Exhibit 10.55.8
CASH MANAGEMENT AND SECURITY AGREEMENT
(this
" Agreement ")
dated
as of September 29, 1999
among
EMERITUS PROPERTIES XII, LLC
c/o
Emeritus Corporation
3131
Elliott Avenue, Suite 500
Seattle, Washington 98121
Attn:
William Shorten
(the
" Borrower "),
EMERITUS CORPORATION
3131
Elliott Avenue, Suite 500
Seattle, Washington 98121
Attn:
William Shorten
(the
" Manager "),
and
AMRESCO CAPITAL, L.P.
c/o
AMRESCO Services, L.P.
245
Peachtree Center Avenue, N.E.
Suite
1800
Atlanta, Georgia 30303-1231
Attention: Loan Servicing
(together with its successors and
assigns, the " Lender ")
WHEREAS, pursuant to
the Deed of Trust and Security Agreement dated as of
_______________,1999 (the " Mortgage "), by and between the
Lender and the Borrower, the Lender has provided financing (the "
Loan ") to the Borrower secured by the property or
properties owned by the Borrower and described in the Mortgage (the
" Property ");
WHEREAS, from and
after the Lockbox Effective Date and continuing throughout any
Sweep Period (as defined below), the Lender may deliver to the
Borrower's bank or banks (the " Clearing Bank ") maintaining
the operating account or accounts of the Borrower (the "
Property Account ") a Clearing Bank Instruction Letter
attached as Exhibit A , hereto (together with any
modifications, amendments or replacements thereof, the "
Instruction Letter "), which provides that all Rents (as
defined in the Mortgage) be deposited in the account named therein
(upon delivery of the Instruction Letter, a " Clearing
Account ") and swept periodically into the accounts established
hereunder;
NOW THEREFORE, in
consideration of the mutual premises contained herein and for other
good and valuable consideration the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1.
Defined Terms .
(a) As
used herein the following capitalized terms shall have the
respective meanings set forth below:
" Account
Proceeds " shall mean any and all Rents and other revenue in
connection with any Property that is deposited by any Clearing
Bank, the Borrower, the Manager or otherwise into the Cash
Collateral Account from time to time.
" Accrued
Interest " shall have the meaning given to such term in the
Note.
" Affiliate
Expense " shall have the meaning ascribed to such term in
Section 3 hereof.
" Amounts Due
" shall have the meaning ascribed to such term in
Section 6 hereof.
" Approved
Operating Budget " shall have the meaning given to such term in
Section 3(e) below.
" Borrower's
Interest " shall have the meaning ascribed to such term in
Section 2(b) below.
" Borrower
Remainder Account " shall mean the account of Borrower to which
monies in the Borrower Remainder Sub-account are allocated in
accordance with the terms hereof.
" Business Day
" shall mean any day other than a Saturday, Sunday or any day on
which commercial banks in the City in which the Deposit Bank is
located are closed for business.
" Capital
Expenditures Budget " shall have the meaning ascribed to such
term in Section 3 hereof.
" Cash Collateral
Account " shall have the meaning ascribed to such term in
Section 2 hereof.
" Certificates
" means the securities issued in connection with a Secondary Market
Transaction of the Loan.
" Clearing
Account " shall have the meaning given such term in the
Recitals.
