Document:

Exhibit
10.4

 

GUARANTY

 

GUARANTY, dated as of November 18, 2004
(the “Guaranty”), by FIRST UNION REAL ESTATE EQUITY AND MORTGAGE
INVESTMENTS, an Ohio
business trust (the “Guarantor”),
in favor of KEYBANK NATIONAL ASSOCIATION, a national banking association having
an address at 101 Federal Street, Boston, Massachusetts 02110, as the agent (KEYBANK
NATIONAL ASSOCIATION, in such capacity as the agent, hereinafter referred to as
the “Agent”) for a syndicate of
Lenders (singly and collectively, the “Lenders”)
as specifically provided in the Loan Agreement (as defined below).

 

INTRODUCTORY
STATEMENT

 

WHEREAS, pursuant to that certain Loan
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the “Loan Agreement”)
entered into by and among FT-FIN ACQUISITION LLC, a Delaware limited liability
company (the “Borrower”), the Agent and the Lenders, the Agent and the Lenders
have agreed to make a loan to the Borrower in the aggregate principal amount of
$53,000,000.00 (the “Loan”), upon
the terms and subject to the conditions set forth therein.  Capitalized terms used herein and not
otherwise defined herein, but defined in the Loan Agreement, shall have the
meaning set forth in the Loan Agreement.

 

WHEREAS, the Borrower is a subsidiary of the Guarantor
and will derive substantial economic benefit from the granting of the Loan.

 

WHEREAS, as a condition to making the Loan,
the Agent and the Lenders have required the Guarantor to execute and deliver
this Guaranty, guaranteeing the payment and performance of the Guarantied
Obligations set forth below.

 

NOW THEREFORE, in consideration of the
premises and in order to induce the Agent and the Lenders to make the Loan and
extend other financial accommodations under the Loan Agreement, the Guarantor
hereby agrees as follows:

 

1.                                       Guaranty.  Guarantor, as a primary party and not merely
as a surety, unconditionally and irrevocably guarantees the following
obligations (hereinafter, the “Guaranteed Obligations”):

 

a.                                       Specific
Obligations.  The Guarantor shall be:

 

i.                                          Liable
for any loss, damage or liability suffered by Agent and the Lenders, to the
extent such arises out of any of the following (hereinafter, a “Guaranty
Event”):

 

a)                                      Fraud
by the Guarantor;

 

b)                                     Breach
of a material warranty or material representation with respect to the
Guarantor;

 

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c)                                      Breach
of a material warranty or material representation by the Guarantor with respect
to the Borrower, any Property Owner or the Loan Arrangement;

 

d)                                     Failure
of the Borrower or any Property Owner to pay when due, prior to an Event of
Default, any amounts for real estate taxes or insurance premiums;

 

e)                                      Misappropriation
by the Borrower or the Property Owner of any insurance proceeds, condemnation
takings or awards, or rental or other income from the Property; and

 

f)                                        Imposition
of any taxes, assessments, impositions, recording fees, and other governmental
charges with respect to the recording of the Mortgage and/or establishment,
structure and effectuation of the Loan Arrangement.

 

ii.                                       Liable
under the Environmental Indemnity; and

 

iii.                                    Liable
for the amount of any distributions made by the Borrower, FT-FIN GP or any
Property Owner to the Guarantor in breach of the terms and provisions of the
Loan Documents.

 

b.                                      Additional
Obligations.  Upon the occurrence of
a Trigger Event (as defined hereunder), Guarantor, as a primary party and not
merely as a surety, unconditionally and irrevocably guarantees to the Agent and
the Lenders the prompt and full payment (and not merely the collectibility),
performance and observance of all of the obligations, terms and conditions to
be paid, performed or observed by the Borrower under the Loan Agreement, the
Note and each other Loan Document, each as the same may be hereafter amended,
modified, extended, renewed or recast, including, but not limited to the
payment of the then outstanding principal together with interest and other
charges thereon as provided for in the Loan Agreement.  As used herein, the term “Trigger Event”
shall mean and refer to the occurrence of any of the following events:

 

i.                                          Borrower
or its member or any person or entity having direct or indirect control of
Borrower’s member wrongly contests in bad faith or in any way wrongly
interferes with, in bad faith, directly or indirectly any foreclosure action,
UCC sale and/or assignment or transfer in lieu of foreclosure transaction
commenced by Agent or any Lender or with any other enforcement of Agent’s or
any Lender’s rights, powers or remedies under the Mortgage or any of the other
Security Documents or under any document evidencing, securing or otherwise
relating to the Property or any portion of the foregoing (whether by making any
motion, bringing any

 

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counterclaim, claiming
any defense, seeking any injunction or other restraint, commencing any action
or otherwise);

 

ii.                                       Borrower
or its member or any person or entity having direct or indirect control of
Borrower’s member in bad faith initiates a voluntary filing with respect to
Borrower under the provisions of federal, state or other bankruptcy and
insolvency law, or votes adversely to Agent’s or any Lender’s interest in an
involuntary filing with respect to Borrower under the provisions of federal,
state or other bankruptcy and insolvency law;

 

iii.                                    If
a Change of Control shall occur without the prior written consent of the Agent,
which consent (i) will not be unreasonably withheld or delayed by the Agent and
(ii) will not be conditioned by the Agent on the payment of any fees other than
the Agent’s and the Lenders’ reasonable costs associated therewith.

