EXHIBIT 4.10
PREPARED OUT OF STATE AND LOAN NO. 6 103 651
UPON RECORDATION 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
THIS ASSIGNMENT OF LEASES AND RENTS (this "ASSIGNMENT") is made as of
September 27, 1999, by CRIT-NC, LLC, a Virginia limited liability company 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 Mecklenburg County,
North 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 Twenty-Two Million
Nine Hundred Fifty Thousand and No/100 Dollars ($22,950,000.00) ("LOAN")
evidenced by that certain Promissory Note dated as of the date of this
Assignment ("NOTE") and secured by, among other things, that certain Deed of
Trust 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
Mecklenburg County, North 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
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to the 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.
BORROWER:
CRIT-NC, LLC, a Virginia limited liability
company (SEAL)
By: CORNERSTONE REALTY
INCOME TRUST, INC., a Virginia
corporation, Managing Member
Attest: /s/ David S. McKenney By: /s/ S. J. Olander
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Name: David S. McKenney Name: Stanley J. Olander, Jr.
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Title: Sr. Vice President Title: Chief Financial Officer
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[CORPORATE SEAL]
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ACKNOWLEDGMENT
STATE OF VIRGINIA
CITY OF RICHMOND
I, a Notary Public of the County and State aforesaid, certify that
Stanley J. Olander, Jr. personally came before me this day and acknowledged that
(s)he is a Secretary of Cornerstone Realty Income Trust, Inc. a Virginia
corporation, which is the Managing Member of CRIT-NC, LLC, a Virginia limited
liability company, and that by authority duly given and as the act of the
company, the foregoing instrument was signed in its name by, Stanley J. Olander,
Jr., its duly authorized Chief Financial Officer,as the act and deed of the
corporation on behalf of the limited liability company.
Witness my hand and official stamp or seal this 27th day of September,
1999.
/s/ Jacquelyn B. Owens
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Notary Public
My Commission Expires: 6/30/03
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[NOTARY SEAL]
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EXHIBIT A
(Legal Description of Real Property)
(Stone Point)
BEGINNING at a set iron rod on the Northerly right-of-way line of York Road
(N.C. Highway 49) as described in Deed Book 10610, Page 448 of the Mecklenburg
County Public Registry, said point being located N 60(degrees) 18' 1" W - 130.69
feet from a found NCDOT right-of-way disc nominal to station 15+09.315, also
being a point on the Easterly line of Orion Development Corporation (now or
formerly) as described in Deed Book 5338, Page 484 of the Mecklenburg County
Public registry; thence from said Point of Beginning, along the Easterly and
Northerly lines of said Orion Development Corporation, N 44(degrees) 25'14" W -
357.13 feet to a found 1" pipe and S 45(degrees) 34'46" W - 209.57 feet to an
existing iron located in the Northeasterly margin of the property of Gretta L.
Neely (now or formerly) as described in Deed Book 7428, Page 776 of the
Mecklenburg County Public Registry; thence, along the Northeasterly line of the
Neely property N 44(degrees) 23'25" W - 382.48 feet to an existing iron located
in the Easterly line of the property of Steele Creek Partnership (nor or
formerly) as described in Deed Book 5732, Page 247 of the Mecklenburg County
Public Registry; thence along the Easterly line of the Steele Creek Partnership
property and the Easterly line of the property of York Ridge Apartments
Associates (now or formerly) as described in Deed Bok 7843, Page 106 of the
Mecklenburg County Public Registry N 05(degrees) 18'13" W -649.66 feet to a
found concrete monument having grid coordinates N=504,343.752 and
E=1,413,664.771 and being located N 08(degrees) 55'17" E - 1647.959 feet
(Ground) 1647.713 feet (Grid) from NCGS Monument "Moss" having grid coordinates
N=502,710.6542 and E=1,413,445.7971, combined grid factor = 0.99985065; thence
along the Southerly line of Lots 4, 3, 2 and 1 as shown on a map recorded in Map
Book 24, Page 820 of the Mecklenburg County Public Registry the following (2)
courses and distances:
(1) N 85(degrees)58' 16" E - 341.53 feet to a found 1" inch pipe;
(2) N 59(degrees) 50' 40" E - 490.88 feet to a set "PK" nail
located in the centerline of the right-of-way of John Price
Road; Thence along the centerline of John Price Road the
following (3) courses:
(1) along the arc of a curve to the left having a central angle of
23(degrees) 09' 07", a radius of 855.00' feet, an arc length
of 345.49' feet and whose chord bears S 09(degrees) 01' 08" E
- 343.14' feet to a point'
(2) S 20(degrees) 35' 42" E - 346.00 feet to a point;
(3) along the arc of a curve to the right having a central angle
of 9(degrees) 43' 47", a radius of 623.36 feet, an arc length
of 105.86 feet and whose chord bears S 15(degrees) 45' 14" E -
105.73 feet to the most Northeasterly corner of said "NCDOT"
right-of-way as described in Deed Book 10610, Page 448 of the
Mecklenburg County Public Registry.
