Sample
lock box agreement.
This Agreement ("Agreement") is executed
as of _________[Date], between _________, a _________ corporation
("Lender"), _________, a _________ limited partnership
("Borrower"), and _________, a _________("Manager"),
with reference to the following facts:
A. Lender has made a loan to Borrower evidenced by
that certain Note (the "Note") dated as of _________ in the principal
amount of $_____(which may be increased by reason of the deferral of
interest as provided for there) and secured by a Deed of Trust and Security
Agreement with Fixture Filing _________[Date] (the "Deed of
Trust"), executed by the Borrower, as grantor, to _________, as Trustee, for
the benefit of the Lender, which Deed of Trust was recorded on _________ as
Instrument No. _________ in the Official records of the Recorder of _________
County, California, and by other security. The Deed of Trust encumbers certain
real property located in _________ County, California, more particularly
described on Exhibit A thereto together with certain other personal property
and other property as set forth therein (the "Mortgaged Property").
B. The parties now wish to enter into this agreement
to set forth certain agreements of the parties regarding the collection and use
of revenues received with respect to the Mortgaged Property.
In consideration of the
foregoing and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged here, the parties here agree as follows:
1. Manager. The Mortgaged Property shall be managed
and leased by Manager, or such other person as may be approved in writing by
Lender, pursuant to a management and leasing agreement approved in writing by
Lender.
2. Deposits. All rents and other amounts (including
without limitation security deposits, condemnation awards, and insurance
proceeds) received with respect to the Mortgaged Property
("Receipts") shall be collected by Manager and any Receipts received
by or currently held by Borrower shall immediately be paid to Manager. Manager
shall deposit all Receipts in the Account, as defined below.
3. Assignment. Borrower, to secure its obligations
under the Note and Deed of Trust (collectively, the "Secured
Obligations"), does grant to Lender a security interest in, and assign and
transfer to and pledge with Lender all right, title, and interest (whether
legal, equitable or beneficial) of Borrower in and to the security described
below (collectively, the "Account Collateral"):
Account No. _________(the "Account")
with or payable by _________ Bank (the "Bank") at its office at
_________, California _________ in the name of Borrower, including all sums now
or at any time hereafter on deposit in the Account and all sums due or to
become due on the Account (including interest), and any proceeds of and
replacements of the Account.
4. Withdrawals.
(a). Before Default. Before the occurrence of an
Event of Default (as defined below), withdrawals or disbursements of funds in
the Account shall be made only by Manager, as property manager for Borrower.
Manager shall only use amounts withdrawn or disbursed from the Account as
follows: (i) to pay operating and leasing expenses of the Mortgaged Property
approved by Lender; (ii) the remainder, less an appropriate reserve approved by
the Lender, shall on the first day of each month be paid to the Lender to the
extent of payments due under the Note; and (iii) the remainder, less an
appropriate reserve approved by Lender, shall on the first day of each calendar
quarter be paid to Borrower. Borrower and Manager acknowledge and agree that Lender
shall not approve as operating or leasing expenses the payment by Manager of
any fees or other amounts to Borrower or any of its general partners or any
affiliates or relatives of Borrower or any of its general partners and Borrower
covenants and agrees not to request or accept any such payments.
(b). After Default. Upon the occurrence of an Event
of Default, Lender may give notice of the Event of Default to Bank and
thereafter withdrawals or disbursements from the account may be made only by
Lender.
5. Financial Reporting.
(a). Reports. Borrower shall cause Manager to submit
to Lender weekly reports on leasing and such other matters as Lender may
request and monthly reports on the cash flow of the Mortgaged Property and on
such other matters as Lender may request. Such monthly reports as to cash flow
shall (i) be in such detail as Lender may request; and (ii) be accompanied by
copies of invoices, checks, bank notices, and statements relating to the
Account, and such other supporting documents as Lender shall request. Lender
shall have the right to conduct an audit at Borrower's expense of the matters
set forth in the monthly reports and Borrower and Manager shall cooperate with
Lender in performing the audit and shall make available such of its books and
records relating to the Mortgaged Property as Lender shall reasonably request.
(b). Meetings. At Lender's request, Manager and
Borrower shall consult with Lender regarding leasing activities and financial
issues affecting the Mortgaged Property from time to time. Lender shall not,
however, have any right or authority to direct or control Manager or Borrower
in the operation of the Mortgaged Property.
