SECOND QUARTER 1996
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 28, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-2537
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
68-0164244
(I.R.S. Employer Identification No.)
2789 NORTHPOINT PARKWAY, SANTA ROSA, CA 95407-7397
(Address of principal executive offices)
(707) 545-6440
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Classes of Common Stock
COMMON STOCK, $.01 PAR VALUE
Outstanding at May 31, 1996: 9,710,829 shares
This document contains __ pages.
The Exhibit listing appears on Page 15.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
April 28, October 31,
ASSETS 1996 1995
(Unaudited)
Current Assets:
Cash and short-term investments $ 4,499 $ 6,602
Accounts receivable, net of
allowance for doubtful accounts
of $1,392 and $1,229 31,311 29,565
Inventories 18,294 15,886
Current deferred income tax assets 6,311 6,665
Other current assets 2,056 2,476
Income taxes recoverable 253
Total Current Assets 62,724 61,194
Deferred income tax assets 4,518 4,597
Other assets and investments 11,544 12,432
Property, Plant and Equipment:
Land and improvements 9,922 8,651
Buildings and improvements 37,119 31,461
Machinery and equipment 107,418 101,586
Construction-in-progress 20,413 23,717
174,872 165,415
Less accumulated depreciation (78,903) (73,804)
Property, Plant and Equipment - Net 95,969 91,611
Total Assets $174,755 $169,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $10,931 $10,324
Accrued expenses 10,140 9,515
Accrued compensation expenses 5,528 6,559
Current maturities on long-term debt 3,412 3,344
Notes payable 2,321 3,339
Deferred revenue 709 98
Total Current Liabilities 33,041 33,179
Accrued postretirement health benefits
and pension liabilities 2,174 2,150
Deferred income tax liabilities 2,341 2,239
Long-term debt 49,117 47,267
Minority interest 12,643 11,105
Convertible redeemable preferred stock 11,309 11,357
Common Stockholders' Equity:
Common stock, $.01 par value;
authorized 30,000,000
shares; issued and outstanding
9,593,000 and 9,489,000 shares 96 95
Paid-in capital 45,497 44,461
Retained earnings 19,661 17,901
Cumulative foreign currency
translation adjustment (1,124) 80
Common Stockholders' Equity 64,130 62,537
Total Liabilities and
Stockholders' Equity $174,755 $169,834
The accompanying notes are an integral part of these financial
statements.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the three and six month periods ended
April 28, 1996 and April 30, 1995
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
Revenue $48,451 $41,487 $92,362 $77,480
Cost of sales 30,652 25,923 60,147 47,275
Gross Profit 17,799 15,564 32,215 30,205
Operating expenses:
Research and development 2,622 1,632 5,010 3,019
Selling and administrative 10,094 9,390 19,201 18,634
Amortization of intangibles 278 304 565 475
Total operating expenses 12,994 11,326 24,776 22,128
Income From Operations 4,805 4,238 7,439 8,077
Other income (expense):
Interest income 65 196 139 422
Interest expense (812) (991) (1,723) (1,911)
Income Before Provision For
Income Taxes and Minority
Interest 4,058 3,443 5,855 6,588
Provision for income taxes 1,705 1,445 2,459 2,766
Minority interest 282 585
Net Income 2,071 1,998 2,811 3,822
Dividend on convertible redeemable
preferred stock 240 480
Net Income Applicable to
Common Stock $1,831 $1,998 $2,331 $3,822
Net Income Per Common and Common
Equivalent Share $ .18 $ .21 $ .23 $ .41
Weighted Average Number of
Common Shares Used to Compute
Net Income Per Share 10,158 9,377 10,139 9,103
The accompanying notes are an integral part of these financial statements.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the six month period ended April 28, 1996
(Amounts in thousands)
(Unaudited)
FOREIGN
COMMON STOCK PAID-IN RETAINED CURRENCY
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION
BALANCE AT
NOVEMBER 1, 1995 9,489 $95 $44,461 $17,901 $80
Shares issued to Employee
Stock Ownership Plan 40 438
Exercise of stock options,
including tax benefit 64 1 598
Foreign currency translation
adjustment for the period (1,204)
Net income for the period 2,811
Dividend on preferred stock (480)
Dividend on common stock (571)
BALANCE AT APRIL 28, 1996 9,593 $96 $45,497 $19,661 $(1,124)
The accompanying notes are an integral part of these financial statements.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and six month periods ended
April 28, 1996 and April 30, 1995
(Amounts in thousands)
(Unaudited)
Three Months Ended Six Months Ended
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
Cash Flows From
Operating Activities:
Cash received from customers $46,657 $35,241 $89,568 $72,499
Interest received 6 197 107 494
Cash paid to suppliers
and employees (38,040) (31,043) (76,980) (66,076)
Cash paid to ESOP+ (402) (406)
Interest paid (608) (833) (2,128) (2,103)
Income taxes paid, net of refunds (356) (3,518) (4,989) (3,887)
Net Cash Provided By (Used For)
Operating Activities 7,659 (358) 5,578 521
Cash Flows From Investing
Activities:
Purchase of plant and equipment (11,373) (7,837) (16,794) (11,138)
Proceeds from sale-leaseback of
new equipment 776 6,676
Cash portion of payment for
purchase of Netra, net of
cash acquired (1,477) (1,477)
Net Cash Used For
Investing Activities (10,597) (9,314) (10,118) (12,615)
Cash Flows From
Financing Activities:
Proceeds from long-term debt 4,310 6,910
Proceeds from notes payable 6 154 188
Proceeds from exercise
of stock options 255 370 453 372
Repayment of long-term debt (432) (1,488) (2,900) (1,892)
Repayment of notes payable (924) (307) (924) (307)
Payment of dividend on
preferred stock (240) (480)
Payment of dividend on
common stock (571) (539)
Net Cash Provided By (Used For)
Financing Activities 2,969 (1,419) 2,642 (2,178)
Effect of exchange rate
changes on cash (87) 106 (205) 76
Net increase (decrease) in cash and
short-term investments (56) (10,985) (2,103) (14,196)
Cash and short-term investments
at beginning of period 4,555 16,452 6,602 19,663
Cash and short-term investments
at end of period $ 4,499 $5,467 $4,499 $5,467
(Continued)
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the three and six month periods ended
April 28, 1996 and April 30, 1995
(Amounts in thousands)
(Unaudited)
0Three Months Ended Six Months Ended
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
Reconciliation Of Net
Income To Cash Flows From
Operating Activities:
Net income $ 2,071 $1,998 $2,811 $3,822
Adjustments to reconcile
net income to net cash
(used for) provided by
operating activities:
Depreciation and amortization 3,318 2,149 6,496 3,970
Minority interest in earnings
of Flex Products, Inc. 282 585
Loss on disposal or abandonment
of equipment 53 79 55 98
Accrued postretirement
health benefits 44 10 55 37
Deferred income tax liabilities 12 153 109 510
Other non-cash adjustments
to net income (138) (119) (220) (179)
Change in:
Accounts receivable (1,411) (1,730) (2,748) (4,683)
Inventories (1,876) (97) (2,759) (1,786)
Income tax recoverable 1,411 1 (178) 2
Deferred income tax assets (123) 12 408 (699)
Other current assets and
other assets and investments 816 (432) (59) (1,760)
Accounts payable, accrued
expenses and accrued
compensation expenses 2,981 27 575 2,040
Deferred revenue 121 (249) 195 (41)
Income taxes payable 98 (2,160) 253 (810)
Total adjustments 5,588 (2,356) 2,767 (3,301)
Net Cash (Used For)
Provided By
Operating Activities $ 7,659 $ (358) $5,578 $ 521
The accompanying notes are an integral part of these financial
statements.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and six month periods ended
April 28, 1996 and April 30, 1995
(Unaudited)
1. GENERAL
Optical Coating Laboratory, Inc. (OCLI) designs, develops and
manufactures multi-layer thin film coatings which control and enhance light
by altering the transmission, reflection and absorption of its various
wavelengths to achieve a desired effect, such as anti-reflection, anti-
glare, electromagnetic shielding, electrical conductivity and abrasion
resistance. OCLI markets and distributes components worldwide to OEMs of
optical and electro-optical systems. OCLI sells its Glare/Guard brand
ergonomic computer display products through resellers and office retailers.
Flex Products, Inc. (Flex Products), a 60% owned subsidiary of OCLI,
designs and manufactures thin film coatings on flexible substrates using
high vacuum roll-to-roll processes. In addition to supplying a critical
pigment for use in anti-counterfeiting applications, Flex Products
manufactures energy-conserving window film for residential, commercial and
automotive applications, as well as photoreceptor components for copiers
and ChromaFlair pigments for commercial paints.
The Condensed Consolidated Balance Sheet as of April 28, 1996, the
Condensed Consolidated Statements of Income for the three and six month
periods ended April 28, 1996 and April 30, 1995, the Condensed Consolidated
Statement of Common Stockholders' Equity for the six month period ended
April 28, 1996 and the Condensed Consolidated Statements of Cash Flows for
the three and six month periods ended April 28, 1996 and April 30, 1995
have been prepared by the Company without audit. In the opinion of
management, all adjustments, consisting of normal recurring accruals
necessary to present fairly the financial position, results of operations
and cash flows at April 28, 1996 and for all periods presented, have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report to Stockholders for fiscal 1995.
The results of operations for the period ended April 28, 1996 are not
necessarily indicative of the operating results anticipated for the full
year.
2. INVENTORIES
Inventories consisted of the following:
April 28, October 31,
1996 1995
(Amounts in thousands)
Raw materials and supplies $ 8,521 $7,330
Work-in-process and finished goods 9,773 8,556
$18,294 $15,886
3. ACCRUED EXPENSES
Accrued expenses consisted of the following:
April 28, October 31,
1996 1995
(Amounts in thousands)
Workers' compensation reserve $ 767 $ 937
Ground water remediation reserve 1,182 1,187
Other accrued liabilities 8,191 7,391
$10,140 $9,515
4. LONG-TERM DEBT
Long-term debt consisted of: April 28, October 31,
1996 1995
(Amounts in thousands)
Unsecured senior notes. Interest at 8.71%
payable semiannually. Principal payable in
annual installments of $3.6 million from
1998 through 2002. $18,000 $18,000
Unsecured bank term loan. Variable interest
rates averaging 6.3% at April 28, 1996,
payable quarterly. Principal payable semiannually
as follows:
Payment Dates Amounts
April 30, 1996 $ 500,000
October 1996 and
April 1997 1,000,000
Each October and
April thereafter 2,000,000 14,500 14,500
Mortgage payable. Interest at 8%.
Collateralized by a 72,000 sq. ft.
newly constructed building and
related land area. Principal and
interest payable over 15 years
at $25,000 per month. 2,570
Mortgage payable. Interest at 7.5%.
Collateralized by a 72,000 sq. ft. newly
constructed building and related land
area leased to Flex Products, Inc.
Principal and interest payable over
15 years at $28,000 per month. 3,000
Unsecured borrowings under revolving
bank line of credit. Repaid during first
quarter of fiscal 1996. 2,000
Land improvement assessment. Interest
at an average rate of 6.75%. Principal
and interest payable in semiannual
installments of $77,000 through 1998. 276 401
Scottish Development Agency (SDA) building loan,
with a conditional interest moratorium
through January 31, 1998 with interest at 9.5%
thereafter. Semiannual principal payments of
approximately $100,000 are payable through
January 1998 with subsequent payments of $331,000,
comprising principal and interest, through 2006.
Collateralized by the land and building of the
Company's Scottish subsidiary. 3,766 4,026
Notes payable to private parties in
connection with the purchase of MMG.
Principal and interest at 8% payable
over ten years in quarterly installments
of approximately $420,000 through 2003. 6,581 7,721
Bank loans of MMG with interest rates
ranging from 4.5% to 8.0%. Payable in
semiannual and annual installments through
2005. Partly collateralized by
mortgages on MMG land and buildings
and liens on equipment. 3,057 3,050
Present value of obligations
under capital leases at an assumed
interest rate of 8.0% payable in
monthly installments through 2004. 779 913
52,529 50,611
Less current maturities (3,412) (3,344)
$49,117 $47,267
The Company has a $30 million unsecured credit facility comprised of a
$15 million term loan and a $15 million revolving line of credit. The
revolving line of credit carries a commitment fee of .375% per year on the
unused portion of the facility and expires on April 28, 2000. The Company
has an incremental credit facility to cover a surety letter for
approximately $3.3 million issued to secure 50% of the Company's notes
payable arising from the purchase of MMG. The Company also has a letter of
credit for approximately $700,000 to satisfy the Company's workers'
compensation self-insurance requirements. The surety commitment and letter
of credit facilities carry a fee of 1.25% per year.
The Company's subsidiary in Scotland has a credit arrangement of up to
approximately $470,000 at market interest rates and has outstanding letters
of credit of approximately $320,000 to guarantee import duty. There were
no borrowings under the credit arrangement in fiscal years 1996 or 1995.
The Company's subsidiary in Germany has various credit facilities with
local banks totaling approximately $2.3 million which are used for working
capital requirements. These credit facilities are utilized as part of
normal local payment practices.
The Company has certain financial covenants and restrictions under its
bank credit arrangements and the unsecured senior notes.
During the first six months of 1996, the Company entered into an
operating lease arrangement for a newly acquired continuous coating machine
and related equipment. The term of the operating lease is six years, with
monthly payments of approximately $90,000, and provides for an early buyout
at fair value at the end of five years.
5. STOCK OPTIONS
During the six months ended April 28, 1996, options to purchase
534,450 shares of the Company's common stock were granted under the
Company's incentive compensation and employee stock option plans at prices
equal to 100% of the market price on the date of grant. At April 28, 1996,
1,993,750 shares are subject to outstanding options at prices ranging from
approximately $6.13 to $14.13 per share, of which 1,160,359 option shares
are exercisable. At the Annual Meeting held on March 29, 1996, the
Stockholders approved the 1996 Incentive Compensation Plan which authorizes
the Company to grant options to purchase the Company's common stock up to
950,000 shares. At April 28, 1996, options to purchase 730,263 shares of
common stock are available for future grants under all of the Company's
authorized plans.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF MATERIAL CHANGES IN
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
REVENUE. Revenue for the second quarter of fiscal 1996 was $48.5 million,
an increase of $7 million or 17%, over revenue of $41.5 million in the
second quarter of fiscal 1995. Revenue for the first six months of fiscal
1996 was $92.4 million, an increase of $14.9 million or 19%, over revenue
of $77.5 million for the first six months of fiscal 1995. Fiscal 1996
second quarter and first six months revenue increased primarily due to the
consolidation of Flex Products, Inc. (Flex Products). The Company
increased its ownership in Flex Products from 40% to a controlling 60% in
May of 1995, resulting in the consolidation of Flex Products' financial
results into the Company's financial statements beginning in the third
quarter of fiscal 1995.
In addition to the increase in revenue from the consolidation of Flex
Products, fiscal 1996 second quarter and first six months revenue reflects
an increase in shipments of products used in office automation, projection
imaging and telecommunications applications and a decrease in shipments of
products used in display applications.
GROSS PROFIT. Gross profit for the second quarter of fiscal 1996 was $17.8
million or 36.7% of revenue for the second quarter of fiscal 1996 compared
to $15.6 million or 37.5% of revenue for the second quarter of fiscal 1995.
Gross profit for the first six months of fiscal 1996 was $32.2 million or
34.9% of revenue compared to $30.2 million or 39.0% of revenue for the
first six months of fiscal 1995. Gross profit dollar increases for the
current year periods resulted from the consolidation of Flex Products
partially offset by start up costs associated with a new flat glass
continuous coating manufacturing facility. Gross profit margin declines in
the current year periods were due to decreased shipments of higher margin
products used in display applications and the aforementioned start up
costs, partially offset by the higher gross margins of Flex Products.
RESEARCH AND DEVELOPMENT. Research and development expenditures in the
second quarter of 1996 were $2.6 million, or 5.4% of revenue compared to
$1.6 million or 3.9% of revenue for the second quarter of 1995. Research
and development expenditures for the first six months of 1996 were $5.0
million, or 5.4% of revenue compared to $3.0 million or 3.9% of revenue for
the first six months of 1995. The year to year increases were due to the
consolidation of Flex Products and to the realignment of engineering
resources from manufacturing to new product development programs.
SELLING AND ADMINISTRATIVE. Selling and administrative expenses in the
second quarter of fiscal 1996 were $10.1 million or 20.8% of revenue
compared to $9.4 million or 22.6% of revenue for the second quarter of
1995. Selling and administrative expenses for the first six months of
fiscal 1996 were $19.2 million or 20.8% of revenue compared to $18.6
million or 24.1% of revenue for the first six months of 1995. The dollar
increase in selling and administrative expenses and the decrease in selling
and administrative expenses as a percentage of revenue was due to the
consolidation of Flex Products whose selling expenses per revenue dollar
are substantially less than in other product areas of the Company.
INCOME FROM OPERATIONS. During the second quarter of 1996, the Company
received greater than average technology transfer fees which were
substantially offset by expenses recorded in anticipation of the closure of
the Glare/Guard computer display filter manufacturing operation in
Scotland. As a result of the foregoing changes in revenue, gross profit
and operating expenses, the Company's income from operations was $4.8
million for the second quarter of fiscal 1996 compared to $4.2 million for
the second quarter of fiscal 1995, an increase of $567,000 or 13%. The
Company's income from operations totaled $7.4 million for the first six
months of fiscal 1996 compared to $8.1 million for the first six months of
fiscal 1995, a decrease of $638,000 or 8%.
INTEREST INCOME AND EXPENSE. Interest income for the second quarter of
fiscal 1996 decreased $131,000, or 67%, compared to the second quarter of
fiscal 1995. Interest income for the first six months of fiscal 1996
decreased $283,000, or 67%, compared to the first six months of fiscal
1995. The decrease in interest income reflects the lower average cash
balances available for investment in the current periods compared to the
year ago periods. Interest expense, net of capitalized interest, for the
second quarter of 1996 decreased $179,000, or 18%, compared to the second
quarter of 1995. Interest expense, net of capitalized interest, for the
first six months of 1996 decreased $188,000, or 10%, compared to the first
six months of 1995. Most of the decrease in interest expense resulted from
the Company refinancing its debt obligations during the third quarter of
1995 at more favorable interest rates and decreased market interest rates
on its variable rate loans.
INCOME TAXES AND MINORITY INTEREST. The effective income tax rate was 42%
for the second quarter and first six months of fiscal 1996 and 1995.
Minority interest was $282,000 for the second quarter and $585,000 for the
first six months of fiscal 1996, representing the 40% share of Flex
Products' net income accruing to the minority shareholder.
NET INCOME. The Company had net income applicable to common stock of $1.8
million, or $.18 per share, for the second quarter of fiscal 1996 compared
to $2.0 million, or $.21 per share, for the second quarter of fiscal 1995.
The Company had net income applicable to common stock of $2.3 million, or
$.23 per share, for the first six months of fiscal 1996 compared to $3.8
million, or $.41 per share, for the first six months of fiscal 1995.
FINANCIAL CONDITION
During the second quarter and first six months of fiscal 1996, the Company
generated $7.7 million and $5.6 million, net, from its operating
activities. Net income, depreciation and amortization generated $5.4
million and $9.3 million in cash flow, while increases in working capital
and other operating activities generated $2.3 million and required $3.7
million.
The Company's investing activities for the second quarter and first six
months of fiscal 1996 required $10.6 million and $10.1 million.
Approximately $11.4 million and $16.8 million was invested in plant and
equipment while $776,000 and $6.7 million was generated by an operating
lease arrangement for a newly acquired flat glass continuous coating
machine and related equipment.
During the second quarter of fiscal 1996, the Company entered into a
mortgage loan agreement in the amount of $3.0 million, collateralized by a
newly constructed 72,000 square foot manufacturing facility located on the
Company's Santa Rosa, California campus which is being leased to Flex
Products. During the first quarter of fiscal 1996, the Company entered into
a mortgage loan agreement in the amount of $2.6 million, collateralized by
a newly constructed 72,000 square foot manufacturing facility located on
the Company's Santa Rosa, California campus, which houses the company's new
flat glass continuous coating equipment. Separately, the Company repaid
approximately $432,000 and $2.9 million of long-term debt during the second
quarter and first six months of fiscal 1996.
As a result of these operating, investment and financing activities, the
Company's cash and short-term investment position decreased by $56,000 and
$2.1 million during the second quarter and first six months of fiscal 1996.
