FORM OF ASSIGNMENT OF RENTS CONTRACT
ASSIGNMENT OF RENTS CONTRACT
THIS ASSIGNMENT OF RENTS CONTRACT (hereinafter, "Assignment") is
made as of the ___ day of ___________________, _____, by and between Genesis
Financial Group, Inc., a Michigan corporation (hereinafter, "Sponsor") and
Gen-Net Lease Income Fund Trust, Corporate and Government Series, a Michigan
grantor trust (hereinafter, "Fund") and __________________________________,
the trustees of the Fund (hereinafter, "Trustees").
Whereas, the Sponsor has the knowledge and expertise to identify and
negotiate the purchase of stand alone, single use, leased commercial real
estate properties in which the tenant is credit worthy to the extent of
having a BBB or better Standard and Poor's or equivalent credit rating or is
a federal or state agency or is the US Postal Service ("Leased Property");
Whereas, the Sponsor can, either directly or through a wholly owned,
title holding affiliate (hereinafter for these purposes is also deemed to be
the "Sponsor"), acquire and own one or more Leased Properties which conform
to the foregoing criteria and each of which has a lease with a qualifying
tenant as described above with a remaining lease term of ten (10) years or
more ("Lease"); and
WHEREAS, in order to acquire said Leased Property, the Sponsor will
incur or take subject to mortgage indebtedness representing in the aggregate
an outstanding balance equal to no more than seventy-five percent (75%) of
the total purchase price of the Leased Property;
WHEREAS, the Fund, based on and subject to the evaluation and
approval of the Leased Property and the Lease by its Board of Trustees, is
prepared to invest with the Sponsor an amount equal to twenty-five percent
(25%) or more of the total purchase price of the Leased Property, said Fund
investment to be used exclusively to provide the Sponsor with the money
required by it, in addition to mortgage proceeds, to allow the Sponsor to
purchase the Leased Property and pay all necessary and appropriate
transaction costs and fees that are the obligation of the purchaser of said
Leased Property;
WHEREAS, because of fluctuations in interest rates and other factors
affecting market values, there is a possibility that the Leased Property can
be sold for more than was paid for it, such that the excess proceeds could be
shared between the Sponsor and the Fund; and
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WHEREAS, the Fund and the Sponsor desire to enter into this
Assignment establishing the terms, conditions, rights and obligations of the
parties with respect to such investment.
Now, therefore, in consideration of their mutual covenants and other
good and valuable consideration, the parties agree as follows:
1. ASSIGNMENT. The Sponsor hereby irrevocably assigns and transfers
to the Trustees, for and on behalf of the Fund, all right, title and interest
to all rents due to the Sponsor pursuant to that certain Lease between
_________________________ and __________________ dated ______________, _____,
attached hereto as Exhibit A and incorporated by reference, to the extent
such rents are not first applied by the Sponsor to service the mortgage
indebtedness encumbering the Leased Property and to cover all the Sponsor's
monetary obligations under the Lease until the Leased Property is sold or
otherwise disposed of by the Sponsor.
2. PRESENT ASSIGNMENT. This Assignment shall constitute a present,
absolute and unconditional assignment of the rents due and owing under the
Lease on or after ________________________, ________, until the termination
of this Assignment (hereinafter, "Assigned Rents") subject only to the terms
and conditions herein. The Trustees hereby name the Sponsor, as their agent,
to collect the Assigned Rents and promptly to remit the Net Amount, as
defined below, to the Fund.
The Sponsor shall collect the Assigned Rents, apply that portion of the
collected amount to the timely payment of the Sponsor's obligations under the
Lease, to the timely payment of any mortgages or deeds of trust to which the
Leased Property is subject, and to the enforcement of the Lease terms against
the tenant, if deemed by the Sponsor to be necessary and appropriate, to
apply property management and lease administration fees according to the
terms and conditions of separate agreements covering these services, and to
provide a monthly accounting to the Trustees of the Assigned Rents so
collected, applied and remitted (the "Net Amount"). The Sponsor shall have
the right to discount, compromise or settle any rent payment or claim arising
under the Lease in consultation with the Trustees, and any such action shall
require a written report from the Sponsor to the Trustees setting forth the
specific reasons and justification for said action including the advice of
legal counsel to the Sponsor. The Trustees shall have no right or obligation
whatsoever to take action to enforce any Lease provision or any determination
by the Sponsor regarding any Lease provision. Any fees paid from the Assigned
Rents to the Sponsor or any affiliate for property management services or
separate lease administration services must be first determined by the Fund's
Board of Trustees to be fair, reasonable and competitive with fees charged by
other parties providing similar services.
3. PURCHASE PRICE. The Fund shall acquire its rights to the Assigned
Rents and the Final Payment (defined below) by paying to the Sponsor the sum
of _________________
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Dollars ($___________), (hereinafter the "Purchase Amount"). The Purchase
Amount is due in full upon the Fund's execution of this Assignment.
