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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_ I determine (1) the existence; location and nature of any -Hazardous Substance on, under or about the Property; (2) the existence, location, nature, and magnitude of any Hazardous Substance that has been released on, under or about the Property; or (3) whether or not Landlord, Mortgagor, or any tenant are in compliance with applicable Environmental Law. I. Upon Lender's request and at any time, Mortgagor agrees, at Mortgagor's expense, to engage a qualified environmental engineer to prepare an environmental audit of the Property and to submit the results of such audit to Lender. The choice of the environmental engineer who will perform such audit is subject to Lender's approval. J. Lender has the right, but not the obligation, to perform any of Mortgagor's obligations under this section at Mortgagor's expense. K. As a consequence of any breach of any representation, warranty or promise made in this section, (1) Lendlerd ant Mortgagor agree to indemnify and hold Lender and Lender's successors or assigns harmless from and against all losses, claims, demands, liabilities, damages, cleanup, response and remediation costs, penalties and expenses, including without limitation all costs of litigation and attorneys' fees, which Lender and Lender's successors or assigns may sustain; and (2) at Lender's discretion, Lender may release this Security Instrument and in return Mortgagor will provide Lender with collateral of at least equal value. to the Property without prejudice to any of Lender's rights under this Security Instrument. L. Notwithstanding any of the language contained in this Security Instrument to the contrary, the terms of this section will: survive any foreclosure . or satisfaction of this Security Instrument regardless of any passage of title to Lender or any disposition by Lender of any or all of the Property. Any eleims and defenses te the eentrer nre hereby waked. 20. CONDEMNATION. Mortgagor and Landlord will give Lender prompt notice of any perlaing or threatened action by private or public entities to purchase or take any or all of the Property through condemnation, eminent domain, or any other means. Mortgagor. authorizes Lender to intervene in Mortgagor's name in any of the above described actions or claims. Mortgagor assigns to Lender the proceeds of any award or claim for damages connected with a condemnation or other taking of all or any part of the Property. Such proceeds will be considered payments and will be applied as provided in this Security Instrument. This assignment of proceeds is subject to the terms of any prior mortgage, deed of trust, security agreement or other lien document. 21. INSURANCE. Mortgagor agrees to keep the Property insured against the risks reasonably associated with the Property. Mortgagor will maintain this insurance in the amounts Lender requires. This insurance will last until the Property is released from this Security Instrument. What Lender requires pursuant to the preceding two sentences can change during the term of the Secured Debts. Mortgagor may choose the insurance company, subject to Lender's approval, which will not be unreasonably withheld. All insurance policies and renewals will include a standard "mortgage clause" and, where applicable, "loss payee clause." If required by Lender, Mortgagor agrees to maintain comprehensive general liability insurance and rental loss or business interruption insurance in amounts and under policies acceptable to Lender. The comprehensive general liability insurance must name Lender as an additional insured. The rental loss or business interruption insurance must be in an amount equal to at least coverage of one year's debt service, and required escrow account deposits (if agreed to separately in writing). Mortgagor will give Lender and the insurance company immediate notice of any loss. All insurance proceeds will be applied to restoration or repair of the Property or to the Secured Debts, at Lender's option. If Lender acquires the Property in damaged condition, Mortgagor's Arkansas Mortgage -Leasehold AR/4MFINNELL009371000051B7020083006Y Initials 01996 Bankers Systems, Inc., St. Cloud, MN 5i?y"' rights to any insurance policies and proceeds will pass to Lender to the extent of the Secured Debts. Mortgagor will immediately notify Lender of cancellation or termination of insurance. If Mortgagor fails to keep the Property insured, Lender may obtain insurance to protect Lender's interest in the Property and Mortgagor will pay for the insurance on Lender's demand. Lender may demand that Mortgagor pay for the insurance all at once, or Lender 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 Mortgagor, may be written by a company other than one Mortgagor would choose, and may be written at a higher rate than Mortgagor could obtain if Mortgagor purchased the insurance. Mortgagor acknowledges and agrees that Lender or one of Lender's affiliates may receive.. commissions on the purchase of this insurance. 22. ESCROW FOR TAXES AND INSURANCE. Mortgagor will not be required to pay to Lender funds for taxes and insurance in escrow. 23. CO-SIGNERS. If Mortgagor signs this Security Instrument but is not otherwise obligated to pay the Secured Debts, Mortgagor does so only to mortgage Mortgagor's interest in the Property to secure payment of the Secured Debts and Mortgagor does not agree by signing this Security Instrument to be personally liable on the Secured Debts. If this Security Instrument secures a guaranty between Lender and Mortgagor, Mortgagor agrees to waive any rights that may prevent Lender from bringing any action or claim against Mortgagor or any party indebted under the obligation. These rights may include, but are not limited to, any anti -deficiency or one -action laws. 24. APPLICABLE LAW. This Security Instrument is governed by the laws of Arkansas, 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. 25. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each party's obligations under this Security Instrument are independent of the obligations of any other party. Lender may sue each Mortgagor or Landlord individually or together with any other Mortgagor or Landlord. Lender -may release any part of the Property and Mortgagor and Landlord will still be obligated under this Security Instrument for the remaining Property. Mortgagor agrees that Lender and any party to this Security Instrument may extend, modify or make any change in the terms of this Security Instrument or any evidence of debt without Mortgagor's consent. Such a change will not release Mortgagor from the terms of this Security Instrument. The duties and benefits of this Security Instrument will bind and benefit the successors and assigns of Mortgagor, Landlord and Lender. 26. AMENDMENT, INTEGRATION AND SEVERABILITY. This Security Instrument may not be amended or modified by oral agreement. No amendment or modification of this Security Instrument is effective unless made in writing and executed by Mortgagor, Landlord and Lender. This Security Instrument and any other documents relating to the Secured Debts are the complete and final expression of the agreement. If any provision of this Security Instrument is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. 27. 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 Security Instrument. 28. NOTICE, FINANCIAL REPORTS, ADDITIONAL DOCUMENTS AND RECORDING TAXES. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first Arkansas Mortgage•Lessehold AR/4MFINNELL00937100005187020083006Y m Initials 1996 Bankers Systems. Inc.. St. Cloud, MN Page 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 Mortgagor will be deemed to be notice to all Mortgagors. Mortgagor will inform Lender in writing of any change in Mortgagor's name, address or other application information. Mortgagor will provide Lender any financial statements or information Lender requests. All financial statements and information Mortgagor gives Lender will be correct and complete. Mortgagor agrees to pay all expenses, charges and taxes in connection with the preparation and recording of this Security Instrument. Mortgagor and Landlord agree to sign, deliver, and file any additional documents or certifications that Lender may consider necessary to perfect, continue, and preserve Mortgagor's obligations under this Security Instrument and to confirm Lender's lien status on any Property, and Mortgagor agrees to pay all expenses, charges and taxes in connection with the preparation and recording thereof. Time is of the essence. 29. WAIVERS. Except to the extent prohibited by law, Mortgagor waives all appraisement, sale, redemption and homestead exemption rights relating to the Property under the laws of the State of Arkansas, especially under § 18-49-106. To the extent applicable, Mortgagor relinquishes all rights of curtesy and dower in the Property. 30. CONSTRUCTION LOAN. This Security Instrument secures an obligation incurred for the construction of an improvement on the Property. Mortgagor and Lender agree that the loan proceeds ate to be used for the purpose of paying all direct and indirect costs of construction. Mortgagor agrees that Lender is not the trustee for the benefit of the contractor, subcontractor or materialmen and that such contractor, subcontractor or materialmen do not have equitable liens on the loan proceeds and that they do not have third -party beneficiary status to any of the' loan proceeds. Lender is obligated to make the construction advances. The construction advances shall be applied by Mortgagor to the payment of all direct and indirect costs of construction. Notice is hereby given that to the full extent permitted under Ark. Stat. Ann. § 18-44-110, the lien of this Security Instrument will have priority over any statutory liens on account of labor and material supplied for construction. SIGNATURES. By signing, Mortgagor and Landlord agree to the terms and covenants contained in this Security Instrument. Mortgagor and Landlord also acknowledge receipt of a copy of this Security Instrument. MORTGAGOR: SEVEN HI OM LE SHELTER, INC. By LANDLORD: cm SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Martgagedenehoid Initials AR/4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN,. En . Page 10 ACKNOWLEDGMENT. (Business or Entity) , 4 OF �0 OF �JQ, t On ^�Is�_,the day of �r i ^ �� before me, y 5 the undersigned officer, personally appeared LOWELL GRISHAM and GEORGE FAUCETTE, who acknowledged himself/herself/themselves to be the PRESIDENT and VICE PRESIDENT of SEVEN HILLS HOMELESS SHELTER, INC. a corporation, and that he/she/they, as such officers, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation as such officers. In witness whereof, I hereunto set my hand and official se My commis n e Tres: llfOIS �:ti:••.: CHRIS SC _ I SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortg.ge•Leasehold AR/4MFlNNELL009371000051870219 0083006Y a Initials 96 Bankers Systems, Inc., St. Cloud, MN Page 11 (Business or Entity)' e= OF Q"se5 OF/l ss. On this the t day of C 6 , before me, the undersigned officer, personally appeared DAN COODY, who acknowledged himself/herself/themselves to be the MAYOR of CITY OF FAYETTEVILLE, ARKANSAS a corporation, and that he/she/they, as such MAYOR, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herself/themselves as MAYOR. In witness whereof, I hereunto set my hand and official seal. My commission expires: otary max. (NPublic) �0SARY SEVEN HILLS HOMELESS SHELTER. INC. Arkansas Mortgage-Leenehold Initials AR14MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN BrGe " Page 12 W-9 Form Request for Taxpayer Give form to the (Rev. January 2DD5) Identification Number and Certification requester. Do not Departmem of the Treasury send to the IRS. Internal Reverue Service Name las reported on your income tax return) m SEVEN HILLS HOMELESS SHELTER, INC. n o. Business name, if different from above C O e 0.c N Individual! Check appropriate box: ❑ Sole Proprietor IH Corporation ❑ Partnership ❑ Other ...................... Exempt from ❑ backup withholding 02 E'm —` Address (number, street, and apt. or suite no.) Requester's name and address (optional) io PO BOX 474 ARVEST BANK P. 0. Box 1327 City, state, and ZIP code Fayetteville, AR 72702 rn FAYETTEVILLE, AR 72702 List account number(s) here (optional) ra UTITaxpayer Identification Number (TIN) Enter your TIN in the appropriate box. The TIN provided must match the name given on Line 1 to avoid Social security number backup withholding. For individuals, this is your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a 77N on page 3. or Note: IF the account is in more than one name, see the chart on page 4 for guidelines on whose number Employer identification number to enter. 71311 6 1 0 1 3 1 9 ( 6 10 Certification - Under penalties of perjury, I certify that 1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and 2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or lb) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (cl the IRS has notified me that I am no longer subject to backup withholding, and 3. I ant a U.S. person (including a U.S. resident alien). Certification Instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct TIN. (See the instructions on page 4.) n oryrt I Signature of Here U.S. person ► Purpose of Form A person who is required to file an information return with the IRS, must obtain your correct taxpayer identification number (TIN) to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. U.S. person. Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN to the person requesting it (the requester) and, when applicable, to: 1. Certify that the TIN you are giving is correct (or you are waiting for a number to be issued), 2. Certify that you are not subject to backup withholding, or 3. Claim exemption from backup withholding if you are a U.S. exempt payee. Note: If a requester gives you a form other than Form W-9 to request your TIN, you must use the requester's form Alit is substantially similar to this Form W-9. For federal tax purposes you are considered a U.S. person if you are: ♦ an individual who is a citizen or resident of the United States, + a partnership, corporation, company, or association created or organized in the United States or under the laws of the United States, or Date ♦ any estate (other than a foreign estate) or trust. See Regulation section 301.7701-6(a) and 7(a) for additional information. Foreign person. If you are a foreign person, do not use Form W-9. Instead, use the appropriate Form W-8 (see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities). Nonresident alien who becomes a resident alien. Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a "saving clause." Exceptions specified in the saving clause may permit an exemption from tax to continuefor certain types of income even after the recipient has otherwise become a U.S. resident alien for tax purposes. If you are a U.S. resident alien who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement that specifies the following five items: 1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien. 2. The treaty article addressing the income. 3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions. Bankers Systems, Inc.. St. Cloud, MN Form W-9 6/16/2005 Cat. No. 10231X (pegs t of4) Form W-9 (Rev. 1-20051 UCC FINANCING STATEMENT FOLLOW INSTRUCTIONS (front and back) CAREF OF, I ARVEST BANK P. O. BOX 1327 FAYETTEVILLE, Arkansas 72702 THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY EXACT FULL LEGAL NAME - insert only one debtor name (ta or 1b) - do not abbreviate or OR I SEVEN HILLS HOMELESS SHELTER, INC. names AR 1 72702 ORGANIZATION 'Corporation ' 73-1603960 DEBTOR I I Arkansas I 2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert only one debtor name 12a or 2b1 - do not abbreviate or combine names 2a. ORGANIZATION'S NAME OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 2c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY 2d. TAX ID a: SSN OR EIN ADO'L INFO RE 120. TYPE OF ORGANIZATION 21. JURISDICTION OF ORGANIZATION 2g. ORGANIZATIONAL ID I, if any ORGANIZATION DEBTOR ❑ NONE 3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR S/P) - insert only one secured party name (3a or 3b1 3a. ORGANIZATION'S NAME ARVEST BANK GR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 3c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY P.O. Box 1327 Fayetteville AR 72702 USA 4. This FINANCING STATEMENT covers the following collateral: All of the following which Debtor owns now or in the future, together with all parts, accessories, repairs, replacements, improvements, and accessions, and wherever located: INVENTORY: All inventory held 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 Debtor's business. EQUIPMENT: All equipment including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record keeping equipment, parts, and tools. The property includes any equipment described in a list or schedule Debtor gives to Secured Party, but such a list is not necessary to create or perfect a valid security interest in all of Debtor's equipment. 