EXHIBIT 10.3
Loan No. 6 103 651
UNCONDITIONAL AND IRREVOCABLE
GUARANTY OF PAYMENT AND PERFORMANCE
(RECOURSE CARVEOUTS)
Dated as of September 27, 1999
DEFINITIONS: In this Guaranty the following terms shall have the
following meanings:
1. BORROWER: CRIT-NC, LLC, a Virginia limited liability company
2. LENDER: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey Corporation
3. GUARANTOR: CORNERSTONE REALTY INCOME TRUST, INC., a Virginia
corporation
4. LOAN: That loan from Lender to Borrower in the principal
amount of Twenty-Two Million Nine Hundred Fifty
Thousand and No/100 Dollars ($22,950,000.00),
evidenced by the Note, secured by the Security
Instrument.
5. NOTE: That certain Promissory Note dated as of September
27, 1999 made by ▇▇▇▇▇▇▇▇ in favor of ▇▇▇▇▇▇ in the
principal amount of the Loan.
6. SECURITY
INSTRUMENT: Those certain two (2) Deeds of Trust and Security
Agreements dated as of September 27, 1999 executed by
▇▇▇▇▇▇▇▇ and securing the repayment of the Note, to
be recorded in the real estate records of Wake
County, North Carolina and Mecklenburg County, North
Carolina.
7. DEBT: The principal amount evidenced by the Note and
secured by the Security Instrument, together with all
renewals, extensions and modifications thereof, or so
much thereof as may be outstanding from time to time,
including any future advances made thereunder,
together with interest thereon at the rate of
interest which may or shall become due and payable
pursuant to the provisions of the Note, the Security
Instrument, or any other instrument evidencing or
securing the Loan, together with all renewals,
extensions and modifications of the foregoing, and
together with all expenses,
including but not limited to legal fees and costs,
incurred by the Lender in connection with the
collection of all or any portion thereof.
8. LOAN
DOCUMENTS: The Note, Security Instrument, this Guaranty, any
loan agreement of even date herewith between Lender
and Borrower and all documents collateral or
pertaining to the foregoing instruments, together
with all renewals, extensions, and modifications of
the foregoing.
9. OBLIGATIONS: All covenants, duties, promises, agreements,
conditions, undertakings and all other obligations
(other than payment of the Debt) which Borrower is to
perform, satisfy or cause to occur, or not to occur,
as the case may be, and which are set forth in the
Loan Documents, together with all reasonable
expenses, including, but not limited to legal fees
and costs, incurred by Lender in connection with the
enforcement of any of the foregoing.
10. PROPERTY: The real property and improvements covered by and
more particularly described in the Security
Instrument and securing the Note, being four
apartment projects located in Mecklenburg County,
North Carolina and Wake County, North Carolina
commonly known as Charleston Place, Stone Point, St.
Regis and Remington Place.
RECITALS:
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▇▇▇▇▇▇▇▇ has applied to the Lender for the Loan. The Lender is willing to make
the Loan to Borrower only if the Guarantor executes and delivers this Guaranty
and guarantees payment to the Lender of the Debt and the payment and performance
of all Paragraph 8 and Paragraph 9 recourse indebtedness of Borrower under the
Note.
CONSIDERATION:
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As an inducement to the Lender to make the Loan and because the
Guarantor will benefit from the Loan and the transactions relating thereto, the
Guarantor makes this Guaranty.
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COVENANTS:
1. NATURE AND SCOPE OF GUARANTY.
1.1 The Guarantor, jointly and severally (if executed by more than
one person), irrevocably, absolutely and unconditionally
guarantees to the Lender, its successors and assigns, the
payment and performance of all Paragraph 8 and Paragraph 9
recourse indebtedness of Borrower under the Note, including,
but not limited to, full personal recourse liability for
payment of all of the Debt and the performance of all of the
Obligations pursuant to the terms of Paragraph 9 of the Note.
This Guaranty is a primary and absolute obligation of the
Guarantor.
1.2 Guarantor will make all payments hereunder in lawful money of
the United States of America in immediately available funds
without set-off, counterclaim or defense.
