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HomeMy WebLinkAbout10-25-01 3. MORTGAGEr /o 2 - C / 3. m0(RTC&A CITY OF ORONO,MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENT PROJECT) SERIES 2001A and CITY OF ORONO, MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENT PROJECT) TAXABLE SERIES 2001B and CITY OF ORONO,MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENT PROJECT) SUBORDINATE SERIES 2001C COMBINATION MORTGAGE, SECURITY AGREEMENT, FIXTURE FINANCING STATEMENT AND ASSIGNMENT OF LEASES AND RENTS Dated as of November 1, 2001 from ORONO SENIOR HOUSING> Mortgagor LLC, as Mort a or to CITY OF ORONO, MINNESOTA, as Mortgagee 2 COMBINATION MORTGAGE, SECURITY AGREEMENT, FIXTURE FINANCING STATEMENT AND ASSIGNMENT OF LEASES AND RENTS This COMBINATION MORTGAGE, SECURITY AGREEMENT, FIXTURE FINANCING STATEMENT AND ASSIGNMENT OF LEASES AND RENTS, dated as of November 1, 2001 (the "Mortgage"), is by and between Orono Senior Housing, LLC, a Minnesota limited liability company (the "Mortgagor") and the City of Orono, a municipal corporation and political subdivision of the State of Minnesota(the"City" or the"Mortgagee," provided that upon the assignment of this Mortgage to the Trustee (hereinafter defined), as described in paragraph 11 hereof, the term "Mortgagee," as used herein, shall mean said Trustee),with capitalized terms used but not defined herein being used with the meanings,if any, ascribed thereto in the below defined Loan Agreement. WHEREAS, the Mortgagor and the Mortgagee have agreed to enter into a Loan Agreement(the "Loan Agreement") of even date herewith,pursuant to which the Mortgagee will lend to the Mortgagor the gross proceeds of$ in aggregate principal amount of its Senior Housing Revenue Bonds(Orono Woods Apartment Project),Series 2001A(the"Series 2001A Bonds") and the gross proceeds of$ in aggregate principal amount of its Senior Housing Revenue Bonds(Orono Woods Apartment Project),Taxable Series 2001B (the "Series 2001B Bonds"), and the gross proceeds of$ in aggregate principal amount of its Senior Housing Revenue Bonds (Orono Woods Apartment Project), Subordinate Series 2001 C (the "Subordinate Bonds"), to be issued pursuant to Minnesota Statutes, Chapter 462C (the "Act"). As described below, this Mortgage does not secure repayment of the Subordinate Bonds; consequently, the term "Bonds" when used herein refers solely to the Series 2001A Bonds and the Series 2001B Bonds, collectively; and WHEREAS,the Mortgagee and Wclls Fargo U.S.Bank Minncsota,Trust National Association, a national banking association with trust powers in Minneapolis, Minnesota (the "Trustee"), have agreed to enter into a Trust an Indenture of Trust of even date herewith (the "Indenture"), pursuant to which the Mortgagee will assign to the Trustee, as security for the owners of the Bonds, the Loan Repayments and all other rights and interests of the Mortgagee in the Loan Agreement(except for the rights of the Mortgagee thereunder relating to expenses, indemnity and advances of the Mortgagee); and WHEREAS, the Trustee is authorized by the Indenture to receive as part of the Trust Estate any and all other property conveyed,mortgaged,assigned or transferred,or in which a security interest is granted, by(among others)the Mortgagor, and to hold and apply the Trust Estate pursuant to the provisions of the Indenture; and WHEREAS,the Mortgagee will assign its interest in this Mortgage to the Trustee as further security for the Bonds; and 1 WHEREAS,the Mortgagor has agreed to mortgage and grant a security interest in the Mortgaged Property,as defined herein and further described in Exhibit A hereto,to secure the obligations of the Mortgagor under the Loan Agreement, including its obligation to make Loan Repayments and other payments at times and in amounts sufficient to pay when due the principal of, premium (if any) on and interest on the Bonds; and WHEREAS, as further security for the obligations of the Mortgagor under the Loan Agreement, the Mortgagor and the Mortgagee desire that Mortgagor assign to Assignee all of the right, title, and interest of Mortgagor in, to, and under any and all leases and agreements for the use or occupancy of the Mortgaged Property, or any part thereof, whether now or hereafter existing, and Mortgagor desires and intends by this instrument to assign to Mortgagee all of the right, title, and interest of Mortgagor in, to, and under any and all such leases and agreements; and WHEREAS,the Mortgagor and the Mortgagee are not securing the Mortgagor's obligations under the Loan Agreement to pay principal, premium on, or interest on the Subordinate Bonds by this Mortgage; NOW,THEREFORE,in consideration of One Dollar($1.00)and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged; in consideration of the purchase and acceptance of the Bonds by the persons who, from time to time, may become the owners thereof; and to secure the due and punctual payment of any and all liabilities of the Mortgagor under the Loan Agreement, including(without limitation)Loan Repayments and other payments in amounts and at times sufficient to pay the principal of, premium(if any)on and interest on the Bonds and the payment of all expenses and advances of the Mortgagee and the Trustee under the Loan Agreement,the Indenture and this Mortgage,the Mortgagor does hereby grant, bargain, sell, convey, and warrant and assign to the Mortgagee, its permitted successors and assigns a lien on and security interest in,and does hereby mortgage and pledge unto the Mortgagee, its successors and assigns, forever, with power of sale, the following: I All of its right, title and interest in and to the tracts, parcels and interests in land described in Exhibit A hereto (the "Land") and the buildings, structures and other improvements now standing or at any time hereafter constructed or placed upon the Land(the "Buildings"),including but not limited to(i)all building materials and supplies now or hereafter located on the Land and suitable or intended to be incorporated in any building, structure, or other improvement located or to be