EXHIBIT 10.4
WHEN RECORDED, RETURN TO:
Benjamin F.S. Herd, Esq.
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
TO BE RECORDED IN THE
SECURITY DEED RECORDS OF
GWINNETT COUNTY, GEORGIA
DEED TO SECURE DEBT AND SECURITY AGREEMENT
LOAN NO. CF3654900
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (this "Security Deed")
executed on July 10, 2006, but to be effective as of July 10, 2006, by SUN
COUNTRYSIDE ATLANTA LLC, a Michigan limited liability company, as grantor for
all purposes hereunder ("Borrower"), whose address is 27777 Franklin Road, Suite
200, Southfield, Michigan 48034, in favor of ARCS COMMERCIAL MORTGAGE CO., L.P.,
a California limited partnership, as grantee for all purposes hereunder
("Lender"), whose address is 26901 Agoura Road, Suite 200, Calabasas Hills,
California 91301. For all state law, statutory and other purposes hereunder, (i)
the term "Borrower" as used herein shall be deemed to mean a grantor of the
Property as described herein the same as if the term "grantor" were used in lieu
of the term "Borrower" throughout this Security Deed, and (ii) the term "Lender"
as used herein shall be deemed to mean a grantee of the Property with all of the
rights conferred hereby the same as if the term "grantee" were used in lieu of
the term "Lender" throughout this Security Deed.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 1
WITNESSETH:
THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS
($10.00), AND OTHER VALUABLE CONSIDERATION, INCLUDING THE INDEBTEDNESS HEREIN
RECITED AND THE TRUST HEREIN CREATED, THE RECEIPT AND SUFFICIENCY OF WHICH ARE
HEREBY ACKNOWLEDGED, BORROWER HEREBY IRREVOCABLY GRANTS, BARGAINS, SELLS,
CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND ASSIGNS, AND GRANTS A SECURITY
INTEREST, TO AND IN FAVOR OF LENDER, ITS SUCCESSORS AND ASSIGNS, with power of
sale, in all of Borrower's estate, right, title and interest in, to and under
any and all of the following described property, whether now owned or hereafter
acquired (collectively, the "Property"):
(A) All that certain real property situated in the County of Gwinnett,
State of Georgia, more particularly described on Exhibit A attached hereto and
incorporated herein by this reference (the "Real Estate"), together with all of
the easements, rights, privileges, franchises, tenements, hereditaments and
appurtenances now or hereafter thereunto belonging or in any way appertaining
thereto and all of the estate, right, title, interest, claim and demand
whatsoever of Borrower therein or thereto, either at law or in equity, in
possession or in expectancy, now owned or hereafter acquired;
(B) All structures, buildings and improvements of every kind and
description owned by Borrower now or at any time hereafter located or placed on
the Real Estate (the "Improvements");
(C) Borrower's interest in all easements, rights-of-way, strips and gores
of land, vaults, streets, ways, alleys, passages, sewer rights, and other
emblements now or hereafter located on the Real Estate or under or above the
same or any part or parcel thereof, and all estates, rights, titles, interests,
tenements, hereditaments and appurtenances, reversions and remainders
whatsoever, in any way belonging, relating or appertaining to the Property or
any part thereof, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired by Borrower;
(D) All furniture, furnishings, fixtures, goods, equipment, inventory or
personal property owned by Borrower and now or hereafter located on, attached to
or used in or about the Improvements, including, but not limited to, all
machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets,
awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and all
appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposals and incinerating equipment, and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
owned by Borrower as are now or hereafter used or furnished in operating the
Improvements, or the activities conducted therein, and all building materials
and equipment hereafter situated on or about the Real Estate or Improvements,
and all warranties and guaranties relating thereto, and all additions thereto
and substitutions and replacements therefor (exclusive of any of the foregoing
owned or leased by tenants of space in the Improvements);
(E) Borrower's interest in all water, water courses, ditches, wells,
reservoirs and drains and all water, ditch, well, reservoir and drainage rights
and powers which are appurtenant
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 2
to, located on, under or above or used in connection with the Real Estate or the
Improvements, or any part thereof, together with (i) all utilities, utility
lines, utility commitments, utility capacity, capital recovery charges, impact
fees and other fees paid in connection with same, (ii) reimbursements or other
rights pertaining to utility or utility services provided to the Real Estate
and/or Improvements and (iii) the present or future use or availability of waste
water capacity, or other utility facilities to the extent same pertain to or
benefit the Real Estate and/or Improvements, including, without limitation, all
reservations of or commitments or letters covering any such use in the future,
whether now existing or hereafter created or acquired;
(F) Borrower's interest in all minerals, crops, timber, trees, shrubs,
flowers and landscaping features now or hereafter located on, under or above the
Real Estate;
(G) All cash funds, deposit accounts and other rights and evidence of
rights to cash, now or hereafter created or held by Lender pursuant to this
Security Deed or any other of the Loan Documents (as hereinafter defined),
including, without limitation, all funds now or hereafter on deposit in the
Reserves (hereinafter defined);
(H) Borrower's interest in all leases, licenses, tenancies, concessions and
occupancy agreements of the Real Estate or the Improvements now or hereafter
entered into (severally, a "Lease", and collectively, the "Leases") and all
rents, royalties, issues, profits, bonus money, revenue, income, accounts
receivable and other benefits (collectively, the "Rents" or "Rents and Profits")
of the Real Estate, the Improvements, or the fixtures or equipment, now or
hereafter arising from the use or enjoyment of all or any portion thereof or
from any Lease (including, without limitation, oil, gas and mineral leases),
license, tenancy, concession, occupancy agreement or other agreement pertaining
thereto or arising from any of the Contracts (as hereinafter defined) or any of
the General Intangibles (as hereinafter defined) and all cash or securities (the
"Security Deposits") deposited, to the extent applicable, into the security
deposit account (the "Security Deposit Account") that secure performance by the
tenants, lessees or licensees, as applicable, of their obligations under any
Leases, licenses, concessions or occupancy agreements, or which may be available
to Borrower or its designee to effect repairs or maintenance, whether said cash
or securities are to be held until the expiration of the terms of said Leases,
licenses, concessions or occupancy agreements or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject
to, however, the provisions contained in Section 1.11 of this Security Deed;
(I) Borrower's interest in all contracts and agreements now or hereafter
entered into covering any part of the Real Estate or the Improvements
(collectively, the "Contracts") and all revenue, income and other benefits
thereof, including, without limitation, management agreements, service
contracts, maintenance contracts, equipment leases, personal property leases and
any contracts or documents relating to construction on any part of the Real
Estate or the Improvements (including plans, specifications, studies, drawings,
surveys, tests, operating and other reports, bonds and governmental approvals)
or to the management or operation of any part of the Real Estate or the
Improvements;
(J) Borrower's interest in all present and future monetary deposits given
to any public or private utility with respect to utility services furnished to
any part of the Real Estate or the Improvements;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 3
(K) Borrower's interest in all present and future funds, accounts,
instruments (including, without limitation, promissory notes), investment
property, letter-of-credit rights, letters of credit, money, supporting
obligations, accounts receivable, documents, causes of action, claims, general
intangibles (including, without limitation, payment intangibles and software,
trademarks, trade names, servicemarks and symbols now or hereafter used in
connection with any part of the Real Estate or the Improvements, all names by
which the Real Estate or the Improvements may be operated or known, all rights
to carry on business under such names, and all rights, interest and privileges
which Borrower has or may have as developer or declarant under any covenants,
restrictions or declarations now or hereafter relating to the Real Estate or the
Improvements) and all notes or chattel paper (whether tangible or electronic)
now or hereafter arising from or by virtue of any transactions related to the
Real Estate or the Improvements (collectively, the "General Intangibles");
(L) Borrower's interest in all water taps, sewer taps, certificates of
occupancy, permits, special permits, uses, licenses, franchises, certificates,
consents, approvals and other rights and privileges now or hereafter obtained in
connection with the Real Estate or the Improvements and all present and future
warranties and guaranties relating to the Improvements or to any equipment,
fixtures, furniture, furnishings, personal property or components of any of the
foregoing now or hereafter located or installed on the Real Estate or the
Improvements;
(M) Borrower's interest in all building materials, supplies and equipment
now or hereafter placed on the Real Estate or in the Improvements and all
architectural renderings, models, drawings, plans, specifications, studies and
data now or hereafter relating to the Real Estate or the Improvements;
(N) All right, title and interest of Borrower in any insurance policies or
binders now or hereafter relating to the Property including any unearned
premiums thereon;
(O) Borrower's interest in all proceeds, products, substitutions and
accessions (including claims and demands therefor) of the conversion, voluntary
or involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation awards;
and
(P) All other or greater rights and interests of every nature in the Real
Estate or the Improvements and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Borrower.
TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof, to the use, benefit and behalf of Lender and the
successors and assigns of Lender, IN FEE SIMPLE Forever; and Borrower covenants
that Borrower is lawfully seized and possessed of the Property as aforesaid, and
has good right to convey the same, that the same is unencumbered except for the
Permitted Exceptions (hereinafter defined), and that Borrower does warrant and
will forever defend the title thereto against the claims of all persons
whomsoever, except as to the Permitted Exceptions (hereinafter defined).
This conveyance is intended to operate as and is to be construed as a deed
passing the title to the Property to Lender and is made under those provisions
of the existing laws of the
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 4
State of Georgia relating to deeds to secure debt (including, e.g., O.C.G.A.
Section 44-14-60), and not as a mortgage, and is given to secure the following
described indebtedness:
(1) The debt evidenced by those certain Promissory Notes described on
Exhibit C attached hereto and made a part hereof for all purposes (such
Promissory Notes, together with any and all renewals, modifications, amendments,
restatements, consolidations, substitutions, replacements, and extensions
thereof, are hereinafter collectively referred to as the "Notes" and any one of
the Notes is individually referred to as a "Note") each dated as indicated on
Exhibit C, together with interest (including, without limitation, interest at
the Default Interest Rate (as defined in each of the Notes)) and any fees as
therein provided;
(2) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any
other agreements, documents or instruments now or hereafter evidencing, securing
or otherwise relating to the indebtedness evidenced by the Notes (the Notes,
this Security Deed and the Other Deeds of Trust (as defined on Exhibit C), the
Assignments (as defined on Exhibit C) and such other agreements, documents and
instruments, together with any and all renewals, modifications, amendments,
restatements, consolidations, substitutions, replacements, and extensions and
modifications thereof, are hereinafter collectively referred to as the "Loan
Documents") and the payment of all other sums therein covenanted to be paid,
including, without limitation, any applicable yield maintenance premiums or
prepayment fees;
(3) Any and all future or additional advances (whether or not obligatory)
made by Lender to protect or preserve the Property, or the lien or security
interest created hereby on the Property, or for taxes, assessments, operating
expenses or insurance premiums as hereinafter provided or for performance of any
of Borrower's obligations hereunder or under the other Loan Documents or for any
other purpose provided herein or in the other Loan Documents (whether or not the
original Borrower remains the owner of the Property at the time of such
advances), together with interest thereon at the Default Interest Rate; and
(4) Any and all other indebtedness now owing or which may hereafter be
owing by Borrower (but not any affiliate of Borrower) to Lender and originated
by Lender, however and whenever incurred or evidenced, whether express or
implied, absolute or contingent, or due or to become due, and all renewals,
modifications, amendments, restatements, consolidations, substitutions,
replacements and extensions thereof.
(All of the sums referred to in Paragraphs (1) through (4) above are herein
sometimes referred to as the "secured indebtedness" or the "indebtedness secured
hereby").
PROVIDED, HOWEVER, that if the principal and interest and all other sums
due or to become due under the Notes, including, without limitation, any
prepayment fees required pursuant to the terms of the Notes, shall have been
paid at the time and in the manner stipulated therein and all other sums payable
hereunder and all other indebtedness secured hereby shall have been paid and all
other covenants contained in the Loan Documents shall have been performed, then,
in such case, this Security Deed shall be canceled and surrendered.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 5
ARTICLE I
COVENANTS OF BORROWER
For the purpose of further securing the indebtedness secured hereby and for
the protection of the security of this Security Deed, for so long as the
indebtedness secured hereby or any part thereof remains unpaid, Borrower
represents, covenants and agrees as follows:
1.1 Warranties of Borrower. Borrower, for itself and its successors and
assigns, does hereby represent, warrant and covenant to and with Lender, its
successors and assigns, that:
(a) Organization and Existence. Borrower is a duly organized, validly
existing entity in good standing under the laws of the state where it was
organized and in all other jurisdictions in which Borrower is transacting
business.
(b) Authorization. Borrower has the power and authority to execute,
deliver and perform the obligations imposed on it under the Loan Documents and
to consummate the transactions contemplated by the Loan Documents and has taken
all necessary actions in furtherance thereof including, without limitation, that
those partners, shareholders or members of Borrower whose approval or consent is
required by the terms of Borrower's organizational documents have duly approved
or consented to the transactions contemplated by the Loan Documents and have
authorized execution and delivery thereof by the respective signatories. To the
best of Borrower's knowledge, no other consent by any local, state or federal
agency is required in connection with the execution and delivery of the Loan
Documents.
(c) Valid Execution and Delivery. All of the Loan Documents requiring
execution by Borrower have been duly and validly executed and delivered by
Borrower.
(d) Enforceability. All of the Loan Documents constitute valid, legal
and binding obligations of Borrower and are fully enforceable against Borrower
in accordance with their terms, subject only to bankruptcy laws and general
principles of equity.
(e) No Defenses. The Notes, this Security Deed and the other Loan
Documents are not subject to any right of rescission, set-off, counterclaim or
defense, nor would the operation of any of the terms of the Notes, this Security
Deed or any of the other Loan Documents, or the exercise of any right
thereunder, render this Security Deed unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury.
(f) Defense of Usury. Borrower knows of no facts that would support a
claim of usury to defeat or avoid its obligation to repay the principal of,
interest on, and other sums or amounts due and payable under, the Loan
Documents.
(g) No Conflict/Violation of Law. The execution, delivery and
performance of the Loan Documents by the Borrower will not cause or constitute a
default under or violate the organizational documents of Borrower, any
indemnitor or any general partner, shareholder or managing member of Borrower or
any indemnitor. The execution, delivery and performance of the obligations
imposed on Borrower under the Loan Documents will not cause Borrower to be
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 6
in default, including after due notice or lapse of time or both, under the
provisions of any agreement, judgment or order to which Borrower is a party or
by which Borrower is bound.
(h) Compliance with Applicable Laws and Regulations. All of the
Improvements and the use of the Property by the Borrower comply in all material
respects with, and shall remain in material compliance with, all applicable
statutes, rules, regulations and private covenants now or hereafter relating to
the ownership, construction, use or operation of the Property, including all
applicable statutes, rules and regulations pertaining to requirements for equal
opportunity, anti-discrimination, fair housing, environmental protection, zoning
and land use. The Improvements comply in all material respects with, and shall
remain in material compliance with, applicable health, fire and building codes.
There is no evidence of any illegal activities relating to controlled substances
on the Property. All certifications, permits, licenses and approvals, including,
without limitation, certificates of completion and occupancy permits required
for the legal use, occupancy and operation of the Property for the use currently
being made thereof have been obtained and are in full force and effect. All of
the Improvements comply with all material requirements of any applicable zoning
and subdivision laws and ordinances.
(i) Consents Obtained. All consents, approvals, authorizations, orders
or filings with any court or governmental or administrative agency or body, if
any, required for the execution, delivery and performance of the Loan Documents
by Borrower have been obtained or made.
(j) No Litigation. Except as shown on Exhibit D attached hereto and
made a part hereof, there are no pending actions, suits or proceedings,
arbitrations or governmental investigations against the Property, Borrower or
any guarantor of Borrower an adverse outcome of which would materially affect
(i) the Borrower's performance under the Notes, the Deeds of Trust or the other
Loan Documents; (ii) the Property; or (iii) the ability of the Property to
continue to generate income, or continue in operation, in a manner consistent
with current operations.
(k) Title. The Borrower has good and marketable fee simple title to
the Property, subject only to those matters expressly listed as exceptions to
title or subordinate matters in the title insurance policy accepted by Lender in
connection with this Security Deed (all such items, excluding therefrom,
however, all preprinted and/or standard exceptions, are herein referred to as
the "Permitted Exceptions"). The possession of the Property has been peaceful
and undisturbed and title thereto has not been disputed or questioned. Further,
Borrower has full power and lawful authority to grant, bargain, sell, convey,
assign, transfer and mortgage its interest in the Property in the manner and
form hereby done or intended. Borrower will preserve its interest in and title
to the Property and will forever warrant and defend the same to Lender against
any and all claims whatsoever and will forever warrant and defend the validity
and priority of the lien and security interest created herein against the claims
of all persons and parties whomsoever, subject to the Permitted Exceptions. The
foregoing warranty of title shall survive the foreclosure of this Security Deed
and shall inure to the benefit of and be enforceable by Lender in the event
Lender acquires title to the Property pursuant to any foreclosure.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 7
(l) Permitted Exceptions. The Permitted Exceptions do not and will not
materially and adversely affect (1) the ability of the Borrower to pay in full
the principal and interest on the Notes in a timely manner; or (2) the current
use of the Property, the current operation of the Property or the value of the
Property.
(m) First Lien. Upon the execution by the Borrower and the recording
of this Security Deed, and upon the execution and filing of UCC-1 financing
statements or amendments thereto, the Lender will have a valid first lien on the
Property and a valid security interest in all personal property encumbered
hereby, subject to no liens, charges or encumbrances other than the Permitted
Exceptions.
(n) ERISA. The Borrower has made and shall continue to make all
required contributions to all employee benefit plans established or maintained
by it, if any, and the Borrower has no knowledge of any material liability which
has been incurred by the Borrower which remains unsatisfied for any taxes or
penalties with respect to any such employee benefit plan or any such
multi-employer plan, and each such plan has been administered in material
compliance with its terms and the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any other
applicable federal or state law.
(o) Contingent Liabilities. The Borrower has no known material
contingent liabilities.
(p) No Other Obligations. The Borrower has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Borrower is a party or by which the
Borrower or the Property is otherwise bound, other than obligations incurred in
the ordinary course of the operation of the Property and other than obligations
under this Security Deed, the Notes and the other Loan Documents.
(q) Fraudulent Conveyance. The Borrower (1) has not entered into the
Loans (as defined on Exhibit C) or any Loan Document with the actual intent to
hinder, delay, or defraud any creditor; and (2) received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Giving effect to
the Loans contemplated by the Loan Documents, the fair saleable value of the
Borrower's assets exceed and will, immediately following the execution and
delivery of the Loan Documents, exceed the Borrower's total liabilities,
including, without limitation, subordinated, unliquidated, disputed or
contingent liabilities (if permitted hereunder). The fair saleable value of the
Borrower's assets is and will, immediately following the execution and delivery
of the Loan Documents, be greater than the Borrower's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute and matured (if permitted hereunder). The Borrower's
assets do not and, immediately following the execution and delivery of the Loan
Documents will not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. The Borrower does not
intend to, and does not believe that it will, incur debts and liabilities
(including, without limitation, contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of the
Borrower).
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 8
(r) Investment Company Act. The Borrower is not (1) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (2) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (3) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
(s) Access/Utilities. The Property has adequate rights of access to
public ways and is served by adequate water, sewer, electric and/or gas,
telephone, cable (where appropriate) and storm drain facilities. All public
and/or private utilities, as the case may be, necessary to the continued use and
enjoyment of the Property as presently used and enjoyed are located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property. All roads, and
access to such roads, necessary for the current utilization of the Property for
its current purpose have been completed and dedicated to public use and accepted
by all governmental authorities or are the subject of access easements for the
benefit of the Property without any further condition or cost to Borrower or
tenants.
(t) Taxes Paid. Borrower has filed all federal, state, county and
municipal tax returns required to have been filed by Borrower or with respect to
the Property, and has paid all taxes prior to the delinquency date thereof
pursuant to such returns or to any notice of assessment relating to the
Property, and Borrower has no knowledge of any basis for additional assessment
with respect to such taxes. Further, the Property is free from delinquent water
charges, sewer rents, taxes and assessments.
(u) Single Tax Lot. The Real Estate consists of a single tax lot and
no portion of said tax lot covers property other than the Real Estate or a
portion of the Real Estate and no portion of the Real Estate lies in any other
tax lot.
(v) Special Assessments. Except as disclosed in the title insurance
policy, there are no pending or, to the knowledge of the Borrower, proposed
special or other assessments for public improvements or otherwise affecting the
Property, nor, to the knowledge of the Borrower, are there any contemplated
improvements to the Property that may result in such special or other
assessments.
(w) Flood Zone. The Property is not located in a flood hazard area as
defined by the Federal Insurance Administration, except as shown in the survey
of the Property delivered to Lender in connection with this Security Deed.
(x) Seismic Exposure. The Real Estate is not located in Zone 3 or Zone
4 of the "Seismic Zone Map of the U.S.".
(y) Misstatements of Fact. No statement made in the Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no fact presently known to the Borrower which has not been disclosed
which materially and adversely affects, nor as far as
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 9
the Borrower can foresee, is likely to adversely affect the business, operations
or condition (financial or otherwise) of Borrower. Further, and in clarification
of the foregoing, all reports, certificates, affidavits, statements and other
data furnished by Borrower to Lender, or its respective agents, in connection
with the Loan are true and correct in all material respects and do not include
or omit any fact or circumstance, which inclusion or omission, respectively,
would make the statements therein misleading.
(z) Condition of Improvements. The Property has not been damaged by
fire, water, wind or other cause of loss, and any previous damage to the
Property has been fully restored. The Improvements are structurally sound, in
good repair and free of defects in materials and workmanship and have been
constructed and installed in substantial compliance with the plans and
specifications relating thereto. All major building systems located within the
Improvements, including, without limitation, any heating and air conditioning
systems and the electrical and plumbing systems, are in good working order and
condition.
(aa) No Insolvency or Judgment. None of Borrower, any general partner
or member of Borrower, or any guarantor of any of the Loans is currently (a) the
subject of or a party to any completed or pending bankruptcy, reorganization or
insolvency proceeding; or (b) the subject of any unsatisfied judgment of record
or docketed in any court of the state in which the Property is located or in any
other court located in the United States. The proposed Loans will not render the
Borrower nor any general partner or member of Borrower insolvent. As used in
this Security Deed, the term "insolvent" means that the sum total of all of an
entity's liabilities (whether secured or unsecured, contingent or fixed, or
liquidated or unliquidated) is in excess of the value of all such entity's
non-exempt assets, i.e., all of the assets of the entity that are available to
satisfy claims of creditors.
(bb) No Condemnation. No part of the Property has been taken in
condemnation or other like proceeding to an extent which would impair the value
of the Property, the Security Deed or the Loans or the usefulness of the
Property for the purposes contemplated by the loan application relating to the
Countryside Atlanta Loan (as defined on Exhibit C) (the "Loan Application"), nor
is any proceeding pending, known to be threatened or known to be contemplated
for the partial or total condemnation or taking of the Property.
(cc) No Labor or Materialmen Claims. All parties furnishing labor and
materials have been paid in full and, except for such liens or claims insured
against by the policy of title insurance to be issued in connection with the
Loan, there are no mechanics', laborers' or materialmen's liens or claims
outstanding for work, labor or materials affecting the Property, whether prior
to, equal with or subordinate to the lien of the Security Deed.
(dd) No Purchase Options. No tenant, person, party, firm, corporation
or other entity has an option to purchase the Property, any portion thereof or
any interest therein.
(ee) Leases. The Property is not subject to any leases, subleases,
licenses, concessions or other agreements related to the leasing or renting of
the Property or any portion thereof, except as set forth on the rent roll
provided to Lender and certified by Borrower of even date herewith (the "Rent
Roll"). No person has any possessory interest in the Property or right to occupy
the same, except pursuant to the leases shown on the Rent Roll ("Existing
Leases"). As
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 10
of the date hereof, (i) the Borrower is the owner and holder of the landlord's
interest under the Existing Leases; (ii) there are no prior assignments of all
or any portion of the Existing Leases or any portion of the Rents and Profits
which are presently outstanding and have priority over the assignment of leases
and rents contained herein in Section 1.11 given by Borrower to Lender; (iii)
all Rents due and payable under each Existing Lease have been paid in full and
no said Rents have been paid more than one (1) month in advance of the due dates
thereof and (iv) there are no offsets or defenses to the payment of any portion
of the Rents. All Security Deposits with respect to the Property on the date
hereof have, to the extent legally required, been transferred to the Security
Deposit Account and Borrower is in material compliance with all legal
requirements relating to such Security Deposits including, to the extent
applicable, the requirements of 68 P.S.Section 250.511. The representations set
forth in this Section are in addition to those set forth in Section 1.12 of this
Security Deed.
(ff) Intentionally deleted.
(gg) Boundary Lines. No improvements on adjoining properties encroach
upon the Property, and no easements or other encumbrances upon the Real Estate
encroach upon any of the Improvements, so as to affect the value or
marketability of the Property except those which are insured against by title
insurance.
(hh) Survey. To Borrower's knowledge, the survey of the Property
delivered to Lender in connection with this Security Deed does not fail to
reflect any material matter affecting the Property or the title thereto.