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 (CONTINUED) 5. ALTERNATIVE DESIGNATION (if applicable): ❑ LESSEE/LESSOR ❑ CONSIGNEE/CONSIGNOR ❑ BAILEEBAILOR ❑ SELLER/BUYER ❑ AG. LEN ❑ NON-UCC FLUNG Debtor 1 ❑ Debtor 2 Bankers Systems, Inc., St. Claud, MN Form UCC-1-LAZ 5/30/2001 SECURED PARTY COPY — NATIONAL UCC FINANCING STATEMENT (FORM UCC7) (REV. 07129!981 UCC FINANCING STATEMENT ADDENDUM FOLLOW INSTRUCTIONS (front and back) CAREFULLY 9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT OR I SEVEN HILLS HOMELESS SHELTER, INC. 1O. one name Ills or THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY rhhrovi<tn nr rnmhin, nemnc OR 11 a. ORGANIZATION'S NAME 11b. INDIVIDUALS LAST NAME FIRST NAME MIDDLE NAME SUFFIX 11c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY lid. TAX ID if: SSN OR EIN ADD'L INFO RE ORGANIZATION DEBTOR 11.. TYPE OF ORGANIZATION 1 if. JURISDICTION OF ORGANIZATION 119. ORGANIZATIONAL ID /, if any ❑ NONE 12. ADDITIONAL SECURED PARTY'S or ASSIGNOR S/P'S NAME - insert only one name (12a or 12b) OR 12a. ORGANIZATION'S NAME 12b, INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX 12c. MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY m. Isis PINANWNG IAIEMENIcovemo timber to be cut or (J collateral, or is filed as a ❑ fixture filing. 14. Description of real estate: 15. Name and address of a RECORD OWNER of above -described real estate lit Debtor does not have a record interest) 15. Additional collateral description: BUILDING MATERIALS AND SUPPLIES, EQUIPMENT, APPLIANCES, DEPOSIT ACCOUNTS, INSTRUMENTS, INVESTMENT PROPERTY, INSURANCE POLICIES AND PROCEEDS AND ALL FUTURE ADDITIONS TO, REPLACEMENTS OF, SUBSTITUTIONS FOR AND PROCEEDS AND PRODUCTS OF ANY OF THE FOREGOING ITEMS LOCATED AT 1033 HUNTSVILLE RD, FAYETTEVILLE, WASHINGTON COUNTY,, ARKANSAS. - 17. Check o if applicable and check o one box. _ Debtor is a ❑ Trust or D Trustee acting with respect to property held in trust or ❑ Decedent's Estate l0. cneck o It applicable and nteck on'y one box. ❑ Debtor is a TRANSMITTING UTILITY ❑ Filed in connection with a Manufactured -Home Transaction -- effective 30 years ❑ Filed in connection with a Public -Finance Transaction -- effective 30 years SECURED PARTY COPY — NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1 Ad) (REV. 07/29/98) Bankers Systems, Inc., St, Cloud. MN Form UCC-IAD0-LAZ 5/30/2001 LOAN NUMBER LOAN NAME ACCT. NUMBER AGREEMENT DATE INITIALS 3458186 SEVEN HILLS 09/06/06 BR1 HOMELESS SHELTER, INC. NOTE AMOUNT INDEX (w/Margin) RATE MATURITY DATE LOAN PURPOSE $700,000.00 Not Applicable 8.500% 07/01/08 Commercial Creditor Use Only CONSTRUCTION LOAN AGREEMENT Construction Loan DATE AND PARTIES.The date of this Construction• Loan Agreement (Agreement) is September 6, 2006. The parties and their addresses are:. .... CONSTRUCTION LENDER: AR VEST BANK P.O. Box 1327 Fayetteville, Arkansas 72702 BORROWER: SEVEN HILLS HOMELESS SHELTER, INC. an Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 OWNER: SEVEN HILLS HOMELESS SHELTER, INC. An Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 1. DEFINITIONS. All references to. dollar amounts refer to amounts in lawful money of the United States of America. For the purposes of this Agreement, the following words will be defined as indicated. A. Agreement. This Agreement is this Construction Loan Agreement and any attached exhibits and schedules, and their amendments. B. Completion Date. By the Project's Completion Date of JULY 1, 2008 I will complete or cause to be completed: the Project's development and construction; the installation of all fixtures and equipment that are required for the operation of the Property; and at your request for any or all leases, the tenants' execution of letters of acceptance for possession of their leased premises. C. Construction Contract. The Construction Contract includes all contracts between me and the Project's general contractor, and any subcontractors, laborers, material suppliers and others contributing work, equipment or materials to the Project. D. Construction Liens. Construction Liens include any notices or claims created by statutes for the purpose of securing priority of payment of the price or value of labor or work performed and materials supplied in the Project's development, construction and equipping and that attaches to the Property and the Project, or any notices or claims to withhold funds related to the Loan. Construction Liens include without limitation mechanic's liens, materialmen liens, construction liens and all similar statutory liens. E. Construction Title Insurance Policy. The Construction Title Insurance Policy is the ALTA Standard Coverage Loan Policy form, revised to the most recent date, and any endorsements that you require. F. Disbursement Schedule. The Disbursement Schedule provides a schedule of the amounts and the dates for each Loan advance, subject to this Agreement's terms and conditions. The Disbursement Schedule is incorporated by reference into this Agreement. G. Environmental Law. Environmental Law includes without limitation the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Hazardous Materials Transportation Act, and the Resource Conservation and Recovery Act, and all 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. H. Hazardous Substance. A Hazardous Substance is any toxic, radioactive, ignitable, corrosive or hazardous material, waste, pollutant or contaminant which has characteristics which render the substance dangerous or potentially dangerous to health, safety, welfare or the environment if such substance is or becomes regulated by any federal, state, or local law, regulation or ordinance. The term includes without limitation, any substances defined as "hazardous material," "toxic substances," "hazardous waste" or "hazardous substance" under any environmental law. Arkansas Construction Loan Agreement A R/4 M F I N N ELL0093710000518702001 01996 Bankers Systems, Inc., St. Cloud, MNEx " Initials I. Improvements. Improvements include all existing physical development of the Property, all buildings or other structures on the Property and all of the Project's future improvements and construction, except for any demolition as specified in the Plans and Specifications. J. Loan. The Loan refers to this transaction generally, including obligations and duties arising from the terms of all documents prepared or submitted for this transaction. Under the Loan, Borrower may obtain advances from you up to the total principal amount of $700,000.00, subject to this Agreement's conditions and terms. K. Loan Documents. Loan Documents refer to all the documents executed as a part of or in connection with the Loan. L. Plans and Specifications. The Plans and Specifications include the Project's plans, specifications and drawings, with the certifications, any studies, data, working or shop drawings, any models, any contracts or agreements, and any changes and additions made concerning these plans, specifications, models and drawings. M. Project. As set forth in the Plans and Specifications, the Project includes all future physical development of the Property and offsite improvements as well as construction on the Property, except for any planned demolition. The Project also includes any furniture, furnishings, fixtures, or equipment when required in any Commitment, the Plans and Specifications, or any leases required by any Commitment. If all or part of these improvements will add or alter existing improvements, then the Project also includes the addition or alteration. Physical development of the Property will include without limitation grading, landscaping, and installation of streets, sidewalks, utility lines, drainage, hydrants, retention basins, and similar physical improvement of the land. Construction on the Property will include without limitation buildings, structures, fixtures, additions and alterations, and similar construction on the Property. N. Promissory Note. The Promissory Note includes any note or notes or other written and executed evidence of the borrower's and co-signer's promise to pay you for debts, liabilities and obligations that are extended under the Loan and any riders, extensions, renewals, modifications, substitutions and amendments thereto. O. Pronouns. "1", "me" and "my" refers to Borrower and every person, individually or together, who signs the Promissory Note, evidencing my promise to pay you for credit extended subject to this Agreement, any riders, extensions, renewals, amendments and modifications, and to Owner and every person, individually or together, who owns the Property on which the Project's development, construction and equipping will occur. "You" and "your" refers to the construction lender. P. Property. Property includes all of the real property on which this Project will occur. The Property is located in WASHINGTON County at 1033 HUNTSVILLE ROAD, FAYETTEVILLE, Arkansas , and is legally described as: SEE EXHIBIT A Q. Security Agreement. The Security Agreement includes any agreement which creates or provides for an interest in personal property or fixtures which is used to secure payment or performance of an obligation owed to you. R. Security Instrument. The Security Instrument includes a mortgage, deed of trust, deed to secure debt or other similar instrument that transfers an interest in real estate for the purpose of securing repayment and performance of the Loan. S. Title Insurance Company. Under the Loan, will serve as the Title Insurance Company. 2. OBLIGATORY LOAN ADVANCES. In consideration of my agreement to construct and complete the Improvements described herein, you are obligated to open the Loan and to disburse advances up to the total principal amount of 6700,000.00, as long as I have complied with all conditions precedent required for each advance. 3. TITLE. Owner has or will acquire a good and marketable fee simple ownership or a leasehold interest in the Property. 4. TERM. This Agreement will remain effective until I fully perform all of the Loan's debts, liabilities and obligations and you end this Agreement in writing. 5. A RCHITECTS AND GENERAL CONTRACTOR. The Project's architects and professional engineers exclude your consulting architect. You will choose your consulting architect, an independent architect, professional engineer or other construction consultant to periodically inspect the Project's progress and quality to protect your interests exclusively. 6. SECURITY. I hereby transfer, assign and grant to you all of my right, title and interest in and to all of the following property as security for -the Loan: A. Utility Deposits. All amounts deposited with any public or private utility for utilities installation or service on or for the Property. B. Fixtures. All construction materials, machinery and appliances acquired with Loan reserves or proceeds. C. Plans and Specifications. The Project's Plans and Specifications. D. Account. Any deposit account created under this Agreement and on any amounts placed in such account. E. Construction Contract. The Construction Contract and the General Contractor's Consent and Acknowledgment. The General Contractor's Consent and Acknowledgment includes the Project general contractor's consent to and acknowledgment of the terms and conditions of this Agreement; representations about the Construction Contract, the Plans and Specifications, and the Project's budget; the general contractor's agreement to continue to perform general contractor's Construction Contract with you after my default; subordination to you of all claims, liens and encumbrances that general contractor has or will acquire in the Property; and agreement to other terms. F. Architect's Contract. The contract with the Project's architect and professional engineers and the Architect's Consent and Acknowledgment, which includes the Architect's consent to and acknowledgment of the terms and conditions of this Agreeme t; SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement Initials AR/4MFINNELL00937100005187020083006Y °1996 Bankers Systems, Inc., St. Cloud, MN Ea' Paagge2 �'V 1 EXHIBIT A A part of the Northeast Quarter (NE/4) of the Northeast Quarter (NE/4) of Section Twenty-two (22), Township, Sixteen (16) North, Range Thirty (30) West of the 5th Principal Meridian, being more particularly described herewith as follows: Beginning at a point South 02°4T37" East 44.29 feet from the Northwest corner of the NEi4 of the NE'4 of said Section 22, said point being on the West 40 aae tract line and the South right of way line of Hturntille Road: thence running along said south right of way line of Huntsville Road South 87°5021" East l 55.34 feet: thence leaving said south right of way line of Hunts -Lille Road and running South 01°28'11" East _'58.35 feet thence South 87°28'11" East 60.00 feet; thence South 01°28'1" East 65.00 feet; thence South 02°47'36" \Vest 396.89 feet: thence North 87°50'21" West 239.38 feet to the west line of the NE14 ofNEl4 of said Section 22: thence along said west line North 02°4T36." East 720.00 feet to the Point of Beginning containing ,..' 3.51 aces. more or less, being subject to the rights of way and easements of record. representations about the Architect's contract, the Plans and Specifications, and the Project's' budget; subordination to you of all claims, liens and encumbrances that Architect has or will acquire in the Property; the Architect's agreement to continue to perform its Architect's contract with you after my default; and agreement to other terms. G. Other Agreements. Any other agreement which, in your sole judgment, would assist you in completing the Project should I be in default under the Loan. H. Other Collateral. To the extent possible under state law in any and all government licenses, permits and approvals necessary for the Project. In addition, any and all other collateral described in any other Loan Document. 7. CONDITIONS PRECEDENT TO FIRST LOAN DISBURSEMENT. You will open the Loan and disburse or at your option, the Title Insurance Company disburses, the Loan's first advance only after I comply with all of the following conditions on or before September 6, 2006. . A. Other Loan Documents. I will execute the other Loan Documents and provide you with all other documents, information and warranties that you request. I will provide these in a form, a substance and with an execution acceptable to you. B. Record Security Instrument. I will not permit any work or any materials to be furnished for the Project until you properly perfect or otherwise make effective as to third parties any security interests, assignments or other consensual liens or encumbrances. C. Title Insurance. I will have furnished to you a title insurance commitment, interim binder or a Construction Title Insurance Policy, acceptable to you, from the Title Insurance Company. I will also furnish any title insurance statements and other instruction or documents required by Title Insurance Company for the issuance of the title insurance commitments, interim binders, and Construction Title Ihsurance Policy. The Construction Title Insurance Policy will insure your lien on the Property and all appurtenant easements required by this Agreement against all defects, other liens, encumbrances and exceptions except those you approve in writing and the Construction Title Insurance Policy's customary objections and exceptions that will be cured by the Project's completion and the final disbursement. D. Builder's Risk and Casualty Insurance. I will obtain builder's risk insurance, with a coverage, a form and an amount acceptable to you and as required by the Construction Contract, insuring the Improvements under construction against loss or damage by fire or other casualty. This builder's risk insurance will provide for extended coverage, coverage against collapse, all risk course of construction coverage and other hazards reasonably required by you to be insured. After completing construction, this builder's risk insurance will convert to a casualty insurance in the amount of the Improvements' replacement cost. This builder's risk insurance policy will name you as a loss payee in a standard mortgage clause or provide for a similar endorsement. This builder's risk insurance policy will provide that coverages will not be canceled or diminished without at least 10 days prior written notice to you. I will also provide flood insurance and earthquake insurance when required by you or by applicable law. E. Permits; Compliance with Laws. I will furnish copies of all completed governmental building permits, approvals, consents and other licenses required for the Project's construction under the Plans and Specifications, including any offsite improvements. At your request, these copies will be certified. I also will have furnished