EXHIBIT 10.3
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT, made this ______ day of ______________, 2003, by
NAVARRE CORPORATION, a Minnesota corporation, 0000 00xx Xxxxxx Xxxxx, Xxx Xxxx,
XX 00000 ("Assignor"), and THE BUSINESS BANK, its successors and assigns, whose
post office address is 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000
("Assignee").
FOR VALUE RECEIVED, Assignor hereby grants, transfers and assigns to
Assignee, the immediate and continuing right to receive and collect the rents,
income, profits and issues (collectively the "Rents") arising out of or payable
from or collected from the real property ("Premises") described in Exhibit "A"
attached hereto, and all leases and agreements for the leasing, use or occupancy
of the Premises now, heretofore, or hereafter entered into ("Leases"), together
with all guarantees therefor and all renewals and extensions thereof, together
with all payments derived therefrom including but not limited to claims for the
recovery of damages done to the Premises or for the abatement of any nuisance
existing thereon, claims for damages resulting from default under said Leases
whether resulting from acts of insolvency or acts of bankruptcy or otherwise,
and lump sum payments for the cancellation of said Leases or the waiver of any
obligation or term thereof prior to the expiration date and the return of any
insurance premiums or ad valorem tax payments made in advance and subsequently
refunded for the purpose of securing the following (herein collectively referred
to as the Indebtedness Secured Hereby"):
ONE. Payment of the indebtedness evidenced by that certain
Promissory Note ("Note") (including any extensions or renewals thereof) in the
principal sum of Four Million Five Hundred and Fifty Thousand and 00/100 Dollars
($4,550,000.00) dated of even date herewith, executed and delivered by the
Assignor and payable to the order of Assignee, secured by a Mortgage and
Security Agreement and Fixture Financing Statement ("Mortgage") of even date
herewith from Assignor to Assignee upon the Premises, filed for record in the
County of Hennepin, State of Minnesota;
TWO. Payment of all other sums with interest thereon becoming due
and payable to the Assignee herein and in the Note and Mortgage contained;
THREE. Performance and discharge of each and every obligation,
covenant and agreement of Assignor herein and in the Note and Mortgage
contained.
AND TO PROTECT THE SECURITY OF THIS ASSIGNMENT, XXXXXXXX AGREES:
1. Performance Of Leases. To faithfully abide by, perform and discharge
each and every obligation, covenant and agreement of said Leases by
lessor to be performed; to use its best efforts to enforce or secure
the performance of each and every obligation, covenant, condition and
agreement of said Leases by the tenants to be performed; not to borrow
against, pledge, or assign any rentals due under the Leases, nor
consent to a subordination or assignment of the interest of the tenants
thereunder to any party other than Assignee, nor anticipate the rents
thereunder for more than one (1) month in advance, nor waive, excuse,
condone or in any manner release or discharge the tenants of or from
their obligations, covenants, conditions and agreements to be
performed, nor enter into any additional Leases of all or any part of
the Premises having a term of more than one (1) year without the prior
written consent of the Assignee.
2. Protect Security. At Assignor's sole cost and expense, to appear in and
defend any action or proceeding arising under, growing out of or in any
manner connected with the Leases or the obligations, duties or
liabilities of the landlord thereunder, and to pay all costs and
expenses of Assignee, including attorney's fees in a reasonable sum, in
any such action or proceeding in which the Assignee in its sole
discretion may appear.
3. Representations. Assignor represents and warrants that it is now the
absolute owner of said Xxxxx and Leases with full right and title to
assign the same; that there are no outstanding assignments or pledges
of the Leases or Rents; that there are no existing defaults under the
provisions of any of the Leases on the part of any party to the Leases;
that all obligations on the part of the landlord under any Lease have
been fully complied with; that no Rents have been waived, anticipated,
discounted, compromised or released and that the tenants have no
defenses, setoffs, or counterclaims against Assignor.
