1
This Instrument was prepared by
and after recording return to:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, Ney, Zatcoff, & Waserman
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
STATE OF GEORGIA
COUNTY OF ▇▇▇▇▇▇
DEED TO SECURE DEBT, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT ("Security Deed" or "Deed to Secure Debt") made and entered into this
17th day of July, 1997, by and between ▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P., a
Georgia limited partnership (hereinafter referred to as "Grantor"), and THE
CANADA LIFE ASSURANCE COMPANY, a corporation organized and existing under the
laws of Canada, whose mailing address is ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, as secured party (hereinafter referred to as
"Grantee");
W I T N E S S E T H:
FOR AND IN CONSIDERATION of the sum of Ten and No/100 Dollars ($10.00)
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to secure the indebtedness and other
obligations of Grantor hereinafter set forth, Grantor does hereby grant,
bargain, sell, warrant, convey, assign, transfer, release, pledge and set over
unto Grantee and the successors, successors-in-title and assigns of Grantee all
of the following described land and interests in land, estates, easements,
rights, improvements, personal property, fixtures, equipment, furniture,
furnishings, appliances and appurtenances (hereinafter collectively referred to
as the "Premises"):
(a) ALL THOSE CERTAIN tracts, pieces or parcels of land
located in ▇▇▇▇▇▇▇ County, Georgia and more particularly described in Exhibit
"A" attached hereto and by this reference incorporated herein and made a part
hereof (hereinafter referred to as the "Land");
(b) TOGETHER WITH all buildings, structures and improvements
of every nature whatsoever now or hereafter situated on the Land, and all gas
and electric fixtures, radiators,
2
heaters, engines and machinery, boilers, ranges, elevators and motors, plumbing
and heating fixtures, carpeting and other floor coverings, fire extinguishers
and any other safety equipment required by governmental regulation or law,
washers, dryers, water heaters, mirrors, mantels, air conditioning apparatus,
refrigerating plants, refrigerators, cooking apparatus and appurtenances, window
screens, awnings and storm sashes, which are or shall be attached to said
buildings, structures or improvements and all other furnishings, furniture,
fixtures, machinery, equipment, appliances, vehicles (excluding Grantor's
personal automobiles, if any), building supplies and materials, books and
records, chattels, inventory, accounts, farm products, consumer goods, general
intangibles and personal property of every kind and nature whatsoever now or
hereafter owned by Grantor and located in, on or about, or used or intended to
be used with or in connection with the use, operation or enjoyment of the
Premises, including all extensions, additions, improvements, betterments,
after-acquired property, renewals, replacements and substitutions, or proceeds
from a permitted sale of any of the foregoing, and all the right, title and
interest of Grantor in any such furnishings, furniture, fixtures, machinery,
equipment, appliances, vehicles and personal property subject to or covered by
any prior security agreement, conditional sales contract, chattel mortgage or
similar lien or claim, together with the benefit of any deposits or payments now
or hereafter made by Grantor or on behalf of Grantor, all tradenames,
trademarks, servicemarks, logos and goodwill related thereto which in any way
now or hereafter belong, excluding, however, the service-▇▇▇▇ "Creating
Communities for Superior Lifestyles", relate or appertain to the Premises or any
part thereof or are now or hereafter acquired by Grantor; and all inventory,
accounts, chattel paper, documents, equipment, fixtures, farm products, consumer
goods and general intangibles constituting proceeds acquired with cash proceeds
of any of the property described hereinabove, all of which are hereby declared
and shall be deemed to be fixtures and accessions to the Land and a part of the
Premises as between the parties hereto and all persons claiming by, through or
under them, and which shall be deemed to be a portion of the security for the
indebtedness herein described and to be secured by this Deed to Secure Debt. The
location of the above-described collateral is also the location of the Land;
(c) TOGETHER WITH all easements, rights-of-way, strips and
gores of land, vaults, streets, ways, alleys, passages, sewer rights, waters,
water courses, water rights and powers, minerals, flowers, shrubs, crops, trees,
timber and other emblements now or hereafter located on the Land or under or
above the same or any part or parcel thereof, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances,
reversion and reversions, remainder and remainders, whatsoever, in any way
belonging, relating or appertaining to the Premises or any part thereof, or
which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Grantor;
(d) TOGETHER WITH all income, rents, issues, profits, and
revenues of the Premises (collectively, the "Rents") from time to time accruing
(including without limitation all payments under leases or tenancies, tenant
security deposits whether held by Grantor or in a trust
2
3
account, and escrow funds), and all the estate, right, title, interest,
property, possession, claim and demand whatsoever at law, as well as in equity,
of Grantor of, in and to the same; reserving only a revocable license to Grantor
to collect the same so long as no "Default" (as such term is hereinafter
defined) shall exist hereunder. Although this assignment constitutes a present
and current assignment of all the Rents, so long as Grantor is not in Default
hereunder, Grantee shall not demand that such Rents be paid directly to Grantee,
and Grantor shall have a revocable license to collect, but no more than one (1)
month prior to accrual, all such Rents; provided that such revocable license
shall ipso facto terminate without further action by Grantee and without notice
to Grantor upon the occurrence of a Default; provided further, however, if
Grantee in its sole and absolute discretion elects to accept a cure of any
Default, the foregoing license shall be reinstated; provided, however, nothing
herein shall be deemed to require Grantee to accept a cure of any Default; and
(e) TOGETHER WITH all unearned premiums, accrued, accruing or
to accrue under insurance policies now or hereafter obtained, or caused to be
obtained, by Grantor and Grantor's interest in and to all proceeds of the
conversion, voluntary or involuntary, of the Premises or any part thereof into
cash or liquidated claims, including, without limitation, proceeds of casualty
insurance, title insurance or any other insurance maintained on the Premises or
any part of either thereof, and all awards and/or other compensation heretofore
and hereafter made to the present and all subsequent owners of the Premises or
any part of either thereof by any governmental or other lawful authorities for
the taking by eminent domain, condemnation or otherwise, of all or any part of
the Premises or any easement or other right therein, including awards for any
change of grade of streets.
TO HAVE AND TO HOLD the Premises and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Grantee and the
successors, successors-in-title and assigns of Grantee, IN FEE SIMPLE forever;
THIS INSTRUMENT IS A DEED passing legal title pursuant to the laws of
the State of Georgia governing deeds to secure debt, and is also a security
agreement granting a present and continuing security interest and security title
in the portion of the Premises constituting personal property or fixtures,
pursuant to the Uniform Commercial Code of the State of Georgia, and it is not a
mortgage. This deed to secure debt and security agreement is made and intended
to secure payment and performance of: (i) an indebtedness of Grantor to Grantee
evidenced by that certain Real Estate Note of even date herewith, made by
Grantor and payable to the order of Grantee, in the stated principal amount of
Four Million and No/100 Dollars ($4,000,000.00) bearing interest and default
interest and payable as therein provided in installments, the final installment
of which is due and payable on May 1, 2001, if not sooner paid (hereinafter
called the "Note") (the Note, this Deed to Secure Debt and any and all other
documents, agreements and/or instruments, evidencing, securing or in any way
related to the Indebtedness (as hereinafter defined) are hereinafter
3
4
collectively referred to as the "Loan Documents"); (ii) any and all renewals,
extension or extensions, modification or modifications of the Note, and
substitution or substitutions for the Note, either in whole or in part; (iii)
all advances, if any, made by Grantee pursuant to the terms of this Deed to
Secure Debt; (iv) all expenses incident to the collection of the indebtedness
secured by this Deed to Secure Debt; and (v) all duties and obligations of
Grantor under this Deed to Secure Debt. The obligations and indebtedness which
this deed to secure debt and security agreement is given to secure are
hereinafter sometimes collectively called the "Indebtedness".
SHOULD THE INDEBTEDNESS BE PAID according to the tenor and effect
thereof when the same shall become due and payable, and should Grantor perform
all covenants herein contained in a timely manner, then Grantee, at the request
of Grantor shall cancel and satisfy this Security Deed of record.
Grantor hereby further covenants and agrees with Grantee as follows:
ARTICLE 1
COVENANTS AND AGREEMENTS
Section 1.01 Payment of Indebtedness. Grantor shall pay the
Note according to the tenor thereof all in the coin and currency of the United
States of America and the remainder of the Indebtedness promptly as the same
shall become due.
Section 1.02 Warranty of Title to the Premises. Grantor
covenants that to Grantor's actual knowledge Grantor is lawfully seized and
possessed of the Premises as aforesaid, and has good right to convey the same,
that the same are unencumbered except for those matters expressly set forth in
Exhibit "B" attached hereto and by this reference incorporated herein and made a
part hereof (hereinafter referred to as the "Permitted Encumbrances"), and that
Grantor does warrant and will forever defend the title thereto against the
claims of all persons whomsoever, except as to the Permitted Encumbrances.
Section 1.03 Taxes, Liens and Other Charges.
(a) Subject to Section 1.05, Grantor shall pay, on or before
the due date thereof, all taxes, assessments, levies, license fees, permit fees
and all other charges (in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen) of every character whatsoever (including
all penalties and interest thereon) now or hereafter levied, assessed, confirmed
or imposed on, or in respect of, or which may be a lien upon, the Premises, or
any part thereof, or any estate, right or interest therein, or upon the Rents,
and shall submit to Grantee such evidence of the due and punctual payment of all
such taxes, assessments and other fees and charges as Grantee may
4
5
require. Notwithstanding the foregoing, Grantor shall have the right to contest
in good faith any of the foregoing taxes, assessments or other charges provided
that (i) Grantor notifies Grantee of Grantor's intention to contest any of such
items, (ii) Grantee's security interest in the Premises is not and will not be
adversely affected by such action as determined by Grantee in its reasonable
discretion, (iii) at the option of Grantee, Grantor shall deposit with Grantee
the amount of any of the foregoing items to be contested by Grantor, which
amount shall be held by Grantee for the payment of such items, and (iv) any such
action undertaken by Grantor shall not result in any additional lien or other
encumbrance being filed against the Premises.
(b) Grantor shall pay, on or before the due date thereof, all
taxes, assessments, charges, expenses, costs and fees which may now or hereafter
be levied upon, or assessed or charged against, or incurred in connection with,
the Note, the other Indebtedness, this Deed to Secure Debt or any other
instrument now or hereafter evidencing, securing or otherwise relating to the
Indebtedness, other than income, franchise and doing business taxes, and shall
submit to Grantee such evidence of the due and punctual payment of all such
taxes, assessments, charges, expenses, costs and fees as Grantee may require.
(c) Subject to Section 1.05, Grantor shall pay, on or before
the due date thereof, all premiums on policies of insurance covering, affecting
or relating to the Premises, as required pursuant to Section 1.04. Grantor shall
submit to Grantee such evidence of the due and punctual payment of all such
premiums, as Grantee may reasonably require.