 

 Upon
the occurrence of any Guaranty Event or any Trigger Event, Agent may at its
option proceed directly and at once, without further notice, against Guarantor
hereunder, without proceeding against Borrower, Property Owner, or any other
person or other Collateral for the obligations secured by this Guaranty.  Any sums payable by Guarantor hereunder shall
bear interest at the Default Rate from the date of demand until the date paid.

 

If Borrower, or Guarantor if so required,
shall fail or refuse to perform or continue performance of all of the
Obligations of the Loan Agreement on the part of Borrower to be kept and
performed, then, if an Event of Default exists on account thereof under the
Loan Agreement or this Guaranty, in addition to any other rights and remedies
which Agent or any Lender may have hereunder or elsewhere, and not in
limitation thereof, Agent or any Lender, at such party’s option, may exercise
any or all of its rights and remedies under the Loan Agreement and each other
Loan Document.

 

This Guaranty shall survive and continue in
full force and effect beyond and after the payment and satisfaction of the
Guaranteed Obligations and the obligations of Borrower in the event Agent or
any Lender is required to disgorge or return any payment or property received
as a result of any laws pertaining to preferences, fraudulent transfers or
fraudulent conveyances.

 

2.                                       Waiver.
 The Guarantor hereby absolutely,
unconditionally and irrevocably waives, to the fullest extent permitted by law,
(i) promptness, diligence, notice of acceptance and any other notice with
respect to this Guaranty, (ii) presentment, demand of payment, protest, notice
of dishonor or nonpayment and any other notice with respect to the Guaranteed
Obligations, (iii) any requirement that the Agent protect, secure, perfect or
insure any security interest or Lien on any property subject thereto or exhaust
any right or take any action against the Borrower or any other Person or any
collateral (other than the Collateral pledged to the Agent and the Lenders
pursuant to the Security Documents), (iv) any and all right to assert any
defense (other than the defense of indefeasible payment), set-off, counterclaim
or cross-claim of any nature whatsoever with respect to

 

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this Guaranty (except as
otherwise provided in Section 20(a)(iii) hereof), the obligations of the
Guarantor hereunder or the obligations of any other person or party relating to
this Guaranty or the obligations of the Guarantor hereunder or otherwise with
respect to the Guaranteed Obligations in any action or proceeding brought by
the Agent to collect the Guaranteed Obligations or any portion thereof or to
enforce the obligations of the Guarantor under this Guaranty, and (v) any other
action, event or precondition to the enforcement of this Guaranty or the
performance by the Guarantor of the obligations hereunder.

 

3.                                       Guaranty
Absolute.

 

a.                                       The
Guarantor guarantees that, to the fullest extent permitted by law, the
Guaranteed Obligations will be paid or performed strictly in accordance with
their terms, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent with respect thereto.

 

b.                                      No
invalidity, irregularity, voidability, voidness or unenforceability of the Loan
Agreement, the Note, or any other Loan Document or any other agreement or
instrument relating thereto, or of all or any part of the Guaranteed
Obligations or of any security therefor shall affect, impair or be a defense to
this Guaranty.

 

c.                                       This
Guaranty is one of payment and performance, not collection, and the obligations
of the Guarantor under this Guaranty are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against or any Affiliate or Subsidiary thereof or whether or
any Affiliate or Subsidiary thereof is joined in any such action or actions.

 

d.                                      The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:

 

i.                                          any
change in the manner, place or terms of payment or performance, and/or any
change or extension of the time of payment or performance of, renewal or
alteration of, any Guaranteed Obligation, any security therefor, or any
liability incurred directly or indirectly in respect thereof, or any other
amendment or waiver of or any consent to departure from the Loan Agreement or
the Note or any other Loan Document, including any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the Borrower
or any Subsidiary or Affiliate thereof or otherwise;

 

ii.                                       any
sale, exchange, release, surrender, realization upon any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever

 

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securing, all or any of
the Guaranteed Obligations (other than the Collateral pledged to the Agent and
the Lenders under the Security Documents), and/or any offset against such
Guaranteed Obligations, or failure to perfect, or continue the perfection of,
any Lien in any such property, or delay in the perfection of any such Lien, or
any amendment or waiver of or consent to departure from any other guaranty for
all or any of the Guaranteed Obligations;

 

iii.                                    any
exercise or failure to exercise any rights against the Borrower or any Affiliate
or Subsidiary thereof or others (including the Guarantor);

 

iv.                                   any
settlement or compromise of any Guaranteed Obligation, any security therefor or
any liability (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof;

 

v.                                      any
manner of application of Collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
Collateral for all or any of the Guaranteed Obligations or any other assets of the
Borrower or any Affiliate or Subsidiary thereof,

 

vi.                                   any
change, restructuring or termination of the existence of the Borrower or any
Affiliate or Subsidiary thereof;

 

vii.                                the
release of the Borrower or any other party, other than the Guarantor, now or hereafter
liable upon or in respect of the Loan Documents; or

 

viii.                             any
other agreements or circumstance of any nature whatsoever which might otherwise
constitute a defense available to, or a discharge of, this Guaranty and/or the
obligations of the Guarantor hereunder, or a defense to, or discharge of, the
Borrower or any Affiliate or Subsidiary thereof relating to this Guaranty or
the obligations of the Guarantor hereunder or otherwise with respect to the
Loan or other financial accommodations to the Borrower (other than the defense
of indefeasible payment).