4. Present Assignment. This Assignment shall constitute a perfected,
absolute and present assignment, provided the Assignor shall at the
sole discretion of Assignee have the right to collect, but not prior to
accrual, all of the monthly or other regular rent payments from
tenants, and to retain, use and enjoy the same unless and until an
Event of Default, as defined in the Mortgage, shall occur hereunder, or
under the Note, the Mortgage or under any other instrument now or
hereafter securing the Note or the Indebtedness Secured Hereby.
Notwithstanding the foregoing, Assignor shall have no right to collect
or retain any other Rents, including but not limited to insurance or
condemnation proceeds hereunder and the disposition of such proceeds,
if any, shall be in accordance with the terms and conditions of the
Mortgage.
5. Remedies. Upon or at any time after a default in the payment of any
Indebtedness Secured Hereby or in the performance of any obligation,
covenant or agreement herein or in said Note and Mortgage contained, or
upon an Event of Default hereunder or under the Mortgage, or if any
representation or warranty herein proves to be untrue then Assignee,
without regard to waste, adequacy of the security or solvency of the
Assignor, may declare all Indebtedness Secured Hereby immediately due
and payable, may revoke the privilege granted Assignor hereunder to
collect the Rents, and may, at its option, without notice, either:
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(a) In person or by agent, with or without taking possession of or entering
the Premises, with or without bringing any action or proceeding, give,
or require the Assignor to give, notice to Tenant under the Lease
authorizing and directing the Tenant to pay all Rents directly to the
Assignee; collect all of the Rents; enforce the payment thereof and
exercise all of the rights of the Assignor under the Lease and all of
the rights of the Assignee hereunder; and may enter upon, take
possession of, manage and operate the Premises, or any part thereof;
may cancel, enforce or modify the Lease, and fix or modify rents, and
do any acts which the Assignee deems proper to protect the security
hereof; or
(b) Apply for appointment of a receiver in accordance with the statutes and
law made and provided for, which receivership Assignor hereby consents
to, who shall collect the Rents; manage the Premises so as to prevent
waste; execute leases within or beyond the period of receivership;
perform the terms of this Assignment and apply the Rents as hereinafter
provided.
It is understood and agreed that such remedies are not to be deemed to be
mutually exclusive and Assignee may pursue all such remedies simultaneously.
Any Rents shall be applied in the following order: (aa) to payment of all
reasonable fees of any receiver appointed hereunder, (bb) to application of
Tenant's security deposits as required by Minn. Stat. Section 504B.178, (cc) to
payment when due of prior or current real estate taxes or special assessments
with respect to the Premises or, if the Mortgage so requires, to the periodic
escrow for payment of the taxes or special assessments then due, (dd) to payment
when due of premiums for insurance of the type required by the Mortgage or, if
the Mortgage so requires, to the periodic escrow for the payment of premiums
then due, (ee) to payment of all expenses for normal maintenance of the Premises
and (ff) if received prior to any foreclosure sale to the Indebtedness Secured
Hereby. If the Premises shall be foreclosed and sold pursuant to a foreclosure
sale, then during the period of redemption from such foreclosure sale:
(i) If the Assignee is the purchaser at the foreclosure sale, the Rents
shall be paid to the Assignee to be applied to the extent of any
deficiency remaining after the sale, the balance, after payment of any
deficiency, to be retained by the Assignee, and if the Premises are
redeemed by the Assignor or any other party entitled to redeem, any
balance so retained shall be applied as a credit against the redemption
price, provided, if the Premises are not redeemed, any remaining excess
Rents shall belong to the Assignee, whether or not a deficiency exists;
(ii) If the Assignee is not the purchaser at the foreclosure sale, the Rents
shall be paid to the Assignee to be applied to the extent of any
deficiency remaining after the sale, and the balance, after payment of
any deficiency, if any, to be applied as a credit against the
redemption price, provided, if the Premises are not redeemed any
remaining excess rents shall be paid to the purchaser.