(d) Grantor shall pay or cause to be paid any and all taxes,
charges, filing, registration and recording fees, excises and levies imposed
upon Grantee by reason of its ownership of the Note, this Deed to Secure Debt or
the other Loan Documents, any security instrument with respect to the equipment
of Grantor or with respect to its interest therein and any instrument of further
assurance, other than income, franchise and doing business taxes, and shall pay
or cause to be paid all stamp taxes, intangible taxes and other taxes required
to be paid on the Note, the Deed to Secure Debt or the other Loan Documents. In
the event Grantor fails to make such payments or fails to cause such payments to
be made within five (5) days after written notice thereof from Grantee, then
Grantee shall have the right, but no the obligation, to pay the amounts due, and
Grantor shall, on demand, reimburse Grantee for said amounts, together with
interest thereon at the Default rate from the date said amounts are so advanced
until the same are paid to Grantee. In the event of the passage of any state,
federal, municipal or other governmental law, order, rule or regulation,
subsequent to the date hereof, in any manner changing or modifying the laws now
in force governing the taxation of deeds to secure debt or debts secured thereby
or the manner of collecting such taxes so as to adversely affect Grantee,
Grantor will pay any such tax on or before the due date thereof. If Grantor
fails to make such prompt payment or if, in the opinion of Grantee, any such
state, federal, municipal, or other governmental law, order, rule or regulation
prohibits Grantor from making such payment or would penalize Grantee if Grantor
makes such payment or
5
6
if, in the opinion of Grantee, the making of such payment might result in the
imposition of interest beyond the maximum amount permitted by applicable law,
then the entire balance of the Indebtedness and all interest accrued thereon
shall, at the option of Grantee, become due and payable 60 days after notice.
(e) Grantor will not suffer any mechanic's, materialman's,
laborer's, statutory or other lien to be filed of record or to remain
outstanding against the Premises; provided that Grantor shall have thirty (30)
days after Grantor has actual knowledge of any such lien being filed to bond off
or otherwise discharge any such lien.
Section 1.04 Insurance.
(a) Grantor shall procure for, deliver to and maintain for the
benefit of Grantee during the term of this Deed to Secure Debt, original
insurance policies having a term of not less than one (1) year with the premium
prepaid issued by insurance companies having a Best Rating of A-7 or better, in
such amounts, in such form and substance, and with such expiration dates as are
acceptable to Grantee, and containing non-contributory standard mortgagee
clauses, their equivalent and a satisfactory mortgagee loss payable endorsement
in favor of Grantee, such policies to provide that the insurer shall give
Grantee at least thirty (30) days prior written notice of cancellation or
termination, and to provide that no act or thing done by Grantor, as "Insured"
shall invalidate or diminish the insurance provided to Grantee, and providing
the following types of insurance covering the Premises and the interest and
liabilities incident to the ownership, possession and operation thereof;
(1) "All Risk" hazard insurance insuring, without
limitation, against loss or damage by fire, lightning, windstorm, hail,
explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles,
smoke, flood (if applicable), collapse, vandalism and malicious mischief and
against such other hazards as, under good insurance practices, from time to time
are insured against for properties of similar character and location, the amount
of which insurance shall be not less than one hundred percent (100%) of the full
replacement cost of the insurable portions of the Premises without deduction for
depreciation and including a replacement cost endorsement, an agreed amount
endorsement and an inflation guard endorsement;
(2) Comprehensive general public liability
insurance against claims for bodily injury, death or property damage occurring
in, on or about the Premises, covering liabilities incident to the construction,
ownership, possession and operation of the Premises, and naming Grantee as an
additional insured thereunder, in the minimum amount of $1,000,000.00;
(3) Rental insurance against loss of rental income
(including, but not limited to apartment rent, garage and storage rent) arising
out of any hazard against which the
6
7
Premises are required to be insured under Subsection 1.04(a)(1) above for one
(1) year, in an amount not less than $834,000.00; provided, however, if and when
the rental income rises above the sum of $834,000.00, Grantor shall increase
promptly the amount of rent loss insurance pari passu with the rental income
increase;
(4) Flood insurance in the same minimum amount as
required for hazard insurance if any portions of the Premises is located in a
flood hazard area; and
(5) Such other insurance on the Premises or any
replacements or substitutions therefor and in such amounts as may from time to
time be reasonably required by Grantee against other insurable casualties which
at the time are commonly insured against in the case of properties of similar
character and location, due regard being given to the height and type of the
improvements, their construction, location, use and occupancy, or any
replacements or substitutions therefor including, without limitation, boiler
insurance and flood hazard insurance, if applicable.
(b) Grantor is hereby authorized and empowered to enter into
negotiations to adjust or compromise any loss under any insurance policies
maintained pursuant to this Section 1.04, provided, however, the settlement
derived from any such negotiations shall be subject to the approval of Grantee.
All such proceeds shall be paid to Grantee and, subject to satisfaction of items
(i) through (iv) hereinafter immediately set forth, Grantee shall disburse said
proceeds to Grantor for restoration of the Premises, subject to reasonable
conditions on the disbursement of such proceeds to assure such proceeds shall be
used solely for the restoration of the damaged Premises; (i) Grantor is not then
in Default hereunder or in default under any other Loan Documents beyond any
applicable cure period, (ii) the costs and expenses incurred in connection with,
and the plans and specifications prepared for, such restoration shall have been
previously approved in writing by Grantee, (iii) the damage can be repaired in
less than twelve (12) months from the date of such damage or destruction, and
(iv) the damage can be completely repaired for the lesser of twenty-five percent
(25%) of the outstanding principal balance of the Note or $1,000,000.00. In the
event any insurance company fails to disburse directly and solely to Grantee but
disburses instead either solely to Grantor or to Grantor and Grantee jointly,
Grantor agrees immediately to endorse and transfer such proceeds to Grantee.
Upon the failure of Grantor to endorse and transfer such proceeds as aforesaid,
Grantee may execute such endorsements or transfers for and in the name of
Grantor and Grantor hereby irrevocably appoints Grantee as Grantor's agent and
attorney-in-fact so to do. If items (i) through (iv) are not satisfied, then
after deducting from said insurance proceeds all of its expenses incurred in the
collection and administration of such sums, including attorneys' fees, Grantee
may apply the net proceeds or any part thereof, at its option, (i) to the
payment of the Indebtedness, whether or not due and in whatever order Grantee
elects, (ii) to the repair and/or restoration of the Premises, and/or (iii) for
any other purposes or objects for which Grantee is entitled to advance funds
under this Deed to Secure Debt, all without affecting the security interest
7
8
created by this Deed to Secure Debt; and any balance of such moneys then
remaining shall be paid to Grantor or the person or entity lawfully entitled
thereto. Grantee shall not be held responsible for any failure to collect any
insurance proceeds due under the terms of any policy regardless of the cause of
such failure.
(c) Prior to the expiration date of each policy maintained
pursuant to this Section 1.04, a certificate of insurance evidencing a
replacement of, or an endorsement evidencing a renewal of each existing policy
in form and content satisfactory to Grantee shall be delivered to Grantee. In
addition, within a commercially reasonable time, Grantor shall deliver to
Grantee the renewals or replacements thereof of each existing policy maintained
pursuant to this Section 1.04, in form and content satisfactory to Grantee.
Grantor shall deliver to Grantee receipts evidencing the payment for all such
insurance policies and renewals or replacements. The delivery of any insurance
policies hereunder shall constitute an assignment of all unearned premiums as
further security hereunder. In the event of the foreclosure of this Deed to
Secure Debt or any other transfer of title to the Premises in extinguishment or
partial extinguishment of the Indebtedness, all right, title and interest of
Grantor in and to all insurance policies then in force shall pass to the
purchaser or to Grantee, as the case may be, and Grantee is hereby irrevocably
appointed by Grantor as attorney-in-fact for Grantor to assign any such policy
to said purchaser or to Grantee, as the case may be, without accounting to
Grantor for any unearned premiums thereon.
Section 1.05 Monthly Deposits. Grantor shall deposit with
Grantee, commencing on September 1, 1997 and continuing on the due date of each
installment under the Note, (1) such amounts as, in the estimation of Grantee,
shall be necessary to pay as they become due (a) the taxes and assessments
referred to in Section 1.03 and (b) the premiums for insurance referred to in
Section 1.04, (and Grantor shall deposit with Grantee, contemporaneously with
the execution hereof, such amounts which, together with the monthly payment,
shall be sufficient to pay such taxes and premiums when due). Said deposits to
be held by Grantee, free of interest, and free of any liens or claims on the
part of creditors of Grantor and as part of the security of Grantee, and to be
used by Grantee to pay current taxes and assessments on the Premises or
insurance premiums with respect to the Premises as the same accrue and are
payable. Payment from said sums for said purposes shall be made by Grantee and
may be made even though such payments will benefit subsequent owners of the
Premises. Said deposits shall not be, nor be deemed to be, trust funds but may
be commingled with the general funds of Grantee. If said deposits are
insufficient to pay the taxes and assessments or insurance premiums in full as
the same become payable, Grantor will deposit with Grantee such additional sum
or sums as may be required in order for Grantee to pay such taxes and
assessments or insurance premiums in full. Upon any default or Default in the
provisions of this Deed to Secure Debt or the Note which is not cured within any
applicable cure period, or any instrument evidencing, securing or in any way
relating to the Indebtedness, Grantee may, at its option, apply any money in its
possession or control resulting from said deposits to the payment of the
Indebtedness in such manner as it may elect
8
9
Section 1.06 Condemnation. If all or any "Material Portion"
(as such term is hereinafter defined) of the Premises shall be damaged or taken
through condemnation (which term when used in this Deed to Secure Debt shall
include any damage or taking by any governmental or quasi-governmental authority
and any transfer by private sale in lieu thereof), either temporarily or
permanently, then the entire Indebtedness shall at the option of Grantee,
immediately become due and payable. For purposes of this Section 1.06, the terms
"Material Portion" shall mean: (i) all or any portion of any of the buildings
located on the Premises, (ii) any access to the Premises, unless other access
reasonably acceptable to Grantee remains (iii) a reduction in the number of
parking spaces available on the Premises from that which existed immediately
prior to such condemnation, unless Grantor is able to provide replacement
parking on the Premises or on property immediately adjacent thereto so that the
Premises have adequate parking to accommodate the residents of the Premises and
to satisfy all applicable zoning requirements; or (iv) any other portion of the
Premises the loss of which shall have a material adverse effect on the Premises
or the operation thereof. Grantor, immediately upon obtaining knowledge of the
institution, or the proposed, contemplated or threatened institution, of any
action or proceeding for the taking through condemnation of the Premises or any
part thereof, will notify Grantee, and Grantor is hereby authorized, in good
faith, to commence, appear in and prosecute, any action or proceeding relating
to condemnation. Any compensation, awards, damages, claims, rights of action and
proceeds and the right thereto are hereby assigned by Grantor to Grantee, and
Grantee is authorized, at its option, to settle, collect and receive all such
compensation, awards or damages and to give proper receipts and acquittances
therefor without any obligation to question the amount of any such compensation,
awards or damages. After deducting from said condemnation proceeds all of its
expenses incurred in the collection and administration of such sums, including
attorney's fees, Grantee may apply the net proceeds or any part thereof, at its
option, (a) to the payment of the Indebtedness, whether or not due and in
whatever order Grantee elects, (b) to the repair and/or restoration of the
Premises, and/or (c) for any other purposes or objects for which Grantee is
entitled to advance funds under this Deed to Secure Debt, all without affecting
the security interest created by this Deed to Secure Debt, and any balance of
such moneys then remaining shall be paid to Grantor or any other person or
entity lawfully entitled thereto. In the event Grantee applies such proceeds to
the payment of the Indebtedness, such proceeds to be applied without any
prepayment penalty, and the monthly installments due and payable under the note
shall be adjusted accordingly.
