NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS MORTGAGE AT ANY ONE TIME, THE
MAXIMUM PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY THIS MORTGAGE,
EXCLUDING ADVANCES MADE BY THE MORTGAGEE IN PROTECTION OF THE
MORTGAGED PROPERTY OR THE LIEN OF THIS MORTGAGE, IS $17,194,529.00
UNDER CHAPTER 287 OF MINNESOTA STATUTES.
MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
THIS MORTGAGE,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING is made as of June 1, 2008 (this
“Instrument”), by the Mortgagor, LTF REAL ESTATE
VRDN I, LLC , a Delaware limited liability company, whose
mailing address is 2902 Corporate Place, Chanhassen, MN 55317
(“Mortgagor”), in favor of and for the benefit of the
Mortgagee, GENERAL ELECTRIC CAPITAL CORPORATION , a Delaware
corporation, whose mailing address is Suite 470, 8400
Normandale Lake Boulevard, Minneapolis, Minnesota 55437
(“Mortgagee”).
Mortgagor, in
consideration of the indebtedness herein recited, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, irrevocably gives, grants, sells,
conveys, warrants, sets over, mortgages and assigns to Mortgagee,
as security for such indebtedness, all of Mortgagor’s estate,
right, title and interest, now owned or hereafter acquired,
including any reversion or remainder interest, in the real property
located in the City of Chanhassen, County of Carver, State of
Minnesota described on Exhibit A attached hereto and
incorporated herein including all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements,
rights, appurtenances, tenements, hereditaments, rents, royalties,
mineral, oil and gas rights and profits, water, water rights and
water stock appurtenant to the property (collectively
“Premises”);
TOGETHER with all
of Mortgagor’s estate, right, title and interest, now owned
or hereafter acquired, in, under and to:
(a) all
buildings, structures, improvements, parking areas, landscaping,
equipment, fixtures and articles of property now or hereafter
erected on or attached to the Premises; including, but without
being limited to, all heating, air conditioning, manufacturing and
incinerating apparatus and equipment; all boilers, engines, motors,
dynamos, generating equipment, piping and plumbing fixtures, water
heaters, walk-in refrigerators and freezers, cooling, ventilating,
sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings,
underpadding, elevators, escalators, partitions, mantels, built-in
mirrors, window shades, blinds, draperies, screens, storm sash,
awnings, signs, and outdoor shrubbery and plants, and including
also all interest of any owner of the Premises in any of such items
hereafter at any time acquired under conditional sale contract,
chattel mortgage or other title retaining or security instrument,
all of which property mentioned in this clause (a) shall be
deemed part of the realty covered by this Instrument and not
severable wholly or in part without material injury to the freehold
of the Premises (all of the foregoing together with replacements
and additions thereto are referred to herein as
“Improvements”); and
(b) all
compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of
insurance therefor, arising out of or relating to a (i) taking
or damaging of the Premises or Improvements thereon by reason of
any public or private improvement, condemnation proceeding
(including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or
the Improvements for any reason whatsoever;
(c) proceeds
under any insurance any time provided with respect to the Premises,
Improvements and other collateral described herein for the benefit
of or naming Mortgagee and refunds or rebates of taxes or
assessments on the Premises;
(d) all
written and oral leases and rental agreements (including, without
limitation, that certain Lease Agreement dated June 13, 2008
(the “Lease Agreement”) between Mortgagor and LTF Club
Operations Company, Inc. (“Tenant”)) (including
extensions, renewals and subleases; each of the foregoing
singularly shall be referred to herein as a “Lease,”
and all of the foregoing shall be referred to collectively herein
as the “Leases”) now or hereafter affecting the
Premises including, without limitation, all rents, issues, income,
profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment
(“Rents”), all guaranties of tenants’ performance
under the Leases (including, without limitation, all rights, title
and interest in that certain Lease Guaranty and Negative Pledge
Agreement dated as of June 1, 2008 by Life Time Fitness,
Inc.), all letter-of-credit rights and all other supporting
obligations associated with the Leases and all rights and claims of
any kind that Mortgagor may have against any tenant under the
Leases or in connection with the termination or rejection of the
Leases in a bankruptcy or insolvency proceeding;
(e) to the
extent assignable without third party consents, plans,
specifications, documents, contracts and agreements relating to the
design or construction of the Improvements; Mortgagor’s
