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HomeMy WebLinkAbout151-06 RESOLUTION• RESOLUTION NO. 151-06 A RESOLUTION TO AMEND THE LEASE WITH SEVEN HILLS HOMELESS SHELTER, INC. TO ALLOW ASSIGNMENT OF A LEASEHOLD INTEREST FOR A MORTGAGE AND TO AUTHORIZE THE MAYOR TO SIGN A LEASEHOLD MORTGAGE WHEREAS, on December "7, "2004, the City of Fayetteville and Seven Hills Homeless Shelter, Inc. entered into a ninety-nine year lease so that Seven Hills could build and operate transitional housing to serve Fayetteville residents on city owned property; and WHEREAS, increased construction expenses require Seven Hills to secure a construction loan of about $700,000.00 to build their facility and to secure this loan with a Leasehold Mortgage. - NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby approves amending the existing Lease with Seven Hills Homeless Shelter, Inc. (attached as Exhibit A) by deleting its paragraph 8. Assignment and replacing it with the following: "8. Assignment. The City of Fayetteville shall allow Seven Hills Homeless Shelter, Inc. to enter into a Leasehold Mortgage to finance construction costs of the project. No other assignment and no subletting shall be allowed. Seven Hills remains responsible to furnish the services for Fayetteville residents required by this lease regardless of any mortgage." Section 2: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Coody upon advice of City Attorney Williams to sign a Leasehold Mortgage as "Landlord" so that Seven Hills Homeless Shelter, Inc. can enter into such Leasehold Mortgage as "Mortgagor/Grantor" to secure a construction loan to build its project PASSED and APPROVED this 5th day of September, 2006. APPROVED. By: D COODY, Mayor ATTEST: By: � .,`,ERK/TR,y'%,, S p,'.G� i E :FAYETTEVILLE; • elP.°143/(ANSP"Ci..4 • 'Ott i HH14 SONDRA SMIT , City Clerk AMENDED LEASE AGREEMENT This Amended Lease Agreement is made and entered into this 5th day of September, 2006, by and between the City of Fayetteville, Arkansas, Lessor, and Seven Hills Homeless Center, Inc. (hereinafter "Seven Hills"), Lessee, Witnesseth: WHEREAS, Seven Hills is a non-profit agency established and dedicated to provide a Homeless Shelter and to provide transitional housing for the homeless; and, WHEREAS, providing transitional housing to Fayetteville citizens and permanent supportive housing for persons with disabilities are valid public purposes; and, WHEREAS, Seven Hills will provide such service to Fayetteville citizens so that these citizens can reestablish themselves, obtain employment, and move to private housing within a fairly short period of time and to disabled citizens for permanent supportive housing. NOW, THEREFORE, the City of Fayetteville and Seven Hills agree as follows: 1. Leased Premises. For and in consideration of Seven Hills' promise to promptly provide transitional housing for needy, homeless Fayetteville citizens and permanent supportive housing and the covenants and agreements herein entered into and agreed upon by Seven Hills as obligations to the City of Fayetteville, the City lets, leases and demises unto Seven Hills, subject to the terms and conditions contained herein, the following described property situated in Washington County, Arkansas. (Attached as Exhibit A is the legal description and map.) To have and to hold said premises unto the said Seven Hills for and during the term herein stated, subject to the covenants, terms and conditions herein contained. 2. Term. This lease shall commence on December 1, 2004, and shall extend for a term of Ninety -Nine (99) years, ending at midnight on November 30, 2103. 3. Consideration. The primary consideration for the City is Seven Hills' agreement in paragraph 4 to serve Fayetteville citizens by promptly constructing its transitional housing project. 4. Use. Seven Hills agrees to use the lease premises for the purpose of constructing, operating and maintaining a transitional housing facility. If at any time the property ceases to be used for this purpose, the lease shall terminate. Seven Hills agrees to furnish rent subsidized transitional housing for Fayetteville citizens and residents throughout this lease period. Seven Hills shall deliver quarterly written reports to the Mayor's office concerning the number of Fayetteville citizens/residents housed or otherwise assisted by Seven Hills. 5. Improvements. Seven Hills may make any such improvements as are necessary to carry out the service of providing rent subsidized transitional housing facilities. Design for any such improvements shall be approved by the City of Fayetteville. Upon termination of this lease, all improvements shall become the property of the City. 6. Taxes. Seven Hills shall pay any and all ad valorem taxes and special improvement district taxes levied and assessed against said premises and the improvements located thereon during the term of this lease. , 7. Notices. All notices, requests, demands and other communications required by or permitted hereunder shall be in writing and shall be directed to the following: City of Fayetteville 113 W. Mountain St. Fayetteville, AR 72701 Seven Hills Homeless Center, Inc. P.O. Box 474 Fayetteville, AR 72702-0474 8. Assignment. The City of Fayetteville shall allow Seven Hills Homeless Shelter, Inc. to enter into a Leasehold Mortgage to finance construction costs of the project. No other assignment and no subletting shall be allowed. Seven Hills remains responsible to furnish the services for Fayetteville residents required by this lease regardless of any mortgage. 9. Insurance. A. Seven Hills shall be solely responsible for maintaining insurance on its property, including movables, trade fixtures, furniture, furnishings and inventory, as well as improvements to the property. B. Seven Hills shall, during the term of this lease, maintain public liability insurance. The limits of such public liability insurance shall not be less than $500,000.00 per person and $500,000.00 per accident. The policy shall contain a clause that the insurer will not cancel or change the insurance without giving the City of Fayetteville, ten days prior written notice. A certificate of such insurance shall be delivered to the City. 10. Maintenance. Seven Hills shall be responsible for all maintenance, routine preventative or corrective, on any and all improvements made to the leased property. Sage House and Seven Hills shall cooperate and jointly equip, use and maintain the playground located between their leased premises. 11. Compliance with Laws. Seven Hills agrees not to violate any law, ordinance, rule or regulation of any governmental authority having jurisdiction of the leased premises. This agreement shall be governed by the laws of the State of Arkansas. 12. Waste/Nuisance. Seven Hills agrees not to commit waste, nor permit waste to result or to be done to or upon the aforesaid premises. Further, Seven Hills agrees not to operate, nor permit to be operated, nor to exist thereon or therein, any public or private nuisance. 13. Title and Quiet Enjoyment. The City of Fayetteville covenants and warrants that it is the owner in fee simple absolute of the leased premises and may lease said premises as herein provided. Upon the observance and performance of all the covenants, terms and conditions upon Seven Hills' part to be observed and performed, Seven Hills shall peaceably and quietly hold and enjoy the demised premises for the term hereby demised without hindrance or interruption by the City or any other person or persons lawfully or equitably claiming by, through or under the City, subject to the terms and conditions of this lease. 2 14. Entire Agreement. This lease agreement contains the entire agreement of both parties hereto, and no other oral or written agreement shall be binding on the parties hereto IN WITNESS WHEREOF, the parties hereto have hereunto set their hand and seals on this the 5th day of September, 2006. ATTEST: ,,,,t K, TR?:cc,�. _U" •/3= E : FAYETTEVILLE : = By: s4_':.i•= VP,S,• KAN , By: 0"-/l SONDRA SMITH, City Clerk CITY OF FAY_s TTEVILLE, Lessor ATTEST: By: /V Vt-1 Title: 1, �-L�VAZf D COODY, Mayor SEVEN HILLS HOMELESS CENTER, INC., Lessee By 3 OWELL GRI AM, President Board of Directors of Seven Hills Homeless Center, Inc. /se, S��k" LOAN NUMBER LOAN NAME ACCT. NUMBER NOTE DATE INITIALS 3458186 SEVEN HILLS 09/06/06 BR1 HOMELESS SHELTER, INC. NOTE AMOUNT INDEX Iw/Margin) RATE MATURITY DATE LOAN PURPOSE $700,000.00 Not Applicable 8.500% 07/01/08 Commercial Creditor Use Only PROMISSORY NOTE AND SECURITY AGREEMENT (Commercial - Draw) DATE AND PARTIES. The date of this Promissory Note and Security Agreement (Loan Agreement) is September 6, 2006. The parties and their addresses are: LENDER: ARVEST BANK P.O. Box 1327 Fayetteville, Arkansas 72702 Telephone: (479) 575-1000 BORROWER: SEVEN HILLS HOMELESS SHELTER, INC. an Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 1. DEFINITIONS. As used in this Loan Agreement, the terms have the following meanings: A :Pronouns. The pronouns -I,".'me,' and "my" refer to each Borrower signing this Loan Agreement, individually and together. 