evidence that the Project's Plans and Specifications will fully comply with all zoning and building code laws, environmental laws and any other covenants and restrictions. F. Assignment of Contracts. I will provide you with the Architect's Consent and Acknowledgment and the General Contractor's Consent and Acknowledgment. G. Liability Insurance. I will furnish certificates from the Project's general contractor and subcontractors that evidence workers' compensation and liability insurance, including contractual liability, for the course of Project's development, construction, and equipment and that names you as additional insured. On your request, I will obtain general public liability insurance naming you as an additional insured and in an amount acceptable to you. My general public liability insurance policy will contain a standard non -contribution mortgagee's loss payable endorsement for you. H. Surety Bonds. At your request, I will have furnished from a surety licensed to do business in the state where the Property is located, acceptable to you, and that names you and I as joint and several obligees, performance bonds for all contractors, labor and material payment bonds, and a completion bond. I will also arrange to have the performance and payment bonds name the Project's general contractor as the principal and you as the obligee or co -beneficiary. Each bond will be for the amount of the contract or more. I will arrange for these bonds to be executed by the same surety, unless you permit otherwise in writing. The bonds and any notice of commencement of construction will be duly recorded, when required by law, in the real property records of the county, district or parish where the Property is located. I will arrange to have the bond terms require that the contractor give notice to you of my default under the Construction Contract and give you an opportunity to cure this default. I. Project Budget. I will obtain your approval of the Project's budget, detailing all of the costs for any acquisition, development, construction, equipping and furnishing of the Property, and a schedule or a cash flow statement that estimates the amount and the time of each Loan advance. J. Plans and Specifications. I will furnish a complete copy of Plans and Specifications that set forth all of the Project's improvements and construction and contains the Project architect's or professional engineer's certification. The Project's architect or professional engineer will provide a certified statement that the Plans and Specifications comply with all applicable laws and ordinances as well as the requirements of any leases to be assigned to you. The Project architect's or professional engineer's certified statement will also state that the Plans and Specifications are complete and contain sufficient detail that any buildings will be ready for occupancy when built by the Plans and Specifications. I will also obtain written approval of the Plans and Specifications from you and all tenants under any leases assigned to you. K. Project's Contracts. I will provide you with a list of all the contracts I have made for the Project. On your request, I will provide you copies of contracts. I will provide you with any other information that you require to estimate the Project's cost. If you decide that these contracts, subcontracts and purchase orders do not include all of the labor and materials required to complete Arkansas Construction Loan Agreement ARf4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN Foie?" the Project's development and construction, then upon written notice from you, I will obtain firm bids or estimates for the excluded labor and materials, L. Soil Test. I will obtain your approval of my licensed soil engineer's report of the Property's soil and drainage. M. No Environmental Problems. I will have furnished to you a preliminary environmental report from an environmental engineer satisfactory to you. At your request, this report will be updated as circumstances may warrant. N. No Pending Lawsuits or Claims. I will furnish evidence satisfactory to you that no litigation or proceedings are pending or threatened against me or the Project's general contractor that could affect the validity or priority of the Security Instrument's lien or affect my ability to perform this Agreement, the Construction Contract, and my obligations under any leases. O. Landlord Lien Subordination Agreements. I will furnish a copy of my lease of the Property, if any, and a landlord lien subordination agreement of my landlord's interest that arises out of my lease. I will furnish a landlord lien subordination agreement that is in a form and substance satisfactory to you. P. Authority And Power. When applicable, I will have furnished my attorney's opinion, satisfactory to you that all of the following are true: (1) I am duly organized, validly existing, and in good standing in the state of my incorporation or organization and in the state or district where the Property is located. (2) I have the power and authority to execute and perform this Agreement and all of the other Loan Documents requiring my execution and performance. Q. Property's Restrictions. I will furnish you with a copy of all covenants, conditions and restrictions applicable to the Property now or on the Project's completion and you accept these covenants, conditions and restrictions. R. Additional Requirements. I will furnish any additional documents and evidence that you require. S. Agreement Termination. You may end this Agreement on SEPTEMBER 6, 2006 if I have not performed all of the conditions precedent to the first disbursement of Loan reserves and proceeds and begun construction of the Project on or before this date. 8. CONDITIONS PRECEDENT TO ALL LOAN DISBURSEMENTS. The following conditions will be complied with before you disburse , or at your option, the Title Insurance Company disburses, any Loan reserves and proceeds. A. Construction Escrow Agreement. At your request, you and I will enter into a construction escrow agreement with the Title Insurance Company directing the Title Insurance Company, rather than you, to make Loan disbursements after I satisfy this Agreement's disbursement conditions to its satisfaction. The Title Insurance Company will determine the form of the escrow agreement. I will comply with the escrow agreement's terms and conditions to the extent they do not contradict this Agreement. I agree to pay the fees, costs and expenses that Title Insurance Company charges for its services under the construction escrow agreement. B. Payments. I will make timely payments of any amounts due and payable under the Loan. C. Survey. At your request, I will furnish you with a survey plat of the Property of recent date, prepared and certified by a licensed surveyor or prepared by a licensed professional engineer and certified by a licensed surveyor. .D. Inspection. At your sole discretion, you, your consulting architect or your agent will have inspected the project and have found 'that the project at that time reflects good quality work and materials, complies with the plan and specification and completes that construction stage. You are under no obligation to supervise, inspect or inform me of the progress of construction, and I will not rely upon you therefor. You will incur no liability or obligation to me arising out of such inspection. All your inspections and approvals are solely for your own benefit and may not be relied upon by any third party. E. No Default Declared. I have not received written notice from you that a default under this Agreement or any of the Loan Documents has occurred. F. No Waiver. Your acquiescence to my failure to comply with any condition of any Loan disbursement does not waive my need to comply with this condition, so you may require my compliance with this condition at any time after your acquiescence. G. Documents Furnished. Before each disbursement of the Loan reserves and proceeds, I will furnish or cause to be furnished to you (or the Title Insurance Company when they are making the disbursements) the following documents. Cl) Application For Disbursement. I will provide you with a properly executed standard American Institute of Architect's payment request form (or another form you approve) and any supporting evidence that you require before disbursing Loan reserves and proceeds. I will only apply for a disbursement for work actually done and materials actually incorporated in the Project. My requests are my certification that all of the request's contents are true, complete and correct as of the request's date. (2) Certification. At your request, I will have furnished to you a certification by the Project's architect or another qualified inspector acceptable to you that the Project's development, construction and equipping has complied and will continue to comply with all applicable laws. (3) Verification Of Contracts. At your request, I will provide you a sworn statement as to the contract amounts due to the Project's architect, professional engineers, contractors and material suppliers for all of their work and labor performed, equipment and materials supplied to a reasonably current and specified date. You may require each listed person's verification before making any disbursements. If my list of all contracts that I have made for the Project has changed, then I will provide you with written statement advising you of the changes. I will provide you with a written statement advising you that no changes have occurred, when my list of all contracts has not changed. (4) Lien Waivers and Subordinations. I will supply you with waivers or releases of Construction Liens as well as lien subordinations or disclaimers from Project fixture and equipment suppliers that satisfy your requirements and applicable law. I will also supply you with any supporting data that you request from those benefiting from the disbursement, [u ull 1 c Lift ACI cec curl Yen u,r Arkansas Construction Loon Agreement Initials AR/4MFINNELL00937100005187020083006Y °1996 Bankers Systems, Inc., St. Cloud, MN Ex�?? t I (5) Disbursement Requirements. I will furnish any other documentation that is requested by whomever is administering the disbursements. (6) Title Insurance Documentation. I will furnish other documentation that the Title Insurance Company requires when it is administering the disbursements. 9. CONDITIONS PRECEDENT TO THE FINAL LOAN DISBURSEMENT. You or at your option, the Title Insurance Company, will make the final disbursement of the Loan reserves and proceeds, except for any undisbursed Loan proceeds or reserves allocated for tenant improvements, after I furnish or cause to be furnished the following to your satisfaction. A. Certifications and Lien Waivers. After fully completing and equipping the Project, I will supply you with sworn statements, certifications and final unconditional waivers or releases of Construction Liens from the Project's general contractor, subcontractors and material suppliers. These sworn statements, certifications and final unconditional waivers or releases will satisfy your requirements and applicable law. I will also supply you with any supporting data that you request from those benefiting from Loan disbursements. B. Certificate of Occupancy or Completion. I will provide you with a copy of the certificate of occupancy, completion or other satisfactory written confirmation that the Project is complete and any structures are ready for occupancy. You will also receive satisfactory evidence that all utilities are available at the Improvements and all connection fees are paid. C. Title Insurance. I will provide you with the Title Insurance Company's final endorsement to the Construction Title Insurance Policy as you require at your sole discretion, and a Construction Title _Insurance Policy will be issued for the face amount of the Promissory Note, free of all exceptions and objections. D. Property Insurance Policy. I will provide you with evidence that an insurance policy has been obtained for the Property and its Improvements that provides fire and extended coverage for replacement cost of the Improvements, with a Lender's loss payable endorsement. E. Taxes and Insurance. I will have made all tax and insurance deposits, if any, required by the Security Instrument. F. As -Built Plans and Specifications. I will furnish you a full and complete certified set of "as built" Plans and Specifications. G. All Other Requirements. I will comply with all other requirements of this Agreement. H. Free of Liens. All fixtures and equipment required for the operation of the Property are installed and are free and clear of all liens and security interests. I. Tenant Certificates. At your request, you will receive from each tenant, if any, an estoppel certificate and an executed • acknowledgment of their acceptance of their real estate leasehold interest in all or part of the Property. Each certificate will be in writing and its form and substance will be satisfactory to you. 10. RESERVES AND DEPOSITS. You may set aside and reserve Loan proceeds for Loan interest, fees and expenses, taxes and insurance. A. Reserves. No interest will accrue on any reserve Loan proceeds. Disbursement of reserves is disbursement of the Loan's proceeds. At my request, you will disburse the reserves for the purpose they were set aside for, as long as I am not in default • under this Agreement and the undisbursed Loan reserves and proceeds cover or exceed your estimated cost for completing the Project. You may directly pay these reserved items, reimburse me for payments I made, or reduce the reserves and increase the Loan proceeds available for disbursement. B. Deposits. You may also require me to deposit with you amounts needed to finish the Project, including any installation of any required fixtures and equipment, when the Loan's undisbursed proceeds and reserves are less than your estimated cost for • completing the Project. You make these estimates solely to protect your interests. You will provide me with a written request for a deposit with supporting documentation of your estimate, which is final and conclusive, and I will deposit this deficiency as soon • as you request. You may apply the amounts that I deposit with you to cure any default or to reimburse yourself for payments that you made on my behalf. C. Account. You may establish a non -interest bearing account for any reserved Loan proceeds and amounts I am required to • deposit with you. 11. DISBURSING LOAN PROCEEDS. Disbursement of Loan reserves and proceeds will be subject to the following terms and conditions. A. Disbursement Schedule. You will disburse the Loan reserves and proceeds to yourself for reimbursements of fees, costs and expenses that you advance for me and to me as indicated in the Disbursement Schedule and subject to the conditions precedent under this Agreement. B. Payments. You may make advances payable to me or jointly to me and Project's general contractor, the subcontractors or the material suppliers for amounts due under the Construction Contract. Alternatively, you may make payments for the Project's construction costs directly to any contractor, subcontractor, material supplier; this power is coupled with an interest that makes it irrevocable and survives my default. Any disbursement may be deposited into an account established by me or another payee entitled to payment under the Construction Contract. You may also pay yourself for amounts I owe you or you pay others. I will receive and hold advances made payable to me in trust to be applied first to paying the cost of Improvements before any other purpose. C. Fees and Expenses. I will pay all fees, costs and expenses relating to the Loan's closing before or at the time of the first disbursement of Loan reserves and proceeds or at another time that you specify. I may pay these fees and expenses in cash by a cashiers check or request that the amount due for these fees and expenses be disbursed to you from the Loan's proceeds. Any fees, costs and expenses that you advance or incur on my behalf become a part of the Loan's debt and secured by the Property, even when these amounts and the Loan disbursements exceed the face amount of the Note. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement AR/4MFINNELL00937100005187020083006y 01996 Bankers Systems. Inc., St. Cloud, MN Ex/iert+'," D. Your Right to Advance Funds. You may (but are not required to) advance amounts to cure any default and these advances will become a part of the Loan's debt and secured by the Property, even when these amounts and the Loan disbursements exceed the face amount of the Note. 12. WARRANTIES AND REPRESENTATIONS. I make to you the following warranties and representations which will continue as long as this Agreement is in effect, except when this Agreement provides otherwise. 