EXHIBIT 10.4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and entered
into as of this 22nd day of November, 1989, by and between DECADE
COMPANIES INCOME PROPERTIES - A LIMITED PARTNERSHIP, a Wisconsin
limited partnership ("Borrower"), and HOME SAVINGS OF AMERICA,
F.A., a federally chartered savings and loan association
("Secured Party").
RECITALS
A. Borrower owns, in fee simple, certain real property in
Madison, Dane County, Wisconsin, commonly known as 237-293 and
301-417 North Thompson Drive, and more particularly described in
Exhibit A attached hereto and, by this reference, made a part
hereof ("Property");
B. In connection with the Property, Secured Party is
making a loan in the principal amount of FOUR MILLION ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($4,100,000.00), evidenced by a
Promissory Note Adjustable Interest Rate ("Note") of even date
and a Mortgage, an Assignment of Rents and Leases and this
Security Agreement, all of even date. Said Note and the
documents securing the same are hereinafter sometimes
collectively referred to as ("Loan Documents"); and
C. Secured Party requires, as a condition precedent to its
advancing funds pursuant to the Loan Documents, that the Borrower
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower agrees as
follows:
1. Borrower hereby grants to Secured Party, its successors
and assigns, a continuing security interest in the following
(hereinafter called the "Collateral"):
(a) all furnishings, furniture, fixtures, machinery,
equipment, appliances, systems, building materials,
vehicles and personal property of every kind and nature
whatsoever (including, without limitation, all gas and
electric fixtures, radiators, heaters, engines and
machinery, boilers, ranges, elevators and motors,
plumbing and heating fixtures and systems, carpeting
and other floor coverings, washers, dryers, water
heaters, mirrors, mantels, air conditioning apparatus
and systems, refrigerating plant, refrigerators,
computers and all hardware and software therefor,
cooking apparatus and appurtenances, window screens,
draperies, awnings, and storm sashes) which are or
shall be attached to any buildings, structures or
improvements now or hereafter located on the Property,
or which are or shall be located in, on or about the
Property, or which, wherever located (including,
without limitation, in warehouses or other storage
facilities or in the possession of or on the premises
of vendors or manufacturers thereof), are used or
intended to be used in or in connection with the
construction, fixturing, equipping, furnishing, use,
operation or enjoyment of the Property or the
improvements located thereon, and any and all
replacements thereto, but specifically excluding all
personal property now or hereafter owned or leased by
any tenant leasing any portion of the Property, or
buildings, structures or improvements located thereon;
(b) all warehouse receipts or other documents of title
relating to any of the foregoing;
(c) all permits, licenses and franchises, including all
extensions, additions, improvements, betterments,
renewals and replacements of any of the foregoing,
together with the benefit of any deposits or payments
now or hereafter made by the Borrower, or either of
them, or on their behalf in connection with any of the
foregoing;
(d) all accounts receivables from tenants, suppliers or
service organizations serving the Property or any
buildings, structures or improvements now or hereafter
located thereon; and
(e) all proceeds of any of the foregoing;
to secure the following obligations (hereinafter collectively
called the "Obligations"):
(i) the payment of the indebtedness due under the
terms of the Note and the performance of all other
obligations of the Borrower under the Loan
Documents;
(ii) the performance of any and all covenants,
agreements, liabilities and obligations of
Borrower to Secured Party, its successors and
assigns, provided for or arising under this
Security Agreement; and
(iii) the payment of all costs and expenses of
collection, legal expenses and reasonable
attorneys' fees incurred by Secured Party, its
successors and assigns, in the enforcement of the
rights of Secured Party hereunder or under the
Loan Documents.