rights under any payment, performance, or other bond in connection
with the design or construction of the Improvements; all
landscaping and construction materials, supplies, and equipment
used or to be used or consumed in connection with construction of
the Improvements, whether stored on the Premises or at some other
location; and contracts, agreements, and
2
purchase orders
with contractors, subcontractors, suppliers, and materialmen
incidental to the design or construction of the
Improvements;
(f) to the
extent permitted by applicable law and to the extent assignable
without third party consents, all contracts, deposits, deposit
accounts, accounts, rights, claims or causes of action pertaining
to or affecting the Premises or the Improvements, including,
without limitation, all supporting obligations and any and all
proceeds thereof, options or contracts to acquire other property
for use in connection with operation or development of the Premises
or Improvements, management contracts, service or supply contracts,
permits, licenses, franchises and certificates with respect to the
Premises and Improvements, and all commitments or agreements, now
or hereafter in existence with respect to the Premises and
Improvements, intended by the obligor thereof to provide Mortgagor
with proceeds to satisfy the obligations evidenced hereby or
improve the Premises or Improvements, and the right to receive all
proceeds due under such commitments or agreements including
refundable deposits and fees;
(g) all
books, records, surveys, reports and other documents related to the
Premises, the Improvements, the Leases or other items of collateral
described herein; and
(h) all
additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and
intangible, described herein.
All of the
foregoing described collateral is exclusive of any goods,
equipment, inventory, furniture, furnishings or trade fixtures
owned and supplied by tenants or subtenants of the Premises. The
Premises, the Improvements, the Leases and all of the rest of the
foregoing property are herein referred to as the
“Property.”
TO HAVE AND TO
HOLD the Property and all parts, rights, members and appurtenances
thereof to the use, benefit and behoof of Mortgagee and its
successors and assigns in fee simple forever.
TO SECURE TO
Mortgagee (a) the repayment of the obligations under the
Reimbursement Agreement dated as of June 1, 2008 (as amended,
the “Reimbursement Agreement”) by and among Mortgagor,
Mortgagee and GE Government Finance, Inc. and all renewals,
extensions and modifications thereof; (c) the repayment of any
future advances, with interest thereon, made by Mortgagee to
Mortgagor pursuant to Section 30 hereof (the “Future
Advances”); (d) the payment of all other sums, with
interest thereon, advanced in accordance herewith to protect the
security of this Instrument or to fulfill any of Mortgagor’s
obligations hereunder or under the other Financing Documents (as
defined below); (e) the performance of the covenants and
agreements of Mortgagor contained herein or in the other Financing
Documents; and (f) the repayment of all sums now or hereafter
owing to Mortgagee by Mortgagor pursuant to any instrument which
recites that it is secured hereby. The indebtedness and obligations
described in clauses (a)-(f) above are collectively referred
to herein as the “Indebtedness.” The Reimbursement
Agreement, this Instrument, and all other documents evidencing,
securing or guaranteeing the Indebtedness (except the Environmental
Indemnity Agreement Regarding Hazardous Substances), as the same
may be modified or amended from time to time, are referred to
herein as the “Financing Documents.” The terms of the
Financing Documents secured hereby may provide that the interest
rate or payment terms or balance due
3
may be indexed,
adjusted, renewed, or renegotiated from time to time, and this
Instrument shall continue to secure the Indebtedness
notwithstanding any such indexing, adjustment, renewal or
renegotiation. If not sooner paid, the Indebtedness secured by this
Instrument is due and payable in full on June 1,
2033.
Mortgagor
represents and warrants that Mortgagor has good, marketable and
insurable title to, and has the right to mortgage an indefeasible
fee simple estate in, the Premises, Improvements, Rents and Leases,
and the right to convey the other Property, that the Property is
unencumbered and that Mortgagor will warrant and forever defend
unto Mortgagee the title to the Property against all claims and
demands, subject only to the permitted exceptions set forth in
Exhibit B attached hereto (herein “Permitted
Exceptions”).
Mortgagor
represents, warrants, covenants and agrees for the benefit of
Mortgagee as follows:
Section 1.
Payment of Principal and Interest . Mortgagor shall
promptly pay or cause to be paid when due the principal of and
interest on the Indebtedness, any prepayment and other charges
provided in the Financing Documents and all other sums secured by
this Instrument.