" Cash Collateral
Account Payments " shall mean the disbursement of funds from
the Cash Collateral Account for the payment of the following items
in the following order of priority:
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1st,
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to the payment required to be made to the Tax
and Insurance Escrow Fund in accordance with the terms and
conditions of the Mortgage;
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2nd,
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to the payment of the Monthly Payment (with
interest payable at the Initial Interest Rate and principal payable
in the scheduled installment amount);
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3rd,
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to the payment required to be made to the
Replacement Escrow Fund in accordance with the terms and conditions
of the Mortgage;
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4th,
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to the payment of operating expenses incurred
for the Property pursuant to the terms and conditions of the
applicable Approved Operating Budget (" Monthly Operating
Expenses "), including the payment of property management fees
to Manager (an affiliate of Borrower) (or the successor thereto
owned substantially by the same parties thereof) pursuant to a
property management agreement approved by Lender and in accordance
with the Approved Operating Budget, but excluding any Affiliate
Expenses;
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5th,
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to the payment of Extraordinary Expenses
approved in writing by Lender, if any;
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6th,
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to the payment of any other amounts due under
the Loan Documents, including without limitation (a) any advances
made by Lender thereunder for the protection of the Property and
Lender's lien thereon and (b) any escrows or reserves which are
established or required under the Loan Documents and whose funding
is not provided for above;
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7th,
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to the principal amount currently due under
the Note until such principal amount is paid in full;
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8th,
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to the payment of Accrued Interest, including
interest legally permitted to accrue thereon, or to the payment of
interest accrued at the Default Rate, it being understood that upon
an Event of Default or at any time on or after the Final Demand
Date, Lender may apply any sums then held in the Cash Collateral
Account or collected thereafter to the payment of the Debt in the
foregoing or any other order, in Lender's sole discretion;
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10th,
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to the payment of Affiliate Expenses; and
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Last, the remaining
funds, if any, shall be disbursed to Borrower.
" Clearing
Bank " shall have the meaning given such term in the
Recitals.
" Collateral "
shall mean (i) the Cash Collateral Account, (ii) the Tax and
Insurance Escrow Fund, (iii) the Replacement Escrow Fund, and (iv)
any and all proceeds and products thereof.
" Collection
Period " with respect to any Payment Date, shall mean the
period of days from the eleventh day of the month immediately
preceding the Payment Date to the tenth day of the month in which
such Payment Date occurs. With respect to the first Payment Date,
the Collection Period shall commence on and include the date hereof
and end on and include the tenth day of the calendar month of such
first Payment Date.
" Debt " shall
have the meaning set forth for such term in the Note.
" Default Rate
" shall have the meaning given to such term in the Note.
" Deposit Bank
" shall mean the bank or banks selected by the Lender to maintain
the Cash Collateral Account.
" Eligible
Account " Either (i) an account or accounts maintained with an
Eligible Bank or (ii) a Trust Account. Eligible Accounts may bear
interest.
" Eligible
Bank " shall mean a bank that insures deposits held by such
bank through the Federal Deposit Insurance Corporation.
" Escrow
Accounts " shall have the meaning ascribed to such term in
Section 2(e) below.
" Event of
Default " shall have the meaning set forth for such term in the
Mortgage.
" Extraordinary
Expenses " shall have the meaning ascribed to such term in
Section 3 hereof.
" Final Demand
Date " shall have the meaning set forth for such term in the
Note.
" Final Payment
Date " shall have the meaning given to such term in the
Note.
" Initial Interest
Rate " shall have the meaning given to such term in the
Note.
" Instruction
Letter " shall have the meaning ascribed to such term in the
Recitals.
" Loan " shall
have the meaning ascribed to such term in the Recitals.
" Loan
Documents " shall have the meaning set forth for such term in
the Mortgage.
" Lockbox
Effective Date " shall mean the earlier of the following dates:
(a) the Scheduled Maturity Date if the Debt has not been paid in
full by such date, or (b) the date of any Event of Default which
has not been cured to Lender's satisfaction before the expiration
of any applicable notice and cure period provided under the Loan
Documents.
" Lockbox
Termination Date " shall mean the earlier of (i) the date that
the Debt is paid in full, (ii) the date (from time to time) that
the deposit account arrangement (as set forth herein) is suspended
or terminated in writing by Lender (in its sole discretion), (iii)
the date an Event of Default and the passage of applicable cure
periods is cured to Lender's satisfaction (Lender having no
obligation to accept any such cure unless required by applicable
law), or (iv) the date Lender has foreclosed upon the Property or
otherwise obtained legal title and control of the Property and all
Rents therefrom.
" Monthly
Operating Expense " shall have the meaning given to such term
in the definition of Cash Collateral Account Payments.
" Monthly
Payment " shall have the meaning given to such term in the
Note.
" Mortgage "
shall have the meaning given such term in the Recitals.
