Document:

exhibit10-5.htm

ENVIRONMENTAL INDEMNITY AGREEMENT

 

THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") is executed effective as of June 12, 2014, by TOTB North, LLC, a Florida limited liability company (“Borrower”) and Owens Realty Mortgage, Inc., a Maryland corporation and Owens Financial Group, Inc., a California corporation (collectively, “Guarantor”) (Guarantor and Borrower are herein individually, collectively, jointly and severally, "Indemnitor"), for the benefit of BANK OF THE OZARKS ("Lender").

 

RECITALS

 

The following matters are true and correct, are a part of this Agreement, and form the basis for this Agreement:

 

A. Lender is making a loan ("Loan") to Borrower under and pursuant to the terms and provisions of that certain Construction Loan Agreement between Lender, as lender, and Borrower, as borrower (the "Loan Agreement") of even date herewith which Loan is further evidenced by that certain Promissory Note (the "Note") executed by Borrower and payable to the order of Lender in the original principal amount of TWENTY-ONE MILLION THREE HUNDRED FOUR THOUSAND AND NO/100 DOLLARS ($21,304,000.00), secured, inter alia, by that certain Mortgage, Security Agreement and Fixture Filing (the "Lien Instrument") covering the Mortgaged Property (as hereinafter defined) including, without limitation, that certain land or property interest; and

 

B. As a material inducement in order for Lender to make the Loan to Borrower, Indemnitor has agreed to execute and deliver this Agreement to and for the benefit of Lender.

 

NOW, THEREFORE, for and in consideration of the making of the Loan by Lender to Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby agrees as follows:

 

AGREEMENT

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

Customary Complying Substances:  Hazardous Substances which are (i) customarily used in connection with the occupancy, use, operation or maintenance of the Mortgaged Property, (ii) in reasonably minimal amounts, taking into account the intended and proper use thereof, and, to the extent required by applicable law, properly containerized and labeled, and (iii) stored, transported, disposed of and used in a manner that do not violate Environmental Laws.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

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Environmental Laws:  Any federal, state or local law, statute, ordinance, order, decree, code, directive or regulation, whether now or hereafter in effect, pertaining to health, industrial hygiene or the environmental conditions on, under or about the Mortgaged Property, including, but not limited to, the following, as now or hereafter amended:  Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9601 et seq.; Resource, Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq. as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), Pub. L. 99-499, 100 Stat. 1613; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. § 2601 et seq.; Emergency Planning and Community Right to Know Act of 1986 ("EPCRA"), 42 U.S.C. § 11001 et seq.; Clean Water Act ("CWA"), 33 U.S.C. § 1251 et seq.; Clean Air Act ("CAA"), 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. § 1251 et seq.; any applicable corresponding state laws or ordinances; and regulations, rules, guidelines or standards promulgated pursuant to such laws, statutes and regulations, as such statutes, regulations, rules, guidelines and standards are amended from time to time.

 

Environmental Reports:  Those certain Phase I Environmental Site Assessments and other environmental reports, whether one or more, with respect to the Mortgaged Property described on Exhibit B attached hereto and made a part hereof for all purposes.

 

Event of Default:  Shall have the meaning provided in Article IV hereof.

 

Governmental Authority:  Any and all applicable courts, boards, agencies, commissions, offices or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) or quasi-governmental unit, whether now or hereafter in existence, with jurisdiction over all or any portion of the Mortgaged Property or the activities thereon or Indemnitor.

 

Hazardous Substances:  Any substance, product, waste or other material which is or becomes listed, regulated or addressed as being a toxic, hazardous, polluting or similarly harmful substance under any Environmental Law, including (but not limited to):  (i) any substance included within the definition of "hazardous waste" pursuant to Section 1004 of RCRA; (ii) any substance included within the definition of "hazardous substance" pursuant to Section 101 of CERCLA; (iii) any substance included within the definition of "regulated substance", "hazardous substance", "waste" or "pollutant" (or other similar terms, without limitation) pursuant to any applicable state law or ordinance wherein the Mortgaged Property is located; (iv) asbestos or asbestos containing materials in any form that are or could reasonably be expected to become friable; (v) polychlorinated biphenyls; (vi) petroleum products; (vii) underground storage tanks, whether empty, filled or partially filled with any substance; (viii) any radioactive materials, urea formaldehyde foam insulation or radon; (ix) mold and mold causing substances; and (x) any other chemical, material or substance, the exposure to which is prohibited, limited or regulated by any Governmental Authority on the basis that such chemical, material or substance is toxic, hazardous or harmful to human health or the environment.

 

Hazardous Substances Contamination:  The contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, surface water, air or other elements on or of the Mortgaged Property by Hazardous Substances, or the contamination of the buildings, facilities, soil, groundwater, surface water, air or other elements on or of any other property as a result of Hazardous Substances at any time being located on or discharged from the Mortgaged Property, including the migration of vapors from contaminated soil or ground water into improvements (whether before or after the date of the Lien Instrument); provided, however, the use, storage or existence of any Customary Complying Substances shall not constitute a Hazardous Substances Contamination.

 

  

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Indemnified Parties:  Shall have the meaning provided in Section 7.1 hereof.

 

Loan Documents:  The Note, the Lien Instrument, the Loan Agreement, this Agreement and any and all other agreements, documents and instruments now or hereafter executed by Indemnitor or any other Person in connection with the Loan or the performance and discharge of the obligations related hereto or thereto, together with any and all renewals, modifications, amendments, restatements, consolidations, substitutions, replacements, extensions and supplements hereof or thereof.

 

Mortgaged Property:  That certain real property located in Miami-Dade County, Florida, as more particularly described in the Lien Instrument, including the land more particularly described on Exhibit A attached hereto and incorporated herein by reference, together with all improvements located thereon, certain personalty as described in the Lien Instrument, together with certain other rights, estates, interests, collateral and benefits now or at any time hereafter securing the payment of the Loan and related obligations, whether by virtue of the Loan Documents or otherwise.

 

Person:  Any corporation, limited liability company, limited liability partnership, general partnership, limited partnership, firm, association, joint venture, trust or any other association or legal entity, including any public or governmental body, quasi-governmental body, agency or instrumentality, as well as any natural person.

 

Remedial Work.  Such corrective work and procedures as may be reasonably necessary or desirable in light of any Hazardous Substances Contamination or a violation by Indemnitor or the Mortgaged Property of any Environmental Laws, all of which Remedial Work shall be undertaken in a manner consistent with the requirements of all applicable Environmental Laws.

 

Section 1.2 Capitalized terms not defined in this Agreement shall have the same meanings as given them in the Loan Agreement.

 

Section 1.3 Additional Definitions.  As used herein, the following terms shall have the following meanings:  (i) "hereof," "hereby," "hereto," "hereunder," "herewith" and similar terms mean of, by, to, under and with respect to this Agreement or to the other documents or matters being referenced; (ii) "heretofore" means before, "hereafter" means after, and "herewith" means concurrently with the date of this Agreement; (iii) all pronouns, whether in masculine, feminine or neuter form, shall be deemed to refer to the object of such pronoun whether same is masculine, feminine or neuter in gender, as the context may suggest or require; (iv) "including" means including, without limitation; and (v) all terms used herein, whether or not defined in Section 1.1 hereof, and whether used in singular or plural form, shall be deemed to refer to the object of such term whether such is singular or plural in nature, as the context may suggest or require.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

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ARTICLE II

 

REPRESENTATIONS AND WARRANTIES

 

Indemnitor unconditionally represents and warrants to Lender as follows:

 

Section 2.1 No Hazardous Substances.  Except as may be disclosed in the Environmental Reports, (i) to Indemnitor’s knowledge, the Mortgaged Property does not contain any Hazardous Substances other than Customary Complying Substances, and the Mortgaged Property is not affected by any Hazardous Substances Contamination, and (ii) neither Indemnitor nor, to Indemnitor’s knowledge, any other Person, including any predecessor owner, tenant, licensee, occupant, user or operator of all or any portion of the Mortgaged Property, has ever undertaken, caused, permitted, authorized or suffered the presence, use, manufacture, handling, generation, transportation, storage, treatment, discharge, release, burial or disposal on, under, from or about the Mortgaged Property of any Hazardous Substances (other than Customary Complying Substances) or the transportation to or from the Mortgaged Property of any Hazardous Substances (other than Customary Complying Substances).

 

Section 2.2 No Violation of Law. To the Indemnitor’s knowledge and except as may be disclosed in the Environmental Reports, the Mortgaged Property and the operations conducted thereon do not violate any applicable law, statute, ordinance, rule, regulation, order or determination of any Governmental Authority or any Environmental Laws.

 

Section 2.3 Permits and Licenses.  To Indemnitor’s knowledge, all notices, permits, licenses and similar authorizations, if any, required to be obtained or filed in connection with the ownership, operation or use of the Mortgaged Property, including the past or present generation, treatment, storage, disposal or release of any Hazardous Substances into the environment, have been duly obtained or filed.

 

Section 2.4 Adjoining Property.  Except as may be disclosed in the Environmental Reports, to Indemnitor's knowledge, no property adjoining the Mortgaged Property is or has in the past been used for the disposal, storage, treatment, processing, manufacturing or other handling of Hazardous Substances in violation of any Environmental Laws, nor, to Indemnitor's knowledge, is any other property adjoining the Mortgaged Property affected by Hazardous Substances Contamination.