Section 2.
Funds for Taxes, Insurance and Other Charges . Except
as is hereinafter provided with respect to the impounding of such
payments by Mortgagee following the occurrence of an Event of
Default (hereinafter defined), Mortgagor shall pay or cause to be
paid when due, prior to delinquency, all annual real estate taxes,
insurance premiums, assessments, water and sewer rates, ground
rents and other charges (the “Impositions”) payable
with respect to the Property. Upon the occurrence of an Event of
Default, and at Mortgagee’s sole option at any time
thereafter, Mortgagor shall pay in addition to each monthly payment
due under the Reimbursement Agreement, one-twelfth of the annual
Impositions (as estimated by Mortgagee in its sole discretion), to
be held by Mortgagee in escrow without interest to Mortgagor, for
the payment of such Impositions (such payments being referred to
herein as “Impounds”).
Annually during
the term of this Instrument, Mortgagee shall compare the Impounds
collected to the Impositions paid or to be paid. If the amount of
such Impounds held by Mortgagee at such time shall exceed the
amount deemed necessary by Mortgagee to provide for the payment of
Impositions as they fall due, if no Event of Default shall have
occurred and be continuing, such excess shall be at
Mortgagor’s option, either repaid to Mortgagor or credited to
Mortgagor on the next monthly installment or installments of
Impounds due. If at any time the amount of the Impounds held by
Mortgagee shall be less than the amount deemed necessary by
Mortgagee to pay Impositions as they fall due, Mortgagor shall pay
to Mortgagee any amount necessary to make up the deficiency within
30 days after notice from Mortgagee to Mortgagor requesting payment
thereof. Upon the occurrence of an Event of Default hereunder,
Mortgagee may apply, in any amount and in any order as Mortgagee
shall determine in Mortgagee’s sole discretion, any Impounds
held by Mortgagee at the time of application (i) to pay
Impositions which are now or will hereafter become due, or
(ii) as a credit against sums secured by this Instrument. Upon
payment in full of all sums secured by this Instrument, Mortgagee
shall refund to Mortgagor any Impounds then held by
Mortgagee.
4
Section 3.
Application of Payments . (a) Each installment
payment received by Mortgagee from Mortgagor under or with respect
to the Reimbursement Agreement or this Instrument or the other
Financing Documents shall be applied by Mortgagee to the
Indebtedness in such order as provided in the Financing
Documents.
(b) If
requested by Mortgagee, Mortgagor shall promptly furnish to
Mortgagee all notices of Impositions which become due, and in the
event Mortgagor shall make payment directly, Mortgagor shall
promptly furnish to Mortgagee receipts evidencing such
payments.
Section 4.
Charges, Liens . Mortgagor shall promptly discharge
any lien which has, or may have, priority over or equality with,
the lien of this Instrument, and Mortgagor shall pay, when due, the
claims of all persons supplying labor or materials to or in
connection with the Property. Mortgagor shall not allow any lien to
be perfected against the Property other than the Permitted
Exceptions set forth in Exhibit B attached hereto. If
any such lien is filed against the Property, Mortgagor shall
promptly, at its own expense, cause such lien to be released of
record or bonded off and to deliver evidence of such release or
bonding to Mortgagee. Mortgagor may contest any such lien by
appropriate proceedings in good faith, timely filed, provided that
enforcement of the lien is stayed pending such contest or Mortgagor
pays to Mortgagee 125% of the amount of the lien to be held by
Mortgagee in escrow without interest to Mortgagor. Mortgagee may
require that Mortgagor post security for payment of such
lien.
Section 5.
Insurance and Damage or Destruction of Property .
Mortgagor shall obtain and maintain the types of insurance upon and
relating to the Property as required by the Reimbursement
Agreement, and, upon the damage or destruction of the Property,
insurance proceeds shall be disbursed as provided in the
Reimbursement Agreement.
Section 8.
Protection of Mortgagee’s Security . If an
Event of Default shall have occurred and be continuing, or if any
action or proceeding is commenced which affects the Property or
title thereto or the interest of Mortgagee therein, including, but
not limited to, eminent domain, insolvency, code enforcement, or
arrangements or proceedings involving a bankrupt or decedent, then
Mortgagee at Mortgagee’s option may make such appearances,
disburse such sums and take such action as Mortgagee deems
necessary, in its sole discretion, to protect Mortgagee’s
interest, including, but not limited to (a) disbursement of
reasonable attorneys’ fees, (b) entry upon the Property
to make repairs and (c) procurement of satisfactory insurance
as provided in Section 5 hereof.