(ii) Forfeiture. There has not been and shall never be committed by
Borrower or any other person in occupancy of or involved with the operation or
use of the Property and legitimately acting on behalf of Borrower any act or
omission affording the federal government or any state or local government the
right of forfeiture as against the Property or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
(jj) Use of Rents and Profits. All Rents and Profits generated by or
derived from the Property shall first be utilized solely for current expenses
directly attributable to the ownership and operation of the Property, including,
without limitation, current expenses relating to Borrower's liabilities and
obligations with respect to this Security Deed and the other Loan Documents, and
none of the Rents and Profits generated by or derived from the Property shall be
diverted by Borrower and utilized for any other purposes unless all such current
expenses attributable to the ownership and operation of the Property have been
fully paid and satisfied. Any license agreements which generate income with
respect to the Property, including cable licenses or similar arrangements, are
not prepaid and the benefits thereof have been assigned for the benefit of
Lender.
(kk) No Broker. No financial advisors, brokers, underwriters,
placement agents, agents or finders have been dealt with by the Borrower in
connection with the Loans.
(ll) Intentionally deleted.
(mm) Conviction of Criminal Acts. Each of Borrower and any indemnitor
and guarantor of Borrower's obligations under the Loan Documents has never been
convicted of a crime and is not currently the subject of any pending or, to
Borrower's knowledge, threatened criminal investigation or proceeding.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 11
(nn) Security Agreements. There are no security agreements or
financing statements affecting any of the Property other than (i) as disclosed
in writing by Borrower to Lender prior to the date hereof and (ii) the security
agreements and financing statements created in favor of Lender.
(oo) Homestead. The Property forms no part of any property owned, used
or claimed by Borrower as a residence or business homestead and is not exempt
from forced sale under the laws of the State in which the Real Estate is
located. Borrower hereby disclaims and renounces each and every claim to all or
any portion of the Property as a homestead.
(pp) Contracts. Borrower will comply with all of its obligations under
all Contracts which are material to the operation of the Property in accordance
with Borrower's current practice, and with all material obligations under all
other Contracts.
(qq) No Margin Stock. None of the proceeds of the indebtedness secured
hereby will be used for the purpose of purchasing or carrying "margin stock"
within the meaning of Regulation U or a "margin security" with the meaning of
Regulation T issued by the Board of Governors of the Federal Reserve System, or
for any other purpose which would be inconsistent with such Regulations T or U
or any other Regulations of such Board of Governors, or for any purpose
prohibited by legal requirements or by the terms and conditions of the Loan
Documents.
(rr) Material Adverse Effect. There are no judicial, administrative,
mediation or arbitration actions, suits or proceedings pending or threatened
against or affecting Borrower (and, if Borrower is a partnership, any of its
general partners or if Borrower is a limited liability company, any member of
Borrower) or the Property which, if adversely determined, would have a material
adverse effect on (a) the Property, (b) the business, prospects, profits,
operations or condition (financial or otherwise) of Borrower, (c) the
enforceability, validity, perfection or priority of the lien of any Loan
Document, or (d) the ability of Borrower to perform any obligations under any
Loan Document (collectively, a "Material Adverse Effect").
(ss) Permits Obtained. All certificates, permits, licenses and
approvals, including, without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Property as a manufactured housing community or mobile home park, have been
obtained and are in full force and effect, except for those which, if not
obtained, would not have a Material Adverse Effect.
1.2 Defense of Title. If, while this Security Deed is in force, the title
to the Property or the interest of Lender therein shall be the subject, directly
or indirectly, of any action at law or in equity, or be attacked directly or
indirectly, or endangered, clouded or adversely affected in any manner,
Borrower, at Borrower's expense, shall take all necessary and proper steps for
the defense of said title or interest, including the employment of counsel
reasonably approved by Lender, the prosecution or defense of litigation, and the
compromise or discharge of claims made against said title or interest.
Notwithstanding the foregoing, in the event that Lender reasonably determines
that Borrower is not adequately performing its obligations under this Section,
Lender
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 12
shall provide Borrower written notice of such determination, and if Lender
reasonably determines that Borrower is still not adequately performing its
obligations under this Section within thirty (30) days after its receipt of such
notice, Lender may, without limiting or waiving any other rights or remedies of
Lender hereunder, take such steps with respect thereto as Lender shall deem
necessary or proper; any and all costs and expenses incurred by Lender in
connection therewith, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be
immediately paid by Borrower on demand and shall be secured by this Security
Deed and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Notes.
1.3 Performance of Obligations. Borrower shall pay when due the principal
of and the interest on the indebtedness secured hereby including all charges,
fees and other sums required to be paid by Borrower as provided in the Loan
Documents, and shall observe, perform and discharge all obligations, and
conditions, and comply with all prohibitions, covenants and agreements to be
observed, performed or discharged by Borrower set forth in the Loan Documents in
accordance with their terms. In the event that Lender determines that Borrower
is not adequately performing any of its obligations under this Security Deed or
under any of the other Loan Documents, Lender may, without limiting or waiving
any other rights or remedies of Lender hereunder, take such steps with respect
thereto as Lender shall deem necessary or proper, and any and all costs and
expenses reasonably incurred by Lender in connection therewith, together with
interest thereon at the Default Interest Rate from the date incurred by Lender
until actually paid by Borrower, shall be immediately paid by Borrower on demand
and shall be secured by this Security Deed and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Notes.
1.4 Insurance. Borrower shall, at Borrower's expense, maintain in force and
effect on the Property at all times while this Security Deed continues in effect
the following insurance:
(a) Insurance against loss or damage to the Property by fire,
windstorm, tornado and hail and against loss and damage by such other, further
and additional risks as may be now or hereafter embraced by an "all-risk" form
of insurance policy. The amount of such insurance shall be not less than one
hundred percent (100%) of the full replacement (insurable) cost of the
Improvements, furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Property and owned by Borrower
from time to time, without reduction for depreciation. The determination of the
replacement cost amount shall be adjusted annually to comply with the
requirements of the insurer issuing such coverage or, at Lender's election, by
reference to such indices, appraisals or information as Lender determines in its
reasonable discretion. Full replacement cost, as used herein, means, with
respect to the Improvements, the cost of replacing the Improvements without
regard to deduction for depreciation, exclusive of the cost of excavations,
foundations and footings below the lowest basement floor, and means, with
respect to such furniture, furnishings, fixtures, equipment and other items, the
cost of replacing the same, in each case, with inflation guard coverage to
reflect the effect of inflation, or annual valuation. Each policy or policies
shall contain a replacement cost endorsement and either an agreed amount
endorsement (to avoid the operation of any co-insurance provisions) or a waiver
of any co-insurance provisions, all subject to Lender's approval.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 13
(b) Comprehensive Commercial General Liability Insurance for personal
injury, bodily injury, death and property damage liability in amounts not less
than $1,000,000.00 per occurrence, $2,000,000.00 aggregate and with total excess
and umbrella coverage totaling $10,000,000.00 (or such lesser amount as Lender
may approve in its discretion). During any construction on the Property, each
contractor having a contract for construction in an amount equal to or greater
than $100,000.00 shall also provide the insurance required in this Subsection
(b), except that the minimum required coverages shall be $1,000,000.00 per
occurrence and $2,000,000.00 in the aggregate (both inclusive of umbrella
coverage). Lender hereby retains the right to periodically review the amount of
said liability insurance being maintained by Borrower and to require an increase
in the amount of said liability insurance should Lender deem an increase to be
reasonably prudent under then existing circumstances.
(c) General boiler and machinery insurance coverage is required if
steam boilers or other pressure-fired vessels are in operation at the Property.
Minimum liability amount per accident must equal the greater of the replacement
(insurable) value of the Improvements housing such boiler or pressure-fired
machinery or $2,000,000.00.
(d) If the Property or any part thereof is identified by the Secretary
of Housing and Urban Development as being situated in an area now or
subsequently designated as having special flood hazards (including, without
limitation, those areas designated as Zone A or Zone V), flood insurance in an
amount equal to the lesser of: (i) the minimum amount required, under the terms
of coverage, to compensate for any damage or loss on a replacement basis (or the
unpaid balance of the indebtedness secured hereby if replacement cost coverage
is not available for the type of building insured); or (ii) the maximum
insurance available under the appropriate National Flood Insurance
Administration program.
(e) During the period of any construction on the Property or
renovation or alteration of the Improvements, a so-called "Builder's All-Risk
Completed Value" or "Course of Construction" insurance policy in non-reporting
form for any Improvements under construction, renovation or alteration in an
amount approved by Lender and Worker's Compensation Insurance covering all
persons engaged in such construction, renovation or alteration.
(f) Loss of rents or loss of business income insurance in amounts
sufficient to compensate Borrower for all Rents and Profits during a period of
not less than twelve (12) months in which the Property may be damaged or
destroyed. The amount of coverage shall be adjusted annually to reflect the
Rents and Profits or income payable during the succeeding twelve (12) month
period.
(g) Intentionally deleted.
All such insurance shall (i) be with insurers authorized to do business in
the state within which the Property is located and who have and maintain a
rating of at least "A" (or its equivalent) from Standard & Poor's, a Division of
The McGraw-Hill Companies, Inc. or any other nationally recognized statistical
agency selected by Lender; (ii) contain the complete address of the Property (or
a complete legal description); (iii) be for terms of at least one year; (iv)
contain deductibles which do not exceed $10,000.00 or, with respect to the
policy described in clause (d) above $3,000.00; and (v) be subject to the
approval of Lender as to insurance
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 14
companies, amounts, content, forms of policies, method by which premiums are
paid and expiration dates. Without limitation to the generality of the
foregoing, the insurance policies required pursuant to this Section 1.4 shall be
required to cover perils of terrorism and acts of terrorism.
Borrower shall as of the date hereof deliver to Lender evidence that said
insurance policies have been paid current as of the date hereof and certified
copies of such insurance policies and original certificates of insurance signed
by an authorized agent of the applicable insurance companies evidencing such
insurance satisfactory to Lender. Borrower shall renew all such insurance and
deliver to Lender certificates evidencing such renewals at least thirty (30)
days before any such insurance shall expire. Without limiting the required
endorsements to the insurance policies, Borrower further agrees that all such
policies shall include a standard, non-contributory, mortgagee clause naming:
ARCS Commercial Mortgage Co., L.P.,
its successors and assigns
26901 Agoura Road, Suite 200
Calabasas Hills, California 91301
(x) as an additional insured under all liability insurance policies; (y) as the
first mortgagee on all property insurance policies; and (z) as the loss payee on
all loss of rents or loss of business income insurance policies. Borrower
further agrees that all such insurance policies: (1) shall provide for at least
thirty (30) days' prior written notice to Lender prior to any cancellation or
termination thereof and prior to any modification thereof which affects the
interest of Lender; (2) shall contain an endorsement or agreement by the insurer
that any loss shall be payable to Lender in accordance with the terms of such
policy notwithstanding any act or negligence of Borrower which might otherwise
result in forfeiture of such insurance; (3) shall waive all rights of
subrogation against Lender; and (4) in the event that the Real Estate or the
Improvements constitute a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, shall include an ordinance or law
coverage endorsement which will contain Coverage A: "Loss Due to Operation of
Law" (with a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverages. Lender agrees that such insurance policies may be in
the form of a blanket policy provided that, in the event that any such coverage
is provided in the form of a blanket policy, Borrower hereby acknowledges and
agrees that failure to pay any portion of the premium therefor which is not
allocable to the Property or by any other action not relating to the Property
which would otherwise permit the issuer thereof to cancel the coverage thereof,
would require the Property to be insured by a separate, single-property policy.
The blanket policy must properly identify and fully protect the Property as if a
separate policy were issued for one hundred percent (100%) of replacement cost
at the time of loss and otherwise meet all of Lender's applicable insurance
requirements set forth in this Section 1.4. The delivery to Lender of the
insurance policies or the certificates of insurance as provided above shall
constitute an assignment of all proceeds payable under such insurance policies
relating to the Property by Borrower to Lender as further security for the
indebtedness secured hereby. In the event of foreclosure of this Security Deed,
or other transfer of title to the Property in extinguishment in whole or in part
of the secured indebtedness, all right, title and interest of Borrower in and to
all proceeds payable under such policies then in force concerning
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 15
the Property shall thereupon vest in the purchaser at such foreclosure, or in
Lender or other transferee in the event of such other transfer of title.
Approval of any insurance by Lender shall not be a representation of the
solvency of any insurer or the sufficiency of any amount of insurance. In the
event Borrower fails to provide, maintain, keep in force or deliver and furnish
to Lender the policies of insurance required by this Security Deed or evidence
of their renewal as required herein, Lender may, but shall not be obligated to,
procure such insurance and Borrower shall pay all amounts advanced by Lender
therefor, together with interest thereon at the Default Interest Rate from and
after the date advanced by Lender until actually repaid by Borrower, promptly
upon demand by Lender. Any amounts so advanced by Lender, together with interest
thereon, shall be secured by this Security Deed and by all of the other Loan
Documents securing all or any part of the indebtedness secured hereby. Lender
shall not be responsible for nor incur any liability for the insolvency of the
insurer or other failure of the insurer to perform, even though Lender has
caused the insurance to be placed with the insurer after failure of Borrower to
furnish such insurance. Borrower shall not obtain insurance for the Property in
addition to that required by Lender without the prior written consent of Lender,
which consent will not be unreasonably withheld provided that (i) Lender is a
named insured on such insurance; (ii) Lender receives complete copies of all
policies evidencing such insurance; and (iii) such insurance and the related
insurer comply with all of the applicable requirements set forth herein.
Any failure by Lender to insist on full compliance with all of the above
insurance requirements at closing does not constitute a waiver of Lender's right
to subsequently require full compliance with these requirements.
1.5 Payment of Taxes. Borrower shall pay or cause to be paid, except to the
extent provision is actually made therefor pursuant to Section 1.6 of this
Security Deed, all taxes and assessments which are or may become a lien on the
Property or which are assessed against or imposed upon the Property. Borrower
shall furnish Lender with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such taxes and
assessments at least fifteen (15) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing, Borrower may in good faith, by
appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a) such
contest is diligently pursued; (b) Lender determines, in its reasonable opinion,
that such contest suspends the obligation to pay the tax or assessment and that
nonpayment of such tax or assessment will not result in the sale, loss,
forfeiture or diminution of the Property or any part thereof or any interest of
Lender therein, unless Borrower pays such tax; and (c) prior to the earlier of
the commencement of such contest or the delinquency date of the asserted tax or
assessment, Borrower deposits in the Impound Account (as hereinafter defined) an
amount determined by Lender to be adequate to cover the payment of such tax or
assessment and a reasonable additional sum to cover possible interest, costs and
penalties; provided, however, that Borrower shall promptly cause to be paid any
amount adjudged by a court of competent jurisdiction to be due, with all
interest, costs and penalties thereon, promptly after such judgment becomes
final; and provided further that in any event each such contest shall be
concluded and the taxes, assessments, interest, costs and penalties shall be
paid prior to the date any writ or order is issued under which the Property may
be sold, lost or forfeited.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 16
1.6 Tax and Insurance Impound Account. Borrower shall establish and
maintain at all times while this Security Deed continues in effect an impound
account (the "Impound Account") with Lender for payment of real estate taxes and
assessments and insurance on the Property and as additional security for the
indebtedness secured hereby. Borrower shall deposit in the Impound Account an
amount determined by Lender to be sufficient (when added to the monthly deposits
described herein) to pay the next due annual installment of real estate taxes
and assessments on the Property at least one (1) month prior to the delinquency
date thereof and the next due annual insurance premiums with respect to the
Property at least one (1) month prior to the due date thereof. Commencing on the
first monthly payment date under the Notes and continuing thereafter on each
monthly payment date under the Notes, Borrower shall pay to Lender, concurrently
with the monthly payment due under the Notes, deposits in an amount equal to
one-twelfth (1/12) of the amount of the annual real estate taxes and assessments
that will next become due and payable on the Property, plus one-twelfth (1/12)
of the amount of the annual premiums that will next become due and payable on
insurance policies which Borrower is required to maintain hereunder, each as
estimated and determined by Lender. All sums in the Impound Account shall be
held by Lender in the Impound Account to pay said taxes, assessments and
insurance premiums in one installment before the same become delinquent.
Borrower shall be responsible for ensuring the receipt by Lender, at least
thirty (30) days prior to the respective due date for payment thereof, of all
bills, invoices and statements for all taxes, assessments and insurance premiums
to be paid from the Impound Account, and Lender shall pay the governmental
authority or other party entitled thereto directly to the extent funds are
available for such purpose in the Impound Account. In making any payment from
the Impound Account, Lender shall be entitled to rely on any bill, statement or
estimate procured from the appropriate public office or insurance company or
agent without any inquiry into the accuracy of such bill, statement or estimate
and without any inquiry into the accuracy, validity, enforceability or
contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or
title or claim thereof. No interest on funds contained in the Impound Account
shall be paid by Lender to Borrower and any interest or other earnings on funds
deposited in the Impound Account shall be solely for the account of Lender. If
the total funds in the Impound Account shall exceed the amount of payments
actually applied by Lender for the purposes of the Impound Account, such excess
may be credited by Lender on subsequent payments to be made hereunder or, at the
option of Lender, refunded to Borrower. If, however, the Impound Account shall
not contain sufficient funds to pay the sums required when the same shall become
due and payable, Borrower shall, within ten (10) days after receipt of written
notice thereof, deposit with Lender the full amount of any such deficiency.
Notwithstanding anything to the contrary contained in this Security Deed,
including, without limitation, the provisions of this Section 1.6 hereof, at
Borrower's option, its obligation to make monthly deposits into the Impound
Account shall not include any amounts attributable to the premiums for insurance
coverage required to be carried on the Property pursuant to the terms of this
Security Deed, so long as:
(a) No default shall have occurred and be continuing hereunder or
under any of the Loan Documents;
(b) Borrower renews all insurance policies required to be carried on
the Property pursuant to the terms of this Security Deed prior to their
expiration;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 17
(c) Borrower delivers to Lender certificates evidencing such renewals
at least thirty (30) days before the expiration of any such policy.
If Borrower elects not to make such monthly payments into the Impound Account as
stated above, Borrower shall be entitled to a five (5) day grace period with
respect to the delivery to Lender of certificates of insurance described in
Section 1.4, the failure of which to timely deliver such items (including stated
grace period) shall be a default under this Deed of Trust at Lender's sole
option and election. In the event of a default hereunder or under any Loan
Document, in addition to Lender's other rights and remedies, (x) Borrower's
obligations to make monthly deposits into the Impound Account shall be
immediately reinstated with the next succeeding monthly payment due under the
Sun Villa Note and (y) Borrower shall immediately deposit an amount determined
by Lender to be sufficient (when added to the monthly deposits described in this
Section 1.6) to pay the next due installments of real estate taxes and
assessments and insurance premiums at least one (1) month prior to their
respective delinquency dates. Nothing contained herein shall be construed as to
relieve Borrower of its obligations to make monthly deposits into the Impound
Account in respect of real estate taxes and assessments on the Property as
described in this Section 1.6.
1.7 Replacement Reserve. Borrower shall not initially be under any
obligation to establish or maintain a reserve for periodic replacements at the
Property. Notwithstanding the foregoing, however, in the event that an Event of
Default has occurred and is continuing, then, as additional security for the
indebtedness secured hereby, Borrower shall establish and maintain at all times
while this Security Deed continues in effect a replacement reserve (the
"Replacement Reserve") with Lender for payment of costs and expenses incurred by
Borrower in connection with capital improvements, repairs and replacements
performed at the Property, including, but not limited to, the performance of
work to the roofs, chimneys, gutters, downspouts, paving, curbs, ramps,
driveways, balconies, porches, patios, exterior walls, exterior doors and
doorways, windows, carpets, appliances, fixtures, elevators and mechanical and
HVAC equipment (collectively, the "Repairs"). Commencing on the first monthly
Payment Date under the Countryside Atlanta Note after the occurrence of an Event
of Default and continuing thereafter on each monthly Payment Date, Borrower
shall pay to Lender, concurrently with the monthly payment due under the
Countryside Atlanta Note, a deposit to the Replacement Reserve in an amount
equal to $1,129.17 per month. All sums in the Replacement Reserve shall be held
by Lender in the Replacement Reserve to pay the costs and expenses of Repairs,
and Lender shall, to the extent funds are available for such purpose in the
Replacement Reserve, disburse to Borrower the amount paid or incurred by
Borrower in performing such Repairs within ten (10) days following: (a) the
receipt by Lender of a written request from Borrower for disbursement from the
Replacement Reserve and a certification by Borrower to Lender that the
applicable item of Repair has been completed; (b) the delivery to Lender of
invoices, receipts or other evidence verifying the cost of performing the
Repairs; and (c) for disbursement requests (i) in excess of $20,000.00 with
respect to any single Repair, or (ii) for any single Repair that is structural
in nature, delivery to Lender of (1) affidavits, lien waivers (provided,
however, Lender shall not unreasonably withhold its consent to Borrower's
provision of a conditional lien waiver subject only to the payment of the amount
specified in such disbursement request so long as such conditional lien waiver
is accompanied by a final unconditional lien waiver corresponding to any
conditional lien waiver previously delivered) or other evidence reasonably
satisfactory to Lender showing that all materialmen, laborers, subcontractors
and any other parties who might or could
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 18
claim statutory or common law liens and are furnishing or have furnished
materials or labor to the Property have been paid all amounts due for labor and
materials furnished to the Property; (2) a certification from an inspecting
architect or other third party acceptable to Lender describing the completed
Repairs and verifying the completion of the Repairs and the value of the
completed Repairs; and (3) a new (or amended) certificate of occupancy for the
portion of the Improvements covered by such Repairs, if said new certificate of
occupancy is required by law, or a certification by Borrower that no new
certificate of occupancy is required by law. Lender shall not be required to
make advances from the Replacement Reserve more frequently than one time in any
calendar month. In making any payment from the Replacement Reserve, Lender shall
be entitled to rely on such request from Borrower without any inquiry into the
accuracy, validity or contestability of any such amount. Lender may, at Lender's
expense (provided that Borrower shall be responsible for any such expenses
incurred by Lender during the occurrence and continuation of an Event of
Default), make or cause to be made during the term of this Security Deed an
annual inspection of the Property to determine the need, as determined by Lender
in its reasonable judgment, for further Repairs of the Property. In the event
that such inspection reveals that further Repairs of the Property are required,
Lender shall provide Borrower with a written description of the required Repairs
and Borrower shall complete such Repairs to the reasonable satisfaction of
Lender within ninety (90) days after the receipt of such description from
Lender, or such later date as may be approved by Lender in its sole discretion.
Interest or other earnings on the funds contained in the Replacement Reserve
shall be credited to Borrower as provided in Section 4.28 hereof. In the event
that the amounts on deposit or available in the Replacement Reserve are
inadequate to pay the cost of the Repairs, Borrower shall pay the amount of such
deficiency.
1.8 Security Interest In Reserves.
(a) As additional security for the payment and performance by Borrower
of all duties, responsibilities and obligations under the Notes and the other
Loan Documents, Borrower hereby unconditionally and irrevocably assigns,
conveys, pledges, mortgages, transfers, delivers, deposits, sets over and
confirms unto Lender, and hereby grants to Lender a security interest in all
sums on deposit or due under this Security Deed and the other Loan Documents
including, without limitation, (i) the Impound Account, the Replacement Reserve
and any other reserve set forth on Exhibit B attached hereto (collectively, the
"Reserves"), (ii) the accounts into which the Reserves have been deposited,
(iii) all insurance on said accounts, (iv) all accounts, contract rights and
general intangibles or other rights and interests pertaining thereto, (v) all
sums now or hereafter therein or represented thereby, (vi) all replacements,
substitutions or proceeds thereof, (vii) all instruments and documents now or
hereafter evidencing the Reserves or such accounts, (viii) all powers, options,
rights, privileges and immunities pertaining to the Reserves (including the
right to make withdrawals therefrom), and (ix) all proceeds of the foregoing.
Borrower hereby authorizes and consents to the account into which the Reserves
have been deposited being held in Lender's name or the name of any entity
servicing the Notes for Lender and hereby acknowledges and agrees that Lender,
or at Lender's election, such servicing agent, shall have exclusive control over
said account. Notice of the assignment and security interest granted to Lender
herein may be delivered by Lender at any time to the financial institution
wherein the Reserves have been established, and Lender, or such servicing
entity, shall have possession of all passbooks or other evidences of such
accounts. Borrower hereby holds Lender harmless with respect to all risk of loss
regarding amounts on
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 19
deposit in the Reserves, except to the extent that any such loss is caused by
the gross negligence or intentional misconduct of Lender. Borrower hereby
knowingly, voluntarily and intentionally stipulates, acknowledges and agrees
that the advancement of the funds from the Reserves as set forth herein is at
Borrower's direction and is not the exercise by Lender of any right of set-off
or other remedy upon an Event of Default. If an Event of Default shall occur,
then Lender may, without notice or demand on Borrower, at its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then
remaining in the Reserves and apply the same, after deducting all costs and
expenses of safekeeping, collection and delivery (including, but not limited to,
attorneys' fees, costs and expenses) to the indebtedness evidenced by the Notes
or any other obligations of Borrower under the other Loan Documents in such
manner as Lender shall deem appropriate in its sole discretion, and the excess,
if any, shall be paid to Borrower, (B) exercise any and all rights and remedies
of a secured party under any applicable Uniform Commercial Code, or (C) exercise
any other remedies available at law or in equity. No such use or application of
the funds contained in the Reserves shall be deemed to cure any Event of Default
or other default under the other Loan Documents.
