all
payments made by Brookdale California - RC with respect to the Indebtedness and
all amounts received by Lender from the enforcement of its rights under the
Security Instrument shall be applied first to the portion of the Indebtedness
for which neither Brookdale California - RC nor Guarantor has personal
liability.
3. The obligations of Guarantor under this Guaranty shall survive any
foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu
of foreclosure, and any release of record of the Security Instrument, and, in
addition, the obligations of Guarantor relating to Brookdale California - RC's
obligations under Section 18 of the Security Instrument shall survive any
repayment or discharge of the Indebtedness.
4. Guarantor's obligations under this Guaranty constitute an
unconditional guaranty of payment and not merely a guaranty of collection.
5. The obligations of Guarantor under this Guaranty shall be performed
without demand by Lender and shall be unconditional irrespective of the
genuineness, validity, regularity or enforceability of the Note, the Security
Instrument, or any other Loan Document, and without
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<PAGE>
regard to any other circumstance which might otherwise constitute a legal or
equitable discharge of a surety or a guarantor. Guarantor hereby waives any and
all benefits and defenses under California Civil Code Section 2810 and agrees
that by doing so Guarantor shall be liable even if Brookdale California - RC had
no liability at the time of execution of the Note, the Security Instrument or
any other Loan Document, or thereafter ceases to be liable. Guarantor hereby
waives any and all benefits and defenses under California Civil Code Section
2809 and agrees that by doing so Guarantor's liability may be larger in amount
and more burdensome than that of Brookdale California - RC. Guarantor hereby
waives the benefit of all principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Guaranty and
agrees that Guarantor's obligations shall not be affected by any circumstances,
whether or not referred to in this Guaranty, which might otherwise constitute a
legal or equitable discharge of a surety or a guarantor. Guarantor hereby waives
the benefits of any right of discharge under any and all statutes or other laws
relating to guarantors or sureties and any other rights of sureties and
guarantors thereunder. Without limiting the generality of the foregoing,
Guarantor hereby waives, to the fullest extent permitted by law, diligence in
collecting the Indebtedness, presentment, demand for payment, protest, all
notices with respect to the Note, the Security Instrument and this Guaranty
which may be required by statute, rule of law or otherwise to preserve Lender's
rights against Guarantor under this Guaranty, including, but not limited to,
notice of acceptance, notice of any amendment of the Loan Documents, notice of
the occurrence of any default or Event of Default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, and notice of the incurring by Brookdale California - RC of
any obligation or indebtedness. Guarantor also waives, to the fullest extent
permitted by law, all rights to require Lender to (a) proceed against Brookdale
California - RC or any other guarantor of Brookdale California - RC's payment or
performance with respect to the Indebtedness (an "Other Guarantor") (b) if
Brookdale California - RC or any Other Guarantor is a partnership, proceed
against any general partner of Brookdale California - RC or the Other Guarantor,
(c) proceed against or exhaust any collateral held by Lender to secure the
repayment of the Indebtedness, or (d) pursue any other remedy it may now or
hereafter have against Brookdale California - RC, or, if Brookdale California -
RC is a partnership, any general partner of Brookdale California - RC, including
any and all benefits under California Civil Code Sections 2845, 2849 and 2850.
6. Guarantor understands that the exercise by Lender of certain rights
and remedies contained in the Security Instrument (such as a nonjudicial
foreclosure sale) may affect or eliminate Guarantor's right of subrogation
against Brookdale California - RC and that Guarantor may therefore incur a
partially or totally nonreimburseable liability under this Guaranty.
Nevertheless, Guarantor hereby authorizes and empowers Lender to exercise, in
its sole and absolute discretion, any right or remedy, or any combination
thereof, which may then be available, since it is the intent and purpose of
Guarantor that the obligations under this Guaranty shall be absolute,
independent and unconditional under any and all circumstances. Guarantor
expressly waives any defense (which defense, if Guarantor had not given this
waiver, Guarantor might otherwise have) to a judgment against Guarantor by
reason of a nonjudicial foreclosure.