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 I operate. B. Authority. The execution, delivery and performance of this Agreement and the obligation evidenced by this Agreement are within my 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 agreement to which I am a party or to which I am or any of my Property is subject. C. Name and Place of Business. Other than previously disclosed in writing to you I 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 or Lease of Property. I have the power and authority to own, develop, construct and equip the Property. E. Validity. The execution and performance of this Agreement and other Loan Documents is not and will not cause a default under any other agreement binding or affecting me, or a violation of any law or court order that may affect the Property or the Property's planned usage. I represent and warrant that the copy of the Project architect's contract and the Construction Contract that I provide you are true, correct and complete copies and that they are not.subject to any claim, setoff or encumbrance. F. Legal Assurances. I am not in violation of any law or any order from.a court or any other type of governmental unit that may affect my ability to perform this Agreement or that may affect the validity or priority of your lien on the Property. No. lawsuits or other proceedings are pending or threatened against me, the Project's general contractor or the Property that may adversely affect your lien on the Property, my ability to perform this Agreement or the Construction Contracts or any leases required under the Loan, except those already disclosed to and acknowledged by you in writing. G. Accuracy of Information. All financial statements, other information or certifications furnished by me to you are true, complete and correct as of the date made, and do not misstate or omit any fact necessary,to avoid being misleading. H. Project Budget. The Project's budget that I submitted to you accurately and completely reflects all costs which I reasonably ,expect to incur in the acquisition, development, construction, equipping and furnishing of the Property and the Project. I will prevent the Project's actual cost from exceeding the Project's budgeted cost. 1. Utility Services. All necessary utility services are available or can be brought into the Property without extra cost, except as the final cost breakdown that I submitted to you provides. Utility services are necessary if required to construct and operate the Improvements for their intended purposes. I have obtained all easements authorizing installation of these off -site utilities. J. Environmental Representations, Warranties and Agreements. I represent, warrant and agree to the following: (1) Except as previously disclosed and acknowledged in writing to you, 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. (2) Except as previously disclosed and acknowledged in writing to you, I have not and will not cause, contribute to or permit the release of any Hazardous Substance on the Property. - (3) 1 will immediately notify you if one or more of the following occur: (a) A release or threatened release of Hazardous Substance occurs on, under or about the Property or migrates or threatens to migrate from nearby property. (b) There is a violation of any Environmental Law concerning the Property; in such an event, I will take all necessary remedial action in accordance with any Environmental Law. (4) Except as previously disclosed and acknowledged in writing to you, I have no knowledge of or reason to believe there is any pending or threatened investigation, claim, or proceeding of any kind relating to one or more of the following: (a) Any Hazardous Substance located on, under or about the Property. (b) Any violation by me or any tenant (or landlord) of any Environmental Law. I will immediately notify you in writing as soon as I have reason to believe there is any such pending or threatened investigation, claim, or proceeding. In such an event; you have 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. (5) Except as previously disclosed and acknowledged in writing to you, I and every tenant (or landlord) have been, are and will remain in full compliance with any applicable Environmental Law. (6) Except as previously disclosed and acknowledged to you in writing, 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 you first agree in writing. (7) I will regularly inspect the Property, monitor the activities and operations on the Property, and confirm that all permits, licenses or approvals required by any applicable Environmental Law are obtained and complied with. (8) I will permit, or cause any tenant (or landlord) to permit, you or your agent to enter and inspect the Property and review all records at any reasonable time to determine all of the following: 1In\ICI CCf CI ir, TCC 1\IC ti Arkansas Construction Loan Agreement Initials AR/4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN E ery" I (a) The existence, location and nature of any Hazardous Substance on, under or about the Property. (b) The existence, location, nature, and magnitude of any Hazardous Substance that has been released on, under or about the Property. (c) Whether or not I and any tenant (or landlord) are in compliance with any applicable Environmental Law. (dl Upon your request, I agree, at my expense, to engage a qualified environmental engineer to prepare an environmental audit of the Property and to submit the results of such audit to you. The choice of the environmental engineer who will perform such audit is subject to your approval. (9) You have the right, but not the obligation, to perform any of my obligations under this subsection at my expense. (10) As a consequence of any breach of any representation, warranty or promise made in this subsection, all of the following applies: (a) I will indemnify and hold you and your successors or assigns harmless from and against all losses, claims, demands, liabilities, damages, cleanup, response and remediation costs, penalties and expenses, including without limitation all costs of litigation and reasonable attorneys' fees to the extent not prohibited by law which you and your successors or assigns may sustain. (b) At your discretion, you may release the Security Instrument and in return I will provide you with collateral of at least equal value to the Property secured by this Security Instrument without prejudice to any of your rights under this Security Instrument. (11) Despite any of the language contained in the Security Instrument to the contrary, the terms of this subsection will survive any foreclosure or enforcement of the lien or satisfaction of any Security Instrument regardless of any passage of title to you or any disposition by you of any or all of the Property. Any claims and defenses to the contrary are hereby waived. 13. AGREEMENTS. Until the Loan and all related debts, liabilities and obligations are paid and discharged, I will comply with the following terms, unless you waive compliance in writing. A. Contractors and Suppliers. I will ensure that the Project uses contractors, subcontractors and material suppliers that you regard as financially sound and qualified. B. Material SuppliersLiens. I will seek your prior approval before permitting the purchase and installation of any fixtures or personal property on the Property, when the material suppliers reserve title, the right to remove or repossess, or the right to consider such items as personal property after these are incorporated into the Improvements. C. Construction Liens. I will not permit any Construction Lien relating to the Project to be filed, recorded or asserted against the Property, any appurtenant interest or right, any account created under this Agreement or any funds due to the Project's general contractor. Within 10 days after any Construction Liens are filed, recorded or asserted, I will diligently dispute their validity or promptly procure their discharge or release by providing security or indemnity sufficient to either release the Construction Lien or obtain title insurance insuring against all Construction Liens; you may act on my behalf in this manner when I fail to do so. You need not inquire into the validity or amount of these Construction Liens when settling, compromising, discharging or releasing these Construction Liens. I will pay all of your costs, expenses and reasonable attorney's fees for obtaining the discharge or release of these Construction Liens. You may opt to recover these items on demand from me, from any account created under this Agreement, or treat your payment as an advance and disbursement under the Promissory Note. D. Indemnity. I will defend, indemnify and hold harmless you, your agents, successors and assigns for anything that anyone, other than you or your agents, do or fail to do under or about the Property. I will defend you against all claims, demand, cleanup response and remediation requirements that result from these actions or omissions. This includes without limitation losses, punitive and compensatory damages, expenses, costs and attorneys' fees, and liability resulting from a finding that you, your agents, successors and assigns and I are engaged in a joint venture or partnership. My duty continues after the Loan's debts, liabilities and obligations are paid and discharged until your interest in the Property has ended. E. No Third Party Beneficiary Rights. You and I do not intend to create any third -party beneficiary rights under this Agreement. No one other than me will have any right to obtain or compel a disbursement of the Loan's reserves or proceeds. F. Right to Assign. I will not assign or attempt to assign my rights under this Agreement. An attempted assignment in violation of this agreement will not vest any rights in the purported assignee. You may assign, negotiate, pledge or transfer the Promissory Note, the Security Instrument and other Loan Documents to anyone to secure a Loan from them to you. G. Inspection. I will help you or your consulting architect or other representatives to enter onto the Property and inspect the quality and progress of the Project's performance, labor and materials, I will promptly comply with your requirements to remove any dissatisfaction about the Project's quality or progress. H. Publicity. I agree that you may display a sign at the construction site informing. the public that you are the construction lender for the Project. I will provide you with the opportunity to participate in any other favorable publicity opportunities with the Project, like mentioning your role in press releases and providing you with the opportunity to participate in the ground -breaking, opening ceremonies and other similar events. I. Construction. I will cause the Project's development, construction and equipping and any offsite development to be done diligently, continuously, on time, with high quality labor and materials and strictly by the Plans and Specifications. I will cause the Project development, construction and equipping to begin on SEPTEMBER 6, 2006 and to be fully completed no later than JULY 1, 2008. On this completion date, for any leased premises I will have obtained all tenants' executed letters of acceptance of possession for their leased premises. J. Change Orders. The Plans and Specifications will not be materially changed until you give written approval of each material change. beVtN nIub NUMtLtba antetn, mc. Arkansas Construction Loan Agreement Initials AR/4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN E 7' I K. Extras and Contract Charges. I will obtain your prior written approval of any substantial extras or any material changes to any contract or subcontract with any contractor, subcontractor, supplier, architect or professional engineer. I will promptly furnish you all executed copies of all contracts not already furnished to you that are between me and project managers, architects, professional engineers, contractors, subcontractors and material suppliers and those that are between the Project's general contractor and all of its subcontractors and material suppliers. L. Fees and Expenses. I will pay all reasonable and bona fide pre -closing, closing and post -closing fees, costs and expenses incurred by you incidental to the Loan. M. Improvement District. I will not consent or vote to have any of the Property incorporated or annexed into any improvement or other district or area. N. Loan Disbursements. I will apply or cause Project contractors and suppliers to apply the Loan disbursements only to work actually done and materials actually incorporated in the Project and scheduled to be paid under the Disbursement Schedule. 0. Taxes and Insurance. I will pay all taxes when due. I will pay all insurance premiums when due on all insurance required by this Agreement. If I fail to obtain or maintain any insurance required by the Loan, you may obtain insurance to protect your interest in the Property. You may obtain insurance with different coverage and at higher rates than what I could have obtained. You may obtain this insurance from a company other than the one I would choose. I will also cause Project's general contractor, any subcontractor or material supplier to obtain and maintain any insurance required under this Agreement. P. Financial Records. I will maintain my financial books and records by consistently applied generally accepted accounting principles then in effect. I will provide or cause to be provided to you financial records from me and my parent or subsidiaries, if any, and the general contractor or any subcontractors involved in the Project. Any interim financial records will be provided as soon as available or at least within 30 days after the close of each of my interim business periods. Annual statements will be provided as soon as available or at least within days after the close of my fiscal year. Financial statements will be certified by my chief financial or accounting officer or my independent public accountant as fairly representing my financial condition for the stated periods as current, complete, true and accurate in all material respects and without any direct or contingent liabilities, except as disclosed on such financial statements. The annual and interim financial statements and auditing reports will state whether they are audited, reviewed, compiled or prepared statements. I will promptly inform you in writing of any material adverse changes in my financial condition or that of the Project's general contractor. Q. Additional Information. I will provide you with any: (1) Of my reports, notices or statements to the Securities and Exchange Commission or any securities exchange and to my stockholders, owners, or the holders of any material indebtedness or the trustee under any indenture as soon as available or at least 30 days after issuance. (2) Information that may materially and adversely affect my ability to perform this Agreement and notify you of this information and its anticipated effect with an immediate telephone call or similar contact. (3) Other information about my business, operations and financial affairs and condition within 30 days after your request. R. Claims. I will promptly inform you in writing of any threatened or pending lawsuits, arbitration or other proceeding against me, :The Project's architect, the general contractor or the Property that singly or together with other proceedings may adversely affect my ability to perform this Agreement, the Construction Contract or the leases required under the Loan. I will use my best efforts to bring about a favorable and speedy result of any of these lawsuits, arbitration or other proceedings. I authorize you to intervene in my name in any condemnation, eminent domain, or other proceeding to take the Property. I assign to you the proceeds of any award or claim for damages connected with a condemnation or other taking of all or any part of the Property. Such proceeds will be considered payments. This assignment is subject to any prior mortgage, deed of trust, security agreement or other lien document. S. Leasehold. If I have a leasehold interest in the Property, I will make all lease payments on or before their respective due dates and will not otherwise breach my lease agreement. T. Leases and Rents. I will not lease all or substantially all of the Property without obtaining your prior written consent and approval of these leasesform, terms and provisions. I will not modify, amend, or terminate any of the leases assigned to you. I will not accept any rental payment in advance of its due date, without your prior written consent. I will not breach my obligations or fail to meet my conditions or requirements under any of the leases assigned to you. U. Notice of Default. I will promptly notify you in writing of any work stoppage or labor dispute affecting the Project as well as any claims filed against Loan reserves and proceeds, any account created under this Agreement or the Property, and any condition or event that is a breach or failure of any condition, warranty, representation, or term of this Agreement, the other Loan Documents or any contract related to the Project. V. Lender's Actions Only for Lender's Protection. I agree that you and your consulting architect are not obligated to inspect, supervise, prevent Construction Liens, or inform me about the Project's progress or performance. You and your consulting architect act for your protection when inspecting the Project, procuring sworn statements and waivers of liens, approving change orders and similar actions. You will incur no liability or obligation to me arising out of such inspection. An inspection for or by you does not waive any default and is not a representation that I have complied with this Agreement, any applicable laws or that the Project is free from defective materials or labor. 