EXHIBIT 10.4
Recording Requested By
and When Recorded Return to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. WE CERTIFY THIS TO BE A TRUE AND
Coudert Brothers CORRECT COPY OF THE ORIGINAL
Twentieth Floor RECORDED 10-5-99 Series # 15007425
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: _______________________________
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ First American Title Company
DEED OF TRUST AND SECURITY AGREEMENT
MICRO LINEAR CORPORATION, A DELAWARE CORPORATION,
BORROWER,
TO
FIRST AMERICAN TITLE GUARANTY COMPANY,
AS TRUSTEE,
FOR THE BENEFIT OF
SUN LIFE ASSURANCE COMPANY OF CANADA,
BENEFICIARY
DEED OF TRUST AND SECURITY AGREEMENT
Cover Sheet DATE: October 1, 1999
BORROWER Micro Linear Corporation, a Delaware Corporation
BORROWER'S NOTICE ADDRESS:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TRUSTEE: First American Title Guaranty Company and all successors and
assigns for the benefit of Lender (as determined below).
TRUSTEE'S NOTICE ADDRESS:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LENDER Sun Life Assurance Company of Canada, a Canadian corporation,
together with other holders from time to time of the Note (as
herein defined).
LENDER'S NOTICE ADDRESS: c/o Sun Life of Canada
One Sun Life Executive Park ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention:
Mortgage Investments Group
NOTE AMOUNT: $3,000,000
STATE: California
RECORD OWNER OF THE LAND (AS DEFINED HEREIN): Micro Linear Corporation, a
Delaware Corporation
Exhibit A hereto is incorporated herein by reference.
This document prepared by: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇
Table of Contents
1. DEFINITION OF TERMS
2. GRANTING CLAUSES
3. REPRESENTATIONS AND WARRANTIES
3.1 Due Organization; Authority
3.2 Execution, Delivery and Effect of Loan Documents
3.3 Other Obligations
3.4 Construction and Completion of Improvements
3.5 Legal Actions
3.6 Financial Statements
3.7 Adverse Change to Property
3.8 Title to Property
3.9 Compliance with Laws and Private Covenants
3.10 Independence of the Property
3.11 Contamination
4. COVENANTS
4.1 Payments
(a) Secured Debt
(b) Property Taxes and Charges
(c) Escrow
(d) Taxes on Trustee or Lender
(e) Liabilities
(f) Right to Contest
(g) Expenses
4.2 Operation of the Property
(a) Maintenance; Alterations
(b) Liens
(c) Compliance with Laws and Private Covenants
(d) Use
(e) Inspection
(f) Notification of Contamination; Clean-Up
4.3 Insurance
4.4 Sales and Encumbrances
4.5 Financial Records and Statements
4.6 Indemnity
4.7 Notices
4.8 Estoppel Certificates
4.9 Legal Existence
4.10 Defense and Notice of Actions
4.11 Lost Note
4.12 Personalty
4.13 Further Assurances
4.14 Year 2000 Compliance
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5. CASUALTIES AND TAKINGS
5.1 Notice to Lender
5.2 Repair and Replacement
5.3 Insurance and Taking Proceeds
(a) Collection
(b) Assignment to Lender
5.4 Disbursement of Insurance Proceeds to Borrower
6. ASSIGNMENT OF RENTS, ISSUES AND PROFITS
6.1 Assignment of Rents
6.2 Performance of Leases
7. CONCERNING TRUSTEE
7.1 Trustee's Covenants
7.2 Resignation of Trustee
7.3 Substitution of Trustee
7.4 Reconveyance and Agreements
7.5 Release of Lien
7.6 Exculpation and Indemnification of Trustee
8. LEGAL PROCEEDINGS
9. DEFAULTS; REMEDIES OF LENDER
9.1 Events of Default
(a) Breach of Named Covenants
(b) Breach of Other Covenants
(c) Misrepresentations
(d) Bankruptcy
(e) Adverse Court Action
9.2 Remedies
(a) Acceleration
(b) Foreclosure
(c) Offset Rights
(d) Cure Rights
(e) Possession of Property
(f) Receiver
(g) Uniform Commercial Code Remedies
(h) Judicial Actions
(i) Subrogation Q) Sale
(k) Other
9.3 Holding Over
9.4 General Provisions
(a) Multiple Sales
(b) Cumulative Remedies
(c) Right to Purchase
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(d) Right to Terminate Proceedings
(e) No Waiver or Release
(f) Waivers and Agreements Regarding Remedies
(g) Waiver of Jury Trial
(h) Lender's Discretion
(i) Sales
10. POSSESSION AND DEFEASANCE
10.1 Possession
10.2 Defeasance
11. GENERAL
11.1 Lender's Right to Waive, Consent or Release
11.2 No Impairment
11.3 Amendments
11.4 No Usury
11.5 Notices
11.6 Successors and Assigns
11.7 Severability
11.8 Gender and Construction
11.9 Joint and Several Liability
11.10 Modifications
11.11 Governing Law
11.12 Captions
11.13 N/A
11.14 Sale, Assignment or Conversion of Secured Debt
11.15 Acknowledgment of Receipt
11.16 Time of the Essence
11.17 Exhibits
EXHIBIT A - Property Description
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1. DEFINITION OF TERMS. As used herein, the terms defined on the cover
sheet hereof shall have the meanings given on such sheet, and the
following terms shall have the following meanings:
1.1 Commitment: a certain commitment executed by Borrower and
Lender for the loan secured by this Deed of Trust.
1.2 Casualty: as defined in Paragraph 5.1.
1.3 Clean-Up: removal and/or remediation of Contamination in
accordance with Laws and good commercial practice.
1.4 Contamination: the presence of, use, generation, manufacture,
storage, treatment, disposal, discharge or release on, from or
to the Property of Hazardous Substances.
1.5 Contested Sum: as defined in clause (f) of Paragraph 4.1.
1.6 Deed of Trust: this Deed of Trust and Security Agreement and
all modifications or amendments thereto or extensions thereof.
1.7 Environmental Actions or Claims: any claim, action or
proceeding brought by a governmental authority in connection
with Contamination or any claim or action brought by a third
party relating to Contamination.
1.8 Event of Default: as defined in Paragraph 9.1.
1.9 N/A
1.10 Hazardous Substances: all substances and compounds prohibited
or regulated under any Laws; materials containing asbestos or
urea formaldehyde; gasoline and other petroleum products;
flammable explosives; radon and other natural gases;
radioactive materials; and polychlorinated biphenyls and
similar solvents.
1.11 Improvements: all buildings, structures and other improvements
now or hereafter existing, erected or placed on or under the
Land, or in any way used in connection with the use,
enjoyment, occupancy or operation of the Land or any portion
thereof; all fixtures of every kind and nature whatsoever now
or hereafter owned by Borrower and used or procured for use in
connection with the Realty.
1.12 In its sole unfettered discretion: as defined in Paragraph
11.8.
1.13 Insurance Premiums: as defined in Paragraph 4.3.
1.14 Insurance Proceeds: as defined in clause (a) of Paragraph 5.3.
1.15 Land: the land described in Exhibit A attached hereto,
together with all estate, title, interests, title reversion
rights, rents, increases, issues, profits, rights of way or
uses, additions, accretions, servitudes, gaps, gores,
liberties, privileges, water rights, water courses, alleys,
streets, passages, ways, vaults, adjoining strips of ground,
licenses,
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tenements, franchises, hereditaments, rights, appurtenances
and easements, now or hereafter owned by Borrower and
existing, belonging or appertaining to the Land, all claims or
demands whatsoever of Borrower therein or thereto, either at
law or in equity, in possession or in expectancy and all
estate, right, title and interest of Borrower in and to all
streets, roads and public places, opened or proposed, now or
hereafter used in connection with, existing, belonging or
appertaining to the Land.
1.16 Laws: any and all Federal, regional, state or local laws,
ordinances, rules, regulations, statutes, decisions, orders,
judgments, directives or decrees of any governmental or
regulatory authority, court or arbitrator whether now in force
or as amended or enacted in the future, including, without
limitation, the Americans with Disabilities Act of 1990, the
Water Pollution Control Act, the Toxic Substances Control Act,
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 as amended by the Superfund Amendment
and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act of 1976, and all regulations thereunder.
1.17 Leases: all leases, license agreements and other occupancy or
use agreements (whether oral or written), now or hereafter
existing, which cover or relate to all or any portion of the
Property, together with all options therefor, amendments
thereto and renewals, modifications and guarantees thereof,
and all rents, royalties, issues, profits, revenues, income
and other benefits of the Property arising at any time
(including, without limitation, after the filing of any
petition under any present or future Federal or state
bankruptcy or similar law) from the use or enjoyment thereof,
including, without limitation, cash or securities deposited
thereunder to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of the Leases or
applied to one or more of the installments of rent coming due,
additional, percentage, participation and other rentals, fees
and deposits.
1.18 Lease Assignment: a certain Assignment of Leases and Rents of
even date herewith from Borrower to Lender and all
replacements, substitutions, modifications or amendments
thereto or extensions thereof .
1.19 Loan Documents: this Deed of Trust, the Note, the Lease
Assignment, the Guaranty, and any and all other documents or
instruments related thereto or to the Secured Debt now or
hereafter given by or on behalf of Borrower and the
Guarantor(s) to or for the benefit of Lender.
1.20 Net Proceeds: as defined in Paragraph 5.3.
1.21 Note: a certain Promissory Note of even date herewith made by
Borrower in favor of Lender in the Note Amount and all
replacements, substitutions, modifications, renewals and
extensions thereof, which Note is payable in Monthly Payments,
until the Maturity Date (as each term is defined in the Note).
1.22 Parties in Interest: as defined in clause (d) of Paragraph
9.1.
1.23 Permitted Encumbrances: matters set forth or referred to in
Schedule B Part 1 of Lender's title insurance policy issued in
connection with the execution and recording of
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this Deed of Trust and the matters disclosed that certain
ALTA/ACSM survey dated September 24, 1999 prepared by Mission
Engineers, Inc. (Job No. 94571).
1.24 Personalty: all of Borrower's interest in personal property of
any kind or nature whatsoever, whether tangible or intangible,
which is used or will be used in the construction of the
Realty, all accounts, documents, instruments, chattel paper,
equipment, and general intangibles (as those terms are defined
in the Uniform Commercial Code of the State) relating to the
ownership or occupancy of the Property, all plans and
specifications, contracts and subcontracts for the
construction, reconstruction or repair of the Improvements,
all bonds, permits, licenses, guarantees, warranties, causes
of action, judgments, claims, profits, security deposits,
utility deposits, refunds of fees, Insurance Premiums,
deposits paid to any governmental authority, letters of
credit, insurance policies, Insurance Proceeds, Taking
Proceeds, and escrowed funds together with all present and
future attachments, accretions, accessions, replacements, and
additions thereto and products and proceeds thereof.