'You" and 'your' refer to the Lender. B. Loan Agreement. Loan Agreement refers to this combined Note and Security Agreement, and any extensions, renewals, modifications and substitutions of this Loan Agreement. C. Loan. Loan refers to this transaction generally, Including obligations and duties arising from the terms of all documents prepared or submitted far this transaction such as applications, security agreements, disclosures or notes, and this Loan Agreement. D. Loan Documents. Loan Documents refer to all the documents executed as a part of or in connection with the Loan. E. Property. Property is any property, real, personal or intangible, that secures my performance of the obligations of this Loan. F. Percent. Rates and rate change limitations are expressed as annualized percentages. 2. PROMISE TO PAY. For value received, I promise to pay you or your order, at your address, or at such other location as you may designate, amounts advanced from time to time under the terms of this Loan Agreement up to the maximum total principal balance of *700,000.00 (Principal) plus interest from the date of disbursement, on the unpaid outstanding Principal balance until this Loan Agreement matures or this obligation is accelerated. All advances made will be made subject to the terms of a separate construction loan agreement and all other terms and conditions of this Loan. 3. INTEREST. Interest will accrue on the unpaid Principal balance of this Loan Agreement at the rate of 8.600 percent (Interest Rate). A. Interest After Default. If you declare a default under the terms of this Loan, including for failure to pay in full at maturity, you may increase the Interest Ram payable on the outstanding Principal balance of this Loan Agreement. In such event, interest will accrue on the outstanding Principal balance at the Interest Rate in effect from time to time, plus an additional 6.000 percent, until paid in full. B. Maximum Interest Amount. Any amount assessed or collected as interest under the terms of this Loan Agreement will be limited to the maximum lawful amount of interest allowed by state ar federal law, whichever is greater. Amounts collected in excess of the maximum lawful amount will be applied first to the unpaid Principal balance. Any remainder will be refunded to me. C. Statutory Authority. The amount assessed or collected on this Loan Agreement is authorized by the Alabama usury laws under Ala. Code, title 8 chapt. 8. D. Accrual. Interest accrues using an Actual/360 days counting method. 4. ADDITIONAL CHARGES. As additional consideration, I agree to pay, or have paid, these additional fees and charges. A. Nonrefundable Fees and Charges. The following fees are earned when collected and will not be refunded if I prepay this Loan Agreement before the scheduled maturity date. UCC Search. A(n) UCC Search fee of $56.00 payable from separate funds on or before today's date. Recording - Releases. Ain) Recording - Releases fee of 514.00 payable from separate funds on or before today's date. Recording - Mortgage. Ain) Recording - Mortgage fee of $35.00 payable from separate funds on or before today's date. Processing Fee. Ain) Processing Fee tee of $75.00 payable from separate funds on or before today's date. Non -RE Filing. A(n) Non -RE Filing fee of S16.00 payable from separate funds on or before today's date. Flood Cert.. A(n) Flood Cert. fee of $25.00 payable from separate funds on or before today's date. Appraisal. Ain) Appraisal fee of *2,750.00 payable from separate funds on or before today's date. Abstract or Title Search. A(nl Abstract or Title Search fee of $1,000.00 payable from separate funds on or before today's date. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Promissory Nola me 3ecvriiy Aerw,mnt ARI4MFINNELL00937100005181020083006N 01996 Banken Systems, Inc., St. Cloud, MN EacEZRZC 5. REMEDIAL CHARGES. In addition to interest or other finance charges, I agree that I will pay these additional fees based an my method and pattern of payment. Additional remedial charges may be described elsewhere in this Loan Agreement. A. Late Charge. If a payment is more than 10 days late, 1 will be charged 5.000 percent of the Unpaid Portion of Payment or $15.00, whichever is greater. However, this charge will not be greater than $50.00. I will pay this late charge promptly but only once for each late payment. 6. PURCHASE MONEY SECURITY INTEREST. This Loan creates a Purchase Money Security Interest to the extent you are making advances or giving value to me to acquire rights in or the use of collateral and I in fact use the value given for that purpose. Purchase Money Loan means any loan or advance used to acquire rights in or the use of any Property. The portion of the Property purchased with loan proceeds will remain subject to the Purchase Money Security Interest until the Secured Debts are paid in full. I authorize you. at your option, to disburse the loan proceeds directly to the seller of the Property. Payments an any non -Purchase Money Loan also secured by this Loan will not be applied to the Purchase Money Loan. Payments on the Purchase Money Loan will be applied first to the non -purchase money portion of the loan, if any, and then to the purchase money portion in the order in which the purchase money Property was acquired. If the purchase money Property was acquired at the same time, then payments will be applied in the order you select. No security interest will be terminated by application of this formula. You may include the name of the seller on the check or draft for this Loan Agreement. 7. PAYMENT. I agree to pay this Loan Agreement in installments of accrued interest beginning October 1, 2006, and then on the same day in each 3rd month thereafter. I agree to pay the entire unpaid Principal and any accrued but unpaid interest on July 1, 2008. Payments will be rounded to the nearest S.01. With the final payment I also agree to pay any additional tees or charges owing and the amount of any advances you have made to others on my behalf. Payments scheduled to be paid on the 29th, 30th or 31st day of a month that contains no such day will, instead, be made on the last day of such month. Each payment I make on this Loan Agreement will be applied first to interest that is due then to principal that is due, and finally to any charges that 1 owe other than principal and interest. If you and I agree to a different application of payments, we will describe our agreement on this Loan Agreement. You may change how payments are applied in your sole discretion without notice to me. The actual amount of my final payment will depend on my payment record. 8. PREPAYMENT. I may prepay this Loan in full or in part at any time. Any partial prepayment will not excuse any later scheduled payments until I pay in full. 9. LOAN PURPOSE. The purpose of this Loan is INITIAL CONSTRUCTION 10. SECURITY. This Loan is secured by Property described in the SECURITY AGREEMENT section, and by separate security instruments prepared together with this Loan Agreement as follows: • Document Name Parties to Document Mortgage -Leasehold - 1033 HUNTSVILLE ROAD SEVEN HILLS HOMELESS SHELTER, INC. 11. SECURITY AGREEMENT. A. Secured Debts. This Security Agreement will secure the following debts (Secured Debts), together with all extensions, renewals, refinancings, modifications and replacements of these debts: 111 Sums Advanced under the terms of this Loan Agreement. All sums advanced and expenses incurred by you under the terms of this Loan Agreement. (2) All Debts. All present and future debts of all Borrowers owing to you, even if this Security Agreement is not specifically referenced, the future debts are also secured by other collateral, or if the future debt is unrelated to or of a llifferent type than this debt. Nothing in this Security Agreement constitutes a commitment t0 make additional or future loans or advances. Any such commitment must be in writing. This Security Agreement will not secure any debt for which you fail to give any required notice of the right of rescission. This Security Agreement will not secure any debt for which a non -possessory, non -purchase money security.interest is created in "household goods" in connection with a "consumer loan," as those terms are defined by federal law governing unfair and deceptive credit practices. B. Security Interest. To secure the payment and performance of the Secured Debts, I give you a security interest in all of the Property described in this Security Agreement that I own or have sufficient rights in which to transfer an interest, now or in the future, wherever the Property is or will be located, and all proceeds and products from the Property (including, but not limited to, all parts, accessories, repairs, replacements, improvements, and accessions to the Property). Property is all the collateral given as security for the Secured Debts and described in this Security Agreement, and includes all obligations that support the payment or performance of the Property. "Proceeds" includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property; any rights and claims arising from the Property; and any collections and distributions on account of the Property. This Security Agreement remains in effect until terminated in writing, even if the Secured Debts are paid and you are no longer obligated to advance funds to me under any loan or credit agreement. C. Property Description. The Property subject to this Security Agreement is described as follows: (1) Inventory. All inventory which I hold for ultimate sale or lease, or which has been or will be supplied under contracts of service, or which are raw materials, work in process, or materials used or consumed in my business. (2) Equipment. All equipment Including. but not limited to, all machinery, vehicles, furniture, fixtures, manufacturing equipment. farm machinery and equipment, shop equipment, office and recordkeeping equipment, and parts and tools. All equipment described In a list or schedule which 1 give will also be included in the Property, but such a list is not necessary for a valid security interest in my equipment. 