" Mortgage
Sub-accounts " shall have the meaning ascribed to such term in
Section 2(c) .
" Note " shall
mean that certain Fixed Rate Note of even date herewith, made by
the Borrower in favor of the Lender and evidencing the Loan, as the
same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
" Operating
Budget " shall have the meaning ascribed to such term in
Section 3 hereof.
" Operating
Expenses " shall mean, collectively, all capital and operating
costs for the Property incurred by Borrower in accordance with the
terms and provisions of the Loan Documents.
" Payment Date
" shall mean the respective date upon which the respective payment
is due under the Loan Documents.
" Person "
shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company,
institution, entity, party or government (whether territorial,
national, federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division,
agency, body or department thereof).
" Property "
shall have the meaning ascribed to such term in the Recitals.
" Rating
Agencies " shall mean (i) any nationally-recognized statistical
rating organizations that provide a rating on any Certificates on
the date of issuance of the Certificates or (ii) prior to the
issuance of the Certificates, any nationally-recognized statistical
rating organizations that have been designated by the Lender in its
sole discretion.
" Rents "
shall have the meaning ascribed to such term in the Mortgage.
" Replacement
Escrow Fund " shall have the meaning ascribed to such term in
the Mortgage.
" Scheduled
Maturity Date " means the "Scheduled Maturity Date" as defined
in the Note.
" Secondary Market
Transaction " shall have the meaning given to such term in the
Mortgage.
" Servicer "
shall mean a servicer or account administrator of the Lender
designated by and acting for the benefit of the Lender.
" Special Debt
Service Reserve " shall have the meaning given to such term in
the definition of Cash Collateral Account Payments.
" Sweep Period
" shall mean that period of time commencing on the Lockbox
Effective Date until the Lockbox Termination Date.
" Tax and
Insurance Escrow Fund " shall have the meaning given to such
term in the Mortgage.
" Trust
Account " shall mean a segregated trust account maintained by a
corporate trust department of a federal depository institution or a
state chartered depository institution subject to regulations
regarding fiduciary funds on deposit similar to Title 12 of the
Code of Federal Regulations § 9.10(B) which has corporate
trust powers and is acting in its fiduciary capacity.
(b) The
meanings given to capitalized terms defined herein shall be equally
applicable in both singular and plural forms of such terms.
(c)
Capitalized terms used and not defined herein shall have the
respective meanings given to such terms in the Mortgage.
(d) The
Agreement constitutes the "Disbursement Agreement" referred to in
the Note and constitutes one of the "Loan Documents" referred to in
the Note.
Section 2.
Deposit of Rent; Establishment of the Accounts and Other
Matters .
(a)
During any Sweep Period, all Rents and other revenue, income
and sums collected from, or arising with respect to, the Property
shall be deposited in the Clearing Account, to be disbursed in
accordance with the provisions of this Agreement.
(b)
Prior to or during any Sweep Period, Lender will establish
and maintain (while the Loan is outstanding) a cash collateral
account (which may be a book-entry sub-account of an Eligible
Account) at the Deposit Bank (the " Cash Collateral Account
") which shall be entitled "AMRESCO Capital, L.P. as Mortgagee of
Emeritus Properties XII, LLC Cash Collateral Account." In
connection with a Secondary Market Transaction, the Lender shall
have the right to cause Deposit Bank to entitle the Cash Collateral
Account with such other designation as the Lender may select in its
reasonable discretion to reflect such assignment or transfer. The
Lender shall, or shall cause the Servicer to, cause the Deposit
Bank to deposit into the Cash Collateral Account, all Rents and
other amounts transferred to the Deposit Bank from the Clearing
Bank.
(c) If
required under the Loan Documents, all or any sub-account of the
Cash Collateral Account shall be an interest bearing account; and
in conjunction therewith, Lender shall be entitled to, and shall
report under its Federal tax identification number, the interest
amount allocated to Borrower by Lender, if any, on such account or
sub-account. With respect to any such interest, Lender shall
allocate to Borrower an interest amount equal to an amount
determined by applying to the average monthly balance of the
applicable account (or sub-account), the quoted interest rate for
the Deposit Bank's business money market savings account, as such
rate changes from time to time (such allocated amount being
referred to as " Borrower's Interest "). If such Deposit
Bank quotes more than one interest rate for a business money market
savings account, then the lowest of such rates shall be utilized.