Thence along the Northerly and Westerly line of said "NCDOT"
right-of-way the following (5) courses:
(1) S 79(degrees) 07' 52" W - 30.00 feet to a found "NCDOT"
right-of-way disc;
(2) S 03(degrees) 46' 19" W - 140.16 feet to a found "NCDOT"
right-of-way disc;
(3) S 02(degrees) 47' 22" W - 251.56 feet to a set iron rod
passing a "NCDOT" right-of-way disc at 245.00 feet;
(4) S 39(degrees) 12'49" W - 71.52 feet to a set iron rod
(5) S 60(degrees) 32' 17" W - 167.61 feet to the Point of
Beginning, passing an "NCDOT" Right-Of- Way disc at 9.81 feet,
containing 18.903 acres more or less (including right-of-way).
Said property is described according to plat of survey entitled "Stone Point
Apartments" prepared for Cornerstone Realty Income Trust, Inc. by Delta Land
Services, Inc., dated September 1, 1999 and last revised September 15, 1999,
which plat is incorporated by this reference for purposes of this description.
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(Charleston Place)
Lying and being in the City of Charlotte, Mecklenburg County, State of North
Carolina and more particularly described as follows:
To find the true point of BEGINNING, commence at the intersection of the
centerlines of Monroe Road (which has a 90' right-of-way) and Timber Springs
Drive (which has a variable width right-of-way) and run thence with the
centerline of Monroe Road S. 26-02-08 E., 750.37 feet to a point; thence leaving
said centerline S. 80-09-57 E., 56.26 feet to an existing rebar in the center of
a broken concrete monument in the northeasterly margin of the right-of-way of
Monroe Road, the true point of BEGINNING; thence from said point of BEGINNING
with the northeasterly margin of the right-of-way of Monroe Road N. 26-02-08 W.,
720.81 feet to an existing bent #4 rebar; thence with the arc of a circular
curve to the right having a radius of 20.00 feet (chord bearing N. 18-57-53 E.,
a chord distance of 28.28 feet) an arc distance of 31.42 feet to an existing
bent #4 rebar located on the southerly margin of Timber Springs Drive; thence
with the southerly margin of Timber Springs Drive the following nine (9) courses
and distances; (1) N. 63-57-52 E., 67.30 feet to a set #5 rebar; (2) with the
arc of a circular curve to the left having a radius of 313.01 feet (chord
bearing N. 56-58-53 E., a chord distance of 76.21 feet) an arc distance of 76.40
feet to an existing #4 rebar; (3) with the arc of a circular curve to the right
having a radius of 160.00 feet (chord bearing N. 56-58-53 E., a chord distance
of 38.90 feet) an arc distance of 39.00 feet to an existing #4 rebar; (4) with
the arc of a circular curve to the right having a radius of 286.00 feet (chord
bearing S. 82-08-34 E., a chord distance of 318.97 feet) an arc distance of
338.36 feet to an existing #4 rebar; (5) S. 48-15-00 E., 258.50 feet to an
existing #5 rebar; (6) with the arc of a circular curve to the left having a
radius of 200.00 feet (chord bearing S. 68-10-00 E., a chord distance of 136.26
feet), an arc distance of 139.04 feet to an existing #4 rebar; (7) S. 88-05-00
E., 100.00 feet to an existing bent 1/2" pipe; (8) with the arc of a circular
curve to the right having a radius of 195.00 feet (chord bearing S. 77-40-00 E.,
a chord distance of 70.51 feet), an arc distance of 70.90 feet to an existing
bent 1/2" pipe; and (9) S. 67-15-00 E., 89.25 feet to an existing 1" rod located
in the westerly boundary of the property conveyed to Timber Crest Apartments,
LLC by instrument recorded in Book 9213, Page 495, Mecklenburg County Public
Registry; thence with the westerly boundary of Timber Crest Apartments, LLC (now
or formerly) S. 10-33-53 E., 604.43 feet to an existing concrete monument
located in the northerly boundary of the property conveyed to American Store &
Lock #4 by instrument recorded in Book 5622, Page 646, Mecklenburg County Public
Registry (said concrete monument lying N. 80-09-57 W., 387.77 feet from another
concrete monument); thence with the northerly boundary of the American Store &
Lock #4 (now or formerly) and the northerly boundary of the property conveyed to
Hide-A-Way Inn, Inc. by instrument recorded in Book 4228, Page 191, Mecklenburg
County Public Registry N. 80-09-57 W., 859.70 feet to the BEGINNING, containing
14.949 acres.
TOGETHER WITH so much of the right-of-way of Monroe Road as lies between the
following boundaries: the centerline thereof; the northeasterly margin of the
right-of-way thereof; and between the centerline of Timber Springs Drive and the
southerly boundary line of the above-described real property (hereinabove called
N. 80-09-57 W. 859.70 feet), extended until said southerly boundary line
intersects the centerline of the right-of-way of Monroe Road.
Said property containing 14.949 acres according to Final As Built Plat of
Charleston Place prepared by James E. Davis of Concord Engineering & Surveying,
Inc., dated August 23, 1999 and last revised September 22, 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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