14. DEFAULT. I will be in default if any of the following occur: A. Payments. I 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 SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement Initials ARl4MFINNELL00937100005187020083QO6Y 01996 Bankers Systems, Inc., St. Cloud, MN Ex�ri I 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 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. D. Failure to Perform. I fail to perform any condition or to keep any promise or covenant of this 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 provided. H. Judgment. I fail to satisfy or appeal any judgment against me. 1. 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. K. 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 Agreement or that the prospect for payment or performance of the Loan is impaired for any reason. O. Deposits. I fail to promptly deposit any amounts that you require me to deposit with you. P. Contractor's Insolvency. Any Project general contractor or subcontractor becomes insolvent, either because its liabilities exceed its assets or the Project's general contractor or subcontractor is unable to pay its debts as they become due, and I fail to procure a contract with a new contractor or subcontractor, reasonably satisfactory to you, within 30 days from the occurrence of this insolvency. Q. Commitment. Any governmental agency or another lender, committed to insuring the obligation secured by the Security Instrument or making an interim or permanent loan, fails or refuses to insure, purchase or fund the Loan from you by the time specified in any commitment, and I then fail to promptly pay to you all sums advanced by you under this Agreement. R. Encroachment. Any encroachment to the Property or to other property results from the existence or construction of the Improvements when this encroachment is not removed or corrected within 30 days. S. Unsatisfactory Construction. You or your consulting architect determine that any construction work is not constructed according to the Plans and Specifications or the Construction Contract, communicate this failure to me, and I do not obtain correction of the unsatisfactory construction to the satisfaction of you and your consulting architect within 30 days after notification of this disapproval. T. Interruption of Construction. Construction on the Improvements is delayed or discontinued for the shortest period provided under any performance or payment bonds or otherwise, 10 or more continuous days, so your consulting architect in its sole discretion concludes that the construction may not be completed on or before the Completion Date. The permissible delays for certain events may be increased from 10 to 15 continuous days for a single continuous period or 30 total non -continuous days or shorter periods required by the payment or performance bonds. These certain events permitting delay or discontinuance include: fire, earthquake, or other acts of God, acts of the public enemy, riot, insurrection, governmental regulation of the sale of material and supplies or the transportation thereof, or strikes directly affecting the work of construction, or shortages of material or labor resulting directly from governmental controls or diversions. 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 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. Termination. You may terminate my right to obtain advances and may refuse to make any further extensions of credit. D. Waiver. 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. E. Take Possession of the Property. You may take possession of the Property to the extent and in a manner not otherwise prohibited by law. F. Complete Project. You may, but are not obligated to, do anything you determine is necessary or desirable to complete the Project under the Plans and Specifications or as you otherwise consider appropriate. You may at your sole discretion advance funds to complete the Project even when all of these advances exceed the Loan's maximum total principal amount. You may discontinue completing the Project at any time without liability. I appoint and constitute you as my attorney -in -fact with full power and substitution in the Property to complete the Project's development, construction and equipping in my name. This power of attorney is irrevocable since it is a power coupled with an interest. SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement AR/4MFINNELL00937100005187020083006Y °1996 Bankers Systems, Inc., St. Cloud, MN F 5e G. Lender's Right to Cure. You may, but are not obligated to, advance Loan reserves or proceeds to cure any default that may be cured by a payment of money. H. Casualty. If all or part of the Improvements are damaged or destroyed by a casualty, I will proceed diligently to make settlement with the insurance company and cause the insurance proceeds to be deposited with you. If you decide that sufficient insurance proceeds and undisbursed Loan reserves and proceeds exist to complete the Project on or before the Completion Date, then you may disburse any insurance proceeds I deposit with you for the Project's restoration and completion. You need not make any disbursements of the Loan reserves and proceeds until such restoration is completed to your satisfaction. If you decide that insufficient insurance proceeds and undisbursed Loan reserves and proceeds exist to complete the Project on or before the Completion Date, then you will collect, retain and apply these insurance proceeds to reduce the Loan's principal balance. 1. Correction of Improper Condition. You may, but are not required to, order any of the following conditions be corrected before the Project's development, construction and equipping may continue when, in your reasonable discretion, you determine that: (1) The Plans and Specifications are defective. (2) The Project substantially deviates from the Plans and Specifications. (3) The Project's workmanship or materials are defective. (4) Encroachments exist that you did not consent to. (5) A violation of any applicable law, regulation or ordinance has occurred on the Property or with the development, construction or equipping of the Property. 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 Agreement or any other Loan Document. Expenses include, but are not limited to, reasonable attorneys' fees (as determined under Ark. Code Ann. §16-22-308), court costs, and other legal expenses. If not paid immediately, these expenses will bear interest from the date of the payment until paid in full at the same interest rate in effect as provided in the terms of the Promissory Note. 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. APPLICABLE LAW. This Agreement is governed by the laws of Arkansas, 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. 18. 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. You may assign all or part of your rights or duties under this Agreement or the Loan Documents without my consent. If you assign this Agreement, all of my covenants, agreements, representations and warranties contained in this Agreement or the Loan Documents will benefit your successors and assigns. I may not assign this Agreement or any of my rights under it without your prior written consent. The duties of the Loan will bind my successors and assigns. 19. AMENDMENT, INTEGRATION AND SEVERABILITY. This Agreement may not be amended or modified by oral agreement. No amendment or modification of this Agreement is effective unless made in writing and executed by you and me. This Agreement and the other Loan Documents are the complete and final expression of the understanding between you and me. If any provision of this Agreement is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. 20. 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 Agreement. 21. 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. Notice to one Owner will be deemed to be notice to all Owners. 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. 22. LIST OF EXHIBITS. The following documents, that are checked, are incorporated by reference into this Agreement: OBuilder's Risk Insurance OConstruction Contract OCopy of any Leases DDisbursement Schedule OPlans and Specifications OProject Budget ❑Subdivision Price List OSurety Bonds OTitle Insurance Policy or Title Insurance Commitment or Interim Binder SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement Initials AR14MFINNELL00937100005187020083QO6Y 01996 Bankers Systems, Inc., St. Cloud, MN Eat"' ❑Abstract and Title Opinion ❑Architect's Consent and Acknowledgment OGeneral Contractor's Consent and Acknowledgment OPromissory Note ❑Security Agreement OSecurity Instrument ❑Guaranty Agreement OAffidavit Under Section 22 of the Lien Law of the State of New York 23. SIGNATURES. By signing, I agree to the terms contained in this Agreement. I also acknowledge receipt of a copy of this Agreement. . BORROWER: SEVEN HILS HOMrLESAHELTER, INC. VICE OWNER: SEVEN VICE PRESIDENT SEVEN HILLS'HOMELESS SHELTER, INC. Arkansas Construction Loan Agreement Initials AR(4MFINNELL00937100005187020083006Y .01996 Bankers Systems, Inc., St. Cloud, MN Ex erg" Is 11 CONTRACTOR'S AFFIDAVIT & INDEMNITY THE STATE OF ARKANSAS COUNTY OF WASHINGTON BEFORE ME, the undersigned authority, a Notary Public in and for said County and State, personally appeared the person whose.name is subscribed hereto, who after being first duly sworn, by me, upon oath, deposes and says as follows: 1. My name is t ____ and I am the_____________ 7 (Title) of _Zc. herein referred to as "Contractor". am duly authorized and empowe to make this Affidavit and have personal knowledge of the information contained herein. I hereby certify as follows: 2. That Contractor did �/he/reLtofore, and on or about U*twb contract with S✓�- ,95t /'o n/sr Y cf, hereinafter referred, whether singular or plural, as "Owner," for the construction of certain improvements on, within and to that certain real property more particularly described in Exhibit "A" attached hereto and made part hereof. 3. That said improvements have been fully completed pursuant to the contract and in strict accordance with all plans, specifications and agreements (whether written or oral) thereto. 4. Contractor has been paid in full all amounts owed in connection with the contract to make improvements on, within and to the real property described in 'Exhibit "A"'. 5. That all bills or amounts due subcontractors, laborers, suppliers or materialmen, for the labor,and materials going into the construction of the improvements and/or any other sums of money due for the construction of the improvements, have been fully paid and satisfied by contractor and there are no outstanding claims or disputes as to such bills or amounts. 6. That said Contractor hereby waives irrevocably all of its rights, title and interest in and to the property, whether arising by virtue of any constitutional, statutory, contractual or mechanic's and materialmen's liens or whether arising by any other reason whatsoever. 7. INDEMNITY: Contractor shall indemnify and hold harmless WASHINGTON COUNTY ABSTRACT AND TITLE COMPANY AND CHICAGO TITLE INSURANCE COMPANY from any and all liability, costs, claims and actions, including attorneys' fees and the cost and expense of any action or threatened action arising from the inaccuracy of assertions and/or statements of. fact made herein. Contractors Affidavit & Indemnity Page 2 8. The Contractor expressly understands that WASHINGTON COUNTY ABSTRACT AND TITLE COMPANY AND CHICAGO TITLE INSURANCE COMPANY is relying upon the facts herein stated to be true and this affidavit is made for the purpose of inducing WASHINGTON COUNTY ABSTRACT AND TITLE COMPANY AND CHICAGO TITLE INSURANCE COMPANY to issue its title policies, without exception to mechanic's and materialmans liens, covering the above described property. EXECUTED THIS I DAY OF �G1G�/E_ 2066 crG% J<4 . COMPANY BY: — vi 2 SWORN TO AND SUBSCRIBED before m • OFFICIAL SEAL BRICE RICHARD NOTARY PUBLIC . ARKANSAS WASHINGTON COUNTY COMMISMA XP. 02/01/2011 My Commission Expires: EXHIBIT A A part of the Northeast Quarter (NE/4) of the Northeast Quarter (NE/4) of Section Twenty-two (22), Township Sixteen (16) North, Range Thirty (30) West of the 5th Principal Meridian, being more particularly described herewith as follows: Beginning at a point South 02°4T37" East 44.29 feet from the Northwest corner of the NE/4 of the NE/4 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 ofway .line of Huntsville Road South 87°50'21" East 155.34 feet: thence leaving said south right of way line of Huntsville Road and running South 01`28'11" East 258.35 feet: thence South 87°28'11" East 60.00 feet; thence South 01°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 NE/4 ofNE/4 of said Section 22: thence along said west line North 02°47'36" East 720.00 feet to the Point of Beginning containing 3.51 acres, more or less, being subject to the rights of way and easements of record - AMENDED LEASE AGREEMENT This Amended Lease Agreement is made and entered into this 5a' 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: I. 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. 92 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 5`h day of September, 2006. ATTEST: By: SONDRA SMITH, City Clerk _r . 1 L.�.. • / /1%ice CITY I By: SEVEN HILLS HOMELESS CENTER, INC., Lessee By: DWELL GRI M, President Board of Directors of Seven Hills Homeless Center, Inc. 3 Accepting Office Address OR# Filing Reference INDEMNITY AGREEMENT • THIS AGREEMENT is made and entered into this _6TH day of_SEPTEMBER, 2006, by and between SEVEN HILLS HOMELESS SHELTER, INC, hereinafter (collectively if more than one) referred to as "Indemnitor," and CHICAGO TITLE INSURANCE COMPANY, hereinafter referred to as "Chicago Title." This Agreement concerns that certain real property, or any interest therein, hereinafter referred to as "the Property," in the County of_WASHINGTON_ State of _ARKANSAS_, described in EXHIBIT "A" which is attached hereto and made a part hereof as if spread at length herein. WHEREAS, Indemnitor has requested CHICAGO TITLE to issue its policies of title insurance insuring an interest to that certain real property referred to in the preceding paragraph; WHEREAS, CHICAGO TITLE is unwilling to issue such policies unless exception is made for the following matters (hereinafter called "the exception"); to wit: WHEREAS, Indemnitor, regardless of his interest in or relationship to the Property, has an interest in the issuance of and desires Chicago Title from time to time to issue its policy or policies of title insurance insuring the Property against loss which may result from the exception, and/or insuring holders of mortgages or deeds of trust encumbering the Property against loss by reason of any such exception; WHEREAS, CHICAGO TITLE is willing to consider the issuance of such policy or policies of title issuance as Indemnitor shall request, insuring against loss by reason of the exception affecting the property, however, CHICAGO TITLE shall determine whether to issue each policy based on reliance on the covenants, conditions, representations and warranties of Indemnitor herein made, and upon a determination by CHICAGO TITLE that each and every covenant to be performed by Indemnitor has, as a condition precedent to such issuance, been performed. NOW THEREFORE, IN CONSIDERATION OF THE ISSUANCE by CHICAGO TITLE of each policy of title insurance as CHICAGO TITLE shall decide to issue insuring against loss by reason of the exception, Indemnitor agrees as follows: 1. Indemnitor hereby indemnifies and agrees to hold CHICAGO TITLE harmless from all liability, loss or damages of any nature, including reasonable attorneys' fees incurred in enforcing this agreement, which CHICAGO TITLE may sustain resulting from the issuance, either now or in the future, of policies of title insurance which indemnify the named insureds in the policies against loss that may result from the exception. 