 

Section 2.5 No Right to Lien.  Except as may be disclosed in the Environmental Reports, neither Indemnitor nor, to Indemnitor’s knowledge, any other Person, including any predecessor owner, tenant, licensee, occupant, user or operator of all or any portion of the Mortgaged Property, has in the past undertaken, caused, permitted, authorized or suffered the presence, use, manufacture, handling, generation, transportation, storage, treatment, discharge, release, burial or disposal of any Hazardous Substances on, under, from or about any other real property, all or any portion of which is legally or beneficially owned (or any interest or estate therein which is owned) by Indemnitor in any jurisdiction now or hereafter having in effect a so-called "superlien" law or ordinance or any part thereof, the effect of which law or ordinance would be to create a lien on the Mortgaged Property to secure any obligation in connection with the "superlien" law of such other jurisdiction.

 

  

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MIAMI-DADE COUNTY, FLORIDA

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Section 2.6 No Investigations.  To Indemnitor’s knowledge, no inquiry, investigation, administrative order, consent order and agreement, litigation or settlement is proposed or in existence, or to Indemnitor’s knowledge, threatened or anticipated with respect to any allegations that there has been, there is currently or there is a threat of a presence, release, threat of release or placement of any Hazardous Substances in violation of Environmental Laws on, under, from or about the Mortgaged Property, or the manufacture, handling, generation, transportation, storage, treatment, discharge, burial or disposal of any Hazardous Substances in violation of Environmental Laws on, under, from or about the Mortgaged Property, or the transportation of any Hazardous Substances to or from the Mortgaged Property.  Indemnitor has not received any written notice, and has no knowledge, that any Governmental Authority or private third party has determined, or threatens to determine, or is investigating any allegations that there has been, there is currently or there is a threat of a presence, release, threat of release or placement of any Hazardous Substances in violation of Environmental Laws on, under, from or about the Mortgaged Property, or the manufacture, handling, generation, transportation, storage, treatment, discharge, burial or disposal of any Hazardous Substances in violation of Environmental Laws on, under, from or about the Mortgaged Property, or the transportation of any Hazardous Substances to or from the Mortgaged Property in violation of Environmental Laws.

 

Section 2.7 No Release, Etc.  Except as may be disclosed in the Environmental Reports, Indemnitor has taken all steps reasonably necessary to determine that no Hazardous Substances have been generated, placed, held, located (other than Customary Complying Substances) treated, or otherwise released on, under, from or about the Mortgaged Property in violation of Environmental Laws.

 

Section 2.8 No New Activity.  To Indemnitor’s knowledge, except as may be disclosed in the Environmental Reports, no activities or operations have occurred on or about the Mortgaged Property since the effective date of the applicable Environmental Report which, by virtue of the nature of such activity or operation, would impose a material possibility or concern that (i) a Hazardous Substances Contamination could have occurred on or about the Mortgaged Property since the date of the applicable Environmental Report, or (ii) a violation of Environmental Law could have occurred since the date of the applicable Environmental Report.  To Indemnitor's knowledge, the information and factual circumstances described in the Environmental Reports remains true, correct and complete in all material respects as of the date hereof.

 

ARTICLE III

 

COVENANTS

 

Indemnitor unconditionally covenants and agrees with Lender as follows:

 

Section 3.1 No Hazardous Substances.  Indemnitor will not use or store Hazardous Substances (other than Customary Complying Substances) or generate, manufacture, produce, release, discharge, treat or dispose of on, under, from or about the Mortgaged Property in violation of Environmental Laws or transport to or from the Mortgaged Property any Hazardous Substances in violation of Environmental Laws or knowingly allow any other Person to do so. Prior to any construction, renovation or any other activities at the Mortgaged Property which might, in Lender's reasonable determination, disturb any suspect asbestos containing material, Indemnitor shall conduct an asbestos survey in form and substance reasonably satisfactory to Lender or, if applicable, as required by any Environmental Laws.  If asbestos containing material is discovered as a result of such survey, Indemnitor shall comply in all material respects with all federal laws, state laws, local ordinances and all regulations concerning the removal and disposal of such materials, including all worker protection practices and standards.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

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Section 3.2 Compliance with Environmental Laws.  Indemnitor will keep and maintain the Mortgaged Property in material compliance with, and shall not cause or permit the Mortgaged Property to be in violation of, any Environmental Law.

 

Section 3.3 Notice of Proceedings or Events.  Indemnitor will give prompt written notices to Lender of:  (i) any proceeding or inquiry by any Governmental Authority or nongovernmental entity or Person, of which Indemnitor has knowledge, with respect to the presence of any Hazardous Substances on, under, from or about the Mortgaged Property, the migration thereof from or to other property or the disposal, storage or treatment of any Hazardous Substances generated or used on, under or about the Mortgaged Property; (ii) all claims made or threatened by any third party against Indemnitor or the Mortgaged Property or any other owner or operator, including a tenant, of the Mortgaged Property relating to any loss or injury resulting from any Hazardous Substances; (iii) Indemnitor's discovery of any Hazardous Substances Contamination on the Mortgaged Property or any current or historical circumstances relative to the Mortgaged Property of an environmental nature which could subject Indemnitor or the Mortgaged Property to liability for damages or remediation pursuant to any Environmental Laws; and (iv) Indemnitor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Mortgaged Property that could cause the Mortgaged Property or any part thereof to be subject to any investigation or remediation pursuant to any Environmental Laws.

 

Section 3.4 Lender's Rights.  Indemnitor will permit Lender to join and participate in, as a party if it so elects, any legal proceedings or actions initiated with respect to the Mortgaged Property in connection with any Environmental Laws or Hazardous Substances, and Indemnitor shall pay all court costs, reasonable attorneys' fees and expenses actually incurred by Lender in connection therewith.

 

Section 3.5 Remedial Work.  If any Remedial Work is reasonably necessary or desirable, Indemnitor shall commence and thereafter diligently prosecute to completion all such Remedial Work within such period of time as may be required under any Environmental Laws.  Indemnitor's written proposal for any Remedial Work shall be provided to Lender in advance for Lender's review and approval which proposal shall include (i) the identity and biographical information with respect to any proposed contractor or engineer to be used with respect to such Remedial Work, (ii) a description of the measures to be undertaken as a part of such Remedial Work to insure that value is maintained with respect to the Mortgaged Property and that minimal disruption occurs as a result thereof to existing tenants at the Mortgaged Property and to the ongoing revenue from the Mortgaged Property, and (iii) such other information as Lender may reasonably request.  Lender shall be provided a copy of all environmental reports prepared after discovery of the reasonable necessity to perform Remedial Work immediately upon receipt thereof by Indemnitor, and shall be copied on all correspondence with any Governmental Authority regarding the Hazardous Substances Contamination and/or the Remedial Work.  Indemnitor shall provide Lender with periodic written status reports with respect to any Remedial Work in form, detail and at a frequency reasonably acceptable to Lender.  All costs and expenses of such Remedial Work shall be paid by Indemnitor, including Lender's reasonable attorneys' fees and costs actually incurred in connection with monitoring or review of such Remedial Work.  In the event Indemnitor shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Lender may, but shall not be required to, cause such Remedial Work to be performed, and all reasonable costs and expenses thereof, or incurred in connection therewith, shall become part of the Indebtedness (as defined in the Lien Instrument).

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

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Section 3.6 Monitoring System.  In the event that Lender acquires knowledge or receives notice that any Hazardous Substance (other than Customary Complying Substances) or Hazardous Substances Contamination exists in, on or under the Mortgaged Property, in violation of applicable Environmental Law, upon Lender's written request thereof, Indemnitor will establish and maintain, at Indemnitor's sole expense, a system to assure and monitor continued compliance with Environmental Laws and the exclusion of Hazardous Substances (other than Customary Complying Substances) from the Mortgaged Property, by any and all owners or operators, including tenants, of the Mortgaged Property, which system shall include annual reviews of such compliance by employees or agents of Indemnitor who are familiar with the requirements of the Environmental Laws and, at the request of Lender no more than once each year, an environmental report which shall allow reliance thereon by Lender; provided, however, that if any such environmental report indicates any violation of any Environmental Laws or a need for further investigative or Remedial Work, (i) such system shall include at the request of Lender for detailed reviews of the status of such violation and/or the conducting of such further investigations ("Supplemental Reports") by the environmental consulting firm approved by Lender, and (ii) Lender may require the preparation of any additional environmental reports as may be determined by Lender to be reasonably necessary. Indemnitor shall furnish an environmental report or such Supplemental Reports to Lender within sixty (60) days after Lender so requests, together with such additional information as Lender may reasonably request.

 

ARTICLE IV

 

EVENTS OF DEFAULT

 

The term "Event of Default", as used herein, shall mean the occurrence at any time and from time to time, of any one or more of the following:

 

Section 4.1 Existence of Contamination.  If either Indemnitor or Lender acquires knowledge or receives notice that Hazardous Substances (other than Customary Complying Substances) or Hazardous Substances Contamination exists in, on, about or under any of the Mortgaged Property, and Indemnitor fails, within thirty (30) days after acquisition of such knowledge or of such notice (or such shorter period of time as may be required under any Environmental Law), (i) to notify Lender thereof in accordance with Section 3.3 and 9.3 of this Agreement (in the event Lender was not the party to acquire such knowledge or receive such notice to begin with); and (ii) to commence and thereafter diligently prosecute to completion any necessary Remedial Work.