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<PAGE>
Without limiting the generality of the foregoing, Guarantor hereby expressly
waives any and all benefits under (i) California Code of Civil Procedure Section
580a (which Section, if Guarantor had not given this waiver, would otherwise
limit Guarantor's liability after a nonjudicial foreclosure sale to the
difference between the obligations of Guarantor under this Guaranty and the fair
market value of the property or interests sold a such nonjudicial foreclosure
sale), (ii) California Code of Civil Procedure Sections 580b and 580d (which
Sections, if Guarantor had not given this waiver, would otherwise limit Lender's
right to recover a deficiency judgment with respect to purchase money
obligations and after a nonjudicial foreclosure sale, respectively), and (iii)
California Code of Civil Procedure Section 726 (which Section, if Guarantor had
not given this waiver, among other things, would otherwise require Lender to
exhaust all of its security before a personal judgment could be obtained for a
deficiency). Notwithstanding any foreclosure of the lien of the Security
Instrument, whether by the exercise of the power of sale contained in the
Security Instrument, by an action for judicial foreclosure or by Lender's
acceptance of a deed in lieu of foreclosure, Guarantor shall remain bound under
this Guaranty.
7. In accordance with Section 2856 of the California Civil Code,
Guarantor also waives any right or defense based upon an election of remedies by
Lender, even though such election (e.g., nonjudicial foreclosure with respect to
any collateral held by Lender to secure repayment of the Indebtedness) destroys
or otherwise impairs the subrogation rights of Guarantor or the right of
Guarantor (after payment of the obligations guaranteed by Guarantor under this
Guaranty) to proceed against Brookdale California - RC for reimbursement, or
both, by operation of Section 580d of the Code of Civil Procedure or otherwise.
8. In accordance with Section 2856 of the California Civil Code,
Guarantor waives any and all other rights and defenses available to Guarantor by
reason of Sections 2787 through 2855, inclusive, of the California Civil Code,
including any and all rights or defenses Guarantor may have by reason of
protection afforded to Brookdale California - RC with respect to any of the
obligations of Guarantor under this Guaranty pursuant to the antideficiency or
other laws of the State of California limiting or discharging Brookdale
California - RC's Indebtedness, including Sections 580a, 580b, 580d, and 726 of
the California Code of Civil Procedure.
9. In accordance with Section 2856 of the California Civil Code,
Guarantor agrees to withhold the exercise of any and all subrogation and
reimbursement rights against Brookdale California - RC, against any other
person, and against any collateral or security for the Indebtedness, including
any such rights pursuant to Sections 2847 and 2848 of the California Civil Code,
until the Indebtedness has been indefeasibly paid and satisfied in full, all
obligations owed to Lender under the Loan Documents have been fully performed,
and Lender has released, transferred or disposed of all of its right, title and
interest in such collateral or security.
10. At any time or from time to time and any number of times, without
notice to Guarantor and without affecting the liability of Guarantor, (a) the
time for payment of the principal of or interest on the Indebtedness may be
extended or the Indebtedness may be renewed
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<PAGE>
in whole or in part; (b) the time for Brookdale California - RC's performance of
or compliance with any covenant or agreement contained in the Note, the Security
Instrument or any other Loan Document, whether presently existing or hereinafter
entered into, may be extended or such performance or compliance may be waived;
(c) the maturity of the Indebtedness may be accelerated as provided in the Note,
the Security Instrument, or any other Loan Document; (d) the Note, the Security
Instrument, or any other Loan Document may be modified or amended by Lender and
Brookdale California - RC in any respect, including, but not limited to, an
increase in the principal amount; and (e) any security for the Indebtedness may
be modified, exchanged, surrendered or otherwise dealt with or additional
security may be pledged or mortgaged for the Indebtedness.