(b) The Reserves are solely for the protection of Lender and entail no
responsibility on Lender's part beyond the payment of the respective costs and
expenses in accordance with the terms thereof and beyond the allowing of due
credit for the sums actually received. Upon assignment of this Security Deed by
Lender, any funds in the Reserves shall be turned over to the assignee and any
responsibility of Lender, as assignor, with respect thereto shall terminate. The
Reserves shall not, unless otherwise explicitly required by applicable law, be
or be deemed to be escrow or trust funds, but, at Lender's option and in
Lender's discretion, may either be held in a separate account or be commingled
by Lender with the general funds of Lender. Upon full payment of the
indebtedness secured hereby in accordance with its terms (or if earlier, the
completion of the applicable conditions to release of each Reserve to Lender's
satisfaction) or at such earlier time as Lender may elect, the balance in the
Reserves then in Lender's possession shall be paid over to Borrower and no other
party shall have any right or claim thereto.
(c) Any amounts received by Lender from Borrower may be invested by
Lender (or its Servicer, as defined in the Notes) for its benefit, and Lender
shall not be obligated to pay, or credit, any interest earned thereon to
Borrower except as may be otherwise specifically provided in this Security Deed.
1.9 Casualty and Condemnation. Borrower shall give Lender prompt written
notice of the occurrence of any casualty in excess of $50,000.00 affecting, or
the institution of any proceedings for eminent domain or for the condemnation
of, the Property or any portion thereof (collectively, an "Insured Event"). All
insurance proceeds on the Property, and all causes of action, claims,
compensation, awards and recoveries for any damage, condemnation or taking of
all or any part of the Property or for any damage or injury to it for any loss
or diminution in value of the Property, are hereby assigned to and shall be paid
to Lender. Lender may participate in any suits or proceedings relating to any
such proceeds, causes of action, claims, compensation, awards or recoveries and
Lender is hereby authorized, in its own name or in Borrower's name, to adjust
any loss covered by insurance or any condemnation claim or cause of action, and
to settle or compromise any claim or cause of action in connection therewith,
and Borrower shall from time to time deliver to Lender any instruments required
to permit such participation; provided,
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 20
however, that Lender shall not have the right to participate in the adjustment
of any loss which is not in excess of the lesser of (i) ten percent (10%) of the
then outstanding principal balance of the Countryside Atlanta Note, and (ii)
$350,000.00. Provided no Event of Default is then continuing hereunder or under
any of the other Loan Documents and no event has occurred which, with the giving
of notice or the passage of time or both, would constitute an Event of Default
or other default under any of the other Loan Documents, Lender shall apply any
sums received by it under this Section first to the payment of all of its costs
and expenses (including, but not limited to, reasonable legal fees and
disbursements) incurred in obtaining those sums, and then, as follows:
(a) In the event that Lender receives insurance proceeds or
condemnation awards upon the occurrence of an Insured Event in an amount not in
excess of the lesser of (i) ten percent (10%) of the then outstanding principal
balance of the Countryside Atlanta Note, and (ii) $350,000.00, (collectively,
the "Threshold Amount"), Borrower shall repair or restore the Property to the
condition existing before such Insured Event, and Lender shall, to the extent
such insurance proceeds or condemnation awards are available for such purpose,
advance such funds to Borrower in accordance with, and satisfaction of, the
terms and conditions for disbursement relative to the Replacement Reserve as
described on Exhibit B to this Security Deed.
(b) In the event any proceeds or awards from an Insured Event exceed
the Threshold Amount but less than fifty percent (50%) of the Improvements
located on the Real Estate have been taken or destroyed, then if:
(1) the Property can, in Lender's reasonable judgment, with
diligent restoration or repair, be returned to a condition at least equal
to the condition thereof that existed prior to the casualty or partial
taking causing the loss or damage by the earlier to occur of (i) six (6)
months after the receipt of insurance proceeds or condemnation awards by
either Borrower or Lender, and (ii) six (6) months prior to the stated
maturity date of the Countryside Atlanta Note, and
(2) all necessary governmental approvals can be obtained to allow
the rebuilding and reoccupancy of the Property as described in subsection
(b)(1) above, and
(3) there are sufficient sums available (through insurance
proceeds or condemnation awards and contributions by Borrower, the full
amount of which shall at Lender's option have been deposited with Lender)
for such restoration or repair (including, without limitation, for any
reasonable costs and expenses of Lender to be incurred in administering
said restoration or repair) and for payment of principal and interest to
become due and payable under the Countryside Atlanta Note during such
restoration or repair, and
(4) the economic feasibility of the Improvements after such
restoration or repair will be such that income from their operation is
reasonably anticipated to be sufficient to pay operating expenses of the
Property and debt service on the indebtedness secured hereby in full with
the same coverage ratio considered by Lender in its determination to make
the Loans, and
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 21
(5) Borrower shall have delivered to Lender, at Borrower's sole
cost and expense, an appraisal report from an appraiser, in form and
substance, satisfactory to Lender appraising the value of the Property as
proposed to be restored or repaired to be not less than the appraised value
of the Property considered by Lender in its determination to make the
Loans, and
(6) The Property can, in Lender's reasonable judgment, be
repaired or restored such that the Property, taken as a whole, as repaired
or restored, will conform to all applicable governmental laws and
ordinances (including, without limitation, current zoning ordinances),
then, Lender shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required to facilitate
such restoration or repair, and any funds deposited by Borrower therefor, to
Borrower in the manner and upon such terms and conditions as would be required
by a prudent interim construction lender, including, but not limited to, the
prior approval by Lender of plans and specifications, contractors and the form
of construction contracts and the furnishing to Lender of permits, bonds, lien
waivers (provided, however, Lender shall not unreasonably withhold its consent
to Borrower's provision of a conditional lien waiver subject only to the payment
of the amount specified in such disbursement request so long as such conditional
lien waiver is accompanied by a final unconditional lien waiver corresponding to
any conditional lien waiver previously delivered), invoices, receipts and
affidavits from contractors and subcontractors in form and substance reasonably
satisfactory to Lender. Any remaining proceeds shall be applied by Lender for
payment of the indebtedness secured hereby in whatever order as Lender directs,
or released to Borrower, in Lender's absolute discretion. Borrower shall, in
good faith, undertake reasonable efforts to cause the conditions described in
this Section 1.9(b) to be fully satisfied (e.g., Borrower shall timely make
applications for necessary governmental permits, shall order an appropriate
appraisal report, etc.). If such conditions are satisfied, Borrower shall be
obligated to undertake restoration and repair of the damaged Improvements
subject to the terms of this Section 1.9. Any disbursement pursuant to this
clause (b) of sums by Lender shall, subject to Borrower's satisfaction of the
provisions hereof, be in a manner to promptly facilitate the restoration or
repair of the Property. In the event Borrower fails to meet the requirements of
this clause (b), then Lender may elect in its absolute discretion and without
regard to the adequacy of Lender's security, to accelerate the maturity date of
the Notes and declare any and all of the indebtedness secured hereby to be
immediately due and payable and apply the remainder of such sums to the payment
of the secured indebtedness in whatever order Lender directs in its sole
discretion, with any remainder being paid to Borrower.
(c) In all other cases, namely, in the event that fifty percent (50%)
or more of the Improvements located on the Real Estate have been taken or
destroyed or in the event the conditions described in Section 1.9(b) are not
fully satisfied, Lender may elect, in Lender's absolute discretion and without
regard to the adequacy of Lender's security, to (i) accelerate the maturity date
of the Countryside Atlanta Note (which, in and of itself, will not have any
effect on the other Notes) and declare the entirety of such indebtedness to be
immediately due and payable and apply the remainder of such sums received
pursuant to this Section to the payment of the Countryside Atlanta Note in
whatever order Lender directs in its absolute discretion, with any remainder
being applied to the payment of the remaining indebtedness secured hereby in
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 22
whatever order Lender directs in its absolute discretion, or (ii) make insurance
or condemnation proceeds available to Borrower for repair or restoration if
Borrower establishes to the satisfaction of Lender, in its sole discretion, that
Borrower otherwise satisfies the requirements of clause (b) above. Should Lender
make the election described immediately above in item (i) of this Section
1.9(c), Borrower may, alternatively, request that such proceeds be applied
towards a Partial Defeasance (hereinafter defined) provided that Borrower
otherwise is entitled to undertake such a Partial Defeasance transaction
pursuant to the terms of Section 1.35(d). Should Lender make the election
described immediately above in item (ii) of this Section 1.9(c), Borrower shall
be obligated to undertake restoration and repair of the damaged Improvements
consistent with the provisions of this Section 1.9.
(d) Any reduction in the indebtedness secured hereby resulting from
Lender's application of any sums received by it hereunder shall take effect only
when Lender actually receives such sums and elects to apply such sums to the
indebtedness secured hereby and, in any event, the unpaid portion of the
indebtedness secured hereby shall remain in full force and effect and Borrower
shall not be excused in the payment thereof. Partial payments received by
Lender, as described in the preceding sentence, shall be applied against the
Countryside Atlanta Note (or any of the other Notes, as applicable) consistent
with the prepayment provisions described therein for casualty or condemnation
proceeds. If Borrower undertakes to restore or repair the Property after the
occurrence of a casualty or partial taking of the Property as provided above,
Borrower shall promptly and diligently, at Borrower's sole cost and expense and
regardless of whether the insurance proceeds or condemnation award, as
appropriate, shall be sufficient for the purpose, restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such casualty or partial taking in accordance with the
foregoing provisions and Borrower shall pay to Lender all costs and expenses of
Lender incurred in administering said rebuilding, restoration or repair,
provided that Lender makes such proceeds or award available for such purpose.
Borrower agrees to execute and deliver from time to time such further
instruments as may be requested by Lender to confirm the foregoing assignment to
Lender of any award, damage, insurance proceeds, payment or other compensation.
Borrower hereby irrevocably constitutes and appoints Lender as the
attorney-in-fact of Borrower (which power of attorney shall be irrevocable so
long as any indebtedness secured hereby is outstanding, shall be deemed coupled
with an interest, shall survive the voluntary or involuntary dissolution of
Borrower and shall not be affected by any disability or incapacity suffered by
Borrower subsequent to the date hereof), with full power of substitution,
subject to the terms of this Section, to settle for, collect and receive any
such awards, damages, insurance proceeds, payments or other compensation from
the parties or authorities making the same, to appear in and prosecute any
proceedings therefor and to give receipts and acquittance therefor.
1.10 Mechanics' Liens. Borrower shall pay when due all claims and demands
of mechanics, materialmen, laborers and others for any work performed or
materials delivered for the Real Estate or the Improvements; provided, however,
that Borrower shall have the right to contest in good faith any such claim or
demand, so long as it does so diligently, by appropriate proceedings and without
prejudice to Lender and provided that neither the Property nor any interest
therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or
demand, Borrower shall promptly notify Lender of such contest and thereafter
shall, upon Lender's request, promptly provide a
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 23
bond, cash deposit or other security satisfactory to Lender to protect Lender's
interest and security should the contest be unsuccessful. If Borrower shall fail
to immediately discharge or provide security against any such claim or demand as
aforesaid, Lender may do so and any and all expenses incurred by Lender,
together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand and shall be secured by this Security Deed and by all of the
other Loan Documents securing all or any part of the indebtedness evidenced by
the Notes.
1.11 Assignment of Leases and Rents. As additional and collateral security
for the payment of the indebtedness secured hereby and cumulative of any and all
rights and remedies herein provided for, Borrower hereby absolutely and
presently assigns to Lender all Leases, and all existing and future Rents and
Profits. Borrower hereby grants to Lender the sole, exclusive and immediate
right, without taking possession of the Property, to demand, collect (by suit or
otherwise), receive and give valid and sufficient receipts for any and all of
said Rents and Profits, for which purpose, effective on the occurrence and
during the continuance of an Event of Default, Borrower does hereby irrevocably
make, constitute and appoint Lender its attorney-in-fact with full power to
appoint substitutes or a trustee to accomplish such purpose (which power of
attorney shall be irrevocable so long as any indebtedness secured hereby is
outstanding, shall be deemed to be coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by
any disability or incapacity suffered by Borrower subsequent to the date
hereof). Lender shall be without liability for any loss which may arise from a
failure or inability to collect Rents and Profits, proceeds or other payments.
However, until the occurrence of an Event of Default under this Security Deed,
Borrower shall have a license to collect and receive the Rents and Profits when
due and prepayments thereof for not more than one month prior to due date
thereof. Upon the occurrence of an Event of Default, Borrower's license shall
automatically terminate without notice to Borrower and Lender may thereafter,
without taking possession of the Property, collect the Rents and Profits itself
or by an agent or receiver. From and after the termination of such license,
Borrower shall be the agent of Lender in collection of the Rents and Profits and
all of the Rents and Profits so collected by Borrower shall be held in trust by
Borrower for the sole and exclusive benefit of Lender and Borrower shall, within
one (1) Business Day (as hereinafter defined) after receipt of any Rents and
Profits, pay the same to Lender to be applied by Lender as hereinafter set
forth. Neither the demand for or collection of Rents and Profits by Lender, nor
the exercise of Lender's rights as assignee of the Leases, shall constitute any
assumption by Lender of any obligations under any Lease or other agreement
relating thereto. Lender is obligated to account only for such Rents and Profits
as are actually collected or received by Lender. Borrower irrevocably agrees and
consents that the respective payors of the Rents and Profits shall, upon demand
and notice from Lender of an Event of Default hereunder, pay said Rents and
Profits to Lender without liability to determine the actual existence of any
Event of Default claimed by Lender. Borrower hereby waives any right, claim or
demand which Borrower may now or hereafter have against any such payor by reason
of such payment of Rents and Profits to Lender, and any such payment shall
discharge such payor's obligation to make such payment to Borrower. All Rents
and Profits collected or received by Lender shall be applied against all
expenses of collection, including, without limitation, attorneys' fees, against
costs of operation and management of the Property and against the indebtedness
secured hereby, in whatever order or priority as to any of the items so
mentioned as Lender directs in its sole subjective discretion and without regard
to the adequacy of its security. Neither the exercise by Lender of any rights
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 24
under this Section nor the application of any Rents and Profits to the secured
indebtedness shall cure or be deemed a waiver of any Event of Default hereunder.
The assignment of Leases and of Rents and Profits hereinabove granted shall
continue in full force and effect during any period of foreclosure or redemption
with respect to the Property. As additional security for the indebtedness
secured hereby, Borrower has executed and delivered an Assignment of Leases and
Rents dated of even date herewith (as hereafter amended, consolidated or
modified from time to time, the "Countryside Atlanta Assignment") in favor of
Lender covering all of the right, title and interest of Borrower, as landlord,
lessor or licensor, in and to any Leases. All rights and remedies granted to
Lender under the Countryside Atlanta Assignment and all other Assignments (as
defined in Exhibit C) shall be in addition to and cumulative of all rights and
remedies granted to Lender hereunder.
1.12 Leases and Licenses.
(a) Lease Requirements. All Leases shall be written on such standard
form lease (without any material changes unless re-submitted for Lender's
approval, which approval shall not be unreasonably withheld or delayed) as is
attached as Exhibit C to the Receipt and Closing Certificate of even date
herewith, if any, and shall be on arms length terms, shall provide for free rent
only if the same is consistent with prevailing market conditions and shall
provide for market rents (including Security Deposits, if any) then prevailing
in the market area of the Real Estate or as reasonably determined by Borrower
suing prudent business practices; provided, however, (x) Borrower shall be
permitted to offer leasing incentive consistent with its ordinary business and
marketing practices and those of its affiliates, and (y) Borrower shall be
permitted to allow month-to-month tenancies without obtaining written Lease
renewals following the expiration and pursuant to the terms of written Leases.
Notwithstanding the foregoing sentence and the provisions of Section 1.12(b)
below, Borrower shall be permitted to offer Leases to Sun Home Services, Inc.
("SHS"), an affiliate of borrower, utilizing form leases similar to that
attached as Exhibit C to the Receipt and Closing Certificate of even date
herewith, but such leases may provide for (i) term lengths and rental amounts to
be determined by Borrower in its sole discretion, in the case of leases of sites
on which SHS wishes to place model homes, and (ii) the right of the lessee to
sublease, in the case of leases of sites on which SHS wishes to place a
manufactured home and lease such home and sublease the underlying site to a
resident. Borrower shall also submit to Lender for Lender's approval, prior to
the execution thereof, any proposed Lease, license or occupancy agreement of the
pad sites, clubhouse or other improvements or any portion thereof that differs
materially and adversely from the aforementioned form lease. Except as otherwise
provided herein, Borrower shall not execute any Lease, license or occupancy
agreement except for an actual occupancy by the tenant, lessee or licensee
thereunder. No Lease shall contain any option or right of first refusal to
purchase all or any portion of the Property.
(b) Acts Requiring Consent of Lender. Except as required by law or
pursuant to any master agreement with residents of the Property, Borrower shall
not, without the prior written consent of Lender, (i) exclusive of Security
Deposits, accept any payment of Rent or installments of Rent for more than one
(1) month in advance; (ii) enter into any written lease having a term
inconsistent with the overall business model of Borrower and its affiliates;
(iii) cancel or terminate any Lease (other than for non-payment of Rent or any
other material default thereunder) or amend or modify any Lease; (iv) take or
omit to take any action or
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 25
exercise any right or option which would permit the tenant under any Lease to
cancel or terminate said Lease; (v) anticipate, discount, release, waive,
compromise or otherwise discharge any Rents payable or other obligations under
the Leases; (vi) further pledge, transfer, mortgage or otherwise encumber or
assign the Leases or future payments of Rents, except as otherwise expressly
permitted by the terms of this Security Deed or incur any material indebtedness,
liability or other obligation to any tenant, lessee or licensee under the
Leases; or (vii) permit any Lease to become subordinate to any lien other than
the lien of this Security Deed; provided, however, that Borrower may take any of
the actions described in subsection (iii) or (v) above so long as such actions
are taken by Borrower in the ordinary course of business and are consistent with
sound customary leasing and management practices for properties similar to the
Property.
(c) Affirmative Covenants Regarding Leases. Borrower shall at all
times promptly and faithfully perform, or cause to be performed, all of the
covenants, conditions and agreements contained in all Leases, now or hereafter
existing, on the part of the landlord, lessor or licensor thereunder to be kept
and performed. Borrower, at no cost or expense to Lender, shall enforce, short
of termination, the performance and observance of each and every condition and
covenant of each of the other parties under each Lease. Borrower shall furnish
to Lender as required pursuant to Section 1.18(c) below, a current rent roll
certified by Borrower as being true and correct containing the names of all
tenants, the terms of their respective Leases, the pad site occupied and the
rentals or fees payable thereunder and the amount of each tenant's Security
Deposit. Upon the request of Lender, but not more than once during a calendar
year, Borrower shall deliver to Lender a copy of any designated Lease or, if
required by Lender, a copy of every Lease.
(d) Security Deposits. If required under applicable law, all Security
Deposits of tenants, whether held in cash or in any other form, shall not be
commingled with any other funds of Borrower or any other person and, if cash,
shall be deposited by Borrower at commercial or savings bank or banks, or
otherwise held in compliance with applicable law. Any bond or other instrument
which Borrower is permitted to hold in lieu of cash Security Deposits under any
applicable legal requirements shall be maintained in full force and effect in
the full amount of such deposits unless replaced by cash deposits as hereinabove
described; shall be issued by an institution reasonably satisfactory to Lender;
shall, if permitted pursuant to any applicable legal requirements, name Lender
as payee or mortgagee thereunder or, at Lender's option, be assigned or fully
assignable to Lender; and shall, in all respects, comply with any applicable
legal requirements and otherwise be reasonably satisfactory to Lender. Borrower
shall, upon request, provide Lender with evidence reasonably satisfactory to
Lender of Borrower's compliance with the foregoing. Upon an Event of Default
under this Security Deed, Borrower shall, immediately upon Lender's request (if
permitted by applicable law), deliver to Lender the Security Deposits (and any
interest previously earned thereon and not disbursed to the person(s) lawfully
entitled to receive same) with respect to all or any portion of the Property, to
be held by Lender subject to the terms of the Leases.
(e) Rights of Lender Upon Default. Upon an Event of Default, whether
before or after the whole principal sum secured hereby is declared to be
immediately due or whether before or after the institution of legal proceedings
to foreclose this Security Deed, forthwith, upon demand of Lender, Borrower
shall surrender to Lender and Lender shall be entitled to take actual possession
of the Property or any part thereof personally, or by its agent or
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 26
attorneys. In such event, Lender shall have, and Borrower hereby gives and
grants to Lender, the right, power and authority to make and enter into Leases
for such rents and for such periods of occupancy and upon conditions and
provisions as Lender may deem desirable in its sole discretion, and Borrower
expressly acknowledges and agrees that the term of such Lease may extend beyond
the date of any foreclosure sale at the Property; it being the intention of
Borrower that in such event Lender shall be deemed to be and shall be the
attorney-in-fact of Borrower for the purpose of making and entering into Leases
for the rents and upon the terms, conditions and provisions deemed desirable to
Lender in its sole discretion and with like effect as if such Leases had been
made by Borrower as the owner in fee simple of the Property free and clear of
any conditions or limitations established by this Security Deed. The power and
authority hereby given and granted by Borrower to Lender shall be deemed to be
coupled with an interest, shall not be revocable by Borrower so long as any
indebtedness secured hereby is outstanding, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability
or incapacity suffered by Borrower subsequent to the date hereof. In connection
with any action taken by Lender pursuant to this Section, Lender shall not be
liable for any loss sustained by Borrower resulting from any failure to let the
Property, or any part thereof, or from any other act or omission of Lender in
managing the Property, nor shall Lender be obligated to perform or discharge any
obligation, duty or liability under any Lease or under or by reason of this
instrument or the exercise of rights or remedies hereunder. BORROWER SHALL, AND
DOES HEREBY, INDEMNIFY LENDER FOR, AND HOLD LENDER HARMLESS FROM, ANY AND ALL
CLAIMS, ACTIONS, DEMANDS, LIABILITIES, LOSS OR DAMAGE WHICH MAY OR MIGHT BE
INCURRED BY LENDER UNDER ANY SUCH LEASE OR UNDER THIS SECURITY DEED OR BY THE
EXERCISE OF RIGHTS OR REMEDIES HEREUNDER AND FROM ANY AND ALL CLAIMS AND DEMANDS
WHATSOEVER WHICH MAY BE ASSERTED AGAINST LENDER BY REASON OF ANY ALLEGED
OBLIGATIONS OR UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE
TERMS, COVENANTS OR AGREEMENTS CONTAINED IN ANY SUCH LEASE OTHER THAN THOSE
RESULTING SOLELY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER.
Should Lender incur any such liability, the amount thereof, including, without
limitation, costs, expenses and attorneys' fees, together with interest thereon
at the Default Interest Rate from the date incurred by Lender until actually
paid by Borrower, shall be immediately due and payable to Lender by Borrower on
demand and shall be secured hereby and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Notes. Nothing in
this Section shall impose on Lender any duty, obligation or responsibility for
the control, care, management or repair of the Property, or for the carrying out
of any of the terms and conditions of any such Lease, nor shall it operate to
make Lender responsible or liable for any waste committed on the Property by the
tenants or by any other parties or for any dangerous or defective condition of
the Property, or for any negligence in the management, upkeep, repair or control
of the Property. Borrower hereby assents to, ratifies and confirms any and all
actions of Lender with respect to the Property taken under this Section. The
foregoing rights are in addition to all other rights and remedies granted to
Lender pursuant to this Security Deed.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 27
1.13 Alienation and Further Encumbrances.
(a) Borrower acknowledges that Lender has relied upon the principals
of Borrower and their experience in owning and operating properties similar to
the Property in connection with the closing of the Countryside Atlanta Loan.
Accordingly, except as specifically allowed hereinbelow in this Section and
notwithstanding anything to the contrary contained in Section 4.5 hereof, in the
event that the Property or any part thereof or interest therein shall be sold
(including any installment sales agreement), conveyed, disposed of, alienated,
hypothecated, leased (except to tenants of space in the Improvements in
accordance with the provisions of Section 1.12 hereof), assigned, pledged,
mortgaged, further encumbered or otherwise transferred or Borrower shall be
divested of its title to the Property or any interest therein, in any manner or
way, whether voluntarily or involuntarily, without the prior written consent of
Lender being first obtained, which consent may be withheld in Lender's sole
discretion, then the same shall constitute an Event of Default and Lender shall
have the right, at its option, to declare any or all of the indebtedness secured
hereby, irrespective of the maturity date specified in any of the Notes,
immediately due and payable and to otherwise exercise any of its other rights
and remedies contained in Article III hereof. If such acceleration is during any
period when a prepayment fee is payable pursuant to the provisions set forth in
the Notes, then, in addition to all of the foregoing, such prepayment fee shall
also then be immediately due and payable to the same end as though Borrower were
prepaying the entire indebtedness secured hereby on the date of such
acceleration. For the purposes of this Section, the sale, conveyance, transfer,
disposition, alienation, hypothecation, pledge or encumbering (whether
voluntarily or involuntarily) of all or any portion of the ownership interest in
(or, directly or indirectly through constituent parties, any of the ultimate
beneficial ownership interest in) Borrower shall be deemed to be a transfer of
an interest in the Property. Notwithstanding the foregoing, however, transfers
or assignments of ownership interests in Borrower (and/or its constituent
parties) may be undertaken without the consent of Lender in each of the
following circumstances:
(1) Direct or indirect ownership interests in Borrower, Sun QRS
Countryside Manager, Inc., a Michigan corporation, and/or Sun Communities
Operating Limited Partnership, a Michigan limited partnership ("SCOLP") may
be freely transferred so long as Sun Communities, Inc., a Maryland
corporation ("Sun") maintains at least a 51% ultimate beneficial ownership
interest in Borrower.