 

  

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Section 4.2 Breach of Representation, Warranty or Covenant.  If Indemnitor violates or fails to comply with any covenant or agreement contained herein or any representation or warranty contained herein shall be false or misleading, or erroneous in any material respect.

 

Section 4.3 Cross-Default with Loan Agreement.  The occurrence of any "Event of Default" as specified in the Loan Agreement.

 

ARTICLE V

 

REMEDIES

 

If an Event of Default shall occur and be continuing, Lender may, at Lender's sole election, exercise any or all of the following:

 

Section 5.1 Acceleration.  Declare all unpaid amounts under the Note and any other unpaid portion of the Indebtedness immediately due and payable, without further notice, presentment, protest, demand or action of any nature whatsoever (each of which is hereby expressly waived by Indemnitor), whereupon the same shall become immediately due and payable.

 

Section 5.2 Remedies Under Loan Documents.  Exercise any and all other rights, remedies and recourses granted under the Loan Documents or as may be now or hereafter existing in equity or at law, by virtue of statute or otherwise, including actions for damages and specific performance.

 

ARTICLE VI

 

SITE ASSESSMENTS

 

If Lender shall ever have a reasonable basis to believe that there are Hazardous Substances (other than Customary Complying Substances) or Hazardous Substances Contamination affecting any of the Mortgaged Property in violation of Environmental Laws, Lender (by its officers, employees and agents) at any time and from time to time, either prior to or after the occurrence of an Event of Default, may contract for the services of Persons (the "Site Reviewers") to perform environmental site assessments ("Site Assessments") on the Mortgaged Property for the purpose of determining whether there exists on the Mortgaged Property any environmental condition which could result in any liability, cost or expense to the owner, occupier or operator of such Mortgaged Property arising under any Environmental Law.  The Site Assessments may be performed at any time or times so as to not unreasonably interfere with any tenants occupying the Mortgaged Property, upon reasonable notice and under reasonable conditions established by Indemnitor which do not unreasonably impede the performance of the Site Assessments.  The Site Reviewers are hereby authorized to enter upon the Mortgaged Property for such purposes.  The Site Reviewers, provided that the Mortgaged Property is materially restored to its condition as existed prior to such Site Assessments, are further authorized to perform both above and below the ground testing for environmental damage or the presence of any Hazardous Substances Contamination on the Mortgaged Property, and such other tests on the Mortgaged Property as may be reasonably necessary to conduct the Site Assessments in the reasonable opinion of the Site Reviewers.  Indemnitor will supply to the Site Reviewers such historical and operational information regarding the Mortgaged Property as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and will make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters.  On request, Lender shall make the results of such Site Assessments fully available to Indemnitor, which (prior to an Event of Default) may at its election participate under reasonable procedures in the direction of such Site Assessments and the description of tasks of the Site Reviewers.  The reasonable cost of performing such Site Assessments shall be paid by Indemnitor upon demand of Lender and any such obligations shall be Indebtedness secured by the Loan Documents and shall be payable by Indemnitor upon demand.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

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ARTICLE VII

 

INDEMNIFICATION

 

Section 7.1 Agreement to Indemnify.  REGARDLESS OF WHETHER ANY SITE ASSESSMENTS ARE CONDUCTED HEREUNDER, INDEMNITOR SHALL, JOINTLY AND SEVERALLY, PROTECT, INDEMNIFY AND HOLD HARMLESS LENDER AND ANY TRUSTEE ACTING ON LENDER'S BEHALF AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “INDEMNIFIED PARTIES”) FROM AND AGAINST ANY AND ALL LOSS, DAMAGE, COSTS, EXPENSE, ACTION, CAUSES OF ACTION AND LIABILITY (INCLUDING COURT COSTS AND REASONABLE ATTORNEYS' FEES AND EXPENSES) DIRECTLY OR INDIRECTLY ARISING FROM OR ATTRIBUTABLE TO THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL OR PRESENCE OF ANY HAZARDOUS SUBSTANCES IN, ON, UNDER, ABOUT OR FROM THE MORTGAGED PROPERTY, WHETHER EXISTING OR NOT EXISTING AND WHETHER KNOWN OR UNKNOWN AT THE TIME OF THE EXECUTION HEREOF AND REGARDLESS OF WHETHER OR NOT CAUSED BY, OR WITHIN THE CONTROL OF INDEMNITOR, INCLUDING (I) DAMAGES FOR PERSONAL INJURY, OR INJURY TO THE MORTGAGED PROPERTY, NEIGHBORING PROPERTIES OR NATURAL RESOURCES OCCURRING UPON OR OFF THE MORTGAGED PROPERTY, FORESEEABLE OR UNFORESEEABLE, INCLUDING THE COST OF DEMOLITION AND REBUILDING OF ANY IMPROVEMENTS ON THE MORTGAGED PROPERTY, INTEREST AND PENALTIES; (II) THE COSTS OF ANY REQUIRED OR NECESSARY ENVIRONMENTAL INVESTIGATION OR MONITORING, ANY REMEDIAL WORK, REPAIR, CLEANUP OR DETOXIFICATION OF THE MORTGAGED PROPERTY AND ANY NEIGHBORING PROPERTIES, AND THE PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL OR OTHER REQUIRED PLANS INCLUDING COURT COSTS AND FEES AND EXPENSES INCURRED FOR ATTORNEYS, CONSULTANTS, CONTRACTORS, EXPERTS AND LABORATORIES; AND (III) LIABILITY TO ANY THIRD PERSON OR ANY GOVERNMENTAL AUTHORITY TO INDEMNIFY SUCH PERSON OR GOVERNMENTAL AUTHORITY FOR COST EXPENDED IN CONNECTION WITH THE ITEMS REFERENCED IN SUBPARAGRAPH (II) IMMEDIATELY ABOVE EXCEPT TO THE EXTENT THE SAME ARISE OR RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY PERSON CLAIMING INDEMNITY HEREUNDER.  THIS COVENANT AND THE INDEMNITY CONTAINED HEREIN SHALL (1) SURVIVE THE RELEASE OF THE LIEN OF THE LIEN INSTRUMENT, OR THE EXTINGUISHMENT OF THE LIEN OF THE LIEN INSTRUMENT BY FORECLOSURE OR ACTION IN LIEU THEREOF AND SHALL CONTINUE IN EFFECT SO LONG AS A VALID CLAIM MAY BE LAWFULLY ASSERTED AGAINST THE INDEMNIFIED PARTIES, AND (2) EXCLUDE ANY DAMAGES ATTRIBUTABLE TO HAZARDOUS SUBSTANCES FIRST INTRODUCED ONTO THE MORTGAGED PROPERTY AFTER A FORECLOSURE THEREOF BY LENDER PURSUANT TO THE LOAN DOCUMENTS (BUT ONLY TO THE EXTENT THAT SUCH HAZARDOUS SUBSTANCES WERE NOT INTRODUCED BY INDEMNITOR OR ANY AFFILIATE OR AGENT OF INDEMNITOR) OR OTHERWISE DUE TO LENDER'S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

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Section 7.2 Indemnification Procedures.  If any action shall be brought against Lender based upon any of the matters for which Lender is indemnified hereunder, Lender shall notify Indemnitor in writing and Indemnitor shall promptly assume the defense thereof, including, without limitation, the employment of counsel reasonably acceptable to Lender and the negotiation of any settlement; provided, however, that any failure of Lender to notify Indemnitor of such matter shall not impair or reduce the obligations of Indemnitor thereunder.  Lender shall have the right, at the expense of Indemnitor to employ separate counsel in any such action and to participate in the defense thereof.  In the event Indemnitor shall fail to discharge or undertake to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder, Lender may, at its sole option and election, defend or settle such claim, loss or liability.  The liability of Indemnitor to Lender hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation court costs and attorneys' fees and expenses, incurred by Lender in effecting such settlement.  Indemnitor shall not, without the prior written consent of Lender:  (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to Lender of a full and complete written release of Lender (in form, scope and substance satisfactory to Lender in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit, proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay any sum or perform any obligation as determined by Lender in its reasonable discretion.  All costs indemnified hereunder shall be immediately reimbursable to Lender when and as incurred and, in the event of any litigation, claim or other proceeding, without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceedings, and Indemnitor shall pay to Lender any and all costs within ten (10) days after written notice from Lender itemizing the amounts thereof incurred to the date of such notice.  In addition to any other remedy available for the failure of Indemnitor to periodically pay such amounts owing hereunder, such amounts, if not paid within said ten (10) day period, shall bear interest at the Default Interest Rate.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

641925 v.2

  

ARTICLE VIII

 

LENDER'S RIGHT TO REMOVE HAZARDOUS MATERIALS

 