Notwithstanding anything to the contrary herein or in any
other Loan Document, the term "Personalty" shall not include
and in no event shall Lender have any lien, interest or other
right whatsoever in any item of process heating, ventilating,
cooling, plumbing, or electrical equipment, communications
equipment, production machinery or equipment, moveable
partitions, or any other equipment, machinery, inventory,
furniture or fixtures located within the Improvements which
may be removed from the Property without any material
permanent damage to the Property or the building systems
thereof. Upon request, Lender shall execute such documents as
Borrower shall reasonably request to evidence the foregoing
exception to any prospective purchaser or lender of Borrower
of such property.
1.25 Property. the Realty and Personalty or any portion thereof or
interest therein, except as the context otherwise requires.
1.26 Property Liabilities: as defined in clause (e) of Paragraph
4.1.
1.27 Property Taxes and Charges: all real estate taxes, personal
property taxes, betterments, assessments (general and
special), imports, levies, water, utility and sewage charges,
any and all income, franchise, withholding, profits and gross
receipts taxes, all other taxes and public charges, imposed
upon or assessed against Borrower or the Property or upon the
revenues, rents, issues, income and profits of use or
possession thereof, and any stamp or other taxes which may be
required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the
Property, regardless to whom paid or assessed.
The term "real estate taxes" in the foregoing sentence shall
include any form of assessment, license fee, license tax,
business license fee or tax, commercial rental tax, levy,
charge, penalty, tax or similar imposition, imposed by any
authority having the direct power to tax, including any city,
county, state or Federal government, or any school,
architectural, lighting, drainage or other improvement or
special assessment district thereof, against any legal or
equitable interest in the Property, except general business
taxes, net income taxes and franchise taxes imposed on Lender
other than taxes or other amounts referred to in Paragraph
4.1(d).
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1.28 Realty: the Land and Improvements or any portion thereof or
interest therein, as the context requires.
1.29 Restoration: as defined in clause (a)(i) of Paragraph 5.4.
1.30 Secured Debt: to the extent not prohibited by Laws, all
principal, interest, late charges and other sums, charges,
premiums, prepayment and other indemnification amounts or
other amounts due or to become due under the Loan Documents,
together with any other sums expended or advanced by or on
behalf of Lender under the Loan Documents or otherwise with
respect to the care, maintenance or preservation of the
Property or the enforcement of the Loan Documents.
1.31 Taking: as defined in Paragraph 5.1.
1.32 Taking Proceeds: as defined in clause (a) of Paragraph 5.3.
1.33 Trustee: as defined on the cover sheet hereof.
2. GRANTING CLAUSES. For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower has executed and
delivered the Loan Documents and hereby irrevocably and absolutely
grants, transfers, assigns, mortgages, bargains, sells and conveys to
Trustee for the benefit of Lender with all POWERS OF SALE AND STATUTORY
RIGHTS AND COVENANTS in the State, all of Borrower's estate, right,
title and interest in, to and under the Realty, and grants to Lender a
first and prior security interest in the Personalty and any and all of
the following, whether now owned or held or hereafter acquired or owned
by Borrower:
(a) all Leases;
(b) all profits and sales proceeds including, without limitation,
▇▇▇▇▇▇▇ money and other deposits, now or hereafter becoming
due by virtue of any contract or contracts for the sale of
Borrower's interest in the Property; and
(c) all proceeds (including claims thereto or demands therefore)
of the conversion, voluntary or involuntary, permitted or
otherwise, of any of the foregoing into cash or liquidated
claims.
FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS OF BORROWER TO
LENDER, in such order of priority as Lender may elect:
(1) payment of the Secured Debt;
(2) payment of such additional sums with interest thereon which
(i) may hereafter be loaned to Borrower by Lender where
evidenced by another note or notes, reciting it is so secured,
payable to Lender or order or any successor in ownership; or
(ii) advanced under the Loan Documents, even if the sum of the
amounts outstanding at any time exceeds the Note Amount; and
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(3) due, prompt and complete observance, performance, fulfillment
and discharge of each and every obligation, covenant,
condition, warranty, agreement and representation contained in
the Loan Documents.
This Deed of Trust is also intended to be a security agreement under
the Uniform Commercial Code as in force from time to time in the State.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Lender that the following are true, correct and complete as of the
date of this Deed of Trust.
3.1 Due Organization; Authority. Borrower is duly organized and
validly existing and in good standing under the laws of the
State and has power adequate to carry on its business as
presently conducted, to own the Property, to make and enter
into the Loan Documents and to carry out the transactions
contemplated therein.
3.2 Execution, Delivery and Effect of Loan Documents. The Loan
Documents have each been duly authorized, executed and
delivered by Borrower, and each is a legal, valid and binding
obligation of Borrower, enforceable in accordance with its
terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and subject to the
exercise of judicial discretion in accordance with general
principles of equity and statutes and judicial decisions
limiting the enforceability of indemnities, due on sale or
similar provisions of the Loan Documents..
3.3 Other Obligations. Borrower is not in violation of any
material term or provision of any document governing its
organization or existence or in default under any material
instruments or obligations relating to Borrower's business,
Borrower's assets or the Property. No party has asserted any
material claim or default relating to the Property or any
other claim which is reasonably likely to have a material
adverse effect on the business, properties or financial
position of the Borrower and its subsidiaries, taken as a
whole (a "Material Adverse Effect"). The execution and
performance of the Loan Documents and the consummation of the
transactions contemplated thereby will not materially violate
or contravene or constitute a material default under any
charter, certificate, by laws, partnership agreement, trust
declaration, contract, agreement, document or other instrument
to which Borrower is a party or by which Borrower may be bound
or affected, do not and will not violate or contravene any
Laws to which Borrower is subject, in either case, in a manner
which is reasonably likely to have a Material Adverse Effect;
nor do any such instruments impose or contemplate any
obligations which are or will be materially inconsistent with
the Loan Documents. Borrower has filed all Federal, state,
county and municipal income tax returns required to have been
filed by Borrower and has paid all taxes which have become due
pursuant to such returns or pursuant to any assessments
received by Borrower except when the failure to file or the
nonpayment is immaterial. Borrower does not know of any basis
for additional assessment with regard to any such material
tax. No approval by, authorization of, or filing with any
Federal, state or municipal or other governmental authority is
necessary in connection with the authorization, execution and
delivery of the Loan Documents.
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3.4 Construction and Completion of Improvements. The presently
existing Improvements have been completed and installed in a
good and workmanlike manner, in compliance in all material
respects with Laws and any plans and specifications previously
delivered to, and approved in writing by, Lender. The
Improvements do not contain any urea formaldehyde or asbestos.
The Improvements are served by electric, gas, sewer, water,
telephone and other utilities required for the present and
contemplated uses and operation thereof. Any and all streets,
utility lines and off-site improvements, which provide access
to the Property or are necessary for its present and
contemplated uses, have been completed, are serviceable and
have been accepted or approved by appropriate governmental
bodies.
3.5 Legal Actions. There are no material actions suits or
proceedings including, without limitation, any Environmental
Actions or Claims (whether or not material), condemnation,
insolvency or bankruptcy proceedings, pending or, to the best
of Borrower's knowledge and belief, threatened against or
affecting Borrower, its business or the Property; or
investigations, at law or in equity before or by any court or
governmental authority pending or, to the best of Borrower's
knowledge and belief, threatened against or affecting
Borrower, Borrower's business or the Property, except in all
the foregoing cases, actions, suits and proceedings fully
covered by insurance and heretofore fully disclosed in writing
to Lender or, which if resolved adversely to Borrower, would
not have a material, adverse effect on Borrower or the
Property. Borrower is not in default with respect to any
order, writ, injunction, decree or demand of any court or any
governmental authority affecting Borrower or the Property.
Furthermore, to the best knowledge and belief of Borrower,
there is no basis for any unfavorable decision, ruling or
finding by any court or governmental authority which would in
any material respect adversely affect the validity or
enforceability of the Loan Documents, or have a Material
Adverse Effect on Borrower (financial or otherwise) or
adversely affect the ability of Borrower to meet Borrower's
obligations under the Loan Documents.
3.6 Financial Statements. All statements, financial or otherwise,
submitted to Lender in connection with the Commitment are
true, correct and complete in all material respects, and such
financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
(or other basis of accounting practices permitted by Lender)
and fairly present the financial condition of the parties or
entities covered by such statements as of the date thereof.
Since the date thereof, and, except as disclosed to Lender in
writing, neither Borrower nor any such party or entity has
experienced any material adverse change in its finances,
business, operations, affairs and prospects taken as a whole.
3.7 Adverse Change to Property. No event or series of events has
occurred since the date of the Commitment which would, either
individually or collectively, materially and adversely affect
the Property.
3.8 Title to Property. Borrower has good and clear record and
marketable title to the Realty and good and merchantable title
to the Personalty, free of all liens, claims, encumbrances or
restrictions other than the Permitted Encumbrances.
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3.9 Compliance with Laws and Private Covenants. The Property
complies in all material respects with all Laws. Borrower has
examined and is familiar with all private covenants affecting
the Property, including, without limitation, private covenants
contained in the Permitted Encumbrances and there now exists
no material violation thereof. Borrower has no notice that any
of the Improvements encroach upon any easement over the Land
or encroach upon adjacent property or that buildings or other
structures on adjacent property encroach upon the Land.
3.10 Independence of the Property. The Land is a separate and
distinct parcel for tax purposes and is not subject to
Property Taxes and Charges against any other land. Borrower
has not by act or omission permitted any building or other
improvements on property not covered by this Deed of Trust to
rely on the Property or any part thereof or any interest
therein to fulfill any municipal or governmental requirement
for the existence of such property, building or improvement,
except for the matters included in the Permitted Exceptions,
and no Improvement on the Property relies on any property not
covered by this Deed of Trust or any interest therein to
fulfill any governmental or municipal requirement. Borrower
has not by act or omission impaired the integrity of the
Property as a single, separate, subdivided zoning lot separate
and apart from all other property.
3.11 Contamination. To the best of Borrower's knowledge and belief,
after due investigation and inquiry, no Hazardous Materials
are present in the soil, groundwater, surface water, air or
building materials of the Property, other that as disclosed in
that certain Environmental Site Assessment dated September 22,
1999 prepared by Allwest Environmental Inc. which has been
provided to Lender.
4. COVENANTS
4.1 Payments.
(a) Secured Debt. Borrower shall pay to Lender the
Secured Debt at the times and in the manner provided
in the Note and the other Loan Documents.
(b) Property Taxes and Charges. Except as provided in
Paragraph 4.1(f), Borrower shall pay, prior to the
date on which interest begins to accrue thereon or
any assessment becomes delinquent, all Property Taxes
and Charges. Upon Lender's written request, Borrower
shall furnish to Lender, within 30 days after the
date on which any such Property Taxes and Charges are
due and payable, official receipts from the
appropriate taxing authority, or other proof
satisfactory to Lender, evidencing the payment
thereof.
