EXHIBIT 4.9
RECORDING REQUESTED BY AND LOAN NO. 6 103 650
WHEN RECORDED RETURN TO:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Christina K. Braisted
ASSIGNMENT OF LEASES AND RENTS
(RICHLAND COUNTY, SOUTH CAROLINA)
This Assignment of Leases and Rents (this "ASSIGNMENT") is made as of
September 27, 1999, by CORNERSTONE REALTY INCOME TRUST, INC., a Virginia
corporation having its principal office and place of business at 306 East Main
Street, Richmond, Virginia 23219 ("BORROWER"), to THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation, having an office at Two Ravinia
Drive, Suite 1400, Atlanta, Georgia 30346 ("LENDER").
RECITALS:
A. Borrower is the sole owner of (a) the premises located in Charleston County,
South Carolina, more particularly described in Exhibit A attached hereto and
incorporated herein ("PROPERTY") and (b) the landlord's interest under the
leases described in Exhibit B attached hereto and incorporated herein ("SPECIFIC
LEASES");
B. Lender has made a loan to Borrower in the principal sum of Fifty Million Five
Hundred Fifty Thousand and No/100 Dollars ($50,550,000.00) ("LOAN") evidenced by
that certain Promissory Note dated as of the date of this Assignment ("NOTE")
and secured by, among other things, that certain Mortgage and Security Agreement
executed by Borrower in favor of Lender dated as of the date of this Assignment
and to be recorded in the real estate records of Richland County, South Carolina
("INSTRUMENT") (capitalized terms used without definition shall have the
meanings ascribed to them in the Instrument) and the Documents; and
C. Lender was willing to make the Loan to Borrower only if Borrower assigned the
Leases and Rents to Lender in the manner provided below to secure payment of the
Obligations.
IN CONSIDERATION of the principal sum of the Note and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower agrees as follows:
1. Assignment. Borrower irrevocably, absolutely and unconditionally assigns,
transfers, and sets over to Lender all of the right, title, interest, and
estates that Borrower may now or later have in, to and under (a) the Leases
(which term shall also include the Specific Leases and all guaranties thereof);
(b) the Rents; (c) all proceeds from the cancellation, surrender, sale or other
disposition of the Leases; (d) the right to collect and receive all the Rents;
and (e) the right to
enforce and exercise, whether at law or in equity or by any other means, all
terms and conditions of the Leases ("LEASE PROVISIONS"). This assignment is
intended by Borrower and Lender to constitute a present, absolute assignment and
not a collateral assignment for additional security only. Upon full payment and
satisfaction of the Obligations and written request by Borrower, Lender shall
transfer, set over, and assign to Borrower all right, title, and interest of
Lender in, to, and under the Leases and the Rents.
2. Borrower's License. Until an Event of Default occurs, Borrower shall have a
revocable license ("LICENSE") from Lender to exercise all rights extended to the
landlord under the Leases. Borrower shall hold the Rents, or an amount
sufficient to discharge all current sums due on the Obligations, in trust for
use in the payment of the Obligations. Upon an Event of Default, whether or not
legal proceedings have commenced and without regard to waste, adequacy of
security for the Obligations or the solvency of Borrower, the License shall
automatically terminate without notice by Lender (any such notice being
expressly waived by Borrower). Upon such termination, Borrower shall deliver to
Lender within seven (7) days (a) all Rents (including prepaid Rents) held by
Borrower, (b) all unapplied security or other deposits paid pursuant to the
Leases, and (c) all previously paid charges for services, facilities or
escalations, to the extent, in each of the foregoing instances, allocable to any
period after the Event of Default. Borrower agrees and stipulates that upon
execution of this Assignment, Borrower's only interest in the Leases or Rents is
as a licensee revocable upon an Event of Default.
3. Lender as Creditor of Tenant. Upon execution of this Assignment, Lender, and
not Borrower, shall be the creditor of any Tenant in respect of assignments for
the benefit of creditors and bankruptcy, reorganization, insolvency, dissolution
or receivership proceedings affecting any such Tenant; provided, however, that
Borrower shall be the party obligated to make timely filings of claims in such
proceedings or to otherwise pursue creditor's rights therein. Notwithstanding
the foregoing, Lender shall have the right, but not the obligation, to file such
claims instead of Borrower and if Lender does file a claim, Borrower agrees that
Lender (a) is entitled to all distributions on such claim to the exclusion of
Borrower and (b) has the exclusive right to vote such claim and otherwise to
participate in the administration of the estate in connection with such claim.