1.3 Guarantor's liability hereunder shall remain unchanged
irrespective of any invalidity, illegality or unenforceability
of any other guaranty, pledge, assignment or other security
for the Debt or Obligations, and without regard to any claim,
counterclaim, set-off or defense which Borrower, any other
guarantor, surety or obligor might be privileged to assert
with respect to the validity, legality or enforceability of
the Debt or Obligations and irrespective of any present or
future law or order of any government or any agency thereof
purporting to reduce, amend or otherwise affect any obligation
of the Borrower or of any other guarantor, surety or other
obligor or to vary the terms of payment of the Debt or the
terms of any of the Obligations. If for any reason whatsoever
(including but not limited to ultra ▇▇▇▇▇, lack of authority,
illegality, force majeure, act of God or impossibility) the
Debt or the Obligations cannot be enforced against Borrower,
such unenforceability shall in no manner affect the liability
of Guarantor hereunder and Guarantor shall be liable hereunder
notwithstanding that Borrower may not be liable for such Debt
or such Obligations.
1.4 The obligations of the Guarantor hereunder are independent of
the obligations of the Borrower relative to the Debt and
Obligations, and a separate action or actions for payment,
damages or performance may be brought and prosecuted against
Guarantor, or any of them should there be more than one,
regardless of whether an action is or could be brought against
Borrower, any security for the Debt and/or any of the
Obligations or any other party obligated to pay the Debt
and/or pay or perform any of the Obligations. Guarantor will
not be privileged to assert, and hereby waives the right to
assert, in any action(s) by Lender against Guarantor any
defense, set-off or counterclaim which Borrower or any other
obligor might then be privileged to assert. Guarantor
acknowledges and agrees that, as between Guarantor and the
Lender, the Debt and Obligations guaranteed hereunder may be
declared to be due and payable for purposes of this Guaranty
notwithstanding any stay, injunction or other prohibition
arising from the filing of a voluntary or an involuntary
bankruptcy petition by or against Borrower, or
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otherwise, which may prevent or delay any such declaration as
against the Borrower. In addition, in the event that Borrower
does not or is unable so to pay the Debt or perform the
Obligations for any reason, including, without limitation,
liquidation, dissolution, receivership, conservatorship,
insolvency, bankruptcy, assignment for the benefit of
creditors, sale of all or substantially all assets,
reorganization, arrangement, composition, or readjustment of,
or other similar proceedings affecting the status,
composition, identity, existence, assets or obligations of
Borrower, or the disaffirmance or termination of any of the
Debt or Obligations in or as a result of any such proceeding,
Guarantor shall pay the Debt and perform the Obligations and
no such occurrence shall in any way affect Guarantor's
obligations hereunder.
1.5 If any claim is ever made upon Lender for repayment or
recovery of any amount received by Lender in payment or on
account of the Debt and/or any of the Obligations by virtue of
such amount having been a preference under applicable
bankruptcy laws or for any other reason and Lender repays all
or part of said amount pursuant to any judgment, decree or
order of any court or administrative body having jurisdiction
over Lender or any of its property or any settlement or
compromise of any such claim effected by Lender with any such
claimant (including but not limited to the Borrower or any
other guarantor), then any such judgment, decree, order,
settlement or compromise shall be binding upon the Guarantor,
and, notwithstanding any prior satisfaction or cancellation of
this Guaranty, of the Note or any other instrument evidencing
the Debt and any of the Obligations, this Guaranty shall
continue to be effective or shall be automatically reinstated,
as the case may be, and the Guarantor shall be and remain
liable to Lender hereunder for the amount so repaid or
recovered to the same extent as if such amount had never
originally been received by ▇▇▇▇▇▇. Such amount shall be paid
by Guarantor to Lender on demand.
1.6 This Guaranty shall automatically remain in effect for a
period of one hundred (100) days after the date on which all
of the Debt and Obligations are last fully paid and performed,
and, if no bankruptcy petition is filed against Borrower
within ninety (90) days after such date, then, in that event
this Guaranty shall be deemed to have been canceled as of the
aforesaid date on which all of the Debt and Obligations were
last fully paid and performed, subject to being automatically
reinstated for the reasons stated in Subsection 1.5 above. If,
however, a bankruptcy petition is filed by or against the
Borrower during said ninety (90) day period, this Guaranty
shall continue in effect unless and until a final,
non-appealable decision by a court of competent jurisdiction
has been rendered or an agreement has been entered or reached
pursuant to which Lender shall be entitled to retain all
monies paid by Borrower to Lender. If Lender is obligated to
return to the Borrower, to the estate of the Borrower or to a
bankruptcy trustee for the Borrower any monies previously paid
by the Borrower, then this Guaranty shall continue in effect
and Guarantor, as provided in Subsection 1.5 above, shall
continue to be liable to Lender for repayment of such monies.