If the Deposit Bank does not have an established business money
market savings account (or if any rate for such account can not
otherwise be determined in connection with the deposit of the
same), the comparable interest rate as quoted by Bank of America,
N.A. (or its successor institution) shall be utilized. Borrower's
Interest, less applicable administrative fees as set
forth in the Loan Documents (if any), shall be
and become part of the Cash Collateral Account or the Escrow
Accounts (as applicable). Lender shall not be responsible for
obtaining a specific return or yield on such deposit. Lender shall
cause to be furnished to Borrower on an annual basis such income
tax reporting forms as are required by applicable Federal law.
(d) The
following sub-accounts (collectively, the " Mortgage
Sub-accounts ") of the Cash Collateral Account shall be
maintained on a ledger-entry basis:
(i)
"Tax and Insurance Impound Fund Sub-account";
(ii)
"Monthly Payment Sub-account";
(iii)
"Replacement Escrow Fund Sub-account";
(iv)
"Operating Expense Sub-account";
(v)
"Casualty and Condemnation Proceeds Sub-account"; and
(vi)
"Borrower Remainder Sub-account".
Amounts allocated to
the Mortgage Sub-accounts shall be disbursed in accordance with the
terms of this Agreement and the Mortgage.
(e) (i)
During any Sweep Period, the Lender may deliver
one or more executed Instruction Letters to the Clearing Bank. The
Borrower hereby agrees that it shall, within five (5) Business Days
after receipt of an Instruction Letter, execute an Instruction
Letter to cover such bank, bank location and/or account, which
Instruction Letter shall be in the form of the Instruction Letter
annexed hereto as Exhibit A , with such changes thereto as
may be requested by such Clearing Bank in order to conform such
Instruction Letter with such new bank's customary requirements. If
any Clearing Bank shall request any changes, modifications or
supplements to any Instruction Letter to conform to the Clearing
Bank's customary practice or requirements, as the same may change
from time to time, then if such changes, modifications or
supplements are acceptable to Lender, Borrower shall execute and
deliver to Lender such instruments as the Clearing Bank shall
request to effectuate such modifications or changes. In the event
the Borrower fails to execute an Instruction Letter as provided
above, Borrower hereby appoints the Lender as its attorney-in-fact
with full authority to enter into Instruction Letter(s) and to
execute on behalf of the Borrower any new modified Instruction
Letter acceptable to the proposed Clearing Bank. All costs and
expenses incurred by the Lender to negotiate and execute any
Instruction Letter shall be paid by the Borrower.
(ii) At
the election of the Lender, during any Sweep Period, within ten
(10) Business Days, the Borrower will establish a new Eligible
Account (which shall become the Clearing Account) at a bank
selected by the Lender and shall cause all funds in the
existing
Clearing Account to be transferred to the new
Clearing Account and any future Rents from the Property to be
deposited in such new Clearing Account.
(f)
Lender may elect to establish and maintain while the Loan is
outstanding at the Deposit Bank one or more accounts (which may be
a sub-account of the Cash Collateral Account) (singularly and
collectively referred to as the " Escrow Accounts "), which
if established shall be entitled "AMRESCO Capital, L.P. as
Mortgagee of [BORROWER] [insert name of escrow] Escrow Account,"
and into which Lender may deposit (i) the Tax and Insurance Escrow
Fund, (ii) the Replacement Escrow Fund, and (iii) any other escrow
funds set forth under the Loan Documents. Amounts on deposit in the
Escrow Accounts shall be disbursed at the direction of the Lender
in accordance with the Loan Documents. The Escrow Accounts each
shall be assigned the federal tax identification number of the
Lender.