Section 1.07 Care of Premises.
(a) Grantor will keep the buildings, parking areas, roads and
walkways, recreational facilities, landscaping and all other improvements of any
kind now or hereafter erected on the Land or any part thereof in good condition
and repair, will not commit or suffer any waste or will not do or suffer to be
done anything which would or could increase the risk of fire or other hazard to
the Premises or any other part thereof or which would or could result in the
cancellation of any insurance policy carried with respect to the Premises.
9
10
(b) Grantor will not remove, demolish or alter the structural
character of any improvement located on the Land without the written consent of
Grantee.
(c) If the Premises or any part thereof is damaged by fire or
other cause, Grantor will give immediate written notice thereof to Grantee.
(d) Grantee or its representative is hereby authorized to
enter upon and inspect the Premises at any time during normal business hours
upon 24 hours advance written notice.
(e) Grantor will promptly comply with all present and future
laws, ordinances, rules and regulations of any governmental authority affecting
the Premises or any part thereof.
(f) If all or any part of the Premises shall be damaged by
fire or other casualty, Grantor will promptly restore the Premises to the
equivalent of its original condition; and if a part of the Premises shall be
damaged through condemnation, Grantor will promptly restore, repair or alter the
remaining portions of the Premises in a manner satisfactory to Grantee. In the
event all or any portion of the Premises shall be damaged or destroyed by fire
or other casualty or by condemnation, Grantor shall promptly deposit with
Grantee a sum equal to the amount by which the estimated cost of the restoration
of the Premises (as determined by Grantee in its good faith judgment) exceeds
the actual net insurance or condemnation proceeds with respect to such damage or
destruction, if any, being paid to Grantee and/or Grantor.
Secton 1.08 Leases, Contracts. Etc.
(a) As additional collateral and further security for the
Indebtedness, Grantor does hereby presently, absolutely and unconditionally
assign to Grantee, Grantor's interest in the Rents, together with any and all
leases, tenant contracts, rental agreements, franchise agreements, management
contracts, construction contracts, and other contracts, licenses and permits now
or hereafter affecting the Premises, or any part thereof, and Grantor agrees to
execute and deliver to Grantee such additional instruments, in form and
substance satisfactory to Grantee, as may hereafter be requested by Grantee
further to evidence and confirm said assignment; provided, however, that
acceptance of any such assignment shall not be construed as a consent by Grantee
to any lease, tenant contract, rental agreement, franchise agreement, management
contract, construction contract, or other contract, license or permit, or to
impose upon Grantee any obligation with respect thereto. Grantor shall
faithfully keep and perform, or cause to be kept and performed, all of the
covenants, conditions and agreements contained in each of said instruments, now
or hereafter existing, on the part of Grantor to be kept and performed and shall
at all times do all things necessary to compel performance by each other party
to said instruments of all obligations, covenants and agreements by such other
party to be performed thereunder. Notwithstanding anything to the contrary
contained herein, this assignment is intended and shall be construed to create,
an absolute, present assignment
10
11
from Grantor to Grantee. It is the further intent of Grantee and Grantor that
the Rents absolutely assigned are no longer, during the term of this Deed to
Secure Debt, property of Grantor or property of the estate of Grantor as defined
in 11 U.S.C. ss. 541 and shall not constitute collateral, cash or otherwise, of
Grantor.
(b) Grantor shall not execute a further assignment of the
Rents, or any part thereof, from the Premises unless Grantee shall first consent
to such assignment and unless such assignment shall expressly provide that it is
subordinate to the assignment contained in this Deed to Secure Debt and any
assignment executed pursuant hereto or concerning the Indebtedness.
(c) Grantor shall furnish to Grantee, within ten (10) days
after a request by Grantee to do so, a sworn statement setting forth the names
of all lessees and tenants of the Premises, the terms of their respective
leases, tenant contracts or rental agreements, the space occupied, and the
rentals payable thereunder, and stating whether any defaults, off-sets or
defenses exist under or in connection with any of said leases, tenant contracts
or rental agreements.
(d) Each lease, tenant contract and rental agreement
pertaining to the Premises, or any part thereof and created after the date
hereof, shall be for a term of not more than one year and shall provide that the
tenant thereunder does not have a leasehold interest in the Premises.
(e) Intentionally Omitted.
Section 1.09 Security Agreement.
(a) With respect to the machinery, apparatus, equipment,
fittings, fixtures, building supplies and materials, articles of personal
property, chattels, chattel paper, documents, inventory, accounts, farm
products, consumer goods and general intangibles referred to or described in
this Deed to Secure Debt, or in any way connected with the use and enjoyment of
the Premises, this Deed to Secure Debt is hereby made and declared to be a
security agreement encumbering each and every item of such property included
herein as a part of the Premises, in compliance with the provisions of the
Uniform Commercial Code as enacted in the State of Georgia. Upon request by
Grantee, at any time and from time to time, a financing statement or statements
reciting this Deed to Secure Debt to be a security agreement affecting all of
such property shall be executed by Grantor and Grantee and appropriately filed.
The remedies for any violation of the covenants, terms and conditions of the
security agreement contained in this Deed to Secure Debt shall be (i) as
prescribed herein, or (ii) as prescribed by general law, or (iii) as prescribed
by the specific statutory consequences now or hereafter enacted and specified in
said Uniform Commercial Code, all at Grantee's sole election. Grantor and
Grantee agree that the filing of any such financing statement or statements in
the records normally having to do with personal property shall not in any way
affect the agreement of Grantor and Grantee that everything used in connection
with the production of
11
12
income from the Premises or adapted for use therein or which is described or
reflected in this Deed to Secure Debt, is, and at all times and for all purposes
and in all proceedings, both legal and equitable, shall be, regarded as part of
the real estate conveyed hereby regardless of whether (A) any such item is
physically attached to the improvements, (B) serial numbers are used for the
better identification of certain items capable of being thus identified in an
exhibit to this Deed to Secure Debt, or (C) any such item is referred to or
reflected in any such financing statement or statements so filed at any time.
Similarly, the mention in any such financing statement or statements of the
rights in and to (1) the proceeds of any fire and/or hazard insurance policy, or
(2) any award in eminent domain proceedings for a taking or for loss of value,
or (3) Grantor's interest as lessor in any present or future lease or rights to
income growing out of the use and/or occupancy of the Premises, whether pursuant
to lease or otherwise, shall not in any way alter any of the rights of Grantee
as determined by this Deed to Secure Debt or affect the priority of Grantee's
security interest granted hereby or by any other recorded document, it being
understood and agreed that such mention in such financing statement or
statements is solely for the protection of Grantee in the event any court shall
at any time hold with respect thereto, that notice of Grantee's priority of
interest, to be effective against a particular class of persons, must be filed
in the Uniform Commercial Code records.
(b) Grantor warrants that (i) Grantor's (that is, "Debtor's")
name, identity or corporate structure and residence or principal place of
business are as set forth in the first paragraph of this Security Deed; (ii)
Grantor (that is "Debtor") has been using or operating under said name, identity
or corporate structure without change since July 22, 1994; and (iii) the
location of the collateral is upon the Land. Grantor covenants and agrees that
Grantor will furnish Grantee with notice of any change in the matters addressed
by clauses (i) or (iii) of this Subsection 1.09(b) within thirty (30) days of
the effective date of any such change and Grantor will promptly execute any
financing statements or other instruments deemed necessary by Grantee to prevent
any filed financing statement from becoming misleading or losing its perfected
status.
Section 1.10 Further Assurances; After-Acquired Property. At
any time, and from time to time, upon request by Grantee, Grantor will make,
execute and deliver, or cause to be made, executed and delivered, to Grantee
and, where appropriate, cause to be recorded and/or filed and from time to time
thereafter to be re-recorded and/or refiled at such time and in such offices and
places as shall reasonably be deemed desirable by Grantee, any and all such
other and further mortgages, deeds to secure debt, deeds of trust, security
agreements, financing statements, continuation statements, instruments of
further assurance, certificates and other documents as may, in the reasonable
opinion of Grantee, be necessary or desirable in order to effectuate, complete
or perfect, or to continue and preserve (a) the obligation of Grantor under the
Note and under this Deed to Secure Debt and (b) the security interest created by
this Deed to Secure Debt as a first and prior security interest upon and
security title in and to all of the Premises, whether now owned or hereafter
acquired by Grantor. Upon any failure by Grantor so to do, Grantee may make,
execute,
12
13
record, file, re-record and/or refile any and all such deeds to secure debt,
security agreements, financing statements, continuation statements, instruments,
certificates and documents for and in the name of Grantor, and Grantor hereby
irrevocably appoints Grantee the agent and attorney-in-fact of Grantor so to do.
The security title of this Deed to Secure Debt and the security interest created
hereby will automatically attach, without further act, to all after-acquired
property attached to and/or used in the operation of the Premises or any part
thereof.
Section 1.11 Expenses. Grantor will pay or reimburse
Grantee, upon demand therefor, for all attorney's fees actually incurred being
defined as attorneys fees based on the attorneys normal hourly rate and the
number of hours worked (and not the attorney's fees statutorily defined in
O.C.G.A. ss.13-1-11, costs and expenses incurred by Grantee in any suit, action,
legal proceeding or dispute of any kind in which Grantee is made a party or
appears as party plaintiff or defendant, affecting the Indebtedness, this Deed
to Secure Debt or the interest created herein, or the Premises, including, but
not limited to, any condemnation action involving the Premises or any action to
protect the security hereof, and any such amounts paid by Grantee shall be added
to the Indebtedness and shall be secured by this Deed to Secure Debt.
Section 1.12 Estoppel Affidavits. Grantor, upon ten (10)
days' prior written notice, shall furnish Grantee a written statement, duly
acknowledged, setting forth the unpaid principal of, and interest on the
Indebtedness, stating whether or not to Grantor's knowledge any offsets or
defenses exist against the Indebtedness, or any portion thereof, and, if such
offsets or defenses exist, stating in detail the specific facts relating to each
such offset or defense.