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2. DISCHARGE OF GUARANTOR.
Guarantor shall only be discharged from liability hereunder
upon the payment in full of the Debt and the payment and complete performance of
all the Obligations, but subject, however, to the provisions of Subsections 1.1,
1.5 and 1.6 hereinabove.
3. ASSENT TO AGREEMENTS MADE BY ▇▇▇▇▇▇▇▇.
Guarantor assents to all terms and agreements heretofore or
hereafter made by Borrower with Lender insofar as same may affect the Loan, the
Debt or any of the Obligations.
4. CONSENT TO ▇▇▇▇▇▇'S ACTIONS REGARDING THE BORROWER, THE
GUARANTOR, AND THE COLLATERAL.
Guarantor consents that Lender may from time to time, before
or after any default by the Borrower, with or without further notice to or
assent from Guarantor:
4.1 Exchange with, release or surrender, either with or without
consideration, to the Borrower or to any Guarantor, pledgor or
grantor any collateral, or waive, release or subordinate any
security interest, in whole or in part, now or hereafter held
as security for the Debt and/or any of the Obligations;
4.2 Waive or delay the exercise of any of its rights or remedies
against any person or entity, including but not limited to the
Borrower and/or any guarantor, which waiver or delay shall not
preclude the Lender from further exercise of any of its
rights, powers or privileges expressly provided for herein or
otherwise available, it being understood that all such rights
and remedies are cumulative;
4.3 Release, either fully or partially, any person or entity,
including but not limited to the Borrower, guarantor,
endorser, surety or any judgment debtor;
4.4 Proceed against the Guarantor for payment of the Debt and for
the payment and performance of the Obligations, or any part of
either, without first proceeding against or joining the
Borrower, any other guarantor, surety, endorser of the Note,
or any property securing payment of the Note, the Security
Instrument, or any other Loan Documents;
4.5 Renew, extend or modify the terms of the Loan or any
instrument or agreement evidencing the Debt and/or any of the
Obligations;
4.6 Apply payments by the Borrower, the Guarantor, or any other
person or entity to the reduction of the Debt and/or
Obligations in such manner and in such amounts and at such
time or times and in such order and priority as Lender shall
determine;
4.7 Permit any sale, transfer or encumbrance of the Property or
any part thereof; and
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4.8 Generally deal with the Borrower or any of the security or
other person or party as the Lender shall determine.
The Guarantor hereby ratifies and confirms any such exchange,
release, surrender, subordination, waiver, delay, proceeding, renewal,
extension, modification or application, or other dealing, all of which actions
shall be binding upon Guarantor who hereby waives all defenses, counterclaims or
set-offs which Guarantor might otherwise have as a result of such actions, and
who hereby agrees to remain bound under this Guaranty.
5. WAIVER OF NOTICE.
Guarantor waives all notices whatsoever with respect to this
Guaranty or with respect to the Debt and/or any of the Obligations guaranteed
hereby, including, but not limited to, notice of:
5.1 The Lender's acceptance of this Guaranty or its intention to
act, or its action, in reliance hereon;
5.2 The making of the Loan by ▇▇▇▇▇▇ to Borrower and of the
creation and existence of the Debt and Obligations;
5.3 Presentment and demand for payment of the Debt or any portion
thereof and demand for the payment and/or performance of any
of the Obligations;
5.4 Protest and notice of dishonor or nonpayment with respect to
the Debt and/or Obligations or any portion of either;
5.5 Any default by Borrower or any pledgor, grantor of security,
or guarantor, including the Guarantor under any of the Loan
Documents;
5.6 Any suit or the taking of other action by ▇▇▇▇▇▇ against
▇▇▇▇▇▇▇▇ and any other notice to any other party liable for
the Debt and/or any of the Obligations;
5.7 Any other notices to which the Guarantor may otherwise be
entitled with respect to the Loan, the Debt and/or any of the
Obligations; and
5.8 Any demand for payment under this Guaranty.
Notwithstanding the foregoing, or anything else herein to the contrary,
to the extent the Loan Documents permit the Borrower to cure a default after
notice, Guarantor shall have no obligation hereunder until Borrower fails to
cure such default after notice required under the Loan Documents.
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6. ADDITIONAL WAIVERS.