13) Specific Property. ALL GOODS, ACCOUNTS. GENERAL INTANGIBLES AND OTHER ITEMS OF TANGIBLE AND INTANGIBLE PERSONAL PROPERTY NOW OWNED OR HEREAFTER ACQUIRED BY BORROWER AND LOCATED ON OR INTENDED FOR USE IN OR ARISING FROM THE CONSTRUCTION OR OWNERSHIP OF THE FOLLOWING DESCRIBED REAL PROPERTY AND THE IMPROVEMENTS THEREON INCLUDING, WITHOUT LIMITATION, ALL BUILDING MATERIALS AND SUPPLIES, EQUIPMENT, APPLIANCES. DEPOSIT ACCOUNTS," INSTRUMENTS, INVESTMENT PROPERTY, INSURANCE POLICIES AND PROCEEDS AND ALL FUTURE ADDITIONS TO, REPLACEMENTS OF, SEVEN HILLS HOMELESS SHELTER- INC. Arkansas Prendmy Nota end Security Agreement AR/6MRNNEL1009371000051870200S3006N 01996 Banken Systems. Inc.. $t. Cloud, MN Ellett InitWa e]n D. Failure to Perform. I fail to perform any condition or to keep any promise or covenant of this Loan Agreement: E. Other Documents. A default occurs under the terms of any other Loan Document. F. Other Agreements. I am in default on any other debt or agreement I have with you. G. Misrepresentation. I make any verbal or written statement or provide any financial information that is untrue, inaccurate, or conceals a material fact at the time it is made or provide!. H. Judgment. I fail to satisfy or appeal any judgment against me. I. Forfeiture. The Property is used in a manner or for a purpose that threatens confiscation by a legal authority. J. Name Change. I change my name or assume an additional name without notifying you before making such a change. B. Property Transfer. I transfer all or a substantial part of my money or property. L. Property Value. You determine in good faith that the value of the Property has declined or is impaired.' M. Material Change. Without first notifying you, there is a material change in my business, including ownership, management, and financial conditions. N. Insecurity. You determine in good faith that a material adverse change has occurred in my financial condition from the conditions set forth in my most recent financial statement before the date of this Loan Agreement or that the prospect for payment or performance of the Loan is impaired for any reason. 13. DUE ON SALE OR ENCUMBRANCE. You may, at your option, declare the entire balance of this Loan Agreernent to be immediately due and payable upon the creation of. or contract for the creation of, any lien, encumbrance, transfer or sale of all or any part of the Property. This right is subject to the restrictions imposed by federal law (12 C.F.R. 591), as applicable. However, if I am in default under this Agreement, I may not sell the inventory portion of the Property even in the ordinary course of business. 14. WAIVERS AND CONSENT. To the extent not prohibited by law, I waive protest, presentment for payment, demand. notice of acceleration, notice of intent to accelerate and notice of dishonor. A. Additional Waivers By Borrower. In addition, I, and any party to this Loan Agreement, to the extent permitted by law, consent to certain actions you may take, and generally waive defenses that may be available based on these actions or based on the status of a party to this Loan Agreement. 411 You may renew or extend payments on this Loan Agreement, regardless o1 the number of such renewals or extensions. - (21 You may release any Borrower, endorser, guarantor, surety, accommodation maker or any other co-signer. (3) You may release, substitute or impair any Property securing this Loan Agreement. (4) You, or any institution participating in this Loan Agreement, may invoke your right of set-off. (5) You may enter into any sales, repurchases or participations of this Loan Agreement to any person in any amounts and I waive notice of such sales, repurchases or participations. (6) I agree that any of us signing this Loan Agreement as a Borrower is authorized to modify the terms of this Loan Agreement or any instrument securing, guarantying or relating to this Loan Agreement. B. No Waiver By Lender. Your course of dealing, or your forbearance from, or delay in, the exercise of any of your rights, remedies, privileges or right to insist upon my strict performance of any provisions contained in this Loan Agreement, shall not be construed as a waiver by you, unless any such waiver is in writing and is signed by you. C. Waiver of Claims. 1 waive all claims for loss or damage caused by your acts or omissions where you acted reasonably and in good faith. 15. REMEDIES. After I default, and after you give any legally required notice and opportunity to cure the default, you may at • your option do any one or more of the following. A. Acceleration. You may make all or any part of the amount owing by the terms of this Loan Agreement immediately due. B. Sources. You may use any and all remedies you have under state or federal law or in any Loan Document. C. Insurance Benefits. You may make a claim for any and all insurance benefits or refunds•that may be available on my default. D. Payments Made On My Behalf. Amounts advanced an my behalf will be immediately due and may be added to the balance owing under the terms of this Loan Agreement, and accrue interest at the highest post -maturity interest rate. E. Termination. You may terminate my right to obtain advances and may refuse to make any further extensions of credit. F. Set -Off. You may use the right of set-off. This means you may set-off any amount due and payable under the terms of this Loan Agreement against any right 1 have to receive money from you. My right to receive money from you includes any deposit or share account balance I have with you; any money owed to me on an item presented to you or in your possession for collection or exchange; and any repurchase agreement or other non - deposit obligation. "Any amount due and payable under the terms of this Loan Agreement" means the total amount to which you are entilled to demand payment under the terms of this Loan Agreement at the time you set-off. Subject to any other written contract, if my right to receive money from you is also owned by someone who has not agreed ' to pay this Loan Agreement, your right of set-off will apply to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement. Your right of set-otf does not apply to an account or other obligation where my rights arise only in a representative capacity. It also does not apply to any Individual Retirement Account or other tax-deferred retirement account. You will not be liable for the dishonor of any check when the dishonor occurs because you set-off against any of my accounts. 1 agree to hold you harmless from any such claims arising as a result of your exercise of your right of set-off. G. Assembly of Property. You may require me to gather the Property and make it available to you in a reasonable fashion. H. Repossession. You may repossess the Property so long as the repossession does not involve a breach of the peace. You may sell, lease or otherwise dispose of the Property as provided by law. You may apply what you receive from the disposition of the Property to your expenses, your attorneys' fees and legal expenses (where not prohibited by law), and any debt I owe you. If what you receive from the disposition of the Property does not satisfy the debt, I will be liable for the deficiency (where permitted by law). In some cases, you may keep the Property to satisfy the debt. Where a notice is required, I agree that ten days prior written notice sent by first class mail to my address listed In this Loan Agreement will be reasonable notice to me under the Arkansas Uniform Commercial Code. If the Property is perishable or threatens to decline speedily in value, you may, without notice to me, dispose of any or all of the Property in a commercially reasonable manner at my expense following any commercially reasonable preparation or processing. , If any items not otherwise subject to this Loan Agreement are contained in the Property when you take possession, you may hold these items for me at my risk and you will not be liable for taking possession of them. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Promissory Note end Security Agreement ARI4MFINNELLOOS371000051 e]0200B3006N 01996 Bankers Systems, Inc., St. Cloud, MN Ertl ii S' r A SUBSTITUTIONS FOR AND PROCEEDS AND PRODUCTS OF ANY OF THE FOREGOING ITEMS LOCATED AT 1033 HUNTSVILLE RD, FAYETTEVILLE, WASHINGTON COUNTY, ARKANSAS. D. Duties Toward Property. (11 Protection of Secured Parry's Interest. I will defend the Property against any other claim. I agree to do whatever you require to protect your security interest and to keep your claim in the Property ahead of the claims of other creditors. I will not do anything to harm your position: I will keep books, records and accounts about the Property and my business in general. I will let you examine these and make copies at any reasonable time. I will prepare any report or accounting you request which deals with the Property. 12) Use, Location, and Protection of the Property. I will keep the Property in my possession and in good repair. 1 will use it only for commercial purposes. I will not change this specified use without your prior written consent. You have the right of reasonable access to inspect the Property and I will immediately inform you of any loss or damage to the Property. I will not cause or permit waste to the Property. I will keep the Property at my address listed in the DATE AND PARTIES section unless we agree I may keep it at another location. If the Property is to be used in other states, I will give you a list of those states. The location of the Property is given to aid in the identification of the Property. It does not in any way limit the scope of the security interest granted to you. 1 will notify you In writing and obtain your prior written consent to any change in location of any of the Property. I will not use the Property in violation of any law. I will notify you in writing prior to any change in my address, name or, if an organization, any change in my identity or structure. Until the Secured Debts are fully paid and this Security Agreement is terminated, I will not grant a security interest in any of the Property without your prior written consent. I will pay all taxes and assessments levied or assessed against me or the Property and provide timely proof of payment of these taxes and assessments upon request. 13) Selling, Leasing or Encumbering the Property. I will not sell, offer to sell. lease, or otherwise transfer or encumber the Property without your prior written permission, except for Inventory sold in the ordinary course of business at fair market value, or at a minimum price established between you and me. 1( 1 am in default under this Security Agreement. I may not sell the Inventory portion of the Property even in the ordinary course of business. Any disposition of the Property contrary to this Security Agreement will violate your rights. Your permission to sell the Property may be reasonably withheld without regard to the creditworthiness of any buyer or transferee. I will not permit the Property to be the subject of any court order affecting my rights to the Property in any action by anyone other than you. If the Property includes chattel paper or instruments, either as original collateral or as proceeds of the Property, I will note your security interest on the face of the chattel paper or instruments. E. Authority To Perform. I authorize you to do anything you deem reasonably necessary to protect the Property, and perfect and continue your security interest in the Property. If I fail to perform any of my duties under this Loan Agreement or any other security interest, you are authorized, without notice to me, to perform the duties or cause them to be performed. These authorizations include, but are not limited to, permission to: (1) pay and discharge taxes, liens, security interests or other encumbrances at any time levied or placed on the Property. 12) pay any rents or other charges under any lease affecting the Property. 131 order and pay for the repair, maintenance and preservation of the Property. 14) file any financing statements on my behalf and pay for filing and recording fees pertaining to the Property. (5) place a note on any chattel paper indicating your interest in the Property. (8) take any action you feel necessary to realize on the Property, including performing any part of a contract or endorsing it in my name. (7) handle any suits or other proceedings involving the Property in my name. (8) prepare, file, and sign my name to any necessary reports or accountings, (9) make an entry on my books and records showing the existence of this Agreement. If you perform for me, you will use reasonable care. If you exercise the care and follow the procedures that you generally apply to the collection of obligations owed to you, you will be deemed to be using reasonable care. Reasonable care will not include: any steps necessary to preserve rights against prior parties; the duty to send notices, perform services or take any other action in connection with the management of the Property; or the duty to protect, preserve or maintain any security interest given to others by me or other parties. Your authorization to perform tor me will not create an obligation to perform and your failure to perform will not preclude you from exercising any other rights under the law or this Loan Agreement. All cash and non-cash proceeds of the Property may be applied by you only upon your actual receipt of cash proceeds against such of the Secured Debts, matured or unmatured, as you determine in your sole discretion, If you come into actual or constructive possession of the Property, you will preserve and protect the Property. For purposes of this paragraph, you will be in actual possession of the Property only when you have physical, immediate and exclusive control over the Property and you have affirmatively accepted that control. You will be in constructive possession of the Property only when you have bath the power and the intent to exercise control over the Property. F. Name and Location. My name indicated in the DATE AND PARTIES section is my exact legal name. 1 am an entity organized and registered under the laws of Arkansas. I will provide verification of registration and location upon your request. I will provide you with at least 30 days notice prior to any change in my name, address, or state of organization or registration. G. Perfection of Security Interest. I authorize you to file a financing statement covering the Property. I will comply with, facilitate, and otherwise assist you in connection with obtaining perfection or control over the Property for purposes of perfecting your security interest under the Uniform Commercial Code. I agree to pay all actual costs of terminating your security interest. 12. DEFAULT. I will be in default if any of the following occur: A. Payments. 1 fail to make a payment in full when due. B. Insolvency or Bankruptcy. The death, dissolution or insolvency of, appointment of a receiver by or on behalf of, application of any debtor relief law, the assignment for the benefit of creditors by or on behalf of, the voluntary or involuntary termination of existence by, or the commencement of any proceeding under any present or future federal or state insolvency, bankruptcy, reorganization, composition or debtor relief law by or against me or any co-signer, endorser, surety or guarantor of this Loan Agreement or any other obligations I have with you. C. Business Termination. I merge, dissolve, reorganize, end my business or existence, or a partner or majority owner dies or is declared legally incompetent. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Promissory Note and Security Agreement Ari14MFINNELL009371000051870200830081 °1995 Bankers Systems, Inc., St. Cloud, MN 5t� ' In e I. Use and Operation. You may enter upon my premises and take possession of all or any part of my property for the purpose of preserving the Property or its value, so long as you do not breach the peace, You may use and operate my property for the length of time you feel is necessary to protect your interest, all without payment or compensation to me. J. Waiver. Except as otherwise required by law, by choosing any one or more of these remedies you do not give up your right to use any other remedy. You do not waive a default if you choose not to use a remedy. By electing not to use any remedy, you do not waive your right to later consider the event a default and to use any remedies if the default continues or occurs again. 16. COLLECTION EXPENSES AND ATTORNEYS' FEES. On or after Default, to the extent permitted by law, I agree to pay all expenses of collection, enforcement or protection of your rights and remedies under this Loan Agreement or any other Loan Document. Expenses include, but are not limited to, reasonable attomeys' fees las determined under Ark. Code Ann. 416-22- 3081, court costs, and other legal expenses. If not paid immediately, these expenses will bear interest from the dale of the payment until paid in full at the same interest rate in effect as provided in the terms of this Loan Agreement. All fees and expenses will be secured by the Property I have granted to you, if any. In addition, to the extent permitted by the United States Bankruptcy Code, I agree to pay the reasonable attorneys' fees incurred by you to protect your rights and interests in connection with any bankruptcy proceedings initiated by or against me. 17. COMMISSIONS. I understand and agree that you for your affiliate) will eam commissions or fees on any insurance products, and may earn such fees on other services that I buy through you or your affiliate. 