erected on the Land, (ii) all heating, plumbing and lighting apparatus, motors, engines, electrical equipment, incinerator apparatus, air conditioning equipment,water and gas apparatus,pipes,faucets,and all building service equipment which are now or may hereafter be placed or used upon the Land or in any building or improvement now 2 or hereafter located thereon, whether or not attached or affixed to the Land, (iii) all additions, accessions,increases,parts,fittings,accessories,replacements,substitutions,betterments,repairs and proceeds to and of any and all of the foregoing, and (iv) all hereditaments, easements, appurtenances,estates,and other rights and interests now or hereafter belonging to or in any way pertaining to the Land or to any building or improvement now or hereafter located thereon. II All furnishings, furniture, equipment and all other tangible personal property of any nature whatever now or hereafter located in the Buildings or elsewhere on the Land (the "Equipment"), including all additions, accessions, increases, parts, fittings, accessories, replacements, substitutions, betterments, repairs and proceeds to and of any and all such property, excluding any items released or disposed of in accordance with the Loan Agreement, whether or not attached or affixed to the Land. III All leases, rents, issues, condemnation awards, insurance proceeds, and similar revenues and income arising from the ownership of the Land,the Buildings and the Equipment and all proceeds and products thereof, and including specifically all deposits received or to be received from residents or prospective residents of the Buildings (herein collectively called "Revenues and Income"). To Have and To Hold the Land, the Buildings and the Equipment (collectively, the"Mortgaged Property"),and the Revenues and Income thereof,together with all privileges, hereditaments and appurtenances thereunto now or hereafter belonging, or in anywise appertaining, and the proceeds thereof, unto the Mortgagee, its successors and assigns forever, In Trust Nevertheless,upon the terms and trust as part of the Trust Estate set forth in the Indenture, for the equal and proportionate benefit, security and protection of all owners of the Bonds, without preference, priority or distinction as to lien or otherwise of any of the Bonds over any of the others, Provided, nevertheless, that these presents are upon the express condition that if the Mortgagor shall pay or cause to be paid the principal of,premium(if any)on and interest on the Bonds, and if the Mortgagor shall pay all Additional Payments owing under Section 4.03 of the Loan Agreement, and if the Mortgagor shall pay all rebates owing to the United States in respect of the Bonds,under Section 148 of the Internal Revenue Code of 1986, as amended,(the "Code")and if the Mortgagor shall strictly observe and perform all of the terms, covenants and conditions contained in the Loan Agreement,the Indenture and this Mortgage,including without limitation payment of all amounts which may be owing to the City or the Trustee thereunder, 3 then this Mortgage and the estate, right and interest of the Mortgagee in and to the Mortgaged Property, and the Revenues and Income thereof, shall cease and be and become void and of no force and effect, and shall be satisfied at the Mortgagor's expense, otherwise to remain in full force and effect. The Mortgagor and the Mortgagee further agree as follows: 1. Definitions. Terms used in this Mortgage not otherwise defined in this Mortgage, but defined in the Loan Agreement or the Indenture, shall have the same meaning as in the Loan Agreement or the Indenture unless the context clearly indicates a contrary meaning. 2. Amount and Maturity of Bonds;Loan Repayments. The parties represent and agree as follows: (a) The Bonds shall be in the aggregate principal amounts set forth in the Loan Agreement and shall mature(subject to mandatory sinking fund redemptions as provided in the Indenture)on November 1 of the years and in the amounts, and bear interest at the rates, as set forth in the Indenture. (b) Loan Repayments are required to be made monthly by the Mortgagor in order to pay principal of premium (if any) and interest on the Bonds when and as the same shall become due, or when required to be redeemed as more fully provided in the Loan Agreement and Indenture. 3. Additional Payments. Under the Indenture and the Loan Agreement, the Mortgagor will be obligated, in addition to Loan Repayments, to pay the reasonable fees and expenses of the Trustee and any paying agent of the Bonds, expenses of the City, expenses of the Mortgagee and any advances by the Mortgagee or the Trustee to meet obligations of the Mortgagor for (among other things) taxes, special assessments, utility charges, insurance premiums, and liens in connection with the Mortgaged Property and also to provide indemnity to the Mortgagee, all as more fully provided in the Loan Agreement, which obligations are additional indebtedness intended to be secured by this Mortgage. In addition,the Mortgagor is required to pay all rebates owing to the United States in respect of the Bonds under Section 148 of the Code. 4. Release of Property. Property included in the Mortgaged Property may be released from the lien of this Mortgage as provided in the Loan Agreement and the Indenture. 4 5. Warranty of Title; Permitted Encumbrances. The Mortgagor does hereby covenant, represent and warrant that it is the lawful owner of and has good right and lawful authority to grant, bargain, sell, convey, warrant, mortgage, assign and pledge the Mortgaged Property and Revenues and Income thereof as provided herein; that the Mortgagor is and will continue to be well and truly seized of good and marketable title to the Mortgaged Property;that the Mortgaged Property and Revenues and Income thereof are free and clear of all mortgages, liens,pledges,charges and encumbrances,excepting only Permitted Encumbrances;and that the Mortgagor does warrant and will defend the title to the Mortgaged Property and Revenues and Income thereof against all claims and demands whatsoever not specifically excepted herein. "Permitted Encumbrances" shall mean Permitted Encumbrances as defined in the Loan Agreement and Indenture, including those encumbrances identified in Exhibit B hereto. 