(c) Escrow. Borrower shall pay to Lender monthly, on each
date on which a Monthly Payment (as defined in the
Note) is due, 1/12 of such amount as Lender from time
to time estimates will be required to pay all
Property Taxes and Charges when due. If the Property
Taxes and Charges are due in less than twelve months
from the First Payment Date (as defined in the Note),
Borrower shall make equal monthly payments in amounts
sufficient to pay the Property Taxes and Charges when
due. Borrower shall also pay to Lender monthly, on
each date on which a Monthly Payment is due under the
Note, 1/12 of such amount as Lender from time
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to time estimates will be required to pay Insurance
Premiums. If the Insurance Premiums are due in less
than twelve months from the date of the first Monthly
Payment after the occurrence of an Event of Default,
Borrower shall make equal monthly payments in amounts
sufficient to pay the Insurance Premiums when due.
Lender's estimates shall be based on the amounts
actually payable or, if unknown, on the amounts
actually paid for the year preceding that for which
such payments are being made. Borrower shall transmit
to Lender bills for the Property Taxes and Charges
and Insurance Premiums as soon as received. When
Lender has received funds sufficient to pay the same,
Lender shall, except as provided in Paragraph 10.2,
pay such bills. If the amount paid by Borrower in any
year exceeds the aggregate required, such excess
shall be applied to escrow payments for the
succeeding year. Any deficiencies shall be paid by
Borrower to Lender within the (10) days following
delivery of Lender's written request. Payments for
such purposes may be made by Lender at its discretion
even though subsequent owners of the Property may
benefit thereby. Lender shall not be a trustee of
such funds and may commingle them with its general
assets without any obligation to pay interest thereon
or account for any earnings, income or interest on
such funds.
(d) Taxes on Trustee or Lender. If any Law imposes upon
Trustee or Lender the obligation to pay the whole or
any part of the Property Taxes and Charges or changes
in any way Laws relating to taxation so as to affect
adversely the Loan Documents, then Borrower shall pay
such Property Taxes and Charges or reimburse Trustee
and Lender immediately therefor, unless in the
reasonable, informed opinion of counsel to either
Trustee or Lender, it might be unlawful to require
Borrower to pay the same or such payment might result
in the imposition of interest prohibited by Laws. In
such case, an Event of Default shall exist, but if
Lender accelerates the Secured Debt solely because of
such Event of Default, the Secured Debt shall not
include the prepayment indemnification provided for
in paragraph 13 of the Note.
(e) Liabilities. Except as provided in Paragraph 4.1(f),
Borrower shall pay, prior to delinquency, all debts
and liabilities incurred in the construction,
operation, development, use, enjoyment, repair,
maintenance, replacement, restoration, management and
Clean-Up of the Property ("Property Liabilities")
including without limitation, utility charges, sums
due to mechanics and materialmen and other sums
secured or which might be secured by liens on the
Property.
(f) Right to Contest. Borrower may, in good faith and by
appropriate proceedings, contest the validity,
applicability or amount of any asserted Property
Taxes and Charges, Property Liabilities or liens,
charges, attachments or lis pendens under Paragraph
4.2(b) ("Contested Sum") after written notice of the
same to Lender. During such contest, Borrower shall
not be deemed in default hereunder if: (i) prior to
delinquency of the Contested Sum, Borrower deposits
with Lender or Lender's nominee cash or other
security, in form reasonably satisfactory to Lender,
adequate to cover the payment of such Contested Sum
and any obligation, whether matured or contingent, of
Borrower, Trustee or Lender therefor, together with
interest, costs and penalties thereon; and (ii)
Borrower promptly pays any amounts adjudged to be
due, together with all costs, penalties and interest
thereon, on or before such judgment becomes final.
Each such contest shall be
8
concluded and the Contested Sum, interest, costs and
penalties thereon shall be paid prior to the date any
writ or order is issued under which the Property
could be sold pursuant to such judgment, but in any
event on or before the 15th day following the date
the judgment becomes final.
(g) Expenses. To the extent allowed by Laws, Borrower
shall pay, on demand, but without counterclaim,
setoff, deduction, defense, abatement, suspension,
deferment, discrimination or reduction all fees
(including, without limitation, reasonable attorneys'
fees and disbursements) taxes, recording fees,
commissions and other liabilities, costs and expenses
incurred in connection with: (i) the making or
enforcement of the Loan Documents; (ii) Trustee's or
Lender's exercise and enforcement of its rights and
remedies under Paragraphs 7 and 8 hereof; (iii)
Trustee's or Lender's protection of the Property and
its interest therein in accordance with the Loan
Documents; and (iv) any amendments, consents,
releases, or waivers requested by Borrower if granted
by Lender under the Loan Documents.
Borrower shall not be entitled to any credit on the Secured
Debt by reason of its payment of any sums required to be paid
under Paragraph 4.1(b) through (f) unless such sums are paid
to reimburse Lender for amounts paid by Lender and added by
Lender to the Secured Debt.
4.2 Operation of the Property.
(a) Maintenance; Alterations. Borrower shall maintain and
preserve the Property in good repair and condition
and shall correct any defects or faults in the
Property. Borrower shall not commit, permit or suffer
any demolition or waste of the Property or any use or
occupancy which constitutes a public or private
nuisance. Borrower shall not do, permit or suffer to
be done any act whereby the value of the Property may
be materially decreased. Borrower shall not make any
material alterations, improvements, additions,
utility installments or the like to the Property
without the prior written consent of Lender in each
instance; provided, however, Borrower may make
replacements or substitutions of any item of the
Personalty if the replacement or substitution is of a
quality, utility, value, condition and character
similar to or better than the replaced or substituted
item and is free and clear of any lien, charge,
security interest or encumbrance, except for the
Permitted Liens and those as created or permitted by
this Deed of Trust.
(b) Liens. Except as provided in Paragraph 4.1(f)
Borrower shall promptly discharge any mechanics,
laborers', materialmens' or similar lien or any other
lien, charge, attachment, or lis pendens filed or
recorded against the Property which relates to
Borrower, the Property or any Contamination.
(c) Compliance with Laws and Private Covenants. Borrower
shall keep, observe, and satisfy and not suffer
violations of Laws and private covenants (whether or
not listed as Permitted Encumbrances) materially
affecting the Property.
(d) Use. Borrower shall not permit the use or occupancy
of the Property other than Permitted Leases as
defined in the Lease Assignment and other than
pursuant to
9
Leases which shall have been approved in advance and
in writing by Lender pursuant to the Lease Assignment
or which require no approval thereunder. Borrower
shall not use or permit the use or occupancy of the
Property in a manner which will result in the release
or disposal of Hazardous Materials to the soil,
ground water, surface water, air or building
materials of the Property and Borrower shall take all
steps reasonably necessary under the circumstances
including, without limitation, periodic inspections
and assessments of the Property, to determine whether
the release or disposal of Hazardous Materials to the
soil, ground water, surface water, air or building
materials of the Property has occurred.
(e) Inspection. Whether or not an Event of Default (as
defined in Paragraph 9.1) has occurred and exists,
Lender and its agents and contractors, shall have the
right, but not the duty or obligation, to enter upon
the Property at reasonable times without delay,
hindrance or restriction, in order to conduct
appraisals and inspections of the Property,
including, but not limited to environmental
inspections. If, in the reasonable belief of Lender,
the release or disposal of Hazardous Materials to the
soil, ground water, surface water, air or building
materials of the Property has occurred or is likely
to occur Lender shall have the right, but not the
duty or obligation to conduct, or cause to be
conducted, testing, including, but not limited to,
soil, air and groundwater sampling, regarding such
release or disposal of Hazardous Materials to the
soil, ground water, surface water, air or building
materials of the Property. Any environmental
inspections or testing shall be paid for by Borrower.
Lender shall have the right, but not the duty or
obligation, to disclose the results of such
inspections and testing as required by Laws or as
deemed appropriate by Lender.
(f) Notification of Contamination; Clean-Up. Borrower
shall notify Lender immediately upon discovery of any
release or disposal of Hazardous Materials to the
soil, ground water, surface water, air or building
materials of the Property. Borrower shall not,
without Lender's prior consent, initiate Clean-Up of
any Contamination, or enter into any settlement
agreement, consent decree or other compromise with
respect to any violation or alleged violation of any
Laws concerning Hazardous Substances, if such
Clean-up, settlement agreement, consent decree or
other compromise might, in Lender's sound business
judgment, impair the value of Lender's security
hereunder; provided, however, that Lender's prior
consent shall not be required in the event the
Contamination either poses an immediate threat to the
health, safety or welfare of any individual or is of
such a nature that an immediate remedial response is
necessary, such that it is impossible to obtain
Lender's consent before taking such remedial action;
provided further, however, that in such event,
Borrower shall notify Lender as soon as practicable
of any remedial action so taken.
4.3 Insurance. Borrower shall obtain and keep in force, with one
or more insurers with a Best's Rating of A-NII or higher, such
insurance as Lender may from time to time specify by notice to
Borrower, including, as a minimum, insurance providing: (i)
commercial general liability and property damage coverage with
a broad form coverage endorsement, with limits of liability
determined to be acceptable by Lender from time to time and a
combined single limit of at least $3,000,000; (ii) protection
against fire, "extended coverage" and other "All Risk" perils,
including, if specifically
10
required by Lender, earthquake, to the full replacement cost
of the Property; (iii) rent loss insurance in an amount of not
less than a sum equal to 12 months of rental income from all
Leases; and (iv) flood insurance if the Property is located in
an area identified by the Secretary of Housing and Urban
Development as an area having special flood hazards or in
which flood insurance has been made available under applicable
Laws. All property insurance policies shall include the
standard mortgagee clause in the State naming Lender as the
first mortgagee with all losses payable to Lender, and shall
also include an agreed-amount endorsement sufficient to
prevent Borrower from becoming a co-insurer. All liability
policies shall name Lender as an additional insured. All
insurance policies shall provide that the policy may not be
cancelled without 30 days prior written notice to Lender or
otherwise modified without 10 days prior written notice to
Lender, and that no act or thing done by Borrower shall
invalidate the policy as against Lender, and that the
deductible for any single Casualty shall not be more than
$25,000, or, in the case of earthquake or flood insurance,
such other higher deductible as is commercially reasonable and
customary. At least 30 days prior to the expiration date of
any policy required hereunder, Borrower shall provide Lender
or Lender's designee with evidence of compliance with this
Paragraph 4.3, in such form as required from time to time by
Lender. Such form shall bear notations evidencing the prior
payment of premiums ("Insurance Premiums") or shall be
accompanied by other evidence satisfactory to Lender that such
payment has been made.