4. FINAL PAYMENT. Upon termination of the Assignment as described in
Section 11 below, the Sponsor shall, within one hundred eighty (180) days
thereafter, consummate a sale of the Leased Property and promptly remit the
"Final Payment, described below, to the Fund. In the event the net proceeds
to the Sponsor from the sale of the Leased Property exceeds the Purchase
Amount, the amount due to the Fund from the Sponsor shall be the Purchase
Amount plus a sum equal to thirty percent (30%) of the net consideration from
the sale in excess of the purchase price for the Leased Property paid by the
Sponsor. In the event the net proceeds to the Sponsor from the sale of the
Leased Property is less than the Purchase Amount, the amount due to the Fund
from the Sponsor shall be the net proceeds of the sale of the Leased Property.
5. SPONSOR'S REPRESENTATIONS. The Sponsor represents and
warrants to the following:
a) It is the fee title absolute owner of the real estate
leased pursuant to the Lease.
b) The Lease is a valid, binding and enforceable obligation
between the parties and there are no outstanding suits,
claims, defaults, or actions arising or existing under the
Lease.
c) The Lease and the property rented pursuant to the Lease are in
compliance with all local building code, zoning and other
applicable local laws, regulations and ordinances.
d) The Sponsor has full authority to acquire the Leased Property
and to assign the Assigned Rents pursuant to this Assignment.
e) There are no encumbrances or restrictions of any kind that
could adversely affect this Assignment and the transfer of the
Assigned Rents except those disclosed to the Sponsor in a
title report as existing on the record as of the date the
Sponsor acquires title to the Leased Property, which report
has been provided to the Fund for its review.
6. SECURITY INTEREST. The Sponsor hereby conveys, transfers,
delivers and grants a security interest in the Lease to the Trustees. Said
security interest shall be subordinate to any other security interest
securing any encumbrance existing on the Lease property or placed on the
Lease property by a third party lender as part of the Sponsor's acquisition
of the Lease property. The security interest is given to the Trustees to
secure the prompt payment of the Net Amount due under paragraph 2 above, to
secure the Final Payment and to reimburse any costs of collection incurred by
or on behalf of the Fund.
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7. DEFAULT. Failure to comply with any material provision of this
Assignment, unless cured within five (5) days of Sponsor's receipt of notice
of said failure from the Fund, shall constitute an event of default hereunder.
8. REMEDIES.
a) In addition to all rights afforded the Fund at law or in
equity, in the event of a default the Fund shall, on written
notice to the Sponsor, replace the Sponsor as its agent for
the purpose of collecting the Assigned Rents and making
disbursements as provided under the terms of the Lease. The
Trustees shall appoint the replacement agent which may be an
affiliate of the Trustees.
b) In the event of a default, the Final Payment shall be
immediately due and payable by the Sponsor. Time is of the
essence.
9. NO LIABILITY FOR TRUSTEES. The Trustees shall not be obligated
to perform or discharge any duties or obligation of the Sponsor as owner of
the Lease property or the parties to the Lease.
10. FURTHER ASSURANCES. The Sponsor shall execute, acknowledge and
deliver such additional documents or information in its possession or under
its control as may be reasonably required from time to time to effectuate the
terms of this Assignment.
11. TERMINATION. This Assignment shall terminate on the earlier of
(a) the termination of the Lease, or (b) ___________________, _______. Any
accrued but unpaid Assigned Rents, net of outstanding obligations of the
Sponsor under the Lease and any property management fees or lease
administration fees approved by the Trustees shall be due and payable upon
termination of this Assignment.
12. SUCCESSORS. This Assignment shall be binding upon the parties
hereto, their successors, legal representatives assigns. The Sponsor shall
not assign any of its obligations hereunder.
13. GOVERNING LAW AND CONSTRUCTION. This Assignment is made pursuant
to and shall be governed by the laws of the State of Michigan. Whenever this
Assignment requires or permits action by the Trustees, the action of a
majority of the Trustees shall be required.
14. NOTICES. Any notice which a party may be required or may elect to
give shall be in writing and mailed by certified mail or its equivalent or by
facsimile reproduction with a copy sent by first class mail, and shall be
effective and shall be effective upon
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mailing or completion of the facsimile transmission. Notices shall be
addressed as follows unless otherwise directed in writing.
If to Sponsor:
Genesis Financial Group, Inc.
One Oakland Towne Sq.
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Bus Fax: (000) 000-0000
If to Trustees and Fund:
Bus Fax:
Entered into as of the day and year set forth above.
Genesis Financial Group, Inc.
Attest: _________________________ By: ______________________________
President
Gen-Net Lease Income Fund,
Corporate and Government Series
By:_______________________________, Trustee
By:_______________________________, Trustee
By:_______________________________, Trustee
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