Guarantor waives the following:
6.1 Failure by ▇▇▇▇▇▇ to obtain and perfect any security interest
or lien on any property to secure the Debt and/or Obligations
or any portion thereof.
6.2 All defenses, counterclaims and set-offs which Guarantor may
have at any time to any claim of Lender against ▇▇▇▇▇▇▇▇.
6.3 All diligence by ▇▇▇▇▇▇ in the collection of, protection of or
realization upon the Debt and/or Obligations or any part
thereof, any obligations hereunder or any security for any of
the foregoing or in enforcing any remedy available to it under
any of the Loan Documents or otherwise available at law or in
equity.
6.4 Any claim, right or remedy which Guarantor may now have or
hereafter acquire against the Borrower that arises hereunder
and/or from the performance by any Guarantor hereunder
including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, indemnification, or
participation in any claim, right or remedy of Lender against
the Borrower or any security which Lender now has or hereafter
acquires, whether or not such claim, right or remedy arises in
equity, under contract, by statute, under common law or
otherwise.
6.5 The right to require the Lender to proceed against the
Borrower or any other person liable on the indebtedness, to
proceed against or exhaust any security held from the Borrower
or any other person, or to pursue any other remedy in ▇▇▇▇▇▇'s
power whatsoever and Guarantor waives the right to have the
property of the Borrower first applied to the discharge of the
indebtedness. Lender may, at its election, exercise any right
or remedy it may have against the Borrower or any security
held by ▇▇▇▇▇▇, including, without limitation, the right to
foreclose upon any such security by one or more judicial or
nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, without affecting or
impairing in any way the liability of Guarantor hereunder,
except to the extent the indebtedness has been paid, and
Guarantor waives any defense arising out of the absence,
impairment or loss of any right of reimbursement, contribution
or subrogation or any other right or remedy of Guarantor
against the Borrower or any such security, whether resulting
from such election by ▇▇▇▇▇▇ or otherwise.
6.6 Any defense arising by reason of any disability or other
defense of the Borrower or by reason of the cessation from any
cause whatsoever (including without limitation, any
intervention or omission by ▇▇▇▇▇▇) of the liability, either
in whole or in part, of the Borrower to Lender for the
indebtedness. Guarantor understands that if all or any part of
the liability of the Borrower to Lender for the indebtedness
is secured by real property Guarantor shall be liable for the
full amount of its liability hereunder notwithstanding
foreclosure on such real
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property by trustee sale or any other reason impairing
Guarantor's right to proceed against the Borrower.
6.7 To the fullest extent permitted by law, all rights and
benefits under any applicable law of the State of North
Carolina purporting to reduce a guarantor's obligations in
proportion to the obligation of the principal; provided that
Guarantor's obligations shall not exceed the obligations set
forth in Section 1.1 above.
6.8 Any defense arising by reason of any claim relating to (i) the
incapacity, death, disability, dissolution or termination of
Guarantor, Borrower, Lender or any other person or entity;
(ii) the failure by Lender to file or enforce a claim against
the estate (either in administration, bankruptcy or other
proceeding) of Borrower or any other person or entity; (iii)
recovery from Borrower or any other person or entity becomes
barred by any statute of limitations or is otherwise
prevented; (iv) any transfer or transfers of any of the
property covered by the Security Instrument or any other
instrument securing the payment of the Note; (v) any
modifications, extensions, amendments, consents, releases or
waivers with respect to the Note, the Deed of Trust, any other
instrument now or hereafter securing the payment of the Note,
or this Guaranty; or (vi) Guarantor is or becomes liable for
any indebtedness owing by Borrower to Lender other than under
this Guaranty; Guarantor hereby covenanting and agreeing with
Lender that the obligations and liabilities of Guarantor shall
not be modified, changed, released, limited or impaired in any
manner whatsoever on account of any or all of the foregoing.
6.9 To the fullest extent permitted by law, (i) any defense
arising as a result of any election by ▇▇▇▇▇▇, in any
proceeding instituted under the Bankruptcy Code, under Section
1111(b)(2) of the Bankruptcy Code, (ii) any defense based on
any borrowing or grant of a security interest under Section
364 of the Bankruptcy Code, and (iii) any defense arising as a
result of any election made by Lender under Section 9-501 of
the Uniform Commercial Code. For purposes hereof, the term
"Bankruptcy Code" shall refer to the United States Bankruptcy
Code, 11 U.S.C. Section 101 et seq.