The entering upon and taking possession of such Premises, the appointment of a
receiver, the collection of such Rents and the application thereof as aforesaid
shall not cure or waive any Event of Default, or
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waive, modify or affect notice of Event of Default under said Mortgage
or invalidate any act done pursuant to said notice, nor in any way
operate to prevent the Assignee from pursuing any remedy which now or
hereafter it may have under the terms and conditions of said Mortgage
or the Note secured thereby or any other instruments securing the same.
The rights and powers of the Assignee hereunder shall remain in full
force and effect both prior to and after any foreclosure of the
Mortgage and any sale pursuant thereto and until expiration of the
period of redemption from said sale, regardless of whether a deficiency
remains from said sale. The purchaser at any foreclosure sale,
including the Assignee, shall have the right, at any time and without
limitation as provided in Minn. Stat. Section 582.03, to advance money
to any receiver appointed hereunder to pay any part or all of the items
which the receiver would otherwise be authorized to pay if cash were
available from the Premises and the sum so advanced, with interest at
the rate provided for in the Note, shall be a part of the sum required
to be paid to redeem from any foreclosure sale.
6. No Liability For Assignee. The Assignee shall not be obligated to
perform or discharge, nor does it hereby undertake to perform or
discharge any obligation, duty or liability under the Leases nor shall
this Assignment operate to place responsibility for the control, care,
management or repair of the Premises upon the Assignee nor for the
carrying out of any of the terms and conditions of said Leases; nor
shall it operate to make the Assignee responsible or liable for any
waste committed on the Premises, or for any dangerous or defective
condition of the Premises, or for any negligence in the management,
upkeep, repair or control of said Premises resulting in loss or injury
or death to any tenant, licensee, employee or stranger nor liable for
laches or failure to collect the Rents and Assignee shall be required
to account only for such moneys as are actually received by it.
7. Assignor Hold Assignee Harmless. The Assignor shall and does hereby
agree to indemnify and to hold Assignee harmless of and from any and
all liability, loss or damage which it may or might incur under the
Leases or under or by reason of this Assignment and of and from any and
all claims and demands whatsoever which may be asserted against it by
reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants or agreements
contained in said Leases except for the gross negligence of the
Mortgagee. Should the Assignee incur any such liability, or in the
defense of any such claims or demands, the amount thereof, including
costs, expenses, and reasonable attorney's fees, shall be secured
hereby, shall be added to the Indebtedness Secured Hereby and Assignor
shall reimburse the Assignee therefor immediately upon demand, and upon
the failure of Assignor so to do the Assignee may declare all
Indebtedness Secured Xxxxxx immediately due and payable.
8. Authorization To Tenants. The tenants under the Leases are hereby
irrevocably authorized and directed to recognize the claims of Assignee
or any receiver appointed hereunder without investigating the reason
for any action taken or the validity or the amount of indebtedness
owing to the Assignee, or the existence of any Event of Default under
the Note, Mortgage, or under or by reason of this Assignment, or the
application to be made by the Assignee or such receiver. Assignor
hereby irrevocably directs and authorizes the tenants to pay to
Assignee or such receiver all sums due under the Leases and consents
and directs that said sums shall be paid to any such receiver in
accordance
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with terms of its receivership or to Assignee without the necessity for
a judicial determination that a default has occurred hereunder or under
the Mortgage or that Assignee is entitled to exercise its rights
hereunder, and to the extent such sums are paid to Assignee or such
receiver, the Assignor agrees that the tenants shall have no further
liability to Assignor for the same. The sole signature of the Assignee
or such receiver shall be sufficient for the exercise of any rights
under this Assignment and the sole receipt of the Assignee or such
receiver for any sums received shall be a full discharge and release
therefor to any such tenant or occupant of the Premises. Checks for all
or any part of the Rents collected under this Assignment shall upon
notice from the Assignee be drawn to the exclusive order of the
Assignee or such receiver.
9. Satisfaction. Upon the payment in full of all Indebtedness Secured
Hereby as evidenced by a recorded satisfaction of the Mortgage executed
by Assignee, or its subsequent assign, this Assignment shall without
the need for any further satisfaction or release become null and void
and be of no further effect; however, Assignee shall, upon request,
execute such a satisfaction or release at Assignor's sole cost and
expense.