6. Events of Default; Remedies. If any Event of Default as defined in the Loan Agreement shall occur and be continuing, or if any Event of Default as defined in the Indenture shall occur and be continuing, the Mortgagee shall have authority (i) to accelerate the Loan Repayments and to declare the Bonds immediately due and payable as provided in the Loan Agreement and Indenture, and (ii) to pursue one or more of the remedies provided for in the Loan Agreement and Indenture respectively,and in lieu thereof or addition thereto, one or more of the following remedies and provisions for foreclosure or enforcement of this Mortgage: (a) The Mortgagee may proceed to protect and enforce its rights by a suit or suits in equity or at law, either for the specific performance of any covenant or agreement contained herein or in aid of the execution of any power herein granted, or for the foreclosure of this Mortgage, or for the enforcement of any other appropriate legal or equitable remedy. (b) The Mortgagee shall have and may exercise with respect to all personal property and fixtures which are part of the Mortgaged Property all the rights and remedies accorded upon default to a secured party under the Uniform Commercial Code, as in effect in the State of Minnesota. If notice to the Mortgagor of intended disposition of such property is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in the Loan Agreement and Indenture) at least 10 calendar days prior to the date of intended disposition. (c) The Mortgagee shall be entitled,without notice,except that which is required by law, and without any showing of waste of the Mortgaged Property, inadequacy of the Mortgaged Property as security, or insolvency of the Mortgagor, to the appointment of a receiver of the rents and profits of the Mortgaged Property including those past due, as permitted by Minnesota Statutes, Section 576.01. The Mortgagee or any receiver shall be entitled to receive and dispose of the Revenues and Income of the Mortgaged Property (provided that Sections 5.10 and 5.11 of the Loan Agreement will govern the disposition of condemnation awards or insurance relating to condemnation, damage or destruction 5 of the Land, Buildings, and Equipment upon any such Event of Default) and to sue for and recover any account or other item of Revenues and Income from the Mortgagor or any account debtor or other third person. Subject to any order of a court appointing a receiver or otherwise having jurisdiction of the Trust Estate, the Mortgagee in its discretion may apply the Revenues and Income received by it as provided in Minnesota Statutes,Section 576.01,subdivision 2,as follows:(i)to the application oftenant security deposits as required by Minnesota Statutes,Section 504.20,(ii)to the payment when due of prior or current real estate taxes or special assessments with respect to the mortgaged premises,or the periodic escrow for the payment of the taxes or special assessments,(iii) to the payment when due of premiums for insurance of the types required by the Loan Agreement or this Mortgage, or the periodic escrow for the payment of the premiums, (iv) to the just and reasonable compensation of the Mortgagee for its own services and for the services of counsel, agents and employees by it properly engaged and employed, (v)to the reimbursement of advances made by the Mortgagee pursuant to the provisions of the Loan Agreement or this Mortgage,(vi)to the payment of the indebtedness secured hereby, (vii) to the expenses of operating the Mortgaged Property and conducting the business thereof,and(viii)to the repair,maintenance,renewal,replacement or alteration of the Mortgaged Property. (d) The Mortgagee may(and is hereby authorized and empowered to) foreclose this Mortgage by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Mortgaged Property at public auction and convey the same to the purchaser in fee simple and to apply the proceeds arising from such sale,first,as provided in the Indenture,to the payment of the indebtedness secured thereby and hereby, including all reasonable expenses, liabilities and advances of the Trustee and the Bonds and interest thereon and Loan Repayments relating thereto, and all legal costs and charges of such foreclosure, which costs, charges and fees the Mortgagor agrees topay, and second,to the payment of any obligations of the Mortgagor to the Mortgagee under the Loan Agreement, and, third, to return any surplus to the Mortgagor or such other person as may be entitled thereto. Such sale shall be made at public auction and at such place or places and at such time or times and upon such notice as the Trustee may be advised by counsel to be consistent with the laws applicable thereto, and upon such terms as the Trustee or the public officer conducting such sale may fix. Any such sale made pursuant to judicial proceedings or advertisement shall be made either as an entirety or in such parcels as may be directed by the court or as the Trustee in its sole discretion may determine. The Mortgagor,for itself and all persons and corporations hereafter claiming through or under it, does hereby expressly waive and release all right to have the properties and rights comprised in the Trust Estate marshaled upon any foreclosure or other enforcement hereof. The Mortgagee or public officer conducting such sale from time to time may adjourn any such sale to be made by it by announcement at the time and place appointed for such sale or for such adjourned sale or sales,and without further notice or publication 6 it may make such sale at the time to which the same shall be so adjourned, but in the event of such adjournment or adjournments, sale shall be made within any limitation of time or number of adjournments prescribed by law and, in any event, within six months from the date of sale fixed in the advertisement or court order, unless notice of sale on some