(2) The sale, conveyance, transfer, disposition, alienation,
hypothecation, pledge or encumbering (whether voluntarily or involuntarily)
of all or any portion of the stock of (or, directly or indirectly through
constituent parties, any of the ultimate beneficial ownership interest in
the stock of) Sun shall not be prohibited by the restrictions contained in
this Section 1.13.
(3) Involuntary assignments or transfers caused by the death,
incompetence or dissolution of Borrower, any of its constituent parties or
the owner of any of its constituent parties are permitted if: (i) Borrower
is reconstituted, if required, following such death, incompetence or
dissolution, and (ii) Sun maintains at least a 51% ultimate beneficial
ownership interest in Borrower.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 28
In all cases where assignment of ownership interests is allowed pursuant to this
Section 1.13(a), the proportionate ownership which is proposed to be transferred
shall be calculated so as to take into account prior transfers or assignments
occurring after the date hereof.
(b) Notwithstanding the foregoing provisions of this Section, Lender
shall consent to a sale, conveyance or transfer of the Property in its entirety
or 100% of the ownership interests in Borrower (hereinafter, a "Sale") to any
person or entity provided that each of the following terms and conditions are
satisfied:
(1) No Event of Default or any other default is then continuing
hereunder or under any of the other Loan Documents;
(2) Borrower gives Lender written notice of the terms of such
prospective Sale not less than thirty (30) days before the date on which
such Sale is scheduled to close and, concurrently therewith, gives Lender
all reasonable information concerning the proposed transferee of the
Property (hereinafter, a "Buyer") as Lender would require in evaluating an
initial extension of credit to a borrower and pays to Lender a
non-refundable application fee in the amount of $5,000.00 (the "Application
Fee"). Lender shall have the right, in its reasonable discretion, to
approve or disapprove the proposed Buyer. In determining whether to give or
withhold its approval of the proposed Buyer, Lender shall utilize its
customary underwriting criteria as applied in the origination of the Loan,
and shall consider, among other things, the Buyer's experience and track
record in owning and operating facilities similar to the Property, the
Buyer's entity structure, the Buyer's financial strength, the Buyer's
general business standing and the Buyer's relationships and experience with
contractors, vendors, tenants, lenders and other business entities;
(3) Borrower pays Lender, concurrently with the closing of such
Sale, a non-refundable assumption fee (the "Assumption Fee") equal to one
percent (1.0%) of the then outstanding principal balance of the Countryside
Atlanta Note;
(4) The Buyer assumes and agrees to pay the indebtedness secured
hereby subject to the provisions of Section 4.23 hereof and to perform the
covenants of Borrower under the Loan Documents, including, without
limitation, that certain Post Closing Agreement, if any, executed in
connection herewith, and, prior to or concurrently with the closing of such
Sale, the Buyer executes, without any cost or expense to Lender, such
documents and agreements as Lender shall reasonably require to evidence and
effectuate said assumption and delivers such legal opinions as Lender may
require;
(5) Borrower and the Buyer hereby authorize Lender to prepare,
file of record or otherwise effectuate new financing statements or
financing statement amendments which describe all or any portion of the
assets of Borrower and the Buyer as collateral thereunder and further,
Borrower and the Buyer will execute any other additional documents
reasonably requested by Lender, all without cost to Lender. Borrower and
the Buyer specifically authorize Lender to cause such financing statements
to be filed without any signature of a representative of the Borrower or
Buyer appearing thereon, where such filings are permitted by applicable
law;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 29
(6) Borrower delivers to Lender, without any cost or expense to
Lender, such endorsements to Lender's Title Insurance Policy, hazard
insurance endorsements or certificates and other similar materials as
Lender may deem necessary at the time of the Sale, all in form and
substance satisfactory to Lender, including, without limitation, an
endorsement or endorsements to Lender's Title Insurance Policy insuring the
lien of this Security Deed, extending the effective date of such policy to
the date of execution and delivery (or, if later, of recording) of the
assumption agreement referenced above in subparagraph (4) of this Section
1.13(b) with no additional exceptions added to such policy and insuring
that fee simple title to the Property is vested in the Buyer;
(7) Borrower executes and delivers to Lender, without any cost or
expense to Lender, a release of Lender, its officers, directors, employees
and agents, from all claims and liability relating to the transactions
evidenced by the Loan Documents through and including the date of the
closing of the Sale, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon the Buyer, and which shall
provide for a release by Lender of Borrower, SCOLP, and their respective
officers, directors, employees and agents, from all claims and liability
relating to the transactions evidenced by the Loan Documents from and after
the date of the closing of the Sale;
(8) Subject to the provisions of Section 4.23 hereof, such Sale
is not construed so as to relieve Borrower of any personal liability under
the Countryside Atlanta Note or any of the other Loan Documents for any
acts or events occurring or obligations arising prior to or simultaneously
with the closing of such Sale and Borrower executes, without any cost or
expense to Lender, such documents and agreements as Lender shall reasonably
require to evidence and effectuate the ratification of said personal
liability; provided that if a party associated with the Buyer approved by
Lender in its sole discretion assumes the personal liability of the
Borrower under the Countryside Atlanta Note or any of the other Loan
Documents and such party associated with the Buyer executes, without any
cost or expense to Lender, a guaranty, indemnity agreement or other
instrument assuming such liability in form and substance satisfactory to
Lender, then Lender shall release the current Borrower from all such
personal liability under the Countryside Atlanta Note or any of the other
Loan Documents after the closing of such Sale;
(9) Such Sale is not construed so as to relieve any current
guarantor or indemnitor of its obligations under any guaranty or indemnity
agreement executed in connection with the loan secured hereby and each such
current guarantor and indemnitor executes, without any cost or expense to
Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate the ratification of each such guaranty and
indemnity agreement, provided that if a party associated with the Buyer
approved by Lender in its sole discretion assumes the obligations of the
current guarantor or indemnitor under its guaranty or indemnity agreement
and such party associated with the Buyer executes, without any cost or
expense to Lender, a new guaranty or indemnity agreement in form and
substance satisfactory to Lender, then Lender shall release the current
guarantor or indemnitor from all obligations arising under its guaranty or
indemnity agreement after the closing of such Sale;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 30
(10) The Buyer shall furnish, if the Buyer is a corporation,
partnership or other entity, all documents evidencing the Buyer's capacity
and good standing, and the qualification of the signers to execute the
assumption of the indebtedness secured hereby, which papers shall include,
but not in any way be limited to, certified copies of all documents
relating to the organization and formation of the Buyer and of the
entities, if any, which are partners or members of the Buyer. The Buyer and
such constituent partners, members or shareholders of Buyer (as the case
may be), as Lender may require, shall be single-purpose, single-asset
"bankruptcy remote" entities, whose formation documents shall be approved
by counsel to Lender. To the extent Borrower desires that its Buyer be a
single member limited liability company, Lender shall be entitled to impose
additional requirements with respect to Buyer including, without
limitation, requirements as to the state of its organization and the
necessity for additional opinions of counsel, etc. An individual
recommended by the Buyer and approved by Lender shall serve as an
Independent Director (as defined in Section 1.32(u) of this Security Deed)
of the Buyer (if the Buyer is a corporation or a limited liability company)
or the Buyer's corporate or limited liability company general partner (if
the Buyer is a partnership) or an independent member or, in Lender's
discretion, manager, of Buyer (if the Buyer is a limited liability
company). Unanimous consent of the board of directors (including the
Independent Director) shall be required for, among other things, any
merger, consolidation, dissolution, bankruptcy or insolvency of any such
constituent partner, member or shareholder of the Buyer (as the case may
be) or of the Buyer;
(11) The Buyer, if required by Lender, shall furnish an opinion
of counsel satisfactory to Lender and its counsel (i) that the Buyer's
formation documents provide for the matters described in subparagraph (10)
of this Section 1.13(b), (ii) that the assumption of the indebtedness
evidenced hereby has been duly authorized, executed and delivered, and that
the Loan Documents are valid, binding and enforceable against the Buyer in
accordance with their terms, (iii) that the Buyer and any entity which is a
controlling stockholder or general partner of Buyer, have been duly
organized, and are in existence and good standing, (iv) that the assets of
the Buyer will not be consolidated with the assets of any other entity
(including the Buyer's general partner or managing member, if any) having
an interest in, or affiliation with, the Buyer, in the event of bankruptcy
or insolvency of any such entity or such general partner or managing
member, and (v) with respect to such other matters, as Lender may request;
(12) If the Buyer is a single-member limited liability company,
Buyer must be formed in the state of Delaware, and the Buyer's operating
agreement must provide for the continued existence of the Buyer in the
event of the bankruptcy, death, or dissolution, liquidation, termination or
adjudication of incompetency of the sole member. The Buyer, if required by
Lender, shall also furnish an opinion of counsel satisfactory to Lender and
its counsel that if the Buyer is a single-member limited liability company,
(i) the Buyer is a separate legal entity formed in the state of Delaware;
(ii) the separate existence of the Buyer shall continue until the
cancellation of the certificate of organization; (iii) the Buyer's
operating agreement provides for the continued existence of the Buyer in
the event of the bankruptcy, death, or dissolution, liquidation,
termination or adjudication of incompetency of the sole member, and that
such provisions would be enforceable notwithstanding the bankruptcy, death,
dissolution, liquidation, termination
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 31
or adjudication of incompetency of the sole member; (iv) any judgment
creditor of the sole member may not satisfy its claims against the sole
member by asserting a claim against the Property or any other assets of the
Buyer; (v) a federal bankruptcy court would hold that the laws of the state
of organization of the Buyer, and not federal law, govern the determination
of what persons or entities have authority to file a voluntary bankruptcy
petition on behalf of the Buyer; (vi) in order for any person or entity to
file a voluntary bankruptcy petition on behalf of the Buyer, the prior
unanimous approval or written consent of the member and the board of
directors, including the Independent Director, of the SPC Entity (each as
defined in Section 1.32(u)) is required; and (vii) such requirements and
all other provisions of the Buyer's operating agreement are the valid,
binding and enforceable agreements of the sole member;
(13) If required under the operative documents with respect to a
Secondary Market Transaction, Lender shall have received evidence in
writing from the Rating Agency (as hereinafter defined), at the sole cost
and expense of Borrower, to the effect that the proposed transfer will not
result in a re-qualification, reduction, downgrade or withdrawal of any
rating initially assigned or to be assigned in a Secondary Market
Transaction or, if no such rating has been issued, in Lender's good faith
judgment, such transfer shall not have an adverse effect on the level of
rating obtainable in connection with the Countryside Atlanta Loan;
(14) Borrower shall reimburse Lender for all of Lender's
reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements and Rating Agency fees and
expenses) incurred or anticipated to be incurred by Lender in connection
with a Sale including, without limitation, Lender's determination of
whether Borrower has satisfied all of the conditions and requirements set
forth in this Section 1.13(b);
(15) All of the Related Properties (as defined in Exhibit C)
shall be subject to a simultaneous Sale to the identical Buyer (or
affiliated buyers with common ownership) in satisfaction of all
requirements of the Deeds of Trust; and
(16) Borrower's obligations under the contract of sale pursuant
to which such Sale, conveyance or transfer is proposed to occur shall
expressly be subject to the satisfaction of the terms and conditions of
this Section 1.13(b).
(c) Singular Assumption. Notwithstanding the provisions of Section
1.13(b)(15) above, from and after the expiration of the second (2nd) anniversary
of the date hereof, Borrower shall be entitled to undertake a Sale of the
Property to a third-party unaffiliated Buyer negotiated with such Buyer at arms'
length and without undertaking simultaneous Sales of the Other Properties (such
transaction is herein referred to as a "Singular Assumption") subject to
Borrower's satisfaction of the following requirements:
(1) Both of the following conditions shall be satisfied: (i) the
loan-to-value ratio as to the remaining principal balance of the Other
Loans (after taking into account any principal reduction payment made
pursuant to Section 1.13(c)(3) below) to the appraised value of the Other
Properties shall not exceed eighty percent (80%), and
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 32
(ii) the loan-to-value ratio of the remaining principal balance of the
Countryside Atlanta Note (after taking into account any principal reduction
payment made pursuant to Section 1.13(c)(3) below) to the appraised value
of the Property shall not exceed eighty percent (80%);
(2) Both of the following conditions shall be satisfied: (i) the
debt service coverage ratio for the Other Properties and Other Loans, after
taking into account any prepayment made pursuant to Section 1.13(c)(3)
below shall not be less than 1.20:1, and (ii) the debt service coverage
ratio for the Property and the Countryside Atlanta Note, also after taking
into account any prepayment made pursuant to Section 1.13(c)(3) below shall
not be less than 1.20:1;
(3) If necessary to satisfy the conditions described in Section
1.13(c)(1) and (c)(2) above, Borrower shall make (and/or as applicable,
shall cause the Other Borrowers to make) a partial prepayment of the
Countryside Atlanta Note equal to the amount necessary to fully satisfy the
loan-to-value and debt service coverage ratio requirements specified in
Sections 1.13(c)(1) and 1.13(c)(2). Any partial prepayment of the Notes
undertaken pursuant to this Section 1.13(c)(3) shall be allocated amongst
the Countryside Atlanta Note and the Other Notes such that the
loan-to-value and debt service coverage ratio tests required pursuant to
Section 1.13(c)(1) and 1.13(c)(2) above are satisfied. Any partial
prepayment of the Countryside Atlanta Note or the Other Notes undertaken
pursuant to this Section 1.13(c)(3) shall require the payment of an
appropriate prepayment fee as calculated for each such promissory note as
follows:
amount being prepaid
------------------------ times(x) Required Yield Maintenance
outstanding loan balance (as defined in the Note)
Under no circumstances shall Borrower be required to pay a prepayment fee
pursuant to the foregoing formula which would violate the terms of Section
2.3 of the Note;
(4) With the exception of the conditions specified above in
Section 1.13(b)(15), all of the conditions generally required with respect
to a Sale as described in Section 1.13(b) above shall be satisfied; and
An amendment (the "Uncross Amendment") shall be entered into with respect to
this Security Deed, the Other Deeds of Trust and the Loan Documents related to
the Other Loans such that (i) this Security Deed shall only thereafter secure
the Countryside Atlanta Note and shall no longer serve as security for the Other
Notes, (ii) the Other Deeds of Trust shall be modified so as to no longer cause
the Other Properties to serve as security for the Countryside Atlanta Loan, and
(iii) conforming changes shall be made to all of the other Loan Documents in a
manner satisfactory to Lender in all respects.
1.14 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay
when due all utility charges which are incurred by Borrower or which may become
a charge or lien against any portion of the Property for gas, electricity, water
and sewer services furnished to the Real Estate and/or the Improvements and all
other assessments or charges of a similar nature, or
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 33
assessments payable pursuant to any restrictive covenants, whether public or
private, affecting the Real Estate and/or the Improvements or any portion
thereof, whether or not such assessments or charges are or may become liens
thereon.
1.15 Access Privileges and Inspections. Lender and the agents,
representatives and employees of Lender shall, subject to the rights of tenants,
have full and free access to the Real Estate and the Improvements and any other
location where books and records concerning the Property are kept at all
reasonable times for the purposes of inspecting the Property and of examining,
copying and making extracts from the books and records of Borrower relating to
the Property. Borrower shall lend assistance to all such agents, representatives
and employees of Lender.
1.16 Waste; Alteration of the Property. Borrower shall not commit, suffer
or permit any waste on the Property nor take any actions that might invalidate
any insurance carried on the Property. Borrower shall maintain the Property in
good condition and repair. No part of the Improvements may be removed,
demolished or materially altered, without the prior written consent of Lender.
Without the prior written consent of Lender, Borrower shall not commence
construction of any improvements on the Real Estate other than improvements
required for the maintenance or repair of the Property.
1.17 Zoning; Use. Without the prior written consent of Lender, Borrower
shall not seek, make, suffer, consent to or acquiesce in any change in the
zoning or conditions of use of the Real Estate or the Improvements. Borrower
shall comply in all material respects with and make all payments required under
the provisions of any covenants, conditions or restrictions affecting the Real
Estate or the Improvements. Borrower shall comply in all material respects with
all existing and future requirements of all governmental authorities having
jurisdiction over the Property. Borrower shall keep all licenses, permits,
franchises, certificates of occupancy, consents, and other approvals necessary
for the operation of the Property in full force and effect. Borrower shall
operate the Property as one or more manufactured home communities for so long as
the indebtedness secured hereby is outstanding. If, under applicable zoning
provisions, the use of all or any part of the Real Estate or the Improvements is
or becomes a nonconforming use, Borrower shall not cause or permit such use to
be discontinued or abandoned without the prior written consent of Lender.
Further, without Lender's prior written consent, Borrower shall not file or
subject any part of the Real Estate or the Improvements to any declaration of
condominium or cooperative or convert any part of the Real Estate or the
Improvements to a condominium, cooperative or other form of multiple ownership
and governance.
1.18 Financial Statements and Books and Records. Borrower shall keep
accurate books and records of account of the Property and its own financial
affairs sufficient to permit the preparation of financial statements therefrom
in accordance with generally accepted accounting principles. Lender and its duly
authorized representatives shall have the right to examine, copy and audit
Borrower's records and books of account at all reasonable times. So long as this
Security Deed continues in effect, Borrower shall provide to Lender, in addition
to any other financial statements required hereunder or under any of the other
Loan Documents, the following financial statements and information, all of which
must be certified to Lender as being true and correct by Borrower or the entity
to which they pertain, as applicable, be prepared in accordance
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 34
with generally accepted accounting principles consistently applied and be in
form and substance acceptable to Lender:
(a) copies of all tax returns filed by Borrower, within thirty (30)
days after the date of filing;
(b) quarterly operating statements for the Property, within sixty (60)
days after the end of each March, June, September and December, provided,
operating statements shall be delivered within ten (10) days of request by
Lender in connection with a Secondary Market Transaction;
(c) current rent rolls for the Property, within sixty (60) days after
the end of each March, June, September and December, provided, rent rolls shall
be delivered shall be delivered within five (5) days of request by Lender in
connection with a Secondary Market Transaction;
(d) annual balance sheets, statements of income and expenses and
statements of changes in financial position for the Property and annual
financial statements for Borrower, and each indemnitor and guarantor under any
indemnity or guaranty executed in connection with the Loan within sixty (60)
days after the end of each calendar year prepared and audited by such indemnitor
or guarantor of Borrower's primary accountant; and
(e) such other information with respect to the Property, Borrower and
each indemnitor and guarantor under any indemnity or guaranty executed in
connection with the Countryside Atlanta Loan, which may be reasonably requested
from time to time by Lender, within a reasonable time after the applicable
request.
If any of the materials described in this Section 1.18(a)-(d) are not furnished
to Lender within the applicable time periods, Borrower shall pay to Lender a
late fee of $250.00. Further, if any of the aforementioned materials are not
furnished to Lender within the applicable time periods, or Lender is reasonably
dissatisfied with the contents of any of the foregoing, in addition to any other
rights and remedies of Lender contained herein, Lender shall have the right, but
not the obligation, to obtain the same by means of an audit by an independent
certified public accountant selected by Lender, in which event Borrower agrees
to provide all necessary information to said accountant and to otherwise
cooperate in the making of such audit. Borrower agrees that any and all
materials furnished hereunder are the property of Lender (and its Servicer) and
may be released and made available to such parties as Lender or its Servicer
deems appropriate, including any Rating Agency responsible for rating securities
issued in any Secondary Market Transaction.
1.19 Further Documentation. Borrower shall, on the request of Lender in its
reasonable discretion and at the expense of Borrower, promptly correct any
defect, error or omission which may be discovered in the contents of this
Security Deed or in any of the other Loan Documents and promptly execute,
acknowledge, deliver and record or file such further instruments and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Security Deed and the other Loan Documents or
as may reasonably be deemed advisable by Lender to protect, continue or preserve
the liens and security interests hereunder including, without limitation,
security instruments, financing statements and continuation statements.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 35
1.20 Payment of Costs; Advances to Protect Property.
(a) Payment of Costs. Borrower shall pay all reasonable costs and
expenses of every character incurred in connection with the closing of the Loans
or otherwise attributable or chargeable to Borrower as the owner of the
Property, including, without limitation, appraisal fees, recording fees,
documentary, stamp, mortgage or intangible taxes, brokerage fees and
commissions, title policy premiums and title search fees, uniform commercial
code/tax lien/litigation search fees, escrow fees and reasonable attorneys'
fees. Unless otherwise specified herein, with respect to any action by Borrower
permitted hereunder, Borrower shall pay all of its own costs and expenses
relating thereto but excluding any costs and expenses incurred by Lender or any
party involved in such actions as a result of a Secondary Market Transaction.
(b) Advances to Protect Property. Without limiting or waiving any
other rights and remedies of Lender hereunder, if Lender determines that
Borrower is not adequately performing or has failed to perform any of its
obligations, covenants or agreements contained in this Security Deed or in any
of the other Loan Documents and such inadequacy or failure is not cured within
any applicable grace or cure period, or if any action or proceeding of any kind
(including, but not limited to, any bankruptcy, insolvency, arrangement,
reorganization or other debtor relief proceeding) is commenced which might
affect Lender's interest in the Property or Lender's right to enforce its
security, then Lender may, at its option, with or without notice to Borrower,
make any appearances, disburse or advance any sums and take any actions as may
be necessary or desirable to protect or enforce the security of this Security
Deed or to remedy the failure of Borrower to perform its covenants and
agreements (without, however, waiving any Event of Default or other default
hereunder of Borrower). Borrower agrees to pay on demand all expenses of Lender
reasonably incurred with respect to the foregoing (including, but not limited
to, fees and disbursements of counsel), together with interest thereon at the
Default Interest Rate from and after the date on which Lender incurs such
expenses until reimbursement thereof by Borrower. Any such expenses so incurred
by Lender, together with interest thereon as provided above, shall be additional
indebtedness of Borrower secured by this Security Deed and by all of the other
Loan Documents securing all or any part of the indebtedness evidenced by the
Notes. The necessity for any such actions and of the amounts to be paid shall be
determined by Lender in its sole and absolute discretion. Lender is hereby
empowered to enter and to authorize others to enter upon the Property or any
part thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without thereby becoming liable to Borrower or any person
in possession holding under Borrower. Borrower hereby acknowledges and agrees
that the remedies set forth in this Section 1.20(b) shall be exercisable by
Lender, and any and all payments made or costs or expenses incurred by Lender in
connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by Borrower with interest thereon at the Default Interest
Rate, notwithstanding the fact that such remedies were exercised and such
payments made and costs incurred by Lender after the filing by Borrower of a
voluntary case or the filing against Borrower of an involuntary case pursuant to
or within the meaning of Title 11, United States Code (the "Bankruptcy Code"),
or after any similar action pursuant to any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, which may be or become applicable to Borrower,
Lender,
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 36
any guarantor or indemnitor, the secured indebtedness or any of the Loan
Documents. This indemnity shall survive payment in full of the indebtedness
secured hereby. This Section 1.20(b) shall not be construed to require Lender to
incur any expenses, make any appearances or take any actions.
1.21 Security Interest. This Security Deed is also intended to encumber and
create a security interest in, and Borrower hereby grants to Lender a security
interest in, all Reserves (as hereinabove defined), fixtures, chattels,
accounts, equipment, inventory, contract rights, general intangibles and other
personal property included within the Property, all renewals, replacements of
any of the aforementioned items, or articles in substitution therefor or in
addition thereto or the proceeds thereof (said property is hereinafter referred
to collectively as the "Collateral"), whether or not the same shall be attached
to the Real Estate or the Improvements in any manner. It is hereby agreed that
to the extent permitted by law, all of the foregoing property is to be deemed
and held to be a part of and affixed to the Real Estate and the Improvements.
The foregoing security interest shall also cover Borrower's leasehold interest
in any of the foregoing property which is leased by Borrower. Notwithstanding
the foregoing, all of the foregoing property shall be owned by Borrower and no
leasing or installment sales or other financing or title retention agreement in
connection therewith shall be permitted without the prior written approval of
Lender. Borrower shall promptly replace all of the Collateral subject to the
lien or security interest of this Security Deed when worn out or obsolete with
Collateral comparable to the worn out or obsolete Collateral when new and will
not, without the prior written consent of Lender, remove from the Real Estate or
the Improvements any of the Collateral subject to the lien or security interest
of this Security Deed except such as is replaced by an article of equal
suitability and value as above provided, owned by Borrower free and clear of any
lien or security interest except that created by this Security Deed and the
other Loan Documents and except as otherwise expressly permitted by the terms of
Section 1.13 of this Security Deed. All of the Collateral shall be kept at the
location of the Real Estate except as otherwise required by the terms of the
Loan Documents. Borrower shall not use any of the Collateral in violation of any
applicable statute, ordinance or insurance policy.