Lender shall have the option to apply any monies received by it as such creditor
to the Obligations in the order set forth in the Documents. If a petition is
filed under the Bankruptcy Code by or against Borrower, and Borrower, as
landlord under any Lease, decides to reject such Lease pursuant to Section
365(a) of the Bankruptcy Code, then Borrower shall give Lender at least ten (10)
days' prior written notice of the date when Borrower shall apply to the
bankruptcy court for authority to reject the Lease. Lender may, but shall not be
obligated to, send Borrower within such ten-day period a written notice stating
that (a) Lender demands that Borrower assume and assign the Lease to Lender
pursuant to Section 365 of the Bankruptcy Code and (b) Lender covenants to cure
or provide adequate assurance of future performance under the Lease. If Lender
sends such notice, Borrower shall not reject the Lease provided Lender complies
with clause (b) of the preceding sentence.
4. Notice to Tenant of an Event of Default. Upon demand and notice of an Event
of Default by Borrower sent by Lender to Tenants, Borrower irrevocably
authorizes each Tenant to (a) pay all Rents to Lender and (b) rely upon any such
notice from Lender without any obligation to inquire as to the actual existence
of the default, notwithstanding any claim of Borrower to the
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contrary. Borrower shall have no claim against any Tenant for any Rents paid by
Tenant to Lender.
5. Indemnification of Lender. Borrower hereby agrees to indemnify and hold
Lender harmless from any and all Losses that Lender may incur under the Leases
or by reason of this Assignment, except for Losses incurred as a direct result
of Lender's willful misconduct or gross negligence. Nothing in this Assignment
shall be construed to bind Lender to the performance of any Lease Provisions or
to otherwise impose any liability on Lender including, without limitation, any
liability under covenants of quiet enjoyment in the Leases in the event that any
Tenant shall have been joined as party defendant in any action to foreclose the
Instrument and shall have been barred thereby of all right, title, interest, and
equity of redemption in the premises. This Assignment imposes no liability upon
Lender for the operation and maintenance of the Property or for carrying out the
terms of any Lease before Lender has entered and taken actual possession and
complete control of all operations of the Property. Any Losses incurred by
Lender, by reason of actual entry and taking possession under any Lease or this
Assignment or in the defense of any claims shall, at Lender's request, be
reimbursed by Borrower. Such reimbursement shall include interest at the Default
Rate and Costs. Lender may, upon entry and taking of possession, collect the
Rents and apply them to reimbursement for any such items.
6. Representations and Warranties. Borrower represents and warrants that (a)
Borrower is the absolute owner of the lessor's interest in the Leases, (b)
Borrower has the right, power and authority to assign, transfer, and set over
all of its right, title and interest in, to and under the Leases and Rents and
no other person (other than the respective Tenants) has any right, title or
interest therein, (c) the Leases are valid and in full force and effect and have
not been materially modified, amended or terminated, nor have any of the terms
and conditions of the Leases been waived, except as stated in the Leases, (d)
there are no outstanding assignments or pledges of the Leases or Rents, (d)
there are no outstanding leasing commissions due under the Leases for the
initial term or for any extensions, renewals or expansions, (f) except as
disclosed to Lender in writing, there are no existing defaults or, to any
material extent, any state of facts which, with the giving of notice and/or
passage of time, would constitute a default under the Leases by either party,
(g) no Tenant has any defense, set-off or counterclaim against Borrower to any
material extent, (h) each Tenant is in possession and paying Rent and other
charges as provided in its Lease, (i) no Rents have been or will later be
anticipated, discounted, released, waived, compromised or otherwise discharged,
except in the ordinary course of Borrower's exercise of prudent management
decisions, so long as such decisions are customary and reasonable for apartment
owners, or as may be expressly permitted by the Lease, (j) except as specified
in the Leases and shown on the rent roll delivered to Lender in connection with
the funding of the Loan (the "RENT ROLL"), there are no (i) unextinguished rent
concessions, abatements or other inducements relating to the Leases or (ii)
options or other rights to acquire any interest in the Property in favor of any
Tenant, and (k) the Rent Roll discloses all currently existing Leases and is
true, complete and accurate in all respects.