11. If more than one person executes this Guaranty, the obligations of
those persons under this Guaranty shall be joint and several. Lender, in its
sole and absolute discretion, may (a) bring suit against Guarantor, or any one
or more of the persons constituting Guarantor, and any Other Guarantor, jointly
and severally, or against any one or more of them; (b) compromise or settle with
any one or more of the persons constituting Guarantor for such consideration as
Lender may deem proper; (c) release one or more of the persons constituting
Guarantor, or any Other Guarantor, from liability; and (d) otherwise deal with
Guarantor and any Other Guarantor, or any one or more of them, in any manner,
and no such action shall impair the rights of Lender to collect from Guarantor
any amount guaranteed by Guarantor under this Guaranty. Nothing contained in
this paragraph shall in any way affect or impair the rights or obligations of
Guarantor with respect to any Other Guarantor.
12. Any indebtedness of Brookdale California - RC held by Guarantor now
or in the future is and shall be subordinated to the Indebtedness and any such
indebtedness of Brookdale California - RC shall be collected, enforced and
received by Guarantor, as trustee for Lender, but without reducing or affecting
in any manner the liability of Guarantor under the other provisions of this
Guaranty.
13. Guarantor shall have no right of, and hereby waives any claim for,
subrogation or reimbursement against Brookdale California - RC or any general
partner of Brookdale California - RC by reason of any payment by Guarantor under
this Guaranty, whether such right or claim arises at law or in equity or under
any contract or statute, until the Indebtedness has been paid in full and there
has expired the maximum possible period thereafter during which any payment made
by Brookdale California - RC to Lender with respect to the Indebtedness could be
deemed a preference under the United States Bankruptcy Code.
14. If any payment by Brookdale California - RC is held to constitute a
preference under any applicable bankruptcy, insolvency, or similar laws, or if
for any other reason Lender is required to refund any sums to Brookdale
California - RC, such refund shall not constitute a release of any liability of
Guarantor under this Guaranty. It is the intention of Lender and
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<PAGE>
Guarantor that Guarantor's obligations under this Guaranty shall not be
discharged except by Guarantor's performance of such obligations and then only
to the extent of such performance.
15. Guarantor shall from time to time, upon request by Lender, deliver
to Lender such financial statements as Lender may reasonably require.
16. Lender may assign its rights under this Guaranty in whole or in
part and upon any such assignment, all the terms and provisions of this Guaranty
shall inure to the benefit of such assignee to the extent so assigned. The terms
used to designate any of the parties herein shall be deemed to include the
heirs, legal representatives, successors and assigns of such parties; and the
term "Lender" shall include, in addition to Lender, any lawful owner, holder or
pledgee of the Note.
17. This Guaranty and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements. There are no unwritten oral
agreements between the parties. All prior or contemporaneous agreements,
understandings, representations, and statements, oral or written, are merged
into this Guaranty and the other Loan Documents. Guarantor acknowledges that it
has received copies of the Note and all other Loan Documents. Neither this
Guaranty nor any of its provisions may be waived, modified, amended, discharged,
or terminated except by an agreement in writing signed by the party against
which the enforcement of the waiver, modification, amendment, discharge, or
termination is sought, and then only to the extent set forth in that agreement.
18. Guarantor agrees that any controversy arising under or in relation
to this Guaranty shall be litigated exclusively in the jurisdiction where the
Land is located (the "Property Jurisdiction"). The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to
this Guaranty, the Note, the Security Instrument or any other Loan Document.
Guarantor irrevocably consents to service, jurisdiction, and venue of such
courts for any such litigation and waives any other venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise.
19. GUARANTOR AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP
BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE
EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH
THE BENEFIT OF COMPETENT LEGAL COUNSEL.