1.22 Security Agreement. This Security Deed constitutes both a deed to
secure debt and a "security agreement" between Borrower and Lender with respect
to the Collateral in which Lender is granted a security interest hereunder, and,
cumulative of all other rights and remedies of Lender hereunder, Lender shall
have all of the rights and remedies of a secured party under any applicable
Uniform Commercial Code. Borrower hereby irrevocably authorizes Lender at any
time and from time to time to prepare, file of record in any Uniform Commercial
Code jurisdiction or otherwise effectuate new financing statements or financing
statement amendments which (a) indicate the Collateral (i) as all assets of
Borrower or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of any
applicable Uniform Commercial Code, or (ii) by any other description which
reasonably approximates the description contained in this Security Deed, and (b)
provide any other information required by part 5 of Article 9 of any applicable
Uniform Commercial Code, for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether Borrower is an
organization, the type of organization and any organizational identification
number issued to Borrower and, (ii) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates. Borrower agrees to
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 37
furnish any such information to Lender promptly upon the Lender's request.
Borrower specifically agrees that Lender may cause such financing statements and
financing statement amendments to be filed without any signature of a
representative of the Borrower appearing thereon, where such filings are
permitted by applicable law. Borrower hereby further agrees to execute and
deliver on demand and hereby irrevocably constitutes and appoints Lender the
attorney-in-fact of Borrower to execute and deliver and, if appropriate, to file
with the appropriate filing officer or office such security agreements,
financing statements, continuation statements or other instruments as Lender may
request or require in order to impose, perfect or continue the perfection of the
lien or security interest created hereby. Borrower also ratifies its
authorization for Lender to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof. Expenses of retaking, holding, preparing for
sale, selling or the like (including, without limitation, Lender's reasonable
attorneys' fees and legal expenses), together with interest thereon at the
Default Interest Rate from the date incurred by Lender until actually paid by
Borrower, shall be paid by Borrower on demand and shall be secured by this
Security Deed and by all of the other Loan Documents securing all or any part of
the indebtedness evidenced by the Notes. If notice is required by law, Lender
shall give Borrower at least ten (10) days' prior written notice of the time and
place of any public sale of such property or of the time of or after which any
private sale or any other intended disposition thereof is to be made, and if
such notice is sent to Borrower, as the same is provided for the mailing of
notices herein, it is hereby deemed that such notice shall be and is reasonable
notice to Borrower. No such notice is necessary for any such property which is
perishable, threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Any sale made pursuant to the provisions of this
Section 1.22 shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held contemporaneously with the foreclosure
sale as provided in Section 3.1(e) hereof upon giving the same notice with
respect to the sale of the Property hereunder as is required under said Section
3.1(e). Furthermore, to the extent permitted by law, in conjunction with, in
addition to or in substitution for the rights and remedies available to Lender
pursuant to any applicable Uniform Commercial Code:
(a) In the event of a foreclosure sale, the Property may, at the
option of Lender, be sold as a whole;
(b) It shall not be necessary that Lender take possession of the
aforementioned Collateral, or any part thereof, prior to the time that any sale
pursuant to the provisions of this Section 1.22 is conducted and it shall not be
necessary that said Collateral, or any part thereof, be present at the location
of such sale; and
(c) Lender may appoint or delegate any one or more persons as agent to
perform any act or acts necessary or incident to any sale held by Lender,
including the sending of notices and the conduct of the sale, but in the name
and on behalf of Lender.
Borrower will not change the principal place of business or chief executive
office set forth below, or change the state of its organization or registration,
or change its name, without in each instance, the prior written consent of
Lender. Lender's consent will, however, be conditioned upon, among other things,
the execution and delivery of additional financing statements, security
agreements and other instruments which may be necessary to effectively evidence
or perfect
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 38
Lender's security interest in the Collateral as a result of such changes. The
name, principal place of business and chief executive office of Borrower (as
Debtor under any applicable Uniform Commercial Code), as of the date hereof,
are:
Sun Countryside Atlanta LLC
27777 Franklin Road, Suite 200
Southfield, Michigan 48034
Attention: _________________
The name and address of Lender (as Secured Party under any applicable Uniform
Commercial Code), as of the date hereof, are:
ARCS Commercial Mortgage Co., L.P.
26901 Agoura Road, Suite 200
Calabasas Hills, California 91301
1.23 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Real Estate or the
Improvements without the prior written consent of Lender. The purchaser at any
foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Security Deed
and may take immediate possession of the Property free from, and despite the
terms of, such grant of easement or right-of-way. If Lender consents to the
grant of an easement or right-of-way, Lender agrees to grant such consent
without charge to Borrower other than reasonable expenses, including, without
limitation, reasonable attorneys' fees, incurred by Lender in the review of
Borrower's request and, if applicable, in the preparation of documents relating
to the subordination of this Security Deed to such easement or right-of-way.
1.24 Compliance with Laws.
(a) Borrower shall at all times comply in all material respects with
all statutes, ordinances, regulations and other governmental or
quasi-governmental requirements and private covenants now or hereafter relating
to the ownership, construction, use or operation of the Property, including, but
not limited to, those concerning employment and compensation of persons engaged
in operation and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the
Property; provided, however, that Borrower may, upon providing Lender with
security satisfactory to Lender, proceed diligently and in good faith to contest
the validity or applicability of any such statute, ordinance, regulation or
requirement so long as during such contest the Property shall not be subject to
any lien, charge, fine or other liability and shall not be in danger of being
forfeited, lost or closed. Borrower shall not use or occupy, or allow the use or
occupancy of, the Property in any manner which violates any Lease of or any
other agreement applicable to the Property or any applicable law, rule,
regulation or order or which constitutes a public or private nuisance or which
makes void, voidable or cancelable, or increases the premium of, any insurance
then in force with respect thereto.
(b) Borrower agrees that the Property shall at all times comply in all
material respects and to the extent applicable with the requirements of the
Americans with Disabilities
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 39
Act of 1990, the Fair Housing Amendments Act of 1988 and all other state and
local laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities ("Access Laws"). Borrower agrees to give prompt notice to Lender of
the receipt by Borrower of any complaints related to violations of any Access
Laws and of the commencement of any proceedings or investigations which relate
to compliance with applicable Access Laws.
1.25 Additional Taxes. In the event of the enactment after this date of any
law of the state where the Property is located or of any other governmental
entity deducting from the value of the Property for the purpose of taxation any
lien or security interest thereon, or imposing upon Lender the payment of the
whole or any part of the taxes or assessments or charges or liens herein
required to be paid by Borrower, or changing in any way the laws relating to the
taxation of mortgages, deeds of trust or security agreements or debts secured by
mortgages, deeds of trust or security agreements or the interest of the
mortgagee, beneficiary or secured party in the property covered thereby, or the
manner of collection of such taxes, so as to adversely affect this Security Deed
or the indebtedness secured hereby or Lender, then, and in any such event,
Borrower, upon demand by Lender, shall pay such taxes, assessments, charges or
liens, or reimburse Lender therefor; provided, however, that if in the opinion
of counsel for Lender (a) it might be unlawful to require Borrower to make such
payment, or (b) the making of such payment might result in the imposition of
interest beyond the maximum amount permitted by law, then and in either such
event, Lender may elect, by notice in writing given to Borrower, to declare all
of the indebtedness secured hereby to be and become due and payable in full,
thirty (30) days from the giving of such notice.
1.26 Borrower's Waivers. To the full extent permitted by law, Borrower
agrees that Borrower shall not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, moratorium or extension, or any law now or
hereafter in force providing for the reinstatement of the indebtedness secured
hereby prior to any sale of the Property to be made pursuant to any provisions
contained herein or prior to the entering of any decree, judgment or order of
any court of competent jurisdiction, or any right under any statute to redeem
all or any part of the Property so sold. To the full extent permitted by law,
Borrower shall not have or assert any right under any statute or rule of law
pertaining to the exemption of homestead or other exemption under any federal,
state or local law now or hereafter in effect, the administration of estates of
decedents or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the terms of this Security Deed to a sale of the Property, for
the collection of the secured indebtedness without any prior or different resort
for collection, or the right of Lender under the terms of this Security Deed to
the payment of the indebtedness secured hereby out of the proceeds of sale of
the Property in preference to every other claimant whatever. Borrower, for
Borrower and Borrower's successors and assigns, and for any and all persons ever
claiming any interest in the Property, to the full extent permitted by law,
hereby knowingly, intentionally and voluntarily with and upon the advice of
competent counsel waives, releases, relinquishes and forever forgoes: (a) all
rights of valuation, appraisement, stay of execution, reinstatement and notice
of election or intention to mature or declare due the secured indebtedness
(except such notices as are specifically provided for herein); (b) all right to
a marshalling of the assets of Borrower, including the Property, to a sale in
the inverse order of alienation, or to direct the order in which
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 40
any of the Property shall be sold in the event of foreclosure of the liens and
security interests hereby created and agrees that any court having jurisdiction
to foreclose such liens and security interests may order the Property sold as an
entirety; (c) all rights and periods of redemption provided under applicable
law; and (d) all present and future statutes of limitations as a defense to any
action to enforce the provisions of this Security Deed or to collect any of the
indebtedness secured hereby to the fullest extent permitted by law and agrees
that it shall not solicit or aid the solicitation of the filing of any Petition
(as hereinafter defined) against the Borrower, whether acting on its own behalf
or on behalf of any other party. Without limiting the generality of the
foregoing, Borrower shall not (i) provide information regarding the identity of
creditors or the nature of creditors' claims to any third party unless compelled
to do so by order of a court of competent jurisdiction or by regulation
promulgated by a governmental agency; or (ii) pay the legal fees or expenses of
any creditor of or interest holder in Borrower with respect to any matter
whatsoever.
1.27 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(I) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF GEORGIA OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THE COUNTRYSIDE
ATLANTA NOTE, THIS SECURITY DEED OR ANY OTHER OF THE LOAN DOCUMENTS, (II) AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION PRESIDING OVER GWINNETT COUNTY, GEORGIA, (III)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (IV) AGREES THAT IT WILL NOT
BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN
SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY
OTHER FORUM). TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER FURTHER CONSENTS
AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 4.4
HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).
(b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE
INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR
BORROWER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MANAGERS, MEMBERS,
EMPLOYEES, AGENTS OR ATTORNEYS,
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 41
OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR
BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.
1.28 Intentionally deleted.
1.29 Management. The management of the Property shall be by either: (a)
Borrower or an entity affiliated with Borrower approved by Lender for so long as
Borrower or said affiliated entity is managing the Property in accordance with
the standards customarily employed by Borrower and its affiliates, or (b) a
professional property management company approved by Lender (any such person or
entity which manages the Property, other than Borrower, is hereinafter referred
to as the "Manager"). Any such management by an affiliated entity or a
professional property management company shall be pursuant to a written
agreement approved by Lender. In no event shall any Manager be removed or
replaced or the terms of any management agreement modified or amended without
the prior written consent of Lender. In the event (x) of an Event of Default or
a default under any management contract then in effect, which default is not
cured within any applicable grace or cure period, or (y) of a change in control
(fifty percent or more) of the ownership of Manager or if Manager provides cause
for termination, including, without limitation, gross negligence, willful
misconduct or fraud, or (z) of the Manager becoming insolvent or a debtor in any
bankruptcy or insolvency proceeding, Lender shall have the right to terminate,
or to direct Borrower to terminate, such management contract at any time and, in
any such event of termination of the management contract, to retain, or to
direct Borrower to retain, a new management agent approved by Lender. Whenever
the approval or consent of Lender is required hereunder, such approval or
consent may be conditioned, without limitation, on Lender's obtaining evidence
in writing from the Rating Agency to the effect that the proposed change in
management company will not result in a re-qualification, reduction, downgrade
or withdrawal of any rating initially assigned or to be assigned in a Secondary
Market Transaction or, if no such rating has been issued, in Lender's good faith
judgment, such change in management shall not adversely affect the level of
rating attainable in connection with the Loan. In addition, if within forty-five
(45) days before the end of each calendar quarter Borrower does not provide
evidence of the achievement of a debt service coverage ratio of not less than
1.20:1.0 (the "Required DSCR"), Borrower, at Lender's request made at any time
after such Required DSCR is not maintained, shall terminate the then current
management agreement, or any subsequent agreement relating to the operation and
management of the Property approved by Lender, and replace the then current
Manager with a Manager approved by Lender or if no management agreement is then
in place enter into a management agreement acceptable to Lender with a Manager
approved by Lender. All Rents and Profits generated by or derived from the
Property shall first be utilized solely for current expenses directly
attributable to the ownership and operation of the Property, including, without
limitation, current expenses relating to Borrower's liabilities and obligations
with respect to this Security Deed and the other Loan Documents, and none of the
Rents and Profits generated by or derived from the Property shall be diverted by
Borrower and utilized for any other purposes unless all such current expenses
attributable to the ownership and operation of the Property have been fully paid
and satisfied.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 42
1.30 Hazardous Materials and Environmental Concerns.
(a) Borrower hereby represents and warrants to Lender that, as of the
date hereof. Except as disclosed in that certain Phase I Environmental Site
Assessment dated June 19, 2006 prepared by LandAmerica Assessment Corporation
(the "Environmental Report"), (i) the Property is not, and to the best of
Borrower's knowledge, information and belief, the Property has not been, in
direct or indirect violation of any local, state or federal law, rule or
regulation pertaining to environmental regulation, contamination, remediation or
human health and safety (including the regulation or remediation of Hazardous
Substances as defined below) (collectively, "Environmental Laws"), all as
amended; (ii) no hazardous, toxic or harmful substances, wastes, materials,
pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls, petroleum products, radon, lead-based paint,
flammable explosives, radioactive materials, infectious substances or raw
materials which may include hazardous constituents) or any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, "Hazardous Substances") are located on or have been handled,
manufactured, generated, stored, processed, transported to or from, or disposed
of on or Released or discharged from the Property (including underground
contamination) except for those substances used by Borrower in the ordinary
course of its business and in compliance with all Environmental Laws; (iii) the
Property is not subject to any private or governmental lien or judicial,
administrative or other notice or action relating to Hazardous Substances or
noncompliance with Environmental Laws, nor is Borrower aware of any basis for
such lien, notice or action; (iv) there are no underground storage tanks or
other underground storage receptacles (whether active or abandoned) for
Hazardous Substances on the Property; (v) Borrower has received no notice of,
and to the best of Borrower's knowledge and belief, there does not exist any,
investigation, action, proceeding or claim by any agency, authority or unit of
government or by any third party which could result in any liability, penalty,
sanction or judgment under any Environmental Laws with respect to any condition,
use or operation of the Property; (vi) Borrower has received no notice that, and
to the best of Borrower's knowledge and belief after due inquiry and
investigation, there has been no claim by any party that, any use, operation or
condition of the Property has caused any nuisance, trespass or any other
liability or adverse condition on any other property, nor does Borrower know of
any basis for such notice or claim; and (vii) there are no present environmental
conditions or events or, to the best of Borrower's knowledge, past environmental
conditions or events on or near the Property that could be reasonably
anticipated to materially adversely affect the value of the Property.
(b) Except as described in the Environmental Report, Borrower shall
keep or cause the Property to be kept free from Hazardous Substances (except
those substances used by Borrower in the ordinary course of its business and by
tenants in the ordinary course of their activities, in compliance with all
Environmental Laws) and in compliance with all Environmental Laws, shall not
install or use any underground storage tanks, shall expressly prohibit the use,
generation, handling, storage, production, processing and disposal of Hazardous
Substances by all tenants of space in the Improvements (except those substances
used by tenants in the ordinary course of their activities and in compliance
with all Environmental Laws), and invitees and trespassers, and, without
limiting the generality of the foregoing, during the term of this Security Deed,
shall not install in the Improvements or permit to be installed in the
Improvements asbestos or any substance containing asbestos. If required by
Lender (including if recommended in any third-party environmental report
delivered to Lender) or under any
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 43
Environmental Law, Borrower shall maintain an Operations and Maintenance Program
("O&M Program") for the management of asbestos, lead-based paint, radon or any
other Hazardous Substances at the Property.
(c) Borrower shall promptly notify Lender if Borrower shall become
aware of (i) any Hazardous Substances at, on, under, affecting or threatening to
affect the Property (except those substances used by Borrower or tenants in the
ordinary course of their business or activities, respectively, and in compliance
with all Environmental Laws), (ii) any lien, action or notice affecting or
threatening to affect the Property or Borrower resulting from any violation or
alleged violation of Environmental Law, (iii) any investigation, inquiry or
proceeding concerning Borrower or the Property pursuant to any Environmental Law
or otherwise relating to Hazardous Substances, or (iv) any occurrence, condition
or state of facts which would render any representation or warranty in this
Section incorrect in any respect if made at the time of such discovery. Further,
immediately upon receipt of the same, Borrower shall deliver to Lender copies of
any and all orders, notices, permits, applications, reports, and other
communications, documents and instruments pertaining to the actual, alleged or
potential non-compliance with any Environmental Laws in connection with the
Property or presence or existence of any Hazardous Substances at, on, about,
under, within, near or in connection with the Property (except those substances
used in the ordinary course of its business or by tenants in their ordinary
activities and in compliance with all Environmental Laws). Borrower shall,
promptly, when and as required by an enforceable court order or administrative
order of a governmental agency and regardless of the source of contamination, at
Borrower's sole cost and expense, take all actions as shall be necessary or
advisable for compliance with the terms of this Section 1.30 or for the
remediation of any and all portions of the Property or other affected property,
including, without limitation, all investigative, monitoring, removal,
containment, remedial and response actions in accordance with all applicable
Environmental Laws (and in all events in a manner satisfactory to Lender), and
shall further pay or cause to be paid, at no expense to Lender, all remediation,
response, administrative and enforcement costs of applicable governmental
agencies which may be asserted against the Property. Nothing in the foregoing
sentence requires Borrower to undertake remedial activities if the legal
requirements or orders are satisfied by other measures including but not limited
to institutional controls. In the event Borrower fails to do so (i) Lender may,
but shall not be obligated to, undertake remediation at the Property or other
affected property necessary to bring the Property into conformance with the
terms of Environmental Laws, and (ii) Borrower hereby grants to Lender and its
agents and employees access to the Property and a license to do all things
Lender shall deem necessary to bring the Property into conformance with
Environmental Laws. Such license does not waive any potential claims or rights
Borrower might have against lender should Lender cause or exacerbate any
contamination or violate any Environmental Laws. Any and all costs and expenses
reasonably incurred by Lender in connection therewith, together with interest
thereon at the Default Interest Rate from the date incurred by Lender until
actually paid by Borrower, shall be immediately paid by Borrower on demand and
shall be secured by this Security Deed and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Notes. BORROWER
COVENANTS AND AGREES, AT BORROWER'S SOLE COST AND EXPENSE, TO INDEMNIFY, DEFEND
(AT TRIAL AND APPELLATE LEVELS, AND WITH ATTORNEYS, CONSULTANTS AND EXPERTS
ACCEPTABLE TO LENDER), AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND ALL
LIENS, DAMAGES, LOSSES, LIABILITIES, OBLIGATIONS, SETTLEMENT PAYMENTS,
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 44
PENALTIES, ASSESSMENTS, CITATIONS, DIRECTIVES, CLAIMS, LITIGATION, DEMANDS,
DEFENSES, JUDGMENTS, SUITS, PROCEEDINGS, COSTS, DISBURSEMENTS AND EXPENSES OF
ANY KIND OR OF ANY NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS', CONSULTANTS' AND EXPERTS' FEES AND DISBURSEMENTS ACTUALLY INCURRED
IN INVESTIGATING, DEFENDING, SETTLING OR PROSECUTING ANY CLAIM, LITIGATION OR
PROCEEDING) WHICH MAY AT ANY TIME BE IMPOSED UPON, INCURRED BY OR ASSERTED OR
AWARDED AGAINST LENDER OR THE PROPERTY, AND ARISING DIRECTLY OR INDIRECTLY FROM
OR OUT OF: (I) THE PRESENCE, RELEASE OR THREAT OF RELEASE OF ANY HAZARDOUS
SUBSTANCES ON, IN, UNDER, AFFECTING OR THREATENING TO AFFECT ALL OR ANY PORTION
OF THE PROPERTY, REGARDLESS OF WHETHER OR NOT CAUSED BY OR WITHIN THE CONTROL OF
BORROWER, UNLESS SUCH CONDITION IS CAUSED BY OR EXACERBATED BY LENDER; (II) THE
VIOLATION OF ANY ENVIRONMENTAL LAWS RELATING TO, AFFECTING OR THREATENING TO
AFFECT THE PROPERTY, WHETHER OR NOT CAUSED BY OR WITHIN THE CONTROL OF BORROWER
UNLESS SUCH VIOLATION IS CAUSED BY LENDER; (III) THE FAILURE BY BORROWER TO
COMPLY FULLY WITH THE TERMS AND CONDITIONS OF THIS SECTION 1.30; (IV) THE BREACH
OF ANY REPRESENTATION OR WARRANTY CONTAINED IN THIS SECTION 1.30; OR (V) THE
ENFORCEMENT OF THIS SECTION 1.30, INCLUDING, WITHOUT LIMITATION, THE ACTUAL COST
OF ASSESSMENT, CONTAINMENT AND/OR REMOVAL OF ANY AND ALL HAZARDOUS SUBSTANCES ON
AND/OR FROM ALL OR ANY PORTION OF THE PROPERTY, THE ACTUAL COST OF ANY ACTIONS
TAKEN IN RESPONSE TO THE PRESENCE, RELEASE OR THREAT OF RELEASE OF ANY HAZARDOUS
SUBSTANCES ON, IN, UNDER OR AFFECTING ANY PORTION OF THE PROPERTY TO PREVENT OR
MINIMIZE SUCH RELEASE OR THREAT OF RELEASE SO THAT IT DOES NOT MIGRATE OR
OTHERWISE CAUSE OR THREATEN DANGER TO PRESENT OR FUTURE PUBLIC HEALTH, SAFETY,
WELFARE OR THE ENVIRONMENT, AND COSTS INCURRED TO COMPLY WITH THE ENVIRONMENTAL
LAWS IN CONNECTION WITH ALL OR ANY PORTION OF THE PROPERTY. THE INDEMNITY SET
FORTH IN THIS SECTION 1.30(C) SHALL ALSO INCLUDE ANY AND ALL LIENS, DAMAGES,
LOSSES, LIABILITIES, OBLIGATIONS, SETTLEMENT PAYMENTS, PENALTIES, ASSESSMENTS,
CITATIONS, DIRECTIVES, CLAIMS, LITIGATION, DEMANDS, DEFENSES, JUDGMENTS, SUITS,
PROCEEDINGS, COSTS, DISBURSEMENTS OR EXPENSES OF ANY KIND OR OF ANY NATURE
WHATSOEVER ARISING OUT OF OR RELATING TO INJURY OR DEATH DUE TO EXPOSURE FROM
HAZARDOUS SUBSTANCES THAT MAY BE PRESENT OR RELEASED AT, ON, UNDER OR FROM THE
PROPERTY. LENDER'S RIGHTS UNDER THIS SECTION SHALL SURVIVE PAYMENT IN FULL OF
THE INDEBTEDNESS SECURED HEREBY AND SHALL BE IN ADDITION TO ALL OTHER RIGHTS OF
LENDER UNDER THIS SECURITY DEED, THE COUNTRYSIDE ATLANTA NOTE AND THE OTHER LOAN
DOCUMENTS, AND SHALL TERMINATE ON THE SECOND (2ND) YEAR AFTER: (A) THE SALE OF
THE PROPERTY, (B) LENDER'S FORECLOSURE AGAINST THE
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 45
PROPERTY OR ACCEPTANCE OF A DEED OF LIEU OF FORECLOSURE, (C) THE APPOINTMENT OF
A RECEIVER, OR (D) SUCH OTHER EVENT OR CIRCUMSTANCE IN WHICH BORROWER IS NO
LONGER IN POSSESSION OR CONTROL OF THE PROPERTY.
(d) Upon Lender's request, at any time and from time to time after the
occurrence of an Event of Default or at such other time as Lender has reasonable
grounds to believe that Hazardous Substances are or have been handled,
generated, stored, processed, transported to or from, or Released or discharged
from or disposed of on or around the Property (other than in the normal course
of Borrower's or the tenants' business or activities, respectively, and in
compliance with all Environmental Laws) or that Borrower, any tenant or the
Property may be in violation of Environmental Laws, Borrower shall provide, at
Borrower's sole cost and expense, an inspection or audit of the Property
prepared by a hydrogeologist or environmental engineer or other appropriate
consultant approved by Lender indicating the presence or absence of Hazardous
Substances on the Property (including asbestos-containing material or lead-based
paint). If Borrower fails to provide such inspection or audit within thirty (30)
days after such request, Lender may order the same, and Borrower hereby grants
to Lender and its employees and agents access to the Property and a license to
undertake such inspection or audit. The actual cost of such inspection or audit,
together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand and shall be secured by this Security Deed and by all of the
other Loan Documents securing all or any part of the indebtedness evidenced by
the Notes.