Except as previously disclosed in the Environmental Reports, Lender shall have the right but not the obligation, without in any way limiting Lender's other rights and remedies under the Loan Documents, to enter onto the Mortgaged Property, perform Remedial Work or to take such other actions as it deems reasonably necessary or advisable to clean up, remove, resolve or minimize the impact of or otherwise deal with, any Hazardous Substances or Hazardous Substances Contamination in, on, under, about or from the Mortgaged Property following receipt of any notice from any Person asserting the existence of any Hazardous Substances or Hazardous Substances Contamination pertaining to the Mortgaged Property or any part thereof which, if true, could result in an order, notice, suit, imposition of a lien on the Mortgaged Property or other action and/or which, in Lender's reasonable opinion, could jeopardize Lender's security under the Loan Documents; provided, however, Lender shall have no right to proceed with any of the rights granted to it in this Article VIII until Lender has provided Indemnitor with written notice of Lender's intent to take any of the actions described in this Article VIII and Indemnitor fails to commence, within thirty (30) days (or such shorter period of time as may be required under any Environmental Law) following Indemnitor's receipt of such notice, all Remedial Work or other action necessary to clean-up, remove or resolve any of the foregoing and diligently proceeds thereafter to complete the same.  All reasonable costs and expenses paid or incurred by Lender in the exercise of any such rights shall be included in the Indebtedness secured by the Loan Documents and shall be payable by Indemnitor upon demand.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1 No Exculpation.  This Agreement shall not be subject to any exculpation, non-recourse or other limitation of liability provisions in the Loan Documents, and Indemnitor acknowledges that Indemnitor's obligations under this Agreement are joint, several and unconditional, and are not limited by any such exculpation, non-recourse or similar limitation of liability provisions, if any, in the Loan Documents.

 

Section 9.2 Reimbursable Costs.  Those costs, damages, liabilities, losses, claims, expenses (including court costs and reasonable attorneys' fees and expenses) for which Lender is indemnified hereunder shall be reimbursable to Lender after being paid by Lender, and Indemnitor shall pay such costs, expenses, damages, liabilities, losses, claims, expenses (including court costs and reasonable attorneys' fees and expenses) to Lender within ten (10) days after notice from Lender itemizing the amounts paid to the date of such notice.  In addition to any remedy available for failure to periodically and timely pay such amounts, such amounts shall thereafter bear interest at the Default Interest Rate.  Payment by Lender shall not be a condition precedent to the obligations of Indemnitor under this Agreement.

 

Section 9.3 Notices.  Any notice, communication, request or other documents or demand permitted or required hereunder shall be in writing and given in accordance with the provisions of the Loan Agreement.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

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Section 9.4 Governing Law.  THIS AGREEMENT IS EXECUTED AND DELIVERED AS AN INCIDENT TO A LENDING TRANSACTION NEGOTIATED AND CONSUMMATED IN DALLAS COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN TEXAS; PROVIDED, HOWEVER, THAT EITHER FEDERAL LAW OR, TO THE EXTENT FEDERAL LAW DOES NOT APPLY, THE LAW OF THE SITUS OF THE MORTGAGED PROPERTY SHALL BE APPLIED TO DETERMINE THE COMPLIANCE OF THE MORTGAGED PROPERTY WITH ENVIRONMENTAL LAWS.  Indemnitor, for itself and its successors and assigns, hereby irrevocably (i) submits to the nonexclusive jurisdiction of the state and federal courts in Texas (ii) waives, to the fullest extent permitted by law, any objection that it may now or in the future have to the laying of venue of any litigation arising out of or in connection with any Loan Document brought in the applicable court of Dallas County, Texas or in the United States District Court with jurisdiction over Dallas County, Texas; (iii) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in such court or that such court is an inconvenient forum; and (iv) agrees that any legal proceeding against any party to any Loan Document arising out of or in connection with any of the Loan Documents may be brought in one of the foregoing courts.  Indemnitor agrees that service of process upon it may be made by certified or registered mail, return receipt requested, at its address specified herein.  Nothing herein shall affect the right of Lender to serve process in any other manner permitted by law or shall limit the right of Lender to bring any action or proceeding against Indemnitor or with respect to any of Indemnitor's property in courts in other jurisdictions.  The scope of each of the foregoing waivers is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims.  Indemnitor acknowledges that these waivers are a material inducement to Lender's agreement to enter into agreements and obligations evidenced by the Loan Documents, that Lender has already relied on these waivers and will continue to rely on each of these waivers in related future dealings.  The waivers in this section are irrevocable, meaning that they may not be modified either orally or in writing, and these waivers apply to any future renewals, extensions, amendments, modifications or replacements in respect of the applicable Loan Document.  In connection with any litigation, this Agreement may be filed as a written consent to a trial by the court.

 

Section 9.5 Waiver of Acceptance.  Indemnitor waives any acceptance of this Agreement by Lender.

 

Section 9.6 No Waiver.  The failure of any party to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not be deemed to be a waiver thereof nor give rise to any estoppel against such party, nor excuse any of the parties from their obligations hereunder.  Any waiver of such right or remedy must be in writing and signed by the party to be bound.  This Agreement is subject to enforcement at law and/or equity, including actions for damages and/or specific performance.

 

Section 9.7 Time is of Essence.  Time is of the essence in this Agreement with respect to all of the terms, conditions and covenants herein contained.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

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Section 9.8 Survival.  This Agreement shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive any exercise of any remedy by Lender under the Loan Documents, including foreclosure of the liens of the Loan Documents (or deed in lieu thereof), even if, as part of such foreclosure or deed in lieu of foreclosure, the Indebtedness is satisfied in full.

 

Section 9.9 NO ORAL AGREEMENTS.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.  The provisions hereof and the other Loan Documents may be amended or waived only by an instrument in writing signed by Indemnitor and Lender.

 

Section 9.10 WAIVER OF RIGHT TO TRIAL BY JURY.  INDEMNITOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY KNOWINGLY, INTENTIONALLY, IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

Section 9.11 Joint and Several Liability.  If Indemnitor consists of more than one Person, each shall be jointly and severally liable to perform the obligations of Indemnitor under this Agreement.

 

Section 9.12 Counterparts; Facsimile and Electronic Transmission.  To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature and acknowledgment of, or on behalf of, each party, or that the signature and acknowledgment of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures and acknowledgment of, or on behalf of, each of the parties hereto.  Any signature and acknowledgment page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures and acknowledgments thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature and acknowledgment pages.  Counterparts hereof which are transmitted by facsimile or electronic transmission shall be given the identical legal effect as an original.

 

  

ENVIRONMENTAL INDEMNITY AGREEMENT

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[SIGNATURE PAGE FOLLOWS]

ENVIRONMENTAL INDEMNITY AGREEMENT

MIAMI-DADE COUNTY, FLORIDA

641925 v.2

  

  

  

EXECUTED to be effective as of the date first written above.

 

	  	
INDEMNITOR:

 

TOTB North, LLC, a Florida limited liability company

 

 

By:  _________________________________

        William C. Owens, President

 

STATE OF _______________                 §

                                                                   §

COUNTY OF _____________                 §

 

 

THE FOREGOING INSTRUMENT was acknowledged before me, the undersigned authority, this ____ day of ____________, 2014 by William C. Owens, as President of TOTB North, LLC, a Florida limited liability company, on behalf of the company.  He is personally known to me or has produced ________________________ as identification.

 

 

[S E A L]                                                                                ________________________________                                                              

                                                                                                Notary Public, State of ______________                                                                        

 

 

My Commission Expires:

                                                                                                ________________________________

______________________                                                    Printed Name of Notary Public

 

ENVIRONMENTAL INDEMNITY AGREEMENT – Signature Page

  

  

  

	  	
INDEMNITOR:

 

Owens Financial Group, Inc., a California corporation

 

By:____________________________________                                                                

Name:  ____________________________           

Title:    ____________________________      

STATE OF _______________                       §

                                                                         §

COUNTY OF _____________                       §

 

The foregoing instrument was ACKNOWLEDGED before me this _____ day of _______________, 2014, by ______________________, the ____________________ of ____________________________, a _____________________, on behalf of said ______________________.

 

[S E A L]      __________________________                    

      Notary Public, State of  ________                                                                       

My Commission Expires:

                      __________________________

______________________  Printed Name

ENVIRONMENTAL INDEMNITY AGREEMENT – Signature Page

  

  

  

	  	
INDEMNITOR:

 

Owens Realty Mortgage, Inc., a Maryland corporation

 

By:  ______________________________________                                                              

Name:  _______________________________          

Title:    _______________________________         

STATE OF _______________                       §

                                                                         §

COUNTY OF _____________                       §

 

The foregoing instrument was ACKNOWLEDGED before me this _____ day of _______________, 2014, by ______________________, the ____________________ of ____________________________, a _____________________, on behalf of said ______________________.