At the end of the second quarter of 1996, the Company had financial
obligations of approximately $1.6 million relating to the expansion of Flex
Products' manufacturing capacity. OCLI has no other major outstanding
commitments.
Management believes that the cash on hand at April 28, 1996, cash
anticipated to be generated from future operations, the available funds
from revolving credit arrangements and anticipated financing for new
equipment purchased by Flex Products will be sufficient for the Company to
meet near-term working capital needs, capital expenditures, debt service
requirements and payment of dividends as declared.
INDEPENDENT ACCOUNTANTS' REVIEW
The April 28, 1996 consolidated financial statements included in this
filing on Form 10-Q have been reviewed by Deloitte & Touche LLP,
independent accountants, in accordance with established professional
standards and procedures for such a review.
The report of Deloitte & Touche LLP commenting on their review follows.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
and Stockholders of
Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed the accompanying condensed consolidated balance sheet of
Optical Coating Laboratory, Inc. and subsidiaries as of April 28, 1996, and
the related condensed consolidated statements of income and cash flows for
the three-month and six-month periods ended April 28, 1996 and April 30,
1995 and the related condensed consolidated statement of stockholders'
equity for the six-month period ended April 28, 1996. These financial
statements are the responsibility of the Company's management. We were
furnished with the report of other accountants on their review of the
interim financial information of Flex Products, Inc. (a consolidated
subsidiary), whose total assets constituted, 20% of consolidated total
assets at April 28, 1996 and whose total revenues constituted 17% of
consolidated total revenues for the six-month period ended April 28, 1996.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware
of any material modifications that should be made to such condensed
consolidated financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Optical Coating Laboratory,
Inc. and subsidiaries as of October 31, 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year
then ended (not presented herein); and in our report dated December 18,
1995, we expressed an unqualified opinion on those consolidated financial
statements based on our audit. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of October 31,
1995 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
San Francisco, California
May 15, 1996
PART II. OTHER INFORMATION
Item 1. Legal
Proceedings Page(s)
During the quarter, there were no material developments in legal
proceedings since the report filed on Form 10-Q for the quarter
ended January 28, 1996.
Item 2. Changes in Securities
None
Item 3. Defaults on Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on March 29,
1996.
(b) The management nominees for director listed in the proxy
statement were elected as follows: Herbert M. Dwight, Jr.,
Douglas C. Chance, John McCullough, Renn Zaphiropoulos and
Julian Schroeder.
(c) The stockholders approved the Company's 1996 Incentive
Compensation Plan (the "Plan") with 4,920,192 shares voting in
favor of the Plan, 1,187,331 shares voting against the Plan,
42,430 shares abstaining and 2,431,191 non-voted shares.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a)The following are filed as Exhibits to this Quarterly
Report. The numbers refer to the Exhibit Table of Item 601 of
Regulation S-K.
(10) Secured Promissory Note between the Registrant and
Aid Association for Lutherans dated March 15, 1996.
(11)Computation of earnings per share for the three and
six month periods ended April 28, 1996 and
April 30, 1995.
(15) Letter of Deloitte & Touche LLP regarding unaudited
interim financial information.
(27) Financial Data Schedule for the three months ended
April 28, 1996.
(b) Reports on Form 8-K filed for the three months
ended April 28, 1996.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized and in the capacity indicated.
OPTICAL COATING LABORATORY, INC.
(Registrant)
June 14, 1996
Date /s/ John M. Markovich
Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 11.
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
PRIMARY SHARES:
Average common shares
outstanding 9,550 9,015 9,533 8,997
Common equivalent shares
outstanding 608 362 606 205
10,158 9,377 10,139 9,202
Net income 2,071 1,998 2,811 3,822
Dividend on preferred stock (240) (480)
Net income applicable to
common stock $1,831 $1,998 $2,331 $3,822
Net income per common and common
equivalent share, primary $ .18 $ .21 $ .23 $ .41
FULLY DILUTED SHARES:
Average common shares
outstanding 9,550 9,015 9,533 8,997
Common equivalent shares 662 423 633 270
Potential dilution of convertible
redeemable preferred stock 1,143 1,143
11,355 9,438 11,309 9,267
Net income 1,831 1,998 2,331 3,822
Add back dividend on
preferred stock 240 480
Net income for calculating fully
diluted earnings per share $2,071 $1,998 $2,811 $3,822
Net income per common and common
equivalent share, fully diluted $ .18 $ .21 $ .25 $ .41
Fully diluted earnings per common and common equivalent share do not result in
dilution of three percent or more or are anti-dilutive and, therefore, are not
separately presented in the consolidated statements of income.
EXHIBIT 15
To the Board of Directors and Stockholders
of Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed, in accordance with standards established by the
American Institute of Certified Public Accountants, the unaudited
interim financial information of Optical Coating Laboratory, Inc. and
subsidiaries for the periods ended April 28, 1996 and 1995 as indicated
in our report (which report makes reference to the report of other
accountants), dated May 15, 1996. Because we did not perform an audit,
we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended April 28,
1996, is incorporated by reference in Registration Statements
No. 33-41050, No. 33-26271, No. 33-12276, No. 33-48808, No. 33-65132,
and No. 33-60891 on Forms S-8 and Registration Statements No. 33-61177
and No. 33-65319 on Forms S-3.
We are also aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act, is not considered a part of the
Registration Statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
Deloitte & Touche LLP
San Francisco, California
June 14, 1996
SECURED PROMISSORY NOTE
$3,000,000 Santa Rosa, California March 15, 1996
FOR VALUE RECEIVED, the undersigned, OPTICAL COATING LABORATORY, INC.,
a Delaware corporation (the "BORROWER"), hereby promises to pay, in a
lawful money of the United States, in installments as herein stated, to the
order of AID ASSOCIATION FOR LUTHERANS, a Wisconsin corporation ("HOLDER"),
the principal sum of Three Million and No/100 Dollars ($3,000,000.00) ("THE
LOAN") together with interest on the unpaid principal balance hereof from
the "Interest Accrual Date" (as hereinafter defined) at the rate of seven
and one-half percent (7.5%) per annum (the "INTEREST RATE") in legal tender
of the United States of America until paid in full. The "INTEREST ACCRUAL
DATE" shall be the date hereafter endorsed on the first page of this Note.*
As used herein, the term "Loan Year" shall mean and refer to each
twelve (12) month period starting on the Adjustment Date (as hereinafter
defined).
Until otherwise directed by the Holder in writing, the installments as
herein stated shall be paid by preauthorized Automated Clearinghouse
transaction (ACH) initiated by Holder of immediate available federal funds
to Harris Trust and Savings Bank, 111 West Monroe Street, Chicago, Illinois
60690, Account No. 164-096-0 (Aid Association for Lutherans).
This Note is secured by (i) a Deed of Trust, Financing Statement,
Fixture Filing and Security Agreement (With Assignment of Rents) (the "DEED
OF TRUST") of even date herewith executed by Borrower, as trustor, for
Holder, as beneficiary, which is a lien on property (the "PROPERTY") (and
the rents therefrom) located in the City of Santa Rosa, County of Sonoma,
State of California, all as more particularly described in the Deed of
Trust; (ii) an Assignment of Rents and Leases (the "ASSIGNMENT") of even
date herewith executed by Borrower, as assignor, in favor of Holder, as
assignee, in which Borrower has absolutely assigned to Holder (with a
license back to Borrower on the terms and conditions contained therein) the
rents, additional rents, profits, royalties and payments of the Property.
(It being expressly understood and agreed that all revenues derived from
the Property which are received by Borrower shall be held by Borrower in
trust to be used first for the payments required under this Note and for
legitimate operating expenses of the Property); and (iii) such other and
sundry documents executed by Borrower to further evidence or secure the
Loan. The Deed of Trust, the Assignment and all other documents and
agreements now or hereafter executed and delivered as
________________________________________________________________________
* Interest on the within Note to accrue from and after ___________, 1996
(the "INTEREST ACCRUAL DATE").
security for the Loan are referred to collectively as the "Security
Documents." Reference is hereby made to the Security Documents for a
description of the nature and extent of such security and such assignment
and the rights of Holder with respect thereto.
If the Interest Accrual Date is on any day other than the fifteenth
day of a calendar month, Borrower shall pay, on the fifteenth day of the
next calendar month (such payment date called the "ADJUSTMENT DATE"),
interest accrued on the principal amount from the Interest Accrual Date to
the Adjustment Date, such payment to be deducted by Holder from the
commitment fee delivered by Borrower to Holder. If the Interest Accrual
Date is the fifteenth day of a calendar month, such date shall be deemed to
be the Adjustment Date, and no interest payment shall be made on that date.
From and after the Adjustment Date, except as otherwise provided herein,
principal and interest on this Note shall be payable in installments of
Twenty-Seven Thousand Eight Hundred Eleven and No/100 Dollars ($27,811.00)
to be applied, except as otherwise provided herein, first to the payment of
accrued interest and then to the reduction of principal, commencing on the
fifteenth day of the calendar month following the Adjustment Date and
continuing on the fifteenth day of each calendar month thereafter through
and including the one hundred seventy-ninth (179th) month after the
Adjustment Date. The remaining principal balance hereof, together with all
accrued interest thereon, shall be due and payable on the fifteenth day of
the one hundred eightieth (180th) month after the Adjustment Date.
Interest on this Note will be computed on the basis of a three hundred
sixty (360) day year comprised of twelve (12) thirty (30) day months.
Borrower has no right, and no privilege is reserved, to prepay
principal during the first four (4) Loan Years.
Commencing on the first day of the fifth (5th) Loan Year (that is, on
the fourth (4th) anniversary of the Adjustment Date) through the last day
of the sixth (6th) month of the fifteenth (15th) Loan Year (premium
prepayment period), Borrower shall have the privilege following the giving
of at least sixty (60) days' prior written notice to Holder, of prepaying
all (but not less than all) of the then outstanding principal balance
hereof, together with all interest accrued, but unpaid thereon to the date
of prepayment, and any expenses then due Holder, upon payment by the
Borrower of a prepayment privilege fee (the "PREPAYMENT PRIVILEGE FEE")
equal to the amount prepaid times the "Privilege Rate." As used herein,
the term "PRIVILEGE RATE" shall mean and refer to (a) the difference
between (1) the Interest Rate on the Loan and (2) the market yield of U.S.
Treasury issues (as quoted daily in The Wall Street Journal), which have
the closest maturity date (month and year) to the date the Loan can be
prepaid at par multiplied by (b) the remaining term of the premium
prepayment period (the remaining term to be expressed as a fraction equal
to the number of days between the date of prepayment and the last day of
the premium prepayment period over 365). The Prepayment Privilege Fee
shall be reduced to a present value on a per period basis discounted at the
above Treasury issues rate. In no event, however, shall the Prepayment
Privilege Fee be less than one percent (1%) of the outstanding principal.
Notwithstanding the above, Borrower agrees that in the event of the
occurrence of an Event of Default followed by acceleration of the maturity
of this Note, a tender of an amount necessary to satisfy the entire
indebtedness shall be deemed a voluntary prepayment, and to the extent
permitted by law, shall include the foregoing Prepayment Privilege Fee;
provided, however, that if such tender occurs during the first four (4)
Loan Years, Borrower shall pay a prepayment privilege fee which is equal to
the greater of (i) the amount prepaid multiplied by the Privilege Rate or
(ii) eight percent (8%) of the amount prepaid.
Commencing with the first day of the seventh (7th) month of the
fifteenth (15th) Loan Year, Borrower shall have the right, following the
giving of not less than sixty (60) days' prior written notice to Holder, to
prepay all (and not less than all) of the then outstanding principal
balance of the Loan, together with interest accrued but unpaid thereon to
the date of prepayment and any expenses then due Holder, with no prepayment
privilege fee, penalty or other similar charge.
Anything herein to the contrary notwithstanding, Borrower shall not be
liable for damages or any fee if, after giving notice of prepayment,
Borrower fails to prepay this Note for any reason; provided, however, that
(a) Borrower's failure shall not relieve Borrower of any of its obligations
under this Note or any of the Security Documents or any other documents
relating thereto, and (b) Borrower shall immediately reimburse Holder for
any out-of-pocket expenses (including attorneys' fees and costs) incurred
by Holder relating to the proposed prepayment together with a processing
fee in the amount of One Thousand Dollars ($1,000).
If Holder should determine, in its sole option and absolute
discretion, to accept a prepayment of less than all of the outstanding
principal balance together with accrued but unpaid interest thereon, all
such prepayments accepted in Holder's sole option and absolute discretion
shall, except for any prepayment privilege fee assessed by Holder, first be
applied against accrued interest then due and owing and thereafter against
the principal due hereunder in the inverse order of principal payments as
they mature. Such partial prepayments, if permitted at Holder's sole
option and absolute discretion, shall not relieve the obligation of
Borrower to pay installments of principal and interest when due hereunder
and any such partial prepayments shall be subject to a prepayment privilege
fee as determined by Holder in its sole and absolute discretion. Holder's
consent to any such partial prepayment will not be a consent to any other
or subsequent partial prepayment or a waiver of the need for such consent
in any future or other instance.
Notwithstanding anything to the contrary contained in this Note, if
the Deed of Trust specifically and expressly permits prepayment without
prepayment privilege fee in any instance, no prepayment privilege fee shall
be assessed under this Note.
Without the prior written consent of Holder (which consent or the
denial thereof shall be in Holder's sole and absolute discretion), Borrower
shall not hypothecate, pledge, grant a security interest in or otherwise
encumber (whether voluntarily or by operation of law) all or any portion of
the Trust Property (as defined in the Deed of Trust) (a "PROHIBITED
ENCUMBRANCE").
Except as otherwise provided in Article 1, Section 1.8 of the Deed of
Trust, in the event that without the prior written consent of Holder, which
consent or the denial thereof shall be in Holder's sole and absolute
discretion, (a) Borrower (or any subsequent holder of an interest in the
Trust Property following a transfer to which Holder consents or that is
otherwise permitted hereby (a "SUBSEQUENT OWNER")) sells, assigns, conveys,
contracts to sell, leases (other than pursuant to any existing leases of
the Trust Property that have been approved by Holder) or otherwise
transfers all or any portion of the Trust Property or any interest or
estate therein (whether possessory or nonpossessory), whether voluntarily
or by operation of law; or (b) there occurs a transfer, in the aggregate,
of more than fifty percent (50%) of the shares in Borrower to one person or
entity and any affiliates of any such person or entity (the occurrence of
an event described in (a) or (b) that occurs without Holder's consent being
referred to herein as a "PROHIBITED TRANSFER"), then, at Holder's election
in its sole and absolute discretion, without any notice to Borrower, Holder
may declare the whole of the principal balance of this Note and all accrued
but unpaid interest thereon immediately due and payable, together with a
transfer privilege fee of (a) four percent (4%) of said principal balance
if such Prohibited Transfer occurs during the first four (4) Loan Years, or
(b) the greater of (i) one-half (1/2) of the amount that would be the
Prepayment Privilege Fee and (ii) one percent (1%) of said principal
balance if such Prohibited Transfer occurs at any time after the first four
(4) Loan Years through the sixth (6th) month of the fifteenth (15th) Loan
Year. Commencing with the seventh (7th) month of the fifteenth (15th) Loan
Year, there will be no transfer privilege fee. Any payment of the amount
necessary to satisfy this Note pursuant to the terms of this paragraph
shall be deemed to be a voluntary prepayment of this Note.
Notwithstanding anything to the contrary contained in the preceding
paragraph, the occurrence of (a) a Prohibited Encumbrance, or (b) a
Prohibited Transfer where (i) Borrower retains any interest in the property
so transferred, (ii) Borrower has any agreement or understanding with the
transferee of such property with respect to the retransfer of such property
to Borrower, or (iii) Borrower has any interest in the transferee of such
property, shall be deemed an Event of Default, and Holder shall have all of
its rights and remedies in such event, including, without limitation, the
right to declare the entire unpaid principal balance of this Note and all
accrued but unpaid interest thereon immediately due and payable, together
with the Prepayment Privilege Fee due pursuant to the terms of this Note
upon the occurrence of an Event of Default followed by acceleration of the
maturity of this Note, and to charge interest at the rate of twelve and one-
half percent (12.5%) per annum on such sum from the date of such Prohibited
Transfer or Prohibited Encumbrance until such sum is paid in full.
Upon the occurrence of any of the following events, which events shall
constitute events of default hereunder ("EVENTS OF DEFAULT"), Holder hereof
may, at its sole option and in its absolute discretion, to be exercised at
any time thereafter, without notice to Borrower, any right to which is
hereby waived, declare the entire unpaid principal balance hereof and
accrued but unpaid interest hereon immediately due and payable:
(a) Failure of Borrower to make any payment of principal and/or
interest on this Note within ten (10) days after the date when due;
(b) Failure of Borrower to comply with any other provision
contained in this Note or to perform any other obligation of Borrower
hereunder pursuant to the terms hereof, or the breach of any
representations, warranties, agreements or covenants contained in the Note
or any Security Document, and such failure or breach (and the consequences
that the delay in such performance may have caused) are not cured and/or
remedied within fifteen (15) days after notice of such failure or breach is
given to Borrower from Holder; provided, however, if such failure or breach
cannot, in the sole and absolute discretion of Holder exercised in good
faith, reasonably be cured and/or remediated within said fifteen (15) day
period, Borrower shall have an additional sixty (60) days to cure such
failure or breach so long as Borrower is diligently pursuing such cure
and/or remediation; provided, further, that in no event shall any cure
and/or remediation period exceed seventy five (75) days. Notwithstanding
the foregoing, any such failure or breach shall be deemed an Event of
Default upon the occurrence thereof (for which no notice shall be required
and no cure period shall be available to Borrower) if (i) such failure or
breach is the third (3rd) default to occur within any period of twelve (12)
consecutive months and notice of the first two (2) defaults has been sent
to Borrower, regardless of whether the same or different defaults are
involved and notwithstanding that Borrower may have cured within any
applicable cure period any previous defaults occurring within such twelve
(12) month period or (ii) in the reasonable discretion of Holder, such
failure or breach constitutes or creates a clear and present emergency or
threat to the Trust Property (as defined in the Deed of Trust);
(c) A Prohibited Encumbrance or a Prohibited Transfer occurs; or
(d) An Event of Default (as defined in the Deed of Trust or any
other Security Document).
Commencing after an Event of Default occurs and continuing for as long
thereafter as the Event of Default shall exist, the unpaid principal
balance together with interest accrued to such maturity shall bear interest
at an annual rate of interest equal to twelve and one-half percent (12.5%).
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
personally delivered, or, if mailed, on the date which is three (3)
business days after mailing by United States certified mail, postage
prepaid, return receipt requested, to the parties at the following
addresses (until such addresses are changed by notice pursuant to these
notice provisions):
Borrower:
Optical Coating Laboratory, Inc.
2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Jeff Ryan, Assistant Treasurer
Holder:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Director of Investments
with copies to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attention: Law Department
All persons or entities now or at any time liable, whether primarily
or secondarily, for payment of the indebtedness hereby evidenced, for
themselves, their heirs, legatees, devisees, legal representatives,
executors, administrators, conservators, successors and assigns,
respectively, expressly waive presentment for payment, notice of dishonor,
protest, notice of protest and diligence in collection, and consent that
the time of said payments or any part thereof may be extended by Holder and
that additional security may be accepted by Holder and further consent that
the real or collateral security or any part thereof now or hereafter
securing this Note may be released by Holder without in any way modifying,
altering, releasing, affecting, or limiting their respective liability.
Borrower further waives, to the full extent permitted by law, the right to
plead any and all statutes of limitations as a defense to any demand on
this Note, or on any deed of trust, security agreement, lease assignment,
guaranty or other agreement now or hereafter securing this Note.
The parties hereto intend and believe that each provision in this Note
comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of
any provision or provisions, in this Note is found by a court of law to be
in violation of any applicable local, state or federal ordinance, statute,
law, administrative or judicial decision, or to be illegal, invalid,
unlawful, void or unenforceable as written, then it is the intent of all
parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Note shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interest of Borrower and Holder under the remainder of this Note shall
continue in full force and effect.