(e) Without limiting the foregoing, Lender and its authorized
representatives may, during normal business hours and at its own expense,
inspect the Property and Borrower's records related thereto for the purpose of
determining compliance with Environmental Laws and the terms and conditions of
this Section 1.30.
(f) As used herein, the term "Release" or "Released" shall include,
without limitation, any intentional or unintentional placing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing, discarding or abandoning of any Hazardous
Substance, other than in the normal course of business or activities of its
tenants, and in compliance with all Environmental Laws.
1.31 INDEMNIFICATION; SUBROGATION.
(a) BORROWER SHALL INDEMNIFY, DEFEND AND HOLD LENDER HARMLESS AGAINST:
(I) ANY AND ALL CLAIMS FOR BROKERAGE, LEASING, FINDER'S OR SIMILAR FEES WHICH
MAY BE MADE RELATING TO THE PROPERTY OR THE SECURED INDEBTEDNESS, (II) ANY AND
ALL LIABILITY, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS,
LIENS, CHARGES, ENCUMBRANCES, COSTS AND EXPENSES (INCLUDING LENDER'S ATTORNEYS'
FEES, TOGETHER WITH APPELLATE COUNSEL FEES, IF ANY) OF WHATEVER KIND OR NATURE
WHICH MAY BE ASSERTED AGAINST, IMPOSED ON OR INCURRED BY LENDER UNDER ANY LEASE
OR OCCUPANCY AGREEMENT FOR ANY LOSS ARISING FROM A FAILURE OR INABILITY TO
COLLECT RENTS AND PROFITS OR IN CONNECTION WITH THE
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 46
SECURED INDEBTEDNESS, THIS SECURITY DEED, THE PROPERTY, OR ANY PART THEREOF, OR
THE EXERCISE BY LENDER OF ANY RIGHTS OR REMEDIES GRANTED TO IT UNDER THIS
SECURITY DEED, AND ANY EVENT OF DEFAULT OR ANY OTHER DEFAULT UNDER THIS SECURITY
DEED, (III) ANY LIENS (WHETHER JUDGMENTS, MECHANICS', MATERIALMEN'S OR
OTHERWISE), CHARGES AND ENCUMBRANCES FILED AGAINST THE PROPERTY, AND (IV) ANY
CLAIMS AND DEMANDS FOR DAMAGES OR INJURY, INCLUDING CLAIMS FOR PROPERTY DAMAGE,
PERSONAL INJURY OR WRONGFUL DEATH, ARISING OUT OF OR IN CONNECTION WITH ANY
ACCIDENT OR FIRE OR OTHER CASUALTY ON THE REAL ESTATE OR THE IMPROVEMENTS OR ANY
NUISANCE OR TRESPASS MADE OR SUFFERED THEREON, INCLUDING, IN ANY CASE,
ATTORNEYS' FEES, COSTS AND EXPENSES AS AFORESAID, WHETHER AT PRETRIAL, TRIAL OR
APPELLATE LEVEL FOR ANY CIVIL, CRIMINAL OR ADMINISTRATIVE PROCEEDINGS. SHOULD
LENDER INCUR ANY LIABILITY UNDER THIS SECURITY DEED OR ANY OF THE OTHER LOAN
DOCUMENTS IN CONNECTION WITH THE FOREGOING MATTERS, THE AMOUNT THEREOF,
INCLUDING, WITHOUT LIMITATION, COSTS, EXPENSES AND REASONABLE ATTORNEYS' FEES,
TOGETHER WITH INTEREST THEREON AT THE DEFAULT INTEREST RATE FROM THE DATE
INCURRED BY LENDER UNTIL ACTUALLY PAID BY BORROWER, SHALL BE IMMEDIATELY DUE AND
PAYABLE TO LENDER BY BORROWER ON DEMAND AND SHALL BE SECURED HEREBY AND BY ALL
OF THE OTHER LOAN DOCUMENTS SECURING ALL OR ANY PART OF THE INDEBTEDNESS
EVIDENCED BY THE COUNTRYSIDE ATLANTA NOTE. HOWEVER, NOTHING HEREIN SHALL BE
CONSTRUED TO OBLIGATE BORROWER TO INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, CLAIMS, ACTIONS, SUITS, COSTS OR EXPENSES ASSERTED AGAINST, IMPOSED
ON OR INCURRED BY LENDER BY REASON OF LENDER'S WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE. THIS INDEMNITY SHALL SURVIVE PAYMENT IN FULL OF THE INDEBTEDNESS
SECURED HEREBY.
(b) Lender may engage the services of attorneys if it is made a party
defendant to any litigation (or threatened action or claim) or to enforce the
terms of this Security Deed or to protect its rights hereunder, and, in the
event of any such engagement, Borrower shall pay Lender's attorneys' fees
(together with reasonable appellate counsel fees, if any), consultants' fees,
expert's fees, and expenses reasonably incurred by Lender, whether or not an
action is actually commenced against Borrower. All references to "attorneys" in
this Subsection and elsewhere in this Security Deed shall include without
limitation any attorney or law firm engaged by Lender and Lender's in-house
counsel, and all references to "fees and expenses" in this Subsection and
elsewhere in this Security Deed shall include without limitation any fees of
such attorney or law firm and any allocation charges and allocation costs of
Lender's in-house counsel.
(c) A waiver of subrogation shall be obtained by Borrower from its
insurance carrier and, consequently, Borrower waives any and all right to claim
or recover against Lender, its officers, employees, agents and representatives,
for loss of or damage to Borrower, the Property, Borrower's property or the
property of others under Borrower's control from any cause insured against or
required to be insured against by the provisions of this Security Deed.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 47
1.32 Covenants with Respect to Indebtedness; Operations and Fundamental
Changes of Borrower. Borrower represents, warrants and covenants as of the date
hereof and until such time as the indebtedness secured hereby is paid in full,
that Borrower:
(a) has not owned, does not own and will not own any asset other than
(i) the Property, and (ii) incidental personal property necessary for the
operation of the Property;
(b) has not engaged, is not engaged and will not engage in any
business other than the ownership, management and operation of the Property;
(c) will not enter into any contract or agreement with any
shareholder, partner, principal, member or affiliate of Borrower or any
affiliate of any of the foregoing, except in the ordinary course of business and
upon terms and conditions that are intrinsically fair and are no less favorable
to it than those that would be obtained in a comparable arms-length transaction
with an unrelated third party;
(d) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the secured indebtedness, (ii) unsecured trade and operational debt
incurred in the ordinary course of business not outstanding for more than sixty
(60) days with trade creditors and in amounts as are normal and reasonable under
the circumstances, real estate taxes and assessments, capital expenditures, and
(iii) financing leases and purchase money indebtedness incurred in the ordinary
course of business relating to personal property necessary for the operation of
the Property;
(e) will not cause or allow any debt whatsoever to be secured (senior,
subordinate or pari passu) by the Property, except the indebtedness secured
hereby;
(f) has not made and will not make any loans or advances to any third
party (including any shareholder, partner, principal, member or affiliate of
Borrower, or any guarantor);
(g) is and intends to remain solvent and pay its debts from its assets
as the same shall become due to the extent of revenue generated from the
operation of the Property; provided, however, the foregoing covenant shall not
require the members of Borrower to make any additional capital contributions to
Borrower or cause personal liability;
(h) has done or caused to be done and will do all things necessary to
preserve its existence and corporate, limited liability company and partnership
formalities (as applicable), and, except as otherwise permitted herein, will
not, nor will any partner, limited or general, or member or shareholder thereof,
amend, modify or otherwise change its partnership certificate, partnership
agreement, certificate or articles of incorporation or organization, or by-laws
or operating agreement or regulations, in a manner which adversely affects
Borrower's, or any such partner's, member's or shareholders' existence as a
single-purpose, single-asset "bankruptcy remote" entity;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 48
(i) will conduct and operate its business as presently conducted and
operated;
(j) has maintained, and will maintain books and records and bank
accounts separate from those of its affiliates, including its general partners,
principals and members; provided, however, that Borrower's assets may be
included in a consolidated operating or financial statement of its affiliates
provided that an appropriate notation shall be made on such consolidated
operating or financial statements to indicate the separateness of Borrower from
such affiliates and to indicate borrower's assets and credit are not available
to satisfy the debts and other obligations of such affiliates;
(k) will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including any
affiliate of Borrower, any constituent party of Borrower, any guarantor or any
affiliate of any constituent party or guarantor); has corrected, and shall
correct any known misunderstanding regarding its status as a separate entity;
has conducted, and shall conduct, its business in its own name; has paid, and
will pay, its own liabilities out of its own funds and assets; has not, and
shall not identify itself or any of its affiliates as a division or a part of
the other; and has maintained and utilized, and shall maintain and utilize a
separate telephone number and separate stationery, invoices and checks from any
other entity;
(l) will file its own tax returns or a consolidated federal income tax
return with other persons or entities;
(m) to the extent available only from the cash flow generated from the
operation of the Property, will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations;
(n) will not, nor will any shareholder, partner, principal, member or
affiliate, seek the dissolution or winding up, in whole or in part, of Borrower;
(o) except as otherwise permitted hereunder, will not enter into any
transaction of merger or consolidation, or acquire by purchase or otherwise all
or substantially all of the business or assets of, or any stock or beneficial
ownership of, any entity;
(p) has not, and will not commingle the funds and other assets of
Borrower with those of any shareholder, partner, principal, member or affiliate,
or any other person;
(q) has maintained, and will maintain its assets in such a manner that
it is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person;
(r) has, and any general partner or managing member of Borrower has,
at all times since their respective formation, observed all Michigan legal and
customary formalities regarding their respective formation and will continue to
observe all applicable legal formalities;
(s) does not and will not hold itself out to be responsible for the
debts or obligations of any other person;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 49
(t) upon the commencement of a voluntary or involuntary bankruptcy
proceeding by or against Borrower, Borrower shall not seek a supplemental stay
or otherwise pursuant to Section 105 or any other provision of the Bankruptcy
Code, or any other debtor relief law (whether statutory, common law, case law,
or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which
may be or become applicable, to stay, interdict, condition, reduce or inhibit
the ability of Lender to enforce any rights of Lender against any guarantor or
indemnitor of the secured obligations or any other party liable with respect
thereto by virtue of any indemnity, guaranty or otherwise.
(u) if Borrower is a limited partnership or a limited liability
company, the general partner or managing member (the "SPC Entity") shall be a
corporation whose sole assets are its interests in Borrower and the owners of
any Related Properties, and the SPC Entity will at all times comply, and will
cause Borrower to comply, with each of the representations, warranties, and
covenants contained in this Section 1.32 as if such representation, warranty or
covenant was made directly by the SPC Entity. If Borrower is a corporation,
Borrower itself shall comply with each of the representations, warranties and
covenants contained in this Section 1.32 as an SPC Entity. Borrower shall at all
times cause there to be at least one duly appointed member of the board of
directors (an "Independent Director") of the SPC Entity reasonably satisfactory
to Lender who shall not have been at the time of such individual's appointment,
and may not have been at any time during the preceding five (5) years (i) a
shareholder of, or an officer, director (other than an independent director),
attorney, counsel, partner or employee of, Borrower or any of its shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to, Borrower or any
of its shareholders, subsidiaries or affiliates, (iii) a person or other entity
controlling or under common control with any such shareholder, partner, supplier
or customer, or (iv) a member of the immediate family of any such shareholder,
officer, director, partner, employee, supplier, customer or any other director
of the SPC Entity. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through ownership of
voting securities, by contract or otherwise;
(v) has not caused and shall not cause, as applicable, the board of
directors of Borrower, the members or managers of Borrower, or the board of
directors, members or managers of any general partner of Borrower to take any
action which, under the terms of the organizational documents for Borrower and
its general partner or manager, as applicable, requires the unanimous
affirmative vote of one hundred percent (100%) of the members of the board of
directors, members or manager, including the vote of an Independent Director,
unless at the time of such action there shall be at least one director, member
or manager, as applicable, who is an Independent Director;
(w) shall conduct its business so that the assumptions of fact made
with respect to Borrower in that certain opinion letter dated the date hereof
delivered by Jaffe Raitt Heuer & Weiss, P.C. (the "Non-Consolidation Opinion")
with respect to non-consolidation issues, delivered in connection with the
execution and delivery of the Loan Documents shall be true and correct, in all
material respects at all times;
(x) Borrower further represents and warrants that Borrower's
historical operations have been wholly consistent with the terms and provisions
of this Section 1.32 except
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 50
that Borrower may have incurred prior first lien mortgage financing secured by
the Property which financing is being paid and satisfied in full with the
proceeds of the indebtedness secured hereby.
Notwithstanding anything contained in this Section 1.32 to the contrary,
whether express or implied, Lender and Borrower agree that the following
operations and activities of Borrower, SPC Entity and their affiliates shall not
be considered a violation of any obligation set forth in this Section 1.32: (i)
offering services to residents of the Property through affiliates or other third
parties for which fees and charges may be collected by Borrower or the affiliate
and paid to such affiliate or third party, which may include, without
limitation, cable and internet services, landscaping, snow removal, lease or
sale of manufactured homes, and child care; provided that such affiliates do not
conduct their business in the name of the Borrower and that any agreements
between the Borrower and its affiliates relating to such services are on
commercially reasonable terms similar to those of an arm's-length transaction;
(ii) transferring all gross revenue, whether cash, cash equivalents or similar
assets, to Sun, SCOLP or any other affiliate after collection thereof and
depositing such revenue in the operating bank account maintained for the
Property, provided, however, that Borrower shall employ accounting practices
sufficient to segregate Borrower's funds from the funds of its affiliates and
that such transfer of revenue shall not be permitted if it creates a situation
in which Borrower is in violation of Section 1.32(g); (iii) having Sun, SCOLP or
any affiliate pay all payables, debts and other liabilities arising from or in
connection with the operation of the Property from commingled funds, provided,
however, that such payment by Sun, SCOLP or any other affiliate shall not create
an obligation on behalf of Borrower to repay such affiliate, whether such
obligation is evidenced in writing or otherwise; (iv) using ancillary assets in
connection with the operation of the Property held in the name of Sun, SCOLP or
any affiliates, such as vehicles and office and maintenance equipment, provided,
however, Borrower's use of such equipment shall not obligate Borrower to pay
such affiliate entity any consideration other than commercially reasonable usage
fees on terms similar to those of an arm's-length transaction; (v) treating the
Property for all purposes as part of and within the portfolio of manufactured
housing communities owned by SCOLP or any affiliate, including for marketing,
promotion and providing information and reports to the public or as required by
any and all applicable statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of governmental authorities affecting the
Borrower, its affiliates or the Property, provided, however, the Property shall
at all times be owned only by Borrower and shall be so reflected on all
financial reports or similar information and such ownership by Borrower shall be
clarified and verified by Borrower upon request; and (vi) allocating general
overhead and administrative costs incurred by Sun, SCOLP and/or other affiliates
to the Borrower in a fair and equitable manner; provided, however, that such
allocation shall not be permitted if it creates a situation in which Borrower is
in violation of Section 1.32(g).
1.33 Litigation. Borrower will give prompt written notice to Lender and any
Servicer of any litigation or governmental proceedings pending or threatened (in
writing) against Borrower which might have a Material Adverse Effect.
1.34 ERISA.
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 51
rights under the Notes, this Security Deed or any of the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of this
Security Deed, as requested by Lender in its sole discretion, that (i) Borrower
is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(iii) one or more of the following circumstances is true:
(x) Equity interests in Borrower are publicly offered securities
within the meaning of 29 C.F.R. Section 2510.3-101(b)(2) as amended
from time to time or any successor provision;
(y) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. Section 2510.3-101(f)(2) as amended
from time to time or any successor provision; or
(z) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) as amended from time to time or any successor provision
or (e) or an investment company registered under the Investment
Company Act of 1940.
(c) BORROWER SHALL INDEMNIFY LENDER AND DEFEND AND HOLD LENDER
HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES, EXCISE TAXES, OR OTHER LOSS, COST
DAMAGE AND EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES
AND DISBURSEMENTS AND COSTS INCURRED IN THE INVESTIGATION, DEFENSE AND
SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN CORRECTING ANY PROHIBITED
TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL
PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN LENDER'S
SOLE DISCRETION) THAT LENDER MAY INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF A
DEFAULT UNDER THIS SECTION. THIS INDEMNITY SHALL SURVIVE ANY TERMINATION,
SATISFACTION OR FORECLOSURE OF THIS SECURITY DEED.
1.35 Defeasance.
(a) Notwithstanding anything to the contrary contained in the
Countryside Atlanta Note, this Security Deed or the other Loan Documents, at any
time after the date which (i) is two years after the "startup day," within the
meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended
from time to time or any successor statute (the "Code"), of a "real estate
mortgage investment conduit," (a "REMIC") within the meaning of Section 860D of
the Code in connection with a Secondary Market Transaction, that holds the
Countryside Atlanta
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 52
Note and this Security Deed or (ii) is four years after the date hereof,
whichever shall first occur, and provided (unless Lender shall otherwise
consent, in its sole discretion) no default or Event of Default has occurred and
is continuing hereunder or under any of the other Loan Documents, Borrower shall
have the right to obtain the release of the Property from the lien of this
Security Deed and the other Loan Documents (the "Defeasance") upon the
satisfaction of each of the following conditions precedent:
(i) not less than thirty (30) days' prior written notice to
Lender specifying a regular Payment Date under the Countryside Atlanta Note
(the "Defeasance Election Date") on which the Defeasance Deposit
(hereinafter defined) is to be made;
(ii) the remittance to Lender on the related Defeasance Election
Date of interest accrued and unpaid on the outstanding principal amount of
the Countryside Atlanta Note to and including the Defeasance Election Date
and the scheduled amortization payment due on such Defeasance Election
Date, together with all other amounts then due and payable with respect to
the Countryside Atlanta Loan;
(iii) the irrevocable deposit with Lender of an amount (the
"Defeasance Deposit") of non-callable U.S. Government Securities
(hereinafter defined) which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide,
not later than the due date of any payment, cash in an amount sufficient,
without reinvestment, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to Lender, to pay and discharge the
Scheduled Defeasance Payments (hereinafter defined);
(iv) the delivery on or prior to the Defeasance Election Date to
Lender of:
(A) a security agreement, in form and substance satisfactory
to Lender, creating a first priority lien on the Defeasance Deposit
(the "Defeasance Security Agreement"), which Defeasance Security
Agreement shall be included within the definition of "Security Deed"
for purposes of each Loan Document from and after the date of its
execution;
(B) a release of the Property from this Security Deed, the
Countryside Atlanta Assignment and any UCC Financing Statements
relating thereto (for execution by Lender) in a form appropriate for
cancellation of such documents in the jurisdiction in which the
Property is located (and in the case of a partial defeasance, a
release of Lender's interest in the Property, if any, under the Other
Loans);
(C) a certificate of an authorized representative of
Borrower certifying that the requirements set forth in this
subparagraph (a) have been satisfied;
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 53
(D) an opinion of counsel for Borrower in form and substance
satisfactory to Lender to the effect that the Lender has a perfected
first priority security interest in the Defeasance Deposit;
(E) an opinion of counsel for Lender, prepared and delivered
by the Servicer at Borrower's reasonable expense, stating that the
trust formed as a REMIC in connection with any Secondary Market
Transaction will not fail to maintain its status as a REMIC as a
result of such Defeasance;
(F) evidence in writing from the applicable Rating Agencies
to the effect that the collateral substitution will not result in a
downgrading, withdrawal or qualification of the respective ratings in
effect immediately prior to such Defeasance for any securities issued
in connection with the Secondary Market Transaction which are then
outstanding; and
(G) such other certificates, documents or instruments as
Lender may reasonably request (including, but not limited to any
documents required by any Rating Agency in connection with a Secondary
Market Transaction);
(v) the payment by Borrower to Lender of all out-of-pocket costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred or anticipated to be incurred by Lender in
connection with the release of the Property from the lien of this Security
Deed and the other Loan Documents pursuant to this Section 1.35 including,
without limitation, Lender's determination of whether Borrower has
satisfied all of the related conditions and requirements set forth in this
Section 1.35; and
(vi) subject to the terms of Section 1.35(d) hereinbelow, a
contemporaneous Defeasance election must be undertaken and completed
pursuant to the terms of all of the Deeds of Trust and all of the Related
Properties.
(b) Upon compliance with the requirements of subparagraph (a) above,
the Property shall be released from the lien of this Security Deed, the
Countryside Atlanta Assignment and any UCC Financing Statements related thereto,
the obligations hereunder and under the other Loan Documents with respect to the
Property shall no longer be applicable and the Defeasance Deposit shall be the
sole source of collateral securing the Countryside Atlanta Note. Lender shall
apply the Defeasance Deposit and the payments received therefrom to the payment
of all scheduled principal and interest payments due on all successive Payment
Dates under the Countryside Atlanta Note after the Defeasance Election Date,
including full payment due on the Countryside Atlanta Note on the Lockout
Expiration Date (as defined in the Countryside Atlanta Note) (the "Scheduled
Defeasance Payments"). Borrower, pursuant to the Defeasance Security Agreement
or other appropriate document, shall direct that the payments received from the
Defeasance Deposit shall be made directly to Lender and applied to satisfy the
obligations of Borrower under the Countryside Atlanta Note. In connection with
such release, Borrower shall establish or designate a single-purpose,
bankruptcy-remote successor entity acceptable to Lender (the "Successor
Trustor"), with respect to which a non-consolidation opinion satisfactory in
form and substance to Lender has been delivered to Lender (if such a
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 54
non-consolidation opinion was required of Borrower in connection with the
origination of the indebtedness secured hereby) in which case Borrower shall
transfer and assign to the Successor Trustor all obligations, rights and duties
under the Countryside Atlanta Note and the Defeasance Security Agreement,
together with the pledged Defeasance Deposit. The Successor Trustor shall assume
the obligations of Borrower under the Countryside Atlanta Note and the
Defeasance Security Agreement, and Borrower shall be relieved of its obligations
hereunder and thereunder. Borrower shall pay One Thousand and No/100 Dollars
($1,000.00) to the Successor Trustor as consideration for assuming such Borrower
obligations.
(c) As used herein, the term "U.S. Government Securities" shall mean
non-callable, fixed rate securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (a) "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940, or (b) listed under paragraphs 1, 2 or 3 in Standard & Poor's Eligible
Investment Criteria for AAA Rated Structured Transactions as amended.
(d) Notwithstanding the requirements of Section 1.35(a)(vi)
hereinabove, Borrower shall be entitled to undertake a Defeasance transaction
solely with respect to the Property and the Countryside Atlanta Note and not
with respect to all of the Related Properties and all of the Loans (a "Partial
Defeasance") upon satisfaction of the following additional requirements:
(i) the loan-to-value ratio (the "Partial Defeasance LTV") of the
then remaining collective principal balance of the Loans (excluding the
Countryside Atlanta Loan) to the appraised value of the Related Properties
(excluding the Property) shall not exceed eighty percent (80%);
(ii) the collective debt service coverage ratio (the "Partial
Defeasance DSCR") for the Loans (excluding the Countryside Atlanta Loan)
and the Related Properties (excluding the Property) shall not be less than
1.20:1;
(iii) Borrower establishes an additional Reserve with Lender (the
"Partial Defeasance Reserve") in an amount equal to ten percent (10%) of
the Countryside Atlanta Loan Amount, which Partial Defeasance Reserve shall
serve as additional collateral for the Loans (excluding the Countryside
Atlanta Loan), provided, however that the Partial Defeasance Reserve shall
not be required to the extent that the following requirements are satisfied
as of the date of such Partial Defeasance: (1) the Partial Defeasance LTV
is seventy percent (70%) or lower; and (2) the Partial Defeasance DSCR is
1.30:1 or higher;
In lieu of the cash deposit into the Partial Defeasance Reserve,
Borrower shall be entitled to provide Lender with a freely assignable
(together with the other Loan Documents in relation to a Secondary Market
Transaction) unconditional and irrevocable Letter of Credit (as the same
may be subsequently replaced as described below, "Letter of Credit") in the
amount of the required deposit into the Partial Defeasance Reserve and
issued by a financial institution with a Standard & Poors rating of "AA" or
better and otherwise acceptable to Lender as to form and content. The
Letter of Credit shall be held
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 55
by Lender as additional security for the Loans (excluding the Sun Villa
Loan). The Letter of Credit (and any replacement or substitution therefor)
shall be replaced by a new substitute letter of credit satisfying all of
the requirements described above on or before thirty (30) days prior to its
expiry and, failing such timely replacement, may be drawn upon by Lender
with such funds being deposited into the Partial Defeasance Reserve and
handled and/or disbursed in accordance with the terms therefor. To the
extent Borrower should timely satisfy each of the Disbursement Conditions
and be otherwise entitled to a full disbursement of the Partial Defeasance
Reserve pursuant to the provisions hereinabove, Lender shall release the
Letter of Credit to Borrower. To the extent Lender should assign this
Security Deed or the other Loan Documents, Borrower shall cause the Letter
of Credit to be effectively assigned to the assignee of such Loan Documents
or shall cause the letter of Credit to be reissued to such assignee all
within ten (10) business days' request of Lender for Borrower to do so. All
expenses whatsoever for the assignment or reissuance of such Letter of
Credit shall be paid by Borrower. Any such assignment or reissuance must be
undertaken in the form and pursuant to an arrangement acceptable to Lender,
in Lender's sole discretion and otherwise consistent with the terms of this
subparagraph. To the extent Borrower should fail to timely cause the Letter
of Credit to be renewed or assigned as required herein, Lender (or is
successor) may, but shall not be obligated to, drawn upon the Letter of
Credit and deposit the cash proceeds therefrom into the Partial Defeasance
Reserve. If the provider of the Letter of Credit: (1) becomes insolvent,
(2) commences or is the target of a proceeding in bankruptcy, (3) ceases to
exist, (4) is subject to a downgrade of its rating below that specified
above or (5) if Lender determines that the provider's insolvency is
imminent, Borrower will deliver to Lender a replacement Letter of Credit
satisfying all of the requirements described above within five (5) business
days of the date the insolvency is known, the proceeding in bankruptcy is
filed, the cessation occurs, the rating downgrade occurs or Lender gives
Borrower notice that Lender has determined the provider's insolvency is
imminent. The Letter of Credit is solely for the protection of Lender and
entails no responsibility on Lender's part beyond application of the funds
drawn thereunder in accordance with the terms hereof. If there is a default
under the Loan Documents which is not cured within any applicable grace or
cure period, Lender (or its successor) may, but shall not be obligated to,
draw upon the Letter of Credit and deposit such funds into the Partial
Defeasance Reserve.