 

 

[S E A L]                                                                                _______________________________                                                            

                                                                                                Notary Public, State of _____________                                                                      

 

My Commission Expires:

 

                                                                                               _______________________________

______________________                                                   Printed Name of Notary Public

 

List of Attachments:

Exhibit A – Description of Real Property

Exhibit B – Description of Environmental Reports

ENVIRONMENTAL INDEMNITY AGREEMENT – Signature Page

  

  

  

Exhibit A

 

 

Description of Real Property

 

 

Lots 5, 6 and 7, Block 8, of FIRST ADDITION TO TREASURE ISLAND, according to the plat thereof recorded in Plat Book 53, page 65, of the Public Records of Miami-Dade County, Florida, being more particularly described as follows:

Begin at the Northwest corner of Lot 5, Block 8, FIRST ADDITION TO TREASURE ISLAND, as recorded in Plat Book 53, page 65, of the Public Records of Miami-Dade County, Florida; run thence North 88°41'24" East, along the North line of said Lot 5, a distance of 344.87 feet to the Northeast corner of said Lot 5; thence South 01°37'08" East, along the East line of Lots 5, 6 and 7 of said Block 8, a distance of 300.00 feet to the Southeast corner of said Lot 7; thence South 88°41'24" West, along the South line of said Lot 7, a distance of 344.87 feet to the Southwest corner of said Lot 7; thence North 01°37'08" West, along the West line of said Lots 5, 6 and 7 and the East right-of-way line of East Treasure Drive, a distance of 300.00 feet to the Point of Beginning.

TOGETHER WITH those non-exclusive easements which benefit the above parcel created by the following Agreements:

1.  Reciprocal Parking Agreement dated April 14, 1965, recorded May 25, 1965, in Official Records Book 4607, page 106, and amended and re-recorded June 11, 1965 in Official Records Book 4632, page 238, Public Records of Miami-Dade County, Florida.

2.  Reciprocal Parking Agreement dated January 19, 1966, recorded January 20, 1966, in Official Records Book 4908, page 737, and Amendment to Reciprocal Parking Agreement, dated February 4, 1966, recorded April 18, 1966, in Official Records Book 5024, page 286, Public Records of Miami-Dade County, Florida.

3.  Shared Facilities Easement Agreement dated November 9, 2005 recorded November 9, 2005 in Official Records Book 23946, page 4560, as amended by Amendment thereto recorded February 27, 2007, in Official Records Book 25400, Page 1866, Public Records of Miami-Dade, County, Florida.

EXHIBIT A, Description of Real Property – Cover Page

Miami-Dade County, Florida

  

  

  

Exhibit B

 

 

Description of Environmental Reports

 

	
·  

	
Groundwater Monitoring Report for Arsenic and Monitoring Only Plan (MOP) dated June 13, 2013 by Geosyntec Consultants, Project UT-3848/File 9646

	
·  

	
Addendum to Supplemental Site Assessment Report dated November 20, 2013 by Geosyntec consultants, Project UT-3848/File 9646; FDEP Facility ID# 13-8628799

	
·  

	
Addendum to SSARA dated February 21, 2014 by Geosyntec consultants, Project UT-3848/File 9646

EXHIBIT B, Description of Environmental Reports – Cover Page

Miami-Dade County, Floridaexhibit10-6.htm

GUARANTY

(Carveout)

 

THIS GUARANTY (this "Guaranty") is executed effective as of June 12, 2014, by OWENS REALTY MORTGAGE, INC., a Maryland corporation (“Owens Realty”) and OWENS FINANCIAL GROUP, INC., a California corporation (“Owens Financial” and jointly and severally with Owens Realty, "Guarantor"), for the benefit of BANK OF THE OZARKS (together with its successors and assigns, "Lender").

 

RECITALS:

 

WHEREAS, pursuant to that certain Promissory Note, dated of even date herewith, executed by TOTB North, LLC, a Florida limited liability company ("Borrower") and payable to the order of Lender in the original stated principal amount of $21,304,000.00 (together with all renewals, modifications, increases and extensions thereof, the "Note"), Borrower has become indebted and may from time to time be further indebted, to Lender with respect to a loan (the "Loan") which is made pursuant to that certain Construction Loan Agreement, dated of even date herewith, between Borrower and Lender (the "Loan Agreement"), which Loan is secured by, inter alia, that certain Mortgage, Security Agreement and Fixture Filing, dated of even date herewith, granted by Borrower in favor of Lender (the "Lien Instrument"), and further evidenced, secured or governed by other documents, instruments and agreements executed in connection with the Loan including, without limitation, that certain Environmental Indemnity Agreement, dated of even date herewith (the "Environmental Indemnity") (this Guaranty and all of the foregoing, as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time, being, collectively, the "Loan Documents");

 

WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees to Lender the payment and performance of the Guaranteed Obligations (as herein defined); and

 

WHEREAS, Guarantor is the owner of a direct or indirect interest in Borrower and will directly or indirectly benefit from Lender making the Loan to Borrower.

 

NOW, THEREFORE, as an inducement to Lender to enter into the Loan Agreement and to make the Loan to Borrower, and to extend such additional credit as Lender may from time to time agree to extend, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor, intending to be legally bound hereby, represents and warrants to Lender and covenants and agrees with Lender as follows:

 

ARTICLE I

 

NATURE AND SCOPE OF GUARANTY

 

1.1 Guaranty and Agreement to be Primarily Obligated.  Guarantor hereby irrevocably and unconditionally, jointly and severally, guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise.  Guarantor hereby irrevocably and unconditionally covenants and agrees that Guarantor is liable for the Guaranteed Obligations as a primary obligor.

 

  

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1.2 Definition of Guaranteed Obligations.

 

(a) Guarantor hereby assumes liability as a primary obligor for, hereby unconditionally, jointly and severally, guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against, any and all Losses (as herein defined) incurred or suffered by, or asserted against, Lender to the extent arising out of or in connection with any of the following:

 

(i) to the extent such results from an action or failure to act by any of the Related Parties (as herein defined):  (1) physical waste occurring on the Mortgaged Property, (2) damage or destruction to the Mortgaged Property except to the extent the same is fully insured, and (3) the removal of any portion of the Mortgaged Property in violation of the terms of the Loan Documents;

 

(ii) subject to any right to contest such matters as expressly provided in the Loan Documents, failure of Borrower or Borrower’s agent or designee to pay any valid Impositions (except to the extent, but only the extent, the entire amount of the unpaid Impositions have been paid by Borrower to Lender pursuant to the Loan Documents), mechanic's liens, materialmen's liens or other charges that can create liens on any portion of the Mortgaged Property;

 

(iii) all costs, charges and fees associated with the collection or enforcement of the Loan, this Guaranty or preservation of Lender's rights under the Loan Documents or this Guaranty, including any costs incurred by Lender arising from or relating to the filing of a petition under the U.S. Bankruptcy Code by or against Borrower or Guarantor;

 

(iv) the misapplication, misappropriation or conversion by any Related Party of (1) any insurance proceeds paid by reason of any loss, damage or destruction to the Mortgaged Property, or (2) any awards or other amounts received in connection with the condemnation or eminent domain proceeding of all or a portion of the Mortgaged Property (or any settlement paid in lieu of any such action being taken);

 

(v) the misapplication, misappropriation or conversion by any Related Party of any Rents or other gross revenue of any nature whatsoever from the Mortgaged Property or any portion thereof (including, without limitation, any security deposits, other refundable deposits, or sums paid attributable to the termination of any Lease or other circumstance), or the sale, leasing or operation thereof, to the extent such amounts, pursuant to the Loan Documents, were to be tendered or credited to Lender including, without limitation, all accrued Rents or other gross revenue from the Mortgaged Property accruing from and after the occurrence of an Event of Default;

 

  

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(vi) Borrower’s failure to maintain any one or more of the insurance policies required under the Loan Documents or to pay or provide the amount of any one or more insurance deductibles to the extent of the applicable deductible following a casualty or other insured event or claim;

 

(vii) the seizure or forfeiture of the Mortgaged Property, or any portion thereof, or Borrower's interest therein, resulting from criminal wrongdoing by any Related Party;

 

(viii) Borrower’s indemnification of Lender set forth in Section 8.2 of the Loan Agreement;

 

(ix) the obligations and indemnities of Borrower under the Environmental Indemnity, to the full extent of any Losses incurred by Lender as a result of the existence of Hazardous Substances or Hazardous Substances Contamination (each as defined in the Environmental Indemnity) or failure to comply with Environmental Laws (as defined in the Environmental Indemnity); or

 

(x) the execution, amendment, modification, termination, cancelation or acceptance of a surrender of any Lease or the waiver of any of the terms or provisions of any Lease, to the extent done in violation of the Loan Documents.

 

(b) In addition to, and without limiting the generality of, the foregoing Section 1.2(a), and notwithstanding anything to the contrary set forth in this Guaranty or in any of the other Loan Documents, Guarantor hereby acknowledges and agrees that Guarantor shall be fully and personally liable for the full amount of the Indebtedness and the timely satisfaction of all of the Obligations under the Loan Documents in the event that any of the following circumstances should occur:

 

(i) Borrower or Guarantor files a voluntary petition under the U.S. Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency laws;

 

(ii) any Related Party files, or joins in the filing of, an involuntary petition against Borrower or Guarantor under the U.S. Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower or Guarantor from any Person;

 

  

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(iii) Borrower or Guarantor files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against it, by any other Person under the under U.S. Bankruptcy Code or any other federal, state, local for foreign bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person;

 

(iv) Borrower fails to obtain Lender's prior written consent to any subordinate financing or other voluntary lien encumbering the Mortgaged Property, to the extent Borrower is required to obtain such prior written consent under the Loan Documents before consummating any such action;

 

(v) Borrower fails to obtain Lender’s prior written consent to any voluntary assignment, transfer, pledge or conveyance of the Mortgaged Property or any interest therein or of any direct or indirect ownership interest in Borrower, to the extent, in any such case, Borrower is required to obtain such prior written consent under the Loan Documents before consummating any such action;

 

(vi) any fraud, material or intentional misrepresentation, gross negligence or willful misconduct by any Related Party in connection with the Loan;

 

(vii) any Related Party consents to, or acquiesces in, or joins in, an application for the appointment of a custodian, receiver, trustee or examiner for Borrower or any portion of the Mortgaged Property except to the extent that the same is sought by Lender;

 

(viii) Borrower or Guarantor makes an assignment for the benefit of creditors, or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due; or

 

(ix) any Related Party, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender or in connection with the Loan Documents, (A) seeks a defense, judicial intervention or injunctive or other equitable relief of any kind, (B) asserts in a pleading filed in connection with the judicial proceeding any defense against Lender or any right in connection with any security for the Loan, or (C) delays, opposes, impedes, obstructs, hinders, enjoins or otherwise interferes with or frustrates the due exercise by Lender of any such enforcement action, right or remedy, in each case which is frivolous, brought in bad faith, without merit (in the case of the defense) or unwarranted (in the case of the request of judicial intervention or injunctive or other equitable relief).