(g) In
order to further secure the Debt and as a material inducement for
the Lender to make the Loan in accordance with the terms of the
Loan Documents, the Borrower hereby (i) requests that the Cash
Collateral Account and the Escrow Accounts be established on its
behalf at the Deposit Bank in the names set forth above and (ii)
acknowledges that (A) the Cash Collateral Account and the Escrow
Accounts will be subject to the sole dominion, control and
discretion of the Lender (which may be exercised through the
Servicer), subject to the terms, covenants and conditions of this
Agreement and the Mortgage, (B) the Lender shall have the sole
right to make withdrawals or transfers of funds from the Cash
Collateral Account and the Escrow Accounts, and (C) neither the
Borrower nor any other Person claiming on behalf of or through the
Borrower shall have any right or authority, whether express or
implied, to make use of, or withdraw any funds, investments or
other properties from, the Cash Collateral Account or the Escrow
Accounts, or to give any instructions with respect to the Cash
Collateral Account or the Escrow Accounts.
(h)
Lender may require Borrower to execute (or Lender may execute
as Borrower's attorney-in-fact) any payment directions to the
manager and tenants of the Property (whose estoppel certificates
shall acknowledge their agreement to make payments in accordance
with such directions) and such additional documentation as Lender
may deem necessary to institute such arrangements.
(i) In
the event this Agreement becomes effective upon the Scheduled
Maturity Date, Lender may require Borrower to do the following: (A)
to execute an agreement in recordable form to toll or extend the
applicable statute of limitations after the Scheduled Maturity
Date, and (B) to obtain at Borrower's expense such title policy
endorsements as Lender may deem necessary to reflect such agreement
and such additional engineering report on the Property as Lender
may deem necessary to confirm the adequacy of the Capital
Expenditures Budget (as defined in the Note) beyond the Scheduled
Maturity Date.
Section 3.
Allocation and Disbursement of Funds in the Cash Collateral
Account .
(a)
Commencing on the first Business Day of each Collection
Period on or after the commencement, and during the continuance of,
a Sweep Period occurring prior to the Scheduled Maturity Date, the
Lender or the Servicer shall allocate amounts deposited in the Cash
Collateral
Account from time to time during such
Collection Period in the order and priority set forth for the
Clearing Account Payments as set forth in the Note.
(b)
During a Sweep Period (and subject to
Section 3(a) and 3(c) above), Lender or the
Servicer shall disburse, on the tenth (10th) day of each calendar
month, the following amounts from the Cash Collateral Account:
(i)
Amounts allocated to the Tax and Insurance Impound Fund
Sub-account to the Tax and Insurance Escrow Fund on each Payment
Date for further disbursement therefrom as set forth in the
Mortgage;
(ii)
Amounts allocated to the Monthly Payment Sub-account to the
Lender on the related Payment Date;
(iii)
Amounts allocated to the Replacement Escrow Fund Sub-account
as set forth in the Mortgage;
(iv)
Amounts allocated to the Operating Expense Sub-account on the
last Business Day of each week; and
(v)
Amounts allocated to the Borrower Remainder Sub-account on
the last Business Day of each week.
(c)
Upon the occurrence of an Event of Default under the Loan
Documents or at any time on or after the Final Demand Date, Lender
may apply any sums then held in the Cash Collateral Account to the
payment of the Debt in any order, in Lender's sole discretion.
(d)
Until expended or applied, amounts held in the Cash
Collateral Account shall constitute additional security for the
Debt.
(e)
Under the provisions of the Mortgage, it is understood that
on or before November 30 of each calendar year Borrower must
deliver to Lender for the next succeeding calendar year, on a
month-by-month basis, a management plan and an itemized budget of
capital expenditures (defined in the Mortgage as the "Budget" and
sometimes hereinafter referred to as the " Capital Expenditures
Budget "), together with an itemized operating budget for the
Property (" Operating Budget "). Each such plan and budget
shall be in such format and in such detail as Lender may request,
and beginning with the Operating Budget and Capital Expenditures
Budget for the calendar year in which the Scheduled Maturity Date
occurs and otherwise beginning on the Lockbox Effective Date,
Lender may require additional detail as to, among other items,
budgeted mont