 

i)                                         The
Agent may at any time and from time to time (whether or not after revocation or
termination of this Guaranty) without the consent of, or notice (except as
shall be required by applicable statute and cannot be waived) to, the
Guarantor, and without incurring responsibility to the Guarantor or impairing
or releasing the obligations of the Guarantor hereunder, apply any sums by
whomsoever paid or howsoever realized to any Guaranteed Obligation regardless
of what Guaranteed Obligations remain unpaid.

 

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ii)                                      This
Guaranty shall continue to be effective or be reinstated, as the case may be,
if claim is ever made upon the Agent for repayment or recovery of any amount or
amounts received by the Agent in payment or on account of any of the Guaranteed
Obligations as a result of laws relating to preferences, fraudulent transfers
and fraudulent conveyances, and the Agent repays all or part of said amount by
reason of any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent or its property, or any settlement or
compromise of any such claim effected by the Agent with any such claimant
(including the Borrower).  In such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the Guarantor, notwithstanding any revocation
hereof or the cancellation of any note (including the Note) or other instrument
evidencing any Guaranteed Obligation, and the Guarantor shall be and remain
liable to the Agent hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by the Agent.

 

4.                                       Continuing
Guaranty. This Guaranty is a continuing one and shall (i) remain in full force
and effect until the indefeasible payment and satisfaction in full of the
Guaranteed Obligations, (ii) be binding upon the Guarantor, its successors and
assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent
and the Lenders. All obligations to which this Guaranty applies shall be
conclusively presumed to have been created in reliance hereon.

 

5.                                       Representations,
Warranties and Covenants. The Guarantor hereby represents, warrants and covenants
to and with the Agent and the Lenders that:

 

a.                                       The
Guarantor has the power to execute and deliver this Guaranty and to incur and
perform its obligations hereunder;

 

b.                                      The
Guarantor has duly taken all necessary action to authorize the execution, delivery
and performance of this Guaranty and to incur and perform its obligations
hereunder;

 

c.                                       No
consent, approval, authorization or other action by, and no notice to or of, or
declaration or filing with, any governmental or other public body, or any other
Person, is required for the due authorization, execution, delivery and
performance by the Guarantor of this Guaranty or the consummation of the
transactions contemplated hereby;

 

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d.                                      The
execution, delivery and performance by the Guarantor of this Guaranty does not
and will not, with the passage of time or the giving of notice or both, violate
or otherwise conflict with any term or provision of any material agreement,
instrument, judgment, decree, order or any statute, rule or governmental
regulation applicable to the Guarantor or result in the creation of any Lien
upon any of its properties or assets pursuant thereto;

 

e.                                       This
Guaranty has been duly authorized, executed and delivered by the Guarantor and
constitutes the legal, valid and binding obligation of the Guarantor, and is
enforceable against the Guarantor in accordance with its terms, except as
enforcement thereof may be subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors’
rights generally, and general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law); and

 

f.                                         The
granting of the Loan to the Borrower will constitute a material economic
benefit to the Guarantor.

 

6.                                       Affirmative
Covenants.  The Guarantor covenants and
agrees that, from the date hereof and so long as the Loan or the other
Guaranteed Obligations remain outstanding, the Guarantor shall pay, perform,
observe and otherwise comply with all of the affirmative covenants set forth in
Article 7 of the Loan Agreement that have been made by the Borrower
therein with respect to the Subsidiaries or the Loan Parties, but only to the
extent that such covenants were made with respect to the Guarantor.

 

7.                                       Negative
Covenants.  The Guarantor covenants and
agrees that, from the date hereof and so long as the Loan or the other
Guaranteed Obligations remain outstanding, the Guarantor shall not take any
action (or otherwise suffer or permit to occur any event) contrary to the
negative covenants set forth in Article 8 of the Loan Agreement, as agreed
by the Borrower therein with respect to the Subsidiaries or the Loan Parties,
but only to the extent that such covenants were made with respect to the
Guarantor.

 

8.                                       Expenses.
The Guarantor will, upon demand, reimburse the Agent for any sums, costs, and
expenses which the Agent and/or the Lenders may pay or incur pursuant to the
provisions of this Guaranty or in enforcing this Guaranty or in enforcing
payment of the Guaranteed Obligations or otherwise in connection with the
provisions hereof, including court costs, collection charges, and reasonable
attorneys’ fees, together with interest thereon as specified in Section 15
hereof.