All property insurers shall agree not to acquire any rights of
recovery against Lender by subrogation. Borrower, to the full
extent permitted by Laws and to the full extent permitted
without invalidating the insurance policies required above,
shall obtain endorsements by all insurers waiving any right of
subrogation against tenants under any Leases and shall require
the same of such tenants. Lender shall not because of
accepting, rejecting, approving or obtaining insurance, incur
any liability for the existence, nonexistence, continuation,
form or legal sufficiency of any insurance, the solvency of
any insurer, or the payment of losses.
Borrower shall furnish to Lender or Lender's designee an
original of all policies of insurance required under this Deed
of Trust, provided, however, that if Lender consents to
Borrower providing any of the insurance required under this
Deed of Trust through blanket policies carried by Borrower and
covering more than one location, Borrower shall furnish Lender
or Lender's designee with a certificate of insurance for each
such policy, setting forth the coverage, the limits of
liability as to the Property, the name of the insurer, the
policy number and the expiration date, or with a certified
true copy of the original of each such policy.
Borrower shall keep, observe and satisfy, and not suffer
violations of the requirements, including those requirements
pertaining to acts committed or conditions existing on the
Property, of insurance companies and any bureau or agency
which establishes standards of insurability affecting the
Property. Borrower shall not carry separate or additional
insurance concurrent in form or contributing in the event of
loss with that required by this Deed of Trust.
Upon foreclosure of this Deed of Trust or other transfer of
title or assignment of the Property in discharge, in whole or
part, of the Secured Debt, all right, title and interest
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of Borrower in and to all policies of insurance required by
this Paragraph 4.3 shall inure to the benefit of and pass to
Lender.
4.4 Sales and Encumbrances. Except as herein expressly provided,
Borrower shall not, without the prior written consent of
Lender, which consent, if given in Lender's sole unfettered
discretion, may be conditioned upon a change in the interest
rate under the Note, payment of a fee or change in the term of
the Note, adjustment of the Maturity Date or amortization
period or one or more of the foregoing or other requirements
of Lender:
(a) convey, assign, sell, mortgage, encumber, pledge,
dispose of, hypothecate, grant a security interest
in, grant options with respect to, or otherwise
dispose of (directly or indirectly or by operation of
law or otherwise, of record or not) all or any part
of any legal or beneficial interest in any part or
all of the Property or the Leases, or any interest
therein; or
(b) directly or indirectly sell, assign or otherwise
dispose of (whether or not of record or for
consideration), or permit the sale, assignment or
other disposition of; (i) any legal or beneficial
interest in the stock of any corporation which is
either Borrower or is a beneficial owner of all or
part of Borrower or the Property; or (ii) any legal
or beneficial interest in Borrower (or any trust of
which Borrower is a trustee) if Borrower is a limited
or general partnership, limited liability company,
joint venture, trust, nominee trust, tenancy in
common or other unincorporated form of business
association or form of ownership, except limited
partnership interests if Borrower is a limited
partnership.
4.5 Financial Records and Statements. Borrower shall keep accurate
books and records in accordance with generally accepted
accounting principles consistently applied (or other basis of
accounting practices prescribed or permitted by Lender) in
which full, true and correct entries shall be promptly made as
to all operations of the Property and shall permit all such
books and records to be inspected and copied by Lender, its
designees or its representatives during customary business
hours. Borrower shall deliver to Lender within 120 days after
the close of its financial year, and upon request by Lender at
any time during the term of the loan secured by the Loan
Documents, a statement of condition or balance sheet of
Borrower relating solely to the Property as of the end of such
year and an annual operating statement showing in reasonable
detail all income and expenses of Borrower with respect to the
Property, both certified as to accuracy by either an
independent certified public accountant acceptable to Lender
(if requested by Lender) or the senior financial officer or
partner of Borrower. Borrower shall also deliver to Lender
within 120 days after the close of its financial year and upon
request by Lender at any time during the year a current list
of all persons then occupying portions of the Property under
Leases, the rentals payable by such tenants and the unexpired
terms of their Leases, certified as to their accuracy by a
representative of Borrower acceptable to Lender, and in form
and substance satisfactory to Lender.
4.6 Indemnity. Borrower shall indemnify, defend and hold harmless
Trustee and Lender, its agents, employees and contractors from
and against, and upon demand, reimburse Trustee and Lender for
all claims, demands, liabilities, losses, damages, judgments,
12
penalties, costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, which may be
imposed upon, asserted against or incurred or paid by either
Trustee or Lender by reason of, on account of or in connection
with:
(a) any violation of Laws;
(b) any bodily injury or death or property damage
occurring in, upon or in the vicinity of the Property
through any cause whatsoever;
(c) any Contamination, any Clean-Up, any Environmental
Actions or Claims, or the imposition or recording of
a lien against the Property due to any Contamination;
(d) any act performed or omitted to be performed under
the Loan Documents or on account of any transaction
arising out of or in any way connected with the
Property or the Loan Documents;
(e) any expenditures or amounts advanced (other than
advances of principal under the Note) by Lender at
any time under the Loan Documents; and
(f) any act or omission of Lender under any Lease or
under the Loan Documents as a result of Lender's
exercise of rights or remedies under Paragraph 10.2
or under any of the other Loan Documents.
The foregoing indemnification shall apply in all instances,
unless the claim was directly caused by the gross negligence
or intentional misconduct of Lender, but shall not apply to
Contamination first present on the Property on or after a
foreclosure of this Deed of Trust (or a deed in lieu of such
foreclosure), and any Clean-Up or Environmental Actions or
Claims relating to such Contamination.
Borrower shall have the right to control any action for which
an indemnity is required pursuant to this Paragraph 4.6
through counsel of its choice, subject to Lender's consent;
however, at Lender's option, Lender may participate in such
action through its own counsel at Borrower's expense. If
Borrower does not notify Lender of its intent to control such
action within 30 days of delivery to Borrower of Lender's
notice of such claim, Lender may control and settle such
action, including a settlement for non-monetary relief such as
Clean-Up, without Borrower's consent and at Borrower's
expense.
If Borrower is a general or limited partnership or limited
liability company, Borrower waives any rights it may have to
require Lender to proceed against the assets of the
partnership or limited liability company before proceeding
against the assets of individual general partners in the
exercise of its rights under this Paragraph 4.6.
4.7 Notices. Borrower shall deliver to Lender at Lender's Notice
Address promptly upon receipt of the same, copies of all
notices, certificates, documents and instruments received by
Borrower which materially and adversely affect Borrower, the
Property or the Leases, including, without limitation, those
given in connection with Contamination or Environmental
Actions or Claims.
13
4.8 Estoppel Certificates. Borrower shall promptly furnish to
Lender from time to time, on the request of Lender, written
certifications signed and, if so requested, acknowledged
setting forth the then unpaid principal and interest under the
Note and specifying any claims, offsets or defenses which
Borrower asserts against the Secured Debt or any obligations
to be paid or performed by Borrower under the Loan Documents,
together with any other information reasonably requested by
Lender.
4.9 Legal Existence. Borrower shall continuously maintain its
existence as a legal entity and its right to own the Property
and to do business in the State.
4.10 Defense and Notice of Actions. Borrower shall, without
liability, cost or expense to Trustee or Lender protect,
preserve and defend title to the Property, the security hereof
and the rights or powers of Trustee or Lender hereunder,
against all adverse claimants to title or any possessory or
non-possessory interests therein, whether or not such
claimants or encumbrancers assert title paramount to that of
Borrower, Trustee or Lender or claim their interest on the
basis of events or conditions arising subsequent to the date
hereof.
4.11 Lost Note. Borrower shall, if the Note is mutilated,
destroyed, lost, or stolen, deliver to Lender a new promissory
note containing the same terms and conditions as the Note with
a notation thereon of the unpaid principal and accrued and
unpaid interest, whereupon the prior note shall be void and of
no further force and effect. Any such new note shall be
secured hereby and shall be deemed to be the "Note" referred
to herein.
4.12 Personalty. Borrower shall use the Personalty primarily for
business purposes and keep it at the Land. Borrower shall
immediately notify Lender in writing of any change in its
principal place of business and, as of the execution hereof
and hereafter from time to time when requested by Lender, upon
any acquisition of items of property constituting Personalty,
Borrower shall provide Lender with a current, accurate
inventory of the Personalty.
4.13 Further Assurances. Borrower shall promptly upon request of
Lender or Trustee: (a) correct any defect, error or omission
which may be discovered in the contents of any Loan Document
or in the execution or acknowledgement thereof; (b) execute,
acknowledge, deliver and record or file such further
instruments (including, without limitation, mortgages, deeds
of trust, security agreements, financing statements and
specific assignments of rents or leases); and (c) do such
further acts as may be necessary, desirable or proper in
Trustee's or Lender's opinion to: (i) protect and preserve the
first and valid lien, title and security interest of this Deed
of Trust on the Property or subject thereto any property
intended by the terms thereof to be covered thereby,
including, without limitation, any renewals, additions,
substitutions or replacements thereto; or (ii) protect the
interest and security interest of Trustee or Lender under the
Loan Documents in the Property against the rights or interests
of third parties.
Borrower hereby appoints each of Trustee and Lender as its
attorney-in-fact, coupled with an interest, to take the above
actions and to perform such obligations on behalf of
14
Borrower, at Borrower's sole expense, if Borrower fails to
comply with this Paragraph 4.13.
4.14 Year 2000 Compliance. Borrower has reviewed and assessed its
business operations and computer systems and applications to
address the "Year 2000 Problem" (that is, that computer
applications and equipment used by Borrower, directly or
indirectly through third parties, may be unable to properly
perform date-sensitive functions before, during and after
January 1, 2000). Borrower reasonably believes that the Year
2000 Problem will not result in a material adverse change in
Borrower's business condition (financial or otherwise),
operations, properties or prospects or ability to repay
Lender. Borrower will promptly deliver to Lender such
information relating to this representation at Lender
reasonably requests from time to time.
5. CASUALTIES AND TAKINGS.
5.1 Notice to Lender. In the case of any act or occurrence of any
kind or nature which results in damage, loss or destruction to
the Property ("Casualty"), or commencement of any proceedings
or actions which might result in a condemnation or other
taking for public or private use of the Property or which
relates to injury, damage, benefit or betterment thereto
("Taking"), Borrower shall immediately notify Lender
describing the nature and the extent of the Taking or the
Casualty, as the case may be. Borrower shall promptly furnish
to Lender copies of all notices, pleadings, determinations and
other papers in any such proceedings or negotiations.
5.2 Repair and Replacement. In case of a Casualty or Taking,
Borrower shall promptly (at Borrower's sole cost and expense
and regardless of whether the Insurance Proceeds or the Taking
Proceeds, if any, shall be sufficient or made available by
Lender for the purpose) restore, repair, replace and rebuild
the Property as nearly as possible to its quality, utility,
value, condition, and character immediately prior to the
Casualty or the Taking, as the case may be. However, upon a
Casualty or Taking resulting in a restoration cost that
exceeds 25% of the then replacement value of the Improvements
or a Taking of more than 25% of the area of the Land, and
application by Lender of the Insurance Proceeds or the Taking
Proceeds to reduction of the Secured Debt in accordance with
this Deed of Trust, Borrower shall be obligated only to remove
any debris from the Property and take such actions as are
necessary to make the undamaged or non-taken portion of the
Property into a functional economic unit insofar as it is
possible under the circumstances.
