SECURITY AGREEMENT
[Arizona]
DEBTORS: ASSET INVESTORS OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership ("Operating
Partnership")
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
AIOP LOST DUTCHMAN NOTES, L.L.C., a Delaware
limited liability company ("AIOP")
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SECURED PARTY: U. S. BANK NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EFFECTIVE DATE: April 7, 2000
1. Grant of Security Interest and Collateral Assignment. As collateral
security for the due and punctual payment and performance of the Obligations (as
hereinafter defined), the Debtor hereby grants to the Secured Party, with full
power and authority to exercise all rights and powers granted by the Debtor
hereunder, a lien upon, and a security interest under the Uniform Commercial
Code of Arizona, as in effect in the State of Arizona [Arizona Revised Statutes
("A.R.S.") Sections 47-1101 through 47-11107, as amended from time to time (the
"UCC")] to the extent that the same shall apply, in and to, and hereby
collaterally assigns to the Secured Party, all right, title and interest of the
Debtor in and to the personal property, located in the County of Maricopa, State
of Arizona, to be identified as the "Lost Dutchman Mobile Home Park", "Blue
Valley Mobile Home Park" and "Sun Valley Mobile Home Park" (collectively, the
"Mobile Home Parks") and more particularly described on Exhibit A, attached
hereto (collectively the "Real Property"). Debtor's personal property is more
particularly described on Exhibit B, attached hereto (collectively the
"Collateral"). The Real Property, together with the Collateral are collectively
referred to herein as the "Property".
2. Obligations Secured. "Obligations" shall mean the loan evidenced by
that certain Revolving Promissory Note dated the date hereof in the principal
amount of $15,000,000.00 ("Note"), payable by the Debtor and Community Savanna
Club Joint Venture, a Delaware general partnership ("CSC") to the order of
Secured Party, including without limitation, any future advances, and any and
all interest, commissions, obligations, liabilities, indebtedness, charges, and
expenses now or hereafter chargeable against Operating Partnership by Secured
Party or owing by Operating Partnership to Secured Party in connection with such
loan, whether direct or indirect, joint or several, absolute or contingent, due
1
or to become due, now existing or hereafter arising, and the performance and
fulfillment by Debtor of all of the terms, conditions, promises, covenants, and
provisions contained in this Agreement or in the Note or in any present or
future agreement or instrument between Debtor and Secured Party evidencing or
securing said Note, including the Deed of Trust, Security Agreement, Financing
Statement and Assignment of Rents and Revenues, executed by Debtor
simultaneously herewith (the "Deed of Trust"), the Line of Credit Agreement,
executed by Debtor, CSC, AIOP Florida Partnership I, L.L.C., AIOP Florida
Properties II, L.L.C. and Secured Party (the "Line of Credit Agreement"). Any
capitalized terms used and not otherwise defined herein have the meanings given
them in the Line of Credit Agreement. Any capitalized terms used and not
otherwise defined herein or in the Line of Credit Agreement, shall have the
meanings given to them in the UCC.
3. Warranties and Covenants of the Debtor.
(a) The Debtor has all power, statutory and otherwise, to execute
and deliver this Agreement, to perform its obligations hereunder and to subject
the Collateral to the security interest created hereby, all of which has been
duly authorized by all necessary action. The execution and delivery of this
Agreement, and the performance of this Agreement and the enforcement of the
security interest granted hereby, will not result in any violation of or be in
conflict with or constitute a default under any term of any agreement or
instrument, or, to the best of the knowledge of the Debtor, any judgment,
decree, order, law, statute, rule or governmental regulation applicable to this
Debtor or the Collateral.
(b) AIOP is the sole record and beneficial owner of the Collateral,
and neither the Collateral nor the proceeds thereof are subject to any pledge,
lien, security interest, charge or encumbrance except (i) the lien created
pursuant to this Agreement, and (ii) the lien of the UCC financing statement
delivered by the Debtor to the Secured Party with respect thereto. The Debtor
shall defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein.
(c) The Collateral shall be located at Debtor's places of business
shown above or at the Property. Debtor shall not remove the Collateral from
either of said locations without the prior written consent of the Secured Party
except as contemplated by paragraph 3(g) below. Debtor shall notify Secured
Party of any change in its place of business prior to making the change.
(d) Debtor shall pay all taxes and assessments of every nature
which may be levied or assessed against the Collateral.