2. Borrower hereby covenants and warrants to Secured
Party, its successors and assigns, as follows:
(a) upon notice given by Secured Party from time to time,
Borrower shall prepare and deliver to Secured Party a
full inventory listing, as of the date such notice is
given, all items then constituting Collateral and such
other information as Secured Party may request with
respect to purchases or sales or other acquisitions or
dispositions of Collateral. Each such inventory shall
be certified as being true and complete by a duly
authorized general partner of Borrower. Unless Secured
Party otherwise agrees, in writing, all Collateral
consisting of tangible property will be kept at the
Property;
(b) except for the security interests granted hereunder and
under the Mortgage, Borrower is and will be at all
times the sole owner of the Collateral, free from any
lien, security interest, pledge or encumbrance, and no
person other than the Secured Party has or will have
any security interest or lien upon any of the
Collateral;
(c) Borrower will defend the Collateral against all claims
and demands of all persons at any time claiming the
same or any interest therein;
(d) except for the financing statements to be filed
pursuant to this Agreement or any other financing
statements filed for the benefit of Secured Party, no
financing statement or other acknowledgment of lien
covering any Collateral or any proceeds thereof is on
file in any public office. Borrower shall immediately
give Secured Party notice in writing of any change in
its address from that shown in this Agreement, shall
also upon demand execute and deliver to Secured Party
such financing statements, assignments, and other
documents in form satisfactory to Secured Party, and do
all such further acts and things as Secured Party may
at any time and from time to time reasonably request as
may be necessary or appropriate to establish and
maintain a valid perfected first security interest in
the Collateral as security for the Obligations, free of
any liens, claims or encumbrances, and Borrower will
pay the cost of filing or recording the same or filing
or recording this Agreement in all public offices
wherever filing or recording is deemed by Secured Party
to be necessary or desirable. Borrower will execute
and endorse such documents, certificates or forms as
may be necessary or appropriate in order that the
security interest of Secured Party hereunder may be
noted by the proper authorities upon the certificates
of title of each of the motor vehicles, if any,
described herein, and will deliver or cause to be
delivered to Secured Party any and all such documents
or certificates of title relating to such Collateral.
Borrower hereby appoints Secured Party as its attorney-
in-fact, with full power of substitution to execute,
file and record any and all documents necessary to
perfect and continue the security interests granted and
assignments made herein, including, but not limited to,
financing statements to be filed with the appropriate
authorities. Neither Secured Party nor its agents
shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law in its
capacity as such attorney-in-fact. This power of
attorney is coupled with an interest and shall be
irrevocable so long as any Obligation secured hereby
shall remain outstanding;
(e) except for the replacement or exchange in the ordinary
course of business, Borrower will not sell or offer to
sell, assign, pledge, lease or otherwise transfer or
encumber the Collateral, or any interest therein,
without the prior written consent of Secured Party;
(f) Borrower will maintain or cause to be maintained
insurance at all times with respect to the Collateral,
in such form, in such companies, in such amounts and
against such risks as Secured Party may request, such
insurance to be payable to the Secured Party or
Borrower as their interests may appear. All such
policies of insurance shall provide for a minimum of
thirty (30) days' prior written notice of cancellation
or amendment to Secured Party. Borrower shall furnish
Secured Party with certificates or other evidence
satisfactory to Secured Party showing compliance with
the foregoing provisions and, if required by Secured
Party, shall deposit the policies with Secured Party;
(g) except for the security interests granted hereunder and
under the Mortgage, Borrower will keep all Collateral
free from any lien, security interest or encumbrance
and in first-class order and repair and will not waste
or destroy (or suffer or permit the waste or
destruction of) the Collateral or any part thereof;
(h) Borrower will not use (or suffer or permit the use of)
the Collateral in violation of any statute, ordinance
or policy of insurance thereon, and Secured Party may
examine and inspect the Collateral at any reasonable
time or times, wherever located; and
(i) Borrower will pay or cause to be paid promptly when due
all taxes, assessments and other impositions levied
upon the Collateral, or for its use or operation.
3. At its option, Secured Party (if Borrower fails to do
same within ten (10) days after notice is given by Secured Party)
may discharge, when due, taxes, liens, security interest or other
encumbrances at any time affecting the Collateral and may pay for
the maintenance, repair and preservation of the Collateral.