 

9.                                       Terms.

 

a.                                       All
terms defined in the Uniform Commercial Code of The Commonwealth of
Massachusetts (as amended and in effect from time to time, the “UCC”) and used

 

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herein shall have the
meanings as defined in the UCC, unless the context otherwise requires.

 

b.                                      The
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”.

 

c.                                       All
references herein to Sections and subsections shall be deemed to be references
to Sections and subsections of this Guaranty unless the context shall otherwise
require.

 

10.                                 Amendments
and Modification. No provision hereof shall be modified, altered or limited
except by written instrument expressly referring to this Guaranty and to such provision,
and executed by the party to be charged.

 

11.                                 Waiver
of Subrogation Rights. Until such time as all the Guaranteed Obligations have
been indefeasibly satisfied (including the expiration of any applicable
voidable preference period under the federal bankruptcy laws), the Guarantor
hereby waives and releases any and all rights and claims it may now or
hereafter have or acquire against the Borrower that would constitute it a “creditor”
of the Borrower for purposes of the federal bankruptcy laws, including all
rights of subrogation against the Borrower and its property and all rights of
indemnification, contribution and reimbursement from the Borrower and its
property, regardless of whether such rights arise in connection with this
Guaranty, by operation of law, pursuant to contract or otherwise.

 

12.                                 Remedies
Upon Default.

 

a.                                       Upon
the occurrence and during the continuance of any Event of Default, in addition
to any other rights and remedies which the Agent and/or the Lenders may have
hereunder or at law, and not in limitation thereof, the Agent may, without
notice to or demand upon the Borrower or the Guarantor, declare any Guaranteed
Obligations immediately due and payable, and shall be entitled to enforce the
obligations of the Guarantor hereunder.

 

b.                                      The
Agent’s rights under this Guaranty shall be in addition to, and not in
limitation of, all of the rights and remedies of the Agent and/or the Lenders
under the Loan Documents.  All rights and
remedies of the Agent and/or the Lenders shall be cumulative and may be
exercised in such manner and combination as the Agent and/or the Lenders,
respectively, may determine.

 

13.                                 Set-Off.  After the occurrence and during the
continuance of any Event of Default, and Accounts, deposits, balances or other
sums credited by or due from the Agent, any affiliate of the Agent or any of
the Lenders, or from any affiliate of any of the Lenders, to the Guarantor may
to the fullest extent not prohibited by applicable law at any time or from time
to time, without regard to the existence, sufficiency or adequacy of any other

 

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collateral, and without
notice or compliance with any other condition precedent now or hereafter
imposed by statute, rule of law or otherwise, all of which are hereby waived to
the fullest extent permitted by law, be set off, appropriated and applied by
the Agent against any or all of the Guaranteed Obligations irrespective of
whether demand shall have been made, in such manner as the Agent in its sole and
absolute discretion may determine. 
Within three (3) Business Days of making any such set off, appropriation
or application, the Agent agrees to notify Guarantor thereof, provided the
failure to give such notice shall not affect the validity of such set off or
appropriation or application.  ANY AND
ALL RIGHTS TO REQUIRE THE AGENT OR ANY OF THE LENDERS TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH ACCOUNTS, DEPOSITS, CREDITS
OR OTHER PROPERTY OF THE GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

 

14.                                 Statute
of Limitations. Any acknowledgment or new promise, whether by payment of
principal or interest or otherwise and whether by the Borrower or others
(including the Guarantor), with respect to any of the Guaranteed Obligations
shall, if the statute of limitations in favor of the Guarantor against the
Agent shall have commenced to run, toll the running of such statute of
limitations and, if the period of such statute of limitations shall have
expired, prevent the operation of such statute of limitations.

 

15.                                 Interest.
All amounts payable from time to time by the Guarantor hereunder shall bear
interest at the Default Rate, provided, that such interest shall not be
duplicative of any obligations payable under the Loan Agreement.

 

16.                                 Rights
and Remedies Not Waived. No act, omission or delay by the Agent shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by the Agent of any default hereunder or right or remedy
which it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future occasion.

 

17.                                 Admissibility
of Guaranty.  The Guarantor agrees that
any copy of this Guaranty signed by the Guarantor and transmitted by telecopier
for delivery to the Agent shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence.

 

18.                                 Notices.
All notices, requests and demands to or upon the Agent, the Lenders or the
Guarantor under this Guaranty shall be in writing and given as provided in the
Loan Agreement (and with respect to the Guarantor, c/o the Borrower at the
address of the Borrower as set forth in the Loan Agreement).

 

19.                                 Counterparts.
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and

 

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delivered shall be an
original and all of which shall together constitute one and the same agreement.

 

20.                               CONSENT
TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.

 

a.                                       ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY SECURITY
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR
OF THE UNITED STATES OF AMERICA FOR THE DISTRICT OF MASSACHUSETTS, AND, BY
EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING, (i) TRIAL BY JURY, (ii) TO THE EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO IMPOSE ANY SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM UNLESS SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM
COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE
INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION.