(e) The Debtor shall keep the Collateral at all times insured
against risk of loss or damage by fire (including so-called extended coverage),
theft and such other casualties as the Secured Party may reasonably require, all
in such amounts, under such forms of policies, upon such terms, for such periods
and written by such companies or underwriters as the Secured Party may approve
in its reasonable discretion, losses in all cases to be payable to the Secured
Party and the Debtor as their interests may appear. All policies of insurance
2
shall provide for at least fifteen (15) days' prior written notice of
cancellation to the Secured Party; and the Debtor shall furnish the Secured
Party with an appropriate renewal policy certified by Debtor as complete and
accurate to assure compliance with the provisions of this paragraph.
(f) The Collateral is in good condition. At Debtor's expense,
Debtor shall keep the same in good condition, ordinary wear and tear excepted,
and from time to time shall replace and repair all such parts of the Collateral
as may be broken, worn out, or damaged without allowing any lien to be created
upon the Collateral on account of such replacement or repairs, and shall not
waste or destroy the Collateral. The Secured Party may examine and inspect the
Collateral at any time, wherever located.
(g) Debtor shall not sell, lease, convey, encumber or in any manner
transfer, without the prior written consent of Secured Party, any tangible
personal property now or hereafter owned by Debtor and attached to or contained
in and used in connection with the operation of the Mobile Home Parks, or
otherwise forming a part of the Collateral (except such tangible personal
property as is discarded as obsolete or damaged and is replaced by substitute
items having equivalent or greater book value).
(h) Debtor shall not use the Collateral in violation of any
applicable statutes, regulations or ordinances.
(i) The Debtor's organization and governance documents do not
prohibit any term or condition of this Agreement, and when executed, this
Agreement shall be a binding obligation of the Debtor.
(j) Debtor shall notify Secured Party, in writing, prior to the
time Debtor changes its name, identity or limited liability company structure.
(k) The Collateral is used or bought primarily for use in business.
(l) Debtor shall collect its rents and income in the ordinary
course of business.
(m) After an Event of Default as defined in the Deed of Trust or
the appointment of a receiver as provided therein, Debtor agrees that Secured
Party shall have full power to notify tenants, collect, compromise, endorse,
sell or otherwise deal with proceeds in its own name or that of Debtor at any
time. Secured Party may apply cash proceeds to the payment of any Obligations,
or may release such cash proceeds to Debtor.
4. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default under this Agreement:
(a) Default in the payment or performance of any monetary
obligation contained or referred to herein or in the Note or in the Deed of
Trust securing the same beyond any applicable grace period specified therein;
3
(b) Uninsured loss, theft, damage, or destruction of any material
portion of the Collateral; sale or encumbrance of any of the Collateral; or the
making of any levy, seizure or attachment thereof or thereon;
(c) Default in the due performance or observance of any term,
covenant or agreement on Debtor's part to be performed or observed pursuant to
any of the provisions of this Agreement, other than payment and performance of
any monetary obligation, and such non-monetary default shall continue beyond a
period of thirty (30) days after written notice of the Default being sent to
Debtor by Secured Party; or
(d) The occurrence of an Event of Default under the Line of Credit
Agreement.
5. Rights Upon and Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter, and whether or not the Secured Party shall
declare any or all of the Obligations to be immediately due and payable in the
manner and with the effect stated in the Deed of Trust, then and in such event:
(a) The Secured Party may foreclose upon and take possession of the
Collateral and may exclude the Debtor, and all persons claiming by, through or
under the Debtor, from possession thereof, and may assign the Collateral to a
nominee or a third party. In connection herewith the Secured Party or any third
party assignee or nominee of the Secured Party shall have the right to exercise,
in the name of the Debtor, the Debtor's rights and powers with respect to the
Collateral.
(b) The Secured Party shall have all rights and remedies of a
secured party available under the UCC and any other rights and remedies
available under this Agreement and under the Deed of Trust and any other
documents securing the Note or at law or in equity.
(c) The Debtor hereby agrees that if notice of sale or other
disposition of the Collateral is given in the manner and to the address or
addresses then required pursuant to the Deed of Trust at least five (5) business
days before the time of the sale or other disposition, such notice shall be
deemed reasonable and shall fully satisfy any requirement for the giving of said
notice, whether required by the UCC, any other law or otherwise. Any sale or
disposition may occur by private proceedings at Secured Party's election, and
Debtor acknowledges that, due to the nature of the Collateral and its essential
relationship to the operation of the facility, Secured Party may buy at any such
private sale.
(d) Secured Party shall have the right, power and authority to sell
the Collateral or any part thereof at public or private sale for cash, upon
credit, or for future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all of the
Collateral so sold, in such manner and order as Secured Party may in its sole
discretion elect. Upon any such sale, Secured Party shall have the right to
4
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Any such public sale shall be held at such time or times, within ordinary
business hours, and at such place or places, as Secured Party may fix in the
notice of such sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine. Secured Party
shall not be obligated to make any sale pursuant to any such notice. Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the selling price is paid by the purchaser
thereof, but Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and in case of any
such failure, such Collateral may again be sold upon like notice. Each and every
method of disposition described in this paragraph shall constitute disposition
in a commercially reasonable manner.