Section 1.13 Subrogation. To the full extent of the
Indebtedness, Grantee is hereby subrogated to the liens, claims and demands, and
to the rights of the owners and holders of each and every lien, claim, demand
and other encumbrance on the Premises which is paid or satisfied, in whole or in
part, out of the proceeds of the Indebtedness, and the respective liens, claims,
demands and other encumbrances shall be, and each of them is hereby, preserved
and shall pass to and be held by Grantee as additional collateral and further
security for the Indebtedness, to the same extent they would have been preserved
and would have been passed to and held by Grantee had they been duly and legally
assigned, transferred, set over and delivered unto Grantee by assignment,
notwithstanding the fact that any instrument providing public notice of the same
may be satisfied and canceled of record.
Section 1.14 Books, Records, Accounts and Annual Reports.
Grantor shall keep and maintain or shall cause to be kept and maintained, at
Grantor's cost and expense and in accordance with generally accepted accounting
principles, proper and accurate books, records and accounts reflecting all items
of income and expense in connection with the operation of the Premises and in
connection with any services, equipment or furnishings provided in connection
with the operation of the Premises. Grantee, by Grantee's agents, accountants
and attorneys, shall
13
14
have the right from time to time to examine such books, records and accounts at
the office of Grantor or such other person or entity maintaining such books,
records and accounts, to make copies or extracts thereof as Grantee shall desire
and to discuss Grantor's affairs, finances, and accounts with Grantor and with
the officers and principals of Grantor, at such reasonable times as may be
requested by Grantee. Grantor will furnish to Grantee (i) annually within ninety
(90) days after the end of Grantor's fiscal year an unaudited financial
statement for the Premises for such fiscal year, containing a profit and loss
statement and all supporting schedules covering the operation of the Premises
(including, without limitation, a current rent roll, all in reasonable detail,
prepared in accordance with generally accepted accounting standards consistently
applied; and otherwise satisfactory to Grantee, and certified as true, correct
and complete by Grantor's principal financial or accounting officer; and (ii) at
any time within thirty (30) days after demand by Grantee, unaudited statements,
certified by Grantor's principal financial or accounting officer, and covering
such financial matters as Grantee may reasonably request, including, without
limitation, monthly operating statements with respect to the Premises.
Section 1.15 Limit of Validity. If from any circumstances
whatsoever, fulfillment of any provision of this Deed to Secure Debt or of the
Note, at the time performance of such provision shall be due, shall involve
transcending the limit of validity presently prescribed by any applicable usury
statute or any other applicable law, with regard to obligations of like
character and amount, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, so that in no event shall any exaction be
possible under this Deed to Secure Debt or under the Note that is in excess of
the current limit of such validity, but such obligation shall be fulfilled to
the limit of such validity. The provisions of this Section 1.15 shall control
every other provision of this Deed to Secure Debt and of the Note.
Section 1.16 No Default Affidavits. At Grantee's request,
all payments made under the Note or hereunder shall be accompanied by the
affidavit of Grantor or a principal financial or accounting officer of Grantor,
dated within five (5) days of the delivery of such payment to Grantee, swearing
that he knows of no Default (as hereinafter defined), nor of any circumstances
which after notice or lapse of time or both would constitute a Default, which
has occurred and is continuing or, if any such Default has occurred and is
continuing, specifying the nature and period of existence thereof and the action
Grantor has taken or proposes to take with respect thereto and, except as
otherwise specified, stating that Grantor has fulfilled all of Grantor's
obligations under this Deed to Secure Debt which are required to be fulfilled on
or prior to the date of such affidavit. Notwithstanding anything contained
herein to the contrary, Grantee shall not request such affidavit more than two
(2) times in any twelve month period.
Section 1.17 Use and Management of Premises. Grantor shall
at all time operate the Premises as an apartment project. Grantor shall not be
permitted to alter or change the use of the Premises or to abandon the Premises
without the prior written consent of Grantee.
14
15
Section 1.18 Conveyance of Premises. Grantor hereby
acknowledges to Grantee that (a) the identity and expertise of Grantor were and
continue to be material circumstances upon which Grantee has relied in
connection with, and which constitute valuable consideration to Grantee for, the
extending to Grantor of the Indebtedness evidenced by the Note and (b) any
change in such identity or expertise could materially impair or jeopardize the
security for the payment of the Note granted to Grantee by this Deed to Secure
Debt. Grantor hereby covenants and agrees with Grantee, as part of the
consideration for the extending to Grantor of the Indebtedness evidenced by the
Note, that without the express prior written approval of Grantee (which Grantee
may withhold at its sole discretion), Grantor shall not encumber, pledge,
convey, transfer or assign any or all of its interest in the Premises, and, if
Grantor is a corporation, partnership or other artificial entity, there shall be
no encumbrance, pledge, conveyance, transfer or assignment of any legal or
beneficial interest whatsoever in Grantor. Such consent of Grantee may be given
or withheld by Grantee at its sole discretion. This Section 1.18 is subject to
Section 1.21.
Section 1.19 Acquisition of Collateral. Grantor shall not
acquire any portion of the personal property covered by this Deed to Secure Debt
subject to any security interest, conditional sales contract, title retention
arrangement or other charge or lien taking precedence over the security interest
granted by this Deed to Secure Debt.
Section 1.20 Environmental Matters. Contemporaneously
herewith, Grantor and ▇▇▇▇▇▇▇ Realty Investors, Inc. (hereinafter referred to
collectively as "Indemnitor") have executed and delivered to and in favor of
Grantee the "Indemnity Agreement" (as hereinafter defined) pursuant to which
Indemnitor indemnified Grantee in accordance with the terms thereunder.
Section 1.21 Transfer of Interest.
(a) No Transfer. In the event Grantor sells, conveys,
alienates or otherwise transfers all or any portion of its rights, title and
interest in and to the Premises without the prior written consent of Grantee
(collectively referred to as a "Transfer"), a Default shall occur and exist
under this Deed to Secure Debt and Grantee shall be entitled to exercise any and
all of the rights and remedies available to it under this Deed to Secure Debt,
any other Loan Document, at law or in equity, whether such Transfer occurs
voluntarily or by operation of law, and including, without limitation:
(1) Any Transfer of, or the grant of a security
interest in all or any part of the legal and/or equitable title to the Premises,
except for a transfer to ▇▇▇▇▇▇▇ Realty Investors, Inc.;
(2) Any Transfer of, or the grant of a security
interest in any portion of the general partner's interest in Grantor; and
15
16
(3) Any Transfer of, or the grant of a security
interest in any portion of any beneficial interest in any land trust holding
title to the Premises;
provided however, a Transfer shall not include the following: (i) transfers
occasioned by death as hereinafter set forth; (ii) transfers required by law
(but specifically excepting transfers as a result of foreclosure sale or
bankruptcy or insolvency proceedings); or (iii) transfers of partnership
interests by and among limited partners and between limited partners and general
partners, or intra-family or estate transfers, or transfers of stock in the
▇▇▇▇▇▇▇ Realty Investors, Inc., so long as the ▇▇▇▇▇▇▇ Realty Investors, Inc.
remains as the general partner of Grantor or owner of the Premises.
For avoidance of doubt, in the event of the death or permanent
incompetency of Principal, Grantee will allow the Transfer of the interest of
the deceased or incompetent Principal to his or her heirs or devisees or any
other now existing partners of Grantor, if any, provided (aa) that ownership and
management of the Premises does not change, and (bb) that such death or
incompetency does not result in the dissolution of Grantor. Principal shall
include an individual or entity with more than a ten percent (10%) ownership
interest in the owner of the Premises.
(b) Permitted Transfer. Notwithstanding the foregoing
limitations on transfer and those limitations set forth in Section 1.18 hereof,
and as it relates only to Grantor and ▇▇▇▇▇▇▇ Realty Investors, Inc., and not to
a subsequent owner or purchaser, Grantor or ▇▇▇▇▇▇▇ Realty Investors, Inc. may
transfer all or any portion of the Premises subject to Grantee's approval, which
approval shall not be unreasonably withheld and which approval shall be based
upon the satisfaction of the following terms and conditions:
(1) The purchaser(s) has a minimum net worth of Five
Million and No/100 Dollars ($5,000,000.00), as evidenced by a current financial
statement(s), certified by purchaser and satisfactory in form and content to
Grantee;
(2) Grantee, at Grantor's expense, is supplied with a
credit report, and such other information and data as Grantee shall reasonably
require, from a credit reporting agency or other source satisfactory to Grantee,
which credit report confirms that the new purchaser(s) (and principal(s) of the
purchaser(s)):
(A) demonstrate a credit history regarding both
personal and business credit which is acceptable to Grantee;
(B) have no bankruptcy history; and
(C) are not convicted felons or under indictment
for any matter but specifically including fraud or racketeering
16
17
(3) The purchaser(s)(and Principal(s) of the
purchaser(s)) shall deliver to Grantee a completed financial questionnaire(s),
certified to be true, complete and correct and signed by the purchaser(s) (and
Principal(s) of the purchaser(s)), satisfactory in form and content to Grantee;
(4) The purchaser(s) has ten (10) years building
management and leasing experience and is experienced in the market where the
Premises is located, or shall retain an experienced and qualified management
company and leasing agent, which company must be approved by Grantee;
(5) The purchaser(s) is neither a public syndication
nor a public syndicator unless approved by Grantee, which approval shall not be
unreasonably withheld;
(6) The purchaser(s) (and Principal(s) of the
purchaser(s)) shall provide Grantee with such financial information and
background data and in such detail as Grantee shall reasonably require;
(7) The purchaser(s) (and Principal(s) of the
purchaser(s)) shall execute and deliver to Grantee an indemnification agreement
in form substantially similar to the Indemnity Agreement and acceptable to
Grantee and Grantee's legal counsel indemnifying Grantee for matters occurring
subsequent to the date of the permitted transfer; provided, however, Indemnitor
shall remain liable to Grantee for all matters occurring on or before the date
of the permitted transfer but shall be released for all matters occurring
subsequent thereto;
(8) The ratio of the outstanding balance due and owing
under the Note to the cash purchase price is no greater than 65%; the part of
the purchase price in excess of the balance of the Note shall be paid in cash at
the closing of the permitted transfer;
(9) The ratio of the Premises's current net operating
income and the net operating income during each of the two (2) years immediately
preceding the then current calendar year (if applicable), is at least equal to
or greater than 1.35 to 1 to the annual debt service then due and owing under
the Note. Evidence of the previous two years' net operating income history (if
applicable) shall be provided in the form of annual financial statement(s)
provided in accordance with the terms and conditions of Section 1.14 hereof; and
(10) All requests for Transfers submitted by Grantor
shall be accompanied by a non-refundable processing fee ("Processing Fee") in
the amount of $2,500 payable to Grantee which shall be applied against the fee
specified in ss.1.21(d) if applicable.