6. Power of Attorney. Borrower constitutes and
irrevocably appoints Lender the true and lawful attorney of Borrower, with full
power of substitution, to ask, demand, collect, receive, or receipt for any and
all amounts which may be or become due and payable under the Account, to
execute any and all checks, drafts, withdrawal statements, receipts, or other
orders for the payment of money drawn on the Account, and to endorse the name
of Borrower on all commercial paper given in payment or in part payment, and in
its discretion to file any claim or take any other action or proceeding, either
in its own name or in the name of Borrower or otherwise, which Lender may deem
necessary or appropriate to protect and preserve the security interest of
Lender under this Agreement.
7. Events of Default. As used in this Agreement, the
term "Event of Default" shall mean any one or more of the following:
(a). An Event of Default as defined in the Deed of
Trust.
(b). The failure by Borrower or Manager to keep or
perform any of the terms or provisions of this Agreement.
(c). The levy of any attachment, execution, or other
process against Borrower of all or any part of the Account Collateral.
8. Remedies. Upon the occurrence of an Event of
Default, Lender may at any time and from time to time and without demand or
notice, withdraw and receive the Account Collateral up to the outstanding
amount of the Secured Obligations, and apply the proceeds (including any
interest) to the Secured Obligations. If there is a deficiency, Borrower
covenants and agrees promptly to pay the same to Lender. Borrower acknowledges
that the Account is a deposit account denominated in dollars and that a sale of
it is unnecessary to establish or realize upon the value of it. Borrower agrees
that the disposition of the Account Collateral as set forth above is a
commercially reasonable disposition of the Account Collateral and waives any
rights it may have to receive notice of any such withdrawals or disbursements
or to require a sale of the Account at a public or private sale.
9. Waivers. Borrower waives any right to require
Lender to (a) make or give any presentment, demands for performances, notices
of nonperformance, protests, notices of protest, or notices of dishonor in
connection with the Secured Obligations or the withdrawal of the Account
Collateral, (b) proceed against or exhaust any other collateral, or (c) pursue
any other remedy in Lender's power.
10. Termination. This Agreement shall remain in full
force and effect until all Secured Obligations are indefeasibly satisfied in
full.
11. Representation and Covenants. Borrower
represents, warrants, and covenants that ownership of the Account Collateral is
free and clear of all liens and encumbrances of any nature whatsoever and shall
remain so during the term of this Agreement. Borrower will not attempt to
withdraw the Account Collateral and will not attempt to amend or supplement the
instructions to the Bank set forth in this Agreement and in the Notice of
Security Interest without the prior written consent of Lender.
12. Acknowledgments. Borrower acknowledges and
agrees that Manager was selected by it, that Lender shall not be liable for any
actions or inactions of Manager, and that Lender shall not be deemed to be a
mortgagee in possession by reason of its rights set forth herein. Borrower also
acknowledges and agrees that nothing herein shall be deemed to modify the terms
or conditions of the Note or Deed of Trust or the other documents executed in
connection therewith, including, without limitation, the provisions relating to
the payment of interest and the disbursement of additional loan proceeds.
13. Further Assurances. Borrower shall execute and
deliver such further assignments, notices, and other documents as Lender may
reasonably require from time to time to better assure, assign, and transfer to
Lender the rights now or hereafter intended to be granted to Lender under this
Agreement for carrying out the intention of facilitating the performance of the
terms of this Assignment.
14. Costs and Expenses. All costs and expenses,
including reasonable attorneys' fees, incurred or paid by Lender in exercising
any right, power, or remedy conferred by this Agreement or in the enforcement
thereof, shall become a part of the Secured Obligations, shall be secured by
the Account Collateral, and shall be paid to Lender by Borrower immediately
upon demand.
15. Miscellaneous. The rights, powers, and remedies
of Lender under this Agreement shall be in addition to all rights, powers, and
remedies of Lender at law or under the Deed of Trust or any other agreement or
instrument. Any forbearance or failure or delay by Lender in exercising any
right, power, or remedy under this Agreement shall not be deemed to be a waiver
of such right, power, or remedy, and any single or partial exercise of any
right, power, or remedy under this Agreement shall not preclude the further
exercise of it. This Agreement and all representations and warranties, powers,
and rights it contains are binding upon and shall inure to the benefit of the
parties here and their respective successors and assigns.
16. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of California.
17. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
In witness, the parties have executed this Agreement
as of the date first set forth above.
_________
By
_________
_________
By
_________
The undersigned is executing this Agreement as
Manager to evidence its agreement to comply with the obligations of Manager set
forth in Sections 2, 4 and 5 of the Agreement.
_________
By
_________