10. Assignee Attorney-In-Fact. Assignor hereby irrevocably appoints
Assignee and its successors and assigns as its agent and attorney in
fact, which appointment is coupled with an interest, to exercise any
rights or remedies hereunder and to execute and deliver during the term
of this Assignment such instruments as Assignee may deem necessary to
make this Assignment and any further assignment effective.
11. Subsequent Leases. Until the Indebtedness Secured Hereby shall have
been paid in full, Assignor will, upon demand, deliver to the Assignee
executed copies of any and all other and future Leases upon all or any
part of the said Premises and agrees to make, execute and deliver unto
Assignee upon demand and at any time or times, any and all assignments
and other instruments sufficient to assign the Leases and Rents
thereunder to Assignee or that the Assignee may deem to be advisable
for carrying out the true purposes and intent of this Assignment. From
time to time on request of the Assignee the Assignor agrees to furnish
Assignee with a rent roll of the Premises disclosing current tenancies,
rents payable, and such other matters as Assignee may reasonably
request.
12. No Mortgagee In Possession. Nothing herein contained and no actions
taken pursuant to this Assignment shall be construed as constituting
the Assignee a "Mortgagee in Possession".
13. Continuing Rights. The rights and powers of Assignee or any receiver
appointed hereunder shall continue and remain in full force and effect
until all Indebtedness Secured Hereby, including any deficiency
remaining from a foreclosure sale, are paid in full, and shall continue
after commencement of a foreclosure action and after foreclosure sale
and until expiration of the equity of redemption, if the Assignee be
the purchaser at a foreclosure sale.
14. Successors And Assigns. This Assignment and each and every covenant,
agreement and provision hereof shall be binding upon the Assignor and
its successors and assigns including without limitation each and every
from time to time record owner of the
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Premises or any other person having an interest therein and shall inure
to the benefit of the Assignee and its successors and assigns. As used
herein the words "successors and assigns" shall also be deemed to mean
the heirs, executors, representatives and administrators of any natural
person who is a party to this Assignment.
15. Governing Law. This Assignment is intended to be governed by the laws
of the State of Minnesota.
16. Validity Clause. It is the intent of this Assignment to confer to
Assignee the rights and benefits hereunder to the full extent allowable
by law. The unenforceability or invalidity of any provisions hereof
shall not render any other provision or provisions herein contained
unenforceable or invalid. Any provisions found to be unenforceable
shall be severable from this Assignment.
17. Notices. Any notice which any party hereto may desire or may be
required to give to any other party shall be in writing and the mailing
thereof by certified mail, or equivalent, to the respective party's
address as set forth hereinabove or to such other place such party may
by notice in writing designate as its address shall constitute service
of notice hereunder.
18. Security Deposits. The Assignor agrees that upon default under the
terms of this Assignment or the Note or Mortgage, it shall transfer to
the Assignee any security deposits held by Assignor under the terms of
the Leases. Assignor agrees that such security deposits may be held by
the Assignee and shall become the absolute property of the Assignee
upon an event of default hereunder to be applied in accordance with the
provisions of the Lease. Until Assignee makes such demand and the
deposits are paid over to Assignee the Assignee assumes no
responsibility to the tenants for any such security deposit.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
executed as of the date first above written.
NAVARRE CORPORATION, a
Minnesota corporation
By ________________________
Its ______________________
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STATE OF MINNESOTA )
) ss.
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me this _____ day of
___________________________, 2003, by ____________________________________, the
_____________________________ of Navarre Corporation, a Minnesota corporation,
on behalf of the corporation.
___________________________________
NOTARY PUBLIC
THIS DOCUMENT WAS DRAFTED BY:
BEST & XXXXXXXX LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
(000) 000-0000
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EXHIBIT A
TO
ASSIGNMENT OF RENTS AND LEASES
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