17
18
Failure to meet the conditions set forth in this Section 1.21 shall be cause for
denial of Grantee's approval.
(c) No Waiver. Any consent by Grantee permitting a Transfer
otherwise prohibited under this Deed to Secure Debt shall not constitute a
consent to or waiver of any right, remedy or power of Grantee to withhold its
consent on a subsequent occasion to a Transfer not otherwise permitted by the
provisions of this Section 1.21.
(d) Assumption Fee Upon Approval of Transfer. If a consent to
a Transfer is granted by Grantee, there shall be no change in the terms of the
Note, this Deed to Secure Debt or the other Loan Documents; however, Grantee
shall be paid a non-refundable assumption fee of one percent (1.00%) of the
outstanding principal balance due under the Note at the time of the Transfer to
cover cost to review documents and perform other related duties. In addition,
Grantor shall provide to Grantee immediately upon closing the Transfer, a copy
of the deed or other instrument or document conveying title to the Premises and
a signed indemnification agreement from the transferee and such other persons as
deemed appropriate by Grantee and Grantee's legal counsel in identical form to
the Indemnity Agreement Regarding Hazardous Materials and Handicapped Access
Laws ("Indemnity Agreement") executed by Indemnitor, as one of the Loan
Documents satisfactory to Grantee and Grantee's legal counsel. In the event the
requested Transfer is declined, all such fees shall be returned to Grantor, less
the assumption fee. Transfers among related entities of Grantor are not subject
to the aforesaid one percent (1%) processing fee (Grantee shall determine if the
assuming party is a related entity), however the Processing Fee shall be charged
by Grantee for review of a proposed transfer to a related entity.
(e) Payment of Expenses. In connection with the permitted
transfer or any subsequent sale approved by Grantee, if any, the purchaser or
Grantor shall pay all out-of-pocket expenses relating to consent of sale,
including, but not limited to, the fees and expenses of Grantee's legal counsel
and a title policy endorsement, if necessary. Grantee may impose such reasonable
requirements in connection with such permitted transfer or any subsequent sale
approved by Grantee, if any, as shall be deemed necessary to assure the
enforceability and continued perfection of the lien and security interest
securing the Indebtedness.
(f) Environmental Assessment Report. Approval of any sale or
assumption shall, at Lender's sole option, require a later date environment
assessment report or an update of the most current environmental assessment
report for the Premises.
(g) Subsequent Sale. In the event Grantor makes a Transfer of
all or any portion of the Premises subsequent to a permitted transfer, or if
during the period in which all or any portion of the Indebtedness remains
unpaid, Grantor makes, or a transfer in any manner substantially equivalent to a
sale of an ownership interest in the Premises occurs (such subsequent
18
19
sale or transfer in either event is hereinafter referred to as a "Subsequent
Sale"), Grantee shall have the option to declare the entire outstanding
principal balance under the Note immediately due and payable, or to increase the
interest rate, or to otherwise modify the terms of the Loan Documents.
(h) Delivery by Grantor. Immediately upon the closing of the
permitted transfer or any Subsequent Sale approved by Grantee, Grantor shall
deliver to Grantee (i) a copy of the deed or other instrument conveying title to
the Premises and (ii) an indemnity agreement complying with the terms of
Subsection 1.21(b)(7), executed by the transferee and satisfactory to Grantee.
Section 1.22 Additional Covenants.
Grantor shall diligently pursue completion of (i) the
top-coating and striping of the parking areas on the Land and (ii) certain
landscaping as more particularly set forth in that certain Completion Escrow
Agreement among Grantor, Grantee, and ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (as escrow agent),
dated of even date herewith, and shall complete all of such items on or before
ninety (90) days after the date hereof.
Section 1.23 Future Advances. This Deed to Secure Debt
secures such future or additional advances (in addition to the principal amount
of the Note) as may be made by Grantee or the holder hereof, at its exclusive
option, to Grantor or its successors or assigns in title, provided that all such
advances are made within such period of time as may be provided by law as a
prerequisite for the sufficiency of actual notice or record notice of such
optional future or additional advances as against the rights of creditors or
subsequent purchasers for valuable consideration to the same extent as if such
future or additional advances were made on the date of the execution of this
Deed to Secure Debt. The total amount of Indebtedness secured by this Deed to
Secure Debt may be increased or decreased from time to time. It is the intent of
the parties that this Deed to Secure Debt shall secure the payment of the Note
and any additional advances as permitted hereunder made from time to time to
protect Grantee's collateral pursuant to any additional notes or otherwise, all
of said indebtedness being equally secured hereby and having the same priority
as any amounts advanced as of the date of this Deed to Secure Debt. It is agreed
that any additional sum or sums advanced hereunder to protect Grantee's
collateral by Grantee shall be equally secured with, and have the same priority
as, the original Indebtedness and shall be subject to all of the terms,
provisions and conditions of this Deed to Secure Debt, whether or not such
additional advances are evidenced by other promissory notes of Grantor and
whether or not identified by a recital that it or they are secured by this Deed
to Secure Debt.
Section 1.24 Additional Advances and Disbursements. Grantor
shall pay or shall cause to be paid when due all payments and charges required
to be paid by Grantor under each of the leases and all liens, encumbrances, and
security interests which may be or become superior or inferior to the lien of
this Deed to Secure Debt, and in default thereof, Grantee shall have the right,
19
20
but shall not be obligated, to pay, without notice to Grantor, such payments and
charges and Grantor shall, on demand, reimburse Grantee for all amounts so paid
and all costs and expenses incurred in connection therewith, together with
interest thereon at the Default Rate (as such term is defined in the Note) from
the date such payments and charges are so advanced until the same are paid to
Grantee. In addition, upon default of Grantor in the performance of any other
terms, covenants, conditions or obligations by it to be performed under any such
prior or subordinate lien or encumbrance, or under any of the leases, or any
other lease or security interest, or upon default of Grantor in the performance
of any of the terms, covenants, conditions or obligations by it to be performed
hereunder, Grantee shall have the right, but shall not be obligated, to cure
such default in the name and on behalf of Grantor; which right to cure any
default is intended by Grantor and Grantee to be in addition to, and not in
limitation of or in lieu of or as a waiver of, any right which Grantee may have
to cure any default under any of the leases, as expressly set forth therein. All
sums advanced and reasonable expenses incurred at any time by Grantee pursuant
to this Section 1.24 or as otherwise provided under the terms and provisions of
this Deed to Secure Debt or under applicable law shall bear interest from the
date that such sum is advanced to and including the date of reimbursement,
computed at a rate equal to the lesser of (i) the Default Rate, or (ii) the
maximum rate permitted by applicable law, computed from the original due date to
the date of receipt of such payment by Grantee in good and immediately available
funds. Grantor agrees that any such charges shall not be deemed to be additional
interest or a penalty, but shall be deemed to be liquidated damages because of
the difficulty in computing the actual amount of damages in advance; provided,
however, that any sums collected by Grantee as liquidated damages, as aforesaid,
which are held to be interest in excess of the maximum rate permitted by
applicable law, shall be deemed a payment in reduction of the principal sum then
outstanding under the Note and shall be so applied.
ARTICLE 2
DEFAULT AND REMEDIES
Section 2.01 Default. The terms "Default" or "Defaults",
wherever used in this Deed to Secure Debt, shall mean any one or more of the
following events:
(a) Failure by Grantor to pay any portion of the Indebtedness
within five days (5) days of the due date thereof, whether regularly scheduled,
by maturity, acceleration or otherwise provided, however, as to the first such
payment of principal and interest within any twelve month period which is not
paid when due, Grantee shall provide Grantor with written notice of the failure
to pay and the opportunity to pay the amount of any such payment so due, without
payment of any "Late Charge" (as that term is defined in the Note), on or before
five (5) days after receipt of said notice (but after once giving such notice of
failure to pay during any twelve month period, no
20
21
additional notice of failure to pay shall be required to be given by Lender
during that twelve month period); or
(b) Failure by Grantor duly to observe or perform any other
term, covenant, condition or agreement in this Deed to Secure Debt, the Note, or
in any other Loan Document for thirty (30) days after receipt from Grantee of
written notice of such failure, however, in the event the default is incapable
of being cured within such thirty (30) day period this cure period shall be
extended for a reasonable time thereafter so long as Grantor commences to cure
such default within such thirty (30) day period and thereafter continues to
diligently pursue the cure to completion; provided further, however, the cure
period set forth in this subsection (b) shall not apply to any other default
expressly set forth in this Section 2.01 or to any other covenant or condition
with respect to which a limitation as to time or cure period or right to cure is
expressly provided in this Deed to Secure Debt or in any other Loan Document;
(c) The occurrence of a default or event of default under the
Note or under any other Loan Document, after the lapse of any applicable cure or
grace period, if any;
(d) Any representation or warranty of Grantor contained in
this Deed to Secure Debt, the Note, or in any other Loan Document, proves to be
untrue or misleading in any material respect; or
(e) The filing by Grantor or any endorser or guarantor of the
Note of a voluntary petition in bankruptcy or the filing by Grantor or any such
endorser or guarantor of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief for itself under any present or future federal, state or other
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or Grantor's or any such endorser's or guarantor's seeking or
consenting to or acquiescing in the appointment of any trustee, receiver or
liquidator of Grantor, such endorser or guarantor, or of all or any substantial
part of the Premises or of any other property or assets of Grantor, such
endorser or guarantor, or of any or all of the Rents, or the making by Grantor,
or any such endorser or guarantor, of any general assignment for the benefit of
creditors, or the admission in writing by Grantor, or any such endorser or
guarantor, of its inability to pay its debts generally as they become due or the
commission by Grantor or any such endorser or guarantor of an act of bankruptcy;
or
(f) The filing of a petition against Grantor, or any endorser
or guarantor of the Note, seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal, state or other law or regulation relating to bankruptcy,
insolvency or other relief for debtors, or the appointment of any trustee,
receiver or liquidator of Grantor, or of any such endorser or guarantor or of
all or any substantial part of the Premises or of any or all of the Rents unless
such petition shall be dismissed within sixty (60) days
21
22
after such filing, but in any event prior to the entry of an order, judgment or
decree approving such petition; or
(g) The Premises are subjected to actual or threatened waste,
or any part thereof is removed, demolished or materially altered without the
prior written consent of Grantee; or
(h) Grantor or any endorser or guarantor of the Note (if a
corporation) is liquidated or dissolved or its charter expires or is revoked, or
Grantor or such endorser or guarantor (if a partnership or business association)
is dissolved or partitioned, or Grantor or such endorser or guarantor (if a
trust) is terminated or expires; or
(i) the occurrence of a default or event of default under
Section 1.21 hereof; or
(j) the occurrence of a default or event of default under
the Indemnity Agreement.
Section 2.02 Remedies.