2. Indemnitor further agrees to do whatever is required by CHICAGO TITLE to remove said exception on or within a reasonable amount of time at no cost to CHICAGO TITLE 3. In as much as no collateral has been deposited as part of this agreement, if CHICAGO TITLE shall sustain a loss arising from insuring over said exception, Indemnitor shall become indebted to CHICAGO TITLE in an amount equal to the loss sustained by CHICAGO TITLE and Indemnitor agrees to repay CHICAGO TITLE that amount on demand, together with interest thereon at the then prevailing legal rate of interest per annum from the date of demand. 4. Indemnitor agrees that CHICAGO TITLE may, at its discretion, report to its proposed insured the existence of the matters set forth as the exception to the title. If the insurance that CHICAGO TITLE shall make available to its proposed insured is not satisfactory to its proposed insured, CHICAGO TITLE shall be under no obligation to issue such a policy of title insurance. 5. As security for the performance of the terms of this agreement, Indemnitor has deposited with CHICAGO TITLE INSURANCE COMPANY or its agent, NONE , the following: 6. Wherever the context so requires in this agreement, the singular number includes the plural, and where there is more than one person or entity, or combination thereof, included as the Indemnitor, the obligations of this agreement shall be binding on all such persons, entities, or combination thereof, jointly and severally. 7. This agreement shall inure to the benefit of and otherwise bind the successors and assigns of the parties hereto. 8. CHICAGO TITLE shall have the right to select and approve counsel who may be retained by CHICAGO TITLE or the Indemnitorto defend any action brought by any party as a result of CHICAGO TITLE issuing its policy or policies without showing said exception, or insuring over said exception, or any counsel retained by CHICAGO TITLE or Indemnitor to bring any action or to perform any work to correct the matters shown in the exception, and Indemnitor agrees to pay counsel so selected or approved by CHICAGO TITLE. 9. In the event any Court of competent jurisdiction shall hold any provision of this agreement invalid or unenforceable, such holding shall not invalidate or render unenforceable any other provision hereof. 10. If any Indemnitor be not bound hereunder for any reason, this agreement shall still be binding upon the other Indemnitors. 11. Written notice shall be deemed to have been duly served if delivered to the person or to a member of the firm or to an officer of the corporation for whom it was intended, or if delivered at or sent by certified mail, return receipt requested, to the addressee shown herein. ' II. This agreement shall inure to whichever entity of member of the CHICAGO TITLE family of insurers issues the policy, or policies, of title insurance. INDEMNITOR CHI AGO TITLE INSURANCE COMPANY By Its Authorized Agent AGREEMENT TO PROVIDE INSURANCE DATE AND PARTIES. The date of this Agreement to Provide Insurance (Agreement) is September 6, 2006. The parties and their addresses are: OWNER: SEVEN HILLS HOMELESS SHELTER. INC. an Arkansas Corporation PO BOX 474 FAYETTEVILLE, Arkansas 72702 SECURED PARTY: ARVEST BANK P.O. Box 1327 Fayetteville, Arkansas 72702 The pronouns 'you" and "your refer to the Secured Party. The pronouns "I," 'me" and "my" refer to each person or entity signing this Agreement as Owner. 1. LOAN DESCRIPTION (Loan). A. Date. September 6, 2006 B. Loan Number. 3458186 C. Loan Amount. $700,000.00 2. AGREEMENT TO PROVIDE INSURANCE. As pan of my Loan. I agree to do all of the following. A. I will insure the Property as listed and with the coverages shown in the DESCRIPTION OF PROPERTY section. B. I will have you named on the policy, with the status listed under the STATUS section. C. I will arrange for the insurance company to notify you that the policy is in effect and your status has been noted. D. I will pay for this insurance, including any fee for this endorsement. E. I will keep the insurance in effect until the Property is no longer subject to your security interest. Cl understand that the Property may secure debts in addition to any listed in the LOAN 'DESCRIPTION section.) 3. DESCRIPTION OF PROPERTY. The Property subject to this Agreement is described as follows. Real estate located at 1033 HUNTSVILLE ROAD. FAYETTEVILLE, Arkansas . I agree to insure this Property according to the following described risks, amount of coverage, and maximum deductible allowed. I will insure the Property with the coverages necessary to protect the Property from all risks and liability reasonably associated with the Property. The insurable value of this Property Is The term of coverage will be . The maximum deductible allowed is Inventory: I agree to insure this Property according to the following described risks, amount of coverage, and maximum deductible allowed. I will insure the Property with the coverages necessary to protect the Property from all risks and liability reasonably associated with the Property. The insurable value of this Property Is The term of coverage will be The maximum deductible allowed is . Equipment: I agree to insure this Property according to the following described risks, amount of coverage, and maximum deductible allowed. I will insure the Property with the coverages necessary to protect the Property from all risks and liability reasonably associated with the Property. The insurable value of this Property is The term of coverage will be The maximum deductible allowed is 4. STATUS. Your status shall be listed on the insurance policy as Lienholder. S. MAILING ADDRESS. Please return to Secured Party at the address listed in the DATE AND PARTIES section. SIGNATURES FOR OWNERS AND AUTHORIZATION TO INSURANCE AGENT AND COMPANY. By signing below, I agree to the terms contained in this Agreement and acknowledge receipt of a copy of this Agreement. I request the listed insurance company and agency to provide the indicated coverage, and list you on the policy with the indicated status. I also request the insurance company or its authorized agent to immediately confirm that the policy is in effect by signing this form and forwarding a copy of the policy to you. OWNER: SEVI SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Agreement to Provide Insuranc. Initials ARl4MFINNELL00937100005187020093006Y 01996 Bankers Systems, Inc., St. Cloud, MN 645014: Pepe 1 B1a 7/o6 ALDERMAN AGENDA REQUEST FORM FOR: COUNCIL MEETING OF SEPTEMBER 5, 2006 FROM: ALDERMAN BRENDA THIEL ORDINANCE OR RESOLUTION TITLE AND SUBJECT: 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 APPROVED FOR AGENDA: Zq b rends hid Date Alderman QT _ Kit Williams Date City Attorney (as to form) RESOLUTION NO. 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 5`s day of August, 2006. APPROVED: By: DAN COODY, Mayor ATTEST: By: SONDRA SMITH, City Clerk LEASE AGREEMENT This Agreement, made and entered into this I f Ii day of December, 2004, 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. Seven Hills shall not assign this lease or sublet the lease premises without prior written consent of the City. Any such assignment or subletting shall in no way relieve Seven Hills from liability for the obligation imposed by this lease. Seven Hills may only be released from liability for the obligation imposed by this lease by a specific written release executed by the City. 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 tern 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. 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 ¶ikL day of December, 2004. CITY Li By: '�. J • . lai. Q` .jam �`• ATTEST: �''n;• ;�uuu�P��,``` < By: DL :; I Sondra Smith, City Clerk SEVEN HILLS HOMELESS CENTER, INC., Lessee J By: L W L.G� L GRISHAM, President Board of Directors of Seven Hills Homeless Center, Inc. 3 RESOLUTION NO. 199-04 SCANNED A RESOLUTION TO APPROVE A LEASE OF CITY PROPERTY TO SEVEN HILLS HOMELESS CENTER, INC. WHEREAS, Seven Hills Homeless Center, Inc. is a nonprofit agency established and dedicated to provide homeless shelter, transitional housing and supportive housing for persons with disabilities; and WHEREAS, Seven Hills Homeless Centers' services are badly needed, valid public purposes for Fayetteville residents; and WHEREAS, the City Council has determined that the value of the services to be offered by Seven Hills Homeless Center to Fayetteville residents is sufficient and adequate consideration for the rental value of the city property to be leased to Seven Hills for this purpose. 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 agrees to a long term lease of city property to Seven Hills Homeless Center, Inc. (Attached as Exhibit A) near Huntsville Road so it can construct transitional housing and supportive housing to serve Fayetteville residents. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Coody to sign the lease to Seven Hills Homeless Center, Inc. (attached as Exhibit A). PASSED and APPROVED this 7th day of December, 2004. APPROVED: By: COODY, ATTEST: G• ZY Oc •vP By: 7.c.*i��//IMtM� •. SONDRA SMITH, City Clerk c ;FAYETTEVILLE: FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS KIT WILLIAMS, CITY ATTORNEY DAVID WHITAKER, ASST. CITY ATTORNEY DEPARTMENTAL CORRESPONDENCE Dan Coody, Mayor City Council Kit Williams, City August 29, 2006 Seven Hills Lease Amendment Leasehold Mortgage LEGAL DEPARTMENT Alderman Thiel is presenting an Agenda item to amend the Seven Hills' Lease entered into on December 7, 2004. This amendment would allow Seven Hills to enter into a Leasehold Mortgage to finance the about $700,000:00 they need to construct their project. The City would have to enter into this Mortgage also. Attached is the form Leasehold Mortgage submitted by Arvest Bank. The only really objectionable provisions are in Paragraph 19 K. and L. Subparagraph K is an indemnification warranty that waives our sovereign immunity. It could create liability for Fayetteville when we are immune right now. I cannot recommend such assumption of liability. Subsection L waives all of the City's "claims and defenses" regarding the indemnity warranty and all other provisions of paragraph 19 (A through J). Again, I cannot recommend a contract with that language. Other portions of this .proposed Leasehold. Mortgage has terms and conditions that are not. favorable. to Fayetteville, but none are so dangerous that I would have to recommend rejection (except for 19 K and 19L). Please keep in mind that if you agree to allow Seven Hills to mortgage its ninety-nine year leasehold interest, you are accepting the risk that Seven Hills could default on this mortgage. Such a default could allow the banks to foreclose and "own" this 99 year leasehold interest. The City would seek to require ANY Leasehold owner to abide by the lease to the extent of providing transitional housing service to Fayetteville residents, but this would be very confusing and messy if Seven Hills defaults. I certainly cannot assure you the City would not suffer some financial or property use loss if Seven Hills was not successful. _ AUG-28-2006 NON 12:39 PM ARVEST FYT JOYCE BRANCH FAX NO. 4794426910 P. 02 This instrument was prepared by ARVEST BANK OPERATIONS, INC., P. 0. BOX 1729, LOWELL, Arkansas 72745-1729 When recorded return to ARVEST BANK, P. 0. BOX 1327, FAYETTEVILLE, Arkansas 72702 Space Above This Line For Recording Uata LEASEHOLD MORTGAGE (With Future Advance Clause) DATE AND PARTIES, The date of this Mortgage -Leasehold (Security Instrument) is August 25, 2006. The parties and their addresses are: MORTGAGORIGRANTOR: 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 113W 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 and 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. Iglyly Arkansas Martgaga-Laaaahold Fagg 1 ARf4MCFREEMA00937100006187020082606Y °1996 adnkere Systems, Inc.. St. Cloud, MN Fx � AUG-28-2006 NON 12:39 PM ARVEST FYT JOYCE BRANCH FAX NO. 4794426910 P. 03 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 terminate 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 August 25, 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. if more than one person signs this Security Instrument, each agrees that it will secure debts incurred either individually or with others who may not sign this Security Instrument. 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 moneysecurity 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 is unencumbered, 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: Arkansas Initals 01996 Bankers $yss3ms, Inc., St. Claud. MN F Page 2 AUG-28-2006 NON 12:39 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P. 04 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 including the 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, INL InWAIS Arkansas MMWage-Leueh°Id • Pee 3 AR 4MCFREEMAO093710000S187020082809y °1998 eanherS Systems, Inc.. St. Clad, MN F g AUG-28_2006_MON 12:40 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P. 05 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. Mortgagor will not 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 time 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 attorney in fact to sign Mortgagor's name or pay any amount necessary for performance. Lander'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 HILIS HOMELESS SHELTER. INC. Arkarsaa Mmtgaea'Laasehald Initials AR/4MCFREEMA009371000051870200B2806Y °1996 Bankers Systems, Inc.. St. Claud, MN &t Page 4 AUG-28-2006 NON 12:40 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P. 06 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 -Agreements. 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 any financial information that is untrue, inaccurate, or conceals a material fact at the time it is 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 purpose that 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, O. 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. Initials Arkansas Mortgaemhob ARt6MCFREEMA0093710000519702008280eY 61996 Bankers Systems, Inc., St. C oud. MN Ea er t Page 6 AUG-28-2006 NON 12:40 PM ARVEST FYI JOYCE BRANCH FAX NO. 4794426910 P. 07 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 expenses incurred 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 Landera s 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 owing 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 Lander's right to require full and complete cure of any existing default. 8y 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. 116-22.308), 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. Initials Arkansas MnA0acaloasahold AR14MCFREEMA00937100005187030082806Y 01996 Bankers Systems. Inc., Si. Cloud. MN a Page 6 AUG-28-2006 NON 12:40 PM ARVEST FYT JOYCE BRANCH FAX NO. 4794426910 P. 08 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 opinions i tdherfederal, selette ers concerning local laws, regulations, ordinances, court orders, attorney general 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 or 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 concerning 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, Mr ortgagor Landlord have no knowledge of or reason to believe there is any pending investigation, claim, or proceeding of any kind relating to Cl) 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. r 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. Go Mortgagor will regularly inspect the Property, monitor the activities and operations on the Property, and confirm that all 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 tender's agent to enter and inspect the Property and review all records at any reasonable time to SEVEN HILLS HOMELESS SHELTER. INC. Initials, A,kana. NbrtygrLeeuhold Page 7 AR/4MCFREEMA00B371000051870200E2SO6Y 01995 Bankers Systems, Inc., St. Cloud, MN Evil �" AUG-28-2006 NON 12:40 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P, 09 determine (1) the existence, location and nature of any Hazardous Substance on, under or about the Property; (21 the existence, location, nature, and magnitude of any Hazardous Substance that has been released on, under or about the Property; or (3) whether or not Landlord, Mortgagor, or any tenant are in compliance with applicable Environmental Law: I. Upon Lender's request and at any time, Mortgagor agrees, at Mortgagor's expense, to engage a qualified environmental engineer to prepare an environmental audit of the Property and to submit the results of such audit to Lender. The choice of the environmental engineer who will perform such audit is subject to Lender's approval. J, Lender has the right, but not the obligation, to perform any of Mortgagor's obligations under this section at Mortgagor's expense. K. As a consequence of any breach of any representation, warranty or promise made in this section, (1) Landlord and Mortgagor agree to indemnity and hold Lender and Lender's successors or assigns harmless from and against all losses, claims, demands, liabilities, damages, cleanup, response and remediation costs, penalties and expenses, including without limitation all costs of litigation and attorneys' fees, which Lender and Lender's successors or assigns may sustain; and (2) at Lender's discretion, Lender may release this Security Instrument and in return Mortgagor will provide Lender with collateral of at least equal value to the Property without prejudice to any of Lender's rights under this Security Instrument. L. Notwithstanding any of the language contained in this Security instrument to the contrary, the terms of this section will survive any foreclosure or satisfaction of this Security Instrument regardless of any passage of title to Lender or any disposition by Lender of any or all of the Property. Any claims and defenses to the contrary are hereby waived. 