18. WARRANTIES AND REPRESENTATIONS. 1 make to you the following warranties and representations which will continue as long as this Loan Agreement is in effect: A. Power. I am duly organized, and validly existing and in good standing in all jurisdictions in which I operate. I have the power and authority to enter into this transaction and to carry on my business or activity as it is now being conducted and, as applicable, am qualified to do so in each jurisdiction in which 1 operate. B. Authority. The execution, delivery and performance of this Loan Agreement and the obligation evidenced by this Loan Agreement are within my powers, have been duly authorized, have received all necessary govemmental approval, will not violate any provision of law, or order of court or governmental agency, and will not violate any agreement to which 1 am a party or to which I am or any of my Property is subject. C. Business Name. Other than previously disclosed in writing to you 1 have not changed my name or principal place of business within the last 10 years and have not used any other trade or fictitious name. Without your prior written consent, I do not and will not use any other name and will preserve my existing name, trade names and franchises. D. Ownership of Property. To the extent this is a Purchase Money Security Interest 1 will acquire ownership of the Property with the proceeds of the Purchase Money Loan. Your claim to the Property is ahead of the claims of any other creditor, except as disclosed in writing to you prior to any advance on the Secured Debts. I represent that I am the original owner of the Property and, if I am not, that I have provided you with a list of prior owners of the Property. 19. INSURANCE. I agree to obtain the insurance described in this Loan Agreement. A. Property Insurance. I agree to keep the Property insured against the risks reasonably associated with the Property. I will maintain this insurance in the amounts you require. This insurance will last until the Property is released from this Loan Agreement. I may choose the insurance compan y, subject to your approval, which will not be unreasonably withheld. I will have the insurance company name you as loss payee on any insurance policy. I will give you and the insurance company immediate notice of any loss. You may apply the insurance proceeds toward what is owed on the Secured Debts. You may require added security as a condition of permitting any insurance proceeds to be used to repair or replace the Property. If you acquire the Property in damaged condition, my right to any insurance policies and proceeds will pass to you to the extent of the Secured Debts. I will immediately notify you of cancellation or termination of insurance. If I fail to keep the Property insured, you may obtain insurance to protect your interest in the Property and I will pay for the insurance on your demand. You may demand that I pay for the insurance all at once, or you may add the insurance premiums to the balance of the Secured Debts and charge interest on it at the rate that applies to the Secured Debts. This insurance may include coverages not originally required of me, may be written by a company other than one 1 would choose, and may be written at a higher rate than I could obtain if I purchased the insurance. 1 acknowledge and agree that you or one or your affiliates may receive commissions on the purchase of this insurance. B. Flood Insurance. Flood insurance is not required at this time. It may be required in the future should the property be included in an updated flood plain map. If required in the future, 1 may obtain flood insurance from anyone I want that is reasonably acceptable to you. 20. APPLICABLE LAW. This Loan Agreement is governed by the laws of Arkansas, Alabama, the United States of America, and to the extent required, by the laws of the jurisdiction where the Property is located, except to the extent such state laws are preempted by federal law. Disclosure Regarding Applicable Law The interest rate and related charges on the Loan are governed by the laws of Alabama and federal law. The law of the jurisdiction where you are located, where the property Is located, or where I am located may apply to other issues. 21. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. My obligation to pay the Loan is independent of the obligation of any other person who has also agreed to pay it. You may sue me alone, or anyone else who is obligated on the Loan, or any number of us together, to collect the Loan. Extending the Loan or new obligations under the Loan, will not affect my duty under the Loan and I will still be obligated to pay the Loan. This Loan Agreement shall inure to the benefit of and be enforceable by you and your successors and assigns and shall be binding upon and enforceable against me and my personal representatives, successors, heirs and assigns. 22. AMENDMENT, INTEGRATION AND SEVERABILITY. This Loan Agreement may not be amended or modified by oral agreement. No amendment or modification of this Loan Agreement is effective unless made in writing and executed by you and me. This Loan Agreement and the other Loan Documents are the complete and final expression of the agreement. If any provision of this Loan Agreement is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. 23. INTERPRETATION. Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience only and are not to be used to interpret or define the terms of this Loan Agreement. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Promissory Note end Security Agreement AW4MRNNELL0093710000518702008300sN °1998 Bankers Systems, Inc., 5t. Claud MN Ex iEZW 24. NOTICE. FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to the appropriate party's address listed in the DATE AND PARTIES section, or to any other address designated in writing. Notice to one Borrower will be deemed to be notice to all Borrowers. I will inform you in writing of any change in my name, address or other application information. I will provide you any financial statement or information you request. All financial statements and information I give you will be correct and complete. I agree to sign, deliver, and file any additional documents or certifications that you may consider necessary to perfect, continue, and preserve my obligations under this Loan and to confirm your lien status on any Property. Time is of the essence. 25. CREDIT INFORMATION. I agree to supply you with whatever information you reasonably request. You will make requests for this information without undue frequency, and will give me reasonable time in which to supply the information. 26. ERRORS AND OMISSIONS. I agree, if requested by you, to fully cooperate in the correction, if necessary, in the reasonable discretion of you of any and all loan closing documents so that all documents accurately describe the loan between you and me. I agree to assume all costs including by way of illustration and not limitation, actual expenses, legal fees and marketing losses for tailing to reasonably comply with your requests within thirty (30) days. 27. SIGNATURES. By signing, I agree to the terms contained in this Loan Agreement. I also acknowledge receipt of a copy of this Loan Agreement. BORROWER: AUCETTE, VICE PRESIDENT SEVEN HILLS HOMELESS SHELTER. INC. Arkansas Promissory Note end Security Agreement ARI4MFNNELL00937100005107020053005N °1999 Bankers Systems, Inc.. St Cloud MN al ' DISBURSEMENT AUTHORIZATION AND CASH PAYMENT SUMMARY DATE AND PARTIES. The date of this Disbursement Authorization and Cash Payment Summary is September 6, 2006. The parties and their addresses are: LENDER: ARVEST BANK P.O. Box 1327 Fayetteville. Arkansas 72702 Telephone: (479) 575-1000 BORROWER: SEVEN HILLS HOMELESS SHELTER, INC. an Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 1. DEFINITIONS. As used in this Disbursement Authorization and Cash Payment Summary, the terms have the following meanings: A. Pronouns. The pronouns "I', "me" and "my" refer to all Borrowers signing this Disbursement Authorization and Cash Payment Summary, individually and together. "You" and "Your" refer to the Lender. 8. Loan. 'Loan" refers to this transaction generally, including obligations and dudes arising from the terms of all documents prepared or submitted for this transaction such as applications, security agreements. disclosures or notes, and this Disbursement Authorization and Cash Payment Summery. 2. DISBURSEMENT SUMMARY. The following summarizes the disbursements from the Loan. Loan $700.000.00 Cash Paid In Amount Contributed by Borrower Total Cash Received (see Cash Payment Summary] Disbursed to Borrowers Disbursed to Lender Disbursed to Other Payees Total Amounts Disbursed Amount Remaining To Be Disbursed Undisbursed Fees/Charges $3.971.00 $0.00 $0.00 $75.00 $3,896.00 3. DISBURSEMENT AUTHORIZATION. 