(iv) to the extent property management with respect to the
Property is being undertaken prior to any Partial Defeasance on a shared
basis with any of the other Related Properties (either shared as to
facility, personnel or in any other manner whatsoever) Lender shall be
entitled to require, as a condition to its approval of any such Partial
Defeasance, Borrower's establishment of an independent property management
function with respect to the Property and any relevant Related Property;
and
(v) all other conditions of this Section 1.35 not expressly
contradicted by this subsection (d) shall be fully satisfied.
1.36 Anti-Terrorism and Money Laundering Legislation. Borrower hereby
represents and warrants to, and covenants with, Lender, as of the date hereof
and until such time as the
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 56
secured indebtedness shall have been paid in full, including after giving effect
to any Sale permitted pursuant to Section 1.13(b) hereof, as follows:
(a) None of Borrower, any guarantor or indemnitor of any of the Loans
or other obligations under the Loan Documents, or any principal of any of them,
or any of their respective direct or indirect constituents or affiliates, any of
their respective officers or directors (including officers or directors of any
such constituents or affiliates), and any of their respective brokers, investors
or other agents acting or benefiting in any capacity in connection with the
Loans, is a Prohibited Person (as defined below).
(b) None of Borrower, any guarantor or indemnitor of any of the Loans
or other obligations under the Loan Documents, or any principal of any of them,
or any of their respective direct or indirect constituents or affiliates, any of
their respective officers or directors (including officers or directors of any
such constituents or affiliates) (i) to Borrower's knowledge after due inquiry,
has conducted or will conduct any business or has engaged or will engage in any
transaction or dealing with any Prohibited Person, including making or receiving
any contribution of funds, goods or services to or for the benefit of any
Prohibited Person, (ii) to Borrower's knowledge after due inquiry, has dealt or
will deal in, or otherwise has engaged or will engage in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order (as defined below); or (iii) has engaged or will engage in or
has conspired or will conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the requirements or prohibitions set forth in the Executive Order or the
PATRIOT Act (as defined below).
(c) To Borrower's knowledge after due inquiry, none of Borrower's or
any of such aforesaid guarantor's, indemnitor's or any principal's respective
brokers, investors or other agents acting in any capacity in connection with the
Property or Loans (i) has conducted or will conduct any business or has engaged
or will engage in any transaction or dealing with any Prohibited Person,
including making or receiving any contribution of funds, goods or services to or
for the benefit of any Prohibited Person, (ii) has dealt or will deal in, or
otherwise has engaged or will engage in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order; or
(iii) has engaged or will engage in or has conspired or will conspire to engage
in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the requirements or prohibitions set
forth in the Executive Order or the PATRIOT Act.
(d) Borrower has implemented procedures to ensure that no person who
now or hereafter owns a direct or indirect interest in Borrower or any guarantor
of the Loans is a Prohibited Person.
(e) To the best of Borrower's knowledge, as of the date hereof, no
tenant at the Property currently is a Prohibited Person and Borrower will direct
the manager of the Property to promptly implement procedures, approved by
Borrower, to ensure that no future commercial tenant at the Property is a
Prohibited Person.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 57
(f) Borrower covenants and agrees to deliver to Lender any
certification or other evidence requested from time to time by Lender in its
sole discretion, confirming Borrower's compliance with this Section 1.36.
(g) Borrower represents and warrants that Borrower and any of such
aforesaid guarantor, indemnitor and principal, and all of their respective
affiliates (including any officers and directors of any of the foregoing) are in
full compliance with all applicable orders, rules and regulations issued by, and
recommendations of, the U.S. Department of the Treasury and OFAC (as defined
below) pursuant to IEEPA (as defined below), the PATRIOT Act, other legal
requirements relating to money laundering or terrorism and any executive orders
related thereto.
(h) Borrower is advised that, by law, Lender may be obligated to
"freeze its account" or any account of its investors, either by prohibiting
additional funds, declining any withdrawal, redemption, or transfer request(s)
and/or segregating assets in compliance with governmental regulations, and
Lender may also be required to report such action to governmental or regulatory
authorities, including OFAC.
(i) Borrower has established and maintains an anti-money laundering
and/or terrorism program and/or procedures in accordance with all applicable
laws, rules and regulations of its own jurisdiction including, without
limitation, where applicable, the PATRIOT Act. Borrower further covenants that
it will adopt appropriate policies, procedures and internal controls to be fully
compliant with any additional laws, rules or regulations relating to money
laundering and/or terrorism, including the PATRIOT Act, to which it may become
subject.
(j) Borrower has taken appropriate due diligence efforts to know each
investor, including whether the investor is a Prohibited Person. Borrower has
taken appropriate due diligence efforts to know if any investor is a "Senior
Foreign Political Figure" (as defined in the PATRIOT Act) and, to the extent
that any investor is a Senior Foreign Political Figure, has disclosed such
information to Lender.
(k) Borrower will notify or report unusual or suspicious activity in
accordance with the laws or requirements of its own jurisdiction including,
where applicable, the PATRIOT Act.
(l) Borrower applies, and will continue to apply, its anti-money
laundering program and/or procedures to all investors, and will take appropriate
steps in accordance with the laws of its own jurisdiction to ensure that all
required relevant documentation is retained, including identification relating
to those investors.
(m) Borrower does not believe, and after appropriate due diligence,
has no reason to believe, that any of its investors is a "Prohibited Foreign
Shell Bank" (as defined in the PATRIOT Act), or is named on any available lists
of known or suspected terrorists, terrorist organizations or of other sanctioned
persons issued by the United States government and/or the government(s) of any
jurisdiction(s) in which Borrower is doing business.
(n) Borrower has taken appropriate due diligence efforts to know the
person or entity from whom Borrower acquired the Property, including whether
such person or entity is a Prohibited Person or an immediate family member or
close associate of a Prohibited Person.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 58
(o) Borrower does not believe, and after appropriate due diligence,
has no reason to believe, that the person or entity from whom Borrower acquired
the Property is a Prohibited Foreign Shell Bank, or is named on any available
lists of known or suspected terrorists, terrorist organizations or of other
sanctioned persons issued by the United States government and/or the
government(s) of any jurisdiction(s) in which Borrower is doing business.
(p) Each of Borrower and each of the aforesaid guarantor, indemnitor
and principal has adopted reasonable procedures in accordance with applicable
law as of the date hereof designed to elicit information that substantiates the
statements contained in this Section 1.36.
(q) Borrower will advise Lender immediately of any material change
that would affect the representations, covenants and warranties provided in this
Section 1.36.
(r) As used herein, the following terms shall have the meaning so
specified below:
"IEEPA" shall mean the International Emergency Economic Power Act, 50
U.S.C. Section 1701 et seq.
"OFAC" shall mean the U.S. Department of Treasury's Office of Foreign
Asset Control.
"PATRIOT Act" shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56).
"Prohibited Person" shall mean any person, organization or entity:
(1) listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (the "Executive Order");
(2) that is owned or controlled by, or acting for or on behalf
of, any person or entity that is listed in the Annex to, or is otherwise
subject to the provisions of the Executive Order;
(3) with whom Lender is prohibited from dealing or otherwise
engaging in any transaction by any terrorism or money laundering legal
requirements, including the PATRIOT Act and the Executive Order;
(4) that commits, threatens or conspires to commit or supports
"terrorism" as defined in the Executive Order;
(5) that is named as a "specifically designated national" or
"blocked person" on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website,
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 59
http://www.treas.gov/offices/eotffc/ofac/sdn, or at any replacement website
or other replacement official publication of such list or is named on any
other U.S. or foreign government or regulatory list maintained for the
purpose of preventing terrorism, money laundering or similar activities;
(6) that is covered by IEEPA, OFAC or any other law, regulation
or executive order relating to the imposition of economic sanctions against
any country, region or individual pursuant to United States law or United
Nations resolution; or
(7) that is an affiliate (including any principal, officer,
immediate family member or close associate) of a person or entity described
in one or more of clauses (1)-(6) of this definition of Prohibited Person.
ARTICLE II
EVENTS OF DEFAULT
2.1 Events of Default. The indebtedness secured hereby shall become
immediately due and payable at the option of Lender upon the happening of any
one or more of the following events of default (each, an "Event of Default"):
(a) Borrower fails to (i) make any payment under the Notes when due,
or (ii) timely make any regularly scheduled monthly deposit into a Reserve when
due.
(b) Borrower fails to punctually perform any other covenant,
agreement, obligation, term or condition hereof which requires payment of any
money to Lender (except those specified in Section 2.1(a) above) and such
failure continues for ten (10) days after Lender's written notice to Borrower of
such amount due (it being expressly agreed and understood that no notice or
grace period whatsoever shall be applicable with respect to those items
described in Section 2.1(a) hereinabove).
(c) Borrower fails to provide insurance as required by Section 1.4
hereof or fails to perform any covenant, agreement obligation, term or condition
set forth in Section 1.16 or Section 1.30 hereof.
(d) Borrower fails to perform any other covenant, agreement,
obligation, term or condition set forth herein other than those otherwise
described in this Section 2.1 and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Lender to Borrower; provided,
however, that if such default is susceptible of cure but such cure cannot be
accomplished with reasonable diligence within said period of time, and if
Borrower commences to cure such default promptly after receipt of notice thereof
from Lender, and thereafter prosecutes the curing of such default with
reasonable diligence, such period of time shall be extended for such period of
time as may be necessary to cure such default with reasonable diligence, but not
to exceed an additional ninety (90) days.
(e) Any representation or warranty made herein, in or in connection
with any application or commitment relating to any of the Loans or in any of the
other Loan Documents to Lender by Borrower, by any principal, managing member or
general partner in Borrower or by
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 60
any indemnitor or guarantor under any indemnity or guaranty executed in
connection with any of the Loans is determined by Lender to have been false or
misleading in any material respect at the time made.
(f) There shall be a sale, conveyance, disposition, alienation,
hypothecation, leasing, assignment, pledge, mortgage, granting of a security
interest in or other transfer or further encumbrancing of the Property, Borrower
or its owners, or any portion thereof or any interest therein, in violation of
Section 1.13 hereof.
(g) A default occurs under any of the other Loan Documents which has
not been cured within any applicable grace or cure period therein provided.
(h) Borrower, the managing member of Borrower or SCOLP becomes
insolvent, or shall make a transfer in fraud of creditors, or shall make an
assignment for the benefit of creditors, shall file a petition in bankruptcy,
shall voluntarily be adjudicated insolvent or bankrupt or shall admit in writing
the inability to pay debts as they mature, shall petition or apply to any
tribunal for or shall consent to or shall not contest the appointment of a
receiver, trustee, custodian or similar officer for Borrower, for any such
principal, general partner or managing member (as applicable) of Borrower or for
any such indemnitor or guarantor or for a substantial part of the assets of
Borrower, of any such principal, managing member or general partner of Borrower
or of any such indemnitor or guarantor, or shall commence any case, proceeding
or other action under any bankruptcy, reorganization, arrangement, readjustment
or debt, dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect.
(i) An involuntary petition ("Petition") is filed or any case,
proceeding or other action is commenced against Borrower, against the managing
member of Borrower or against SCOLP seeking to have an order for relief entered
against it as debtor or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or other relief under
any law relating to bankruptcy, insolvency, arrangement, reorganization,
receivership or other debtor relief under any law or statute of any
jurisdiction, whether now or hereafter in effect, or a court of competent
jurisdiction enters an order for relief against Borrower, against any principal,
managing member or general partner of Borrower or against any indemnitor or
guarantor under any indemnity or guaranty executed in connection with any of the
Loans as debtor, or an order, judgment or decree is entered appointing, with or
without the consent of Borrower, of any such principal, managing member or
general partner of Borrower or of any such indemnitor or guarantor, a receiver,
trustee, custodian or similar officer for Borrower, for any such principal,
managing member or general partner of Borrower or for any such indemnitor or
guarantor, or for any substantial part of any of the properties of Borrower, of
any such principal, managing member or general partner of Borrower or of any
such indemnitor or guarantor, and if any such event shall occur, such Petition,
case, proceeding, action, order, judgment or decree shall not be dismissed
within sixty (60) days after being commenced.
(j) Borrower solicits or aids the solicitation of the filing of any
Petition against Borrower including, without limitation: (i) providing
information regarding the identity of creditors or the nature of creditors'
claims to any third party unless compelled to do so by order of a court of
competent jurisdiction or by regulation promulgated by a governmental
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 61
agency, or (ii) paying the legal fees or expenses of any creditor of or interest
holder in Borrower with respect to any matter whatsoever.
(k) The Property or any part thereof shall be taken on execution or
other process of law in any action against Borrower.
(l) Borrower abandons all or a substantial portion of the Property.
(m) The holder of any lien or security interest on the Property
(without implying the consent of Lender to the existence or creation of any such
lien or security interest), whether superior or subordinate to this Security
Deed or any of the other Loan Documents, declares a default and such default is
not cured within any applicable grace or cure period set forth in the applicable
document or such holder institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder.
(n) The Property, or any part thereof, is subjected to actual waste or
to removal, demolition or material alteration so that the value of the Property
is materially diminished thereby and Lender determines (in its subjective
determination) that it is not adequately protected from any loss, damage or risk
associated therewith.
(o) Any dissolution, termination, partial or complete liquidation,
merger or consolidation of Borrower, its managing member, except as permitted
hereunder.
(p) If any of the facts forming the basis of the assumptions set forth
in the Non-Consolidation Opinion shall no longer be true and correct in all
material respects, except as permitted hereunder.
ARTICLE III
REMEDIES
3.1 Remedies Available. If there shall occur an Event of Default, then this
Security Deed is subject to foreclosure as provided by law and Lender may, at
its option and by or through a trustee, nominee, assignee or otherwise, to the
fullest extent permitted by law, exercise any or all of the following rights,
remedies and recourses, either successively or concurrently.
(a) Acceleration. Accelerate the maturity date of the Notes and
declare any or all of the indebtedness secured hereby to be immediately due and
payable without any presentment, demand, protest, notice or action of any kind
whatever (each of which is hereby expressly waived by Borrower), whereupon the
same shall become immediately due and payable. Upon any such acceleration,
payment of such accelerated amount shall constitute a prepayment of the
principal balance of the Notes and any applicable prepayment fee provided for in
the Notes shall then be immediately due and payable.
(b) Entry on the Property. Without in any way curing or waiving any
default or Event of Default of Borrower, either in person, by agent or by
court-appointed receiver, with or without bringing any action or proceeding, or
by a receiver appointed by a court and without regard to the adequacy of its
security, enter upon and take possession of the Property, or any part thereof,
in its own name, without force or with such force as is permitted by law and
without
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 62
notice or process or with such notice or process as is required by law unless
such notice and process are waivable, in which case Borrower hereby waives such
notice and process, and do any and all acts and perform any and all work which
may be desirable or necessary in Lender's judgment to complete any unfinished
construction on the Real Estate, to preserve and/or enhance the value,
marketability or rentability of the Property, to increase the income therefrom,
to manage and operate the Property or to protect the security hereof and all
sums expended by Lender therefor, together with interest thereon at the Default
Interest Rate, shall be immediately due and payable to Lender by Borrower on
demand and shall be secured hereby and by all of the other Loan Documents
securing all or any part of the indebtedness evidenced by the Notes.
(c) Collect Rents and Profits. With or without taking possession of
the Property, sue for or otherwise collect the Rents and Profits, including
those past due and unpaid, and apply the same, less costs and expenses of
operation and collection, including reasonable attorneys' fees, upon any
indebtedness secured hereby, all in such order as Lender in its discretion may
determine.
(d) Appointment of Receiver. Upon, or at any time prior or after,
initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application, ex parte, to a court of competent jurisdiction for appointment of a
receiver for all or any part of the Property, as a matter of strict right and
without notice to Borrower and without regard to the adequacy of the Property
for the repayment of the indebtedness secured hereby or the solvency of Borrower
or any person or persons liable for the payment of the indebtedness secured
hereby, and Borrower does hereby irrevocably consent to such appointment, waives
any and all notices of and defenses to such appointment and agrees not to oppose
any application therefor by Lender, but nothing herein is to be construed to
deprive Lender of any other right, remedy or privilege Lender may now have under
the law to have a receiver appointed, provided, however, that the appointment of
such receiver, trustee or other appointee by virtue of any court order, statute
or regulation shall not impair or in any manner prejudice the rights of Lender
to receive payment of the Rents and Profits pursuant to other terms and
provisions of this Security Deed or the Countryside Atlanta Assignment. Any such
receiver shall have all of the usual powers and duties of receivers in similar
cases, including, without limitation, the full power to hold, develop, rent,
lease, manage, maintain, operate and otherwise use or permit the use of the
Property upon such terms and conditions as said receiver may deem to be prudent
and reasonable under the circumstances as more fully set forth in Section 3.3
below. Such receivership shall, at the option of Lender, continue until full
payment of all of the indebtedness secured hereby or until title to the Property
shall have passed by foreclosure sale under this Security Deed or deed in lieu
of foreclosure.
(e) Foreclosure. Immediately commence an action to foreclose this
Security Deed or to specifically enforce its provisions or any of the
indebtedness secured hereby, pursuant to the applicable statutes in such case
and sell the Property or cause the Property to be sold in accordance with the
requirements and procedures provided by said statutes in a single parcel or in
several parcels at the option of Lender.
In the event foreclosure proceedings are instituted by Lender, all
expenses incident to such proceedings, including, but not limited to, attorneys'
fees and costs, shall be paid
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 63
by Borrower and secured by this Security Deed and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Notes.
The secured indebtedness and all other obligations secured by this Security
Deed, including, without limitation, interest at the Default Interest Rate, any
prepayment charge, fee or premium required to be paid under the Notes in order
to prepay principal (to the extent permitted by applicable law), reasonable
attorneys' fees and any other amounts due and unpaid to Lender under the Loan
Documents, may be bid by Lender in the event of a foreclosure sale hereunder.
(f) Sale by Lender. The Lender, at its option, may sell, and is hereby
authorized and empowered to sell, the Property or any part of the Property at
one or more public sale or sales at the door of the Courthouse in the county
where the Real Estate is located, to the highest bidder for cash, in order to
pay the secured indebtedness and all expenses of sale and of all proceedings in
connection therewith, including reasonable attorney's fees, in bar of the right
and equity of redemption, homestead, and all other rights and exemptions of
every kind, if any (including, without limitation, all rights under any
appraisement, valuation, stay or extension laws and all rights to have the
Property marshaled upon foreclosure hereof), which may now or hereafter exist,
all of which are hereby expressly waived by Borrower, after first advertising
the time, place and terms of sale once a week for four (4) weeks immediately
preceding such sale (but without regard to the number of days) in a newspaper in
which Sheriff's sales are advertised in the county where the Real Estate is
located, all other notice being hereby waived by Borrower. At such public sale,
Lender may execute and deliver to the purchaser a conveyance of the Property or
any part of the Property in fee simple, and with full warranties of title, and
to this end Borrower hereby constitutes and appoints Lender the agent and
attorney-in-fact of Borrower to make such sale and conveyance, and thereby to
divest Borrower of all right, title and equity that Borrower may have in and to
the Property and to vest the same in the purchaser or purchasers at such sale or
sales, and all the acts and doings of said agent and attorney-in-fact are hereby
ratified and confirmed, and any recitals in said conveyance or conveyances as to
facts essential to a valid sale shall be binding upon Borrower. The aforesaid
power of sale and agency hereby granted are coupled with an interest and are
irrevocable by death or otherwise, are granted as cumulative of the other
remedies provided hereby or by law for the collection of this indebtedness
secured hereby, and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the secured indebtedness. In the event of
any sale under this Security Deed by virtue of the exercise of the powers herein
granted, or pursuant to any order in any judicial proceeding or otherwise, the
Property may be sold as an entirety or in separate parcels and in such manner or
order as Lender in its discretion may elect, and, if Lender so elects, Lender
may sell the personal property covered by this Security Deed concurrently with
the real property covered hereby or at one or more separate sales in any manner
permitted by any applicable Uniform Commercial Code, and one or more exercises
of the powers herein granted shall not extinguish nor exhaust such powers, until
the entire Property is sold or the secured indebtedness is paid in full. If the
secured indebtedness is now or hereafter further secured by any chattel
mortgages, pledges, contracts of guaranty, assignments of lease or other
security instruments, Lender may at its option exhaust the remedies granted
under any of said security either concurrently or independently, and in such
order as Lender may determine in its discretion. Upon any foreclosure sale,
Lender may bid for and purchase the Property and shall be entitled to apply all
or any part of the secured indebtedness as a credit to the purchase price. In
the event of any such foreclosure sale by Lender, Borrower shall be deemed a
tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 64
summarily dispossessed according to provisions of law applicable to tenants
holding over. In case Lender shall have proceeded to enforce any right, power,
or remedy under this Security Deed by foreclosure, entry or otherwise or in the
event advertising of the intended exercise of the sale under power provided
hereunder is commenced, and such proceeding or advertisement shall have been
withdrawn, discontinued or abandoned for any reason, then in every such case (i)
Borrower and Lender shall be restored to their former positions and rights, (ii)
all rights, powers and remedies of Lender shall continue as if no such
proceeding had been taken, (iii) each and every Event of Default declared or
occurring prior or subsequent to such withdrawal, discontinuance or abandonment
shall be deemed to be a continuing Event of Default, and (iv) neither this
Security Deed, nor the Countryside Atlanta Note, nor the secured indebtedness,
nor any other Loan Document shall be or shall be deemed to have been reinstated
or otherwise affected by such withdrawal, discontinuance or abandonment; and
Borrower hereby expressly waives the benefit of any statute or rule of law now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with this sentence.
(g) Judicial Remedies. Proceed by suit or suits, at law or in equity,
instituted by Lender, to enforce the payment of the indebtedness secured hereby
or the other obligations of Borrower hereunder or pursuant to the Loan
Documents, to foreclose the liens and security interests of this Security Deed
as against all or any part of the Property, and to have all or any part of the
Property sold under the judgment or decree of a court of competent jurisdiction.
In the event of a judicial sale pursuant to a foreclosure decree, it is
understood and agreed that Lender or its assigns may become the purchaser of the
Property. This remedy shall be cumulative of any other non-judicial remedies
available to the Lender with respect to the Loan Documents. Proceeding with the
request or receiving a judgment for legal relief shall not be or be deemed to be
an election of remedies or bar any available non-judicial remedy of the Lender.
(h) Other. Exercise any other right or remedy available hereunder,
under any of the other Loan Documents or at law or in equity.
3.2 Application of Proceeds. To the fullest extent permitted by law, the
proceeds of any sale under this Security Deed shall be applied to the extent
funds are so available to the following items in such order as Lender in its
discretion may determine:
(a) To payment of the costs, expenses and fees of taking possession of
the Property, and of holding, operating, maintaining, using, leasing, repairing,
improving, marketing and selling the same and of otherwise enforcing Lender's
right and remedies hereunder and under the other Loan Documents, including, but
not limited to, receivers' fees, court costs, attorneys', accountants',
appraisers', auctioneers', managers' and other professional fees, title charges
and transfer taxes.
(b) To payment of all sums expended by Lender under the terms of any
of the Loan Documents and not yet repaid, together with interest on such sums at
the Default Interest Rate.
(c) To payment of the secured indebtedness and all other obligations
secured by this Security Deed, including, without limitation, interest at the
Default Interest Rate and, to the extent permitted by applicable law, any
prepayment fee, charge or premium required to be paid under the Notes in order
to prepay principal, in any order that Lender chooses in its sole discretion.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 65
(d) The remainder, if any, of such funds shall be disbursed to
Borrower or to the person or persons legally entitled thereto.