later date shall be given again in the manner provided by law. (e) Upon any foreclosure sale, the owners of any Bonds outstanding, or the Mortgagee, may bid for and purchase the Trust Estate or any part thereof and upon compliance with the terms of sale may hold, retain and possess and dispose of such property in his,her,its or their own absolute right without further accountability,and any purchaser at any such sale may, in paying the purchase money,turn in any of such Bonds or claims for interest outstanding hereunder in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon. (f) Upon the completion of any sale or sales made under or by virtue of this Mortgage and the Indenture, the Mortgagee shall execute and deliver, or cause to be executed and delivered, to the accepted purchaser or purchasers the property sold with good and sufficient transfers, assigning and transferring all its right, title and interest in and to the properties sold. The Mortgagee and its successor or successors are hereby appointed the true and lawful attorney or attorneys irrevocable of the Mortgagor in its name and stead or in the name of the Mortgagee to make all necessary assignments, transfers and deliveries of the property thus sold,and for that purpose,the Mortgagee and its successors may execute all necessary instruments of assignment and transfer,and may substitute one or more persons with like power, the Mortgagor hereby ratifying and confirming all that said attorney or attorneys or such substitute or substitutes shall lawfully do by virtue hereof. Nevertheless,the Mortgagor, if so requested in writing by the Mortgagee,shall ratify and confirm any such sale or sales by executing and delivering to the Mortgagee or to such purchaser or purchasers all such instruments as may be advisable, in the judgment of the Mortgagee, for the purpose and as may be designated in such request. (g) Upon any sale made under the power of sale hereby granted or under judgment or decree in any judicial proceedings for the foreclosure or otherwise for the enforcement of this Mortgage or the Indenture,the receipt of the Mortgagee or the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at any sale for his,her, its or their purchase money, and such purchaser or purchasers,his,her, its or their assigns or personal representatives shall not,after paying such purchase money and receiving such receipt of the Mortgagee or of such officer therefor, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication, or nonapplication thereof 7 (h) The Mortgagor does hereby expressly consent to sale of the Mortgaged Property by advertisement pursuant to Minnesota Statutes,Chapter 580,which provides for sale after service of notice thereof upon the occupant of the Mortgaged Property and publication of said notice for six weeks in the county in which the Mortgaged Property is located, notwithstanding that service might not be made upon the Mortgagor personally, and that no hearing of any type is required in connection with the sale. Except as required by the aforesaid statutory provision,the Mortgagor hereby expressly waives any and all rights to notice of sale of the Mortgaged Property and any and all rights to a hearing of any type in connection with the sale of the Mortgaged Property. (i) In case of any Event of Default as aforesaid,to the extent that such rights may then lawfully be waived,neither the Mortgagor nor anyone claiming through or under it shall or will setup,claim,or seek to take advantage of any appraisement,valuation, stay, extension or redemption laws now or hereafter in force in any locality where any of the Mortgaged Property may be situated, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the Indenture, or the absolute sale of the Mortgaged Property,or the final and absolute putting into possession thereof,immediately after such sale,of the purchaser or purchasers thereat,but the Mortgagor,for itself and all who may claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of all such laws and all right of appraisement and redemption to which it may be entitled under the laws of the State in which it is situated. (j) Any sale made under the power of sale granted hereby or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforcement ofthis Mortgage or the Indenture shall, if and to the extent then permitted by law, operate to divest all right, title, interest, claims and demand whatsoever, either at law or in equity, of the Mortgagor of,in and to the property so sold,and be a perpetual bar both at law and in equity against the Mortgagor and against any and all persons, firms or corporations claiming or who may claim the property sold,or any part thereof,from,through or under the Mortgagor. 7. Possession of Mortgagor. Unless a Default on the part of the Mortgagor shall exist under the Loan Agreement or an Event of Default shall exist under the Loan Agreement or the Indenture, the Mortgagor shall be entitled to the possession and disposition of the Mortgaged Property and the Revenues and Income thereof subject,however,to the rights of the Trustee to the possession and disposition of the funds and accounts provided for in the Loan Agreement and the Indenture. 8. Further Assurances. As provided in the Loan Agreement,the Mortgagor shall execute, deliver, file and record at its expense such supplements to this Mortgage, financing statements or other documents as may be required in the opinion of counsel, including(without 8 limitation)any supplement to this Mortgage to particularly describe any properties which have been or are intended to become subject to the lien hereof. 9. Amendments. This Mortgage may be amended only as provided in the Loan Agreement and Indenture. 