7. New Leases, Amendments and Terminations. Borrower may (a) terminate any Lease
that is in default, (b) enter into new, bona-fide, arm's length Leases (or renew
existing Leases) provided each Lease satisfies the minimum leasing requirements
in Exhibit C attached hereto and incorporated herein and is on Borrower's
standard form lease (approved by Lender) with no
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modifications that increase the obligations of the landlord, and (c) take such
actions as are customary and reasonable for apartment owners. Upon Lender's
request and at Borrower's expense, Borrower shall (i) promptly deliver to Lender
copies of all notices of default Borrower has sent to any Tenant, (ii) enforce
the Leases and all remedies available to Borrower upon any Tenant's default,
(iii) deliver to Lender copies of all papers served in connection with any such
enforcement proceedings, and (iv) consult with Lender, its agents and attorneys
with respect to the conduct thereof. Borrower shall not enter into any
settlement of any such proceeding without Lender's prior written consent except
in the ordinary course of business, and so long as such actions are reasonable
and customary for apartment owners.
8. Covenants. Borrower shall not, except with the prior written consent of
Lender in each instance, (a) sell, assign, pledge, mortgage or otherwise
transfer or encumber (except hereby) any of the Leases, Rents or any right,
title or interest of Borrower therein; (b) except in the ordinary course of
business, and so long as such actions are reasonable and customary for apartment
owners, accept prepayments of any Rents for a period of more than one (1) month
in advance of the due dates thereof; (c) in any manner intentionally or
materially impair the value of the Property or the benefits to Lender of this
Assignment; (d) except as otherwise permitted in this Assignment, waive, excuse,
condone, discount, set off, compromise, or in any manner release or discharge
any Tenant from any of its obligations under the Leases except in the ordinary
course of business, and so long as such actions are reasonable and customary for
apartment owners; (e) except as otherwise permitted herein, enter into any
settlement of any action or proceeding arising under, or in any manner connected
with, the Leases or with the obligations of the landlord or the Tenants
thereunder except in the ordinary course of business, and so long as such
actions are reasonable and customary for apartment owners; or (f) modify, cancel
or terminate any guaranties under any Lease except in the ordinary course of
business, and so long as such actions are reasonable and customary for apartment
owners. Borrower shall, at its sole cost and expense, duly and timely keep,
observe, perform, comply with and discharge all of the material obligations of
the landlord under the Leases, or cause the foregoing to be done, and Borrower
shall not take any actions that would, either presently or with the passage of
time, cause a default by Borrower under any of the Leases.
9. No Merger. Each Lease shall remain in full force and effect, notwithstanding
any merger of Borrower's and Tenant's interest thereunder.
10. Documents Incorporated. The terms and conditions of the Documents are
incorporated into this Assignment as if fully set forth in this Assignment.
11. WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE DOCUMENTS, OR ANY ACTS OR
OMISSIONS OF LENDER IN CONNECTION THEREWITH.
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IN WITNESS WHEREOF, Borrower has duly executed this Assignment as of
the date first above written.
Signed, sealed, and delivered in the BORROWER:
presence of the following witnesses: CORNERSTONE REALTY INCOME TRUST,
INC., a Virginia corporation
/s/ David S. McKenney
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Witness
Printed Name: David S. McKenney By: /s/ Stanley J. Olander, Jr.
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Name: Stanley J. Olander, Jr.
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/s/ Mark A. Babb Title: Chief Financial Officer
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Witness
Printed Name: Mark A. Babb (CORPORATE SEAL)
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ACKNOWLEDGMENT
STATE OF VIRGINIA )
) PROBATE
CITY OF RICHMOND )
PERSONALLY APPEARED BEFORE ME, the undersigned witness, who being duly
sworn, deposes and states that (s)he saw the within named Cornerstone Realty
Income Trust, Inc., by Stanley J. Olander, Jr., the Chief Financial Officer,
sign, seal and deliver the foregoing Assignment of Leases and Rents and that
(s)he with the other witness whose name is subscribed above witnessed the
execution thereof.
Sworn to before me this 27th day of /s/ Mark A. Babb Mark A. Babb
-----------------------------------
September, 1999 Witness
/s/ Jacquelyn B. Owens (L.S.)
