EX-10.57.09
FHLMC Loan No. 504119192
Village Oaks at Chandler
SECURITY, ASSIGNMENT AND
SUBORDINATION AGREEMENT FOR OPERATING LEASE
(Revision Date
01-19-2007)
THIS SECURITY,
ASSIGNMENT AND SUBORDINATION AGREEMENT FOR OPERATING LEASE (the
“ Agreement ”) is made effective as of this 25th
day of April, 2008, by and among EMERITUS PROPERTIES-NGH,
LLC , a limited liability company organized and existing under
the laws of Washington whose address is c/o Emeritus Corporation,
3131 Elliott Avenue, Suite 500, Seattle, Washington 98121, as
grantor (“ Operator ”); CAPMARK BANK , an
industrial bank organized and existing under the laws of the State
of Utah, whose address is 6955 Union Park Center, Suite 330,
Midvale, Utah 84047, Attn: President, as lender (the
“ Lender ”); and FRETUS INVESTORS CHANDLER
LLC , a limited liability company organized and existing under
the laws of the State of Delaware, whose address is c/o Emeritus
Corporation, 3131 Elliott Avenue, Suite 500, Seattle, Washington
98121 (“ Borrower ”).
RECITALS
A. Borrower
is the owner of a senior housing project known as Village Oaks at
Chandler located in Chandler (Maricopa County), Arizona.
B. Borrower
is the maker of a certain Multifamily Note (the " Note ") of
even date herewith, payable to the order of Lender, in the original
principal amount of $6,350,000.00, bearing interest and being
payable in accordance with the terms and conditions therein set
forth, which Note evidences a loan (the " Loan ") made by
Lender to provide Borrower with financing for the Mortgaged
Property (as defined below). The Loan is secured by a
Multifamily Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (the " Security Instrument ") that
creates a first lien on and encumbers the Mortgaged
Property.
C. Borrower
has leased the Mortgaged Property to Operator pursuant to a certain
lease agreement, dated of even date herewith (the “
Operating Lease ”), as a result of which Operator will
derive substantial benefits from the Loan.
D. The
Note, Security Instrument, this Agreement, and other documents
evidencing and securing the Loan are referred to as the “
Loan Documents ”.
E. As
a condition precedent to Lender’s making the Loan to
Borrower, Lender requires that Operator execute this Agreement and
other documents from Operator for the benefit of Lender encumbering
certain of Operator’s interests in the Collateral
Property.
F. Operator
will benefit materially from Lender’s approval of the
Operating Lease and from the Loan transaction described
hereinabove.
NOW, THEREFORE,
for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged by each of the parties hereto, it is
agreed as follows:
ARTICLE 1
DEFINITIONS
As used herein,
the following terms shall have the meaning set forth below in this
Article. Any term used in this Agreement and not defined
shall have the meaning given to that term in the Security
Instrument:
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“Accounts” means all of Operator’s inventory,
accounts, accounts receivable, contract rights, general intangibles
and all proceeds thereof in each case to the extent, but only to
the extent, they are used in connection with or arise from the
operation of the Collateral Property.
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“
Awards” means 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 Collateral 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
Collateral Property under the power of eminent domain or otherwise
and including any conveyance in lieu thereof.
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“
Collateral Property ” means all property in which a
security interest is granted hereunder as further defined
below.
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“
Contracts” means all contracts, options and other
agreements for the sale of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Collateral
Property entered into by Operator now or in the future, including
cash or securities deposited to secure performance by parties of
their obligations.
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“
Controlled Property ” means property of every kind and
description in which Operator has or may acquire any interest
arising with respect to or out of the operation of the Mortgaged
Property, now or hereafter at any time in the possession or control
of Lender for any reason and all dividends and distributions on or
other rights in connection with such property.
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“
Event of Default ” means the occurrence of any event
listed in Section 22 of the Security Instrument or a default by
Borrower or Operator of any representation, warranty, obligation or
covenant under this Agreement or the Operating Lease.
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“
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
disposals, 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.
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“
Imposition Deposits ” shall have the meaning as
defined in Section 7(a) of the Security Instrument.
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“
Impositions ” shall have the meaning as defined in
Section 7(a) of the Security Instrument.
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“
Improvements” means the buildings, structures,
improvements, and alterations now constructed or at any time in the
future constructed or placed upon the land described in Exhibit
A attached hereto (the " Land "), including any future
replacements and additions (the Land and the Improvements
collectively referred to herein as the “ Mortgaged
Property ”).