10. Loan Agreement and Indenture Control. Any provision in this Mortgage which is inconsistent with the Loan Agreement or the Indenture or any provision thereof shall be interpreted as if such provision were not contained herein and as if the provisions of the Loan Agreement and the Indenture had been fully incorporated herein. In all cases of inconsistency, and in case of any amendment to or supplement to the Loan Agreement or the Indenture,entered into in accordance with the provisions thereof, the provisions of the Loan Agreement (as amended and supplemented) and the Indenture (as amended and supplemented) shall control. Reference is hereby made to copies of the Loan Agreement and the Indenture to be placed on file at the offices of the Mortgagor and the Trustee. 11. Assignment of Mortgage to Trustee; No Recourse to City. Pursuant to that certain Assignment ofMortgage,dated as ofNovember 1,2001 (the"Mortgage Assignment"), the City has assigned all of its right, title and interest in and obligation under this Mortgage to the Trustee, and said Mortgage Assignment is and shall be without recourse to the City, and the Trustee, and not the City, shall then be responsible to discharge any and all obligations as Mortgagee hereunder. It is further understood and agreed that no covenant, provision or agreement contained in this Mortgage or in the Mortgage Assignment, and that no obligation herein or therein otherwise imposed upon the City or respecting the breach thereof, shall give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers nor shall the City be responsible to discharge any of such obligations upon the failure of the Trustee, as assignee of the City under the Mortgage Assignment, to do so. The Mortgagor hereby consents to the Mortgage Assignment. 12. Fixture Filing. From the date of its recording,this Mortgage shall be effective as a financing statement filed as a fixture filing with respect to all goods constituting part of the Mortgaged Property which are or are to become fixtures related to the real estate described herein. For this purpose, the following information is set forth: (a) Mortgagor hereby authorizes Mortgagee to file financing and continuation statements with respect to the Mortgaged Property without the signature of Mortgagor whenever lawful, and Mortgagor irrevocably constitutes and appoints each of Mortgagee, and each of the officers of Mortgagee,as Mortgagor's attorney-in-fact coupled with an interest for such purpose; and Mortgagor agrees to execute such financing and continuation statements as Mortgagee may reasonably request. 9 (b) Mortgagor hereby represents and warrants that no financing statement (other than financing statements showing Mortgagee as the sole secured party, or with respect to liens or encumbrances, if any, expressly permitted by this Mortgage covering any of the mortgaged property or any proceeds thereof) is on file in any public office except pursuant hereto;and Mortgagor will at its own cost and expense,upon demand,furnish to Mortgagee such further information and will execute and deliver to mortgagee such financing statements and other documents in form reasonably satisfactory to mortgagee and will do all such acts as Mortgagee may at any time or from time to time reasonably request or as may be necessary or reasonably appropriate to establish and maintain a perfected security interest in the Mortgaged Property as security for the Borrower's obligations secured by this Mortgage,subject to no other liens or encumbrances, other than liens or encumbrances benefiting Mortgagee and no other party and to liens and encumbrances (if any) expressly permitted by this Mortgage; and Mortgagor will pay the actual expense of filing or recording such financing statements or other documents, and this instrument, in all public offices wherever filing or recording is reasonably deemed by Mortgagee to be desirable. For this purpose, the following information is set forth: (a) Name and Address of Debtor: Orono Senior Housing, LLC c/o Wedum Foundation 3191 Shorewood Drive Arden Hills, MN 55112 I.D. No. 41- Minnesota Organization ID No. (b) Name and Address of Secured Party: U.S.Bank Minnesota, Trust National Association Sixth & Marquette 180 East Fifth Street, 2nd Floor Minneapolis, MN 55479 St. Paul, MN 55101 Attention: Corporate Trust Department 10 (c) This document covers goods which are or are to become fixtures. 13. Assignment of Leases and Rents. The Mortgagor does hereby grant,transfer and assign to the Mortgagee (the "Assignment") all of the right, title and interest of the Mortgagor in and to(i)any and all present or future leases or tenancies,whether written or oral, covering or affecting any or all of the Mortgaged Property(all of which,together with any and all extensions,modifications and renewals thereof,are hereinafter collectively referred to as the "Leases" and each of which is referred to as a "Lease"), and (ii) all rents, profits and other income or payments of any kind due or payable or to become due or payable to or by the Mortgagor as the result of any use, possession or occupancy of all or any portion of the Mortgaged Property or as the result of the use of or lease of any personal property constituting a part of the Mortgaged Property(all of which are hereinafter collectively referred to as"Rents"), but not including any general revenues, income or accounts receivable of the Mortgagor, and whether the Rents accrue before or after foreclosure of the Mortgage or during the periods of redemption thereof, all for the purpose of securing: (a) All indebtedness under the Loan Agreement and all other sums secured by this Mortgage and Assignment pertaining to the Bonds; and (b) Performance and discharge of each and every obligation, covenant and agreement of the Mortgagor contained herein and in the Loan Agreement. 14. Covenant. The Mortgagor warrants and covenants that it is and will remain the absolute owner of the Rents and Leases free and clear of all liens and encumbrances other than the lien granted herein and Permitted Encumbrances;that it has not heretofore assigned or otherwise encumbered its interest in any of the Rents or Leases to any person other than as set forth in the Permitted Encumbrances;that it has the right under applicable law,under the Leases, and otherwise to execute and deliver this Assignment and keep and perform all of its obligations hereunder; that it will warrant and defend the Leases and Rents against all adverse claims, whether now existing or hereafter arising. 