Further, Secured Party, at its option and without notice to
Borrower, may place and pay for insurance on the Collateral upon
Borrower's failure to provide insurance satisfactory to the
Secured Party as provided by this Agreement. To the extent
permitted by applicable law and without limitation of its other
rights and remedies, Secured Party shall be entitled to immediate
reimbursement from the Borrower for any payment made or any
expense incurred by Secured Party pursuant to the foregoing
authorizations, together with interest thereon at the rate
provided in the Note. Until Default (as hereinafter defined),
Borrower may have the possession of the Collateral and may use
same in the operation of the Property in any lawful manner not
inconsistent with any policy of insurance thereon.
4. The occurrence of any of the following events or
conditions shall constitute a "Default" under this Agreement:
(a) any event of default shall occur or exist (and shall
continue beyond applicable grace periods, if any) under
the Mortgage, Note or under the terms of any of the
other Loan Documents;
(b) a default in the performance by Borrower of any of the
other Obligations or of any other covenant, agreement,
or obligation contained or referred to herein, or in
any of the other Loan Documents, to be performed by
Borrower which shall continue for thirty (30) days
after written notice or demand; or
(c) the sale, transfer or encumbrance of any of the
Collateral (except in accordance with the terms of this
Agreement) or the making of any levy, seizure or
attachment thereon.
5. Upon a Default hereunder, and at any time thereafter
(such Default not having been previously cured), Secured Party
shall have all the remedies of a Secured Party under the Uniform
Commercial Code and all other rights and remedies now or
hereafter provided for or permitted by law, including without
limitation, the right to take immediate and exclusive possession
of the Collateral, or any part thereof, and for that purpose
Secured Party may, as far as Borrower can give authority
therefor, with or without judicial process, enter (if this can be
done without breach of the peace) upon any premises on which the
Collateral or any part thereof may be situated. Without
limitation of the foregoing, Secured Party shall be entitled to
hold, maintain, preserve and prepare all of the Collateral for
sale and to dispose of said Collateral, if Secured Party so
chooses, from the Property, provided that Secured Party may
require Borrower to assemble such Collateral and make it
available to Secured Party for disposition at a place to be
designated by Secured Party (which may be other than the
Property) from which the Collateral can be sold or disposed of,
and provided further that for a reasonable period of time prior
to the disposition of such Collateral Secured Party shall have
the right to use same in the operation of the Property. Borrower
will execute and deliver to Secured Party any and all forms,
documents, certificates and registrations as may be necessary or
appropriate to enable Secured Party to sell and deliver good and
clear title to the Collateral to the buyer at the sale as herein
provided. Unless the Collateral is of the type customarily sold
on a recognized market, Secured Party will give Borrower at least
ten (10) days' notice of the time and place of any public sale of
such Collateral or of the time after which any private sale or
any other intended disposition thereof is to be made. The
requirements of reasonable notice shall be met if such notice is
given to the Borrower at least ten (10) days before the time of
the sale or disposition. Secured Party may buy at any public or
private sale. Secured Party shall have the absolute right to
elect to sell the Collateral as a unit with, and not separately
from, the Property and the improvements constructed thereon, or
in individual lots or parcels. The net proceeds realized upon
any disposition of the Collateral, after deduction for expenses
of retaking, holding, preparing for sale, selling and the like
and the reasonable attorneys' fees and legal expenses incurred by
Secured Party, shall be applied towards satisfaction of such of
the Obligations secured hereby, and in such order of application,
as Secured Party may elect. If all of the Obligations are
satisfied, the Secured Party will account to the Borrower for any
surplus realized on such disposition.
6. No waiver by Secured Party of any Default hereunder
shall operate as a waiver of any other Default or of the same
Default on a future occasion. It is agreed and understood that
Secured Party's remedies hereunder shall be limited to the
exercise of such rights and remedies against the Collateral.
Subject to the foregoing, the remedies of the Secured Party
hereunder are cumulative and the exercise of any one or more of
the remedies provided for herein, under the Uniform Commercial
Code or otherwise, shall not be construed as a waiver of any of
the other remedies of Secured Party so long as any part of the
Obligations remain unsatisfied.