(a) Acceleration of Maturity. If a Default shall have
occurred, then the entire Indebtedness shall, at the option of Grantee,
immediately become due and payable without notice or demand, time being of the
essence of this Deed to Secure Debt; and no omission on the part of Grantee to
exercise such option when entitled to do so shall be construed as a waiver of
such right.
(b) Power of Sale. If a Default shall have occurred, Grantee
may sell the Premises, or any part or parcel thereof or any interest of Grantor
therein separately, at Grantee's discretion, with or without taking possession
thereof, at a public sale or public sales before the Courthouse door of the
County in which the Premises or any part thereof is located, to the highest
bidder for cash, after first giving notice of the time, place and terms of such
sale or sales by advertisement published once a week for four weeks (without any
regard for the number of days between the date the first such notice is
published and the date on which any such sale commences) in the newspaper in
which advertisements of sheriff's sales are published in such county. Such
advertisement so published shall be notice to Grantor, and Grantor hereby
expressly waives all other notices. Grantee may bid and purchase at any such
sale, and Grantee, as agent and attorney-in-fact for Grantor and in Grantor's
name, may execute and deliver to the purchaser or purchasers at any such sale a
sufficient conveyance of the Premises, or the part or parcel thereof or the
interest therein which is sold. Grantee's conveyance may contain recitals as to
the occurrence of any Default under this Security Deed, and such recitals shall
be presumptive evidence that all preliminary acts prerequisite to any such sale
and conveyance were in all respects duly complied with. The recitals made by
Grantee shall be binding and conclusive upon Grantor, and the sale and
conveyance made by Grantee shall divest Grantor of all right, title, interest
and equity that Grantor
22
23
may have or have had in, to and under the Premises, or the part or parcel
thereof or the interest therein which is sold, and shall vest the same in the
purchaser or purchasers at such sale or sales. Grantor hereby constitutes and
appoints Grantee as Grantor's agent and attorney-in-fact to make such sale or
sales, to execute and deliver such conveyance or conveyances, and to make such
recitals, and Grantor hereby ratifies and confirms all of the acts and doings of
Grantee as Grantor's agent and attorney-in-fact hereunder. Grantee's agency and
power as attorney-in-fact hereunder are coupled with an interest, cannot be
revoked by bankruptcy, insolvency, incompetency, death, dissolution or
otherwise, and shall not be exhausted until the Indebtedness has been satisfied
in full. Grantor covenants and agrees that, in the event of any sale pursuant to
the agency and power herein granted, Grantor shall be and become a tenant
holding over and shall deliver possession of the Premises, or the part thereof
or interest therein sold, to the purchaser or purchasers at the sale or be
summarily dispossessed in accordance with the provisions of law applicable to
tenants holding over.
(c) Right to Enter and Take Possession.
(1) If a Default shall have occurred, Grantor, upon
demand of Grantee, shall forthwith surrender to Grantee the actual possession of
the Premises and if, and to the extent, permitted by law, Grantee itself, or by
such officers or agents as it may appoint, may enter and take possession of all
of the Premises without the appointment of a receiver, or an application
therefor, and may exclude Grantor and its agents and employees wholly therefrom,
and may have joint access with Grantor to the books, papers and accounts of
Grantor.
(2) If Grantor shall for any reason fail to surrender
or deliver the Premises or any part thereof after such demand by Grantee,
Grantee may obtain a judgment or decree conferring upon Grantee the right to
immediate possession or requiring Grantor to deliver immediate possession of the
Premises to Grantee, and Grantor hereby specifically covenants and agrees that
Grantor will not oppose, contest or otherwise hinder or delay Grantee in any
action or proceeding by Grantee to obtain such judgment or decree. Grantor will
pay to Grantee, upon demand, all expenses of obtaining such judgment or decree,
including reasonable compensation to Grantee, its attorneys and agents, and all
such expenses and compensation shall, until paid, become part of the
Indebtedness and shall be secured by this Deed to Secure Debt.
(3) Upon every such entering upon or taking of
possession, Grantee may hold, store, use, operate, manage and control the
Premises and conduct the business thereof, and, from time to time (A) make all
necessary and proper maintenance, repairs, renewals, replacements, additions,
betterments and improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property; (B) insure or keep
the Premises insured; (C) manage and operate the Premises and exercise all the
rights and powers of Grantor to the same extent as Grantor could in its own name
or otherwise act with respect to the same; and (D) enter
23
24
into any and all agreements with respect to the exercise by others of any of the
powers herein granted to Grantee, all as Grantee from time to time may determine
to be in its best interest. Grantee may collect and receive all the Rents,
including those past due as well as those accruing thereafter, and Grantee may
apply any moneys and proceeds received by Grantee, in whatever order or priority
Grantee in its sole discretion may determine, to the payment of (1) all expenses
of taking, holding, managing and operating the Premises (including compensation
for the services of all persons employed for such purposes); (2) the cost of all
such maintenance, repairs, renewals, replacements, additions, betterments,
improvements, purchases and acquisitions; (3) the cost of such insurance; (4)
such taxes, assessments and other similar charges as Grantee may at its option
pay; (5) other proper charges upon the Premises or any part thereof; (6) the
reasonable compensation, expenses and disbursements of the attorneys and agents
of Grantee; (7) accrued interest; (8) deposits required in Section 1.05 and
other sums required to be paid under this Deed to Secure Debt; or (9) overdue
installments of principal. Notwithstanding anything in this Section 2.02(c) to
the contrary, Grantee shall not be obligated to discharge or perform the duties
of a landlord to any tenant or incur any liability as the result of any exercise
by Grantee of its rights under this Deed to Secure Debt, and Grantee shall be
liable to account only for the Rents actually received by Grantee.
(4) In the event that all such interest, deposits and
principal installments and other sums due under any of the terms, covenants,
conditions and agreements of this Deed to Secure Debt shall be paid and all
Defaults shall be cured, and as a result thereof Grantee surrenders possession
of the Premises to Grantor, the same right of taking possession shall continue
to exist if any subsequent Default shall occur.
(d) Performance by Grantee. If Grantor shall Default in the
payment, performance or observance of any term, covenant or condition of this
Deed to Secure Debt, Grantee may, at its option, pay, perform or observe the
same, and all payments made or costs or expenses incurred by Grantee in
connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by Grantor to Grantee with interest thereon at the Default
Rate; provided, however, any such payments by Grantee shall not release Grantor
from Grantor's obligations or constitute a waiver of Grantor's Default
hereunder. Grantee shall be the sole judge of the necessity for any such actions
and of the amounts to be paid. Grantee is hereby empowered to enter and to
authorize others to enter upon the Premises or any part thereof for the purpose
of performing or observing any such defaulted term, covenant or condition
without hereby becoming liable to Grantor or any person in possession holding
under Grantor.
(e) Enforcement. Upon the occurrence of a Default, Grantee is
authorized to take any one or more of the following actions:
24
25
(1) Foreclose and obtain possession of the Premises by
any lawful procedure.
(2) Exercise any right or remedy available to Grantee
as a secured party under the Georgia Uniform Commercial Code, as it from time to
time is in force and effect, with respect to any portion of the Premises; or
Grantee, at its option, may elect to treat the Premises as real property, or an
interest therein, for remedial purposes.
(3) Apply, on ex parte motion to any Court of
competent jurisdiction, for the appointment of a receiver to take charge of,
manage, preserve, protect, complete construction of, sell, lease and operate the
Premises, or any portion thereof, and any business or businesses situated
thereon, or any combination; to collect the Rents; to make all necessary and
needed repairs; to pay all taxes, assessments, insurance premiums, and all other
costs incurred in connection with the Premises; and, after payment of the
expenses of the receivership, including reasonable attorneys' fees, and after
compensation to the receiver for management and completion of the Premises, to
apply all net proceeds derived therefrom in reduction of the Indebtedness or in
such other manner as the Court shall direct. The appointment of such receiver
shall be a matter of strict right to Grantee, regardless of the adequacy of the
security or of the solvency of any party obligated for payment of the
Indebtedness. All expenses, fees, and compensation incurred pursuant to any such
receivership shall be secured by the lien of this Deed to Secure Debt until
paid. The receiver, personally or through agents, may exclude Grantor wholly
from the Premises and have, hold, use, operate, manage, and control the
Premises, and may in the name of Grantor exercise all of Grantor's rights and
powers and all other rights and powers permitted under the laws of the State of
Georgia, to maintain, construct, operate, restore, insure, and keep insured the
Premises in such manner as such receiver deems appropriate.
(4) Proceed to realize upon any and all other security
for the Indebtedness in such order as Grantee may elect; and no such action,
suit, proceeding, judgment, levy, execution, or other process will constitute an
election of remedies by Grantee or will in any manner alter, diminish, or impair
the security interest created by this Deed to Secure Debt, unless and until the
Indebtedness is paid in full.
(5) Advance such monies, and take such other action,
as is authorized by the terms of this Deed to Secure Debt.
(f) Separate Sales. In the event of any foreclosure of
this Deed to Secure Debt the Premises may be sold as an entirety or in separate
parcels in such manner or order as Grantee in its sole discretion may elect; and
if Grantee so elects, it may sell any personal property covered by this Deed to
Secure Debt at one or more separate sales in any manner permitted by the Uniform
Commercial Code of Georgia; and one or more exercises of the powers herein
granted shall not
25
26
extinguish nor exhaust such powers, until the entire Premises are sold or the
Indebtedness is paid in full. If the Indebtedness is now or hereafter further
secured by any chattel mortgages, pledges, contracts of guaranty, assignments of
lease or other security, Grantee may at its option exhaust the remedies granted
under any of said security, either concurrently or independently, and in such
order as it may determine.
(g) Separate Suits. Grantee shall have the right, at any time
and from time to time, to ▇▇▇ for any sums required to be paid under the Loan
Documents, as the same become due and payable, without regard to whether or not
the entire Indebtedness shall be due on demand, and without prejudice to the
right of Grantee thereafter to enforce any appropriate remedy against Grantor,
including foreclosure or any other action for a Default or Defaults by Grantor
existing at the time such earlier action was commenced.
(h) Discontinuance of Proceedings. In case Grantee shall have
proceeded to enforce any right, power or remedy under this Deed to Secure Debt
by foreclosure, entry or otherwise or in the event Grantee institutes
foreclosure proceedings provided hereunder and such proceedings shall have been
withdrawn, discontinued or abandoned for any reason, or shall have been
determined adversely to Grantee, then in every such case (i) Grantor and Grantee
shall be restored to their former positions and rights, (ii) all rights, powers
and remedies of Grantee shall continue as if no such proceeding had been taken,
(iii) each and every Default declared or occurring prior or subsequent to such
withdrawal, discontinuance or abandonment shall and shall be deemed to be a
continuing Default and (iv) neither this Deed to Secure Debt, nor the Note, nor
said Indebtedness, nor any other instrument concerned therewith, shall be or
shall be deemed to have been reinstated or otherwise affected by such
withdrawal, discontinuance or abandonment; and Grantor 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 the
above.