15. Performance of Leases. The Mortgagor will faithfully abide by,perform and discharge each and every obligation, covenant and agreement which it is now or hereafter becomes liable to observe or perform under any present or future Lease,and,at its sole cost and expense, enforce or secure the performance of each and every obligation, covenant, condition and agreement to be performed by the tenant under each and every Lease, subject to such waivers or extensions of time as may be granted by Mortgagor, provided that Mortgagee shall have the right,at any time,to rescind any such waiver or extension of time. The Mortgagor will observe and comply with all provisions of law applicable to the operation and ownership of the Mortgaged Property. The Mortgagor will at its sole cost and expense,appear in and defend any action or proceeding arising under, growing out of or in any manner connected with any Lease or the obligations, duties or liabilities of the Mortgagor or any tenant thereunder. 11 16. Collection of Rents. Unless permitted by the Mortgagee,the Mortgagor will not collect or accept any Rents for the use or occupancy of the Mortgaged Property for more than one month in advance. Security deposits shall not be deemed Rents for purposes of this paragraph. 17. Protecting the Security of This Assignment. Should the Mortgagor fail to perform or observe any covenant or agreement contained in this Assignment, then the Mortgagee, but without obligation to do so and without releasing the Mortgagor from any obligation hereunder, may make or do the same in such manner and to such extent as the Mortgagee may deem appropriate to protect the security hereof, including, specifically,without limiting its general powers,the right to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of the Mortgagee, and also the right to perform and discharge each and every obligation, covenant and agreement of the Mortgagor contained in the Leases and in exercising any such powers to pay necessary cots and expenses, employ counsel and pay reasonable attorneys' fees. The Mortgagor will pay immediately upon demand all sums expended by the Mortgagee under the authority of this Assignment, together with interest thereon, and the same shall be added to said indebtedness and shall be secured hereby. 18. Present Assignment. This Assignment shall constitute a perfected, absolute and present assignment,provided that the Mortgagor shall have the right to collect,but not prior to accrual (except as permitted by paragraph 16 above), all of the Rents, and to retain, use and enjoy the same unless and until an Event of Default shall occur under the Loan Agreement or the Mortgage or the Mortgagor shall have breached any warranty or covenant in this Assignment. Any Rents which accrue prior to an Event of Default under the Loan Agreement or this Mortgage but are paid thereafter shall be paid to the Mortgagee. 19. Hazardous Waste. The Mortgagor represents and warrants to Mortgagee that,to the best of the Mortgagor's actual knowledge and subject to any matters disclosed by any environmental report delivered to Mortgagee by the Mortgagor, there is not presently located anywhere in, on or under the Mortgaged Property any asbestos, urea-formaldehyde foamed-in- place insulation or polychlorinated biphenyls ("PCB's") or any other hazardous substance, hazardous waste, hazardous facility, pollutant or contaminant (including petroleum products), all as defined in any applicable state, local or federal statute, ordinance, code or regulation "Hazardous Substances" and Mortgagee,or an authorized agent of Mortgagee, (collectively, )� g shall be permitted to enter upon the Mortgaged Property at any time for the purpose of performing inspections, taking soil borings, or conducting any other tests or procedures, which Mortgagee deems appropriate to determine whether any Hazardous Substances are present on the Mortgaged Property. Any such inspections or tests will be at the expense of the Mortgagor only if: 12 (a) Mortgagee has received written notice (or oral notice in case of any emergency) from a governmental entity indicating the possibility of an environmental concern with the Mortgaged Property; or (b) Mortgagee otherwise has received written notice(or oral notice in case of an emergency) indicating in its reasonable opinion, the reasonable likelihood of there being Hazardous Substances on the Mortgaged Property. The Mortgagor agrees that if Mortgagee determines at any time that removal of any Hazardous Substance from the Mortgaged Property is required by applicable governmental or regulatory authorities or pursuant to applicable laws or regulations, Mortgagee may, in its reasonable discretion, require the removal or containment of such Hazardous Substances at the Mortgagor's expense. The Mortgagor hereby agrees that it will indemnify Mortgagee from and against any and all liabilities, claims, demands, costs and expenses, including attorneys' fees, resulting from or due to the release or threatened release of any Hazardous Substances, which were,or are claimed or alleged to have been located on or removed from the Mortgaged Property by any person at any time, except that the Mortgagor shall not be liable for any releases of Hazardous Substances which occur following Mortgagee's acquisition of the Mortgaged Property by reason of a foreclosure sale(after the period of redemption)or a conveyance in lieu of a foreclosure sale or following a sale by the Mortgagor which results in the release of the Mortgagor on the Loan Agreement, provided that such Hazardous Substances release was not caused by an act or omission of the Mortgagor prior to the date of such transfer or conveyance and provided further that such Hazardous Substances were first placed on the Mortgaged Property following Mortgagee's acquisition of the Mortgaged Property by reason of a foreclosure sale(after the period of redemption) or a conveyance in lieu of a foreclosure sale or following a sale by the Mortgagor which results in the release of the Mortgagor on the Loan Agreement. 