All agreements herein are expressly limited so that in no contingency
or event whatsoever, whether by reason of advancement of the proceeds
hereof, acceleration of maturity of the unpaid principal balance hereof, or
otherwise, shall the amount paid or agreed to be paid to Holder for the
use, forbearance or detention of the money to be advanced hereunder exceed
the highest lawful rate permissible under applicable usury laws. If, from
any circumstances whatsoever, fulfillment of any provision in this Note or
in the Security Documents, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law
that a court of competent jurisdiction may deem applicable hereto, then,
ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity and if from any circumstance the Holder shall ever receive as
interest an amount that would exceed the highest lawful rate, such amount
that would be excessive interest shall be applied to the reduction of the
unpaid principal balance due hereunder in the inverse order of maturity and
not to the payment of interest.
This Note shall be governed by and construed in accordance with the
laws of the State of California.
If, by the laws of the United States of America, or of any state or
local jurisdiction having jurisdiction over Borrower, any tax is due or
becomes due in respect of the issuance of this Note or the issuance or
recording of the Security Documents or any security interest created
thereby, Borrower covenants and agrees to pay such tax in the manner
required by any such law. Borrower further covenants to hold harmless and
agrees to indemnify Holder against any liability incurred by reason of the
imposition of any tax on the issuance of this Note or the issuance or
recording of the Security Documents or any security interest created
thereby. Notwithstanding the foregoing provisions of this paragraph,
Borrower shall not be required to indemnify Holder for any income taxes
incurred by Holder relating to this Note.
Time is of the essence with respect to each and every obligation of
Borrower set forth in this Note. In the event that any monthly installment
of this Note is not received by Holder when due, then in addition to all
other rights set forth herein Borrower shall be liable to Holder for a late
payment privilege fee equal to the greater of three percent (3%) of the
overdue payment or Five Hundred and No/Dollars ($500.00), which fee, at
Holder's option, may be either required in addition to the monthly
installment or added to principal. Borrower acknowledges that this fee is
a good faith, reasonable and fair estimate under the circumstances existing
at the time this Note is executed of the amount necessary to compensate
Holder for its additional costs and expenses incident to the handling of
such delinquent installment, including, without limitation, disruption of
Holder's accounting and bookkeeping operations caused by Borrower's failure
to make payment when due, and the loss of Holder's ability to promptly
reinvest the payments. Notwithstanding anything to the contrary contained
in this Note, any payment received while any late fees are owed shall be
applied first to such late fees unless Holder has elected that such late
fees be added to principal.
No delay or omission on the part of Holder or other holder hereof
under this Note or under any security agreement given to secure this Note
(including the Deed of Trust and Assignment) shall operate as a waiver of
such right or of any other right hereunder or under said Deed of Trust or
Assignment.
If Borrower fails to perform any of its covenants or agreements
contained in this Note or in any other Security Document, then Borrower
shall pay all out-of-pocket expenses of Holder (including but not limited
to actual fees and disbursements of counsel) incurred by reason of or in
response to such nonperformance, together with interest thereon at the rate
of twelve and one-half percent (12.5%) per annum from the date such
expenses are incurred until paid.
Except as otherwise provided in this paragraph, Borrower shall not
have any personal liability under this Note, and, in the event of a
foreclosure of the security interest in the Trust Property, no deficiency
judgement may be obtained against Borrower and in the event of an Event of
Default hereunder, Holder shall look solely to the Trust Property and any
other collateral under the Security Documents for recovery of Holder's
losses or damages. If, however, there is a Prohibited Encumbrance or a
Prohibited Transfer, or the filing of a voluntary petition by Borrower in
bankruptcy or any other petition under any section or chapter of the
Bankruptcy Code or any similar law, whether state, federal, foreign,
provincial or otherwise, for relief of debtors, or if Holder is permanently
prevented from acquiring title in the Trust Property following an Event of
Default and is unsuccessful in collecting on its title insurance policy
relating to the Trust Property, the Borrower shall have personal liability
on this Note and in the event of a foreclosure of the security interest in
the Trust Property, a deficiency judgment may be obtained against Borrower.
Borrower shall also have personal liability for all actual attorneys' fees
and other costs incurred by Holder in order to recover from Borrower any of
the amounts for which Borrower has personal liability hereunder. Further,
it is expressly understood and agreed that nothing contained in this
paragraph shall impair, in any manner, any rights, remedies or recourse
Holder may have against any person or entity other than Borrower or, in any
manner or way, constitute or be deemed a release of the debt evidenced by
this Note or otherwise affect or impair the enforceability of the liens,
deed of trust, assignments, rights and security interests created by the
Deed of Trust or any other Security Documents or any other instrument or
agreement evidencing, securing, or relating to the indebtedness evidenced
by this Note. Nothing in this paragraph shall preclude Holder from
foreclosing the Deed of Trust or from enforcing any of its rights and
remedies at law or in equity against Borrower except as stated in this
paragraph. Further, Borrower shall indemnify and hold harmless Holder
from, and be personally liable for, any damage, loss, liability or expense
(including, without limitation, actual attorney's fees and costs) incurred
by Holder as a result of (i) any abusive or destructive act that Borrower
may take or permit that diminishes the value of the Trust Property or any
other security under the Deed of Trust (to the extent of such diminution in
value); (ii) the collection of any revenue received (a) after Borrower has
failed to pay Holder any sum then due and payable or (b) after an Event of
Default from or because of lease of the Trust Property that are not applied
against the Note or to normal and necessary operating expenses for the
Trust Property together with interest thereon from the date Borrower
collects such revenue at the rate of twelve and one-half percent (12.5%)
per annum; (iii) any material misrepresentations contained in any of the
Security Documents, in any certificate, document or instrument delivered to
Holder by Borrower or otherwise made to Holder by Borrower or any officer
of Borrower; (iv) any and all tenant security deposits and rents collected
more than one (1) month in advance of their due date or after the
occurrence of any Event of Default, or any event that, with the passage of
time and/or the giving of notice, would constitute such an Event of
Default, together with interest on such amount thereon from the date
Borrower collects such rents at the rate of twelve and one-half percent
(12.5%) per annum; (v) any real estate taxes, assessments, or any other
charges by any governmental entity that are delinquent or the pro rata
amount of any such real estate taxes, assessments or other charges that
constitute a lien upon the Trust Property or any portion thereof at such
time as Holder (or any successors or assigns of Holder) becomes owner of
the Trust Property; (vi) any amounts necessary to satisfy any construction
liens, mechanics' liens and materialmen's liens arising out of the acts or
omissions of Borrower, provided, however, that Borrower shall have the
right to contest the amount or validity of any such lien, by appropriate
legal proceedings if: (x) the legal proceedings shall operate to prevent
the collection of such lien, so contested and the sale of the Trust
Property to satisfy the same, and (y) Borrower shall deposit with Holder or
with the appropriate court or other governmental authority or title
insurance company satisfactory to Holder a bond or an amount, with such
subsequent additions thereto as may be necessary or sufficient in Holder's
opinion to pay such liens, together with all estimated interest and
penalties in connection therewith; (vii) any act or omission constituting
fraud; (viii) the use of any condemnation or insurance proceeds relating to
the Trust Property for any purpose not approved in writing by Holder or
allowed under the Security Documents, or the misapplication of any security
deposits together with interest thereon from the date of such use or
misapplication at the rate of twelve and one-half percent (12.5%) per
annum; and (ix) fees required to be paid to any government entity for the
transfer of title to the Trust Property (or any portion thereof).
Notwithstanding the foregoing, Borrower's liability under this Note shall
not extend to that portion of any damage, loss, liability or expense that
is payable by Borrower to Holder under that certain Environmental Indemnity
Agreement of even date herewith executed by Borrower in favor of Holder.
Nothing in this paragraph shall be construed to be an election by Holder to
have Borrower's obligations to Holder be treated as recourse debt or
nonrecourse debt for purposes of Section 1111(b) of the Bankruptcy Code or
any successor thereto.
In the event of any inconsistency between provisions of this Note and
those of the Security Documents, the provisions of this Note shall control.
IN WITNESS WHEREOF, this Note is executed as of the date set forth
above.
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: /s/Jeffrey M. Ryan
Name: Jeffrey M. Ryan
Title: Assistant Treasurer
When recorded mail to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919
Attn: Kenneth E. Podell, Esq.
ASSIGNMENT OF RENTS AND LEASES
This ASSIGNMENT OF RENTS AND LEASES (the "ASSIGNMENT") is made as of
March 15, 1996 by OPTICAL COATING LABORATORY, INC., a Delaware corporation
(hereinafter called "ASSIGNOR"), to AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation (hereinafter called "ASSIGNEE").
RECITALS
A. As of the date hereof, Assignor has delivered to Assignee that
certain Secured Promissory Note (which note, and any and all replacements,
rearrangements, modifications, substitutions, extensions and renewals
thereof are hereinafter collectively called the "NOTE") of even date
herewith in the original principal amount of Three Million and No/100
Dollars ($3,000,000.00) evidencing a loan made by Assignee to Assignor in
said amount (the "LOAN"). The Note is secured by that certain Deed of
Trust, Financing Statement, Fixture Filing and Security Agreement (With
Assignment of Rents) (the "DEED OF TRUST") of even date herewith
constituting a lien on that certain real property located in the City of
Santa Rosa, County of Sonoma, State of California, as more particularly
described on Exhibit A attached hereto and by this reference incorporated
herein (the "PROPERTY").
B. As a condition to the making of the Loan to Assignor, Assignee
has required Assignor to assign to Assignee all the rights, interests and
privileges that Assignor, as landlord, has and may hereafter have in any
and all leases, subleases, licenses, franchises or other occupancy
agreements , whether now existing or hereafter made, demising all or any
portion of the Property (the "LEASES").
NOW, THEREFORE, in consideration of the making of the Loan to
Assignor, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby absolutely
and presently conveys, transfers and assigns unto Assignee all of the
Leases, together with all rights and privileges incident thereto, and
together with all rents, additional rents, income, profits and payments due
or to become due therefrom and together with all security deposits,
guaranties and other security now or hereafter held by Assignor as security
for the performance of the obligations of the tenants thereunder.
In connection therewith, Assignor hereby covenants and declares as
follows:
1. This Assignment is intended by Assignor and Assignee to create
and shall be construed to create an absolute assignment to Assignee of all
of Assignor's right, title and interest in the Leases and in rents,
additional rents, income, payments and profits therefrom and shall not be
deemed to create a security interest herein for the payment of any
indebtedness or the performance of any obligations of Assignor under the
Loan Documents (as hereinafter defined).
2. So long as there shall not have occurred a default (subject to
all applicable cure periods) by Assignor with respect to any of its
obligations, financial or otherwise (the "OBLIGATIONS"), under the terms of
the Note, the Deed of Trust, this Assignment or any other documents and
agreements now or hereafter executed and delivered in connection with the
Loan (the Note, the Deed of Trust, this Assignment and any other documents
and agreements now or hereafter executed and delivered in connection with
the Loan being sometimes collectively referred to as the "LOAN DOCUMENTS"),
Assignor will have a revocable license to collect all rents, additional
rents, income, profits and payments from the Leases and to retain, use and
enjoy the same. Upon the occurrence of any such default under the Loan
Documents by Assignor, Assignee may terminate Assignor's license in its
sole and absolute discretion at any time by written notice to Assignor and
may thereafter collect such rents, additional rents, income, profits and
payments itself or by an agent or a receiver.
3. Assignor will not, without Assignee's prior written consent,
which may be granted or denied in Assignee's sole and absolute discretion,
(a) terminate, consent to the cancellation or surrender of, or alter,
modify or amend, any of the Leases; (b) accept prepayments of any
installment of rent or additional rent to become due under any of the
Leases in excess of one (1) month's rent, except prepayments in the nature
of security for the performance of the lessee's obligations thereunder; (c)
relocate any tenant to any location other than the Property; or (d) in any
manner impair the value of the Property or the security of Assignee for the
payment of the indebtedness secured hereby. Any or all future Leases must
provide, in a manner satisfactory to Assignee in its sole and absolute
discretion, that the lessee will recognize as its lessor any person
succeeding to the interest of Assignor upon any foreclosure of the Deed of
Trust.
4. As an incident to this Assignment and notwithstanding anything to
the contrary contained in Paragraph 2 hereof, Assignor hereby presently and
absolutely assigns to Assignee any award made hereafter to Assignor in any
court proceeding involving any of the lessees under the Leases (including,
without limitation, in any bankruptcy, insolvency or reorganization
proceedings in any state or federal court), and any and all payments made
by such lessees in lieu of rent and additional rent. Assignor hereby
irrevocably appoints Assignee as its attorney-in-fact to appear in any such
action and/or to collect any such award or payment.
5. Upon or at any time after default in the payment of the Loan or
in the performance of any of the Obligations, Assignee, without in any way
waiving such default, may at its option and without regard to the adequacy
of the security for the Loan, either by a representative or by agent, with
or without bringing any action or proceeding, or by a receiver appointed by
a court, take possession of the Property and have, hold, manage, lease and
operate the same on such terms and for such period of time as Assignee may
deem proper, including, without limitation, the right to effect new Leases,
to cancel, surrender, alter or amend the terms of, and/or renew then-
existing Leases, and/or to make concessions to tenants; and, either with or
without taking possession of the Property in its own name, demand, sue for
or otherwise collect and receive all rents, additional rents, income,
payments and profits of the Property, including those past due and unpaid,
with full power to make from time to time all alterations, renovations,
repairs or replacements thereto or thereof as may seem proper to Assignee
and to apply such rents, additional rents, income and profits to the
payment of: (a) all expenses of managing the Property, including, without
being limited thereto, the salaries, fees and wages of a managing agent and
such other employees as Assignee may deem necessary or desirable and all
expenses of operating and maintaining the Property, including, without
being limited thereto, all taxes, charges, claims, assessments, water
rents, sewer rents and any other liens, and premiums for all insurance that
Assignee may deem necessary or desirable and the cost of all alterations,
renovations, repairs or replacements, and all expenses incident to taking
and retaining possession of the Property; (b) the indebtedness evidenced by
the Note or otherwise due and owing under the Loan Documents, including all
costs and attorneys' fees, in such order of priority as to any of the items
mentioned in this paragraph as Assignee in its sole discretion may
determine, any statute, law, custom or use to the contrary notwithstanding;
and (c) the remainder, if any, to the person or persons legally entitled
thereto. Assignor further agrees that it will use diligent efforts to
facilitate Assignee's collection of said rents, additional rents, income,
payments and profits and will, upon request by Assignee, execute a written
notice to each tenant directing the tenant to pay rents and other amounts
due and payable under the applicable Lease to said Assignee. The exercise
by Assignee of the option granted it in this paragraph and the collection
of the rents, additional rents, income, payments and profits and the
application thereof as herein provided shall not be considered a waiver of
any default by Assignor under the Note, Deed of Trust or under any of the
other Loan Documents. Notwithstanding the foregoing, no action taken by
Assignee to collect any rents, additional rents, income, payments or
profits will make Assignee a "mortgagee-in-possession" of the Property
unless Assignee personally or by authorized agent enters into actual
possession of the Property. Possession by a court-appointed receiver shall
not be considered possession by Assignee.
6. The receipt by Assignee of any rents, additional rents, income,
payments or profits pursuant to this Assignment after the institution of
foreclosure proceedings either by court action or by the private power of
sale contained in the Deed of Trust shall not cure any such default (unless
sums so collected fully reimburse Assignee for all sums then due) nor
affect such proceedings or any sale pursuant thereto, nor shall the receipt
of this Assignment or any rents, additional rents, income, payments, or
profits pursuant hereto be deemed to limit any rights or remedies of
Assignee under the Deed of Trust.
7. Assignee shall not be obligated to perform or discharge any
obligation or duty to be performed or discharged by Assignor under any of
the Leases prior to taking possession of the Property, and Assignor hereby
agrees to indemnify, defend and hold Assignee harmless from and against any
and all liabilities, claims, losses, demands, damages, costs and expenses
(including, without limitation, actual attorneys' fees and costs) arising
from any of the Leases or from this Assignment (other than arising from
Assignee's gross negligence, wilful misconduct or breach of lease after
taking possession of the Property). This Assignment shall not place
responsibility upon Assignee for the control, care, management or repair of
the Property resulting in loss or injury or death to any tenant, licensee,
employee or stranger or any other person or entity. Assignee shall not be
responsible for any loss sustained by Assignor resulting from the failure
of Assignee to let the Property after default or from any other act or
omission of Assignee in managing the Property after a default, other than
any resulting from Assignee's wilful misconduct. Assignee shall not be
liable for failure to collect rents, additional rents, payments, income and
profits.
8. Assignor covenants and represents that (a) Assignor has full
right and title to assign the Leases and the rents, additional rents,
income, payments and profits due or to become due thereunder; (b) no other
assignment of any interest therein has been made; (c) there are no existing
defaults or events which, with notice or the passage of time or both, shall
constitute a default under the provisions of any of the Leases; and (d)
there are no offsets, credits or defenses to the payment of any obligations
under any of the Leases. Assignor further covenants and agrees that upon a
default in any of its Obligations, Assignor shall hold in trust in a trust
account for the benefit of Assignee, all rents, additional rents, income,
revenues, issues, profits, condemnation awards, administrative rents, use
and occupancy payments, damages, moneys, and security payable or receivable
under or with respect to the Leases, or pursuant to any of the provisions
thereof, whether as rent or otherwise, that are not applied towards
necessary operating expenses of the Property or not immediately paid to
Assignee.
9. Assignor hereby authorizes Assignee to give notice in writing of
this Assignment at any time to any lessee under any of the Leases. At the
sole option of Assignee, any such notice to a lessee may be accompanied by
a copy of this Assignment.
10. Violation of any of the covenants, representations and provisions
contained herein by Assignor shall be deemed a default under the terms of
the Note and the Deed of Trust and shall give Assignee the right to
exercise any or all rights or remedies provided hereunder and the right to
exercise any or all rights or remedies provided under the Note and the Deed
of Trust (subject to all cure periods therein).
11. Payment in full of the Note and satisfaction of all Obligations
secured by the Deed of Trust and recordation of a release of all property
encumbered thereby shall automatically terminate this Assignment. Upon any
partial release and reconveyance of any portion of the property encumbered
by the Deed of Trust, this Assignment shall automatically terminate as to
such portion subject to such partial release and reconveyance.
12. This Assignment applies to and binds the original Assignor and
its heirs, administrators, executors, successors and assigns, as well as
any subsequent owner of the Property.
13. As used herein, the term "ASSIGNEE" includes the original
Assignee and also any future owner or holder of the Note or any interest
therein.
14. This Assignment is intended to cover all of the Leases now or
hereafter created that affect the Property or any portion thereof.
Nevertheless, Assignor agrees that it will, at any time and from time to
time, on demand by Assignee, execute specific assignments of any of the
future Leases affecting the Property or any portion thereof. Assignor
covenants and agrees to deliver copies of all future Leases affecting the
Property promptly to Assignee.
15. This Assignment has been executed and delivered for value at
Sonoma County, California on the date first above written. This Assignment
shall be governed by and construed in accordance with the laws of the State
of California.
16. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
personally delivered, or, if mailed, on the date three (3) business days
after mailing by United States certified mail, prepaid, return receipt
requested, to the parties at the following addresses (until such addresses
are changed by notice pursuant to these notice provisions):
Assignor:
Optical Coating Laboratory, Inc.
2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Jeff Ryan, Assistant Treasurer
Assignee:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Director of Investments
With copies to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Law Department
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
date first above written.
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
EXHIBIT A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
State of _______________ )
)ss
County of _____________ )
On _______________, 1996, before me, ________________________, a
notary public in and for said state, personally appeared
_______________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same
in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________ (Seal)
March 15, 1996
Aid Association For Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Re: Loan of $3,000,000
from AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation ("LENDER") to OPTICAL
COATING LABORATORY, INC., a Delaware
corporation ("BORROWER"); Waiver of
California Civil Code Section
2954.10
Ladies and Gentlemen:
This letter is written to you in connection with the funding by Lender
of a loan to Borrower in the principal amount of Three Million and No/100
Dollars ($3,000,000), which Loan is evidenced by a Secured Promissory Note
in the face amount of Three Million and No/100 Dollars ($3,000,000) of even
date herewith made by Borrower and payable to the order of Lender ("NOTE"),
which Note is secured, inter alia, by a Deed of Trust, Financing Statement,
Fixture Filing and Security Agreement (With Assignment of Rents) of even
date herewith made by Borrower as Trustor for the benefit of Lender as
Beneficiary (the "DEED OF TRUST").