In addition, Guarantor expressly acknowledges that Guarantor will be and remain
fully liable for the indebtedness hereunder even if, as a result of any exercise
of the power of sale under the Security Instrument and/or any other election of
remedies by ▇▇▇▇▇▇ under the Security Instrument and/or any of the other Loan
Documents or for any other reason, any rights of reimbursement, contribution or
subrogation on the part of Guarantor against the Borrower, in respect of the
Property or from or against any other Guarantor has been destroyed or impaired.
Guarantor further expressly acknowledges that Guarantor could, in the absence of
the waivers and agreements set forth herein, have one or more defenses to or
otherwise be exonerated from the obligations and liabilities arising under
Guaranty as a result of any such election of remedies by ▇▇▇▇▇▇, including,
without limitation, exercise of the power of sale under the Security Instrument,
and Guarantor hereby knowingly, expressly and irrevocably waives each and every
such defense to his liability hereunder, and expressly acknowledges the reliance
hereon of ▇▇▇▇▇▇.
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7. SUBORDINATION.
7.1 All rights and claims of Guarantor against Borrower or any of
Borrower's property now or hereafter existing shall be
subordinate and subject in right of payment to the prior
payment in full of the Debt to Lender and/or to the payment
and prior performance, in full, of all the Obligations to
Lender.
7.2 Without ▇▇▇▇▇▇'s prior written consent, Guarantor will not ask
for, demand, sue for, take or receive from Borrower, by
set-off or otherwise, any sums now or hereafter owed by
Borrower to Guarantor, nor any security therefor. Guarantor
hereby transfers, conveys and assigns to the Lender, as
collateral security for any and all of the Debt and
Obligations, all of the said rights and claims of the
Guarantor against the Borrower (and any security therefor),
with full right on the part of the Lender, in its own name or
in the name of the Guarantor, to collect and enforce said
claims, by suit, proof of debt in bankruptcy, or other claims,
by liquidation proceedings or otherwise. Should any payment,
security or proceeds of security be received by the Guarantor
for or on account of any of said claims or rights prior to the
full payment of the Debt and full payment and performance of
any of the Obligations subject to the provisions of
Subsections 1.5 and 1.6 hereinabove, the Guarantor will
forthwith deliver same to the Lender in precisely the form
received (except for the Guarantor's endorsement where
necessary) for application on account of the Debt and/or
Obligations in accordance with Subsection 4.6 hereinabove,
and, until so delivered, the same shall be held in trust by
the Guarantor as property of the Lender. In the event of the
failure of the Guarantor to endorse any instrument for the
payment of money so received by the Guarantor, payable to the
Guarantor's order, the Lender or any officer or employee of
the Lender is hereby constituted and appointed attorney in
fact for the Guarantor, with full power to make any such
endorsement and with full power of substitution, which agency
shall be deemed to be coupled with an interest and, therefore,
is irrevocable.
7.3 The Guarantor hereby further covenants and agrees that any
lease or leases by and between the Borrower, as lessor, and
the Guarantor, as lessee, with respect to the property (real
and personal) covered by the Security Instrument and/or any
security agreement from Borrower to Lender shall, at all
times, be junior, inferior and subordinate to the lien of the
Security Instrument and/or security interest created by the
security agreement as the same now exist or may hereafter be
amended or modified, it being the intent and agreement of the
Guarantor that any and all leases may be terminated by the
Lender through any foreclosure or similar proceeding involving
the Security Instrument and/or security agreement or property
encumbered by either.
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8. SUBROGATION RIGHTS.
Guarantor will not assert any right to which it may be or may
become entitled, whether by subrogation, contribution or otherwise, against the
Borrower or any other guarantor, or against any of their respective properties,
by reason of the performance by the Guarantor of its obligations under this
Guaranty, except after payment in full of the Debt and the full payment and
performance of the Obligations subject to the provisions of Subsections 1.5 and
1.6 hereinabove. If any amount shall be paid to or received by Guarantor on
account of any such right of subrogation or contribution before the Debt and
Obligations have been fully paid and performed, such amount shall be held by
Guarantor for the benefit of Lender and shall be promptly paid to Lender
(without further demand from Lender being necessary). Lender may credit and
apply any such sums to such of the Debt and/or Obligations as Lender may desire
in accordance with Subsection 4.6 hereinabove.