1 authorize you to disburse the following amounts from my Loan. DISBURSED TO: Disbursements to Borrower: Disbursements to Lender: Disbursements to third parties: TOTAL DISBURSED: DATE: 53.971.00 $3,971.00 $700,000.00 $0.00 AMOUNT DISBURSED: $0.00 $0.00 $0.00 $0.00 4. CASH PAYMENT SUMMARY. The following loan charges are cash payments collected prior to or at settlement. DISBURSED TO: DATE: AMOUNT DISBURSED: Cash Fees & Charges disbursed to 09/06/2006 $75.00 Lender: Processing Fee $75.00 Cash Fees & Charges disbursed to third parties: First American Flood Data Service, 09/06/2006 $25.00 Inc.: Food Cert. 925.00 Public Officials: 09/06/2006 Recording - Releases $14.00 Recording - Mortgage $35.00 Non -RE Filing $16.00 ASSOCIATED APPRAISERS, INC.: 09/06/2006 Appraisal WACO TITLE: 09/06/2006 UCC Search 956.00 Abstract oryitleSearch $1,000.00 Items marked with an asterisk 11 have been paid outside o1 closing TOTAL OF CASH PAYMENTS: $2,750.00 Amount remaining to be disbursed, i1 any: 5700,000.00 S65.00 $2,750.00 51,056.00 $3,896.00 $3.971.00 SEVEN HILLS HOMELESS SHELTER. INC. Disbursement Authorization AW4MFINNELL00937100005187020083006N Is 81996 Bankers Systems Inc St Claud. MN of ; //jra ge 1 I acknowledge receipt of a copy of this Disbursement Authorization and Cash Payment Summary on September 6, 2006. BORROWER: SEVEN ILy HOfk)ELE S SHELTER, INC. /Alan. II F UCE TE, VI PRESIDENT SEVEN HILLS HOMELESS SHELTER. INC. D'nbunemant Authoshatkm AR4MFINNELL00937100005189020083006N . 01996 Bankers Systema. Inc., St. Cloud, MN S? Initials Pa9.Pe9.-2 This instrument was prepared by ARVEST BANK OPERATIONS, INC., P. 0. BOX 1729, LOWELL, Arkansas. 72745-1729 When recorded retum to ARVEST BANK, P. 0. BOX 1327, FAYETTEVILLE, Arkansas 72702 Doc ID 0103744100 3 Type REL Recorded 09/ 4/2006 t 09:07 03 AM =ee Amt: $44.00 Paae 1 of 13 dashlnaton County, AR 3ette Stamps. Circuit Clerk =1.1e2006-00037996 Space Above This Line For Recording Data LEASEHOLD MORTGAGE (With Future Advance Clause) DATE AND -PARTIES. The date of this Mortgage -Leasehold (Security Instrument) is SEPTEMBER 6, 2006. The parties and their addresses are: MORTGAGOR/GRANTOR: SEVEN HILLS HOMELESS SHELTER, INC. An Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 LENDER/GRANTEE: ARVEST BANK Organized and existing under the laws of Arkansas P.O. Box 1327 Fayetteville, Arkansas 72702 LANDLORD: CITY OF FAYETTEVILLE, ARKANSAS an Arkansas Corporation 113 W MOUNTAIN ST FAYETTEVILLE, ARKANSAS 1. CONVEYANCE. For good and valuable consideration, the receipt and sufficiency of which is acknowledged, and to secure the Secured Debts and Mortgagor's performance under this Security Instrument, Mortgagor grants, bargains, conveys, mortgages and sells to Lender a security interest in and to all of Mortgagor's rights, title an& interest in the Lease and Mortgagor's leasehold estate in and to the following described real property as security for the Secured Debts (all referred to as Property): SEE EXHIBIT A SEVEN HILLS HOMELESS SHELTER. INC. Arkansas Mortgage -Leasehold ARt4MFINNELL00937100005187020083006Y: • Initials 01996 Bankers Systems, Inc., St. Cloud, MN. P EXHIBIT A A part of the Northeast Quarter (NE(4) of the Northeast Quarter (NE4) of Section Twenty-two (22). Township Sixteen (16) North, Ranee Thirty (30) West of the 5th Principal Meridian, being more particularly described herewith as follows: Beginning at a point South 02°47'37" East 44.29 feet from the Northwest comer of the NE14 of the NE4 of said Section 22, said point being on the West 40 acre tract line and the South right of way line of Huntsville Road; thence running.along said south right of way line ofIiunrsville Road South 87°50'21"East 155.34 feet thence leafing said south right of way line of Huntsville Road and running South 01`28'11" East 253.35 feet thence South 87°28'11" East 60.00 fret; thence South 0I°28'1" East 65.00 feet thence South 02'47'36" West 396.89 feet; thence North 87°50'21" West 239.38 feet to the west line of the NE44 ofNEr4 of said Section 22: thence along said west line North 02°47'36" East 720.00 feet to the Point of Be?inning containing 3.51 acres, more or less. being .subject to the rights of way and easements ofrecord. Amendment t� 1 The leasehold mortgage dated September 6th, 2006 section 19, subsection L, the line stricken should read "Any claims and defenses of the Mortgagor to the contrary are hereby waived." • • The property is located in WASHINGTON County at 1033 HUNTSVILLE ROAD, FAYETTEVILLE, Arkansas. Landlord has leased the Property to Mortgagor pursuant to a lease (Lease) dated December 1, 2004 that will tertninate on November 30, 2103. Lease includes all extensions, renewals, modifications and replacements. Landlord's acknowledgment and consent to this agreement is required. This Security Instrument will remain in effect until the Secured Debts and all underlying agreements have been terminated in writing by Lender. 2. MAXIMUM OBLIGATION LIMIT. The total principal amount secured by this Security Instrument at any one time will not exceed $700,000.00. This limitation of amount does not include interest and other fees and charges validly made pursuant to this Security Instrument. Also, this limitation does not apply to advances made under the terms of this Security Instrument to protect Lender's security and to perform any of the covenants contained in this Security Instrument. 3. SECURED DEBTS. The term "Secured Debts" includes and this Security Instrument will secure each of the following: A. Specific Debts. The following debts and all extensions, renewals, refinancings, modifications and replacements. A promissory note or other agreement, No. 3458186, dated September 6, 2006, from Mortgagor to Lender, with a loan amount of $700,000.00 and maturing on July 1, 2008. One or more of the debts secured by this Security Instrument contains a future advance provision. B. All Debts. All present and future debts from Mortgagor to Lender, even if this Security Instrument is not specifically referenced, or if the future debt is unrelated to or of a different type than this debt. Ies«urnent. Nothing in this Security Instrument constitutes a commitment to make additional or future loans or advances. Any such commitment must be in writing. In the event that Lender fails to provide any required notice of the right of rescission, Lender waives any subsequent security interest in the Mortgagor's principal dwelling that is created by this Security Instrument. This Security Instrument will not secure any debt for which a non - possessory, non -purchase money security interest is created in "household goods in connection with a "consumer loan," as those terms are defined by federal law governing unfair and deceptive credit practices. This Security Instrument will not secure any debt for which a security interest is created in "margin stock" and Lender does not obtain a "statement of purpose," as defined and required by federal law governing securities. C. Sums Advanced. All sums advanced and expenses incurred by Lender under the terms of this Security Instrument. 4. PAYMENTS. Mortgagor agrees that all payments under the Secured Debts will be paid when due and in accordance with the terms of the Secured Debts and this Security Instrument. 5. WARRANTY OF TITLE. Mortgagor warrants that Mortgagor is or will be lawfully seized of the estate conveyed by this Security Instrument and has the right to grant, bargain, convey, sell and mortgage the Property. Mortgagor also warrants that the Property isunencumbered, except for encumbrances of record. 6. PRIOR SECURITY INTERESTS. With regard to any other mortgage, deed of trust, security agreement or other lien document that created a prior security interest or encumbrance on the Property, Mortgagor agrees: SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage•Leesehold AR/4MFINNELL00937100005187020083006Y 81996 Bankers Systems, Inc.. St. Cloud, MN Initials y. a Fx�?d B A. To make all payments when due and to perform or comply with all covenants. B. To promptly deliver to Lender any notices that Mortgagor receives from the holder. C. Not to allow any modification or extension of, nor to request any future advances under any note or agreement secured by the lien document without Lender's prior written consent. 7. CLAIMS AGAINST TITLE Mortgagor, when contractually or legally obligated, will pay all taxes, assessments, liens, encumbrances, lease payments, ground rents, utilities, and other charges relating to the Property when due. Lender may require Mortgagor to provide to Lender copies of all notices that such amounts are due and the receipts evidencing Mortgagor's payment. Mortgagor will defend title to the Property against any claims that would impair the lien of this Security Instrument. Mortgagor agrees to assign to Lender, as requested by Lender, any rights, claims or defenses Mortgagor may have against parties who supply labor or materials - to maintain or improve the Property. 