20. CONDEMNATION. Mortgagor and Landlord will give Lender prompt notice of any pending or threatened action by private or public entities to purchase or take any or all of the Property, through condemnation, eminent domain, or any other means. Mortgagor authorizes Lender to intervene in Mortgagor's name in any of the above described actions or claims. Mortgagor assigns to Lender the proceeds of any award or claim for damages proceeds will be connected with condemnation or other taking of all or any part of the Property. Such considered payments and will be applied as provided in this Security Instrument. This assignment of proceeds is subject to the terms of any prior mortgage, deed of trust, security agreement or other lien document. 21. INSURANCE, Mortgagor agrees to keep the Property insured against the risks reasonably associated with the Property. Mortgagor will maintain this insurance in the amounts Lender requires. This insurance will last until the Property is released from this Security Instrument. What Lender requires pursuant to the preceding two sentences can change during the term of the Secured Debts, Mortgagor may choose the insurance company, subject to Lender's approval, which will not be unreasonably withheld. All insurance policies and renewals will include a standard "mortgage clause" and, where applicable, "loss payee clause," If required by Lender, Mortgagor agrees to maintain comprehensive general liability insurance and rental loss or business interruption insurance in amounts and under policies acceptable to Lender. The comprehensive general liability insurance must name Lender as an additional insured, The rental loss or business interruption insurance must be in an amount equal to at least coverage of one year's debt service, and required escrow account deposits (if agreed to separately in writing). Mortgagor will give Lender and the insurance company immediate notice of any loss, All insurance proceeds will be applied to restoration or repair of the Property or to the Secured, Debts, at Lender's option. If Lender acquires the Property in damaged condition, Mortgagor's SEVEN HILLS HOMELESS SHELTER, INC. I Initials Arkansas Mortsage-Leisaheld Pegs a AR,4MCFREEMA009371000051e70200S2a08Y °1998-Benkan Syaems, Inc., St. Cloud, MN Fwd" AUG-28-2006 NON 12:41 PM ARVEST FYT JOYCE BRANCH FAX NO, 4794426910 P. 10 rights to any insurance policies and proceeds will pass to Lender to the extent of the Secured Debts. Mortgagor will immediately notify Lender of cancellation or termination of insurance. If Mortgagor fails to keep the Property insured, Lander may obtain insurance to protect Lender's interest in the Property and Mortgagor will pay for the insurance on Lender's demand. Lander may demand that Mortgagor pay for the insurance all at once, or Lender 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 Mortgagor, may he written by a company other than one Mortgagor would choose, and may be written at a higher rate than Mortgagor could obtain if Mortgagor purchased the insurance. Mortgagor acknowledges and agrees that Lender or one of Lender's affiliates may receive commissions on the purchase of this insurance. 22. ESCROW FOR TAXES AND INSURANCE. Mortgagor will not be required to pay to Lender funds for taxes and insurance in escrow. 23. CO-SIGNERS. it Mortgagor signs this Security Instrument but is not otherwise obligated to pay the Secured Debts, Mortgagor does so only to mortgage Mortgagor's interest in the Property to secure payment of the Secured Debts and Mortgagor does not agree by signing this Security Instrument to be personally liable on the secu ed Degor ag rees If to this. Srity ristent Security Instrument secures a guaranty between Lender and Mortgagor. may prevent Lender from bringing any action or claim against Mortgagor or any party indebted under the obligation. These rights may include, but are not limited to, any anti -deficiency or one -action laws. 24. APPLICABLE LAW. This Security Instrument is governed by the laws of Arkansas, 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. 25. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each party's obligations under this Security Instrument are independent of the obligations of any other party. !Lender may sue each Mortgagor or Landlord individually or together with any other Mortgagor or Landlord. Lender may release any pan of the Property and Mortgagor and Landlord will still be obligated under this Security Instrument for the remaining Property. Mortgagor agrees that Lender and any party to this Security Instrument may extend, modify or make any change in the terms of this Security Instrument or any evidence of debt without Mortgagor's consent. Such a change will not release Mortgagor from the terms of this Security Instrument. The duties and benefits of this Security Instrument will bind and benefit the successors and assigns of Mortgagor. Landlord and Lender. 26. AMENDMENT, INTEGRATION AND SEVERABILITY. This Security Instrument may nut be amended or modified by oral agreement. No amendment or modification of this Security Instrument is effective unless made in writing and executed by Mortgagor. Landlord and Lender. This Security Instrument and any other documents relating to the Secured Debts are the complete and final expression of the agreement. If any provision of this Security Instrument unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. 27. 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 Security Instrument. 28. NOTICE, FINANCIAL REPORTS, ADDITIONAL DOCUMENTS AND RECORDING TAXES. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first SEVEN HILLS HOMELESS SHELTER, INC. initials Arkansas MertWSeieeeehold 41998 cankers systems. Inc., st. Cloud, MN 'rte Page 9 AR/4MCFREEMADO98710000618702008280&Y AUG-28-2006 MON 12:41 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P. 11 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 Mortgagor will be deemed to be notice to all Mortgagors. Mortgagor will inform Lender in writing of any change in Mortgagor's name, address or other application information. Mortgagor will provide Lender any financial statements or information Lender requests. All financial statements and information Mortgagor gives Lender will be correct and complete. Mortgagor agrees to pay all expenses, charges and taxes in connection with the preparation and recording of this Security Instrument, Mortgagor and Landlord agree to sign, deliver, and file any additional documents or certifications that Lender may consider necessary to perfect, continue, and preserve Mortgagor's obligati ns agrees this s Security Instrument and to confirm Lender's lien status on any Property, an to pay all expenses, charges and taxes in connection with the preparation and recording thereof. Time is of the essence. 29. WAIVERS. Except to the extent prohibited by law, Mortgagor waives all appraisement, sale, redemption and homestead exemption rights relating to the Property under the lawsofthe State of Arkansas, especially under § 18-49-106. To the extent applicable. Mortgagor relinquishes all rights of curtesy and dower in the Property. 30. CONSTRUCTION LOAN. This Security Instrument secures an obligation incurred for the construction of an improvement on the Property. Mortgagor and Lender agree that the loan proceeds are to be used for the purpose of paying all direct and indirect costs of construction. Mortgagor agrees that Lander is not the trustee for the benefit of the contractor, subcontractor or materialmen and that such contractor, subcontractor or materialmen do not have equitable liens on the loan proceeds and that they do not have third -perry beneficiary status to any of the loan proceeds. Lender is obligated to make the construction advances. The construction advances shall be applied by Mortgagor to the payment of all direct and indirect costs of construction. Notice is hereby given that to the full extent permitted under Ark. Stat. Ann. § 18-44-110, the lien of this Security Instrument will have priority over any statutory liens on account of labor and material supplied for construction. SIGNATURES. By signing, Mortgagor and Landlord agree to the terms and covenants contained 'in this Security Instrument. Mortgagor and Landlord also acknowledge receipt of a copy of this Security Instrument, MORTGAGOR: SEVEN HILLS HOMELESS SHELTER, INC. By LOWELL GGRISHAM, PRESIDENT LANDLORD: CITY OF FAYETTEVILLE, ARKANSAS By DAN C000Y, MAYOR SEVEN HILLS HOMELESS SHELTER, INC. Initials Arkamas MortAA9e-teasehold '1996 Rankers Systems, Inc., St. Cloud. MN E i' a Page 1010 A(U4MCFREEMA0093710000616702OOS290RY AUG-28-2006 NON 12:41 PM ARVEST FYI JOYCE BRANCH FAX NO. 4794426910 P. 12 ACKNOWLEDGMENT. (Business or Entity) OF ___________—• ______________ _ OF ss, day of , before me, On this the the underofficer, personally appeared LOWELL GRISHAM, who acknowledged himselflherself/themselves to be the PRESIDENT of SEVEN HILLS HOMELESS SHELTER, INC. a corporation, and that he/she/they, as such officers, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation as such officers. in witness whereof, I hereunto set my hand and official seal. My commission expires: (Notary Public) SEVEN HILLS HOMELESS SHELTER. INC. Initials �_ Arkansas Mptgaga{aaaeIAold Page 11 AR/RMCFREEMA0o937100005187020082806Y 01996 Banker Syaroms. Inc., St. Cloud. MN F fC' AUG-28-2006 NON 12:41 PM ARVEST FYI JOYCE BRANCH FAX NO, 4794426910 P. 13 (Business or Entity) OF —' ---� before me, On this he day of ��� personally appeared DAN the undersigned officer, C000Y, who acknowledged himselflherself/themselves to be theMAYOR of CITY being OF FAYETTEVILLE, ARKANSAS a corporation, and that he/she/theY, as sucauthorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself/herselfhhemselves as MAYOR. In witness whereof. I hereunto set my hand and official seal. My commission expires: INotary Public) OF $s. Arkmsas Merlgrpa.WeeahoW ARI4MCFREEMA00937100006187020082906Y burials, e1996 Bankers Sysmmc, Iro., St. Cloud, Mb � Page 12 From: "Brenda Thiel" <bthiel@cox.net> To: "dlarice Pearman" <cpearman@ci.fayetteville.ar.us> Date: 9.7.06 4:31 PM Subject: RE: Seven Hills Clarice, I have sent this request to Hugh Earnest to follow up on. If you haven't had a response by next week, please let me know. Thanks, Brenda --Original Message ---- From: Clarice Pearman [mailto:cpearman@ci.fayetteville.ar.us] Sent: Thursday, September 07, 2006 4:01 PM To: Brenda Thiel Subject: Seven Hills Ms. Thiel, The Council passed the lease amendment for Seven Hills Homeless Shelter September 5, 2006. I do not have a signed amended lease agreement. You may have Mr. Grisham come by to sign the amended lease anytime between 6 and 5 p.m.. Also, I don't have a signed original of the Leasehold Mortgage. A faxed copy only good for review. Please ask Mr. Grisham to bring an original with him when he comes to the sign above lease. I need all these items to continue processing the resolution and getting the mayor's signature. Thanks for your assistance. Clarice Clarice Pearman - Seven Hills Page 1 From: Clarice Pearman To: Thiel, Brenda Date: 9.7.06 4:01 PM Subject: Seven Hills Ms. Thiel, The Council passed the lease amendment for Seven Hills Homeless Shelter September 5, 2006. I do not have a signed amended lease agreement. You may have Mr. Grisham come by to sign the amended lease anytime between 8 and 5 p.m.. Also, I don't have a signed original of the Leasehold Mortgage. A faxed copy only good for review. Please ask Mr. Grisham to bring an original with him when he comes to the sign above lease. I need all these items to continue processing the resolution and getting the mayor's signature. Thanks for your assistance. Clarice From: Clarice Pearman To: hughearnest2002@yahoo.com Date: 9.22.06 3:47 PM Subject: Re: Seven Hills Hugh, You picked up the agreements for signature of the Seven Hills people and said you would return them that afternoon on September 12th. To date you have not returned them for processing. Please return them to me with the appropriate signatures as soon as possible. I cannot finish processing the resolution until they are received. Have a good day. Thanks. Clarice Clarice Buffalohead-Pearman City Clerk Division 113 West Mountain Fayetteville, AR 72701 479-575-8309 cpearman@ci.fayetteville.ar.us T,r- rn-.''.':_ W- (9.25.06) Clarice Pearman - Re: Seven Hills Page 1 From: Clarice Pearman To: Earnest, Hugh Date: 9.25.06 8:48 AM Subject: Re: Seven Hills Thank you. >>> Hugh Earnest <hugheamest2002@)vahoo.com> 9.25.06 6:29 AM >>> My apology, the bank guy (Brioeoassured me that he would get the signatures from everyone and I ASSUMED that it had been done. will get on it today sorry. --- Clarice Pearman <coearmanCa ci favetteville.ar.us> wrote: > Hugh, > You picked up the agreements for signature of the > Seven Hills people > and said you would return them that afternoon on > September 12th. To > date you have not returned them for processing. > Please return them to > me with the appropriate signatures as soon as > possible. I cannot finish > processing the resolution until they are received. > Have a good day. > Thanks.. > Clarice > Clarice Buffalohead-Pearman > City Clerk Division > 113 West Mountain > Fayetteville, AR 72701 > 479-575-8309 > cDearmanCalci fayetteville.ar.us Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com I From: Hugh Earnest <hugheamest2002@yahoo.com> To: <cpearman@ci.fayetteville.ar.us> Date: 9.26.06 6:22 AM Subject: status Talked to Brice yesterday. what I thought was a relatively simple issue has once again evolved into attorneys checking something on one of the documents and talking about it. Brice assures me that next week will see this thing put to bed. my apology once again. A very competant friend of mine from Regions and a vice president will be in town today we will be visiting about this since she is one of the signatory banks. Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com File No. 0605865 Borrower: Seven Hills Homeless Shelter, Inc. STATE OF ARKANSAS } ` }SS. COUNTY OF The undersigned, referred to herein as "Owner", whether one or more being first duly sworn states on oath that the Owner is the owner of the following described lands situated in Washington County, Arkansas, to -wit: A part of the Northeast Quarter (NE/4) of the Northeast Quarter (NE/4) of Section Twenty-two (22), Township Sixteen (16) North. Range 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 NE/4 of the NE/4 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 of Huntsville Road South 87°50'21" East 155.34 feet; thence leaving said south right of way line of Huntsville Road and running South 01°2811" East 258.35 feet; thence South 87°28'1 I" East 60.00 feet; thence Sopth 01°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 NE/4 of NE/4 of said Section 22; thence along said west line North 02°47'36" East 720.00 feet to the Point of Beginning containing 3.51 acres, more or less, being subject to the rights of way and easements of record. Owner further states that the following facts are true: I. There is no adverse occupant of the property described above. 2. Owner and those under whom Owner claims title have been, in peaceable possession of said lands for more than seven (7) years last past. 3. There are no unrecorded options to purchase, sales contracts or lease agreements outstanding which affect the property described above. 4. There have been no improvements made on the property described above during the last 130 days for which a Mechanics' and Materialmen's Lien may be filed. 5. No appliances have been installed in the property described above on deferred payments which are unpaid for. 6. There are no delinquent assessments due to the Municipal Sanitary System on the property described above. 7. The property described above is not traversed by any roadways or easements except those shown of record. 8. There arc no delinquent assessments due on the Resident's Association on the property described above. 9. That no money whatsoever is owed on subject property to any person, firm or corporation other than the following: as set forth in current Title Commitment 0605865. 