In conjunction therewith, in addition to or in substitution for those rights and
remedies and the rights and remedies provided for herein:
(e) It shall not be necessary that the Collateral or any part
thereof be present at the location of such sale.
(f) The sale by Secured Party of less than the whole of the
Collateral shall not exhaust the rights of Secured Party hereunder or with
respect to the Collateral, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the Collateral shall be
sold; and, if the proceeds of such sale of less than the whole of the Collateral
shall be less than the aggregate of the indebtedness secured hereby, this
Agreement and the security interest created hereby shall remain in full force
and effect as to the unsold portion of the Collateral just as though no sale had
been made.
(g) In the event any sale hereunder is not completed or is
defective in the opinion of Secured Party, such sale shall not exhaust the
rights of Secured Party hereunder and Secured Party shall have the right to
cause a subsequent sale or sales to be made hereunder.
(h) Any and all statements of fact or other recitals made in any
▇▇▇▇ of sale or assignment or other instrument evidencing any sale hereunder as
to nonpayment of the indebtedness or as to the occurrence of an Event of
Default, or as to Secured Party having declared all of such indebtedness to be
due and payable, or as to notice of time, place and terms of sale and the
properties to be sold having been duly given, as to any other act or thing
having been duly done by Secured Party shall be taken as prima facie evidence of
the truth of the facts so stated and recited.
(i) Secured Party may appoint or delegate any one or more persons
as agent to perform any act or acts necessary or incident to any such sale held
by Secured Party, including the sending of notices and the conduct of sale, but
in the name and on behalf of Secured Party.
(j) The proceeds of any sale or other disposition or collection of
or other realization upon all or any part of the Collateral shall be applied in
the following order of priority: first, to pay the costs and expenses of
collection, custody, sale or other disposition or delivery (including, without
5
limitation, reasonable legal costs and reasonable attorneys' fees) and all other
charges incurred by the Secured Party with respect to the Collateral; second, to
the payment of the Obligations in such order as the Secured Party may, in its
sole discretion, determine; and third, to pay any surplus to the Debtor or to
any person or party lawfully entitled thereto, or as a court of competent
jurisdiction may direct.
(k) Secured Party may use or operate the Collateral for the purpose
of preserving it or its value. Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties. Expenses of
retaking, holding, preparing for sale, selling, or costs and expenses in
enforcing this Agreement, or the like shall include Secured Party's reasonable
attorneys' fees and legal expenses, and the same, together with all advances
made by Secured Party on behalf of the Debtor, shall be part of the Obligations
secured hereby. Debtor shall be liable to Secured Party for any deficiency.
6. Release of Collateral. If the Obligations are fully paid and
discharged, all Collateral held hereunder shall be returned to the Debtor by the
Secured Party promptly upon demand, all requisite termination statements under
the UCC shall be executed and delivered to the Debtor by the Secured Party, and
the Secured Party shall take such other action in connection with such discharge
as the Debtor may reasonably request.
7. Further Agreements. The Debtor has previously executed and delivered
to the Secured Party financing statements pursuant to the UCC covering that
portion of the Collateral for which a security interest may be perfected by
filing. The Debtor shall, upon request of the Secured Party, promptly make,
execute and deliver to the Secured Party, from time to time, a listing of the
specific Collateral, including personal property, goods, equipment, furnishings,
furniture acquired and/or owned in connection with the Mobile Home Parks, and
such other and further financing statements, instruments, documents and
certificates, and perform such other and further acts and assurances, as the
Secured Party may request to perfect, to maintain the priority of, or from time
to time, to renew, such security interests, to confirm or more fully perfect the
rights granted hereby, or in any way to assure the Secured Party all of its
rights hereunder. The Debtor shall pay the costs of all filings and recordings
in public offices of record, and shall, upon request of the Secured Party, make,
execute and deliver such other and further instruments, and take such other and
further actions, as the Secured Party may deem necessary or appropriate to
enable it to realize upon the Collateral, to exercise fully its rights
hereunder, and to ratify and confirm any sale hereunder.