7. All of Secured Party's rights hereunder shall inure to
the benefit of its successors and assigns, and all of Borrower's
Obligations shall bind its successors and assigns. All rights of
the Secured Party in, to and under this Agreement and in and to
the Collateral shall pass to and may be exercised by any assignee
thereof. The Borrower agrees that if the Secured Party gives
notice to the Borrower of an assignment of said rights, upon such
notice the liability of the Borrower to the assignee shall be
immediate and absolute. The Borrower will not set up any claim
against the Secured Party as a defense, counterclaim or set-off
to any action brought by any such assignee for any amounts due
hereunder or for possession of the Collateral.
8. 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.
9. The terms and provisions contained herein shall, unless
the context otherwise requires, have the meanings and be
construed as provided in the Uniform Commercial Code of the State
of Wisconsin.
10. All notices demands and requests given or required to
be given hereunder shall be in writing. All such notices,
demands and requests by Secured Party to Borrower shall be deemed
to have been properly given if served in person or if sent by
United States registered or certified mail return, receipt
requested, postage prepaid, addressed to Borrower at:
Decade Companies Income Properties
Brookfield Lakes Corporate Center
18000 West Sarah Lane
Brookfield, Wisconsin 53005
Attention: Jeffrey Keierleber
With a copy to: Mary Fertl
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
or to such other address as the party to be addressed may from
time to time designate by written notice to Secured Party given
as herein required. All notices, demands and requests by
Borrower to Secured Party shall be deemed to have been properly
given if served in person or if sent by United States registered
or certified mail, postage prepaid, addressed to Secured Party
at:
Home Savings of America, F.A.
P. 0. Box 7075
Pasadena, California 91109-7075
With a copy to: Sean P. Kennedy
Portes, Sharp, Herbst, Kravets & Fox, Ltd.
333 West Wacker Drive
Suite 500
Chicago, Illinois 60606
or to such other address as the party to be addressed may from
time to time designate by written notice to Borrower given as
herein required. Notices, demands and requests given by mail in
the manner aforesaid shall be deemed sufficiently served or given
for all purposes hereunder on the date such notice, demand or
request shall be deposited in the mails.
11. Borrower hereby further agrees for itself and for its
successors and assigns that: (a) this Agreement does not
constitute a waiver or partial waiver by Secured Party of any of
its rights under the Mortgage or other Loan Documents, and (b)
this Agreement does not in any way release Borrower from its
obligation to comply with every term, provision, condition,
covenant, agreement, representation, warranty and obligation
provided for in the Loan Documents.
12. Secured Party's rights hereunder are subject to the
terms and provisions of that certain Nonrecourse Agreement
entered into by and between Secured Party and Borrower dated
November 22, 1989.
IN WITNESS WHEREOF, this Agreement has been executed as of
the day and year first above written.
SECURED PARTY: BORROWER:
HOME SAVINGS OF AMERICA, DECADE COMPANIES INCOME
F.A., a federal savings and PROPERTIES - A LIMITED
loan association PARTNERSHIP, a Wisconsin
limited partnership, by
Decade Companies, a
By: __________________________ Wisconsin general
Raymond Rissmann, its partnership, its sole
Vice President general partner
By:___________________________
Jeffrey Keierleber, a
general partner
EXHIBIT A
Legal Description
Parcel 1:
Lot 2, Certified Survey Map 1872, recorded in Vol. 7 of Certified
Survey Maps, page 312, #1450832, in the City of Madison, Dane
County, Wisconsin
Parcel 2:
Lot 1, Certified Survey May 2982, recorded in Vol. 11 of
Certified Survey Maps, page 399, #1593404, in the City of
Madison, Dane County, Wisconsin
Parcel 3:
That certain Easement Declaration recorded in Vol. 997 of
Records, page 299, #1593405; re-recorded in Vol. 1850 of Records,
page 4, #1662733, as amended by that certain First Amendment to
Easement Declaration dated ___________________, 1989, recorded in
Vol. ___ of Records, page _______, #_______________________;
Parcel 4:
That certain Recreational Easement Agreement dated
_______________, 1989, recorded in Vol. ___ of Records, page
____, #_____________.