3.3 Right and Authority of Receiver or Lender in the Event of Default;
Power of Attorney. Upon the occurrence of an Event of Default, and entry upon
the Property pursuant to Section 3.1(b) hereof or appointment of a receiver
pursuant to Section 3.1(d) hereof, and under such terms and conditions as may be
prudent and reasonable under the circumstances in Lender's or the receiver's
sole discretion, all at Borrower's expense, Lender or said receiver, or such
other persons or entities as they shall hire, direct or engage, as the case may
be, may do or permit one or more of the following, successively or concurrently:
(a) enter upon and take possession and control of any and all of the Property;
(b) take and maintain possession of all documents, books, records, papers and
accounts relating to the Property; (c) exclude Borrower and its agents, servants
and employees wholly from the Property; (d) manage and operate the Property; (e)
preserve and maintain the Property; (f) make repairs and alterations to the
Property; (g) complete any construction or repair of the Improvements, with such
changes, additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Lender may in its sole discretion
deem appropriate or desirable to place the Property in such condition as will,
in Lender's sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the
Property, or employ a marketing or leasing agent or agents to do so, directed to
the leasing or sale of the Property under such terms and conditions as Lender
may in its sole discretion deem appropriate or desirable; (i) employ such
contractors, subcontractors, materialmen, architects, engineers, consultants,
managers, brokers, marketing agents, or other employees, agents, independent
contractors or professionals, as Lender may in its sole discretion deem
appropriate or desirable to implement and effectuate the rights and powers
herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such
documents and instruments as are necessary or appropriate to consummate
authorized transactions; (k) enter into such Leases, whether of real or personal
property, or tenancy agreements, under such terms and conditions as Lender may
in its sole discretion deem appropriate or desirable; (l) collect and receive
the Rents and Profits from the Property; (m) eject tenants or repossess personal
property, as provided by law, for breaches of the conditions of their Leases or
other agreements; (n) sue for unpaid Rents and Profits, payments, income or
proceeds in the name of Borrower or Lender; (o) maintain actions in forcible
entry and detainer, ejectment for possession and actions in distress for rent;
(p) compromise or give acquittance for Rents and Profits, payments, income or
proceeds that may become due; (q) delegate or assign any and all rights and
powers given to Lender by this Security Deed; and (r) do any acts which Lender
in its sole discretion deems appropriate or desirable to protect the security
hereof and use such measures, legal or equitable, as Lender may in its sole
discretion deem appropriate or desirable to implement and effectuate the
provisions of this Security Deed. This Security Deed shall constitute a
direction to and full authority to any lessee, or other third party who has
heretofore dealt or contracted or may hereafter deal or contract with Borrower
or Lender, at the request of Lender, to pay all amounts owing under any Lease,
contract, concession, license or other agreement to Lender without proof of the
Event of Default or other default relied upon. Any such lessee or third party is
hereby irrevocably authorized to rely upon and comply with (and
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 66
shall be fully protected by Borrower in so doing) any request, notice or demand
by Lender for the payment to Lender of any Rents and Profits or other sums which
may be or thereafter become due under its Lease, contract, concession, license
or other agreement, or for the performance of any undertakings under any such
Lease, contract, concession, license or other agreement, and shall have no right
or duty to inquire whether any Event of Default or other default under this
Security Deed or under any of the other Loan Documents has actually occurred or
is then existing. Borrower hereby constitutes and appoints Lender, its
assignees, successors, transferees and nominees, as Borrower's true and lawful
attorney-in-fact and agent, with full power of substitution in the Property, in
Borrower's name, place and stead, to do or permit any one or more of the
foregoing described rights, remedies, powers and authorities, successively or
concurrently, and said power of attorney shall be deemed a power coupled with an
interest and irrevocable so long as any indebtedness secured hereby is
outstanding. Any money advanced by Lender in connection with any action taken
under this Section 3.3, together with interest thereon at the Default Interest
Rate from the date of making such advancement by Lender until actually paid by
Borrower, shall be a demand obligation owing by Borrower to Lender and shall be
secured by this Security Deed and by every other instrument securing the secured
indebtedness.
3.4 Occupancy After Foreclosure. In the event there is a foreclosure sale
hereunder and at the time of such sale, Borrower or Borrower's representatives,
successors or assigns, or any other persons claiming any interest in the
Property by, through or under Borrower (except tenants of space in the
Improvements subject to Leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not
prohibited by applicable law, each and all shall, at the option of Lender or the
purchaser at such sale, as the case may be, immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the Property occupied or used, such rental to be due
daily to the purchaser. Further, to the extent permitted by applicable law, in
the event the tenant fails to surrender possession of the Property upon the
termination of such tenancy, the purchaser shall be entitled to institute and
maintain an action for unlawful detainer of the Property in the appropriate
court of the county in which the Real Estate is located.
3.5 Notice to Account Debtors. Lender may, at any time after an Event of
Default, notify the account debtors and obligors of any accounts, chattel paper,
negotiable instruments or other evidences of indebtedness to Borrower included
in the Property to pay Lender directly. Borrower shall at any time or from time
to time upon the request of Lender provide to Lender a current list of all such
account debtors and obligors and their addresses.
3.6 Cumulative Remedies. All remedies contained in this Security Deed are
cumulative and Lender shall also have all other remedies provided at law and in
equity or in any other Loan Documents. Such remedies may be pursued separately,
successively or concurrently at the sole subjective direction of Lender and may
be exercised in any order and as often as occasion therefor shall arise. No act
of Lender shall be construed as an election to proceed under any particular
provisions of this Security Deed to the exclusion of any other provision of this
Security Deed or as an election of remedies to the exclusion of any other remedy
which may then or thereafter be available to Lender. No delay or failure by
Lender to exercise any right or remedy under this Security Deed shall be
construed to be a waiver of that right or remedy or of any Event of Default or
other default hereunder. Lender may exercise any one or more of its rights and
remedies at its option without regard to the adequacy of its security.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 67
3.7 Payment of Expenses. Borrower shall pay on demand all of Lender's
expenses reasonably incurred in any efforts to enforce any terms of this
Security Deed, whether or not any lawsuit is filed and whether or not
foreclosure is commenced but not completed, including, but not limited to,
reasonable legal fees and disbursements, foreclosure costs and title charges,
together with interest thereon from and after the date incurred by Lender until
actually paid by Borrower at the Default Interest Rate, and the same shall be
secured by this Security Deed and by all of the other Loan Documents securing
all or any part of the indebtedness evidenced by the Notes.
ARTICLE IV
MISCELLANEOUS TERMS AND CONDITIONS
4.1 Time of Essence. Time is of the essence with respect to all provisions
of this Security Deed.
4.2 Release of Security Deed. If and when Borrower has paid all of the
secured indebtedness as the same becomes due and payable, or there is a
Defeasance regarding the lien of this Security Deed in accordance with, and in
satisfaction of, the provisions of Section 1.35 of this Security Deed, then, and
in such event only, this Security Deed shall be canceled of record by Lender,
which cancellation shall be effected by Lender in due form at Borrower's cost.
Borrower shall be responsible for the recordation of such release and payment of
any recordation costs associated therewith.
4.3 Certain Rights of Lender. Without affecting Borrower's liability for
the payment of any of the indebtedness secured hereby, Lender may from time to
time and without notice to Borrower: (a) release any person liable for the
payment of the indebtedness secured hereby; (b) extend or modify the terms of
payment of the indebtedness secured hereby; (c) accept additional real or
personal property of any kind as security or alter, substitute or release any
property securing the indebtedness secured hereby; (d) recover any part of the
Property; (e) consent in writing to the making of any subdivision map or plat
thereof; (f) join in granting any easement therein; or (g) join in any extension
agreement of this Security Deed or any agreement subordinating the lien hereof.
4.4 Notices. Any notice, report, demand, request or other instrument
authorized or required to be given or furnished hereunder, under any of the
other Loan Documents or as required by law shall be in writing and shall be
given as follows: (a) by hand delivery; (b) by deposit in the United States mail
as first class certified mail, return receipt requested, postage paid; (c) by
expedited, prepaid, nationwide courier service, either commercial or United
States Postal Service, with proof of actual or attempted delivery; or (d) by
telecopy transmission (other than for notices of default) with a confirmation
copy to be delivered by duplicate notice in accordance with any of clauses
(a)-(c) above, in each case, addressed to the intended addressee at its address
set forth on the first page of this Security Deed or at such other address as
may be designated by such party as herein provided. Any party may change the
address to which any such notice is to be delivered to any other address within
the United States of America, by
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 68
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 4.4. All notices, demands and
requests shall be effective upon personal delivery, or one (1) Business Day
after being deposited with the private courier service, or two (2) Business Days
after being deposited in the United States mail as required above. The inability
to deliver notices because of a changed address of which no notice was given, or
rejection or refusal to accept any notice offered for delivery shall be deemed
to be receipt of the notice as of the date of such inability to deliver or
rejection or refusal to accept delivery. Notice for either party may be given by
its respective counsel. Additionally, notice from Lender may also be given by
the Servicer.
4.5 Successors and Assigns. The terms, provisions, indemnities, covenants
and conditions hereof shall be binding upon Borrower and the successors and
assigns of Borrower, including all successors in interest in and to all or any
part of the Property, and shall inure to the benefit of Lender, and its
successors and assigns and shall constitute covenants running with the land. If
Borrower consists of more than one person or entity, each will be jointly and
severally liable to perform the obligations of Borrower.
4.6 Severability. If any provision under this Security Deed or the
application thereof to any entity, person or circumstance shall be invalid,
illegal or unenforceable to any extent, the remainder of this Security Deed and
the application of the provisions hereof to other entities, persons or
circumstances shall not be affected thereby and shall be enforced to the fullest
extent permitted by law.
4.7 General Interpretative Principles. Within this Security Deed, words of
any gender shall be held and construed to include any other gender, and words in
the singular shall be held and construed to include the plural, and vice versa,
unless the context otherwise requires.
4.8 Waiver; Discontinuance of Proceedings. Lender may waive any single
Event of Default or other default hereunder by Borrower hereunder without
waiving any other prior or subsequent Event of Default or other default
hereunder, and may remedy any Event of Default or other default hereunder by
Borrower hereunder without waiving the Event of Default or other default
hereunder remedied. Neither the failure or delay by Lender in exercising, any
right, power or remedy upon any Event of Default or other default hereunder by
Borrower shall be construed as a waiver of such Event of Default or other
default hereunder or as a waiver of the right to exercise any such right, power
or remedy at a later date. No single or partial exercise by Lender of any right,
power or remedy hereunder shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right, power or remedy hereunder may be
exercised at any time and from time to time. No modification or waiver of any
provision hereof nor consent to any departure by Borrower therefrom shall in any
event be effective unless the same shall be in writing and signed by Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose given. No notice to nor demand on Borrower in any case
shall of itself entitle Borrower to any other or further notice or demand in
similar or other circumstances. Acceptance by Lender of any payment in an amount
less than the amount then due on any of the secured indebtedness shall be deemed
an acceptance on account only and shall not in any way affect the existence of
an Event of Default or other default hereunder.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 69
4.9 Section Headings. The headings of the sections and paragraphs of this
Security Deed are for convenience of reference only, are not to be considered a
part hereof and shall not limit or otherwise affect any of the terms hereof.
4.10 GOVERNING LAW. THIS SECURITY DEED WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, PROVIDED
THAT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY
FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.
4.11 Counting of Days. The term "days" when used herein shall mean calendar
days. If any time period ends on a Saturday, Sunday or holiday officially
recognized by the state within which the Real Estate is located, the period
shall be deemed to end on the next succeeding Business Day; provided, however,
that in the case of payments due by Borrower to Lender on a Saturday, Sunday or
holiday (e.g., monthly deposits into Reserves, payments on the Notes, etc.) such
payments shall be deemed due on the immediately preceding Business Day. The term
"business day" or "Business Day" when used herein shall mean a weekday, Monday
through Friday, except a legal holiday or a day on which banking institutions in
New York, New York are authorized by law to be closed.
4.12 Application of the Proceeds of the Notes. To the extent that proceeds
of the Notes are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced by Lender at Borrower's request and Lender shall be
subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or
encumbrances, irrespective of whether said liens, security interests, charges or
encumbrances are released.
4.13 Unsecured Portion of Indebtedness. If any part of the secured
indebtedness cannot be lawfully secured by this Security Deed or if any part of
the Property cannot be lawfully subject to the lien and security interest hereof
to the full extent of such indebtedness, then all payments made shall be applied
on said indebtedness first in discharge of that portion thereof which is
unsecured by this Security Deed.
4.14 Cross Default. A default hereunder which has not been cured within any
applicable grace or cure period shall be a default under each of the other Loan
Documents.
4.15 Interest After Sale. In the event the Property or any part thereof
shall be sold upon foreclosure as provided hereunder, to the extent permitted by
law, the sum for which the same shall have been sold shall, for purposes of
redemption (if applicable, pursuant to the laws of the state in which the
Property is located), bear interest at the Default Interest Rate.
4.16 Construction of this Document. This document may be construed as a
mortgage, security deed, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of the foregoing, in order to fully effectuate the
liens and security interests created hereby and the purposes and agreements
herein set forth.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 70
4.17 No Merger. It is the desire and intention of the parties hereto that
this Security Deed and the lien hereof shall not merge in fee simple title to
the Property.
4.18 Rights With Respect to Junior Encumbrances. Any person or entity
purporting to have or to take a junior mortgage or other lien upon the Property
or any interest therein shall be subject to the rights of Lender to amend,
modify, increase, vary, alter or supplement this Security Deed, the Notes or any
of the other Loan Documents and to extend the maturity date of the indebtedness
secured hereby and to increase the amount of the indebtedness secured hereby and
to waive or forebear the exercise of any of its rights and remedies hereunder or
under any of the other Loan Documents and to release any collateral or security
for the indebtedness secured hereby, in each and every case without obtaining
the consent of the holder of such junior lien and without the lien or security
interest of this Security Deed losing its priority over the rights of any such
junior lien.
4.19 Lender May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Borrower or the principals or general partners in
Borrower, or their respective creditors or property, Lender, to the extent
permitted by law, shall be entitled to file such proofs of claim and other
documents as may be necessary or advisable in order to have the claims of Lender
allowed in such proceedings for the entire secured indebtedness at the date of
the institution of such proceedings and for any additional amount which may
become due and payable by Borrower hereunder after such date.
4.20 After-Acquired Property. All property acquired by Borrower after the
date of this Security Deed which by the terms of this Security Deed shall be
subject to the lien and the security interest created hereby, shall immediately
upon the acquisition thereof by Borrower and without further deed, mortgage,
conveyance or assignment become subject to the lien and security interest
created by this Security Deed.
4.21 No Representation. By accepting delivery of any item required to be
observed, performed or fulfilled or to be given to Lender pursuant to the Loan
Documents, including, but not limited to, any officer's certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision or condition thereof, and such
acceptance of delivery thereof shall not be or constitute any warranty, consent
or affirmation with respect thereto by Lender.
4.22 Counterparts. This Security Deed may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page.
4.23 Personal Liability. Notwithstanding anything to the contrary contained
in this Security Deed, the liability of Borrower for the indebtedness secured
hereby and for the performance of the other agreements, covenants and
obligations contained herein and in the Loan Documents shall be limited as set
forth in Section 1.05 of the Notes; provided, however, that nothing herein shall
be deemed to be a waiver of any right which Lender may have under
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 71
Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code
to file a claim for the full amount of the indebtedness secured hereby or to
require that all collateral shall continue to secure all indebtedness owing to
Lender in accordance with the Notes, this Security Deed and the other Loan
Documents.
4.24 Recording and Filing. Borrower will cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded,
filed, re-recorded and re-filed in such manner and in such places as Lender
shall reasonably request, and will pay on demand all such recording, filing,
re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a
tax service company to verify the status of payment of taxes and assessments on
the Property.
4.25 Entire Agreement and Modifications. This Security Deed and the other
Loan Documents contain the entire agreements between the parties and supersede
any prior agreements (oral or written), and may not be amended, revised, waived,
discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted.
4.26 Maximum Interest. The provisions of this Security Deed and of all
agreements between Borrower and Lender, whether now existing or hereafter
arising and whether written or oral, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of the Notes or otherwise, shall the amount paid, or agreed to be
paid ("Interest"), to Lender for the use, forbearance or retention of the money
loaned under the Notes exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Borrower and Lender shall, at the
time performance or fulfillment of such provision shall be due, exceed the limit
for Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under the Notes in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the payment
of Interest. All Interest (including any amounts or payments judicially or
otherwise under law deemed to be Interest) contracted for, charged, taken,
reserved, paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Notes, including any extensions and renewals thereof until payment
in full of the principal balance of the Notes so that the Interest thereon for
such full term will not exceed at any time the maximum amount permitted by
applicable law. This Section will control all agreements between Borrower and
Lender.
4.27 Application of Default Interest Rate Not a Waiver. Application of the
Default Interest Rate shall not be deemed to constitute a waiver of any Event of
Default or other default or any rights or remedies of Lender under this Security
Deed, any other Loan Document or applicable legal requirements, or a consent to
any extension of time for the payment or performance of any obligation with
respect to which the Default Interest Rate may be invoked.
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 72
4.28 Interest Payable by Lender. Lender shall cause funds in the Partial
Defeasance Reserve and the Replacement Reserve (the "Funds") to be deposited
into interest bearing accounts of the type customarily maintained by Lender or
its servicing agent for the investment of similar reserves, which accounts may
not yield the highest interest rate then available. The Funds shall be held in
an account in Lender's name (or such other account name as Lender may elect) at
a financial institution or other depository selected by Lender (or its Servicer)
in its sole discretion (collectively, the "Depository Institution"). Borrower
shall earn no more than an amount of interest on the Funds equal to an amount
determined by applying to the average monthly balance of such Funds the quoted
interest rate for the Depository Institution's money market savings account, as
such rate is determined from time to time (such allocated amount being referred
to as "Borrower's Interest"). Lender or its Depository Institution shall be
entitled to report under Borrower's Federal tax identification number,
Borrower's Interest on the Funds. If the Depository Institution does not have an
established money market savings account (or if an interest rate for such
account cannot otherwise be determined in connection with the deposit of such
Funds), a comparable interest rate quoted by the Depository Institution and
acceptable to Lender (or its Servicer) in its reasonable discretion shall be
used. The amount of Borrower's Interest allocated to Funds shall be added to the
balance in the Partial Defeasance Reserve and the Replacement Reserve and shall
be disbursed for payment of the items for which other Funds in the Partial
Defeasance Reserve and the Replacement Reserve are to be disbursed.
Notwithstanding the foregoing, to the extent the Property includes residential
units, the Security Deposit Account shall bear interest, if required, pursuant
to 68 P.S. Section 250.511 which interest earnings shall be allocated to
Borrower to the extent so required by law.
4.29 Further Stipulations. The additional covenants, agreements and
provisions set forth in Exhibit B attached hereto, if any, shall be a part of
this Security Deed and shall, in the event of any conflict between such further
stipulations and any of the other provisions of this Security Deed, be deemed to
control.
4.30 Relationship of the Parties. The relationship between Borrower and
Lender is that of a borrower and a lender only and neither of those parties is,
nor shall it hold itself out to be, the agent, employee, joint venturer or
partner of the other party.
4.31 Fixture Filing. This Security Deed shall be effective from the date of
its recording as a financing statement filed as a fixture filing with respect to
all goods constituting part of the Property which are or are to become fixtures.
The mailing address of Borrower and the address of Lender from which information
concerning the security interests may be obtained are set forth in Section 1.22
above.
4.32 Sale of Notes and Securitization. At the request of the Lender and, to
the extent not already required to be provided by Borrower under this Security
Deed, Borrower shall use reasonable efforts to satisfy the market standards to
which the Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with any Secondary Market
Transaction of rated single or multi-class securities (the "Securities") secured
by or evidencing ownership interests in the Countryside Atlanta Note and this
Security Deed, including, without limitation, to:
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 73
(a) (i) provide such financial and other information with respect to
the Property, the Borrower, its partners, shareholders or members and the
Manager; (ii) provide budgets relating to the Property; (iii) perform or permit
or cause to be performed or permitted such site inspection, appraisals, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of the
Property, as may be reasonably requested by the Lender or the Rating Agencies or
as may be necessary or appropriate in connection with the Secondary Market
Transaction; and (iv) make such representations and warranties as of the closing
date of the Secondary Market Transaction with respect to the Property, Borrower
and the Loan Documents as may be reasonably and specifically requested by the
Lender or the Rating Agencies with respect to matters specifically identified by
Lender, and consistent with the facts covered by such representations and
warranties as they exist on the date thereof (collectively, the "Provided
Information"), together, if customary, with appropriate verification and/or
consents of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to the Lender and the Rating
Agencies; provided, however, such obligation does not create any obligation on
the part of Borrower to update the effective date of any representations made by
Borrower in connection with the origination of the Loan.
(b) cause its counsel to render opinions, which may be relied upon by
the Lender, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, fraudulent conveyance, and true sale
or any other opinion customary in securitization transactions with respect to
the Property and Borrower and its affiliates, which counsel and opinions shall
be reasonably satisfactory to the Lender and the Rating Agencies; and
(c) execute such amendments to the Loan Documents and organizational
documents; provided, however, that the Borrower shall not be required to modify
or amend any Loan Document if such modification or amendment would (i) change
the interest rate, the stated maturity, application of payments or the
amortization of principal set forth in the Countryside Atlanta Note; (ii) modify
or amend any other term of the Countryside Atlanta Loan in a manner adverse to
Borrower; or (iii) modify the manner in which Borrower and/or its affiliates
operate the Property or conduct their business operations. Without limiting the
foregoing, at Lender's request, Borrower shall cooperate in causing the
Countryside Atlanta Note and this Security Deed to be split into two or more
notes, parts or interests, in whatever proportion Lender deems appropriate,
which may be in the form of pari passu interests, senior and junior interests,
or other interests.
Borrower agrees to cooperate with Lender to facilitate any such action, the
transfer or disposition of the Countryside Atlanta Loan, the rating of the
Countryside Atlanta Loan or of a securitization in which the Countryside Atlanta
Loan is included. Borrower's cooperation obligation shall continue until the
Countryside Atlanta Loan has been repaid in full, and shall include, without
limitation, all of the foregoing as each may be reasonably required from time to
time by Lender, Servicer, or any Lender. For purposes hereof, a "Secondary
Market Transaction" shall be (a) any sale or assignment of this Security Deed,
the Notes and the other Loan Documents to one or more investors as a whole loan;
(b) a participation of the Countryside Atlanta Loan to one or more investors;
(c) any deposit of this Security Deed, the Notes and the other Loan Documents
with a trust or other entity which may sell certificates or other instruments to
investors evidencing an ownership interest in the assets of such trust or other
entity or similar
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 74
securitization; (d) any other sale, assignment or transfer of the Countryside
Atlanta Loan or any interest therein to one or more investors; or (e) any
securitization of all or any portion of Lender's interest in the Countryside
Atlanta Loan including a securitization where Lender causes the Countryside
Atlanta Note and this Security Deed to be split into two or more notes, parts or
interests, in whatever proportion Lender deems appropriate, which may be in the
form of pari passu interests, senior and junior interests, or other interests,
and thereafter sells, assigns, participates, syndicates or securitizes all or
any part of either such severed or split note and deed of trust; provided,
however, in the event any new promissory notes evidencing the Loan are prepared
and executed in connection with such a splitting of the Countryside Atlanta
Note, Lender shall promptly return the original Countryside Atlanta Note to
Borrower. At any time during which the Countryside Atlanta Loan is an asset of a
securitization or is otherwise an asset of any rated transaction, "Rating
Agency" shall mean the rating agency or rating agencies that from time to time
rate the Securities, certificates or other instruments issued in connection with
such securitization or other transaction.
All costs and expenses incurred by Lender and/or Borrower in
connection with Borrower's complying with requests made under this Section shall
be paid by Lender.
In the event that the provisions of this Security Deed or any of the
other Loan Documents require the receipt of written confirmation from each
Rating Agency with respect to the ratings on the Securities, or, in accordance
with the terms of the transaction documents relating to a Secondary Market
Transaction, such a rating confirmation is required in order for the consent of
the Lender to be given, the Lender shall pay all of the costs and expenses of
the Lender, or its Servicer and each Rating Agency in connection therewith, and,
if applicable, shall pay any fees imposed by any Rating Agency as a condition to
the delivery of such confirmation. Nothing in this Section 5.32 shall result in
an economic change in the transaction, impose any legal obligations on Borrower
or restrict Borrower in any material way.
[No Further Text on this Page; Signature Page Follows]
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Page 75
IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has
duly executed this Security Deed under seal to be effective as of the date set
forth in the first paragraph hereof.
BORROWER:
Signed, sealed and delivered in the SUN COUNTRYSIDE ATLANTA LLC,
presence of: a Michigan limited liability company
- ------------------------------------- By: SUN QRS COUNTRYSIDE MANAGER, INC.,
Unofficial Witness: a Michigan corporation,
----------------- its Manager
By: /s/ Jonathan M. Colman (SEAL)
- ------------------------------------- -----------------------------
Printed Name of Notary Public: Name: Jonathan M. Colman
Title: Executive Vice President
- -------------------------------------
(NOTARIAL SEAL)
Date of Expiration:
----------
Exhibit LIST
Exhibit A - Legal Description
Exhibit B - Additional Stipulations
Exhibit C - Description of Selected Loan Documents
Exhibit D - Disclosed Litigation
DEED TO SECURE DEBT AND SECURITY AGREEMENT - Signature Page
EXHIBIT D, Disclosed Litigation - Page 1