5.3 Insurance Proceeds and Taking Proceeds.
(a) Collection. Borrower shall use its best efforts to
collect the maximum amount of insurance proceeds
payable on account of any Casualty ("Insurance
Proceeds"), and the maximum award, payment or
compensation payable on account of any Taking
("Taking Proceeds"). In the case of a Casualty,
Lender may, in its sole unfettered discretion, make
proof of loss to the insurer, if not made promptly by
Borrower. Borrower shall not settle or otherwise
compromise any claim for Insurance Proceeds or Taking
Proceeds without Lender's prior written consent.
15
(b) Assignment to Lender. Borrower hereby assigns, sets
over and transfers to Lender all Insurance Proceeds
and Taking Proceeds and authorizes payment of such
Insurance Proceeds and Taking Proceeds to be made
directly to Lender. Lender shall apply the Insurance
Proceeds and Taking Proceeds first to pay all
expenses incurred by Lender in connection with the
Casualty or Taking, including, without limitation,
attorney's fees and title fees.
(c) Application of Proceeds. Unless the conditions set
forth in Paragraph 5.4 for the application of
Insurance Proceeds to Restoration are satisfied,
Lender may, in its sole unfettered discretion, apply
the balance of the Insurance Proceeds or Taking
Proceeds ("Net Proceeds") to either of the following,
or any combination thereof:
(i) to the payment of the Secured Debt, either
in whole or in part, in any order determined
by Lender in its sole unfettered discretion;
or
(ii) to repair or replacement, either partly or
entirely, of any part of the Property so
destroyed, damaged or taken, in which case
Lender may impose such terms, conditions and
requirements for the disbursement of the
Insurance Proceeds or Taking Proceeds as it,
in its sole unfettered discretion, deems
advisable. Lender shall be a trustee with
respect to any Insurance Proceeds or Taking
Proceeds, and shall deposit the Insurance
Proceeds or Taking Proceeds in an interest
bearing account.
If any portion of the Secured Debt shall thereafter be unpaid,
Borrower shall not be excused from the payment thereof in
accordance with the terms of the Loan Documents. Lender shall
not, in any event or circumstance, be liable or responsible
for failure to collect or exercise diligence in the collection
of any Insurance Proceeds or Taking Proceeds.
5.4 Disbursement of Insurance Proceeds to Borrower.
Notwithstanding anything to the contrary in the Loan
Documents, Lender will disburse the Insurance Proceeds to
Borrower, subject to and in accordance with the terms and
conditions of this Paragraph 5.4, provided that: (1) there
exists no Event of Default or occurrence or facts which with
the passage of time, the giving of notice, or both, will be an
Event of Default which remains uncured at the commencement of
or during the Restoration; (2) the Casualty does not occur
within nine months of the Maturity Date; (3) Lender's security
is not impaired by the Restoration or release of Insurance
Proceeds; and (4) Borrower has submitted evidence satisfactory
to Lender that Restoration can be completed within 270 days
after the Casualty, subject to delay beyond Borrower's
control, other than lack of funds.
As to any loss or damage which Lender estimates can be
repaired for less than 1/2 of 1 % of the then Secured Debt,
Lender shall disburse to Borrower from the Net Proceeds the
amount which it determines is necessary to repair the damage,
which amounts shall be used by Borrower to restore the damage
to the Property caused by the Casualty.
As to all other Casualties, Lender shall disburse the Net
Proceeds related thereto to Borrower on the following terms
and conditions:
16
(a) Prior to the first and each subsequent disbursement,
Borrower shall give proof satisfactory to Lender
that:
(i) Lender is holding a fund comprised of the
Net Proceeds and, if necessary, additional
deposits made by Borrower or tenants of the
Property, sufficient to restore the Property
to its condition and use immediately prior
to such loss or damage ("Restoration"),
together with a fund comprised of Net
Proceeds or funds deposited by Borrower,
sufficient to pay operating expenses,
Property Taxes and Charges, the Monthly
Payments (as defined in the Note) and other
so-called "carrying costs" of the Property
during the period of Restoration;
(ii) there are no Laws preventing Restoration of
the Property;
(iii) immediately after Restoration, the Leases on
the Property will produce sufficient income
to provide a debt coverage ratio of at least
1.1 : 1. The debt coverage ratio shall be
calculated by dividing the operating income
(less operating expenses and Property Taxes
and Charges) obtained from the Leases during
the twelve month period immediately after
the Restoration by the total principal and
interest payments due on all indebtedness
secured by the Property during the same
period;
(iv) the Restoration will be conducted under the
supervision of an architect, engineer and/or
a general contractor selected by and paid by
Borrower and approved by Lender;
(v) the Restoration will be performed pursuant
to plans and specifications approved by
Lender and by a contractor or contractors
approved by Lender; and
(vi) the Property, after such Restoration, shall
be in compliance with Laws.
(b) With respect to each disbursement and accompanying
each request therefor, there shall be delivered to
Lender:
(i) a certificate addressed to Lender and
executed by Borrower and by the architect,
engineer or general contractor supervising
the Restoration that such disbursement is to
pay for costs of the Restoration not paid
previously by any other prior disbursement,
that the amount of such disbursement does
not exceed the aggregate of such costs
incurred or paid on account of work, labor
or services performed and materials
installed in or stored upon the Property at
the date of such certificate and that the
disbursement requested, together with the
disbursements made prior thereto,
collectively, as a percentage of the total
Net Proceeds, do not exceed the percentage
of completion of the Restoration; and
(ii) an endorsement to Lender's title insurance
policy, in which the making of the
disbursement is recognized and the effective
date of coverage is changed to the date of
disbursement.
17
(c) Each disbursement shall be in the amount not greater
than 90% of the costs described in the certificate
referred to in Paragraph 5.4(b)(i) hereof.
Disbursement of the final balance of the Net
Proceeds, constituting not less than ten percent
(10%) thereof, shall be disbursed only upon delivery
to Lender of the following, in addition to the
foregoing:
(i) evidence satisfactory to Lender that all
claims then existing for labor, services and
materials enforceable by lien upon the
Property have been paid in full or provision
acceptable to Lender has been made therefor;
(ii) a certificate of such architect, engineer or
general contractor that the Restoration of
the Property has been completed in a good
workmanlike manner and in accordance with
all Laws;
(iii) an estoppel affidavit in form satisfactory
to Lender from each tenant occupying or
leasing space in the Property affected by
the Casualty; and
(iv) an as-built survey of the Improvements
certified to Lender and in form satisfactory
to Lender.
(d) If the quality of the Restoration is at least equal
to the quality of the Improvements before the
Casualty, any Net Proceeds in excess of the amount
used in payment of the Restoration shall be
distributed to Borrower.
Lender shall not be a trustee with respect to any Insurance
Proceeds, and may mingle Insurance Proceeds with its funds
without obligation to pay interest thereon. Lender shall in no
event be liable for the performance or observance of any
covenant or condition arising under any Lease in connection
with the Property nor obligated to take any action to restore
the Property.
6. ASSIGNMENT OF RENTS, ISSUES AND PROFITS.
6.1 Assignment of Rents. Borrower hereby assigns to Lender the
rents, issues, profits, royalties, and payments payable under
any lease of the Property, or portion thereof including any
oil, gas or mineral lease, or any installments of money
payable pursuant to any agreement or any sale of said property
or any part thereof, reserving to Borrower the rights prior to
default by Borrower in payment of the Secured Debt secured
hereby or in the performance of any agreement hereunder, to
collect and retain such rents, issues, profits, royalties,
payments and installments of money as they may become due and
payable. Upon any such default, Lender, without regard to the
adequacy of any security for the Secured Debt hereby secured,
such be entitled to (1) collect such rents, issues, profits,
royalties, payments and installments of money and apply the
same as more particularly set forth in this Paragraph, all
without taking possession of the Property, or (2) enter and
take possession of the Property or any part thereof, in
person, by agent, or by a receiver to be appointed by the
court and to ▇▇▇ for or otherwise collect such rents, issues,
profits, royalties, payments and installments of money. Lender
may apply any such rents, issues, profits, royalties, payments
and installments of money so collected, less costs and
expenses of
18
operation and collection, including reasonable attorneys'
fees, upon any indebtedness secured hereby, in such order as
Lender may determine, and, if such costs and expenses and
attorneys' fees shall exceed the amount collected, the excess
shall be immediately due and payable. The collection of such
rents, issues, profits, royalties, payments and installments
of money and the application thereof as set forth above shall
not cure or waive any default or notice of default hereunder
or invalidate any act done pursuant to such notice, except to
the extent any such default fully is cured. Failure or
discontinuance of Lender at any time, or from time to time, to
collect any such moneys shall not impair in any manner the
subsequent enforcement by Lender of the right, power and
authority herein conferred on Lender. Nothing contained
herein, including the exercise of any right, power or
authority herein granted by Lender, shall be, or be construed
to be, an affirmation by Lender of any tenancy, lease or
option, or an assumption of liability under, or the
subordination of the lien or charge of this Deed of Trust to
any such tenancy, lease or option. Borrower hereby agrees
that, in the event Lender exercises its rights as in this
Paragraph provided, Borrower waives any right to compensation
for the use of Borrower's furniture, furnishings or equipment
in the Property for the period such assignment of rents or
receivership is in effect, it being understood that the rents,
issues, profits, royalties, payments and installments of money
derived from the use of any such items shall be applied to
Borrower's obligation hereunder as above provided. In the
event that Borrower concurrently herewith or hereafter
executes any separate assignment of rents or leases to Lender,
then to the extent of any inconsistency between the provisions
hereof and any such assignment, the provisions of such
assignment shall control.
6.2 Performance of Leases. Borrower promises and agrees to keep,
perform and observe all of the lessor's covenants, agreements
and obligations, under the terms of all leases now or
hereafter executed relating to all or any portion of the
Property, to require that lessees under said leases keep,
perform, and observe all of the covenants, agreements and
obligations thereunder on their part to be kept, performed and
observed; not to alter, amend or modify such leases or any of
them without the prior written consent of Lender; and upon
default by Borrower in the performance thereof, Lender herein
or at its request the Borrower herein, without incurring any
obligations so to do or releasing Borrower from any obigations
herein secured, may perform said covenants, obligations or
agreements, or exercise any right or remedy which Borrower may
have either at law or in equity or under said leases or any of
them to require lessees to perform such covenants, obligations
or agreements, and all amounts expended or incurred, including
but not limited to costs, expenses and attorneys' fees, by
Lender or Trustee in so doing shall be due and payable
immediately from Lender.