9. PERIODIC FINANCIAL STATEMENTS.
Within sixty (60) days after the end of Guarantor's fiscal
year, Guarantor will furnish to Lender, Guarantor's financial condition and
consolidated balance sheet as of the end of said preceding year and Guarantor's
statement of profit and loss for said preceding year and such additional
financial data as Lender may reasonably request, all such balance sheets, profit
and loss statements, and additional data to be prepared in accordance with
generally accepted accounting principles consistently applied and be certified
as being so prepared by Guarantor or, at ▇▇▇▇▇▇'s election, by Guarantor's
certified public accountant. Guarantor will provide to Lender such other
financial information and statements concerning Guarantor's financial status as
Lender may request from time to time, all of which shall be in form and
substance acceptable to Lender. Guarantor shall be in default hereunder if there
is any falsity in any material respect or any material omission in any
representation or statement made by Guarantor to Lender or in any information
furnished Lender, by or on behalf of Borrower or Guarantor, in connection with
the Debt and/or any of the Obligations or if there is a material adverse change
in the financial condition of Guarantor, as reasonably determined by Lender.
10. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants to Lender that:
10.1 The Guarantor has received good, valuable and sufficient
consideration for Guarantor's execution and delivery of this
Guaranty.
10.2 If any Guarantor is a corporation, limited partnership,
trustee or other entity that is not a natural person, it is
(i) a duly organized and valid existing entity under the laws
of the state or country of its incorporation; (ii) that it is
qualified to do business in each state in which qualification
is necessary; (iii) that it has the power to execute this
Guaranty; (iv) that the execution of this Guaranty has been
duly authorized and that it is a binding and valid obligation
of the entity permitted by its articles of incorporation,
bylaws, partnership agreement, trust agreement or like
instrument that authorizes or limits its actions; (v) that no
governmental
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consent or approval is required in connection with the
execution, delivery or performance of this Guaranty.
10.3 If any Guarantor is a partnership, the obligations of said
Guarantor shall remain in force notwithstanding any changes in
the individuals composing the partnership and the term
"Guarantor" shall include any altered or successive
partnerships, but the predecessor partnerships and their
partners shall not thereby be released from any obligations or
liability hereunder.
10.4 This Guaranty constitutes the valid and binding obligation of
the Guarantor.
10.5 All balance sheets, statements of profit and loss, and other
financial data that have been given to Lender with respect to
Guarantor (i) are complete and correct in all material
respects; (ii) accurately present the financial condition of
Guarantor as of the stated dates, and the results of its or
their operations, for the periods for which the same have been
furnished; and (iii) have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods covered thereby.
10.6 All balance sheets disclose all known liabilities, direct and
contingent, as of their respective dates.
10.7 There has been no change in the condition of the Guarantor,
financial or otherwise, since the date of the most recent
financial statements given to the Lender with respect to
Guarantor other than changes in the ordinary course of
business, none of which changes has been materially adverse.
This representation shall apply to all financial statements
and financial data hereafter given to Lender by Guarantor as
of the time the same are given to Lender.
10.8 There are no actions, suits or proceedings pending or
threatened against or affecting Guarantor that will have a
material and adverse effect on Guarantor and that will not be
removed in the ordinary course of business.
10.9 There are no judgments or tax liens against Guarantor or any
property of Guarantor that will have a material and adverse
effect on Guarantor and that will not be removed in the
ordinary course of business.
10.10 Guarantor's execution, delivery or performance of this
Guaranty will not violate any provision of law, governmental
rule or regulation, order, writ, judgment, injunction, decree,
determination or award of any court, arbitrator, governmental
department, commission, board, bureau, or agency, or any
provision of any indenture, agreement or other instrument to
which Guarantor is a party or by which Guarantor or any of
Guarantor's properties or assets is bound, will not conflict
with, result in breach of or constitute a default under any
such indenture, agreement or other instrument or result in the
creation or imposition of any lien, charge or encumbrance of
any type on any properties or assets of Guarantor.
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11. CHANGE IN OWNERSHIP OF GUARANTOR.