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Notary Public for________________________
My Commission Expires: 6/30/03
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EXHIBIT A
(Legal Description of Real Property)
(Arbors at Windsor Lake)
All that certain piece, parcel, or lot of land, with improvements, situate,
lying and being near the City of Columbia, in the County of Richland, State of
South Carolina, and having the following boundaries and measurements, to wit:
BEGINNING AT AN EXISTING 1-1/2" PIPE IN THE SOUTHWESTERN MOST CORNER OF SAID
TRACT WHERE SAID TRACT INTERSECTS WITH HUNT CLUB ROAD (SR 40-1975) 60' R/W AND
WINDSOR LAKE BOULEVARD (SR 40- 1196) R/W WIDTH VARIES, THENCE RUNNING IN A
NORTHEASTERLY DIRECTION ALONG SAID WINDSOR LAKE BOULEVARD AS FOLLOWS:
N 02 08'16" W FOR A DISTANCE OF 100.02 FEET TO AN EXISTING 1-1/2" PIPE; N
10 53'55" E FOR A DISTANCE OF 99.21 FEET TO A NEW #5 REBAR WITH CAP; N 20
54'39" E FOR A DISTANCE OF 309.48 FEET TO A NEW #5 REBAR WITH CAP; N 22
09'01" E FOR A DISTANCE OF 131.64 FEET TO AN EXISTING DISTURBED 1" PIPE; N
16 42'06" E FOR A DISTANCE OF 87.07 FEET TO AN EXISTING 1" PIPE; N 05
31'41" E FOR A DISTANCE OF 98.61 FEET TO A NEW #5 REBAR WITH CAP' N 05
36'39" E FOR A DISTANCE OF 70.74 FEET TO A NEW #5 REBAR WITH CAP; N 27
48'41" E FOR A DISTANCE OF 68.64 FEET TO AN EXISTING RIGHT-OF-WAY MONUMENT;
N 66 36'21" E FOR A DISTANCE OF 79.41 FEET TO AN EXISTING 1" PIPE;
THENCE TURNING AND RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF LOREN I.
CINTRON (D.B. D1346-0446) S 34 59'37" E FOR A DISTANCE OF 53.35 FEET TO AN
EXISTING #4 REBAR; THENCE RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF LELIA M.
HANSARD (D.B. D1276, 0869) S 35 01'34" E FOR A DISTANCE OF 53.03 FEET TO AN
EXISTING #4 REBAR; THENCE RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF PENELOPE
J. GEORGE (D.B. D902, 0857) S 31 29'39" E FOR A DISTANCE OF 7.78 FEET TO AN
EXISTING #4 REBAR; THENCE RUNNING WITH PROPERTIES NOW OR FORMERLY OF PENELOPE J.
GEORGE (D.B. 0902, 0857) AND JEFFERY S. SHEALY (D.B. D1201-0453) S 32 18'18" E
FOR A DISTANCE OF 97.13 FEET TO AN EXISTING #5 REBAR WITH CAP; THENCE TURNING
AND RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF JEFFERY S. SHEALY (D.B.
D1201-0453) N 55 04'34" E FOR A DISTANCE OF 115.00 FEET TO AN EXISTING #4 REBAR
AT THE RIGHT-OF-WAY BAY SPRINGS ROAD 50' R/W; THENCE TURNING AND RUNNING ACROSS
BAY SPRINGS ROAD 50' R/W S 83 48'04" E FOR A DISTANCE OF 66.42 FEET TO A NEW #5
REBAR AND CAP AT THE RIGHT-OF-WAY OF BAY SPRINGS ROAD 50' R/W; THENCE TURNING
AND RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF DONALD & CHRISTINA HOTZ (D.B.
D1267-0833) N 54 56'02" E FOR A DISTANCE OF 60.13 FEET TO AN EXISTING #4 REBAR;
THENCE RUNNING WITH THE PROPERTY NOW OR FORMERLY OF DOROTHY M. & OSCAR J.