 

(c) The circumstances and obligations of Guarantor set forth in Section 1.2(a) and Section 1.2(b) above, as and to the extent set forth in said provisions, are hereinafter collectively referred to as the "Guaranteed Obligations".

 

  

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(d) Notwithstanding anything to the contrary in any of the Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Indebtedness or to require that all collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with the Loan Documents.

 

1.3 Additional Defined Terms.

 

(a) "Losses":  Any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, demands, causes of action, damages, actual out-of-pocket losses, fines, penalties, charges, fees, costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees and expenses), judgments, awards and amounts paid in settlement of whatever kind or nature (including, without limitation, court costs, reasonable attorneys’ fees and expenses and other costs of defense).

 

(b) "Related Parties" or "Related Party":  Borrower, Guarantor, any Affiliate of either, or any of their respective principles, officers, general partners, members or any agent or employee of any such Person including duly authorized property management personnel.

 

(c) "Borrower":  The term "Borrower" as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or any interest in Borrower.

 

(d) Undefined Terms:  Capitalized terms used but not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Loan Agreement.

 

1.4 Nature of Guaranty.  This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection.  This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after (if Guarantor is a natural person) Guarantor's death (in which event this Guaranty shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs).  The fact that at any time or from time to time the Guaranteed Obligations may be increased, reduced or paid in full shall not release, discharge or reduce the obligation of Guarantor to Lender with respect to any indebtedness or obligations of Borrower thereafter incurred (or other Guaranteed Obligations thereafter arising) under the Note or otherwise.  This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment, sale, pledge, transfer, participation or negotiation of all or part of the Note.

 

  

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1.5 Guaranteed Obligations Not Reduced by Offset.  The Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower, or any other Person, against Lender or against payment or performance of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise and Guarantor hereby waives and relinquishes, to the fullest extent permitted by applicable Legal Requirements, all rights and remedies to any defense, right of offset or other claim which Guarantor may have against Lender.

 

1.6 Payment and Performance by Guarantor.  If all or any part of the Guaranteed Obligations shall not be punctually paid and performed when due, whether at demand, maturity or earlier by acceleration or otherwise, Guarantor shall, immediately upon demand by Lender, and without presentment, protest, notice of protest, notice of nonpayment or nonperformance, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever (all such notices being hereby expressly waived by Guarantor), pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender's address as set forth herein.  Such demand may be made at any time coincident with or after the time for payment and performance of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations.  Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

 

1.7 No Duty to Pursue Others.  It shall not be necessary for Lender (and Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender's rights against any collateral which shall ever have been given to secure the Loan or the Guaranteed Obligations, (iii) enforce Lender's rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan or the Guaranteed Obligations, or (vi) resort to any other means of obtaining payment and performance of the Guaranteed Obligations.  Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

 

1.8 Agreement and Waiver of Notice.  Guarantor agrees to the provisions of the Loan Documents, and, to the extent permitted by law, hereby waives notice of, and any rights of consent to (i) any loans or advances made by Lender to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Lien Instrument, the Loan Agreement or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower's execution and delivery of any promissory notes or other documents, instruments or agreements arising under the Loan Documents or in connection with the Mortgaged Property, (v) the occurrence of any breach by Borrower of any of the terms or conditions of the Loan Agreement or any other Loan Document or the occurrence of any Event of Default, (vi) Lender's transfer, sale, assignment, pledge, participation or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or the posting or advertising for the sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, and (ix) any other action at any time taken or not taken by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the other Loan Documents, and any other documents, instruments or agreements evidencing, securing or relating to any of the Guaranteed Obligations.

 

  

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1.9 Payment of Expenses.  In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall, immediately upon demand by Lender, pay Lender all actual costs and expenses (including, without limitation, court costs and reasonable attorneys' fees and expenses) incurred by Lender in the enforcement hereof or the preservation of Lender's rights hereunder, together with interest thereon at the Default Interest Rate from the date the payment of such expenses is requested by Lender until the date Lender receives payment in full of such expenses.  The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

 

1.10 Effect of Bankruptcy.  In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or any agreement, stipulation or settlement, Lender must rescind or restore any payment, or any part thereof, received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect, and this Guaranty shall remain (or shall be reinstated to be) in full force and effect.  It is the intention of Borrower and Guarantor that Guarantor's obligations hereunder shall not be discharged except by Guarantor's payment or performance of such obligations and then only to the extent of such payment or performance.

 

1.11 Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating Guarantor to the rights of Lender) to assert any claim against, or seek contribution, indemnification or any other form of reimbursement from, Borrower (or any other Person liable for payment and performance of any or all of the Guaranteed Obligations) for any payment made by Guarantor under or in connection with this Guaranty or otherwise until that date that is three hundred sixty-seven (367) days from the date that the Indebtedness is paid in full.

 

1.12 Multiple Guarantors.  If (i) this Guaranty is executed by more than one party constituting Guarantor, it is specifically agreed that Lender may enforce the provisions hereof with respect to one or more of such parties constituting Guarantor without seeking to enforce the same as to all or any such parties; or (ii) one or more additional guaranty agreements ("Other Guaranties") are executed by one or more additional guarantors ("Other Guarantors"), which guaranty, in whole or in part, any of the indebtedness or obligations evidenced by the Loan Documents, it is specifically agreed that Lender may enforce the provisions of this Guaranty or of the Other Guaranties with respect to one or more of the parties constituting Guarantor and/or one or more of the Other Guarantors under the Other Guaranties without seeking to enforce the provisions of this Guaranty or the Other Guaranties as to all or any of the parties constituting Guarantor or the Other Guarantors.  Each of the parties constituting Guarantor hereby waives any requirement of joinder (and shall not seek joinder) of all or any other of the parties constituting Guarantor or all or any of the Other Guarantors in any suit or proceeding to enforce the provisions of this Guaranty or of the Other Guaranties.  The liability hereunder of all parties constituting Guarantor shall be joint and several.

 

  

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ARTICLE II

 

EVENTS AND CIRCUMSTANCES NOT REDUCING

 

OR DISCHARGING GUARANTOR'S OBLIGATIONS

 

Guarantor hereby consents and agrees to each of the following, and agrees that Guarantor's obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantor might otherwise have as a result of or in connection with any of the following:

 

2.1 Modifications.  (A) Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Indebtedness, the Note, the other Loan Documents, or any other document, instrument, agreement, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations, or any failure of Lender to notify Guarantor of any such action, or (B) any sale, assignment or foreclosure (or delivery of a deed in lieu of foreclosure) of the Note, the Loan Agreement, the Security Instrument, or any other Loan Documents or any sale or transfer of the Property or any failure of Lender to notify Guarantor of any such action.

 

2.2 Adjustment.  Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to Borrower, Guarantor or any Other Guarantor.

 

2.3 Condition of Borrower or Guarantor.  The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or Guarantor, or any sale, lease or transfer of any or all of the assets of Borrower or Guarantor, or any changes in the direct or indirect shareholders, partners or members, as applicable, of Borrower or Guarantor; or any reorganization of Borrower or Guarantor.

 

2.4 Invalidity of Guaranteed Obligations.  The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment and performance of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

  

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2.5 Release of Obligors.  Any full or partial release of the liability of Borrower for the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment or performance of the Guaranteed Obligations, or any part thereof, by operation of law, Lender’s voluntary act, or otherwise, it being recognized, acknowledged and agreed by Guarantor that Guarantor may be required to pay or perform the Guaranteed Obligations in full without assistance or support from any other Person, and Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other Persons (including Borrower) to pay or perform the Guaranteed Obligations.

 

2.6 Other Collateral.  The taking or accepting of any other security, collateral or guaranty, or other assurance of payment and performance, for all or any part of the Guaranteed Obligations.

 

2.7 Release of Collateral.  Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security, at any time existing in connection with, or assuring or securing payment and performance of, all or any part of the Guaranteed Obligations.

 

2.8 Care and Diligence.  The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

 

  

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2.9 Unenforceability.  The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment and performance of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized, acknowledged and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.