Guarantor will not, without the prior written consent of
Lender, do or permit another to do any of the following:
11.1 If Guarantor or any constituent of Guarantor is a corporation,
(i) transfer, assign, sell or encumber any stock in Guarantor
or in any such constituent held by any stockholder of
Guarantor or of any such constituent as of the date hereof
(whether such purported transfer shall be by direct transfer
by such stockholder, by operation of law, the result of
encumbrance of such stock by such stockholder, the result of
action by any party against such stockholder, or otherwise) or
(ii) issue any additional stock of Guarantor or any such
constituent after the date hereof;
11.2 If Guarantor or any constituent of Guarantor is a partnership,
(i) transfer, assign, sell or encumber any partnership
interest in Guarantor or in any such constituent of Guarantor
held by any partner (general or limited) of Guarantor or of
any such constituent as of the date hereof (whether such
purported transfer shall be by direct transfer by such
partner, by operation of law, the result of encumbrance of
such partnership interest by such partner, the result of any
action by any party against such partner, or otherwise), or
(ii) admit to Guarantor or any such constituent any partner,
whether general or limited).
11.3 If Guarantor or any constituent of Guarantor is the trustee
pursuant to a trust, (i) transfer, assign, sell or encumber or
allow any transfer, assignment, sale or encumbrance of any
beneficial interest in any such trust as of the date hereof
(whether such purported transfer shall be by direct transfer,
by operation of law, the result of encumbrance of such
beneficial interest, the result of action by a party against
any beneficiary, or otherwise), or (ii) admit any new
beneficiary of the trust.
11.4 Effect any change in ownership of Borrower in violation of the
Security Instrument or any transfer or encumbrance of the
Property, as defined in the Security Instrument, or any
portion thereof, in violation of the Security Instrument.
12. DEFAULT, SECURITY INTEREST/RIGHT OF SET-OFF.
12.1 In the event of any default by Guarantor hereunder or if
Guarantor shall die, Lender may, at its option, accelerate all
sums due and payable under the Loan Documents and declare the
same immediately due and payable.
12.2 At any time when any of the Debt shall then be due and payable
and/or any of the Obligations payable or performable by
Guarantor under this Guaranty, Lender, without prior demand or
notice of any kind to Guarantor, may, from time to time,
appropriate, set-off and apply toward payment of the Debt
and/or payment or
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performance of any of the Obligations any funds or property in
which it then has a security interest under this Section and
may transfer into its own name or that of its nominee any such
funds or property which are then in its possession, custody or
control. Lender will promptly notify Guarantor after any such
set-off and application, but failure to give such notice will
not affect the validity of any such set-off and application.
13. ASSIGNMENT BY LENDER.
Lender may, without notice of any kind to Guarantor, sell,
assign, transfer, participate, syndicate or pool (as collateral or otherwise)
the Debt and/or any of the Obligations, and any security therefor, and in such
event, each and every immediate and successive assignee, transferee or holder of
the Debt and/or any of the Obligations, or any interest therein, shall have the
right to enforce this Guaranty, by suit or otherwise, for the benefit of such
assignee, transferee or holder, as fully as if such assignee, transferee or
holder were herein by name specifically given such rights, powers and benefits,
but Lender shall have, to the extent permitted by Laws (as defined in the
Security Instrument) an unimpaired right, prior and superior to that of any such
assignee, transferee or holder, to enforce this Guaranty for the benefit of
Lender as to such part of the Debt and/or any of the Obligations as it has not
sold, assigned or transferred.
14. COSTS OF ENFORCEMENT.
Guarantor shall pay Lender, on demand, all costs and expenses
paid or incurred by ▇▇▇▇▇▇ in enforcing the obligations of Guarantor hereunder,
including, by way of illustration and not by way of limitation, all court costs
and reasonable attorneys' fees regardless of whether suit is filed and also
including such costs and attorneys' fees at trial and on appeal. If ▇▇▇▇▇▇
obtains a judgment against Guarantor for the Debt and/or any of the Obligations,
Guarantor hereby agrees that the amount due under such judgment shall bear
interest at the Default Rate, as defined in the Note, which definition is
incorporated herein by this reference, from date of judgment until such judgment
is paid in full.
15. CUMULATIVE REMEDIES.
▇▇▇▇▇▇'s rights and remedies hereunder are cumulative with any
and all other rights and remedies which Lender has or may hereafter have under
the other Loan Documents or which are otherwise available at law or in equity.
No delay on the part of Lender in exercising any of its rights or remedies shall
constitute a waiver thereof.
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16. ENTIRE AGREEMENT BETWEEN LENDER AND GUARANTOR.