 

b.                                      The
Guarantor irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Guarantor at its address
determined pursuant to Section 18 hereof.

 

c.                                       Nothing
herein shall affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Guarantor in any other jurisdiction.

 

d.                                      The
Guarantor hereby waives presentment, notice of dishonor and protests of all
instruments included in or evidencing any of the Guaranteed Obligations, and
any and all other notices and demands whatsoever (except as expressly provided
herein).

 

21.                                 GOVERNING
LAW. THIS GUARANTY, THE SECURITY DOCUMENTS AND THE GUARANTEED OBLIGATIONS SHALL
BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
APPLICABLE

 

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TO CONTRACTS EXECUTED AND
TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.

 

22.                                 Captions;
Separability.

 

a.                                       The
captions of the Sections and subsections of this Guaranty have been inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Guaranty.

 

b.                                      If
any term of this Guaranty shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.

 

23.                                 Acknowledgment
of Receipt. The Guarantor acknowledges receipt of a copy of this Guaranty and
each of the Loan Documents.

 

24.                                 Entire
Agreement. This Guaranty sets forth the entire agreement and understanding of
the Agent, the Lenders and the Guarantor with respect to the matters covered
hereby and, by accepting this Guaranty, the Guarantor acknowledges that no oral
or other understanding, agreements, representations or warranties have been
made and/or exist with respect to the matters covered by this Guaranty or with
respect to the obligations of the Guarantor hereunder or otherwise, except as
specifically set forth in this Guaranty.

 

[SIGNATURE PAGE FOLLOWS]

 

11

 

IN WITNESS WHEREOF, the Guarantor has duly executed or
caused this Guaranty to be duly executed in The Commonwealth of Massachusetts
as of the date first above set forth.

 

 

	
   

  	
  FIRST UNION REAL ESTATE EQUITY

  AND MORTGAGE INVESTMENTS

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carolyn Tiffany

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
						

 

S1Exhibit
10.5

 

INDEMNITY
AGREEMENT REGARDING HAZARDOUS MATERIALS

 

This indemnity agreement (“Indemnity Agreement”), dated as of November 18,
2004, is given pursuant to the terms and conditions of the Loan Agreement dated
as of even date captioned “Loan Agreement” (the “Loan Agreement”) among FT-FIN ACQUISITION LLC, a Delaware
limited liability company (“Borrower”),
KEYBANK NATIONAL ASSOCIATION, a national banking association having an address
at 101 Federal Street, Boston, Massachusetts, and the other lending
institutions which become parties to the Loan Agreement (KEYBANK NATIONAL
ASSOCIATION and such other lending institutions which become parties to the
Loan Agreement are collectively referred to as the “Lenders” and individually as the “Lender”), and KEYBANK NATIONAL ASSOCIATION, as Agent (the “Agent”). 
All capitalized terms used in this Indemnity Agreement which are not
otherwise specifically defined herein shall have the same meaning herein as in
the Loan Agreement.

 

W I  T  N  E  S
S  E  T  H:

 

WHEREAS, Borrower is the owner, directly and
indirectly, of all or a substantial portion of the ownership interests in the Borrower
Partnerships or Borrower LLCs (each such entity a “Subsidiary” collectively the “Subsidiaries”), which Subsidiaries own various fee, ground
lease, land estate and other interests in the Individual Properties (such
interests, collectively, the “Property”);

 

WHEREAS, the Agent, on behalf of itself and
the Lenders, has made and Borrower has accepted a loan in the amount of $53,000,000.00
(the “Loan”), which Loan is
evidenced by that certain Note of even date from Borrower payable to the Agent
on behalf of itself and the Lenders in the principal amount of $53,000,000.00
(the “Note”) executed pursuant to
the Loan Agreement;

 

WHEREAS, as a condition to making the Loan,
the Agent requires Borrower, certain of the Subsidiaries of the Borrower, and
First Union Real Estate Equity and Mortgage Investments (“First Union”) to
provide certain indemnities concerning Hazardous Materials (as hereinafter
defined) presently upon, in or under any Property, or hereafter placed or
otherwise located thereon or therein;

 

WHEREAS, to induce the Agent to make the Loan
to Borrower, Borrower, First Union, Churchill and Orlando (singly and
collectively, the “Indemnitor”) have agreed to provide this Indemnity Agreement
for the Agent’s benefit.