The undersigned, having received the benefit of advice of legal
counsel of its own selection, hereby:
(1) acknowledges that the Note and Deed of Trust contain provisions
allowing Lender to charge prepayment fees upon the acceleration of the
maturity date of the principal and accrued interest under the Note upon
certain direct or indirect conveyances of rights, title or interests,
including, without limitation, "Prohibited Transfers" (as defined in the
Deed of Trust) and "Prohibited Encumbrances" (as defined in the Deed of
Trust) in the property (the "PROPERTY") subject to the Deed of Trust;
(2) expressly waives the provisions of California Civil Code Section
2954.10 (and any similar provision of applicable law in any manner
conditioning the enforceability of any prepayment fees as set forth in the
Note and Deed of Trust) and expressly agrees to the payment of any
prepayment fees as set forth in the Note and/or the Deed of Trust,
including, without limitation, prepayment fees charged upon the
acceleration of the maturity date of the principal and accrued interest
under the Note as a result of any Prohibited Transfers or Prohibited
Encumbrances;
(3) expressly acknowledges that (a) in establishing the annual
interest rate of 7.5%, Lender has assumed and taken into account the fact
that the loan evidenced by the Note will not be prepaid and that there will
be no Prohibited Transfers or Prohibited Encumbrances or any other event
that would cause Lender to accelerate the maturity date of the Note, and
(b) the provisions in the Note and/or Deed of Trust relating to Borrower's
payment of
Aid Association for Lutherans
March 15, 1996
Page Two
a premium in the event of an acceleration are intended to compensate Lender
in the event that this assumption proves to be incorrect;
(4) expressly acknowledges that Lender's agreement to make the loan
evidenced by the Note was expressly conditioned on the waiver and agreement
contained herein and that Borrower bargained for and received specific
exceptions from Lender's normal and usual terms and provisions (for
example, (a) Borrower bargained for and received a provision wherein
Lender, in reliance on Borrower's management of the Property subject to the
Deed of Trust, agreed that the Note should be non-recourse; and (b)
Borrower bargained for and received specific exceptions from Lender's
normal and usual due on sale provisions (e.g., one-time assumption upon
satisfaction of certain conditions), and that the foregoing constitutes
"evidence of a course of conduct by the obligee of individual weight to the
consideration in that transaction for the waiver or agreement," all within
the meaning of California Civil Code Section 2954.10.
Sincerely,
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
COMPANY NAME: OPTICAL COATING LABORATORY, INC. AAL NUMBER: LOAN NO. 75650
THIS Agreement made March 15, 1996 by and between OPTICAL COATING
LABORATORY, INC., a Delaware corporation (hereinafter "COMPANY"), and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation (hereinafter "AAL").
WHEREAS, COMPANY agrees to have AAL originate preauthorized payment
entries ("DEBIT ENTRIES") on the 15th day of each month to COMPANY'S
account ("ACCOUNT") specified in Schedule A, attached hereto, in payment of
mortgage loan dated as of the date hereof ("OBLIGATION") owed by COMPANY to
AAL pursuant to the terms of this Agreement and the Rules relating to ACH
preauthorized payments and deposits ("RULES") of the National Automated
Clearing House Association and the Wisconsin Automated Clearing House
Association; and
WHEREAS, AAL is willing to initiate Debit Entries on the terms set
forth below;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, AAL and COMPANY agree as follows:
1. Authorization. Subject to the terms set forth below, COMPANY
authorizes AAL to initiate Debit Entries to the Account in accordance with
the agreement for payments owing from time to time by COMPANY to AAL
resulting from Obligation. AAL shall initiate Debit Entries not earlier
than the date payment is due under the Note by Company in favor of AAL.
2. Authorization Limitations: Procedures. No Debit Entry shall be
initiated under this Agreement except in conformity with the authorization
provided above. No single Debit Entry initiated under this Agreement shall
be in excess of the Maximum Entry Amount defined in Schedule A, attached to
and made a part of this Agreement. Such maximum amount may be changed by
AAL from time to time on 10 days prior written notice to COMPANY. Credit
Entries may be initiated only to reverse a prior Debit Entry if done in
error.
3. Originator's Failure to Originate. COMPANY shall not be deemed in
breach or default on any obligation or suffer any loss of discount or other
penalty by reason of the failure of AAL to initiate any Debit Entry in
accordance with (or as authorized by) the terms of this Agreement, or by
reason of any delay in receipt by COMPANY'S financial institution, or the
nonreceipt by such institution of any Debit Entry initiated by AAL.
4. Compliance with Rules. COMPANY and AAL shall comply with and be bound
by the Rules as in effect from time to time.
5. Acceptance and Return of Entries. COMPANY agrees to accept any Debit
Entry initiated in accordance with this Agreement, and to maintain
sufficient balances in the Account to honor such Debit Entries. Any Debit
Entry initiated under this Agreement may be returned in accordance with the
Rules. COMPANY shall not be deemed to have accepted any Debit Entry that
is returned in accordance with the Rules. Failure to accept any such Debit
Entry does not relieve the COMPANY of its obligations under Obligation.
6. Debit Entry Information. Each Debit Entry initiated under this
Agreement shall be accompanied by information required under the Rules. It
shall be the responsibility of the COMPANY'S financial institution to
provide notification of all Debit Entries to the COMPANY.
7. COMPANY'S Account. The Account specifics are provided in Schedule A,
attached to and made a part of this Agreement. The COMPANY Account may be
changed by COMPANY from time to time on 30 days prior written notice to
AAL. If COMPANY is a natural person, COMPANY represents to AAL that the
Account is, and during the term of this agreement, will be, maintained
primarily for business, and not for personal, family, or household
purposes.
8. Bank Service Charges. COMPANY shall be responsible for any charges
assessed by its financial institution for these Debit Entries.
9. Questions and Errors. In the event of any question or error relating
to Debit Entries initiated pursuant to this Agreement, COMPANY should
contact Investment Accounting at AAL, (414/734-5721) and AAL SHOULD CONTACT
______________________________________________________________________.
(Contact person's name and phone number)
10. Liability of Parties. Neither AAL nor COMPANY shall be liable for the
act or omission of any Automated Clearing House, financial institution, or
other person. However, the failure of an Automated Clearing House,
financial institution or other person to accept a Debit Entry initiated by
AAL because of insufficient balances in the Account shall be deemed a
default of COMPANY under the Obligation unless COMPANY causes AAL to
receive payment in full in immediately available funds of the amount of
such Debit Entry on or before the expiration of the grace period for the
payment of such amount (as such grace period is specified in the note
evidencing the Obligation).
11. Notices. Any written notice or other written communication required
or permitted to be given under this Agreement shall be delivered, or sent
by United States registered mail, postage prepaid, and, if to AAL,
addressed to:
Assistant Treasurer
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919
and, if to COMPANY, addressed to:
COMPANY Name OPTICAL COATING LABORATORY, INC.
COMPANY Address 2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Jeff Ryan, Assistant
Treasurer
unless another address is substituted by notice delivered or sent as
provided herein. Any such notice shall be deemed given when so delivered
or sent.
12. Termination. This Agreement may be terminated by COMPANY or AAL at
any time by giving 30 days prior written notice thereof to the other party;
provided, that AAL shall not terminate this Agreement so long as it
requires COMPANY to make installment payments by means of preauthorized
automated clearinghouse transactions. Notwithstanding such termination,
this Agreement shall remain in force and effect as to all transactions
which shall have occurred prior to the date of termination. This Agreement
shall terminate upon the satisfaction of the Obligation. Termination of
this Agreement does not release AAL or COMPANY from the terms and
liabilities of the Obligation.
13. Law Governing. This Agreement shall be construed in accordance with
and governed by the laws of the State of Wisconsin.
14. Entire Agreement, Etc. This Agreement embodies the entire Agreement
of the parties with respect to the subject matter hereof, and supersedes
all previous negotiation, representations, and agreements with respect
thereto, and shall be binding upon the parties hereto, and their respective
successors and assigns. This Agreement may be amended only by a writing
signed by both parties.
Signed:
"COMPANY"
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
"AAL"
Aid Association for Lutherans, a
Wisconsin corporation
By: ________________________
Wayne C. Streck
Vice President -
Mortgages and Real Estate
By: ________________________
Kenneth E. Podell
Assistant Secretary
SCHEDULE A
COMPANY Name: Optical Coating Laboratory, Inc. AAL Number: LOAN NO. 75650
COMPANY Taxpayer Identification Number: ______________________
Maximum Entry Amount: $27,811
COMPANY Account: The Account is the following deposit Account maintained
by the COMPANY:
Financial Institution: ___________________________________
Street Address: ___________________________________
City, State, Zip Code: ___________________________________
ABA Number: ___________________________________
Bank's Telephone Number: ___________________________________
COMPANY Account Number: ___________________________________
Date of this Schedule: ___________________________________
ATTACH VOIDED CHECK HERE
AUTHORIZATION AGREEMENT FOR PREAUTHORIZED PAYMENTS
COMPANY NAME: OPTICAL COATING LABORATORY, INC. AAL NUMBER: LOAN NO. 75650
THIS Agreement made March 15, 1996 by and between OPTICAL COATING
LABORATORY, INC., a Delaware corporation (hereinafter "COMPANY"), and AID
ASSOCIATION FOR LUTHERANS, a Wisconsin corporation (hereinafter "AAL").
WHEREAS, COMPANY agrees to have AAL originate preauthorized payment
entries ("DEBIT ENTRIES") on the 15th day of each month to COMPANY'S
account ("ACCOUNT") specified in Schedule A, attached hereto, in payment of
mortgage loan dated as of the date hereof ("OBLIGATION") owed by COMPANY to
AAL pursuant to the terms of this Agreement and the Rules relating to ACH
preauthorized payments and deposits ("RULES") of the National Automated
Clearing House Association and the Wisconsin Automated Clearing House
Association; and
WHEREAS, AAL is willing to initiate Debit Entries on the terms set
forth below;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, AAL and COMPANY agree as follows:
1. Authorization. Subject to the terms set forth below, COMPANY
authorizes AAL to initiate Debit Entries to the Account in accordance with
the agreement for payments owing from time to time by COMPANY to AAL
resulting from Obligation. AAL shall initiate Debit Entries not earlier
than the date payment is due under the Note by Company in favor of AAL.
2. Authorization Limitations: Procedures. No Debit Entry shall be
initiated under this Agreement except in conformity with the authorization
provided above. No single Debit Entry initiated under this Agreement shall
be in excess of the Maximum Entry Amount defined in Schedule A, attached to
and made a part of this Agreement. Such maximum amount may be changed by
AAL from time to time on 10 days prior written notice to COMPANY. Credit
Entries may be initiated only to reverse a prior Debit Entry if done in
error.
3. Originator's Failure to Originate. COMPANY shall not be deemed in
breach or default on any obligation or suffer any loss of discount or other
penalty by reason of the failure of AAL to initiate any Debit Entry in
accordance with (or as authorized by) the terms of this Agreement, or by
reason of any delay in receipt by COMPANY'S financial institution, or the
nonreceipt by such institution of any Debit Entry initiated by AAL.
4. Compliance with Rules. COMPANY and AAL shall comply with and be bound
by the Rules as in effect from time to time.
5. Acceptance and Return of Entries. COMPANY agrees to accept any Debit
Entry initiated in accordance with this Agreement, and to maintain
sufficient balances in the Account to honor such Debit Entries. Any Debit
Entry initiated under this Agreement may be returned in accordance with the
Rules. COMPANY shall not be deemed to have accepted any Debit Entry that
is returned in accordance with the Rules. Failure to accept any such Debit
Entry does not relieve the COMPANY of its obligations under Obligation.
6. Debit Entry Information. Each Debit Entry initiated under this
Agreement shall be accompanied by information required under the Rules. It
shall be the responsibility of the COMPANY'S financial institution to
provide notification of all Debit Entries to the COMPANY.
7. COMPANY'S Account. The Account specifics are provided in Schedule A,
attached to and made a part of this Agreement. The COMPANY Account may be
changed by COMPANY from time to time on 30 days prior written notice to
AAL. If COMPANY is a natural person, COMPANY represents to AAL that the
Account is, and during the term of this agreement, will be, maintained
primarily for business, and not for personal, family, or household
purposes.
8. Bank Service Charges. COMPANY shall be responsible for any charges
assessed by its financial institution for these Debit Entries.
9. Questions and Errors. In the event of any question or error relating
to Debit Entries initiated pursuant to this Agreement, COMPANY should
contact Investment Accounting at AAL, (414/734-5721) and AAL SHOULD CONTACT
______________________________________________________________________.
(Contact person's name and phone number)
10. Liability of Parties. Neither AAL nor COMPANY shall be liable for the
act or omission of any Automated Clearing House, financial institution, or
other person. However, the failure of an Automated Clearing House,
financial institution or other person to accept a Debit Entry initiated by
AAL because of insufficient balances in the Account shall be deemed a
default of COMPANY under the Obligation unless COMPANY causes AAL to
receive payment in full in immediately available funds of the amount of
such Debit Entry on or before the expiration of the grace period for the
payment of such amount (as such grace period is specified in the note
evidencing the Obligation).
11. Notices. Any written notice or other written communication required
or permitted to be given under this Agreement shall be delivered, or sent
by United States registered mail, postage prepaid, and, if to AAL,
addressed to:
Assistant Treasurer
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919
and, if to COMPANY, addressed to:
COMPANY Name OPTICAL COATING LABORATORY, INC.
COMPANY Address 2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Jeff Ryan, Assistant
Treasurer
unless another address is substituted by notice delivered or sent as
provided herein. Any such notice shall be deemed given when so delivered
or sent.
12. Termination. This Agreement may be terminated by COMPANY or AAL at
any time by giving 30 days prior written notice thereof to the other party;
provided, that AAL shall not terminate this Agreement so long as it
requires COMPANY to make installment payments by means of preauthorized
automated clearinghouse transactions. Notwithstanding such termination,
this Agreement shall remain in force and effect as to all transactions
which shall have occurred prior to the date of termination. This Agreement
shall terminate upon the satisfaction of the Obligation. Termination of
this Agreement does not release AAL or COMPANY from the terms and
liabilities of the Obligation.
13. Law Governing. This Agreement shall be construed in accordance with
and governed by the laws of the State of Wisconsin.
14. Entire Agreement, Etc. This Agreement embodies the entire Agreement
of the parties with respect to the subject matter hereof, and supersedes
all previous negotiation, representations, and agreements with respect
thereto, and shall be binding upon the parties hereto, and their respective
successors and assigns. This Agreement may be amended only by a writing
signed by both parties.
Signed:
"COMPANY"
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
"AAL"
Aid Association for Lutherans, a
Wisconsin corporation
By: ________________________
Wayne C. Streck
Vice President -
Mortgages and Real Estate
By: ________________________
Kenneth E. Podell
Assistant Secretary
SCHEDULE A
COMPANY Name: Optical Coating Laboratory, Inc. AAL Number: LOAN NO. 75650
COMPANY Taxpayer Identification Number: ______________________
Maximum Entry Amount: $27,811
COMPANY Account: The Account is the following deposit Account maintained
by the COMPANY:
Financial Institution: ___________________________________
Street Address: ___________________________________
City, State, Zip Code: ___________________________________
ABA Number: ___________________________________
Bank's Telephone Number: ___________________________________
COMPANY Account Number: ___________________________________
Date of this Schedule: ___________________________________
ATTACH VOIDED CHECK HERE
BORROWER'S AFFIDAVIT AND SOLVENCY CERTIFICATE
On March 15, 1996, OPTICAL COATING LABORATORY, INC., a Delaware
corporation ("BORROWER"), being duly sworn, deposes and says as follows:
1. The principal place of business of Borrower is 2789 North Point
Parkway, Santa Rosa, California 95407-7397.
2. This Borrower's Affidavit and Solvency Certificate ("AFFIDAVIT")
is given to Aid Association for Lutherans ("LENDER") to induce Lender to
make a loan to Borrower in the amount of Three Million and No/100 Dollars
($3,000,000.00) (the "LOAN") as evidenced by a certain Secured Promissory
Note (the "NOTE") dated as of even date herewith, in the original principal
amount of Three Million and No/100 Dollars ($3,000,000.00) executed by
Borrower and payable to the order of Lender, said Note being secured by,
among other things, a Deed of Trust, Financing Statement, Fixture Filing
and Security Agreement (With Assignment of Rents) (the "DEED OF TRUST")
dated as of even date herewith, from Borrower for the benefit of Lender and
an Assignment of Rents and Leases (the "ASSIGNMENT") dated as of even date
herewith. Borrower intends that Lender and its transferees, successors and
assigns may rely on the representations set forth in this Affidavit in
connection with the consummation of the Loan, all of which representations
and statements shall be deemed made and effective as of the date hereof and
as of each date the Loan or any amount thereof is funded. (The Note, Deed
of Trust, Assignment, and all other documents executed by Borrower and
delivered to Lender in connection with the Loan are hereinafter
collectively referred to as the "LOAN DOCUMENTS.")
3. Borrower is the fee simple owner of the tract of land described
in Exhibit A and the improvements thereon (the "MORTGAGED PROPERTY"), free
and clear of any liens, easements, or other encumbrances except those
listed in that certain Preliminary Title Report No. 62207603 (the "TITLE
REPORT") from North American Title Company (the "TITLE COMPANY").
4. To the best of Borrower's knowledge, there are not any structural
defects in any of the said improvements or personalty, and the heating,
electrical, plumbing and drainage at or servicing the Mortgaged Property
are in good condition and working order and adequate in quantity and
quality for the normal operation of the Mortgaged Property, except as
otherwise disclosed to Lender. To the best of Borrower's knowledge after
diligent inquiry, there is no asbestos present in the Mortgaged Property
and there are no underground tanks on the Mortgaged Property. No part of
the Mortgaged Property has been destroyed or damaged by fire or other
casualty.
5. Borrower has delivered to Lender a true, correct and complete
copy of its By-Laws, Articles of Incorporation and corporate resolutions
authorizing the execution by Borrower of the Loan Documents. Such
documents have not been modified, amended or otherwise changed since the
date thereof and all documents required to be filed in connection with the
conduct of Borrower's business have been filed in the appropriate offices.
6. Except for rights of tenants under the Leases described in
Exhibit B, Borrower is now in possession of the Mortgaged Property and its
possession of the Mortgaged Property is peaceable and undisturbed.
Borrower's fee simple title to the Mortgaged Property cannot in good faith
be disrupted or questioned, and Borrower does not know any facts by reason
of which any claim to the Mortgaged Property, or any part thereof, might
arise or be set up adverse to Borrower, except for liens and encumbrances
disclosed by the Title Report. The Mortgaged Property is free and clear of
(a) any lien for taxes and any governmental charge or assessment (except
taxes not yet due and payable), and (b) any easements, rights-of-way,
restrictive covenants, liens by contract, judgment, statute or proceeding
in any court or any encumbrances of any nature whatsoever, except those set
forth in the Title Commitment.
7. All utilities required for the operation of the Mortgaged
Property (including, without limitation, electric, gas, water and sewer)
are available to and enter the Mortgaged Property through adjoining public
streets or through adjoining private land in accordance with valid public
or private easements that will inure to the benefit of Lender pursuant to
the provisions of the Deed of Trust.
8. All statements, representations and warranties contained in the
Loan Documents or in any writing previously delivered by Borrower to Lender
in connection with the Loan are true and correct in all material respects,
and all obligations of Borrower to be performed prior to making the Loan
and all conditions to the making of the Loan have been performed and
satisfied.
9. There have been no material adverse changes, financial or
otherwise, in the condition of Borrower or in the actual or pro forma
operating statements for the Mortgaged Property from that disclosed to
Lender in the loan application submitted to Lender by Borrower, or in any
supporting data submitted therewith, and all of the information contained
therein is true and correct.
10. There is no material claim, investigation, litigation or
condemnation proceeding pending or threatened against the Mortgaged
Property or Borrower, except as heretofore disclosed in writing to Lender.
11. There is no judgment, decree or order of any court or
governmental or administrative agency or instrumentality which has been
issued against Borrower and which has or may have any material adverse
effect on the Mortgaged Property or on the business of Borrower, except as
have been heretofore disclosed to Lender in writing.
12. The books and records of Borrower have been maintained in the
regular course of business and in accordance with generally accepted
accounting principles consistently applied. Borrower is solvent as
reflected by the entries in said books and records and as reflected by the
actual facts, and Borrowers know of no fact or pending or threatened claim
or litigation that might result in the insolvency or bankruptcy of
Borrower.