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“
Insurance Proceeds” means 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 Collateral Property (as
defined below), whether or not Operator obtained the insurance
pursuant to Lender’s requirement.
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“
Leases ” means all present and future leases or
agreements for use or occupancy of the Mortgaged Property,
including but not limited to the Operating Lease, subleases,
licenses, concessions or grants or other possessory interests now
or hereafter in force, whether oral or written, covering or
affecting the Collateral Property, or any portion of the Collateral
Property (including proprietary leases or occupancy agreements if
Operator is a cooperative housing corporation), and all
modifications, extensions or renewals. The term "Leases"
shall also include any occupancy and admission agreements
pertaining to occupants of the Mortgaged Property, including both
residential and commercial agreements.
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“
Names ” means all names under or by which any of the
above Collateral Property may be operated or known, and all
trademarks, trade names, and goodwill relating to any of the
Collateral Property.
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“
Obligations ” means the full and punctual payment,
when due (whether at stated maturity, upon acceleration or
otherwise), of any and all present and future indebtedness,
liabilities and obligations of every kind and nature of Borrower to
Lender, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, joint or several, both now and
hereafter existing, or due or to become due, arising under, out of,
as a result of, or in connection with the Note, and the due and
punctual performance of all of the other terms and provisions of
the Note, this Agreement and other Loan Documents.
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“
Other Earnings” means all earnings, royalties,
accounts receivable, issues and profits from the Land, the
Improvements or any other part of the Collateral Property and, if
Operator is a cooperative housing corporation, maintenance charges
or assessments payable by shareholders or residents.
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“
Other Rights” means 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 benefiting
the Land or the Improvements, or both, and all rights-of-way,
streets, alleys and roads related to the Mortgaged Property which
may have been or may in the future be vacated.
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“
Payments ” means all payments due, or received, from
occupants, entrance fees, second party charges added to base rental
income, base and/or additional meal sales, 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, furniture leases, and laundry
services/leases, if any, and any and all other services provided to
third parties in connection with the Mortgaged Property, if any,
and any and all other personal property on
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the Mortgaged
Property, excluding personal property belonging to occupants of the
Mortgaged Property (other than property belonging to
Operator).
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“
Permits” means to the extent assignable under
applicable law, all permits, licenses and contracts, if any,
relating to the operation and authority to operate the Mortgaged
Property as a senior housing project.
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“
Permitted Liens ” means the Liens described in
Exhibit B attached hereto and made a part hereof.
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“
Personalty” means all equipment, inventory, general
intangibles 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,
including furniture, furnishings, 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 leases 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, also including all personal
property currently owned or acquired by Operator after the date
hereof used in connection with the ownership and operation of the
Mortgaged Property as a senior housing project, all kitchen or
restaurant supplies, dining room facilities, medical facilities, or
related furniture and equipment, and any other equipment, supplies
or furniture owned by Operator and leased to any third
party service provider or facility operator under any use,
occupancy, or lease agreements, as well as all licenses, permits,
certificates, and approvals required for the operation of the
Mortgaged Property as a senior housing project, to the extent
permitted by applicable law and regulations, including replacements
and additions thereto.
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“
Persons ” means an individual, a corporation, a
partnership, a joint venture, a trust, an unincorporated
association, a limited liability company, government or political
subdivision or agency thereof, or any other entity.
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“
Proceeds” means all proceeds from the conversion,
voluntary or involuntary, of any of the other Collateral Property
into cash or liquidated claims, and the right to collect such
proceeds.
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Refunds ” means all refunds or rebates of Impositions
with respect to the Collateral Property by any municipal, state or
federal authority or insurance premiums (other than refunds
applicable to periods before the real property tax year in which
the Security Instrument is dated).
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“
Rents ” means all rents (whether from residential or
non-residential space), revenues and other income of the Land or
the Improvements, including entrance fees, application fees,
processing fees, community fees and any other amounts or fees
deposited by any resident or tenant, subsidy payments received from
any sources (including, but not limited to payments under any
housing assistance payments contract), 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, together with and including all proceeds from any
private
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insurance for
tenants to cover rental charges and charges for services at or in
connection with the Mortgaged Property, and the right to Third
Party Payments.
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Tenant Security Deposits ” means all tenant or
occupant security deposits that have not been forfeited by any
tenant or occupant under any Lease with respect to the Mortgaged
Property.