 

NOW, THEREFORE, for and in consideration of
the sum of Ten and No/100 ($10.00) Dollars and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Agent, by its acceptance of delivery hereof, Indemnitor hereby agrees as
follows:

 

1.                                       Definitions.  The following definitions shall apply for
purposes of this Indemnity Agreement:

 

a.                                       “Environmental Law” shall mean any federal,
state or local statute, regulation or ordinance or any judicial or
administrative decree or decision, whether now existing or hereinafter enacted,
promulgated or issued, with respect to any

 

1

 

Hazardous Materials,
drinking water, groundwater, wetlands, landfills, open dumps, storage tanks,
underground storage tanks, solid waste, waste water, storm water run-off, waste
emissions or wells.  Without limiting the
generality of the foregoing, the term shall encompass each of the following
statutes, and regulations promulgated thereunder, and amendments and successors
to such statutes and regulations, as may be enacted and promulgated from time
to time:  (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (codified in
scattered sections of 26 U.S.C.; 33 U.S.C.; 42 U.S.C. and 42 U.S.C. §9601 et
seq.); (ii) the Resource Conservation and Recovery Act of 1976 (42
U.S.C. §6901 et  seq.); (iii) the Toxic Substances Control Act (15
U.S.C. §2601 et  seq.); (iv) the Clean Water Act (33 U.S.C. §1251 et
seq.); (v) the Clean Air Act (42 U.S.C. §7401 et  seq.);
(vi) the Safe Drinking Water Act (21 U.S.C. §349; 42 U.S.C. §201 and §300f et
seq.); (vii) the National Environmental Policy Act of 1969 (42 U.S.C.
§4321); and (viii) the Superfund Amendment and Reauthorization Act of 1986
(codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42
U.S.C.).

 

b.                                      “Hazardous Materials” shall mean each and
every element, compound, chemical mixture, contaminant, pollutant, material,
waste or other substance which is defined, determined or identified as
hazardous or toxic under any Environmental Law. 
Without limiting the generality of the foregoing, the term shall mean
and include:

 

i.                                          “hazardous substances” as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendment and Reauthorization Act of 1986, or Title III of the
Superfund Amendment and Reauthorization Act, each as amended, and regulations
promulgated thereunder;

 

ii.                                       “hazardous waste” as defined in the Resource
Conservation and Recovery Act of 1976, as amended, and regulations promulgated
thereunder;

 

iii.                                    “hazardous materials” as defined in the
Hazardous Materials Transportation Act, as amended, and regulations promulgated
thereunder;

 

iv.                                   “chemical substance or mixture” as defined
in the Toxic Substances Control Act, as amended, and regulations promulgated
thereunder;

 

c.                                       “Indemnified Parties” shall mean the Agent,
each Lender, Agent and each Lender’s parent, Subsidiaries and Affiliates, each
of their respective shareholders, directors, officers, employees and agents,
and the successors and assigns of any of them; and “Indemnified Party” shall mean any one of the Indemnified
Parties.

 

2

 

d.                                      “Release” shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, storing,
escaping, leaching, dumping, or discarding, burying, abandoning, or disposing
into the environment.

 

e.                                       “Threat of Release” shall mean a substantial
likelihood of a Release which requires action under Environmental Laws to
prevent or mitigate damage to the environment which may result from such
Release.

 

2.                                       Indemnity
Agreement.  Indemnitor covenants and
agrees, jointly and severally, at its sole cost and expense, to indemnify,
defend (at trial and appellate levels and with attorneys, consultants and
experts acceptable to Agent) and hold each Indemnified Party harmless against
and from any and all liens, damages, losses, liabilities, obligations,
settlement payments, penalties, assessments, citations, directives, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including,
without limitation, reasonable attorneys’, consultants’ and experts’ fees and
disbursements incurred in investigating, defending against, settling or
prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against such Indemnified Party
and, and arising directly or indirectly from or out of: (A) the Release or
Threat of Release of any Hazardous Materials on, in, under or affecting all or
any portion of any Property, regardless of whether or not caused by or within
the control of Indemnitor or any Subsidiary; (B) the violation of any
Environmental Laws relating to or affecting any Property or Indemnitor or any
Subsidiary, whether or not caused by or within the control of Indemnitor or any
Subsidiary; (C) the failure of Indemnitor to comply fully with the terms and
conditions of this Indemnity Agreement; or (D) the enforcement of this
Indemnity Agreement, including, without limitation, (i) the costs of
assessment, containment and/or removal of any and all Hazardous Materials from
all or any portion of any Property or any surrounding areas, (ii) the
costs of any actions taken in response to a Release or Threat of Release of any
Hazardous Materials on, in, under or affecting all or any portion of any
Property or any surrounding areas to prevent or minimize such Release or Threat
of Release so that it does not migrate or otherwise cause or threaten danger to
present or future public health, safety, welfare or the environment, and (iii)
costs incurred to comply with the Environmental Laws in connection with all or
any portion of any Property or any surrounding areas.  The Agent’s and the other Indemnified Parties’
rights under this Indemnity Agreement shall be in addition to all rights of the
Agent under the Loan Agreement, the Note, and under any other documents or
instruments evidencing, securing or relating to the Loan (the Loan Agreement,
the Note, and such other documents or instruments, as amended or modified from
time to time, being herein referred to as the “Loan Documents”), and payments by Indemnitor under this
Indemnity Agreement shall not reduce Indemnitor’s obligations and liabilities
under any of the Loan Documents.  If any
action or proceeding in respect of which indemnity may be sought from Indemnitor
in accordance with Section 2 is brought or asserted against any
Indemnified Party, such Indemnified Party shall promptly notify in writing