10. There arc no outstanding judgments against seller as a result of legal action to include but not limited to Tax Liens, Divorce, Bankruptcy, or Foreclosure or as a result of Child Support. WITNESS the of the undersigned on the 2 day of 0c4t,bti, 2006. B •••.i City ofFetteville. Arkansas, a municipal corporation �Sa • No ..0 ?7' 1, of G• �'C(mn 2 •.• '/ n O : rQCO before me, a Notary Public, on the cz My Commission Expires: y-F-OS 2006. AMENDED LEASE AGREEMENT This Amended Lease Agreement is made and entered into this 5`s 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 7. Notices. All notices, requests, demands and other communi permitted hereunder shall be in writing and shall be directed to the following: City of Fayetteville 113 W. Mountain S Fayetteville, AR 72 Seven Hills Homeless Center, Inc. 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. 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 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 City or any other person or persons lawfully c subject to the terms and conditions of this lease. hindrance or interruption by the equitably claiming by, through or under the City, 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. CITY By: ATTEST: By: SONDRA SMITH, City Clerk SEVEN HILLS HOMELESS CENTER, INC., Lessee By: ATTEST: By: Title: LOWELL GRISHAM, President Board of Directors of Seven Hills Homeless Center, Inc. This instrument was prepared by ARVEST BANK OPERATIONS, INC., P. 0. BOX 1729, LOWELL, Arkal 72745-1729 When recorded return to ARVEST BANK, P. 0. BOX 11 FAYETTEVILLE, Arkansas 72702 Space Above This Line For i LEASEHOLD MOI (With Future Advance 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 113W 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 and- interest in the Lease and Mortgagor's leasehold estate in and to the following described real property as -security for the Secured Debts fall referred to as Property): SEE EXHIBIT A SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold Initials AR/4MFINNELL00937100005187020083006Y- 01996 Bankers Systems, Inc., St, Cloud, MN. Page 1 EXHIBIT A A part of the Northeast Quarter (NEJ4) of the Northeast Quarter (NE'4) of Section Twenty-two (22). Township Sixteen (16) North, Range 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 corner of the NE'4 of the NE/4 of ssaid Section 22, said point being on the West 40 acre tract line and the South right of way line of Huntsville Road: thence muting along said south right ofway line of Huntsville Road South 87°50'21"East 15534 feet- thence leaving said south right of way line ofHuntsville Road and running South 01°2811" East 55.35 feet: thence South 87°2311" East. 60.00 feet: thence South 0I°28'1" East 65.00 feet thence South 02`47'36" West 396.89 feet: thence North 87°5021" West 23938 feet to the west line of the NE/4 ofNE4 of said Section 22: thence along said west line North 02°47'36" East 720.00 feet to the Point of Beginning containing 3.51 acres. more or less, being subject the rights of way and easements of record. Amendment 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." 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 Spies 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 including the 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-Leeeehold Initials ARf4MFINNELL00937100005187020083006y: 01996 Bankers Systems, Inc.. St. Cloud, MN. Ex i . Page 3 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. Mortgagor will not 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 persona( 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 time 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 attorney 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 Initials AR14MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN '" - F�r�k Page 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. Agreements. 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 any financial information that is untrue, inaccurate, or conceals a material fact at the time it is 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 purpose that 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. O. 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{eesehold Initials AR14MFINNELL00937100005187020083006y: 01996 Bankers Systems. Inc., St. Cloud, MN Ex�7t Page 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 expenses incurred 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 owing 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. § 16-22-308), 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 - Initials ARI4MFINNELL00937100005197020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN Ex,' Page 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 attorneysfees 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 ur 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 concerning 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 that all 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 Initials AR/4MFINNELL00937100005187020083006Y_ °1996 Bankers Systems. Inc., St. Cloud. MN Ex� Page 7 determine (1) the existence, location and nature of any -Hazardous Substance on, under or about the Property; (2) the existence, location, nature, and magnitude of any Hazardous Substance that has been released on, under or about the Property;. or (3) whether or not Landlord, Mortgagor, or any tenant are in compliance with applicable Environmental Law. I. Upon Lender's request and at any time, Mortgagor agrees, at Mortgagor's expense, to engage a qualified environmental engineer to prepare an environmental audit of the Property and to submit the results of such audit to Lender. The choice of the environmental engineer who will perform such audit is subject to Lender's approval. J. Lender has the right, but not the obligation, to perform any of Mortgagor's obligations under this section at Mortgagor's expense. K. As a consequence of any breach of any representation, warranty or promise ma section, (1) Londlerd and Mortgagor agree to indemnify and hold Lender and successors or assigns harmless from and against all losses, claims, demands, damages, cleanup, response and remediation costs, penalties and expenses, in g without limitation all costs of litigation and attorneys' fees, which Lender and Lender's successors or assigns may sustain; and (2) at Lender's discretion, Lender may release this Security Instrument and in return Mortgagor will provide Lender with collateral of at least equal value to the Property without prejudice to any of Lender's rights under this Security Instrument. L. Notwithstanding any of the language contained in this Security Instrument to the contrary, the terms of this section will survive any foreclosure or satisfaction of this S Instrument regardless of any passage of title to Lender or any disposition by Lender all of the Property. Any elaims and defenses to the eentrarj are hereby Waived. 20. CONDEMNATION. Mortgagor and Landlord will give Lender prompt notice of any p or threatened action by private or public entities to purchase or take any or all of the Property through condemnation, eminent domain, or any other means. Mortgagor authorizes Lender to intervene in Mortgagor's name in any of the above described actions or claims. Mortgagor assigns to Lender the proceeds of any award or claim for damages connected with a condemnation or other taking of all or any part of the Property. Such proceeds will be considered payments and will be applied as provided in this Security Instrument. This assignment of proceeds is subject to the terms of any prior mortgage, deed of trust, security agreement or other lien document. 21. INSURANCE. Mortgagor agrees to keep the Property insured against the risks reasonably associated with the Property. Mortgagor will maintain this insurance in the amounts Lender requires. This insurance will last until the Property is released from this Security Instrument. What Lender requires pursuant to the preceding two sentences can change during the term of the Secured Debts. Mortgagor may choose the insurance company, subject to Lender's approval, which will not be unreasonably withheld. All insurance policies and renewals will include a standard "mortgage clause" and, where applicable, "loss payee clause." If required by Lender, Mortgagor agrees to maintain comprehensive general liability insurance and rental loss or business interruption insurance in amounts and under policies acceptable to Lender. The comprehensive general liability insurance must name Lender as an additional insured. The rental loss or business interruption insurance must be in an amount equal to at least coverage of one year's debt service, and required escrow account deposits (if agreed to separately in writing). Mortgagor will give Lender and the insurance company immediate notice of any loss. All insurance proceeds will be applied to restoration or repair of the Property or to the Secured Debts, at Lender's option. If Lender acquires the Property in damaged condition, Mortgagor's SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold. Initials AR14MFINNELL009371000051870Z0083006Y 01996 Bankers Systems, Inc., St. Cloud. MN Ex? Page 8 rights to any insurance policies and proceeds will pass to Lender to the extent of the Secured Debts. Mortgagor will immediately notify Lender of cancellation or termination of insurance. If Mortgagor fails to keep the Property insured, Lender may obtain insurance to protect Lender's interest in the Property and Mortgagor will pay for the insurance on Lender's demand. Lender may demand that Mortgagor pay for the insurance all at once, or Lender 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 Mortgagor, may be written by a company other than one Mortgagor would choose, and may be written at a higher rate than Mortgagor could obtain if Mortgagor purchased the insurance. Mortgagor acknowledges and agrees that Lender or one of Lender's affiliates may receive commissions on the purchase of this insurance. 22. ESCROW FOR TAXES AND INSURANCE. Mortgagor will not be required to pay to Lender funds for taxes and insurance in escrow. 23. CO-SIGNERS. If Mortgagor signs this Security Instrument but is not otherwise obligated to pay the Secured Debts, Mortgagor does so only to mortgage Mortgagor's interest in the Property to secure payment of the Secured Debts and Mortgagor does not agree by signing this Security Instrument to be personally liable on the Secured Debts. If this Security Instrument secures a guaranty between Lender and Mortgagor, Mortgagor agrees to waive any rights that may prevent Lender from bringing any action or claim against Mortgagor or any party indebted under the obligation. These rights may include, but are not limited to, any anti -deficiency or one -action laws. 24. APPLICABLE LAW. This Security Instrument is governed by the laws of Arkansas, 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. 25. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each party's obligations under this Security Instrument are independent of the obligations of any other party. Lender may sue each Mortgagor or Landlord individually or together with any other Mortgagor or Landlord. Lender -may release any part of the Property and Mortgagor and Landlord will still be obligated under this Security Instrument for the remaining Property. Mortgagor agrees that Lender and any party to this Security Instrument may extend, modify or make any change in the terms of this Security Instrument or any evidence of debt without Mortgagor's consent. Such a change will not release Mortgagor from the terms of this Security Instrument. The duties and benefits of this Security Instrument will bind and benefit the successors and assigns of Mortgagor, Landlord and Lender. 26. AMENDMENT, INTEGRATION AND SEVERABILITY. This Security Instrument may not be amended or modified by oral agreement. No amendment or modification of this Security Instrument is effective unless made in writing and executed by Mortgagor, Landlord and Lender. This Security Instrument and any other documents relating to the Secured Debts are the complete and final expression of the agreement. If any provision of this Security Instrument is unenforceable, then the unenforceable provision will be severed and the remaining provisions will still be enforceable. 27. 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 Security Instrument. 28. NOTICE, FINANCIAL REPORTS, ADDITIONAL DOCUMENTS AND RECORDING TAXES. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold - Initials AR/4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN 5e Page 9 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 Mortgagor will be deemed to be notice to all Mortgagors, Mortgagor will inform Lender in writing of any change in Mortgagor's name, address or other application information. Mortgagor will provide Lender any financial statements or information Lender requests. All financial statements and information Mortgagor gives Lender will be correct and complete. Mortgagor agrees to pay all expenses, charges and taxes in connection with the preparation and recording of this Security Instrument. Mortgagor and Landlord agree to sign, deliver, and file any additional documents or certifications that Lender may consider necessary to perfect, continue, and preserve Mortgagor's obligations under this Security Instrument and to confirm Lender's lien status on any Property, and Mortgagor agrees to pay all expenses, charges and taxes in connection with the preparation and recording thereof: Time is of the essence. 29. WAIVERS. Except to the sale, redemption and homestead State of Arkansas, especially relinquishes all rights of curtesy 30. CONSTRUCTION LOAN. T 'construction of an improvement proceeds are to be used for the Mortgagor agrees that Lender is or materialmen and that such cc liens on the loan proceeds and that they do not loan proceeds. Lender is obligated to make advances shall be applied by Mortgagor to th construction. Notice is hereby given that to the full exten 18-44-110, the lien of this Security Instrument will have account of labor and material supplied for construction. extent prohibited by law, Mortgagor waives all appraisement, exemption rights relating to the Property,:iirider the laws of the under § 18-49-106. To the extent applicable, Mortgagor and dower in the Property. his Security Instrument secures an obligation incurred for the on the Property. Mortgagor and Lender agree that the loan purpose of paying all direct and indirect costs of construction. not the trustee for the benefit of the contractor, subcontractor not have enuitahle )ntractor or materidlmen do have third -party beneficiary the construction advances. e payment of all direct a t status to any of the( The construction nrl indirect costs of permitted under Ark. Stat. Ann. § priority over any statutory liens oq SIGNATURES. By signing, Mortgagor and Landlord agree to the terms and covenants contained in this Security Instrument. Mortgagor and Landlord also acknowledge receipt of a copy of this Security Instrument. MORTGAGOR: SEVEN HILLS HOMELESS SHELTER, INC. By LOWELL GRISHAM, PRESIDENT By GEORGE FAUCETTE, VICE PRESIDENT LANDLORD: [a]111 SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold Initials AR/4MFINNELL009371000051e70200e3006Y- 01996 Bankers Systems, Inc., St. Cloud, MN'. Page 10 ACKNOWLEDGMENT. (Business or Entity) OF OF SS. On this the day of , before me, the undersigned officer, personally appeared LOWELL GRISHAM and GEORGE FAUCETTE, who acknowledged himself/herself/themselves to be the PRESIDENT and VICE PRESIDENT of SEVEN HILLS HOMELESS SHELTER, INC. a corporation, and that he/she/they, as such officers, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation as such officers. In witness whereof, I hereunto set my hand and official seal. 'My commission expires: (Notary Public) SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage-LeeaehoM Initials AR/4MFINNELL00937100005187020083006y *1996 Bankers Systems, Inc., St. Cloud. MN Exd2 Page 11 (Business or Entity) OF4rka,as OF PA ss. On this the / day ofbefore me, Cyr a� , the undersigned officer, personally appeared DAN COODY, who acknowledged himself/herself/themselves to be the MAYOR of CITY OF FAYETTEVILLE, ARKANSAS a corporation, and that he/she/they, as such MAYOR, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by, signing the name of the corporation by himself/herself/themselves as MAYOR. In witness whereof, I hereunto set my hand and official �aseal. � . My commission expires:—�'Q.LGf/ (Notary Public) a111nrrrrt". . • • . • . . • . a01ARY 4 PUB' -0 SEVEN HILLS HOMELESS SHELTER, INC. Arkansas Mortgage -Leasehold Initials AR/4MFINNELL00937100005187020083006Y 01996 Bankers Systems, Inc., St. Cloud, MN Ex$ ? ' Page 12 III 111111117 T117 .117177 7TI From: Clarice Pearman To: Thiel, Brenda Date: 10.9.06 1:15 PM Subject: Res. 151-06 Attachments: 151-06 Seven Hills Homeless Shelter.pdf CC: Audit Alderman Thiel, Attached is a copy of the resolution and backup for the your item passed by City Council, September 5, 2006. If anything else is needed please let me know. Thanks. Clarice