20. Authorization. The execution and delivery of this Mortgage by the Mortgagor, and performance by Mortgagor of its obligations hereunder have been duly authorized by all necessary action on the part of Mortgagor and its constituent entities, and do not and will not violate any present regulation, order, writ, injunction or decree of any court or governmental or quasi-governmental body, agency or other instrumentality (collectively, "Governmental Authorities") applicable to Mortgagor or the Mortgaged Property (collectively, "Laws"), or result in a breach of any of the terms, conditions or provisions of, or constitute a default UNDER, or (except as created by this Mortgage) result in the creation or imposition of any lien of any nature whatsoever upon any of the assets of Mortgagor pursuant to the terms of, any mortgage, deed of trust, indenture, agreement or instrument to which Mortgagor is a party or by which it or any of its properties is bound. 21. Compliance with Laws. Mortgagor(either directly or through its tenants), at its own sole cost and expense (or the cost and expense of its tenants), shall promptly comply 13 with all Laws, and all orders,rules and regulations(collectively, "Orders")of the national and Local Boards of Fire Underwriters or any other body or bodies exercising similar functions, foreseen or unforeseen, ordinary as well as extraordinary, which may be applicable to the Mortgaged Property or any part thereof, or to the use or manner of use of the Mortgaged Property or the owners, tenants or occupants thereof, whether or not any such Laws or Orders shall necessitate structural changes or improvements or interfere with the use or enjoyment of the Mortgaged Property. Mortgagor shall also procure, pay for and maintain all permits, licenses, approvals and other authorizations, necessary for the operation of its business at the Premises and the lawful use and occupancy of the premises, or any part thereof, in connection therewith. 22. Discharge of Liens. Mortgagor shall pay,from time to time when the same shall become due,all claims and demands of mechanics,materialmen,laborers and others which, if unpaid, might result in or permit the creation of a Lien on the Mortgaged Property or any part thereof, or on the revenues,rents,royalties, issues, income and profits arising therefrom, and in general will do or cause to be done everything necessary so that the first lien of the Mortgage shall be fully preserved at the sole cost and expense of Mortgagor and without expense to Mortgagee. If any such liens are filed, Mortgagor will cause the same to be permanently discharged of record by payment or otherwise, unless no Event of Default has occurred and is continuing and the Mortgagor shall in good faith and at its own expense,be contesting such lien or liens or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection thereof or other realization thereon or the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy the same; provided that during such contest Mortgagor shall provide an indemnity bond or other security reasonably satisfactory to Mortgagee to cover the amount of the contested item or items and the amount of the interest and penalties covering the period through which such proceedings may be expected to last, and in any event assuring the discharge of Mortgagor's obligation hereunder and of any additional charge, penalty or expense arising from or incurred as a result of such contest; and if Mortgagor shall have posted a bond as security against payment of any such lien,interest,penalties and other charges related thereto. Mortgagee shall be named as an additional obligee under the bond. Except as provided above or as expressly permitted by the Loan Agreement,Mortgagor will not directly or indirectly create, incur or suffer to exist any lien on the Mortgaged Property or any part thereof(including without limitation any lien securing the repayment of a loan made to Mortgagor by any member(s), manager(s) or governor(s) of Mortgagor), whether or not junior to the lien of this Mortgage, and such other documents as may be executed as further security for the Bonds or in favor of Mortgagee. 14 23. Use of Mortgaged Property. Mortgagor will maintain,preserve and renew from time to time such rights of way, easements, grants, privileges, licenses and franchises as are necessary for the use and operation of the Mortgaged Property in the manner heretofore used and operated, and will not use or operate, or permit the use or operation of, the mortgaged Property for any other purpose(other than incidental uses related to such primary use), initiate, join in or consent to any new private restrictive covenant (apart from any permitted encumbrance) easement or other public or private restrictions to the use of the Mortgaged Property, without the prior written consent in each instance of Mortgagee, which may be withheld in its reasonable discretion. Mortgagor shall,however, comply in all material respects with all lawful and restrictive covenants which may at any time affect the Mortgaged Property and with zoning ordinances and other private or public restrictions as to the use thereof. Mortgagor will not cause or maintain any nuisance in, at or on the Mortgaged Property. Mortgagor will pay or cause to be paid all charges for all public and private utility services, all public or private rail and highway services(if any),all public or private communications services and all sprinkler systems and protective services(if any)at any time rendered to or in connection with the Mortgaged Property or any part thereof, will comply in all material respects or use reasonable efforts to cause compliance with all contracts relating to any such services, and will do all other things required for the maintenance and continuance of all such services. 