 

2.10 Offset.  The Note, the Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of Borrower or Guarantor against Lender, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

 

2.11 Merger.  The reorganization, merger or consolidation of Borrower into or with any other Person.

 

2.12 Preference.  Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.

 

2.13 Other Actions Taken or Omitted.  Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be required to pay or perform the Guaranteed Obligations pursuant to the terms hereof, it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall be obligated to pay and perform the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or not contemplated, and whether or not otherwise or particularly described herein, which obligation and Guarantor's liability hereunder shall be deemed satisfied only upon the full and final payment, performance and satisfaction of the Guaranteed Obligations.

 

2.14 Representations.  The accuracy or inaccuracy of the representations and warranties made by Guarantor herein or by Borrower in any of the Loan Documents.

 

ARTICLE III

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

To induce Lender to enter into the Loan Documents and extend credit to Borrower, Guarantor represents, warrants and covenants to Lender, as of the date hereof, as follows:

 

  

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3.1 Benefit.  Guarantor is the owner of a direct or indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the making of the Loan to Borrower.

 

3.2 Familiarity and Reliance.  Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or payment and performance of the Guaranteed Obligations; provided, however, Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

 

3.3 No Representation by Lender.  Neither Lender nor any other party has made any representation, warranty or statement to Guarantor in order to induce Guarantor to execute this Guaranty.

 

3.4 Guarantor's Financial Condition.  As of the date hereof, and after giving effect to this Guaranty and the contingent obligations evidenced hereby, Guarantor (A) is, and will be, solvent, (B) has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and (C) has and will have property and assets sufficient to satisfy and repay its obligations, liabilities (including contingent liabilities) and debts, including, without limitation, the Guaranteed Obligations.

 

3.5 Legality.  The execution, delivery and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which Guarantor is a party or which may be applicable to Guarantor.  This Guaranty is a legal and binding obligation of Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors' rights and by general principles of equity.

 

3.6 Liens.  Guarantor has not created nor is the beneficiary of any Liens encumbering the Mortgaged Property or any interest therein.

 

3.7 Financial Information.  All of the financial information provided by Guarantor to Lender is true and correct in all material respects as of the date hereof.

 

3.8 Statements and Reports.  Guarantor agrees to deliver to Lender, during the term of the Loan and until the Loan has been fully paid and satisfied, the following statements and reports:

 

(a) Semi-annual, unaudited financial statements of Guarantor within forty-five (45) days after the end of each June and December (and accurate as of the last day of each such period), which shall include a balance sheet and income statement, together with a detailed schedule of all contingent liabilities and a statement of projected cash flows, which financial statement and related materials shall be prepared by Guarantor in accordance with Acceptable Accounting Standards and certified by the chief financial officer of Guarantor (or, in the case of an individual Guarantor, such Guarantor).

 

  

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(b) Annual unaudited financial statements, balance sheets and income statements of Guarantor within forty-five (45) days after the end of each calendar year (which shall be preliminary without tax adjustments), prepared in accordance with Acceptable Accounting Standards and certified to by the chief financial officer of Guarantor (or, in the case of an individual Guarantor, such Guarantor).

 

(c) Copies of all state (if applicable) and federal tax returns prepared with respect to Guarantor within thirty (30) days of such returns being filed with the Internal Revenue Service or applicable state authority.

 

(d) Copies of extension requests or similar documents with respect to federal or state (if applicable) income tax filings for Guarantor within thirty (30) days of such documents being filed with the Internal Revenue Service or applicable state authority.

 

(e) Such other reports and statements as Lender may reasonably require from time to time.

 

3.9 Financial Covenants. Guarantor hereby covenants and agrees, as a material inducement to Lender to make the Loan to Borrower, to the following:

 

(a) Liquidity Covenant:  Owens Realty shall, at all times throughout the term of the Loan, own and maintain minimum Liquid Assets of at least $5,000,000.00 as determined by Lender and shall provide to Lender evidence of such minimum Liquid Assets upon the request of Lender.  As used herein, the term "Liquid Assets" shall be deemed to mean assets of the following types and nature so long as such are not pledged, encumbered, hypothecated, subject to rights of offset or otherwise restricted:

 

(1) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

 

(2) time deposits with, or insured certificates of deposit or bankers' acceptances of, any commercial bank that (i) (A) is Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;

 

  

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(3) commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least "Prime-1" (or the then equivalent grade) by Moody's or at least "A-1" (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

 

(4) money market accounts or similar investments classified in accordance with GAAP as current assets of Borrower, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody's or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (1), (2) and (3) of this definition.

 

(b) Net Worth Covenant:  Owens Realty shall, at all times throughout the term of the Loan, maintain a minimum Net Worth of at least $35,000,000.00.  As used herein, the term "Net Worth" shall mean, on any applicable date of determination, (i) the net book value of all assets of Owens Realty (excluding, however, receivables from Affiliates, patent rights, trademarks, trade names, franchises, copyrights, licenses, goodwill and other intangible assets), after all appropriate deductions in accordance with Acceptable Accounting Standards (including, without limitation, reserves for doubtful receivables, obsolescence, depreciation and amortization), less (ii) all liabilities of Owens Realty (including, without limitation, liabilities for taxes and a fair valuation of contingent or indirect liabilities), all as determined in accordance with Acceptable Accounting Standards and otherwise in Lender's sole discretion.

 

(c) Other Financial Covenants:

 

(i) Guarantor covenants and agrees to act, in all respects, in good faith with respect to the obligations and covenants described in this Section 3.9 and all calculations required hereunder.  Guarantor further agrees to promptly respond to any inquiries made by Lender or its agent with respect to Guarantor's ongoing compliance with the financial covenants described in this Section 3.9 or with respect to documentation with respect thereto.  The failure of Guarantor, at any time, to satisfy the foregoing financial covenants shall constitute a default hereunder and under the other Loan Documents.

 

(ii) Guarantor shall not, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, either (i) enter into or effectuate any transaction with any Affiliate which would reduce the Net Worth of Guarantor, including, without limitation, the payment of any dividend or distribution to a shareholder, partner or member as applicable, or the redemption, retirement, purchase or other acquisition for consideration of any stock or other ownership interest in Guarantor, or (ii) sell, pledge, mortgage or otherwise transfer to any Person any of Guarantor’s assets, or any interest therein.

 

  

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3.10 Survival.  All representations and warranties made by Guarantor herein shall survive the execution hereof.

 

ARTICLE IV 

 

SUBORDINATION OF CERTAIN INDEBTEDNESS

 

4.1 Subordination of All Guarantor Claims.  As used herein, the term "Guarantor Claims" shall mean all debts and liabilities of Borrower to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities are evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor.  Guarantor Claims shall include, without limitation, all rights and claims of Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantor's payment and performance of all or a portion of the Guaranteed Obligations.  So long as any portion of the Indebtedness, the Obligations or the Guaranteed Obligations remains outstanding, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any amount upon the Guarantor Claims.

 

4.2 Claims in Bankruptcy.  In the event of any receivership, bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency proceeding involving Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims.  Guarantor hereby assigns such dividends and payments to Lender but only to the extent that the indebtedness has not been paid in full.  Should Lender receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to Guarantor and which, as between Borrower and Guarantor, shall constitute a credit against the Guarantor Claims, then upon full payment and performance to Lender of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon Guarantor Claims.

 

4.3 Payments Held in Trust.  Notwithstanding anything to the contrary in this Guaranty, in the event that Guarantor should receive any funds, payment, claim or distribution which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims and distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay them promptly to Lender, and Guarantor covenants promptly to pay the same to Lender.

 

  

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4.4 Liens Subordinate.  Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment of Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower's assets securing payment and performance of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attach.  Without the prior written consent of Lender, Guarantor shall not (i) create any Lien encumbering the Mortgaged Property or any interest therein, (ii) exercise or enforce any creditor's rights it may have against Borrower, or (iii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including, without limitation, the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor.  The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents against Borrower granting Liens in any of its assets to any Person other than Lender or Guarantor transferring any of its assets to any Person other than Lender.

 

4.5 No Limitations.  Nothing contained in this Guaranty shall affect or limit the ability of Lender to enforce any of Lender's rights or remedies with respect to the Mortgaged Property.  Nothing contained in this Guaranty shall affect or limit the rights of Lender to proceed against any other Person, including Borrower, or any other party with respect to the enforcement of any guarantees of payment, guarantees of performance and completion, hazardous materials indemnifications or agreements or other similar rights, including, without limitation, those indemnities contained in the Environmental Indemnity.