Any amounts
disbursed by Mortgagee pursuant to this Section, with interest
thereon, shall become additional Indebtedness of Mortgagor secured
by this Instrument. Unless Mortgagor and Mortgagee agree to other
terms of payment, such amounts shall be immediately due and payable
and shall bear interest from the date of disbursement at the
Post-Default Rate (as defined in the Reimbursement Agreement).
Mortgagor hereby covenants and agrees that Mortgagee shall be
subrogated to the lien of any mortgage or other lien discharged, in
whole or
5
in part, by the
Indebtedness. Nothing contained in this Section shall require
Mortgagee to incur any expense or take any action
hereunder.
Section 9.
Inspection . Mortgagee may make or cause to be made
entries upon the Property to inspect the interior and exterior
thereof. Except in the case of emergency, such inspection shall be
with reasonable prior notice and shall in any case be with due
regard to rights of tenants.
Section 10.
Condemnation . If the Property, or any part thereof,
shall be condemned for any reason, including without limitation
fire or earthquake damage, or otherwise taken for public or
quasi-public use under the power of eminent domain, or be
transferred in lieu thereof, all damages or other amounts awarded
for the taking of, or injury to, the Property shall be paid and
applied as provided in the Reimbursement Agreement.
Section 11.
Mortgagor and Lien not Released . From time to time,
and subject to the requirements of the Reimbursement Agreement,
Mortgagee may, at Mortgagee’s option, without giving notice
to or obtaining the consent of Mortgagor, Mortgagor’s
successors or assigns or of any junior lienholder or guarantors,
without liability on Mortgagee’s part and notwithstanding
Mortgagor’s breach of any covenant or agreement of Mortgagor
in this Instrument, extend the time for payment of the Indebtedness
or any part thereof, reduce the payments thereon, release anyone
liable on any of the Indebtedness, accept an extension or
modification or renewal note or notes therefor, modify the terms
and time of payment of the Indebtedness, release from the lien of
this Instrument any part of the Property, take or release other or
additional security, reconvey any part of the Property, consent to
any map or plan of the Property, consent to the granting of any
easement, join in any extension or subordination agreement, and
agree in writing with Mortgagor to modify the rate of interest or
period of amortization of the obligations under the Reimbursement
Agreement or decrease the amount of the monthly installments
payable thereunder. Any actions taken by Mortgagee pursuant to the
terms of this Section shall not affect the obligation of Mortgagor
or Mortgagor’s successors or assigns to pay the sums secured
by this Instrument and to observe the covenants of Mortgagor
contained herein, shall not affect the guaranty of any person,
corporation, partnership or other entity for payment of the
Indebtedness, and shall not affect the lien or priority of the lien
hereof on the Property. Mortgagor shall pay Mortgagee a service
charge, together with such title insurance premiums and
attorneys’ fees as may be incurred at Mortgagee’s
option, for any such action if taken at Mortgagor’s
request.
Section 12.
Forbearance by Mortgagee not a Waiver . Any
forbearance by Mortgagee in exercising any right or remedy
hereunder, or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any other right or remedy.
The acceptance by Mortgagee of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver
of Mortgagee’s right to either require prompt payment when
due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the
payment of taxes or other liens or charges by Mortgagee shall not
be a waiver of Mortgagee’s right to accelerate the maturity
of the Indebtedness secured by this Instrument, nor shall
Mortgagee’s receipt of any awards, proceeds or damages under
Sections 5 and 10 hereof operate to cure or waive
Mortgagor’s default in payment of sums secured by this
Instrument.
6
Section 13.