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“
Third Party Payments ” means all rights to payments
from Medicare or Medicaid programs, or similar federal, state or
local programs, boards, bureaus or agencies, if any, and rights to
payment from residents or private insurers, if any, arising from
the operation of the Mortgaged Property as a senior housing
project, utility deposits, unearned premiums, accrued, accruing or
to accrue under insurance policies now or hereafter obtained by the
Operator for the Collateral Property and all proceeds of any
conversion of the Collateral Property or any part thereof
including, without limitation, proceeds of hazard and title
insurance and all awards and compensation for the taking by eminent
domain, condemnation or otherwise, of all or any part of the
Collateral Property or any easement therein.
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ARTICLE 2
UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT
2.1 Collateral
Property . As security for the payment, performance
and observance of the covenants and agreements of Operator
contained in this Agreement and of the Borrower under the Loan
Documents, Operator hereby grants to Lender a security interest in
all of Operator’s now owned or hereafter acquired or arising
right, title and interest in and to the following property
(collectively the “ Collateral Property ”)
provided that the Collateral Property is strictly limited in all
cases (whether or not so specified below) to the extent, and only
to the extent, they are a part of the Mortgaged Property or
attached to, used in connection with or arising from the operation
of the Mortgaged Property:
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Tenant Security
Deposits;
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Products of all
the foregoing.
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2.2 This Agreement is
also a security agreement under the Uniform Commercial Code (the
“ Code ”) for any of the Collateral Property
which, under applicable law, may be subjected to a security
interest under the Uniform Commercial Code, whether such Collateral
Property is owned now or acquired in the future, and all products
and cash and non-cash proceeds thereof (collectively, " UCC
Collateral "), and Operator hereby grants to Lender a security
interest in the UCC Collateral. Operator hereby
authorizes Lender to prepare and file financing statements,
continuation statements and financing statement amendments in such
form as Lender may require to perfect or continue the perfection of
this security interest and Operator agrees, if Lender so requests,
to execute and deliver to Lender such financing statements,
continuation statements and amendments. Borrower shall
pay all filing costs and all costs and expenses of any record
searches for financing statements and/or amendments that Lender may
require. Without the prior written consent of Lender,
Operator shall not create or permit to exist any other lien or
security interest in any of the UCC Collateral.
2.3 Unless Operator
gives Notice to Lender within 30 days after the occurrence of
any of the following, and executes and delivers to Lender
modifications or supplements of this Agreement (and any financing
statement which may be filed in connection with this Agreement) as
Lender may require, Operator shall not (i) change its name,
identity, structure or jurisdiction of organization;
(ii) change the location of its place of business (or chief
executive office if more than one place of business); or
(iii) add to or change any location at which any of the
Collateral Property is stored, held or located.
2.4 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 Agreement 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.
ARTICLE 3
ASSIGNMENT
OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION
3.1 As part of the
consideration for the Loan and approval of the Operating Lease,
Operator absolutely and unconditionally assigns and transfers to
Lender all Rents. It is the intention of Operator 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 Operator. Promptly upon request by Lender,
Operator agrees to execute and deliver such further assignments as
Lender may from time to time require. Operator 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
Collateral Property. 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 Collateral Property and it is
the intention of the Operator that in this circumstance this
Agreement create and perfect a lien on Rents in favor of Lender,
which lien shall be effective as of the date of this
Agreement.
3.2 After the
occurrence of an Event of Default, Operator 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 Operator 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 installments of
interest and principal then due and payable under the Note 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, 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
Operator free and clear of, and released from, Lender's rights with
respect to Rents under this Agreement. 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, Operator'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. Operator
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, (i) Lender may give, and Operator hereby
irrevocably authorizes Lender to give, notice to all tenants of the
Mortgaged Property instructing them to pay all Rents to Lender,
(ii) no tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and (iii) no
tenant shall be obligated to pay to Operator 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. Operator shall not interfere with and
shall cooperate with Lender's collection of such Rents.
3.3 Operator
represents and warrants to Lender that Operator has not executed
any prior assignment of Rents (other than an assignment of Rents
securing any indebtedness that will be paid off and discharged with
the proceeds of the loan evidenced by the Note), that Operator has
not performed, and Operator 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, and that at the time of execution of this
Agreement there has been no anticipation or prepayment of any Rents
for more than two months prior to the due dates of such
Rents. Operator shall not collect or accept payment of
any Rents more than two months prior to the due dates of such
Rents.
3.4 If an Event of
Default has occurred and is continuing, Lender may, regardless of
the adequacy of Lender's security or the solvency of Operator 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 managem
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