8. CONCERNING TRUSTEE.
7.1 Trustee's Covenants. Trustee, by its acceptance hereof,
covenants faithfully to perform and fulfill the trusts herein
created, being liable, however, only for gross negligence or
willful misconduct, and hereby waives any statutory fee and
agrees to accept reasonable compensation, in lieu thereof, for
any services rendered by it in accordance with the terms
hereof.
7.2 Resignation of Trustee. Trustee may resign at any time upon
giving 30 days notice in writing to Borrower and to Lender.
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7.3 Substitution of Trustee. In the event of the death, removal,
resignation, refusal to act, or the inability to act of
Trustee, or in Lender's sole unfettered discretion for any
reason whatsoever, Lender may, at any time or from time to
time without notice and without specifying any reason therefor
and without applying to any court, select and appoint a
successor trustee, and all powers, rights, duties and
authority of Trustee, as aforesaid, shall thereupon become
vested in such successor without conveyance from the
predecessor trustee. Such substitute trustee shall not be
required to give bond for the faithful performance of its
duties unless required by Lender. Such substitute trustee
shall be appointed by written instrument duly recorded in the
county where the Realty is located, which appointment may be
executed by an authorized agent of Lender, and such
appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of
any action by the Board of Directors and any superior officer
of Lender. Borrower hereby ratifies and confirms any and all
acts which the herein-named Trustee or its successors or
assigns in this trust shall do lawfully by virtue hereof.
Borrower hereby agrees, on behalf of itself and its heirs,
executors, administrators, legal representatives and assigns,
that the recitals contained in any deed or deeds executed in
due form by Trustee or any substitute trustee, acting under
the provisions of this Deed of Trust, shall be prima facie
evidence of the facts recited therein, and that it should not
be necessary to prove in any court, otherwise than by such
recitals, the existence of the facts essential to authorize
the execution and delivery of such deed or deeds and the
passing of title thereby.
7.4 Reconveyance and Agreements. At any time, or from time to
time, without liability therefor and without notice, upon
written request of Lender and presentation of this Deed of
Trust and the Note or notes secured hereby for endorsement,
and without affecting the personal liability of any person for
the payment of the Secured Debt or the effect of this Deed of
Trust upon the remainder of the Property, Trustee may reconvey
any part of the Property, consent in writing to the making of
any map or plat thereof, join in granting any easement
thereon, or join in any extension agreement or any agreement
subordinating the lien or charge hereof.
7.5 Release of Lien. Upon written request of Lender stating that
the Secured Debt has been paid and upon surrender to Trustee
of this Deed of Trust and the Note or notes secured hereby for
cancellation and retention and payment of its fees, Trustee
shall reconvey, without warranty, the Property then held
hereunder. The recitals in such reconveyance of any matters or
facts shall be conclusive proof of the truthfulness thereof.
The grantee in such reconveyance may be described as "the
person or persons legally entitled thereto."
7.6 Exculpation and Indemnification of Trustee. Trustee shall not
be liable for any error of judgment or act done by Trustee in
good faith, or be otherwise responsible or accountable under
any circumstances whatsoever, except for Trustee's gross
negligence or willful misconduct. Trustee shall have the right
to rely on any instrument, document or signature authorizing
or supporting any action taken or proposed to be taken by it
hereunder, believed by Trustee in good faith to be genuine.
All monies received by Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner
20
from any other moneys (except to the extent required by law),
and Trustee shall be under no liability for interest on any
moneys received by it hereunder (except to the extent required
by Law). Borrower will reimburse Trustee for, and indemnify,
save harmless and defend Trustee against, any and all
liability and expenses (including, without limitation,
reasonable attorneys' fees and expenses) which Trustee may
incur in the performance of its duties under the Loan
Documents.
8. LEGAL PROCEEDINGS. Whether or not an Event of Default (as defined in
Paragraph 9.1) has occurred and exists, Lender shall have the right,
but not the duty or obligation, to intervene or otherwise participate
in, prosecute or defend at any time any legal or equitable proceedings
including, without limitation, any eminent domain proceedings which
affect the Property, the Leases or any of the rights created by the
Loan Documents, but only after notice to Borrower and if permitted by
Laws.
9. DEFAULTS; REMEDIES OF LENDER.
9.1 Events of Default. Any of the following shall constitute an
"Event of Default" hereunder:
(a) Breach of Named Covenants. Any breach by Borrower of
the covenants in Paragraph 4.1(a) (Secured Debt),
Paragraph 4.1(b) (Property Taxes and Charges),
Paragraph 4.2(f) (Clean-Up) or Paragraph 4.3
(Insurance); provided, however, that a breach of the
covenant in Paragraph 4.1(a) to pay the Secured Debt
as and when due under the Note and the other Loan
Documents shall not constitute an Event of Default
unless it shall continue for 5 days after the date
such payment is due; provided further, however, that
such 5-day grace period shall not apply more than
twice in any one period of 12 consecutive months, the
third such breach in such 12-month period
constituting an Event of Default without expiration
of any grace period.
(b) Breach of Other Covenants. Any breach by Borrower of
any other covenant, agreement, condition, term or
provision of any of the Loan Documents or any
certificate or side letter delivered in connection
with the Loan Documents, which continues for 30 days
after written notice thereof by Lender to Borrower;
provided, however, that if the nature of Borrower's
breach is such that more than 30 days is reasonably
required to cure the same, then Borrower shall not be
deemed to be in default if Borrower commences such
cure as promptly as reasonably possible within such
30-day period, diligently prosecutes such cure to
completion, and completes such cure with 60 days from
the date of Lender's aforesaid notice to Borrower.
(c) Misrepresentations. Any representation or warranty
made by Borrower in the Loan Documents or any
certificate or side letter delivered in connection
with the Loan Documents proves to be untrue,
misleading or is not fulfilled, in any material way.
(d) Bankruptcy. Immediately upon the occurrence of any of
the following: (i) any one or more of the then legal
or beneficial owners of the Property, or any
individual or entity then personally liable on the
Secured Debt (including, without limitation, any
guarantor or indemnitor pursuant to any guaranty or
indemnity) or, if Borrower is a
21
partnership, any general partner or joint venturer
(collectively "Parties in Interest") becomes
insolvent, makes a transfer in fraud of, or an
assignment for the benefit of, creditors, or admits
in writing its inability, or is unable, to pay debts
as they become due; or (ii) a receiver, custodian,
liquidator or trustee is appointed for all or
substantially all of the assets of a Party in
Interest or for the Property in any proceeding
brought by a Party in Interest, or any such receiver
or trustee is appointed in any proceeding brought
against a Party in Interest or the Property and such
appointment is not promptly contested or is not
dismissed or discharged within 120 days after such
appointment, or a Party in Interest consents or
acquiesces in such appointment, or (iii) a Party in
Interest files a petition under the Bankruptcy Code,
as amended, or under any similar law or statute of
the United States or any state thereof; or (iv) a
petition against a Party in Interest is filed
commencing an involuntary case under any present or
future Federal or state bankruptcy or similar law and
such petition is not dismissed or discharged within
120 days after the filing thereof; or (v) any
composition, rearrangement, liquidation, extension,
reorganization or other relief of debtors now or
hereafter existing is requested by a Party in
Interest.
(e) Adverse Court Action. A court of competent
jurisdiction enters a stay order with respect to,
assumes custody of or sequesters all or a substantial
part of the Property or the Property is taken on
execution or by other process of law.
9.2 Remedies. In case of an Event of Default, Lender and, to the
extent authorized by Lender, Trustee may, at any time
thereafter, at its option, without notice, and without
bringing any legal action or proceeding unless expressly
required by law, exercise any or all of the following
remedies:
(a) Acceleration. Declare the entire Secured Debt due and
payable, and it shall thereupon be immediately due
and payable.
(b) Foreclosure. Should Lender elect to foreclose by
exercise of the power of sale herein contained,
Lender shall notify Trustee and shall deposit with
Trustee this Deed of Trust and the Note and such
receipts with evidence of expenditures made and
secured hereby as Trustee may require. Trustee shall
then have the following duties and powers:
(i) Upon receipt of such notice from Lender, Trustee
shall cause to be recorded, published and
delivered to Borrower such Notice of Default
and Election to Sell as then required by law
and by this Deed of Trust and the Note and
after lapse of such time as may then be
required by law and after recordation of
such notice of default, Trustee without
demand on Borrower, shall, after notice of
sale having been given as required by law,
sell the Property at the time and place of
sale fixed by it in said notice of sale,
either as a whole or in separate parcels or
items and such order as Trustee may
determine, at public auction to the highest
bidder for cash in lawful money of the
United States payable at the time of sale.
Trustee shall deliver to such purchaser its
deed conveying the Property so sold, but
without any covenant or warranty, express or
implied. The recitals in such deed of any
matters or facts shall be conclusive proof
of the
22
truthfulness thereof. Any person, including,
without limitation, Borrower, Trustee or
Lender, may purchase at such sale.
(ii) After deducting all costs, fees and expenses of
Trustee and of this trust, including costs
of evidence of title in connection with
sale, Trustee shall apply the proceeds of
sale to payment of: all sums expended under
the terms hereof, not then repaid, with
accrued interest at the rate then applicable
under the Note; all other sums then secured
hereby; and the remainder, if any, to the
person or persons legally entitled thereto.
Trustee may postpone the sale of all or any
portion of the Property by public
announcement at the time and place first
fixed for sale, and from time to time
thereafter may postpone such sale by public
announcement at the time and place fixed by
the preceding postponement, and without
further notice make such sale at the time
fixed by the last postponement, or may, in
its discretion, give new notice of sale.
(c) Offset Rights. Apply in satisfaction of the Secured
Debt or any amount at any time to become due or
payable in connection with the ownership occupancy,
use, restoration or repair of the Property, any
deposits or other sums credited by or due from Lender
to Borrower, including without limitation, Insurance
Proceeds, Taking Proceeds and funds held in the
escrow account referred to in Paragraph 4.1(c).
(d) Cure Rights. Whether or not an Event of Default has
occurred and without releasing Borrower from any
obligation hereunder or under the Loan Documents,
perform any of Borrower's obligations. In connection
therewith, Lender may enter upon the Property and do
such acts and things as Lender deems necessary or
desirable to protect the Property or the Leases,
including, without limitation: (i) paying,
purchasing, contesting or compromising any
encumbrance (including, without limitation, any
junior debt outstanding), charge, lien, claim of
lien, Property Taxes and Charges or Property
Liabilities; (ii) paying any Insurance Premiums;
(iii) employing counsel, accountants, contractors and
other persons to assist Lender in the foregoing; and
(iv) undertaking the Clean-Up of any Contamination.