8. Indemnification; Waivers. The Debtor shall indemnify and hold
harmless the Secured Party from any and all liability or damage which the
Secured Party may incur in the exercise and performance, in good faith, of any
of its powers and duties specifically set forth herein, but not for any
liability or damage incurred on account of the gross negligence or willful
misconduct of the Secured Party provided, however, that Debtor shall not
indemnify Secured Party from and against claims asserted by third parties as a
consequence of the Secured Party's negligence or misconduct. No delay or
omission on the part of the Secured Party in exercising any right hereunder
6
shall operate as a waiver of such right or of any other right hereunder. Any
waiver of any such right on any one occasion shall not be construed as a bar to
or waiver of any such right on any such future occasion. No course of dealing
between the Debtor and the Secured Party nor any failure to exercise, nor any
delay in exercising, on the part of the Secured Party, any right, power or
privilege hereunder or under any of the Obligations, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or in the exercise of any other right, power or privilege. The Secured party
shall be under no duty or liability with respect to the Collateral other than to
use reasonable care in the custody of any Collateral while in its possession and
shall not be liable for any failure to take action necessary to preserve rights
against prior or other parties on any instrument constituting the Collateral.
9. Further Transfers Prohibited. The Debtor covenants and agrees that
it will not, at any time during the term of this Agreement, except as
contemplated by paragraph 3(g) hereof, further convey or encumber the Collateral
in any manner whatsoever; and the Debtor agrees that it will do all things
necessary to maintain the enforceability and priority of the Secured Party's
security interest in the Collateral.
10. Notices. Any and all notices, demands, consents, and other
communications required or permitted under this Agreement shall be deemed
adequately given only if given in the manner and to the addresses provided in
the Deed of Trust.
11. General Provisions.
(a) No waiver by Secured Party of any default shall operate as a
waiver of any other default or of the same default on a future occasion. The
taking of this Security Agreement shall not waive or impair any other security
said Secured Party may have or hereafter acquire for the payment of the above
indebtedness, nor shall the taking of any such additional security waive or
impair this Security Agreement; but said Secured Party may resort to any
security it may have in the order it may deem proper, and notwithstanding any
collateral security, Secured Party shall retain its rights of setoff against
Debtor.
(b) At its option, but without obligation to the Debtor, the
Secured Party may discharge taxes, liens, or security interests or other
encumbrances at any time levied or placed on the Collateral, may place and pay
for insurance thereon, may order and pay for the repair, maintenance and
preservation thereof and may pay any necessary filing or recording fees. The
Debtor agrees to reimburse the Secured Party on demand for payment made or any
expense incurred by the Secured Party pursuant to the foregoing authorization.
(c) Until the occurrence of an Event of Default, Debtor may have
possession of the Collateral and use it in any lawful manner not inconsistent
with this Agreement or any policy of insurance thereon, and upon the occurrence
of an Event of Default, Secured Party shall have immediate right to possession
of the Collateral, provided, however, that Secured Party may perfect its
interest in the Collateral by possession.
7
(d) All rights of the Secured Party hereunder shall inure to the
benefit of its successors and assigns; and all promises and duties of Debtor
shall bind its legal representatives, successors or assigns.
(e) Except as otherwise provided by the UCC, Debtor releases
Secured Party from all claims for loss or damage caused by any act or omission
on the part of Secured Party, its officers, agents and employees, except gross
negligence or willful misconduct.
(f) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado except to the extent that the
laws of the State of Arizona regarding the creation, perfection and realization
upon the security interests and liens hereunder require the application of the
State in which the Property is located. Further, the place where this Agreement
is entered into and the place of performance and transaction of business shall
be deemed to be the State of Colorado.
(g) Unless the context otherwise requires, all terms used herein
which are defined in the UCC, shall have the meaning therein stated.
8
DATED effective the 7 day of April, 2000.
DEBTORS:
ASSET INVESTORS OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: ASSET INVESTORS CORPORATION, a Delaware
corporation, General Partner
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
AIOP LOST DUTCHMAN NOTES, L.L.C., a Delaware
limited liability company
By: ASSET INVESTORS OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
Sole Member and Manager
By: ASSET INVESTORS CORPORATION, a
Delaware corporation, General
Partner
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
9
SECURED PARTY:
U.S. BANK NATIONAL ASSOCIATION
By: /s/▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇ ▇▇▇▇▇, Vice President
10
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Notary Public
( S E A L )
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of
April, 2000, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Chief Financial Officer of Asset Investors
Corporation, a Delaware corporation, as general partner of Asset Investors
Operating Partnership, L.P., a Delaware limited partnership, as Sole Member and
Manager of AIOP Lost Dutchman Notes, L.L.C., a Delaware limited liability
company.
Witness my hand and official seal.
My commission expires: 12/7/2000
/s/▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Notary Public
( S E A L )
11
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 7 day of April,
2000, by ▇▇▇ ▇▇▇▇▇ as Vice President of U. S. BANK NATIONAL ASSOCIATION.
Witness my hand and official seal.
My Commission Expires: 12/7/2000
/s/▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Notary Public
[ S E A L ]
12