McMILLAN (D.B. D1012-0663) N 54 56'02" E FOR A DISTANCE OF 39.92 FEET TO A #4
REBAR; THENCE RUNNING ALONG THE PROPERTY OF DOROTHY M. AND OSCAR J. McMILLAN
(D.B. D1012-0663) N 74 06'22" E FOR A DISTANCE OF 8.00 FEET TO AN EXISTING #4
REBAR; THENCE RUNNING ALONG THE PROPERTY NOW OR FORMERLY OF HORACE DENNARD &
JANE M. MILLER (D.B. D1173-0003) N 74 06'22" E FOR A DISTANCE OF 46.98 FEET TO
AN EXISTING #4 REBAR; THENCE TURNING AND RUNNING ALONG THE PROPERTIES NOW OR
FORMERLY OF TAMMY WATTS (D.B. D1089-0296), JOSEPH C. & VANGALENE FRINKS (D.B.
D1215-0568) AND K & T CORPORATION (D.B. D1418-0332) S 34 59'29" E FOR A DISTANCE
OF 110.15 FEET TO AN EXISTING DISTURBED #4 REBAR; THENCE RUNNING ALONG THE
PROPERTY NOW OR FORMERLY OF JIMMY & DOROTHY GREEN (D.B. D1054-0727) S 35 02'21"
E FOR A DISTANCE OF 59.86 FEET TO AN EXISTING DISTURBED #4 REBAR; THENCE RUNNING
ALONG PROPERTIES NOW OR FORMERLY OF WILLIE E. GRANT (D.B. D1181-0965), JAMES V.
DEBLOSSIO (D.B. D1182-0546), EVELYN GRAHAM & GLENN BUTLER (D.B. D1387- 0304),
ODESSA Y. WASHINGTON (D.B. D1208-0612) AND RICHARD B. MORA (D.B. D1363-0403) S
35 00'29" E FOR A DISTANCE OF 344.86 FEET TO AN EXISTING #4 REBAR; THENCE
TURNING ALONG THE PROPERTY NOW OR FORMERLY OF FOX CHASE TOWNHOMES HOME OWNERS
ASSOCIATION (COMMON AREAS) (D.B. D976-0862) AS FOLLOWS:
S 07 05'31" E FOR A DISTANCE OF 46.03 FEET TO AN EXISTING 1-1/2" PIPE; S 07
04'18" E FOR A DISTANCE OF 53.29 FEET TO AN EXISTING #4 REBAR; S 39 03'33"
W FOR A DISTANCE OF 64.93 FEET TO AN EXISTING #5 REBAR WITH CAP; S 12
30'46" E FOR A DISTANCE OF 111.22 FEET TO AN EXISTING 1" PIPE;
THENCE TURNING AND RUNNING ALONG SAID HUNT CLUB ROAD (SR 40-1975) 60' R/W S 77
24'38" W FOR A DISTANCE OF 649.56 FEET TO AN EXISTING #5 REBAR WITH CAP; THENCE
CONTINUING ALONG SAID HUNT CLUB ROAD (SR 40-1975) 60' R/W S 77 25'43" W FOR A
DISTANCE OF 400.02' TO THE PLACE AND POINT OF BEGINNING.
Said property containing 14.487 acres according to plat of ALTA/ACSM Land Title
Survey for Cornerstone Realty Income Trust, Inc., prepared by Power Engineering
Company, Inc., dated August 30, 1999 and last revised September 21, 1999, which
plat is incorporated by this reference for purposes of this description.
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EXHIBIT B
DESCRIPTION OF LEASES
All leases, subleases, lettings and licenses of or affecting the
Property, now or hereafter in effect, and all amendments, extensions,
modifications, replacements or revenues thereof, including, but not limited to,
leases of the Property to the tenants listed on the rent roll attached to that
certain Closing Certification executed by Borrower in favor of Lender of even
date herewith.
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EXHIBIT C
MINIMUM LEASING REQUIREMENTS
All additional Leases and renewal Leases covering the Property shall satisfy the
following conditions:
1. Minimum (original or renewal) Term: Twelve (12) month minimum,
but with respect to the entire Portfolio securing the Loan (as
defined in the Instrument) up to thirty-five percent (35%) of
the total units at any one time may be leased to tenants for a
term of less than twelve (12) months, of which up to thirteen
percent (13%) of the total units at any one time may be leased
for original or renewal terms of less than six (6) months.
2. Rental Basis: Monthly rent with electricity and, if
applicable, gas heating and cooking separately metered to
tenants.
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