(i) Subrogation. To the full extent of said Indebtedness,
Grantee is hereby subrogated to the liens, claims and demands, and to the rights
of the owners and holders of each and every lien, claim, demand and other
encumbrance on the Premises which is paid or satisfied in whole or in part, out
of the proceeds of said Indebtedness, and the respective liens, claims, demands
and other encumbrances shall be, and each of them is hereby preserved and shall
pass to, and be held by, Grantee as, additional collateral and further security
for said Indebtedness, to the same extent they would have been preserved and
would have been passed to and held by Grantee had they been duly and legally
assigned, transferred, set over and delivered unto Grantee by assignment,
notwithstanding the fact that the same may be satisfied and canceled of record.
(j) Purchase of Premises; Application of Proceeds; Possession
of Premises. Upon any foreclosure sale or sales of all or any portion of the
Premises under the power herein granted, (i) Grantee may bid for and purchase
the Premises and upon compliance with the terms of sale, may
26
27
hold, retain and possess and dispose of such property in its own absolute right
without further accountability; (ii) Grantee may, if permitted by law, and after
allowing for costs and expenses of sale, compensation, and other charges, in
paying the purchase price, apply the proceeds of said sale in whatever order
Grantee in its sole discretion may decide to all or any part of the Indebtedness
outstanding and all other sums due to Grantee under the Note, this Deed to
Secure Debt or any other Loan Document, including, without limitation,
attorney's fees, to insurance premiums, liens, assessments, taxes and charges
including utility charges advanced by Grantee, or to the accrued interest on all
of the foregoing; and the remainder, if any, shall be paid to Grantor, or to the
person or entity lawfully entitled thereto; and (iii) Grantor shall be deemed a
tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.
Section 2.03 Waiver of Appraisement, Valuation, etc. Grantor
agrees, to the full extent permitted by law, that in case of a Default on the
part of Grantor hereunder, neither Grantor nor anyone claiming through or under
Grantor will set up, claim or seek to take advantage of any moratorium,
reinstatement, forbearance, appraisement, valuation, stay, extension, homestead,
exemption or redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Deed to Secure Debt, or the
absolute sale of the Premises, or the delivery of possession thereof immediately
after such sale to the purchaser at such sale, and Grantor, for itself and all
who may at any time claim through or under it, hereby waives to the full extent
that it may lawfully so do, the benefit of all such laws, and any and all right
to have the assets subject to the security interest of this Deed to Secure Debt
marshalled upon any foreclosure or sale under the power herein granted.
Section 2.04 Waiver of Homestead. Grantor hereby waives and
renounces all homestead and exemption rights provided for by the Constitution
and the laws of the United States and of any state, in and to the Premises as
against the collection of the Indebtedness, or any part thereof.
Section 2.05 Leases. Grantee, at its option, is authorized
to foreclose this Deed to Secure Debt subject to the rights of any tenants of
the Premises, and the failure to make any such tenants parties to any such
foreclosure proceedings and to foreclose their rights will not be, nor be
asserted to be by Grantor, a defense to any proceedings instituted by Grantee to
collect the Indebtedness.
Section 2.06 Remedies Cumulative. No right, power or remedy
conferred upon or reserved to Grantee by this Deed to Secure Debt is intended to
be exclusive of any other right, power or remedy, but each and every such right,
power and remedy shall be cumulative and concurrent and, subject to Section
3.08, shall be in addition to any other right, power and remedy given hereunder
or now or hereafter existing at law, in equity or by statute.
27
28
Section 2.07 No Waiver.
(a) No delay or omission by Grantee or by any holder of the
Note to exercise any right, power or remedy accruing upon any breach or Default
shall exhaust or impair any such right, power or remedy or shall be construed to
be a waiver of any such breach or Default, or acquiescence therein, and every
right, power and remedy given by this Deed to Secure Debt to Grantee may be
exercised from time to time and as often as may be deemed expedient by Grantee.
No consent or waiver, expressed or implied, by Grantee to or of any breach or
Default by Grantor in the performance of the obligations of Grantor hereunder
shall be deemed or construed to be a consent or waiver to or of any other breach
or Default in the performance of the same or any other obligations of Grantor
hereunder. Failure on the part of Grantee to complain of any act or failure to
act or to declare a Default, irrespective of how long such failure continues,
shall not constitute a waiver by Grantee of its rights hereunder or impair any
rights, powers or remedies of Grantee hereunder.
(b) No act or omission by Grantee shall release, discharge,
modify, change or otherwise affect the original liability (subject to the terms
of Section 3.08 hereof) under the Note, this Deed to Secure Debt or any other
obligation of Grantor or any subsequent purchaser of the Premises or any part
thereof, or any maker, co-signer, endorser, surety or guarantor, or preclude
Grantee from exercising any right, power or privilege herein granted or intended
to be granted in the event of any Default then made or of any subsequent
Default, or alter the security title, security interest of this Deed to Secure
Debt except as expressly provided in an instrument or instruments executed by
Grantee. Without limiting the generality of the foregoing, Grantee may (i) grant
forbearance or an extension of time for the payment of all or any portion of the
Indebtedness; (ii) take other or additional security for the payment of the
Indebtedness; (iii) waive or fail to exercise any right granted hereunder or in
the Note; (iv) release any part of the Premises from the security interest of
this Deed to Secure Debt or otherwise change any of the terms, covenants,
conditions or agreements of the Note or this Deed to Secure Debt; (v) consent to
the filing of any map, plat or replat affecting the Premises; (vi) consent to
the granting of any easement or other right affecting the Premises; (vii) make
or consent to any agreement subordinating the security title, security interest
or lien hereof; or (viii) take or omit to take any action whatsoever with
respect to the Note, this Deed to Secure Debt, the Premises or any document or
instrument evidencing, securing or in any way relating to the Indebtedness; all
without releasing, discharging, modifying, changing or affecting any such
liability, or precluding Grantee from exercising any such right, power or
privilege or affecting the security title, security interest of this Deed to
Secure Debt. In the event of the sale or transfer by operation of law or
otherwise of all or any part of the Premises, Grantee, without notice, is hereby
authorized and empowered to deal with any such vendee or transferee with
reference to the Premises or the Indebtedness, or with reference to any of the
terms, covenants, conditions or agreements hereof, as fully and to the same
extent as it might deal with the original
28
29
parties hereto and without in any way releasing and/or discharging any
liabilities, obligations or undertakings.
Section 2.08 Suits to Protect the Premises. Grantee shall
have power to institute and maintain such suits and proceedings as it may deem
expedient (a) to prevent any impairment of the Premises by any acts which may be
unlawful or constitute a Default under this Deed to Secure Debt, (b) to preserve
or protect its interest in the Premises and in the Rents and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid, if
the enforcement of or compliance with such enactment, rule or order would impair
the security hereunder or by prejudicial to the interest of Grantee.
Section 2.09 Proof of Claim. In the case of any
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Grantor, its creditors or its
property, Grantee, 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 Grantee allowed in such proceeding for the entire
amount of the Indebtedness at the date of the institution of such proceedings
and for any additional amount of the Indebtedness after such date.
Section 2.10 Interest After Default. If any payment due
hereunder or under the Note is not paid either as stated or upon accelerated
maturity or pursuant to any of the terms hereof, then and in such event, Grantor
shall pay or shall cause to be paid interest thereon from and after the date on
which such payment first becomes due at the Default Rate and such interest shall
be due and payable, on demand, at such rate until the entire amount due is paid
to Grantee, whether or not any action shall have been taken or proceeding
commenced to recover the same or to foreclose this Deed to Secure Debt. Nothing
in this Section 2.10 or in any other provision of this Deed to Secure Debt shall
constitute an extension of the time of payment of the Indebtedness.
Section 2.11 Grantor's Actions After Default. After the
occurrence of a Default hereunder, under the Note or any other Loan Document,
and immediately upon the commencement of any action, suit or other legal
proceedings by Grantee to obtain judgment for the Indebtedness, or of any other
nature in aid of the enforcement of the Note or of this Deed to Secure Debt,
Grantor shall if required by Grantee, consent to the appointment of a receiver
or receivers of the Premises and of all the profits thereof.
Section 2.12 Control by Grantee After Default.
Notwithstanding the appointment of any receiver, liquidator or trustee of
Grantor, or of any of its property, or of the Premises or any part thereof,
Grantee shall be entitled to retain possession and control of the Premises.
29
30
Section 2.13 Payment of Indebtedness After Default. Upon the
occurrence of a Default and the acceleration of the maturity hereof, if, at any
time prior to foreclosure sale, Grantor or any other person tenders payment of
the amount necessary to satisfy the Indebtedness, the same shall constitute an
evasion of the payment terms hereof and shall be deemed to be a voluntary
prepayment hereunder, in which case such payment must include the premium
required under the Note, if any. This provision shall be of no force or effect
if at the time that such tender of payment is made Grantor has the right under
this Deed to Secure Debt or the Note to prepay the Indebtedness without premium.
ARTICLE 3
MISCELLANEOUS
Section 3.06 Binding Obligations. This Deed to Secure Debt
shall inure to the benefit of and be binding upon Grantor and Grantee and their
respective heirs, executors, legal representatives, successors,
successors-in-title and assigns. Whenever a reference is made in this Deed to
Secure Debt to "Grantor" or "Grantee", such reference shall be deemed to include
a reference to the heirs, executors, legal representatives, successors,
successors-in-title and assigns of Grantor and Grantee, as the case may be. The
provisions of this Section 3.01 are subject to the restrictions on transfer
contained in Section 1.18 and Section 1.21 hereof.
Section 3.07 Terminology. All personal pronouns used in this
Deed to Secure Debt whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the plural, and vice
versa. Titles of articles and Sections are for convenience only and neither
limit nor amplify the provisions of this Deed to Secure Debt, and all references
herein to articles, Sections or subSections shall refer to the corresponding
articles, Sections or subSections of this Deed to Secure Debt unless specific
reference is made to articles, Sections or subSections of another document or
instrument.
Section 3.08 Severability. If any provisions of this Deed to
Secure Debt or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this Deed to Secure
Debt and the application of such provisions to other persons or circumstances
shall not be affected thereby and shall be enforced to the greatest extent
permitted by law.
Section 3.09 Applicable Law. This Deed to Secure Debt shall
be interpreted, construed and enforced according to the Laws of the State of
Georgia.