Guarantor hereby agrees that this instrument contains the
entire agreement between the parties and there is and can be no other oral or
written agreement or understanding whereby the provisions of this instrument
have been or can be affected, varied, waived or modified in any manner unless
the same be set forth in writing and signed by a duly authorized officer of the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
17. NOTICES.
Any notice from Lender to Guarantor under this Guaranty shall
be given by sending it by a recognized overnight courier which provides receipts
such as Federal Express, delivering it, or by mailing it, postage prepaid, by
United States Certified Mail, return receipt requested, addressed to Guarantor's
address as set forth below or such other address as Guarantor hereafter
designates by advance written notice to Lender.
If to Guarantor:
Cornerstone Realty Income Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Battle & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-4030
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Any notice to Lender under this Guaranty shall be given by
sending it by a recognized overnight courier which provides receipts such as
Federal Express, delivering it or by mailing it, postage prepaid, by United
States Certified Mail, return receipt requested addressed to ▇▇▇▇▇▇'s address
set forth herein or such other address as Lender hereafter designates by advance
written notice to Guarantor.
If to the Lender:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President-Mortgage Loan Servicing;
Reference Loan No. 6 103 651
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With a copy to:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Counsel; Reference Loan
No. 6 103 651
Any notice under this Guaranty shall be deemed to have been given to
Guarantor or Lender when delivered, in the case of personal delivery, and the
earlier of actual receipt or three (3) days after mailing when mailed in
compliance with the requirements of this Section.
18. JURISDICTION.
In the event Lender seeks to enforce this Guaranty by legal
action, the Guarantor hereby waives the right to be sued in the county of the
Guarantor's residence or principal place of business and hereby consents to
being sued in Mecklenburg or Wake County, North Carolina. ▇▇▇▇▇▇▇▇▇ further
agrees that any suit hereunder by ▇▇▇▇▇▇ may be brought in either the United
States District Court for the Eastern or Western District of North Carolina or
in the applicable state court for Mecklenburg or Wake County, North Carolina.
Guarantor waives any right to trial by jury in any civil action arising out of
or based upon this Guaranty. Should Guarantor, or any resident agent appointed
hereunder, be or become a non-resident of the State of North Carolina, Guarantor
shall, by written notice to Lender setting forth the name and address of the
appointed person, appoint a resident agent residing in North Carolina to
receive, for and on Guarantor's behalf, service of process in the State of North
Carolina, which service shall be deemed effective when delivered whether or not
such resident agent gives notice thereof to the Guarantor, provided that ▇▇▇▇▇▇
has simultaneously sent said service of process to Guarantor by United States
Certified Mail return receipt requested in the manner of notices under this
Guaranty. The Guarantor hereby appoints ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, whose address is c/o
McGuire ▇▇▇▇▇ Battle & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, as its resident agent to receive, for and on its behalf, service of
process in the State of North Carolina.
19. CONFLICT OF LAW.
This Guaranty shall be governed by and construed and
enforced in accordance with the laws of the State of North Carolina.
20. GENDER AND NUMBER.
In this Guaranty, wherever the context so requires, the
neuter gender includes the masculine and/or feminine gender, the singular
numbers include the plural, and the plural numbers include the singular.
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21. SUCCESSORS AND ASSIGNS.
This Guaranty shall inure to the benefit of the Lender, its
successors and assigns, and shall be binding upon the Guarantor and its
respective successors and assigns.
22. SAVINGS CLAUSE.
Whenever possible, each provision or portion of this
Guaranty shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision or portion of this Guaranty is
declared or found by a court of competent jurisdiction to be unenforceable or
null and void, such provision or portion thereof shall be deemed stricken and
severed from this Guaranty, and the remaining provisions and portions thereof
shall continue in full force and effect. To the extent permitted by applicable
law Guarantor hereby waives any provision of law that renders any provision
hereof unenforceable. The provisions of this Section shall prevail over and
control over every other provision of this Guaranty.
23. WAIVER OF TRIAL BY JURY.
GUARANTOR AND LENDER (AS ACKNOWLEDGED BY ITS ACCEPTANCE OF THIS
GUARANTY) ▇▇▇▇▇▇ ▇▇▇▇▇, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE
LOAN, THIS GUARANTY, THE LOAN DOCUMENTS, OR ANY ACTS OR OMISSIONS OF LENDER OR
GUARANTOR IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, the Guarantor, intending to be jointly and
severally legally bound hereby (if executed by more than one person), has duly
executed and delivered this Guaranty under seal as of the day and year first set
forth above.
GUARANTOR:
CORNERSTONE REALTY INCOME TRUST,
INC., a Virginia corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Title: Chief Financial Officer
----------------------------
(CORPORATE SEAL)
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