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<PAGE>
20. Any notice, demand, request, statement or consent made hereunder
shall be in writing, signed by the party giving such notice, request, demand,
statement, or consent, and shall be deemed to have been properly given when
either delivered personally, delivered to a reputable overnight delivery service
providing a receipt or deposited in the United States mail, postage prepaid and
registered or certified return receipt requested, at the address set forth
below, or at such other address within the continental United States of America
as may theretofore have been designated in writing. The effective date of any
notice given as aforesaid shall be the date of personal service, one (1)
Business Day (as defined in the Security Instrumnet) after delivery to such
overnight delivery service, or three (3) Business Days after being deposited in
the United States mail, whichever is applicable. For purposes hereof, the
addresses are as follows:
If to Lender: Glaser Financial Group, Inc.
2550 University Avenue West, #310N
St. Paul, Minnesota 55114
Attention: Mortgage Servicing
If to Guarantor: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attention: Darrel W. Copeland
With a copy to: Brookdale Living Communities, Inc.
77 West Wacker Drive, Suite 4400
Chicago, Illinois 60601
Attention: Robert S. Rudnik
ATTACHED EXHIBIT. The following Exhibit is attached to this Guaranty:
Exhibit A Modifications to Guaranty
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<PAGE>
IN WITNESS WHEREOF, Guarantor has signed and delivered this Guaranty or
has caused this Guaranty to be signed and delivered by its duly authorized
representative.
BROOKDALE LIVING COMMUNITIES, INC.
a Delaware corporation
By: ----------------------------------
Its: ----------------------------------
STATE OF ------------)
)
COUNTY OF -----------)
On December ---, 1998, before me, -----------------------, personally
appeared ---------------------, the --------------------- of Brookdale Living
Communities Inc., a Delaware corporation, personally know to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he/she executed same in the
authorized capacity, and that his/her signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
-----------------------------------------
Notary Public
PAGE 8
Indemnity Agreement
[EXECUTION COPY]
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), made as of December 18,
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 54 State Street, Albany, New York 12207 Attention: John State, Telefax
Number (518) 487-4017 (together with its successors and assigns pursuant to
Section 9 hereof).
RECITALS
WHEREAS, pursuant to a Trust Agreement dated as of December 18, 1998
between the Trustee and SELCO (as modified and supplemented and in effect from
time to time, the "Trust Agreement"), The Woodside 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 California - RC,
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, SELCO, as lender and the Trust, as borrower, are parties to a
Loan Agreement, dated as of the date hereof, pursuant to which SELCO is making a
loan to the Trust (the "B Loan");
WHEREAS, SELCO is unwilling to make the Capital Contribution and 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 a fee simple interest in the
land more particularly described in the Glaser Fee 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 SELCO, the Trustee's acceptance of its
duties under the Trust Agreement, and the covenants, agreements, representations
and warranties set forth in this Agreement, the parties hereby covenant, agree,
represent and warrant as follows:
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Indemnity Agreement
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.
"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.
"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,
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Indemnity Agreement
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, 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" is defined 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 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.
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Indemnity Agreement
(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) any
of the Trust's liability and indemnification obligations to the Lender pursuant
to Sections 18 and 51 of the Glaser Fee Mortgage, 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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Indemnity Agreement
(iv) the breach of any representation, warranty or covenant
set forth in Sections 18 and 51 of the Glaser Leasehold Mortgage and
Section 18 and 51 of the Glaser Fee Mortgage or otherwise in the Glaser
Loan Documents regarding Environmental Laws; 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 California 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
California 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 California.
(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
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Indemnity Agreement
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 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
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set forth in (a), (b) or (c) above, addressed if to SELCO at its address 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 to
Guarantor shall be delivered concurrently to each of the following: Brookdale
Living Communities, Inc., 77 West Wacker Drive, Suite 4400, Chicago, Illinois
60601, Attention: Darryl W. Copeland, Jr., Telefax Number (312) 977-3699;
Brookdale Living Communities, Inc., 77 West Wacker Drive, Suite 4400, Chicago,
Illinois 60601, Attention: Robert J. Rudnik, Esquire, Telefax Number (312) 977-
3769; 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 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.
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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 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 Glaser Fee 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.
[Signature on the following page]
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Indemnity Agreement
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:
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