24. Maintenance of Mortgaged Property. Mortgagor shall maintain the Mortgaged Property, including all streets, sidewalks and curbs comprising same, in good repair and condition, and will continuously(other than during periods of repair after major casualty or substantial condemnation, with respect to the portions of the Mortgaged Property damaged or condemned)operate the Mortgaged Property in the manner and for the purposes heretofore used and, at its sole cost and expense, will make or cause to be made, as and when the same shall become necessary, all structural and non-structural, exterior and interior, ordinary or extraordinary,foreseen and unforeseen repairs,renewals and replacements necessary to that end and upon being apprised of any material defect in the repair or condition of the Mortgaged Property,will repair or cure, or cause to be repaired or cured,such defect, in each case at its own expense and with due diligence. All such repairs, renewals and replacements shall be at lease substantially equal in quality to the original Improvements. 25. Alterations. Mortgagor shall give Mortgagee notice of, and a copy of any plans prepared for any alteration which is reasonably estimated to cost $150,000 (the "Alteration Threshold") (inclusive of architectural and engineering fees) or is structural. So long as no Event of Default shall have occurred and be continuing hereunder, Mortgagor shall have the right at any time and from time to time to make or cause to be made reasonable alterations of an additions to the Mortgaged Property or any part thereof, provided that any alteration or addition (i) shall not change the general character of the Mortgaged Property, or reduce the fair market value thereof below its fair market value immediately before such alteration or addition,or otherwise materially alter the overall quality of the Mortgaged Property, 15 (ii)shall be effected with due diligence,in a good and workmanlike manner and with new, first- class materials and in compliance in all material respects with all requirements of applicable Laws,(iii)shall be promptly and fully paid for,or caused to be paid for,by Mortgagor at its sole cost and expense,and(iv)shall be made, in case the estimated cost of such alteration or addition exceeds the Alteration Threshold, (1) only after Mortgagee shall have consented in writing thereto prior to the commencement of such work and in all material respects in accordance with plans and specifications reasonably satisfactory to Mortgagee, (2) only after Mortgagor shall have furnished to Mortgagee a completion or performance bond,a letter of credit or cash deposit or other security reasonably satisfactory to Mortgagee as security for the completion of such work, and(3)if structural, only after submission of appropriate plans to Mortgagee and written approval thereof by Mortgagee(such approval not to be unreasonably withheld or delayed). for purposes of clause(iv)of this subsection,the Alteration Threshold limitation shall apply to any alteration or addition taken separately or, if such alteration or addition is made together with other alterations or additions that constitute a single construction plan or project (whether accomplished in successive stages or procedures),then taken in the aggregate as well. The cost of all such alterations and additions to the Mortgaged Property shall be paid in cash or its equivalent, so that the Mortgaged Property shall at all times be free of Liens for labor and materials supplied or claimed to have been supplied to the Mortgaged Property. All alterations of and additions to the Mortgaged Property shall immediately become and shall remain a part of the Mortgaged Property, and shall be subject to the lien of this Mortgage. 26. Waste. Mortgagor shall not commit or suffer any waste of the Mortgaged Property or make any change in the use of the Mortgaged Property which will in any way materially increase the risk of any fire or other hazard arising out of the operation of the Mortgaged Property,or do or permit to be done thereon anything that may in any way impair the security of this Mortgage. 27. General Right of Entry. Mortgagor agrees that it will permit Mortgagee from time to time upon reasonable advance notice(not exceeding one business day) and during regular business hours(or upon occurrence of any emergency situation,without advance notice and at any time)to enter upon and inspect the Mortgaged Property to determine its compliance with the requirements of this Mortgage and to ascertain its condition. 28. Separate Tax Lot. Mortgagor represents and warrants that the Premises are assessed for real estate tax purposes as a wholly independent tax lot, separate from any adjoining land or improvements not constituting a part of such lot. 29. Governing Law. This mortgage shall be governed by and construed in accordance with the laws of Minnesota and any applicable laws of the United States of America; Mortgagor and Mortgagee agree that Mortgagee shall not be obligated to comply with any filing or recording requirements under the lien laws (or similar laws) of Minnesota. 16 30. Covenants Running With the Land; Successors and Assigns. All of the grants, covenants,terms,provisions and conditions of this Mortgage shall run with the land and shall apply to and bind the successors and assigns of Mortgagor, and apply to and inure to the benefit of the successors and assigns of Mortgagee. 31. Release of Mortgaged Property. The Borrower may release any part of the Mortgaged Property from the lien created by this mortgage only as provided in the Loan Agreement. [The balance of this page is intentionally left blank.] 17 IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed as of the day and year first above written. ORONO SENIOR HOUSING, LLC By Its STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of November, 2001 by , to me personally known, the of Orono Senior Housing,LLC a Minnesota limited liability company. Notary Public [Signature page to Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents] 18 EXHIBIT A to Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents (Legal Description) Those tracts or parcels situated in the County of Orono and State of Minnesota described as follows: EXHIBIT B to Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents (Permitted Encumbrances) MI:79G881.01 796881.02 MFF088B3.WP5 B-1