13. The Note and all other Loan Documents have been duly authorized,
executed and delivered and constitute valid and binding obligations of
Borrower enforceable in accordance with their respective terms. No
approval, consent, order or authorization of any governmental authority and
no designation, registration, declaration or filing with any governmental
entity is required in connection with the execution and delivery of the
Note or any other Loan Document executed and delivered by Borrower to
Lender in connection with the Loan.
14. The execution and delivery of the Note and all other Loan
Documents will not violate or contravene any agreement, indenture or
instrument to which Borrower is a party or by which it or the Mortgaged
Property may be bound, or be in conflict with, result in a breach of, or
constitute a default under any such agreement, indenture or other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of
Borrower except as contemplated by the provisions of the Loan Documents,
and no action or approval with respect thereto by any third person is
required.
15. Borrower has not entered into any contracts or agreements (verbal
or written) for the furnishing of labor and materials (including fabricated
materials) for use in connection with the construction and/or
rehabilitation of improvements on the Mortgaged Property except as
heretofore disclosed in writing to Lender and the Title Company.
16. To the best of Borrower's knowledge after diligent inquiry,
(a) the Schedule of Leases attached hereto as Exhibit B (the
"Schedule of Leases") is true, accurate and complete as of the date hereof;
(b) all obligations required to be undertaken by the lessor to
the date hereof under any leases have been performed, including, but not
limited to, all required tenant improvements, alterations, installations
and construction, for which payment in full has been made in all cases;
(c) no tenant has any offsets, defenses or claims available
against rent payable by it or other performance or obligations otherwise
due from it under any lease;
(d) no tenant is in default under, or is in arrears in the
payment of any sums or in the performance of any obligation required of it
under, its lease;
(e) no item payable by any tenant under any lease has been
heretofore prepaid, except for rent currently due or as prorated, prepaid
escalations and security deposits;
(f) there are no brokers' commissions, finders' fees or other
charges payable or to become payable by or to any third party as a result
of or in connection with any lease or any transaction related thereto;
(g) no tenant or any other party has asserted any claim (other
than for customary refunds at the expiration of a lease) to all or any part
of any security deposit; and
(h) no tenant or any other party has any option to purchase the
Mortgaged Property or any part thereof or right of first refusal or first
offer with respect thereto.
17. Complete copies of any leases listed in the Schedule of Leases,
including all amendments and modifications thereto, have been delivered to
Lender.
18. Borrower is the absolute owner of the personal property listed in
Exhibit C attached hereto. Said personal property is free and clear of all
liens, charges and encumbrances.
19. All labor and material, including all appliances, heating and air
conditioning equipment, and other fixtures, that have been or are to be
performed or furnished to the Mortgaged Property have been paid for in full
to the date hereof. To Borrower's knowledge, there are no mechanics' or
materialmen's liens, lienable bills, or other claims constituting or that
may constitute a lien on the Mortgaged Property and the improvements,
fixtures and equipment to be constructed or installed thereon, or any part
thereof, that are or will become prior or superior to the lien and security
interest evidenced by the Deed of Trust or any of the Loan Documents, of
which Borrower has not advised Lender and the Title Company in writing.
20. The improvements, fixtures and equipment now or to be constructed
and installed upon the Mortgaged Property do or will comply in all material
respects with all applicable zoning ordinances, building codes and other
laws, rules and regulations, and any restrictive covenants affecting the
Mortgaged Property, and the use which Borrower intends to make of such
improvements will comply in all material respects with such zoning
ordinances, building codes and other laws, rules and regulations and
restrictive covenants.
Borrower solemnly affirms under penalties of perjury and upon personal
knowledge that the contents of the foregoing are true. Borrower makes this
Affidavit for the purpose of inducing Lender to make the Loan.
BORROWER:
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
STATE OF )
) ss.
COUNTY OF )
On this ___ day of _________, 1996, before me, the undersigned, a
Notary Public in and for said State, personally appeared _____________,
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person that executed the within instrument, and
acknowledged to me that __ executed the same.
WITNESS my hand and official seal.
_____________________________
Notary Public
Exhibit A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
Exhibit B
RENT ROLL
Flex Products, Inc.
Exhibit C
NONE
When recorded mail to:
Aid Association for Lutherans
Law Department
4321 North Ballard Road
Appleton, WI 54919
Attn: Kenneth E. Podell, Esq.
DEED OF TRUST, FINANCING STATEMENT,
FIXTURE FILING AND SECURITY AGREEMENT
(WITH ASSIGNMENT OF RENTS)
This DEED OF TRUST, FINANCING STATEMENT, FIXTURE FILING AND SECURITY
AGREEMENT (With Assignment of Rents) (this "Deed of Trust") is dated as of
March 15, 1996, by and among OPTICAL COATING LABORATORY, INC., a Delaware
corporation (hereinafter called "Trustor"), North American Title Company
(hereinafter called "Trustee"), and AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation (hereinafter called "Beneficiary").
W I T N E S S E T H
WHEREAS, for value received, Trustor has executed and delivered to
Beneficiary its original promissory note of even date herewith payable to
the order of Beneficiary in the principal amount of Three Million and
No/100 Dollars ($3,000,000.00), and Trustor has agreed to execute and
deliver to Beneficiary, as security for the payment of said note and any
and all extensions, substitutions, replacements, rearrangements,
modifications, and/or renewals thereof (the "Note"), this Deed of Trust
respecting the Trust Property (as hereinafter defined); and
WHEREAS, all things necessary have been done and performed to make the
Note the duly authorized, valid and legally binding obligation of Trustor
and to constitute this instrument the duly authorized and, when executed
and delivered by Trustor, valid and legally binding first Deed of Trust on
the Trust Property, in order to secure the Note as hereinafter provided;
NOW, THEREFORE, Trustor, in consideration of the loan of the principal
sum of Three Million and No/100 Dollars ($3,000,000.00) to Trustor (the
"Loan"), receipt of which is hereby acknowledged, and in order to secure
repayment of all indebtedness evidenced by the Note with interest,
according to its tenor and effect, to secure the performance and observance
by Trustor of all covenants, representations, warranties, conditions and
agreements contained in the Note, and to secure the performance and
observance by Trustor of all covenants, representations, warranties,
conditions and agreements herein contained, does hereby irrevocably grant,
transfer, assign, exercise, release, alienate, convey and pledge to Trustee
in trust, with power of sale and right of entry and possession as provided
below, all of its present and future estate (whether now owned or hereafter
acquired), right, title and interest in and to the following described
property and all rents, additional rents, issues, payments and profits
thereof:
A. The real property (the "Property") described in the attached
Exhibit A which is hereby incorporated into this Deed of Trust by
reference, and all minerals, oil, gas and other hydrocarbon substances on,
in and under the Property, as well as all development rights, air rights,
water, water rights, water stock, parking rights and general intangibles
relating to, generated from, arising out of or incidental to the Property,
its ownership, development or use. The Property described in the attached
Exhibit A is commonly known as 1402 Mariner Way, Santa Rosa, California;
B. All structures, buildings, improvements and fixtures of any kind
now or hereafter located on the Property, including, without limitation,
all apparatus, equipment and appliances used to supply air cooling, air
conditioning, heat, gas, water, light, power, refrigeration, ventilation,
laundry, drying, dishwashing, garbage disposal, waste removal, recreation
or other services on the Property; and all elevators, escalators, and
related machinery and equipment, fire prevention and extinguishing
apparatus, security and access control apparatus, partitions, ducts,
compressors, plumbing, ovens, refrigerators, dishwashers, disposals,
washers, dryers, awnings, storm windows, storm doors, screens, blinds,
shades, curtains and curtain rods, mirrors, cabinets, paneling, rugs,
attached floor coverings, furniture, pictures, antennas, pools and spas and
pool and spa operation and maintenance equipment and apparatus; and all
trees and plants located on the Property (collectively, the
"Improvements"), all of which, including replacements and additions
thereto, shall conclusively be deemed to be affixed to and be part of the
real property conveyed to Trustee under this Deed of Trust;
C. All easements, rights-of-way and rights used in connection with
the Property or as a means of access thereto, and all tenements,
hereditaments and appurtenances of and to the Property;
D. All of the rents, additional rents, revenues, issues, earnings,
products, royalties, profits and income of the Property and/or the
Improvements, subject to the limited and revocable right, power and
authority hereinafter given to and conferred upon Trustor to collect and
apply such rents, revenues, issues, earnings, products, royalties, profits,
incomes and other benefits;
E. All present and future leases, subleases and tenancy agreements
affecting the Property and/or Improvements, including, without limitation,
any security deposits, advance rentals and deposits or payments of a
similar nature;
F. All proceeds, causes of action and claims, both in law and in
equity, arising on account of any damage to or taking of the Property
and/or the Improvements, including but not limited to insurance proceeds
and condemnation proceeds, and all claims arising on account of any damage
to or taking of the Property or the Improvements, and all proceeds, causes
of action and claims for any loss or diminution in value of the Property
and/or the Improvements;
G. All "Equipment," "Farm Products," "Inventory," "Documents,"
"Instruments," "Chattel Paper," "Accounts," and "General Intangibles" (as
such terms are defined in the California Uniform Commercial Code) relating
to, generated from, arising out of or incidental to the ownership,
development, use or operation of the Property or the Improvements (whether
or not subsequently removed from the Property or the Improvements),
including, without limitation, all
(i) machinery and tools; (ii) rugs, carpets and other floor
coverings; (iii) draperies and drapery rods and brackets, awnings,
window shades, venetian blinds and curtains; (iv) lamps, chandeliers
and other lighting fixtures; (v) office maintenance and other
supplies; (vi) apparatus, appliances, furniture and furnishings,
building service equipment, and building materials, supplies and
equipment; (vii) rights, royalties, rents, security deposits, advance
rentals, revenues, profits and benefits; (viii) leases, lease
guarantees, contracts, contract rights, licenses, permits and
certificates; (ix) deposits, funds, money and deposit accounts;
(x) tenements, hereditaments and appurtenances; (xi) approvals and
parcel maps (whether tentative or final), building permits and
certificates of occupancy; (xii) names under or by which the Property
or any of the Improvements may at any time be operated or known and
rights to carry on business under any such names or any variant
thereof; (xiii) trademarks and good will; (xiv) management agreements,
service contracts, supply contracts or other contracts or agreements;
(xv) warranties; (xvi) water stock; (xvii) shares of stock or other
evidence of ownership of any part of the Property or Improvements that
is owned by Trustor in common with others, and all documents of
membership in any owners' or members' association or similar group
having responsibility for managing, maintaining or operating any part
of the Property or Improvements; (xviii) plans and specifications
prepared for construction of improvements on the Property, or any part
thereof, and studies, data and drawings related thereto, including,
without limitation, studies, data or reports relating to toxic or
hazardous wastes or materials located on the Property and/or
Improvements, and contracts and agreements of Trustor relating to the
aforesaid plans and specifications or to the aforesaid studies, data,
reports and drawings or to the construction of improvements on the
Property; (xix) sales agreements, deposit receipts, escrow agreements
and other ancillary documents and agreements entered into respecting
the sale to any purchasers of any part of the Property, and/or
Improvements, together with all deposits and other proceeds of the
sale thereof; (xx) damages, royalties and revenue of every kind,
nature and description whatsoever that Trustor may be entitled to
receive from any person or entity owning or having or hereafter
acquiring a right to the oil, gas or mineral rights and reservations
of the Property; (xxi) deposits made with or other security given to
utility companies by Trustor with respect to the Property and/or
Improvements; (xxii) advance payments of insurance premiums made by
Trustor with respect to, and all claims or demands with respect to,
insurance; (xxiii) negotiable certificates of deposit of Trustor in
Beneficiary's possession and all accounts of Trustor maintained with
Beneficiary and each deposit account of Trustor assigned to
Beneficiary pursuant to any agreement; (xxiv) insurance proceeds;
(xxv) condemnation awards; (xxvi) causes of action, claims,
compensation, awards and recoveries for any damage or injury to the
Property and/or Improvements or for any loss or diminution in value of
the Property and/or Improvements; (xxvii) books and records,
including, without limitation, all computer records, computer tapes
and electronic and electromagnetic representations and reproductions
thereof; (xxviii) guaranties of and security for any of the foregoing;
(xxix) all substitutions, renewals, improvements, attachments,
accessions, additions and replacements to any of the foregoing; and
H. All "Proceeds" (as such term is defined in the California Uniform
Commercial Code), collections, insurance proceeds and products of any of
the property listed in the preceding paragraph G, including without
limitation, proceeds of any voluntary or involuntary disposition or claim
respecting any part thereof (pursuant to judgment, condemnation award or
otherwise) and all documents, instruments, general intangibles, goods,
equipment, inventory, chattel paper, monies, accounts, deposit accounts and
other personal property that may arise from the sale or disposition of any
of the foregoing, all guaranties of and security for any of the foregoing,
and all books and records, including, without limitation, all computer
records, computer tapes and electronic and electromagnetic representations
and reproductions thereof, relating to any of the foregoing.
Anything above or elsewhere in this Deed of Trust to the contrary
notwithstanding, the lien of this Deed of Trust shall not encumber or
attach to any items of equipment or machinery located in or attached to the
Property and used solely in connection with Trustor's manufacturing
operations (including, without limitation, the items of equipment attached
to the Property as of the date hereof known as Beta III and Beta V), even
if such equipment or machinery is or may be deemed a fixture or realty
under California law, but the lien of this Deed of Trust shall encumber and
attach to any items of equipment or machinery located in or attached to the
Property that are used for the operation or maintenance of any
Improvements. Upon Trustor's written request, Beneficiary shall execute
and deliver a written certificate or instrument (in recordable form
requested by Trustor and reasonably satisfactory to Beneficiary) confirming
that any equipment or machinery specifically identified in such certificate
or instrument is not subject to the lien or encumbrance of this Deed of
Trust, but Trustor shall promptly reimburse Beneficiary for any out-of-
pocket costs incurred by Beneficiary relating to the review and execution
of such certificate or instrument (including, without limitation,
attorneys' fees and costs). Trustor shall also have the right at any time
and from time to time to remove any or all equipment or machinery located
in or attached to the Property not encumbered by the lien of the Deed of
Trust, provided that Trustor shall be responsible for repairing any and all
damage to the Property caused by such removal and the failure to repair any
and all such damage shall be deemed to constitute bad-faith waste and
provided further that prior to removal of any such equipment or machinery
attached to the Property that Trustor furnishes Beneficiary with whatever
assurances and/or further security that Beneficiary requires in good faith
that any such damage shall be repaired.
The property listed above in paragraphs (G) and (H) above may be referred
to herein as the "Personal Property."
The Property together with the additional property listed above in
paragraphs A through H shall be referred to herein as the "Trust Property."
This Deed of Trust secures:
One: Payment by Trustor of an indebtedness in the principal sum
of Three Million and No/100 Dollars ($3,000,000.00), with interest
thereon, according to the terms of the Note (which, by reference, is
hereby made a part hereof), and the performance, observance and
discharge of each and every obligation, representation, warranty,
covenant and agreement of Trustor contained in the Note.
Two: Payment by Trustor of such additional sums with interest
thereon as may hereafter be loaned by Beneficiary to Trustor when
evidenced by a promissory note or notes of Trustor and stated by the
terms thereof to be secured hereby.
Three: The performance, observance and discharge of each and
every obligation, representation, warranty, covenant and agreement of
Trustor contained herein.
Four: Payment by Trustor of all other sums with interest thereon
becoming due or payable under the provisions hereof to either Trustee
or Beneficiary.
Five: Payment by Trustor of all real estate and personal
property taxes and assessments levied against the Trust Property.
Six: Payment of any and all sums advanced by Beneficiary to
protect the Trust Property, with interest thereon at an annual rate of
interest equal to twelve and one-half percent (12.5%).
Seven: Performance, observance and discharge of each and every
obligation, representation, warranty, covenant and agreement of
Trustor contained in the Assignment of Rents and Leases (the
"Assignment"), executed by Trustor, in favor of Beneficiary, and in
any and all pledges, agreements, security agreements, supplemental
agreements or other instruments of security executed by Trustor as of
even date herewith or at any time subsequent to the date hereof for
the purpose of further securing any indebtedness hereby secured, or
any part thereof, or any further advancements or further or additional
loans of any sums hereafter made by Beneficiary to Trustor during the
continuance of these trusts and secured hereby, or for the purpose of
supplementing or amending this Deed of Trust or any instrument secured
hereby.
Eight: The performance, observance and discharge of each and
every obligation, representation, warranty, covenant and agreement of
Trustor contained in the Borrower's Affidavit and Solvency Certificate
(the "Certificate"), executed by Borrower, in favor of Beneficiary,
and under all other present and future agreements executed by Trustor
in favor of Beneficiary relative to, evidencing, or securing the Loan
or the indebtedness evidenced by the Note (excluding the obligations,
representations, warranties, covenants and agreements contained in
that certain Environmental Indemnity Agreement of even date herewith
executed by Borrower as indemnitor in favor of Beneficiary, as
indemnitee, which obligations, representations, warranties, covenants
and agreements are not secured by this Deed of Trust or the other
Security Documents (as defined hereinafter) nor are they related in
any manner to any amounts owed to Beneficiary pursuant to the Note).
This Deed of Trust, the Note, the Certificate, the Assignment and any
other deeds of trust, mortgages, agreements or other instruments given
to evidence or further secure the payment and performance of any
obligation secured hereby (and any and all replacements,
rearrangements, modifications, substitutions, extensions, renewals
modifications or amendments thereto) are sometimes referred to
collectively herein as the "Security Documents."
ARTICLE 1
COVENANTS, WARRANTIES AND REPRESENTATIONS OF TRUSTOR
To protect the security of this Deed of Trust, Trustor hereby covenants,
warrants, represents and agrees as follows:
1.1 Ownership. Trustor is the lawful owner in fee of the Trust
Property. The Trust Property is free from any adverse lien, security
interest, encumbrance or adverse claim thereon (except for the lien created
by this Deed of Trust and those claims that are of record and have been
previously disclosed to Beneficiary in writing). Trustor has good right,
full power and lawful authority to convey the Trust Property pursuant to
and in accordance with this Deed of Trust. Trustor shall warrant and
forever defend said Trust Property and the quiet and peaceful possession
thereof against the claims of all persons whomsoever.
1.2 Secured Obligations. Trustor shall pay when due all indebtedness
and perform all obligations that are secured by this Deed of Trust in
accordance with their respective terms, pay when due any future advances
and perform all future obligations secured by this Deed of Trust.
1.3 Insurance Policies.
1.3.1 Trustor shall maintain in full force and effect, at
Trustor's sole cost and expense, (i) comprehensive public liability
insurance insuring Trustor and Beneficiary against loss, damage, or
liability for injury to, or death of, persons and loss or damage to
property occurring from any cause whatsoever in, upon, or about the
Property and the Improvements, (ii) fire, hazard and extended coverage
insurance on the Trust Property, (iii) loss of rental value, (iv) if
required by Beneficiary, boiler and machinery insurance covering pressure
vessels, air tanks, machinery, pressure piping, heating, air conditioning
and elevator and escalator equipment, provided the Improvements contain
equipment of such nature, and insurance against loss of occupancy, use or
rents arising from any such breakdown, in such amounts as are satisfactory
to Beneficiary, and (v) any other insurance required by law. The insurance
policies must be approved by Beneficiary in its reasonable discretion as to
amount, form, deductibles and insurer, and must cover all risks Beneficiary
requires and must be with A+, A or A- rated companies that have a financial
size of X or better as shown in a current Best's Key Rating Guide (or
comparable guide book acceptable to Beneficiary if Best's should become
unavailable); provided, however, that the above-referenced policy or
policies of comprehensive public liability insurance shall be maintained in
amounts not less than Two Million and No/100 Dollars ($2,000,000) combined
single limit; and provided further that the hazard, fire and extended
coverage insurance policies must contain a New York standard mortgagee or
lender clause endorsement making all losses payable to Beneficiary, must
contain cancellation provisions requiring not less than thirty (30) days'
written notice to Beneficiary as a condition precedent to any cancellation
thereof, must be for the full replacement value of the Improvements, and
must contain a "Replacement Cost Endorsement"; and provided further that
Loss of "rent value" insurance shall be in the amount of at least Four
Hundred Twenty Thousand and No/100 Dollars ($420,000.00) for each twelve
(12) month period (and pro rata for any portion thereof). The hazard, fire
and extended coverage insurance policies and a copy of all other insurance
policies, together with receipts for the payment of premiums, are to be
delivered to and held by the Beneficiary. All renewal and replacement
policies (or certificates or binders evidencing same) must be delivered to
the Beneficiary at least fifteen (15) days before expiration of the old
policies. Approval of any insurance by Beneficiary will not be a
representation of the solvency of any insurer or the sufficiency of any
amount of insurance. Anything above to the contrary notwithstanding, in no
event shall Trustor be required to insure against loss by earthquake, earth
movement or flood unless such coverage is available at commercially
reasonable rates. The deductible for fire, hazard and extended coverage
insurance may be One Hundred Thousand Dollars ($100,000).