(e) Possession of Property. Take physical possession of
the Property and of all books, records, and documents
and accounts relating thereto and exercise, without
interference from Borrower, any and all rights which
Borrower has with respect to the Property, including,
without limitation, the right at Borrower's expense
to rent and lease the Property, to hire a
professional property manager for the Property, to
Clean-Up any Contamination and to make from time to
time all alterations, renovations, repairs and
replacements to the Property as may seem proper to
Lender. Nothing in this Paragraph 9.2 shall impose
any duty, obligation or responsibility upon Lender
for the control, care, management, repair or Clean-Up
of the Property. If necessary to obtain possession as
provided for above, Lender may, without exposure to
liability from Borrower or other persons, invoke any
and all legal remedies to dispossess Borrower,
including, without limitation, one or more actions
for forcible entry and detainer, trespass and
restitution.
23
(f) Receiver. Secure the appointment of a receiver or
receivers, as a matter of right for the Property
whether such receivership be incident to a proposed
sale of such Property or otherwise, and without
regard to the value of the Property or the solvency
of Borrower. Borrower hereby consents to the
appointment of such receiver or receivers, waives any
and all defenses to such appointment and agrees not
to oppose any application therefor by Lender. The
appointment of such receiver, trustee or other
appointee by virtue of any court order or Laws shall
not impair or in any manner prejudice the rights of
Lender to receive payment of the rents and income
pursuant to the Lease Assignment.
(g) Uniform Commercial Code Remedies. Exercise any and
all rights of a secured party with respect to the
Personalty under the Uniform Commercial Code of the
State and in conjunction with, in addition to or in
substitution for, those rights and remedies:
(i) take possession of, assemble and collect the
Personalty or render it unusable by
Borrower; and
(ii) require Borrower to assemble the Personalty
and make it available at any place Lender
may designate so as to allow Lender to take
possession of or dispose of the Personalty.
Written notice mailed to Borrower, as provided
herein, 15 days prior to the date of public sale of
the Personalty or prior to the date after which
private sale of the Personalty will be made, shall
constitute reasonable notice. Any sale made pursuant
to the provisions of this Paragraph 9.2(g) shall be
deemed to have been a public sale conducted in a
commercially reasonable manner, if held
contemporaneously with the sale of the Property as
provided in Paragraph 9.2(j) of this Deed of Trust.
In the event of a foreclosure sale, whether made by
Lender under the terms hereof, or under judgment of a
court, the Personalty and the other parts of the
Property may, at the option of Lender, be sold in
parts or as a whole. It shall not be necessary that
Lender take possession of the Personalty prior to the
time that any sale pursuant to the provisions of this
Paragraph 9.2(g) is conducted and it shall not be
necessary that the Personalty be present at the
location of such sale.
A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS
DEED OF TRUST OR ANY FINANCING STATEMENT RELATING TO
THIS DEED OF TRUST SHALL BE SUFFICIENT AS A FINANCING
STATEMENT. THIS DEED OF TRUST IS EFFECTIVE AND SHALL
BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A
FIXTURE FILING WITH RESPECT TO ALL GOODS WHICH ARE OR
ARE TO BECOME FIXTURES INCLUDED WITHIN THE PROPERTY
AND IS TO BE FILED FOR RECORD IN THE REAL ESTATE
RECORDS OF THE LOCATION IN THE STATE WHERE THE
PROPERTY IS SITUATED. THE MAILING ADDRESS OF LENDER
AND THE ADDRESS OF BORROWER FROM WHICH INFORMATION
CONCERNING THE SECURITY INTEREST MAY BE OBTAINED, ARE
SET FORTH ON THE COVER SHEET HEREOF.
24
(h) Judicial Actions. Commence and maintain an action or
actions in any court of competent jurisdiction to
foreclose this Deed of Trust pursuant to the Laws of
the State or to obtain specific enforcement of the
covenants of Borrower hereunder. Borrower agrees that
such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy.
(i) Subrogation. Have and exercise all rights and
remedies of any person, entity or body politic to
whom Lender renders payment or performance in
connection with the exercise of its rights and
remedies under the Loan Documents, including, without
limitation, any rights or remedies under any
mechanic's or vendor's lien or liens, superior
titles, mortgages, deeds of trust liens encumbrances,
rights, equities and charges of all kinds heretofore
or hereafter existing on the Property to the extent
that the same are paid or discharged from the
proceeds of the Note whether or not released of
record.
(j) Sale. Sell the Property in accordance with Laws.
(k) Other. Take such other actions or commence such other
proceedings as Lender deems necessary or advisable to
protect its interest in the Property and its ability
to collect the Secured Debt as are available under
Laws.
Any sums advanced by Lender under this Paragraph 9.2 shall
bear interest at the lesser of (i) the Default Rate specified
in the Note or (ii) the maximum nonusurious interest rate
permitted by applicable law, and shall be payable by Borrower
on demand. Such sums together with such interest shall
constitute a part of the Secured Debt.
All sums realized by Lender under this Paragraph 9.2, less all
costs and expenses incurred by Lender under this Paragraph
9.2, including, without limitation, reasonable attorneys fees
and disbursements, property management fees, costs of title
commitments, inspections, environmental site assessments and
testing, engineering reports, alterations, renovations,
repairs and replacements made or authorized by Lender and all
expenses incident to Lender taking possession of the Property,
and such sums as Lender deems appropriate as a reserve to meet
future expenses of the Property, shall be applied to the
Secured Debt in such order as Lender shall determine.
Thereafter, any balance shall be paid to the person or persons
legally entitled thereto.
9.3 Holding Over. Should Borrower, after Lender has obtained title
to the Property, continue in possession of any part of the
Property, either lawfully or unlawfully, Borrower shall be a
tenant from day to day, terminable at the will of either
Borrower or Lender, at a reasonable rental per diem, such
rental to be due and payable daily to Lender.
9.4 General Provisions.
(a) Multiple Sales. Several sales may be made pursuant to
Paragraph 9.2 exhausting Lender's right to such
remedy for any unsatisfied part of the Secured Debt
and without exhausting the power to exercise such
remedy for any other part of the
25
Secured Debt, whether matured at the time or
subsequently maturing. If a part of the Property is
sold pursuant to Paragraph 9.2, and the proceeds
thereof do not fully pay and satisfy the Secured
Debt, such sale, if so made, shall not in any manner
affect the unpaid and unsatisfied part of the Secured
Debt, but as to such unpaid and unsatisfied part, the
Loan Documents shall remain in full force and effect
as though no such sale had been made.
(b) Cumulative Remedies. All of the rights, remedies and
options set forth in Paragraph 9.2 or otherwise
available at law or in equity, are cumulative and may
be exercised without regard to the adequacy of or
exclusion of any other right, remedy, option or
security held by Lender.
(c) Right to Purchase. At any sale of the Property
pursuant to Paragraph 9.2, Lender shall have the
right to purchase the Property being sold, and in
such case the right to credit against the amount of
the bid made therefor (to the extent necessary) all
or any of the Secured Debt then due.
(d) Right to Terminate Proceedings. Lender may, in its
sole unfettered discretion, at any time before
conclusion of any proceeding or other action brought
in connection with its exercise of the remedies
provided for in Paragraph 9.2, terminate, without
prejudice to Lender, such proceedings or actions.
(e) No Waiver or Release. Lender may resort to any
remedies and the security given by the Loan Documents
in whole or in part, and in such portions and in such
order as may seem best to Lender in its sole
unfettered discretion, and any such action shall not
in any way be considered as a waiver of any of the
rights, benefits or remedies evidenced by the Loan
Documents. The failure of Lender to exercise any
right, remedy or option provided for in the Loan
Documents shall not be deemed to be a waiver of any
of the covenants or obligations secured by the Loan
Documents. No sale of all or any of the Property, no
forbearance on the part of Lender and no extension of
the time for the payment of the whole or any part of
the Secured Debt or any other indulgence given by
Lender to Borrower or any other person or entity,
shall operate to release or in any manner affect
Lender's interest in the Property, or the liability
of Borrower to pay the Secured Debt, except to the
extent that such liability shall be reduced by
proceeds of sale of all or any of the Property
received by Lender.
(f) Waivers and Agreements Regarding Remedies. To the
full extent Borrower may do so and with respect to
Lender's exercise of its remedies hereunder, Borrower
hereby:
(i) agrees that Borrower will not at any time
insist upon, plead, claim or take the
benefit or advantage of any Laws now or
hereafter in force providing for any
appraisal or appraisement, valuation, stay,
extension or redemption, and waives and
releases all rights of redemption,
valuation, appraisal or appraisement, stay
of execution, extension and notice of
election to mature or declare due the whole
of the Secured Debt;
26
(ii) waives all rights to marshalling of the
assets of Borrower, Borrower's partners,
members and shareholders, and others with
interests in Borrower, including the
Property, or to a sale in inverse order of
alienation in the event of foreclosure of
the interests hereby created, and agrees not
to assert any right under any Laws
pertaining to the marshalling of assets, the
sale in inverse order of alienation, the
exemption of homestead, the administration
of estates of decedents, or other matters
whatsoever to defeat, reduce or affect the
right of Lender under the terms of the Loan
Documents to sale of the Property for the
collection of the Secured Debt without any
prior or different resort for collection, or
the right of Lender to the payment of the
Secured Debt out of the proceeds of sale of
the Property in preference to every other
claimant whatsoever;
(iii) waives any right to bring or utilize any
defense, counterclaim or setoff, other than
one in good faith which denies the existence
or sufficiency of the facts upon which the
foreclosure action is grounded or which is
based on Lender's wrongful actions. If any
defense, counterclaim or setoff (other than
one permitted by the preceding sentence) is
timely raised in such foreclosure action,
such defense, counterclaim or setoff shall
be dismissed. If such defense, counterclaim
or setoff is based on a claim which could be
tried in an action for money damages, the
foregoing waiver shall not bar a separate
action for such damages (unless such claim
is required by Laws or applicable rules of
procedure to be pleaded in or consolidated
with the action initiated by Lender) but
such separate action shall not thereafter be
consolidated with Lender's foreclosure
action. The bringing of such separate action
for money damages shall not be deemed to
afford any grounds for staying Lender's
foreclosure action;
(iv) waives and relinquishes any and all rights
and remedies which Borrower may have or be
able to assert by reason of the provisions
of any Laws pertaining to the rights and
remedies of sureties; and
(v) waives the defense of laches and any
applicable statutes of limitation.
(g) WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO
AGAINST THE OTHER, ON OR IN RESPECT OF ANY MATTER
WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED
WITH, THIS DEED OF TRUST OR ANY OF THE OTHER LOAN
DOCUMENTS, OR THE RELATIONSHIP OF BORROWER AND LENDER
HEREUNDER OR THEREUNDER.
(h) Lender's Discretion. Unless specifically stated
otherwise, Lender may exercise its options and
remedies under any of the Loan Documents in its sole
unfettered discretion.