Section 3.010 Notices. Any and all notices, elections or
demands permitted or required to be given under this Deed to Secure Debt shall
be in writing, signed by or on behalf of
30
31
the party giving such notice, election or demand, and shall be deemed to have
been properly given and shall be effective upon being personally delivered, or
upon being deposited in the United States mail, postage prepaid, certified with
return receipt requested, or upon being deposited with an overnight commercial
delivery service requiring proof of delivery, to the other party at the address
of such other party set forth below or at such other address within the
continental United States as such other party may designate by notice
specifically designated as a notice of change of address and given in accordance
herewith; provided, however, that the time period in which a response to any
such notice, election, demand or request must be given shall commence on the
date of receipt thereof; and provided further that no notice of change of
address shall be effective until the date of receipt thereof. Personal delivery
to a party or to any officer, partner, agent or employee of such party at said
address shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Any such notice, election, demand,
request or response, if given to Grantee, shall be addressed as follows:
The Canada Life Assurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: U.S. Mortgage Investment Department
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇ Southeast, Inc.
Eleven ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and if given to Grantor shall be addressed as follows:
▇▇▇▇▇▇▇ Properties Residential, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Holt, Ney, Zatcoff & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
31
32
Section 3.06 Indemnity. Subject to the terms of Section
3.08 hereof, Grantor shall protect, indemnify and save harmless Grantee from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including attorneys' fees and expenses) imposed upon
or incurred by Grantee by reason of (a) any claim for brokerage fees or other
such commissions relating to the Premises or the Indebtedness, or (b) the
condition of the Premises, or (c) failure to pay recording, mortgage,
intangibles or similar taxes, fees or charges relating to the Indebtedness
evidenced by the Note or any other Loan Document. In the event Grantee incurs
any liability, loss or damage by reason of the foregoing, or in the defense of
any claim or demand arising out of or in connection with the foregoing, the
amounts of such liability, loss or damage shall be added to the Indebtedness and
secured by this Deed to Secure Debt, shall bear interest at the interest rate
specified in the Note from the date incurred until paid and shall be payable on
demand.
Section 3.07 Replacement of Note. Upon receipt of evidence
reasonably satisfactory to Grantor of the loss, theft, destruction, mutilation
of the Note, and in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory to Grantor or, in the
case of any such mutilation, upon surrender and cancellation, Grantor will
execute and deliver, in lieu thereof, a replacement Note, identical in form and
substance to the Note and dated as of the date of the Note and upon such
execution and delivery all references in this Deed to Secure Debt to the Note
shall be deemed to refer to such replacement Note.
Section 3.08 Limitation on Liability. Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
Grantor shall not be personally liable for (i) the repayment of any of the
principal or interest, due under the Note, the Deed to Secure Debt or any other
Loan Document, (ii) failure to perform any other covenants, obligations or
agreements under any of the Loan Documents, or (iii) or for any deficiency
judgment which Grantee may obtain after foreclosure on the Premises or any other
collateral after default by Grantor PROVIDED, HOWEVER, the foregoing limitation
on liability shall not apply to, and the Grantor shall be and remain fully and
personally liable for, and shall indemnify and hold harmless Grantee from and
against, any loss, cost, claim, damage, liability or expense (including
attorney's fees actually incurred and expenses related thereto) suffered or
incurred by Grantee and arising, directly or indirectly, from any of the
following:
(a) any breach, violation, default or failure to perform by
the Obligors under any of the terms, covenants and conditions of that certain
Indemnity Agreement Regarding Hazardous Materials and Handicapped Access Laws
(the "Indemnity Agreement") dated of even date herewith by and among Grantor,
Indemnitor and Grantee;
(b) the misappropriation or misapplication of rents, issues,
profits and revenues (including without limitation security or similar deposits,
guarantees and prepaid rents paid by
32
33
tenants of the Premises) received or applicable to the period after receipt of a
notice of default and prior to a foreclosure of the Premises, to the extent that
such rents, issues, profits or revenues to the extent that such rents, issues,
profits or revenues are not paid over to Grantee or not applied to taxes,
insurance or other expenses attributable to the Premises;
(c) the misappropriation or misapplication of (i) proceeds
paid prior to a foreclosure under any insurance policies by reason of damage,
loss or destruction to any portion of the Premises, to the full extent of such
proceeds, or (ii) proceeds or awards resulting from the condemnation or other
taking in lieu of condemnation, prior to any such foreclosure, of any portion of
the Premises, to the full extent of such proceeds or awards;
(d) any fraud, misrepresentation of the Obligors contained
herein or in any of the other Loan Documents;
(e) any breach of the terms and conditions of Section 1.18 of
the Deed to Secure Debt;
(f) any failure to deliver to Grantee after acceleration of
the indebtedness evidenced by the Note any security or other deposits or rents
paid for more than thirty (30) days in advance;
(g) any failure to pay taxes or insurance premiums or charges
for labor or material or any and all other costs, the non-payment of which could
result in a lien being filed or imposed on the Premises;
(h) amounts necessary to repair or restore, as may be required
by the Loan Documents, or any of them, any portion of the Premises encumbered by
the Loan Documents, or any of them, caused by the willful or wanton acts or
omissions of the Grantor or the Indemnitor in purposely damaging the Premises;
(i) all out-of-pocket costs and expenses incurred by Grantee
as a result of enforcing its rights and remedies under the terms and provisions
the Loan Documents, or any of them.
Nothing contained in this paragraph shall (i) be deemed to be
a release or impairment of (a) the Indebtedness, or (b) the lien and security
title of the Loan Documents upon the Premises, or (ii) preclude Grantee from (a)
foreclosing the Loan Documents in case of any default or (ii) preclude Holder
from (a) foreclosing the Loan Documents in case of any default or (b) enforcing
any of the other rights of Grantee except as stated in this paragraph.
33
34
Section 3.09 Assignment. This Deed to Secure Debt is
assignable by Grantee, and any assignment hereof by Grantee shall operate to
vest in the assignee all rights and powers herein conferred upon and granted to
Grantee.
34
35
Section 3.010 Time of the Essence. Time is of the essence
with respect to each and every covenant, agreement and obligation of Grantor
under this Deed to Secure Debt, the Note and any other Loan Document.
Section 3.11 Waiver of Grantor's Rights. BY EXECUTION OF
THIS DEED TO SECURE DEBT, AND BY INITIALLING THIS SECTION 3.11, GRANTOR
EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF GRANTEE TO ACCELERATE THE INDEBTEDNESS
EVIDENCED BY THE NOTE AND ANY OTHER INDEBTEDNESS AND THE POWER OF ATTORNEY GIVEN
HEREIN TO GRANTEE TO SELL THE PREMISES BY NON-JUDICIAL FORECLOSURE UPON DEFAULT
BY GRANTOR; WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) AS IS
SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS DEED TO SECURE
DEBT; (B) WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE
CONSTITUTION OF THE UNITED STATES OF AMERICA (INCLUDING, WITHOUT LIMITATION, THE
FIFTH AND FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE
CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW,
(1) TO NOTICE PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY HEREIN
PROVIDED TO GRANTEE, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO
BE GIVEN UNDER THE PROVISIONS OF THIS DEED TO SECURE DEBT AND (2) CONCERNING THE
APPLICATION, RIGHTS OR BENEFITS OF ANY STATUTE OF LIMITATION OR ANY MORATORIUM,
REINSTATEMENT, MARSHALLING, FORBEARANCE, APPRAISEMENT, VALUATION, STAY
EXTENSION, HOMESTEAD, EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT
GRANTOR HAS READ THIS DEED TO SECURE DEBT AND ANY AND ALL QUESTIONS OF GRANTOR
REGARDING THE LEGAL EFFECT OF THIS DEED TO SECURE DEBT AND ITS PROVISIONS HAVE
BEEN EXPLAINED FULLY TO GRANTOR, AND GRANTOR HAS CONSULTED WITH COUNSEL OF
GRANTOR'S CHOICE PRIOR TO EXECUTING THIS DEED TO SECURE DEBT AND INITIALLING
THIS SECTION AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF
GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART
OF A BARGAINED FOR LOAN TRANSACTION.
Initialed by Grantor
------------------------
Section 3.12 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, GRANTOR HEREBY WAIVES ANY RIGHT TO DEMAND A JURY
TRIAL WITH REGARD TO ANY ISSUES ARISING OUT OF OR RELATED TO THIS DEED TO SECURE
DEBT OR THE LOAN EVIDENCED BY THE NOTE. GRANTEE, BY ACCEPTANCE OF THIS DEED TO
SECURE DEBT, SHALL ALSO
35
36
BE DEEMED TO HAVE WAIVED ANY RIGHT TO A JURY TRIAL WITH REGARD TO SUCH ISSUES.
Initialed by Grantor
------------------------
Section 3.13 Not Joint Venture or Partnership. Grantor and
Grantee intend that the relationship created hereunder, under the Note and all
other Loan Documents be solely that of grantor and grantee or borrower and
lender, as the case may be. Nothing herein is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between
Grantor and Grantee, nor to grant Grantee any interest in the Premises other
than that of mortgagee or lender; it being the intent of the parties hereto that
Grantee shall not share in any losses whatsoever generated by the Premises and
that Grantee shall have no control over the day-to-day management and operation
of the Premises.
Section 3.14 Non-Residential Status of Premises. Grantor
represents and warrants to Grantee that neither all of the Premises nor any part
thereof is to be used as a dwelling place by Grantor at the time this Security
Deed is entered into and, accordingly, the notice requirements of O.C.G.A.
ss.44-14-162.2 shall not be applicable to any exercise of the power of sale
contained in this Security Deed.
Section 3.15 Commercial Transaction. The interest of Grantee
under this Security Deed and the liability and obligation of Grantor for the
payment of the Indebtedness arise from a "commercial transaction" within the
meaning of O.C.G.A. ss.44-14-260(1). Accordingly, pursuant to O.C.G.A.
ss.▇▇-▇▇-▇▇▇, Grantor waives any and all rights which Grantor may have to notice
prior to seizure by Grantee of any interest in personal property of Grantor
which constitutes part of the Premises, whether such seizure is by writ of
possession or otherwise.
Section 3.16 Credits Waived. Grantor shall not claim nor
demand nor be entitled to any credit or credits against the Indebtedness for so
much of the taxes assessed against the Premises or any part thereof as is equal
to the tax rate applied to the amount due on this Deed to Secure Debt or any
part thereof, and no deductions shall otherwise be made or claimed from the
taxable value of the Premises or any part thereof by reason of this Deed to
Secure Debt or the Indebtedness.
36
37
Section 3.17 Definitions. Defined terms used herein, as
indicated by the initial letter thereof being capitalized, and not specifically
defined herein shall have the meaning assigned to such term elsewhere in the
Loan Documents.
37
38
IN WITNESS WHEREOF, Grantor has executed this Deed to Secure
Debt under seal, as of the date and year first above written.
GRANTOR:
--------
Signed, sealed and delivered ▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.,
in the presence of: a Georgia limited partnership
By: ▇▇▇▇▇▇▇ Realty Investors, Inc., a
Georgia corporation, its general
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ partner
--------------------------------
Unofficial Witness
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Notary Public [CORPORATE SEAL]
My commission expires:____________
[NOTARIAL SEAL]
38