1.3.2 All policies of insurance required to be maintained by
Trustor hereunder shall contain a waiver of subrogation against the Trustee
and Beneficiary, and an endorsement or agreement by the insurer that any
loss shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Trustor that might otherwise
result in forfeiture of said insurance and the further agreement of the
insurer waiving all rights of set-off, counterclaim or deductions against
Trustor.
1.3.3 Notwithstanding anything to the contrary herein, in the
event Trustor fails to provide, maintain, keep in full force and effect or
deliver and furnish to Beneficiary the policies of insurance required
hereunder, in addition to all other remedies available under this Deed of
Trust or any of the Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect thereto, may
procure such insurance or single-interest insurance for such risks covering
Beneficiary's interest, and Trustor will pay all premiums thereon (and
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date of expenditure by Beneficiary until the date of payment
by Trustor) promptly upon demand by Beneficiary, and until such payment is
made by Trustor the amount of all such premiums together with interest
thereon shall be secured by this Deed of Trust.
1.3.4 Notwithstanding anything to the contrary herein, in the
event of foreclosure of this Deed of Trust or other transfer of title or
assignment of the Trust Property in extinguishment, in whole or in part, of
the debt secured hereby, all right, title and interest of Trustor in and to
all policies of insurance required herein or the proceeds thereof shall
inure to the benefit of and pass to the successor-in-interest to Trustor or
the purchaser or grantee of the Trust Property.
1.4 Damage and Insurance Proceeds.
1.4.1 Trustor shall give prompt written notice to Beneficiary of
any damage or injury to the Trust Property costing in excess of $25,000 to
repair and Trustor shall give whatever notice to insurers of any such
damage, injury, loss or diminution of value as may be required. All
insurance proceeds on the Trust Property and all causes of action, claims,
compensation, awards and recoveries for any such damage or injury to the
Trust Property are hereby absolutely assigned to and shall be paid to
Beneficiary, and Trustor agrees to execute such further evidence of such
absolute assignment of such insurance proceeds, causes of action, claims,
compensation, awards and recoveries as Beneficiary or Trustee may require.
Beneficiary may (but shall not be obligated to) participate in any suits or
proceedings relating to any such proceeds, causes of action, claims,
compensation, awards or recoveries and may join with Trustor in adjusting
any loss covered by insurance. Subject to the terms and conditions of
Section 1.4.4 below, Beneficiary will apply any sums received by it under
this paragraph first to the payment of all of its costs and expenses
(including but not limited to legal fees and disbursements) incurred in
obtaining those sums, and then, in its sole and absolute discretion and
without regard to the adequacy of its security, to the payment of the
indebtedness and obligations secured by this Deed of Trust or to Trustor
for restoration or repair of the Trust Property under Beneficiary's
prescribed disbursement control procedures as hereinafter described.
1.4.2 In the event Beneficiary elects, subject to the terms and
conditions of Section 1.4.4 below, to apply any sums received under Section
1.4.1 above in whole or in part to the payment of the indebtedness and
obligations secured by this Deed of Trust, no prepayment privilege fee
shall apply (notwithstanding anything to the contrary in the Note). Any
sums applied to the payment of the indebtedness secured by this Deed of
Trust shall be applied first against disbursements by Beneficiary (and any
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date of expenditure by Beneficiary until the date of payment
by Trustor) chargeable to Trustor pursuant to the terms of this Deed of
Trust, then against accrued interest then due and owing under the Note, and
thereafter against the principal due under the Note in the inverse order of
principal payments as they mature.
1.4.3 Notwithstanding the foregoing, in the event of loss,
Beneficiary is hereby authorized either (a) to settle, adjust or compromise
any claim under the above insurance policies without consent of Trustor,
which consent is hereby expressly waived; or (b) to allow Trustor to agree
with the insurance company or companies on the amount to be paid upon the
loss. In either case, Beneficiary is authorized to collect and receive any
such insurance money. Notwithstanding anything to the contrary contained
herein, Trustor may, without the consent of Beneficiary, so long as Trustor
is not in default hereunder, settle, adjust or compromise any claim in an
original amount less than Twenty Five Thousand and No/100 Dollars
($25,000.00).
1.4.4 Notwithstanding anything to the contrary herein contained,
if (i) the insurers do not deny liability as to the insured; (ii) no Event
of Default (as hereinafter defined) exists and no event exists that, with
the passage of time or the giving of notice or both, would constitute such
an Event of Default; (iii) Beneficiary has received evidence, satisfactory
to Beneficiary in its good faith discretion, that there are sufficient
funds available and/or committed, including such insurance proceeds, to
effectuate such restoration and to cover the expenses of operating and
maintaining the Trust Property and servicing the debt secured hereby and
any other debt secured by the Trust Property until the Trust Property is
generating sufficient revenues to cover such expenses and debt service;
(iv) in Beneficiary's judgment, Beneficiary's security will not be
materially impaired by the application of the insurance proceeds to the
restoration of the Improvements; (v) Trustor has delivered to Beneficiary
financial plans and projections, including, without limitation, the status
of all tenancies or uses of the Trust Property, from which Beneficiary, in
its sole judgment, determines that after the completion of such restoration
the Trust Property will be economically viable; (vi) Beneficiary has
approved the plans and specifications to be used in connection with such
restoration; and (vii) the restoration will return the Improvements to
substantially the same condition, character and utility and to at least the
value that existed immediately prior to such casualty; then such insurance
proceeds, after deducting therefrom all expenses incurred by Beneficiary in
the collection and administration thereof, shall be used to pay Trustor for
the cost of rebuilding, replacing, restoring or repairing the Trust
Property so insured in accordance with the disbursement procedures herein
contained. In all other cases, such insurance proceeds may at
Beneficiary's discretion, either be applied in payment or reduction of the
indebtedness secured hereby (whether then due or not) in accordance with
Section 1.4.2 above, or be held by Beneficiary and used to reimburse
Trustor or any other party for the cost of the rebuilding, replacing,
restoring or repairing the Trust Property so insured.
1.4.5 In the event Trustor is entitled (whether pursuant to the
terms hereof or pursuant to Beneficiary's election or otherwise) to payment
out of insurance proceeds for any repair, rebuilding, restoration or
replacement, such proceeds shall be made available, from time to time, upon
Beneficiary being furnished with satisfactory evidence of progress in such
repair, rebuilding, restoration or replacement, together with satisfactory
evidence of the estimated cost of completion thereof and together with any
such architect's certificates, waivers of lien, contractors' sworn
statements and other evidence of cost and payments as Beneficiary may
reasonably require and approve. If the estimated cost of the work exceeds
ten percent (10%) of the original principal amount of the indebtedness
secured hereby, Beneficiary shall also be furnished with all plans and
specifications for such rebuilding, replacement, restoration or repair as
Beneficiary may reasonably require and approve. The aggregate amount of
all payments made prior to the final completion of the work shall never
exceed ninety percent (90%) of the value of the work performed, from time
to time, and at all times the undisbursed balance of said proceeds
remaining in the hands of Beneficiary shall be at least sufficient to pay
for the cost of completion of the work free and clear of liens. If the
amount of such insurance proceeds is insufficient to cover the cost of
repair, rebuilding, replacement or restoration, Trustor shall pay such cost
in excess of the insurance proceeds before being entitled to any payment
out of said insurance proceeds. Any surplus that may remain out of said
insurance proceeds after payment of such cost of repair, rebuilding,
restoration or replacement shall, at the option of Beneficiary, be applied
on account of the indebtedness (whether then due or not) secured hereby in
accordance with the terms of Section 1.4.2 above or be paid to any other
party entitled thereto.
1.4.6 Nothing herein contained shall be deemed to excuse Trustor
from repairing or maintaining the Trust Property as provided in Section 1.9
hereof or from restoring all damage or destruction to the Trust Property,
regardless of whether there are insurance proceeds available or whether any
such proceeds are sufficient in amount. The application or release by
Beneficiary of any insurance proceeds shall not cure or waive any default
or notice of default under this Deed of Trust or invalidate any act done
pursuant to such notice.
1.5 Waiver of Claims. Trustor waives any and all right to claim or
to recover against Beneficiary, its officers, employees, agents, attorneys
and representatives, for loss of or damage to Trustor, the Trust Property,
Trustor's other property or the property of others under Trustor's control
from any cause insured against or required to be insured against by the
provisions of this Deed of Trust.
1.6 Taxes and Assessments.
1.6.1 Trustor agrees to pay prior to delinquency all taxes and
assessments that are or may become a lien on the Trust Property or that are
assessed against the Trust Property or its rents, royalties, profits and
income. Trustor shall furnish to Beneficiary satisfactory evidence
respecting the payment of any and all taxes and assessments. Trustor also
agrees to pay when due all lawful claims and demands of mechanics,
materialmen, laborers and others for any work performed or materials
delivered for the Trust Property. Trustor also agrees to pay when due all
utility charges that are incurred by Trustor for the benefit of the Trust
Property or that may become a charge or lien against the Trust Property for
gas, electricity, water, telephone or sewer services furnished to the Trust
Property and all other charges or assessments of a similar nature, whether
public or private, affecting the Trust Property or any portion thereof,
whether or not such taxes, assessments or charges are liens thereon.
Notwithstanding anything to the contrary herein, in the event Trustor fails
to pay any of the foregoing when due or prior to delinquency as required
herein, in addition to all other remedies available under this Deed of
Trust or any other Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect thereto, may pay
any or all such amounts, and Trustor will pay such amounts advanced (and
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date incurred by Beneficiary until the date of payment by
Trustor) promptly upon demand by Beneficiary, and until such payment is
made by Trustor, the amount of all such advances together with interest
thereon shall be secured by this Deed of Trust. Notwithstanding the
forgoing provisions of this Section 1.6.1, Trustor shall have the right to
contest in good faith any taxes, assessments, claims or demands at any time
affecting the Trust Property, provided that such contest is diligently
prosecuted and provided further that during the course of such contest
Trustor furnishes Beneficiary with whatever assurances and/or further
security that Beneficiary reasonably requires that its security will not be
impaired by virtue of the contest.
1.6.2 Unless waived in writing upon such terms and conditions as
Beneficiary in its sole discretion may determine, Trustor shall deposit
with such party and at such place as Beneficiary may from time to time in
writing appoint, commencing on the "Adjustment Date" (as defined in the
Note), and on the day monthly installments of principal and interest are
payable under the Note until the indebtedness secured by this Deed of Trust
is fully paid, a sum equal to one-twelfth of the estimated total annual
real property taxes and assessments on the Trust Property and of the
estimated total annual premiums on insurance policies required to be
maintained with respect to the Trust Property pursuant to the Deed of
Trust, such estimate to be made from time to time in Beneficiary's
reasonable discretion, with notice of any change in such estimate to be
given in writing by Beneficiary to Trustor at least thirty (30) days in
advance, and such deposit to be held without any allowance of interest and
to be used for the payment of taxes, assessments and insurance renewal
premiums relating to the Trust Property prior to delinquency. If the funds
so deposited are insufficient to pay any such tax, assessment and insurance
renewal premium prior to delinquency, Trustor shall, within five (5) days
after receipt of demand therefor, deposit such additional funds as may be
necessary to pay such taxes, assessments and insurance renewal premiums in
full. Upon the occurrence and during the continuance of an Event of
Default, Beneficiary may at its own option, without being required to do
so, apply any monies at the time on deposit pursuant hereto on any of
Trustor's obligations contained in the Note and/or secured by this Deed of
Trust, in such order and manner as Beneficiary in its sole and absolute
discretion may elect. Such deposits shall be held to be irrevocably
applied by Beneficiary or by any depository appointed pursuant hereto for
the purposes for which the deposits are made hereunder and shall not be
subject to the direction and control of Trustor; provided, however, that
neither Beneficiary nor any such depository appointed pursuant hereto,
shall be liable for any failure to apply to the payment of taxes,
assessments and insurance renewal premiums any amount so deposited unless
Trustor, while not in default under the Note or this Deed of Trust, shall
have requested Beneficiary or said depository in writing, sent by certified
mail return receipt requested, to make application of such funds to the
payment of particular taxes, assessments and/or insurance renewal premiums
accompanied by the bills or invoices for such taxes, assessments and/or
insurance renewal premiums, at least thirty (30) days prior to the date
when any such payment is delinquent. Trustor hereby grants to Beneficiary
a security interest in any such deposits to secure Trustor's obligation
under this Deed of Trust and agrees to execute such financing statements
and take such other actions as are required by Beneficiary to create and
perfect its security interest in such deposits.
1.7 Assignment of Rents.
1.7.1 Trustor hereby presently and absolutely conveys, transfers
and assigns to Beneficiary, its successors and assigns, all the rights,
interest and privileges that Trustor as lessor has and may have in any
leases now existing or hereafter made and affecting the Trust Property or
any part thereof, with all of the existing and future rents, additional
rents, revenues, issues, earnings, products, royalties, income and profits
of the Trust Property that arise from any lease or occupancy agreement
pertaining to the Trust Property. Anything to the contrary herein
notwithstanding, Trustor also hereby assigns to Beneficiary any award made
hereafter to Trustor in any court proceeding involving any of the lessees
(specifically including, without limitation, in any bankruptcy, insolvency
or reorganization proceeding in any state or federal court) and any and all
payments made by or on behalf of any lessee in lieu of rent. Trustor
hereby appoints Beneficiary as its irrevocable attorney-in-fact to appear
in any action and/or to collect any such award or payment.
1.7.2 Anything to the contrary herein notwithstanding, unless
and until there occurs an Event of Default under this Deed of Trust or any
other Security Documents, Trustor will have a license to collect and
receive those rents, additional rents, royalties, income and profits as
they become due. Upon the occurrence of an Event of Default under this
Deed of Trust or any other Security Documents, Beneficiary may terminate
Trustor's license in Beneficiary's sole and absolute discretion at any
time, and may thereafter collect the rents, additional rents, royalties,
income and profits itself or by an agent or receiver. Notwithstanding the
foregoing, no action taken by Beneficiary to collect any rents, additional
rents, royalties, income or profits will make Beneficiary a mortgagee-in-
possession of the Trust Property, unless Beneficiary personally or by
authorized agent enters into actual possession of the Trust Property.
Possession by a court appointed receiver will not be considered possession
by Beneficiary.
1.7.3 Trustor hereby agrees to indemnify Beneficiary against,
and to hold Beneficiary harmless from, any and all liability, claim,
demand, damage, loss, cost or expense (including actual attorneys' fees and
expenses) arising from any of said leases or from this assignment (other
than as arising from Beneficiary's gross negligence, wilful misconduct or
breach of lease after taking possession of the Property), and this
assignment shall not place responsibility for the control, care, management
or repair of said premises upon Beneficiary, or make Beneficiary
responsible or liable for any negligence in the management, operation,
upkeep, repair or control of the Trust Property resulting in loss or injury
or death to any tenant, licensee, employee or stranger. Any expenditures
made by Beneficiary to cure any default by Trustor under any term of any
lease (and interest thereon at the rate of twelve and one-half percent
(12.5%) per annum from the date incurred by Beneficiary until the date of
payment by Trustor) will be paid by Trustor promptly upon demand by
Beneficiary and will be additional indebtedness secured by this Deed of
Trust.
1.7.4 The receipt by Beneficiary of any rents, additional rents,
issues, royalties, income or profits pursuant hereto after the institution
of foreclosure proceedings hereunder shall not cure such default nor affect
such proceedings or any sale pursuant hereto unless the sums collected
equal or exceed all sums then owed by Trustor. All rents, additional
rents, issues, royalties, income and profits collected by Beneficiary or a
receiver will be applied first to pay all expenses of collection, and then
to the payment of all costs of operation and management of the Trust
Property, and then to the payment of the indebtedness and obligations
secured by this Deed of Trust in whatever order Beneficiary directs in its
sole and absolute discretion and without regard to the adequacy of its
security.
1.7.5 Concurrently with the recordation of this Deed of Trust,
the Assignment shall also be recorded. To the extent of any inconsistency
between this Article 1, Section 1.7 of this Deed of Trust and the
Assignment, the terms and provisions of the Assignment shall be
controlling.
1.8 Transfer of Trust Property.
1.8.1 Without the prior written consent of Beneficiary, which
consent or the denial thereof shall be in Beneficiary's sole and absolute
discretion, Trustor shall not hypothecate, pledge, grant a security
interest in or otherwise encumber (whether voluntarily or by operation of
law) all or any portion of the Trust Property (a "Prohibited Encumbrance").
1.8.2 Without the prior written consent of Beneficiary, which
consent or the denial thereof shall be in Beneficiary's sole and absolute
discretion, (i) Trustor (or any subsequent holder of an interest in the
Trust Property following a transfer to which Beneficiary consents or that
is otherwise permitted hereby (a "Subsequent Owner")) shall not sell,
assign, convey, contract to sell, lease (other than pursuant to any
existing leases of the Trust Property that have been approved by
Beneficiary (Beneficiary approves of the lease with Flex Products, Inc.
dated June 30, 1995)) or otherwise transfer all or any portion of the Trust
Property or any interest or estate therein (whether possessory or
nonpossessory), whether voluntarily or by operation of law; or (ii) there
shall occur a transfer in the aggregate of more than fifty percent (50%) of
the shares in Trustor to one person or entity and any affiliates of any
such person or entity (the occurrence of an event described above in (i) or
(ii) that occurs without Beneficiary's consent being referred to herein as
a "Prohibited Transfer"). Notwithstanding the preceding provisions of this
Section 1.8.2, Trustor may, in good faith and by appropriate proceedings,
contest any lien or encumbrance without cost or expense to Trustee or
Beneficiary, but only upon posting, and concurrently supplying to
Beneficiary a certified copy of, a statutory bond or other security
sufficient under applicable law or causing the issuance of title insurance
satisfactory to Beneficiary, fully to protect any and all of the Trust
Property encumbered by such claim of lien and otherwise sufficient in
Beneficiary's sole judgment to protect Trustee and Beneficiary against any
judgment in favor of lien claimant. If the conditions of the preceding
sentence are satisfied within twenty (20) days after Trustor receives
notice of such lien or encumbrance, such lien or encumbrance shall not be
deemed to be a Prohibited Encumbrance or a Prohibited Transfer.
1.8.3 Notwithstanding anything to the contrary contained in this
Section 1.8, Beneficiary shall consent to a one-time transfer of fee
interest in the Trust Property, provided, however, that it is established
to the satisfaction of Beneficiary in its good faith discretion that all of
the following requirements have been satisfied:
(i) not less than thirty (30) days prior to the proposed
transfer, Trustor shall have delivered to Beneficiary (A) a written request
for approval of the proposed transfer; (B) if the proposed transferee is a
limited partnership, a true and complete copy of the such limited
partnership's Agreement of Limited Partnership and Certificate of Limited
Partnership (Form LP-1), and a good standing certificate for such limited
partnership; (C) if the proposed transferee is a general partnership, a
true and complete copy of the Agreement of Partnership and the Statement of
Partnership of such partnership; (D) if the proposed transferee is a
corporation, a true and complete copy of such corporation's Articles of
Incorporation and Bylaws and a good standing certificate for such
corporation; and (E) true and complete copies of all agreements and
documentation relating to the transfer;
(ii) the proposed purchaser must be an experienced owner of
commercial real estate for properties similar to the Trust Property and
must have internal property management personnel with demonstrated
capability in the management of such properties such that the managerial
and operational skills of the proposed purchaser are as good as Trustor's
as of the date hereof and as of the date of the proposed transfer;
(iii) as of the date of the proposed transfer, the
proposed purchaser must be at least as creditworthy as Trustor as of the
date hereof and as of the date of the proposed transfer;
(iv) all documentation relating to the transfer must be good
faith satisfactory to Beneficiary;
(v) no Event of Default and no event, that with the passage
of time and/or the giving of notice would constitute such an Event of
Default, exists and no other event or condition exists that could cause the
Loan to be in jeopardy of default at the time Trustor requests approval of
the proposed transfer and at the time of the transfer;
(vi) at the time of the request for approval of the proposed
transfer, Trustor shall have paid to Beneficiary a nonrefundable transfer
privilege fee equal to one percent (1%) of the then outstanding principal
balance under the Note;
(vii) Trustor shall have obtained an endorsement to
Beneficiary's policy of title insurance, if required by Beneficiary,
insuring the continued priority, without additional exceptions other than
current real property taxes and other matters approved by Beneficiary, of
the lien of this Deed of Trust;
(viii) Trustor and the transferee shall have satisfied
all other good faith requirements of Beneficiary for providing its consent
to such transfers, including, without limitation, the execution and
delivery of an assumption agreement, a security agreement and financing
statement;
(ix) the use of the Trust Property shall remain the same
(that is, for general office and industrial purposes) after the transfer;
and
(x) Trustor shall pay all actual fees and expenses incurred
by Beneficiary or its counsel in connection with the proposed transfer,
including, without limitation, all legal, recording and title insurance
fees and expenses. Trustor acknowledges and agrees that Trustor shall be
liable to Beneficiary for such fees and expenses regardless of whether the
proposed transfer actually occurs, and such liability shall be secured by
the Deed of Trust and shall bear interest at the rate of twelve and one-
half percent (12.5%) per annum from the date incurred by Beneficiary until
paid.