Uniform Commercial Code Security Agreement . This
Instrument is intended to be a security agreement pursuant to the
Uniform Commercial Code, as enacted in the State of Minnesota (the
“Uniform Commercial Code”) for any of the items
specified above as part of the Property which, under applicable
law, may be subject to a security interest pursuant to the Uniform
Commercial Code, and Mortgagor hereby grants and conveys to
Mortgagee a first and prior security interest in all of the
Property that constitutes personalty, whether now owned or
hereafter acquired. Mortgagor agrees that Mortgagee may file this
Instrument, or a reproduction thereof, in the real estate records
or other appropriate index, as a financing statement for any of the
items specified above as part of the Property. Any reproduction of
this Instrument or of any other security agreement or financing
statement shall be sufficient as a financing statement. In
addition, Mortgagor agrees to execute and deliver to Mortgagee,
upon Mortgagee’s request, any financing statements,
extensions, renewals, amendments and other records, and
reproductions of this Instrument in such form as Mortgagee may
require to perfect a security interest with respect to the
foregoing items. Mortgagor shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and
releases thereof, and shall pay all costs and expenses of any
record searches for financing statements Mortgagee may require.
Mortgagor hereby waives any and all rights Mortgagor may have to
file in the real estate records or any other index or record any
financing statement, amendment, termination statement or other
record pertaining to the Collateral and/or Mortgagee’s
interest therein. Without the prior written consent of Mortgagee,
Mortgagor shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in said items,
including replacements and additions thereto. Upon an Event of
Default, Mortgagee shall have the remedies of a secured party under
the Uniform Commercial Code, and Mortgagee may also invoke the
remedies provided in Sections 24, 25, 26 and 27 hereof as to
such items. In exercising any of said remedies Mortgagee may
proceed against the items of real property and any items of
personal property specified above separately or together and in any
order whatsoever, without in any way affecting the availability of
Mortgagee’s remedies under the Uniform Commercial Code or of
the remedies provided in Sections 24, 25, 26 and 27
hereof.
Section 14.
Leases of the Property . Mortgagor shall comply with
and observe Mortgagor’s obligations as landlord under all
Leases of the Property or any part thereof. All Leases now or
hereafter entered into will be in form and substance subject to the
approval of Mortgagee. Mortgagor shall pay all reasonable
attorneys’ fees incurred by Mortgagee in reviewing any Lease
or proposed Lease. All Leases of the Property shall specifically
provide that such Leases are subordinate to this Instrument; that
the tenant attorns to Mortgagee, such attornment to be effective
upon Mortgagee’s acquisition of title to the Property; that
the tenant agrees to execute such further evidences of attornment
as Mortgagee may from time to time request; that the attornment of
the tenant shall not be terminated by foreclosure; and that
Mortgagee may, at Mortgagee’s option, accept or reject such
attornments. Mortgagor shall not, without Mortgagee’s prior
written consent, request or consent to the subordination of any
Lease of all or any part of the Property to any lien subordinate to
this Instrument. If Mortgagor becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise
to any right of set-off against rent, Mortgagor shall (i) take
such steps as shall be reasonably calculated to prevent the accrual
of any right to a set-off against rent, (ii) immediately
notify Mortgagee thereof in writing and of the amount of said
set-offs, and (iii) within ten (10) days after such
accrual, reimburse the tenant who shall have acquired such right to
set-off or take such
7
other steps as
shall effectively discharge such setoff and as shall assure that
rents thereafter due shall continue to be payable without set-off
or deduction. Upon Mortgagee’s receipt of notice of the
occurrence of any default or violation by Mortgagor of any of its
obligations under the Leases, Mortgagee shall have the immediate
right, but not the duty or obligation, without prior written notice
to Mortgagor or to any third party, to enter upon the Property and
to take such actions as Mortgagee may deem necessary to cure the
default or violation by Mortgagor under the Leases. The costs
incurred by Mortgagee in taking any such actions pursuant to this
paragraph shall become part of the Indebtedness, shall bear
interest at the Post-Default Rate, and shall be payable by
Mortgagor to Mortgagee on demand. Mortgagee shall have no liability
to Mortgagor or to any third party for any actions taken by
Mortgagee or not taken pursuant to this paragraph.
Section 15.
Remedies Cumulative . Each remedy provided in this
Instrument is distinct and cumulative to all other rights or
remedies under this Instrument or afforded by law or equity, and
may be exercised concurrently, independently or successively, in
any order whatsoever.
Section 16.
Transfers of the Property or Beneficial Interests in
Mortgagor; Assumption . Mortgagee may, at its option,
declare all sums secured by this Instrument to be immediately due
and payable, and Mortgagee may invoke any remedies permitted or not
prohibited by Sections&
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