 

3

 

(but the failure to give
such notice shall not affect Indemnitor’s obligations hereunder unless Indemnitor
demonstrates that the defense of such action or proceeding was materially
prejudiced by such failure), and Indemnitor shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party and the payment of all defense costs and expenses.  The Indemnified Party shall have the right to
employ separate counsel in any such action or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be borne
by the Indemnified Party unless (i) Indemnitor has agreed in writing to pay
such fees and expenses, or (ii) Indemnitor shall have failed to assume the
defense of such action or proceeding.  If
Indemnitor assumes the defense of such an action, (a) no compromise or
settlement thereof may be effected by Indemnitor without the Indemnified Party’s
consent (which shall not be unreasonably withheld or delayed) unless (i) there
is no finding or admission of any violation of law or any violation of the
rights of any Person and no effect on any other claims that may be made against
the Indemnified Party and (ii) the sole relief provided is monetary damages
that are paid in full by Indemnitor and (b) Indemnitor shall have no liability
with respect to any compromise or settlement thereof effected without its
consent (which shall not be unreasonably withheld).

 

3.                                       Assessment;
Remediation.

 

a.                                       The
Agent shall have the right to require Indemnitor, at its own cost and expense,
to obtain a professional environmental assessment for any Property in
accordance with the Agent’s then standard environmental assessment
requirements, provided that such requirements are consistent with the
reasonable guidelines of Phase I or Phase II environmental site assessments as
established by the Agent consistently applied in similar situations upon the
occurrence of any one or more of the following events: (i) an Event of Default
but only during the continuance thereof; or (ii) upon the Agent obtaining knowledge
of the occurrence of a Release or Threat of Release on, in, on, under or
affecting the said Property and the determination by the Agent that such
Release or Threat of Release could reasonably be expected to have a Material
Adverse Effect.

 

b.                                      In
the event that Indemnitor does not commence any such environmental assessment
within forty-five (45) days of the written request therefor by the Agent, the
Agent may, at Indemnitor’s cost and expense, cause such environmental
assessment to be undertaken.

 

c.                                       Any
amounts paid or advanced by the Agent and all costs and expenditures incurred
in connection with any action taken pursuant to the terms of this Indemnity
Agreement, including but not limited to reasonable environmental consultants’
and experts’ fees and expenses, attorneys’ fees and expenses, court costs and
all costs of assessment monitoring clean-up, containment, remediation, removal
and restoration, with interest thereon at the Default Rate, shall be a

 

4

 

demand obligation of Indemnitor
to the Agent, and shall be added to the Obligations secured by the Collateral
and shall be secured by the lien of the Security Documents as fully and as
effectively and with the same priority as every other Obligation secured
thereby.

 

4.                                       Survival.

 

a.                                       The
indemnity set forth above in Paragraph 2 shall survive the repayment of the
Loan and any exercise by the Agent of any remedies under the Loan Agreement or
any other Loan Document.

 

b.                                      It
is agreed and intended by Indemnitor and the Agent that the indemnity set forth
above in Paragraph 2 may be assigned or otherwise transferred by the Agent to
its successors and assigns and to any subsequent purchaser of all or any
portion of the Loan by, through or under the Agent, without notice to Indemnitor
and without any further consent of Indemnitor. 
To the extent consent of any such assignment or transfer is required by
law, advance consent to any such assignment or transfer is hereby given by Indemnitor
in order to maximize the extent and effect of the indemnity given hereby.

 

5.                                       No Waiver.  The liabilities of Indemnitor under this
Indemnity Agreement shall in no way be limited or impaired by, and Indemnitor
hereby consents to and agrees to be bound by, any amendment or modification of
the provisions of the Loan Documents to or with the Agent or any Person who
succeeds Indemnitor or any Subsidiary as owner of a Property.  Notwithstanding any terms of any of the Loan
Documents to the contrary, the liability of Indemnitor under this Indemnity
Agreement shall in no way be limited or impaired by: (i) any extensions of time
for performance required by any of the Loan Documents; (ii) any sale,
assignment or foreclosure of the Note or any Collateral or any sale or transfer
of all or part of a Property; (iii) any exculpatory provision in any of the
Loan Documents limiting the Agent’s recourse to property encumbered by the Loan
Documents or to any other security, or limiting the Agent’s rights to a
deficiency judgment against Indemnitor; (iv) the accuracy or inaccuracy of the
representations and warranties made by Indemnitor under any of the Loan
Documents; (v) the release of Indemnitor or any other Person from performance
or observance of any of the agreements, covenants, terms or conditions contained
in the Loan Documents by operation of law, the Agent’s voluntary act, or
otherwise; (vi) the release or substitution, in whole or in part, of any
security for the Note; or (vii) the Agent’s failure to file any UCC-1 financing
statements (or the Agent’s improper recording or filing of any thereof) or to
otherwise perfect, protect, secure or insure any security interest or lien
given as security for the Note; and, in any such case, whether with or without
notice to Indemnitor and with or without consideration.