The right described in this Section 1.8. shall be available only with
respect to a single transfer by the original Trustor and not with respect
to subsequent transfers. (A transfer in accordance with such one-time
right is hereinafter referred to as a "One-Time Third Party Transfer.")
For the purposes of this provision, a transfer shall not be deemed to have
occurred if, following notice or request for consent to Beneficiary, such
transfer is not completed for any reason whatsoever. The right to make a
One-Time Third Party Transfer by the original Trustor may be exercised only
with Beneficiary's prior approval of the matters that require its approval,
or as to which it is required to be satisfied, as provided above.
1.8.4 In the event of a Prohibited Transfer, then, at
Beneficiary's election in its sole and absolute discretion, upon notice to
Trustor, Beneficiary may declare the whole of the principal balance of the
Note and all accrued but unpaid interest thereon immediately due and
payable, together with a transfer privilege fee of (i) four percent (4%) of
said principal balance if such Prohibited Transfer occurs during the first
four (4) Loan Years (as defined in the Note) or (ii) the greater of (A) one
half (1/2) of the amount that would be the Prepayment Privilege Fee (as
provided in the Note) and (B) one percent (1%) of said principal balance,
if such Prohibited Transfer occurs at any time during the fifth (5th) Loan
Year through the sixth (6th) month of the fifteenth (15th) Loan Year.
Commencing with the seventh (7th) month of the fifteenth (15th) Loan Year,
there will be no transfer privilege fee.
1.8.5 Notwithstanding anything to the contrary contained in this
Section 1.8, the occurrence of (a) a Prohibited Encumbrance, or (b) a
Prohibited Transfer where (i) Trustor or any Related Party retains any
interest in the property so transferred, (ii) Trustor or any Related Party
has any agreement or understanding with the transferee of such property
with respect to the retransfer of such property to Trustor or to any
Related Party, or (iii) Trustor or any Related Party has any interest in
the transferee of such property, shall be deemed an Event of Default, and
Beneficiary shall have all of its rights and remedies in such event,
including, without limitation, the right to declare the entire unpaid
principal balance of the Note and all accrued but unpaid interest thereon
immediately due and payable, together with the prepayment privilege fee due
pursuant to the terms of the Note upon the occurrence of an Event of
Default followed by acceleration of the maturity of the Note, and to charge
interest at the rate of twelve and one-half percent (12.5%) per annum on
such sum from the date of such Prohibited Transfer or Prohibited
Encumbrance until such sum is paid in full.
1.9 Maintenance, Repair, Alteration.
1.9.1 Trustor will not commit any waste on the Trust Property or
take any actions that would invalidate or give cause for the cancellation
of any insurance carried on the Trust Property. Trustor will maintain the
Trust Property in good condition and repair. Trustor will keep the Trust
Property free from mechanics' liens or other liens or claims for liens not
expressly subordinated to the lien hereof. Notwithstanding the preceding
sentence, Trustor may, in good faith and by appropriate proceedings,
contest any lien or encumbrance without cost or expense to Trustee or
Beneficiary, but only upon posting, and concurrently supplying to
Beneficiary a certified copy of, a statutory bond or other security
sufficient under applicable law or causing the issuance of title insurance
satisfactory to Beneficiary, fully to protect any and all of the Property
encumbered by such claim of lien and otherwise sufficient in Beneficiary's
sole judgment to protect Trustee and Beneficiary against any judgment in
favor of the lien claimant. If the conditions of the preceding sentence
are satisfied within twenty (20) days after Trustor receives notice of such
lien or claim, such lien or claim shall not be deemed to be an Event of
Default hereunder. Trustor will pay when due any indebtedness that may be
secured by a lien or charge on the Trust Property or any part thereof
(other than liens for taxes and assessments, which shall be paid prior to
delinquency) and will, upon request, exhibit satisfactory evidence of the
discharge of any such liens to Beneficiary. No Improvements located on the
Trust Property may be removed, demolished or materially altered without the
prior written consent of Beneficiary. No personal property in which
Beneficiary has a security interest hereunder may be removed from the Trust
Property unless it is immediately replaced by similar property of at least
equivalent value on which Beneficiary will immediately have a valid and
perfected first lien and security interest, ranking senior in priority to
any and all other liens, security interests, encumbrances, or charges
thereon. Trustor shall complete promptly and in good and workmanlike
manner any building or buildings or any improvements now or at any time in
the process of erection upon the Property and to restore promptly in like
manner any Improvement that may be damaged or destroyed thereon. Without
Beneficiary's prior written consent, Trustor will make no material
alterations to the Trust Property except as required by law or municipal
ordinance. Trustor will suffer or permit no change in the general nature
of the occupancy or use of the Trust Property without Beneficiary's prior
written consent.
1.9.2 Without the prior written consent of Beneficiary, Trustor
will not seek, make or consent to any change in the zoning or conditions of
use of the Trust Property. Trustor will comply with and make all payments
required under the provisions of any and all laws, ordinances, regulations,
resolutions, covenants, conditions, and restrictions now or hereafter
affecting the Trust Property or any part thereof or the business or the
activity conducted thereon. Trustor will comply with all existing and
future requirements of all governmental authorities having jurisdiction
over the Trust Property or the use thereof and will not commit, suffer,
permit, or allow any act to be done in and upon the Trust Property in
violation of any existing or future law, ordinance, resolution or
regulation. Trustor will comply with all restrictions of record with
respect to the Trust Property or use thereof. Notwithstanding the forgoing
provisions of this Section 1.9.2, Trustor shall have the right to contest
in good faith any laws, ordinances, regulations, resolutions, covenants,
conditions, and restrictions any time affecting the Trust Property,
provided that such contest is diligently prosecuted and provided further
that during the course of such contest Trustor furnishes Beneficiary with
whatever assurances and/or further security that Beneficiary requires in
good faith that its security will not be impaired by virtue of the contest.
1.9.3 Beneficiary, at any time, is authorized to engage an
independent inspector to survey the adequacy of the maintenance of the
Trust Property and/or to conduct an environmental audit of the Trust
Property to determine whether the Trust Property is in compliance with
and/or whether any conditions exist that may cause the Trust Property to be
in violation of any "Environmental Laws" (as defined hereinafter). The
scope and type of a survey or environmental audit shall be in Beneficiary's
sole and absolute discretion, and Trustor acknowledges that an
environmental audit may include, without limitation, air, soil and ground
water sampling. Provided that an Event of Default has occurred and is
continuing when the work on any such survey or audit commenced or
Beneficiary has a good faith belief that the Property may be in violation
of Environmental Laws, Trustor shall pay the cost incurred by Beneficiary
for any such survey or environmental audit (and interest thereon at the
rate of twelve and one-half percent (12.5%) per annum from the date
incurred by Beneficiary until repayment by Trustor), and all such costs
with interest thereon shall be secured by this Deed of Trust. If the Trust
Property is found to be in violation of any Environmental Laws or any
conditions exist that may make the Trust Property be in violation of any
Environmental Laws or if the maintenance of the Trust Property is found to
be in violation of this Deed of Trust, such inspector shall make
recommendations to, and determine the estimated cost to, bring the Trust
Property into compliance with such laws, correct such conditions or make
such repairs and replacements necessary to comply with this Deed of Trust.
In such event Trustor shall commence implementation of such recommendations
at its own cost and expense within thirty (30) days, and shall thereafter
with diligence, complete such recommendations and Trustor shall provide
Beneficiary with bonds or other assurances required by Beneficiary in its
sole and absolute discretion that said recommendations will be
satisfactorily completed. Trustor acknowledges that any survey or
environmental audit shall be conducted solely for the benefit of
Beneficiary and that in no manner should the completion of such a survey or
environmental audit be deemed to be a representation by Beneficiary as to
the Property's compliance with any Environmental Laws or as to the adequacy
of the maintenance of the Trust Property.
1.10 Books and Records.
1.10.1 Trustor will keep adequate books and records of account
of the Trust Property and of Trustor's own financial affairs sufficient to
permit the preparation of financial statements therefrom in accordance with
generally accepted accounting principles. Beneficiary and its agents will
have the right to examine, copy and audit the records and books of account
of the Trust Property at all reasonable times. If Trustor shall be in
default under this Deed of Trust or under any other Security Documents,
Trustor shall deliver to Beneficiary, upon demand, audited financial
statements and profit-and-loss statements for the Trust Property prepared
by an independent certified public accountant in accordance with generally
accepted accounting principles consistently applied. In addition to the
foregoing, Trustor shall, within one hundred twenty (120) days of the first
day of each calendar year, furnish to Beneficiary financial statements of
Trustor statements of income and expenses of the Trust Property for the
preceding calendar year, a balance sheet of the Trust Property as of the
first day of the calendar year, and a current rent roll (if any part of the
Trust Property is then subject to lease), each shall be certified as to
truth and accuracy by Trustor and shall be satisfactory in form and
substance to Beneficiary in its good faith and absolute discretion and
disclose a solvent condition.
1.10.2 Beneficiary, or its agents, representatives or workmen,
are authorized to enter at any reasonable time (and upon reasonable advance
notice to Trustor) upon or in any part of the Trust Property for the
purpose of inspecting the Trust Property and for the purpose of performing
any of the acts it is authorized to perform under the terms of this Deed of
Trust or any other Security Documents or any other agreement between the
parties.
1.10.3 Trustor will promptly furnish, upon Beneficiary's
request, a duly acknowledged written statement setting forth all amounts
due on the indebtedness secured by this Deed of Trust and stating that no
offsets or defenses exist, and containing such other matters as Beneficiary
may reasonably require.
1.10.4 Trustor hereby represents, warrants and certifies that
all financial statements, information and certificates previously or
contemporaneously delivered to Beneficiary concerning Trustor, and/or the
Trust Property are true, complete and correct in all material respects.
1.11 Management of the Trust Property. Trustor will provide for
competent management of the Trust Property. Any third party manager of the
Trust Property and their management contracts (including any modification,
extension or renewal thereof) shall be approved by Beneficiary in its sole
and absolute discretion. All rights of any person or entity to
compensation or fees pursuant to any such management contract shall be
subordinate to Beneficiary's rights under this Deed of Trust and any other
Security Documents. Any such management contracts shall be terminable upon
the occurrence of an Event of Default, at the option of Beneficiary in
Beneficiary's sole and absolute discretion, upon thirty (30) days' written
notice to the manager thereunder.
1.12 Actions Affecting Trust Property.
1.12.1 Trustor will, at its own expense, appear in and defend
any action or proceeding that would affect Beneficiary's security or the
rights or powers of Beneficiary or Trustee or that purports to affect any
of the Trust Property. If Trustor fails to perform any of its covenants or
agreements contained in this Deed of Trust or in any of the Security
Documents, or if any action or proceeding of any kind (including, but not
limited to any condemnation proceeding or any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding) is commenced
or if there occurs any other event that might affect Beneficiary's,
Trustor's or Trustee's interest in the Trust Property or Beneficiary's
right to enforce its security, then Beneficiary and/or Trustee may, without
notice, any right to such prior notice which is hereby expressly waived, at
their option and without obligation to do so, make any appearances,
disburse any sums and take any actions as may be necessary or desirable to
protect the Trust Property, to protect or enforce the security of this Deed
of Trust or to remedy the failure of Trustor to perform its covenants and
agreements (without, however, waiving any default of Trustor). Trustor
agrees to pay all out-of-pocket expenses of Beneficiary and Trustee thus
incurred (including, without limitation, all actual attorneys' fees and
costs). Any sums so disbursed by Beneficiary or Trustee (and interest
thereon) will be additional indebtedness of Trustor secured by this Deed of
Trust, will bear interest from the date incurred by Beneficiary or Trustee
until paid by Trustor at the rate of twelve and one-half percent (12.5%)
per annum, and will be payable by Trustor upon demand. This paragraph will
not be construed to require Beneficiary or Trustee to incur any expenses,
make any appearances, or take any actions.
1.12.2 If Beneficiary is made or becomes a party to any
litigation concerning this Deed of Trust, the other Security Documents or
the Trust Property or any part thereof or interest therein, or the
occupancy thereof by Trustor, then Trustor shall indemnify, defend and hold
Beneficiary harmless from all liability, claims, demands, obligations,
losses, costs and expenses, incurred by reason of said litigation,
including, without limitation, all actual attorneys' fees and expenses
incurred by Beneficiary in such litigation, whether or not any such
litigation is prosecuted to judgment. If Beneficiary commences an action
against Trustor or appears in any bankruptcy, insolvency, reorganization or
other proceeding for debtor relief to enforce any of the terms hereof or
because of the breach by Trustor of any of the terms hereof, or for the
recovery of any sum secured hereby, Trustor shall pay to Beneficiary, upon
demand, all actual attorneys' fees and expenses, and the right to such
attorneys' fees and expenses shall be deemed to have accrued on the
commencement of such action, shall be enforceable whether or not such
action is prosecuted to judgment, will be additional indebtedness of
Trustor secured by this Deed of Trust and will bear interest at the rate of
twelve and one-half percent (12.5%) per annum from the date incurred until
paid in full.
1.12.3 In the event Trustor requests (i) any changes to this
Deed of Trust or any other documents relating to the Loan, (ii) releases of
any part of the Trust Property or any additional property upon which a
security interest has been granted to secure the indebtedness secured
hereby, or (iii) any waivers by Beneficiary, then Trustor shall reimburse
Beneficiary for all resulting actual attorneys' fees and expenses incurred
by Beneficiary. The need for legal review and preparation of any
documentation shall be in the sole discretion of Beneficiary.
1.13 Security Agreement and Fixture Filing.
1.13.1 Trustor hereby grants to Beneficiary a security interest
in the Personal Property to secure all of Trustor's obligations to
Beneficiary contained in this Deed of Trust and any other Security
Documents. This Deed of Trust constitutes a Security Agreement with
respect to all personal property in which Beneficiary is granted a security
interest hereunder, and Beneficiary shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
California (the "Uniform Commercial Code") as well as all other rights and
remedies available at law or in equity.
1.13.2 Trustor will execute, acknowledge, deliver and cause to
be recorded or filed, in the manner and place required by any present or
future law, any instrument that may be requested by Beneficiary to publish
notice or protect, perfect, preserve, continue, extend, or maintain the
security interest and lien, and the priority thereof, of this Deed of Trust
or the interest of Beneficiary in the Trust Property, including, without
limitation by reason of specification, deeds of trust, security agreements,
financing statements, continuation statements, and instruments of similar
character, and Trustor shall pay or cause to be paid (i) all filing and
recording taxes and fees incident to each such filing or recording, (ii)
all expenses, including without limitation, actual attorneys' fees and
costs, incurred by Beneficiary in connection with the preparation,
execution, and acknowledgement of all such instruments, and (iii) all
federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments, and charges arising out of or in connection with the
execution and delivery of such instruments. Trustor hereby irrevocably
constitutes and appoints Beneficiary the attorney-in-fact of Trustor, to
execute, deliver and, if appropriate, to file with the appropriate filing
officer or office any such instruments if Trustor should fail to do so.
1.13.3 Upon the occurrence and during the continuance of any
Event of Default, Beneficiary shall have the right to cause any of the
Trust Property that is Personal Property and subject to the security
interest of Beneficiary hereunder to be sold at any one or more public or
private sales as permitted by applicable law, and Beneficiary shall further
have all other rights and remedies, whether at law, in equity, or by
statute, as are available to secured creditors under applicable law,
specifically including, without limitation, the right to proceed as to both
the real property and the personal property contained within the Trust
Property as permitted by Uniform Commercial Code Section 9501(4). Any such
disposition may be conducted by an employee or agent of Beneficiary or
Trustee. Any person, including both Trustee and Beneficiary, shall be
eligible to purchase any part or all of such property at any such
disposition.
1.13.4 Expenses of retaking, holding, preparing for sale,
selling or the like shall be borne by Trustor and shall include, without
limitation, Beneficiary's and Trustee's actual attorneys' fees and legal
expenses. Trustor, upon demand of Beneficiary, shall assemble such
personal property and make it available to Beneficiary at such place as
shall be required by Beneficiary in its sole discretion. Beneficiary shall
give Trustor at least five (5) days' prior written notice of the time and
place of any public sale or other disposition of such personal property or
of the time of or after which any private sale or any other intended
disposition is to be made, and if such notice is sent to Trustor, at the
same address as is provided for the mailing of notices herein, it is hereby
deemed that such notice shall be and is reasonable notice to Trustor.
1.13.5 Trustor maintains a place of business in the State of
California, as set forth as the address of Trustor provided herein under
"Requests for Notices" below, and Trustor will immediately notify
Beneficiary in writing of any change in its place of business.
1.13.6 Portions of the Trust Property are goods that are or are
to become fixtures relating to the Property, and Trustor covenants and
agrees that the filing of this Deed of Trust in the real estate records of
the county where the Trust Property is located shall also operate from the
time of filing as a fixture filing in accordance with Sections 9313 and
9402(6) of the Uniform Commercial Code.
1.14 Payments. All sums payable by Trustor hereunder or secured
hereby shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment,
diminution or reduction, and the obligations and liabilities of Trustor
hereunder shall in no way be released, discharged or otherwise affected
(except as expressly provided herein or in the Note) by reason of: (i) any
damage to or destruction of or any condemnation or similar taking of the
Trust Property or any part thereof; (ii) any restriction or prevention of
or interference with any use of the Trust Property or any part thereof;
(iii) any defect in title to or encumbrance on the Property or the
Improvements or any part thereof or any eviction from the Property or any
part thereof by title paramount or otherwise; (iv) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Beneficiary, or any action
taken with respect to this Deed of Trust by any trustee or receiver of
Beneficiary, or by any court, in any such proceeding; (v) any claim that
Trustor has or might have against Beneficiary; (vi) any default or failure
on the part of Beneficiary to perform or comply with any of the terms
hereof or of any other agreement with Trustor; or (vii) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, and
whether or not Trustor shall have notice or knowledge of any of the
foregoing. Trustor waives all rights now or hereafter conferred by statute
or otherwise to any abatement, suspension, deferment, diminution or
reduction of any sum secured hereby and payable by Trustor.
1.15 Condemnation.
1.15.1 Should the Trust Property, or any part thereof or
interest therein, be taken or damaged by reason of any public improvement
or condemnation proceeding, or in any other manner or should Trustor
receive any notice or other information regarding such proceeding, Trustor
shall give prompt written notice thereof to Beneficiary.
1.15.2 Beneficiary shall be entitled to all compensation, awards
and other payments or relief therefor, and shall be entitled at its option
to commence, appear in and prosecute in its own name any action or
proceedings. Beneficiary shall also be entitled to make any compromise or
settlement in connection with such taking or damage. All such
compensation, awards, damages, rights of action and proceeds awarded to
Trustor (the "Proceeds") are hereby assigned to and shall be paid to
Beneficiary, and Trustor agrees to execute such further assignments of the
Proceeds as Beneficiary or Trustee may require.