8. DUE ON SALE OR ENCUMBRANCE. Lender may, at its option, declare the entire balance of the Secured Debt to be immediately due and payable upon the creation of, or contract for the creation of, any lien, encumbrance, transfer or sale of all or any part of the Property. This right is subject to the restrictions imposed by federal law (12 C.F.R. 591), as applicable. 9. TRANSFER OF AN INTEREST IN THE MORTGAGOR. If Mortgagor is an entity other than a natural person (such as a corporation or other organization), Lender may demand immediate payment if: A. A beneficial interest in Mortgagor is sold or transferred. B. There is a change in either the identity or number of members of a partnership or similar entity. C. There is a change in ownership of more than 25 percent of the voting stock of a corporation or similar entity. However, Lender may not demand payment in the above situations if it is prohibited by law as of the date of this Security Instrument. 10. WARRANTIES AND REPRESENTATIONS. Mortgagor and Landlord have the right and authority to enter into this Security Instrument. The execution and delivery of this Security Instrument will not violate any agreement governing Mortgagor or Landlord or to which either is a party. Landlord warrants that Landlord owns the Property in fee simple and the Mortgagor has complied with all obligations owed Landlord by Mortgagor includingthe payment of all rent when due. Landlord and Mortgagor warrant that neither is in default under the Lease and that they will comply with all provisions of the Lease and this Security Instrument until the Secured Debts are fully paid and this Security Instrument is no longer in effect. Mortgagor makes to Lender the following warranties and representations which will continue as long as this Security Instrument is in effect: A. Power. Mortgagor is duly organized, and validly .existing and in good standing in all jurisdictions in which Mortgagor operates. Mortgagor has the power and authority to enter into this transaction and to carry on Mortgagor's business or activity as it is now being conducted and, as applicable, is qualified to do so in each jurisdiction in which Mortgagor operates. B. Authority. The execution, delivery and performance of this Security Instrument and the obligation evidenced by this Security Instrument are within Mortgagor's powers, have been duly authorized, have received all necessary governmental approval, will not violate any provision of law, or order of court or governmental agency, and will not violate any SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold AR/4MFINNELL00937100005187020083008?: 01996 Bankers Systems, Inc., St. Claud, MN, Sc' agreement to which Mortgagor is a party or to which Mortgagor is or any of Mortgagor's property is subject. C. Name and Place of Business. Other than previously disclosed in writing to Lender, Mortgagor has not changed Mortgagor's name or principal place of business within the last 10 years and has not used any other trade or fictitious name. Without Lender's prior written consent, Mortgagor does not and will not use any other name and will preserve Mortgagor's existing name, trade names and franchises. - 11. LANDLORD CONSENT. Landlord consents to and acknowledges the assignment of all of Mortgagor's rights, title and interest in the Property. In the event of default, Landlord will not unreasonably withhold any consent necessary for Lender to exercise any remedy. 12. PROPERTY CONDITION, ALTERATIONS AND INSPECTION. Mortgagor will keep the Property in good condition and make all repairs that are reasonably necessary. Mortgagor will not commit or allow any waste, impairment, or deterioration of the Property. Mortgagor will keep the Property free of noxious weeds and grasses. Mortgagor agrees that the nature of the occupancy and use will not substantially change without Lender's prior written consent Mortgagorwillnot permit any change in any license, restrictive covenant or easement without Lender's prior written consent. Mortgagor will notify Lender of all demands, proceedings, claims, and'actions against Mortgagor, and of any loss or damage to the Property. No portion of the Property will be removed, demolished or materially altered without Lender's prior written consent except that Mortgagor has the right to remove items of personal property comprising a part of the Property that become worn or obsolete, provided that such personal property is replaced with other personal property at least equal in value to the replaced personal property, free from any title retention device, security agreement or other encumbrance. Such replacement of personal property will be deemed subject to the security interest created by this Security Instrument. Mortgagor will not partition or subdivide the Property without Lender's prior written consent. Lender or Lender's agents may, at Lender's option, enter the Property at any reasonable time for the purpose of inspecting the Property. Lender will give Mortgagor notice at the tirne of or before an inspection specifying a reasonable purpose for the inspection. Any inspection of the Property will be entirely for Lender's benefit and Mortgagor will in no way rely on Lender's inspection. 13. AUTHORITY TO PERFORM. If Mortgagor fails to perform any duty or any of the covenants contained in this Security Instrument, Lender may, without notice, perform or cause them to be performed. Mortgagor appoints Lender as attomey in fact to sign Mortgagor's name or pay any amount necessary for performance. Lender's right to perform for Mortgagor will not create an obligation to perform, and Lender's failure to perform will not preclude Lender from exercising any of Lender's other rights under the law or this Security Instrument. If any construction on the Property is discontinued or not carried on in a reasonable manner, Lender may take all steps necessary to protect Lender's security interest in the Property, including completion of the construction. 14. LEASEHOLDS; CONDOMINIUMS; PLANNED UNIT DEVELOPMENTS. Mortgagor agrees to comply with the provisions of the Lease. If the Property includes a unit in a condominium or a planned unit development, Mortgagor will perform all of Mortgagor's duties under the covenants, by-laws, or regulations of the condominium or planned unit development, as amended, including the timely payment of dues and assessments. In addition, except with the written approval of Lender, Mortgagor will not partition or subdivide the Property; abandon or terminate the condominium or planned unit development project; terminate professional SEVEN HILLS HOMELESS SHELTER. INC. Arkansas Mortgage -Leasehold AR/4MFINNELL00937100005187020083006Y • 01996 Bankers Systems, Inc.. St. Cloud, MN . Initials^ Fx�r�" age 4 management; or amend any provision of the covenants, by-laws or regulations of the condominium or planned unit development if the provision benefits Lender. 15. DEFAULT. Mortgagor will be in default if any of the following occur: A. Payments. Mortgagor fails to make a payment in full when due. B. Insolvency or Bankruptcy. The death, dissolution or insolvency of, appointment of a receiver by or on behalf of, application of any debtor relief law, the assignment for the benefit of creditors by or on behalf of, the voluntary or involuntary termination of existence by, or the commencement of any proceeding under any present or future federal or state insolvency, bankruptcy, reorganization, composition• or debtor relief law by or against Mortgagor, Borrower, or any co-signer, endorser, surety or guarantor of this Security Instrument or any other obligations Borrower has with Lender. C. Business Termination. Mortgagor merges, dissolves, reorganizes, ends its business or existence, or a partner or majority owner dies or is declared legally incompetent. D. Failure to Perform. Mortgagor fails to perform any condition or to keep any promise or covenant of this Security Instrument. E. Other Documents. A default occurs under the terms of any other document relating to the Secured Debts. F. Other Agreemems. Mortgagor is in default on any other debt or agreement Mortgagor has with Lender. G. Modification. Mortgagor and Landlord modify, terminate or replace the Lease without prior written consent of Lender. H. Misrepresentation. Mortgagor makes any verbal or written statement or provides a:7y financial information that is untrue, inaccurate, or conceals a material fact at the time it ;s made or provided. I. Judgment. Mortgagor fails to satisfy or appeal any judgment against Mortgagor. J. Forfeiture. The Property is used in a manner or for a purposethat threatens confiscation by a legal authority. K. Name Change. Mortgagor changes Mortgagor's name or assumes an additional name without notifying Lender before making such a change. L. Property Transfer. Mortgagor transfers all or a substantial part of Mortgagor's money or property. This condition of default, as it relates to the transfer of the Property, is subject to the restrictions contained in the DUE ON SALE section. M. Property Value. Lender determines in good faith that the value of the Property has declined or is impaired. N. Material Change. Without first notifying Lender there is a material change in Mortgagor's business, including ownership, management, and financial conditions. 