 

5

 

6.                                       Waiver by Indemnitor and Agent.  Indemnitor waives any right or claim of right
to cause a marshaling of Indemnitor’s assets or to cause the Agent to proceed
against any of the security for the Loan before proceeding under this Indemnity
Agreement against Indemnitor or to proceed against Indemnitor in any particular
order; Indemnitor agrees that any payments required to be made hereunder shall
become due on demand.

 

7.                                       Delay.  No delay on the Agent’s part in exercising
any right, power or privilege under any of the Loan Documents shall operate as
a waiver of any privilege, power or right hereunder.

 

8.                                       Counterparts.  This Indemnity Agreement may be executed in
one or more counterparts, each of which shall be deemed an original.  Said counterparts shall constitute but one
and the same instrument and shall be binding upon each of the undersigned
individually as fully and completely as if all had signed but one instrument so
that the liability of the undersigned hereunder shall be unaffected by the
failure of any of the undersigned to execute all of said counterparts.

 

9.                                       Notices.  Each notice, demand, election or request
provided for or permitted to be given pursuant to this Indemnity Agreement shall
be given in accordance with the terms of the Loan Agreement.

 

10.                                 Amendments.  No provision of this Indemnity Agreement may
be changed, waived, discharged or terminated orally, by telephone or by any
other means except by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.

 

11.                                 Binding Effect.  Except as herein provided, this Indemnity
Agreement shall be binding upon Indemnitor and its successors and assigns, and
shall inure to the benefit of the Agent, each Lender, the other Indemnified
Parties, and respective successors and assigns. 
Notwithstanding the foregoing, Indemnitor, without the prior written
consent of the Agent in each instance, which consent shall not be withheld unreasonably,
may not assign, transfer or set over to another, in whole or in part, all or
any part of its or their benefits, rights, duties and obligations hereunder,
including, but not limited to, performance of and compliance with conditions
hereof.

 

12.                                 GOVERNING LAW; CONSENT TO JURISDICTION.  THIS INDEMNITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
INTERPRETED AND DETERMINED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW).  INDEMNITOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF
MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS

 

6

 

INDEMNITY AGREEMENT, AND
(B) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE
RIGHT, IF ANY, TO TRIAL BY JURY, OR (II) TO OBJECT TO JURISDICTION WITHIN THE
COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM WITHIN THE
COMMONWEALTH OF MASSACHUSETTS. INDEMNITOR AGREES THAT, IN ADDITION TO ANY
METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO INDEMNITOR AS SET FORTH
IN PARAGRAPH 9 ABOVE, AND SERVICE TO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER
THE SAME SHALL BE SO MAILED.  NOTHING
CONTAINED HEREIN, HOWEVER, SHALL PREVENT AGENT FROM BRINGING ANY SUIT, ACTION
OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST INDEMNITOR
PERSONALLY, AND AGAINST ANY PROPERTY OF INDEMNITOR OR ANY SUBSIDIARY, WITHIN
ANY OTHER STATE.  INITIATING SUCH SUIT,
ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT
CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF INDEMNITOR
AND THE AGENT HEREUNDER OR OF THE SUBMISSION HEREIN MADE BY INDEMNITOR TO
PERSONAL JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS.

 

[SIGNATURE
PAGE FOLLOWS]

 

7

 

IN WITNESS WHEREOF, Indemnitor has caused
this Indemnity Agreement to be executed under seal as of the day and year first
written above.

 

	
  INDEMNITOR:

  	
  FT-FIN ACQUISITION LLC,

  	 

	
   

  	
  a Delaware limited Liability Company

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  PARK PLAZA MALL, LLC, a Delaware limited

  liability company, its Sole Member

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  FIRST UNION REAL ESTATE EQUITY

  AND MORTGAGE INVESTMENTS, its

  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carolyn Tiffany

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FT-ORLANDO PROPERTY LLC,

  	 

	
   

  	
  a Delaware limited Liability Company

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  FT-FIN ACQUISITION LLC,

  	 

	
   

  	
   

  	
  a Delaware limited Liability Company

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  PARK PLAZA MALL, LLC, a Delaware limited

  liability company, its Sole Member

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  FIRST UNION REAL ESTATE EQUITY

  AND MORTGAGE INVESTMENTS, its

  Sole Member

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
  Carolyn Tiffany

  	 

	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  	 

										

 

S1

 

	
   

  	
  FT-CHURCHILL PROPERTY L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  FT-FIN GP LLC,

  a Delaware limited Liability Company, its General

  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  FIRST UNION REAL ESTATE EQUITY

  AND MORTGAGE INVESTMENTS, its

  Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carolyn Tiffany

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FIRST UNION REAL ESTATE EQUITY AND

  MORTGAGE INVESTMENTS, its Sole Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Carolyn Tiffany

  
	
   

  	
   

  	
  Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGENT:

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Jeffry M. Morrison

  
	
   

  	
   

  	
  duly authorized

  
								

 

 

854176.3

 

S2

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