(i) Sales. In the event of the sale or other disposition
of the Property pursuant to Paragraph 9.2 and the
execution of a deed or other conveyance pursuant
thereto, the recitals therein of facts (such as
default, the giving of notice of default and
27
notice of sale, demand that such sale should be made,
postponement of sale, terms of sale, sale, purchase,
payment of purchase money and other facts affecting
the regularity or validity of such sale or
disposition) shall be conclusive proof of the truth
of such facts. Any such deed or conveyance shall be
conclusive against all persons as to such facts
recited therein.
The acknowledgment of the receipt of the purchase
money, contained in any deed or conveyance executed
as aforesaid, shall be sufficient to discharge the
grantee of all obligations to see to the proper
application of the consideration therefor as herein
provided. The purchaser at any trustee's or
foreclosure sale hereunder may disaffirm any easement
granted or rental agreement or Lease made in
violation of any provision of the Loan Documents, and
may take immediate possession of the Property free
from, and despite the terms of, such grant of
easement, rental agreement or Lease.
10. POSSESSION AND DEFEASANCE.
10.1 Possession. Until the occurrence of an Event of Default and
except as otherwise expressly provided to the contrary in any
of the Loan Documents, Borrower shall retain full possession
of the Property with full right to use the Property and to
collect the rents, issues and profits therefrom, subject,
however, to all of the terms and provisions of the Loan
Documents.
10.2 Defeasance. If the Secured Debt is paid in full and if all of
the covenants, warranties, conditions, undertakings and
agreements made in the Loan Documents are kept and performed,
then, in that event only, all rights under the Loan Documents
shall terminate and the Property shall become wholly clear of
the liens, grants, security interests, conveyances and
assignments evidenced hereby, and Lender shall release or
cause to be released, such liens, grants, assignments,
conveyances and security interests in due form at Borrower's
cost, and this Deed of Trust shall be void.
To the extent permitted by Laws such an instrument may
describe the grantee as "the person or persons legally
entitled thereto." Lender shall not have any duty to determine
the rights of persons claiming to be rightful grantees of any
of the Property. When the Property has been fully released,
such release shall operate as a reassignment of all future
rents, issues and profits of the Property to the person or
persons legally entitled thereto, unless such release
expressly provides to the contrary.
Notwithstanding the foregoing, Borrower's obligation under
Paragraph 4.6(c) hereof (environmental indemnity) shall not
terminate and shall survive the discharge of the Loan
Documents, whether through full payment of the Secured Debt,
foreclosure, deed in lieu of foreclosure or otherwise, for the
benefit of Lender and its successors and assigns, including
without limitation, any purchaser at a foreclosure sale.
11. GENERAL.
11.1 Lender's Right to Waive, Consent or Release. Lender may at any
time and from time to time, in writing: (a) waive compliance
by Borrower with any covenant herein made
28
by Borrower to the extent and in the manner specified in such
writing; (b) consent to Borrower doing any act which Borrower
is prohibited hereunder from doing, or consent to Borrower's
failing to do any act which Borrower is required hereunder to
do, to the extent and in the manner specified in such writing;
or (c) release any part of the Property, or any interest
therein from this Deed of Trust and the lien of the Loan
Documents. No such act shall in any way impair the rights
hereunder of Lender except to the extent specifically agreed
to by Lender in such writing.
11.2 No Impairment. The interests and rights of Lender under the
Loan Documents shall not be impaired by any indulgence,
including, without limitation: (a) any renewal, extension or
modification which Lender may grant with respect to any of the
Secured Debt; (b) any surrender, compromise, release, renewal,
extension,. exchange or substitution which Lender may grant in
respect of the Property or any interest therein; or (c) any
release or indulgence granted to any maker, endorser,
guarantor, indemnitor or surety of any of the Secured Debt.
11.3 Amendments. The Loan Documents may not be waived, changed or
discharged orally, but only by an agreement in writing and
signed by Lender, and any oral waiver, change or discharge of
any provision of the Loan Documents shall be without authority
and of no force and effect. Any waiver, change or discharge
shall be effective only in the specific instances and for the
purposes for which given and to the extent therein specified.
11.4 No Usury. Any provision contained in any of the Loan Documents
notwithstanding, Lender shall not be entitled to receive or
collect, nor shall Borrower be obligated to pay interest on
any of the Secured Debt in excess of the maximum rate of
interest permitted by Laws, and if any provisions of the Loan
Documents shall ever be construed or held to permit the
collection or to require the payment of any amount of interest
in excess of that permitted by such Laws, the provisions of
this Paragraph 11.4 shall control unless contrary or
inconsistent with any provisions of the Note, in which case
the provisions of the Note shall control. Borrower and Lender
intend to conform strictly to the usury Laws now in force, and
the Loan Documents evidencing or relating to any of the
Secured Debt shall be held subject to modification to conform
to said Laws as now or hereafter construed.
11.5 Notices. Any notice, request, demand or other communication
required or permitted under the Loan Documents (unless
otherwise expressly provided therein) shall be given in
writing by delivering the same in person to the intended
addressee, by overnight courier service with guaranteed next
day delivery or by certified United States Mail postage
prepaid sent to the intended addressee at the applicable
Notice Address or to such different address as either Borrower
or Lender shall have designated by written notice to the other
sent in accordance herewith. Such notices shall be deemed
given when received or, if earlier, in the case of delivery by
courier service with guaranteed next day delivery, the next
day or the day designated for delivery, or in the case of
delivery by certified United States Mail, 2 days after deposit
therein. No notice to or demand on Borrower in any case shall
of itself entitle Borrower to any other or further notice or
demand in similar or other circumstances.
29
11.6 Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Borrower, and any
permitted successors and assigns of Borrower, and shall inure
to the benefit of Lender and its successors, substitutes and
assigns, and shall constitute covenants running with the Land.
All references in this Deed of Trust to Borrower, Lender or
Trustee shall be deemed to include all such successors,
substitutes and assigns.
If in contravention of the provisions of this Deed of Trust or
otherwise, ownership of the Property or any portion thereof
becomes vested in a person other than Borrower, Lender may,
without notice to Borrower, whether or not Lender has given
written consent to such change in ownership, deal with such
successor or successors in interest with reference to the Loan
Documents and the Secured Debt in the same manner as with
Borrower, without in any way vitiating or discharging Lender's
remedies or Borrower's liability under the Loan Documents or
on the Secured Debt.
11.7 Severability. A determination that any provision of the Loan
Documents is unenforceable or invalid shall not affect the
enforceability or validity of any other provision, and any
determination that the application of any provision of the
Loan Documents to any person or circumstances is illegal or
unenforceable shall not affect the enforceability or validity
of such provision as it may apply to any other persons or
circumstances.
11.8 Gender and Construction. Within this Deed of Trust, words of
any gender shall be held and construed to include any other
gender, and words in the singular number shall be held and
construed to include the plural, unless the context otherwise
requires. References in this Deed of Trust to "herein",
"hereunder" or "hereby" shall refer to this entire Deed of
Trust, unless the context otherwise requires. When the phrase
"in its sole unfettered discretion" is used in the Loan
Documents with respect to Lender, it shall permit Lender to
evaluate such criteria (without allowance for reasonableness)
as it chooses in approving or disapproving the requested or
pending action.
11.9 Joint and Several Liability. If Borrower is composed of more
than one party, the obligations, covenants, agreements,
representations and warranties contained in the Loan
Documents, as well as the obligations arising thereunder, are
and shall be joint and several as to each such party.
11.10 Modifications. References to any of the Loan Documents in this
Deed of Trust shall include all amendments, modifications,
extensions and renewals thereof.
11.11 Governing Law. This Deed of Trust shall be construed according
to and governed by the laws of the State.
11.12 Captions. All paragraph and subparagraph captions are for
convenience of reference only and shall not affect the
construction of any provision herein.
11.13 N/A
11.14 Sale, Assignment or Conversion of Secured Debt. Borrower
hereby agrees that Lender may (i) sell all or any portion of
the Secured Debt or securitize all or a portion
30
of the Secured Debt in one or more transactions through the
issuance of passthrough certificates or other securities
evidencing ownership of a portion of the Secured Debt or
beneficial interest therein, in one or more rated or unrated
public or private transactions; (ii) assign servicing rights
with respect to the Secured Debt; or (iii) convert the Note
and this Deed of Trust to registered form (each such
transaction as described in the preceding clauses (i), (ii)
and (iii) being referred to as a "Covered Transaction"),
without the consent of or notice to Borrower. Borrower hereby
agrees that, if requested, it will, at Lender's expense,
reasonably cooperate with Lender and use its best efforts to
facilitate the consummation of a Covered Transaction,
including, without limitation, by: (a) delivering estoppels,
opinions, tax certificates or any other documents, each in
form and substance reasonably acceptable to Lender or any
rating agency; (b) providing such additional information as
may reasonably be required by Lender, or granting reasonable
access to Lender in order to obtain such information,
including, without limitation, updated environmental
information and appraisals; and (c) appointing as its agent a
registrar and transfer agent, which agent shall maintain,
subject to such reasonable regulations as such agent shall
provide, such books and records as may be necessary for the
registration and transfer of the Note and this Deed of Trust,
all in a manner acceptable to Lender in its sole unfettered
discretion. Borrower hereby agrees that Lender may forward to
each potential purchaser, transferee, assignee, service,
trustee, participant or investor in any Covered Transaction,
or to any rating agency, all documents and information which
Lender now has or may hereafter acquire relating to the
Secured Debt, the Property, Borrower or any guarantor or
indemnitor of the Secured Debt that has been furnished by
Borrower or any other party in connection with the Secured
Debt, as Lender may, in its sole unfettered discretion,
determine is necessary or desirable.
11.15 Acknowledgment of Receipt. Borrower hereby acknowledges
receipt, without charge, of a true and complete copy of this
Deed of Trust.
11.16. Time of the Essence. Time is of the essence of each and every
payment and/or performance obligation of Borrower and the
Guarantor(s) under this Deed of Trust or any of the other Loan
Documents.
11.17 Exhibits. The following are the Exhibits referred to in this
Deed of Trust, which are hereby incorporated by reference
herein:
Exhibit A - Property Description
31
IN WITNESS WHEREOF, this Deed of Trust has been executed and delivered as of the
date first above written.
Micro Linear Corporation, A
Delaware Corporation
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
Its: CFO
[ACKNOWLEDGEMENTS]
STATE OF CALIFORNIA
SS.
COUNTY OF SANTA ▇▇▇▇▇
On October 1, 1999 before me, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, personally appeared
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons whose names are subscribed to the
within instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
persons, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (Seal)
------------------------------
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EXHIBIT A
Property Description
All of Parcel 44, as shown on that certain Map entitled, "Parcel Map of
International Business Park," which Map was filed for record in the office of
the Recorder of the County of Santa ▇▇▇▇▇, State of California on January 28,
1977, in Book 388 of Maps page(s) 16 through 27.