0. Insecurity. Lender determines in good faith that a material adverse change has occurred in Mortgagor's financial condition from the conditions set forth in Mortgagor's most recent financial statement before the date of this Security Instrument or that the prospect for payment or performance of the Secured Debts is impaired for any reason. 16. DEFAULT UNDER LEASE. If Mortgagor defaults under any term of the Lease, Landlord agrees to notify Lender in writing of the default before exercising any rights or remedies available to Landlord as a result of the default. In addition, Landlord agrees that Lender will have the right to cure any default within 30 days of receipt of such notice unless the nature of the default is such that it cannot be cured within 30 days, in which case Lender will have a reasonable time to cure so long as Lender exercises reasonable diligence in affecting such cure. SEVEN HILLS HOMELESS SHELTER. INC. Arkansas Mortgage -Leasehold AR/4MFINNELL00937100005187020083006Y: I itials(�'a.- 01996 Bankers Systems. Inc., St. Cloud, MN Ek' /Ppge 5 During the applicable cure period, Landlord agrees that Landlord will take no action to exercise any rights or remedies available under the Lease or by law as a result of such default without Lender's prior written consent In the event Lender cures any default by Mortgagor under the Lease, Mortgagor agrees to indemnify and hold Lender harmless from any expensesincurred by Lender to cure or contest the default under the Lease. Mortgagor agrees that Lender shall be subrogated to all the rights and remedies of the Landlord under the Lease. Lender is not responsible for any prior default of Mortgagor under the Lease and in no way assumes or guarantees Mortgagor's performance under the Lease. At Lender's option, Lender may: A. Contest any allegations by Landlord of default under the Lease. B. Cure the default and retain Mortgagor in possession of the Property. C. Cure the default and foreclose by subrogation to Landlord's rights against Mortgagor's interest in the Property and assume all responsibilities of Mortgagor under the Lease. 17. REMEDIES. On or. after default, Lender may use any and all remedies Lender has under state or federal law or in any document relating to the Secured Debts. •Any•amounts advanced on Mortgagor's behalf will be immediately due and may be added to the balance owing under the Secured Debts Lender may make a claim for any and all insurance benefits or refunds that may be available on Mortgagor's default. Subject to any right to cure, required time schedules or any other notice rights Mortgagor may have under federal and state law, Lender may make all or any part of the amount awing by the terms of the Secured Debts immediately due and foreclose this Security Instrument in a manner provided by law upon the occurrence of a default or anytime thereafter. All remedies are distinct, cumulative and not exclusive, and the Lender is entitled to all remedies provided at law or equity, whether or not expressly set forth. The acceptance by Lender of any sum in payment or partial payment on the Secured Debts after the balance is due or is accelerated or after foreclosure proceedings are filed will not constitute a waiver of Lender's right to require full and complete cure of any existing default. By not exercising any remedy, Lender does not waive Lender's right to later consider the event a default if it continues or happens again. Upon the exercise of these or any other remedies Lender may do such remodeling, renovation and repairs to the Property as Lender may deem necessary, subject to the terms and conditions of the Lease. If Lender exercises any remedy, Lender shall be obligated to Landlord under the terms of the Lease only for the time Lender is in possession of the Property. Lender shall have no further obligation to Landlord and shall be deemed to be released by Landlord from the terms of the Lease when Lender relinquishes possession of the Property. Lender shall have no obligation to undertake any further remedies whatsoever and has no obligation to Mortgagor to cure any defaults under the Lease, except as specifically and expressly undertaken by Lender. 18. COLLECTION EXPENSES AND ATTORNEYS' FEES. On or after Default, to the extent permitted by law, Mortgagor agrees to pay all expenses of collection, enforcement or protection of Lender's rights and remedies under this Security Instrument or any other document relating to the Secured Debts. Mortgagor agrees to pay expenses for Lender to inspect and preserve the Property and for any recordation costs of releasing the Property from this Security Instrument. Expenses include, but are not limited to, reasonable attorneys' fees (as determined under Ark. Code Ann. 516-22-308), court costs, and other legal expenses. These expenses are due and payable immediately. If not paid immediately, these expenses will bear interest from the date of SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold AR/4MFINNELL0o937100005187020083006Y InitialsY ' 01996 Bankers Systems, Inc., St. Cloud, MN Ee /f age 6 the payment until paid in full at the same interest rate in effect as provided in the terms of the Secured Debts. In addition, to the extent permitted by the United States Bankruptcy Code, Mortgagor agrees to pay the reasonable attorneys' fees incurred by Lender to protect Lender's rights and interests in connection with any bankruptcy proceedings initiated by or against Mortgagor. 19. ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES. As used in this section, (1) Environmental Law means, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, 42 U.S.C. 9601 et seq.), all other federal, state and local laws, regulations, ordinances, court orders, attorney general opinions or interpretive letters concerning the public health, safety, welfare, environment or a hazardous substance; and (2) Hazardous Substance means any toxic, radioactive or hazardous material, waste, pollutant or contaminant which has characteristics which render the substance dangerous or potentially dangerous to the public health, safety, welfare or environment. The term includes, without limitation, any substances defined as "hazardous material," "toxic substance," "hazardous waste," "hazardous substance," or "regulated substance" under any Environmental Law. Mortgagor and Landlord represent, warrant and agree that: A. Except as previously disclosed and acknowledged in writing to Lender, no Hazardous Substance has been, is, or will be located, transported, manufactured, treated, refined, or handled by any person on, under or about the. Property, except in the ordinary course of business and in strict compliance with all applicable Environmental Law. B. Except as previously disclosed and acknowledged in writing to Lender, neither Landlord nor Mortgagor has or will cause, contribute• to, or permit the release of any Hazardous Substance on the Property. C. Landlord and Mortgagor agree to immediately notify Lender if (1) a release cr threatened release of Hazardous Substance occurs on, under or about the Property or migrates or threatens to migrate from nearby property; or (2) there is a violation of any Environmental Law conceming the Property. In such an event, Mortgagor or Landlord will take all necessary remedial action in accordance with Environmental Law. D. Except as previously disclosed and acknowledged in writing to Lender, Mortgagor and Landlord have no knowledge of or reason to believe there is any pending or threatened investigation, claim, or proceeding of any kind relating to (1) any Hazardous Substance located on, under or about the Property; or (2) any violation by Landlord, Mortgagor or any tenant of any Environmental Law. Landlord and Mortgagor agree to immediately notify Lender in writing as soon as either party has reason to believe there is any such pending or threatened investigation, claim, or proceeding. In such an event, Lender has the right, but not the obligation, to participate in any such proceeding including the right to receive copies of any documents relating to such proceedings. E. Except as previously disclosed and acknowledged in writing to Lender, Mortgagor and every tenant have been, are and will remain in full compliance with any applicable Environmental Law. F. Except as previously disclosed and acknowledged in writing to Lender, there are no underground storage tanks, private dumps or open wells located on or under the Property and no such tank, dump or well will be added unless Lender first consents in writing. G. Mortgagor will regularly inspect the Property, monitor the activities and operations on the Property, and confirm thatall permits, licenses or approvals required by any applicable Environmental Law are obtained and complied with. H. Mortgagor and Landlord will permit, or cause any tenant to permit, Lender or Lender's agent to enter and inspect the Property and review all records at any reasonable time to SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold ' AR/4MFINNELL009371000051B7020083006Y. a1996 Bankers Systems. Inc., St. Cloud, MN Initials/sL_