 

ARTICLE V

 

MISCELLANEOUS

 

5.1 Waivers and Related Agreements.  Guarantor hereby expressly waives:  (i) any right to revoke this Guaranty with respect to the Guaranteed Obligations; (ii) any right to require Lender to do any of the following before Guarantor is obligated to pay or perform the Guaranteed Obligations or before Lender may proceed against Guarantor: (A) sue or exhaust remedies against Borrower or any other Person liable for the Guaranteed Obligations or any portion thereof; (B) sue on an accrued right of action in respect of any of the Guaranteed Obligations or bring any other action, exercise any other right, or exhaust any other remedy; or (C) enforce rights against Borrower’s assets or the collateral pledged by Borrower to secure the Guaranteed Obligations; (iii) any right relating to the timing, manner or conduct of Lender’s enforcement of rights against Borrower’s assets or the collateral pledged by Borrower to secure the Guaranteed Obligations; (iv) if Guarantor and Borrower (or any other Person) have each pledged assets to secure the Guaranteed Obligations, any right to require Lender to proceed first against collateral pledged by Borrower (or any other Person) before proceeding against the collateral pledged by Guarantor; (v) promptness, diligence, notice of any default, notice of nonpayment or nonperformance, notice of acceleration or intent to accelerate, demand for payment or performance, acceptance or notice of acceptance of this Guaranty, presentment, notice of protest, notice of dishonor, notice of the incurring by Borrower of additional indebtedness, notice of any suit or other action by Lender against Borrower or any other Person, any notice to any Person liable for the obligation which is the subject of the suit or action, and all other notices and demands with respect to the Guaranteed Obligations and this Guaranty; [and] (vi) each of the foregoing rights or defenses, regardless of whether they arise under (A) Rule 31 of the Texas Rules of Civil Procedure, (B) Chapter 17, Section 17.001 of the Texas Civil Practice and Remedies Code, (C) Chapter 43 of the Texas Civil Practice and Remedies Code, or (D) any other statute or law, common law, in equity, under contract or otherwise, or under any amendments, recodifications, supplements or any successor statute or law of or to any such statute or law; and (vii) any and all rights under Sections 51.003, 51.004 and 51.005 of the Texas Property Code, and under any amendments, recodifications, supplements or any successor statute or law of or to any such statute or law.

 

  

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5.2 Notices.  All notices or other communications required or permitted to be given pursuant hereto shall be in writing and shall be deemed properly given if (i) mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested; (ii) by delivering same in person to the intended addressee; or (iii) by delivery to an independent third party commercial delivery service for same day or next day delivery and providing for evidence of receipt at the office of the intended addressee.  Notice so mailed shall be effective upon its deposit with the United States Postal Service or any successor thereto; notice sent by a commercial delivery service shall be effective upon delivery to such commercial delivery service; notice given by personal delivery shall be effective only if and when received by the addressee; and notice given by other means shall be effective only if and when received at the designated address of the intended addressee.  Either party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth herein.  For purposes of such notices, the addresses of the parties shall be as follows:

 

	
  

	
Lender:

	
Bank of the Ozarks

	
  

	
8201 Preston Road

	
  

	
Suite 700

	
  

	
Dallas, Texas 75225

	
  

	
Attention:  Dan Thomas

 

	
  

	
With copy to:

	
Bank of the Ozarks

	
  

	
6th and Commercial

	
  

	
P.O. Box 196

	
  

	
Ozark, Arkansas 72949

	
  

	
Attention:  Robert Lloyd

 

  

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With copy to:

	
Johnston, Allison & Hord, PA

	
  

	
1065 East Morehead Street

	
  

	
Charlotte, NC 28209

	
  

	
Attention:  Wanda C. Townsend

 

	
  

	
Guarantor:

	
Owens Realty Mortgage, Inc.

	 

	
  

	
2221 Olympic Boulevard

	
  

	
Walnut Creek, California 94595

	
  

	
Attn:         William E. Dutra

	
  

	
With a copy to:

	
Shumaker, Loop & Kendrick, LLP

Bank of America Plaza, Suite 2800

101 East Kennedy Boulevard

Tampa, Florida 33602

Attn:       W. Kent Ihrig

 

5.3 GOVERNING LAW.  THE CONTRACTUAL AND OTHER GENERAL AGREEMENTS EVIDENCED BY THIS GUARANTY WILL BE GENERALLY GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS); PROVIDED, HOWEVER, (A)  ANY MATTERS WITH RESPECT TO THE CREATION, PERFECTION, VALIDITY AND ENFORCEMENT OF ANY LIEN OR SECURITY INTEREST WITH RESPECT TO THE MORTGAGED PROPERTY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE SUCH MORTGAGED PROPERTY IS LOCATED, AND (B) TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.  ANY ACTION OR PROCEEDING AGAINST GUARANTOR UNDER OR IN CONNECTION WITH THIS GUARANTY MAY, AT LENDER’S OPTION, BE BROUGHT IN ANY STATE OR FEDERAL COURT IN DALLAS COUNTY, TEXAS.  GUARANTOR HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM, AND (C) CONSENTS TO THE SERVICE OF PROCESS IN ANY MANNER AUTHORIZED BY TEXAS LAW.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST GUARANTOR OR WITH RESPECT TO ANY OF GUARANTOR'S PROPERTY IN COMPETENT COURTS IN OTHER JURISDICTIONS.  GUARANTOR AGREES THAT ANY ACTION OR PROCEEDING BY GUARANTOR AGAINST LENDER SHALL BE BROUGHT ONLY IN A STATE OR FEDERAL COURT LOCATED IN DALLAS COUNTY, TEXAS.

 

  

GUARANTY AGREEMENT (CARVEOUT) – Page 17

641938; Miami-Dade County, Florida

  

GUARANTOR DOES HEREBY DESIGNATE AND APPOINT WILLIAM C. OWENS, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN DALLAS, TEXAS, AND AGREES THAT SERVICE OF PROCESS UPON SAID AUTHORIZED AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF TEXAS.  GUARANTOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN DALLAS, TEXAS (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN DALLAS, TEXAS OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

5.4 Invalid Provisions.  If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

 

5.5 Amendments.  This Guaranty may be amended only by an instrument in writing executed by the party against whom such amendment is sought to be enforced.

 

5.6 Parties Bound; Assignment.  This Guaranty shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives.  Lender shall have the right to assign or transfer its rights under this Guaranty in connection with any assignment of the Loan and the Loan Documents.  Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Guaranty.  No Guarantor shall have the right to assign or transfer its rights or obligations under this Guaranty without the prior written consent of Lender, and any attempted assignment without such consent shall be null and void.

 

5.7 Headings.  Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

 

  

GUARANTY AGREEMENT (CARVEOUT) – Page 18

641938; Miami-Dade County, Florida

  

5.8 Recitals.  The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

 

5.9 Counterparts; Facsimile and Electronic Transmission.  To facilitate execution, this Guaranty may be executed in as many counterparts as may be convenient or required.  It shall not be necessary that the signature and acknowledgment of, or on behalf of, each party, or that the signature and acknowledgment of all Persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single instrument.  It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures and acknowledgment of, or on behalf of, each of the parties hereto.  Any signature and acknowledgment page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures and acknowledgments thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature and acknowledgment pages.  This Guaranty shall become effective when it shall have been executed by Guarantor and when Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the parties hereto.  This Guaranty, and any and all signed certificates and other documents delivered hereunder or in connection herewith, may be transmitted and/or signed by facsimile or e-mail transmission (e.g. “pdf” or “tif”).  The effectiveness of any such documents and signatures shall, subject to applicable Legal Requirements, have the same force and effect as manually-signed originals and shall be binding on all parties to this Guaranty.  Lender may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile or e-mail document or signature.

 

5.10 Rights and Remedies.  If Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor.  The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

 

5.11 ENTIRETY.  THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.  THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY.  THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

 

  

GUARANTY AGREEMENT (CARVEOUT) – Page 19

641938; Miami-Dade County, Florida

  

5.12 WAIVER OF RIGHT TO TRIAL BY JURY.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE LIEN INSTRUMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS DISCRETELY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.

 

5.13 Reinstatement in Certain Circumstances.  If at any time any payment of the principal or interest under the Note or any other amount payable by Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, Guarantor's obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

 

 

[The Remainder of This Page Is Intentionally Left Blank.  Signature Page Follows.]

 

GUARANTY AGREEMENT (CARVEOUT) – Page 20

641938; Miami-Dade County, Florida

  

  

  

EXECUTED, effective as of the date first written above.

 

	  	
GUARANTOR:

 

OWENS REALTY MORTGAGE, INC.,

a Maryland corporation

 

 

____________________________

By: William C. Owens

Title: President

 

OWENS FINANCIAL GROUP, INC.,

a California corporation

 

 

____________________________

By: William C. Owens

Title: President

 

STATE OF ______________                  §

                                                                  §

COUNTY OF ____________                  §

 

This instrument was ACKNOWLEDGED before me this ____ day of __________, 2014, by William C. Owens, as President of Owens Realty Mortgage, Inc., a Maryland corporation, on behalf of the corporation.  He is personally known to me or has produced ____________________ as identification.

 

[S E A L]                                                                                                ________________________________                                                                       

                                                                                                                Notary Public - State of ______________

_____________

My Commission Expires:

 

                                                                                                                ________________________________

_____________________                                                                      Printed Name of Notary Public

 

 

 

 

  

GUARANTY (CARVEOUT) – Signature Page

  

 

STATE OF ______________         §

                                                         §

COUNTY OF ____________         §

  

This instrument was ACKNOWLEDGED before me this ____ day of __________, 2014, by William C. Owens, as President of Owens Financial Group, Inc., a California corporation, on behalf of the corporation. He is personally known to me or has produced ____________________ as identification.

  

[S E A L]                                                                                                 ________________________________ 

                                                                                                                 Notary Public - State of ______________

_____________

My Commission Expires:

  

                                                                                                                 ________________________________

_____________________                                                                       Printed Name of Notary Public

 

 

 

 

 

GUARANTY (CARVEOUT) – Signature Page

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