1.15.3 Subject to the terms and conditions of Section 1.15.4
below, in the event any portion of the Trust Property is so taken or
damaged, Beneficiary shall have the option, in its sole and absolute
discretion, to apply all such Proceeds, after deducting therefrom all costs
and expenses (whether incurred with or without suit), including actual
attorneys' fees and costs, incurred by it in connection with such Proceeds,
to any indebtedness (whether due or not) secured hereby and in such order
as Beneficiary may determine, or to require Trustor to restore and rebuild
and to apply all such Proceeds, after such deductions, to the restoration
of the Trust Property. Such application or release shall not cure or waive
any default or notice of default hereunder or invalidate any act done
pursuant to such notice. Notwithstanding the foregoing, if (i) no Event of
Default exists and no event exists that, with the passage of time or the
giving of notice or both, would constitute such an Event of Default; (ii)
Beneficiary has received evidence, satisfactory to Beneficiary in its good
faith judgment, that there are sufficient funds available and/or committed,
including such condemnation proceeds, to effectuate such restoration and to
cover the expenses of operating and maintaining the Trust Property and
servicing the debt secured hereby and any other debt secured by the Trust
Property until the Trust Property is generating sufficient revenues to
cover such expenses and debt service; (iii) in Beneficiary's judgment,
Beneficiary's security will not be materially impaired by the application
of the condemnation proceeds to the restoration of the Improvements;
(iv) Trustor has delivered to Beneficiary financial plans and projections
from which Beneficiary, in its good faith judgment, determines that after
the completion of such restoration the Trust Property will be economically
viable; (v) Beneficiary has approved the plans and specifications to be
used in connection with such restoration; and (vi) the restoration will
return the Improvements to substantially the same condition, character and
utility that existed immediately prior to such taking; then the Proceeds,
after the deductions provided for above, shall be used to pay Trustor for
the cost of the rebuilding or restoring of the buildings or improvements.
1.15.4 In the event Trustor is required by Beneficiary's option
or otherwise entitled to rebuild or restore as aforesaid, the Proceeds,
after said deductions, shall be paid out in the same manner as provided in
Section 1.4.5 hereof for the payment of insurance proceeds toward the cost
of rebuilding or restoration. If the amount of such Proceeds is
insufficient to cover the cost of rebuilding or restoration, Trustor shall
pay such cost in excess of the Proceeds before being entitled to any
payment out of said Proceeds.
1.15.5 Any surplus that may remain out of said Proceeds after
payment of such cost of rebuilding or restoration shall, at the option of
Beneficiary, be applied on account of the indebtedness (whether then due or
not) secured hereby in such order as Beneficiary may determine or be paid
to any other party entitled thereto. In applying any Proceeds on account
of the indebtedness secured hereby, a prepayment privilege fee shall be
assessed based on the Privilege Rate as defined in the Note. To the extent
that any applicable prepayment fee results from the application of the
award to the prepayment of the indebtedness secured hereby, such amount
shall be paid by the condemning authority as part of the award and not by
Trustor as an amount in addition to the award, and if no such award for
prepayment fees is granted, Trustor shall have no liability for any such
fees (anything to the Note to the contrary notwithstanding).
1.16 Additional Security. In the event Beneficiary at any time holds
additional security for any of the obligations secured hereby, it may
enforce the sale thereof or otherwise realize upon the same, at its option,
either before or concurrently herewith or after a sale is made hereunder.
1.17 Trustee Actions. At any time, or from time to time, without
liability therefor and without notice to Trustor, upon written request of
Beneficiary and presentation of this Deed of Trust and the Note secured
hereby for endorsement, and without affecting the personal liability of any
person for payment of the indebtedness secured hereby or the effect of this
Deed of Trust upon the remainder of said Trust Property, Trustee may (i)
reconvey all or any part of said Trust Property, (ii) consent in writing to
the making of any map or plan thereof, (iii) join in granting any easement
thereon, or (iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof or other agreement affecting this
Deed of Trust.
1.18 Release or Discharge. Without affecting the liability of any
other person liable for the payment of any obligation herein mentioned, and
without affecting the lien or charge of this Deed of Trust upon any portion
of the Trust Property not then or theretofore released as security for the
full amount of all unpaid obligations, Beneficiary may, from time to time
and without notice (i) release any person so liable, (ii) extend the
maturity or alter any of the terms of any such obligation, (iii) grant
other indulgences, (iv) release or reconvey, or cause to be released or
reconveyed at any time at Beneficiary's option any parcel, portion or all
of the Trust Property, (v) take or release any other or additional
security for any obligation herein mentioned, or (vi) make compositions or
other arrangements with debtors in relation thereto.
1.19 Taxes. If, by the laws of the United States of America, or of
any state having jurisdiction over Trustor, any tax is due or becomes due
in respect of the issuance of this Deed of Trust or any other Security
Documents, or the recording of all or any of the foregoing or of any
security interest created thereby, Trustor will pay such tax in the manner
required by such law. Trustor shall also hold harmless and indemnify
Trustee or Beneficiary against any liability incurred by reason of the
imposition of any tax on the issuance of this Deed of Trust or any other
Security Documents, or on the recording of this Deed of Trust or any other
Security Documents or of any security interest created hereby or thereby.
1.20 Regulated Substances.
1.20.1 As used herein, "Regulated Substance" means any
substance, material, or matter including, without limitation, medical waste
that may give rise to liability under any Environmental Laws (as defined
herein). As used herein, "Environmental Laws" means (a) any local, state
or federal laws, rules, ordinances or regulations, either in existence as
of the date hereof, or enacted or promulgated after the date of this Deed
of Trust, that concern the existence, management, control, discharge,
treatment, containment, and/or removal of substances or materials that are
or may become a threat to public health or the environment; or (b) any
common law theory based on nuisance, trespass, negligence, strict
liability, aiding and abetting or other tortious conduct.
1.20.2 Trustor represents and warrants that (i) there has been
no deposit, storage, seepage or filtration of any Regulated Substances
(including, without limitation, asbestos, oil, petroleum or chemical
liquids or solids, liquids or gaseous products) at, upon, under or within
the Trust Property or any contiguous real estate in violation of any
Environmental Laws, and (ii) Trustor has not caused or permitted to occur,
and shall not permit to exist, any condition that may cause a discharge of
any Regulated Substances at, upon, under or within the Property or on any
contiguous real estate.
1.20.3 Trustor further represents and warrants that (i) neither
Trustor nor any other party has been, is or will be involved in operations
at or near the Trust Property, which operations could lead to (A) the
imposition of liability under the Environmental Laws on Trustor, or on any
subsequent or former owner of the Trust Property, or (B) the creation of a
lien on the Trust Property under the Environmental Laws or under any
similar laws or regulations; and (ii) Trustor has not permitted, and
Trustor will not permit, any tenant or occupant of the Property to engage
in any activity that could impose liability under the Environmental Laws on
such tenant or occupant, on Trustor or on any other owner of any of the
Trust Property.
1.20.4 Trustor and the Trust Property shall comply strictly and
in all respects with the requirements of the Environmental Laws and related
regulations and with all similar laws and regulations and shall notify
Beneficiary immediately in the event of any discharge or discovery of any
Regulated Substance at, upon, under or within the Trust Property of which
Trustor has notice. Trustor shall promptly forward to Beneficiary copies
of all orders, notices, permits, applications or other communications and
reports of which Trustor has notice in connection with any discharge or the
presence of any Regulated Substance or any other matters relating to the
Environmental Laws or any similar laws or regulations, as they may affect
the Trust Property.
1.21 Forfeiture. Trustor hereby represents and warrants to
Beneficiary that there has not been committed by Trustor or any other
person involved with the Trust Property any act or omission affording the
federal government or any state or local government the right of forfeiture
as against the Trust Property or any part thereof or any monies paid in
performance of Trustor's obligations under this Deed of Trust and the other
Security Documents, and each agreement and/or obligation of Trustor
incorporated by reference therein or herein, and any modifications or
amendments thereof. Trustor hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture. In furtherance thereof, Trustor hereby indemnifies Beneficiary
and agrees to defend and hold Beneficiary harmless from and against any
loss, damage or injury by reason of the breach of the covenants and
agreements or the warranties and representations set forth in this Section
1.21. Without limiting the generality of the foregoing, the filing of
formal charges or the commencement of proceedings against Trustor,
Beneficiary or all or any part of the Trust Property under any federal or
state law for which a potential result is forfeiture of (a) the Trust
Property or any part thereof or (b) any monies paid in performance of
Trustor's obligations under this Deed of Trust or the other Security
Documents shall, at the election of Beneficiary, constitute an Event of
Default hereunder without notice or opportunity to cure.
1.22 Continuing Obligations. Trustor agrees to fully and faithfully
satisfy and perform the obligations of Trustor contained in this Deed of
Trust and the other Security Documents, and each agreement and/or
obligation of Trustor incorporated by reference therein or herein, and any
modifications or amendments thereof. All representations, agreements,
obligations, covenants and warranties of Trustor contained in any of the
Security Documents incorporated by reference therein, or contained herein
or in any other Security Documents, or otherwise made by Trustor to or with
Beneficiary at any time whether or not contained in any of the foregoing
documents, shall survive the funding of the Loan and shall remain
continuing obligations, agreements, covenants, warranties and
representations of Trustor during any time when any portion of the
obligations secured by this Deed of Trust remain outstanding (it being
understood, however, that statements in any representation or warranty are
represented or warranted to be true and correct only as of the date made
except for representations or warranties pertaining to future conduct,
which such representations and warranties pertaining to the future shall be
deemed to be covenants for purposes of Section 2.1 hereof).
1.23 Americans With Disabilities Act. Trustor hereby represents to
Beneficiary that the Trust Property is in full compliance with the
Americans With Disabilities Act (the "ADA") to the extent that the ADA
applies to the Trust Property. Trustor hereby covenants and agrees not to
permit, commit or suffer to exist any condition which might result in a
violation of the ADA, and if any such condition should occur to immediately
remedy any such condition. Trustor hereby indemnifies and agrees to defend
and hold Beneficiary harmless from and against any loss, damage, injury,
claim, liability, cost or expense (including actual attorneys' fees and
expenses) by reason of the breach of the covenants, agreements and
indemnities set forth in this Section 1.23.
ARTICLE 2
DEFAULT
2.1 Events of Default. Trustor will be in default under this Deed
of Trust if any of the following events should occur, any one or all of
which events shall be an event of default ("Event of Default") hereunder:
(a) Trustor fails to make any payment of principal and/or
interest under the Note within ten (10) days after the date when due;
(b) There occurs either a Prohibited Encumbrance or a Prohibited
Transfer;
(c) Trustor fails to perform any other covenant or obligation or
breaches any other agreements or warranties contained in this Deed of Trust
or incorporated into any other Security Document and such failure or breach
(and the consequences that the delay in such performance may have caused)
are not cured and/or remedied within fifteen (15) days after notice of such
failure or breach is given to Trustor from Beneficiary; provided, however,
if such failure or breach cannot, in the sole and absolute discretion of
Beneficiary exercised in good faith, reasonably be cured and/or remediated
within said fifteen (15) day period, Trustor shall have an additional sixty
(60) days to cure such failure or breach so long as Trustor is diligently
pursuing such cure and/or remediation; provided, further, that in no event
shall any cure and/or remediation period exceed seventy five (75) days.
Notwithstanding the foregoing, any such failure or breach shall be deemed
an Event of Default upon the occurrence thereof (for which no notice shall
be required and no cure period shall be available to Trustor) if (a) such
failure or breach is the third (3rd) default to occur within any period of
twelve (12) consecutive months and notice of the first two (2) defaults has
been sent to Trustor, regardless of whether the same or different defaults
are involved and notwithstanding that Trustor may have cured within any
applicable cure period any previous defaults occurring within such twelve
(12) month period or (b) in the reasonable discretion of Beneficiary, such
failure or breach constitutes or creates a clear and present emergency or
threat to the Trust Property;
(d) Any representation by Trustor or disclosure or certification
made to the Beneficiary by or on behalf of Trustor proves to be false or
misleading in any material respect on the date as of which made, whether or
not that representation, disclosure or certification appears in this Deed
of Trust or in any other Security Documents;
(e) The filing of any claim or lien or notice to withhold
against the Trust Property or any part thereof or of any interest or right
made appurtenant thereto and the continued maintenance of said claim or
lien or notice to withhold for a period of thirty (30) days after discovery
thereof without discharge or satisfaction thereof or provision therefor
satisfactory to Beneficiary in its good faith discretion;
(f) Any failure or breach of any covenant or condition on
Trustor's part to be performed under any other loan agreement, note, deed
of trust or assignment applicable to the Trust Property and such failure or
breach continues for twenty (20) days after notice from Beneficiary;
(g) Any of the following:
(1) A general assignment by Trustor or, if Trustor is a
partnership, by any of the general partners of Trustor, or if Trustor is a
corporation, by any of the shareholders that control Trustor, for the
benefit of creditors;
(2) The filing of a voluntary petition by Trustor or, if
Trustor is a partnership, by any of the general partners of Trustor, or if
Trustor is a corporation, by any of the shareholders that control Trustor,
in bankruptcy or any other petition under any section or chapter of the
Bankruptcy Code or any similar law, whether state, federal, foreign,
provincial or otherwise, for the relief of debtors;
(3) The filing of an involuntary petition or any other
petition under any section or chapter of the Bankruptcy Code or any similar
law, whether state, federal, foreign, provincial or otherwise, for the
relief of debtors against Trustor or any of the general partners of Trustor
if Trustor is a partnership, or any of the shareholders that control
Trustor if Trustor is a corporation, by the creditors of any of the
aforementioned, said petition remaining undischarged or the party subject
thereof failing to obtain vacation thereof for a period of sixty (60) days;
(4) The appointment by any court of a receiver to take
possession of the Trust Property (or any portion thereof) or of any asset
or assets of Trustor or any of the general partners of Trustor if Trustor
is a partnership or any of the shareholders that control Trustor if Trustor
is a corporation, such asset or assets having a value in excess of One
Hundred Thousand Dollars ($100,000) and said receivership remaining
undischarged for a period of sixty (60) days;
(5) Attachment, execution or judicial seizure of the Trust
Property (or any portion thereof) or of all or any part of the assets of
Trustor or any of the general partners of Trustor if Trustor is a
partnership, or any of the shareholders that control Trustor if Trustor is
a corporation, such attachment, execution or other seizure remaining
undismissed or undischarged for a period of sixty (60) days after the levy
thereof;
(h) Trustor fails to pay, with respect to the Trust Property,
any installment of special assessments, or any installment of general real
estate taxes, or any installment of personal property taxes, or any
insurance renewal premiums, prior to delinquency, unless the same is being
contested in good faith pursuant to the last sentence of section 1.6.1
hereto; or
(i) Any default by Trustor under any leases of the Trust
Property or any termination, modification, surrender, merger or other
change of any leases of the Trust Property (or any portion thereof),
without the prior written consent of Beneficiary or as otherwise permitted
under any Security Document.
ARTICLE 3
REMEDIES
3.1 Remedies Upon Default. If Trustor is in default, Beneficiary
may, at its sole option, without notice to Trustor, which notice is hereby
expressly waived, do any one or more of the following:
(a) Declare any or all indebtedness secured by this Deed of
Trust to be due and payable immediately (in which event, all such
indebtedness shall thereafter bear interest at the rate of twelve and one-
half percent (12.5%) per annum until paid);
(b) Enter into the Trust Property, in person, by agent or by
court- appointed receiver; take any and all steps that may be desirable in
Beneficiary's judgment to preserve and enhance the value, marketability or
rentability of the Trust Property; complete any unfinished development;
manage and operate the Trust Property; and apply any rents, additional
rents, royalties, income or profits collected against the indebtedness
secured by this Deed of Trust without in any way curing or waiving any
default of Trustor;
(c) Bring a court action to foreclose this Deed of Trust or to
enforce its provisions or any of the indebtedness or obligations secured by
this Deed of Trust;
(d) Cause any or all of the Trust Property to be sold under the
power of sale granted hereby (pursuant to California Civil Code Section
2924 et seq. and/or any other provision of applicable law) in any manner
permitted by applicable law; and
(e) Exercise any other right or remedy available under law or in
equity, specifically including, without limitation, any or all of the
remedies available to a secured party under the Uniform Commercial Code as
enacted in California as respects personal property subject to any security
interest granted hereunder.
Nothing herein contained shall be construed as constituting
Beneficiary a "mortgagee-in-possession" in the absence of the taking of
actual possession of the Property by Beneficiary pursuant to the terms
hereof. In the exercise of the powers herein granted Beneficiary, no
liability shall be asserted or enforced against Beneficiary, all such
liability being expressly waived and released by Trustor.
3.2 Foreclosure by Power of Sale. For any sale under the power of
sale granted by this Deed of Trust, Trustee shall record and give all
notices required by law and then, upon the expiration of such time as is
required by law, may sell the Trust Property upon any terms and conditions
specified by Beneficiary and permitted by applicable law. Trustee may
postpone any sale by public announcement at the time and place noticed for
the sale. If the Trust Property consists of several lots or parcels,
Beneficiary in its sole and absolute discretion may designate their order
of sale or may elect to sell all of them as an entirety, whether or not
Trustor objects. Any person, including Trustee and Beneficiary, may
purchase at any sale. Upon any sale, Trustee will execute and deliver to
the purchaser or purchasers a deed or deeds conveying the property sold,
but without any covenant or warranty, express or implied, and the recitals
in the deed or deeds of any facts affecting the regularity or validity of
the sale will be conclusive against all persons.
3.3 Proceeds of Foreclosure Sale. The proceeds of any sale under
this Deed of Trust will be applied in the following manner:
FIRST: Payment of the costs and expenses of the sale, including
but not limited to Trustee's actual fees, actual attorneys' fees and costs
for disbursements, title charges, transfer taxes, the cost of surveys,
engineering reports, appraisals, and environmental audits of the Trust
Property, all expenses, liabilities and advances of Trustee, as well as all
allowances, costs and fees provided by law, together with interest thereon
at the maximum rate of interest permitted by applicable law on all advances
made by Trustee;
SECOND: Payment of all sums expended by Beneficiary under the
terms of this Deed of Trust and not yet repaid, together with interest
thereon at the rate of twelve and one-half percent (12.5%) per annum from
the date incurred until paid;
THIRD: Payment of the indebtedness and obligations of Trustor
secured by this Deed of Trust in any order that Beneficiary may choose in
its sole and absolute discretion; and
FOURTH: The remainder, if any, to the person or persons legally
entitled to it.
3.4 Marshalling. Trustor waives all rights to direct the order in
which any of the Trust Property will be sold in the event of any sale under
this Deed of Trust, and also any right to have any of the Trust Property
marshalled upon any sale.
3.5 Remedies are Cumulative. All remedies contained in this Deed of
Trust are cumulative, and Beneficiary shall also have all other remedies
provided by law or in any other agreement between Trustor and Beneficiary.
No delay or failure by Beneficiary to exercise any right or remedy under
this Deed of Trust will be construed to be a waiver of that right or remedy
or of any default by Trustor. Beneficiary may exercise any one or more of
its rights and remedies at its option without regard to the adequacy of its
security.
3.6 Fair Market Value. In consideration of the limitation on
personal liability as provided in the Note, Trustor agrees that to the
extent Trustor is entitled to present competent evidence of the fair market
value of the Trust Property as of the date of foreclosure or sale under
this Deed of Trust or in connection with a bankruptcy proceeding affecting
Trustor and/or the Trust Property, the following shall be considered
competent evidence for the fact finder's determination of the fair market
value of the Trust Property as of the date of the sale:
(i) the Trust Property shall be valued in an "as is" condition as of
the date of the sale, without any assumption or expectation that the
Trust Property will be repaired or improved in any manner before a
resale of the Trust Property after sale;
(ii) the valuation shall be based upon an assumption that the
purchaser desires a prompt resale of the Trust Property for cash
promptly (but no later than twelve (12) months) following the sale;
(iii) all expenses to be incurred when the purchaser at the sale
resells the Trust Property, including reasonable closing costs
customarily borne by the seller in a commercial real estate
transaction, should be taken into account in such valuation,
including, without limitation, brokerage commissions, title insurance,
a survey of the Trust Property, tax prorations, attorneys' fees, and
marketing costs;
(iv) the gross fair market value of the Trust Property shall be
further discounted to account for any estimated holding costs
associated with maintaining the Trust Property pending sale,
including, without limitation, utilities expenses, property management
fees, taxes and assessments, and other maintenance expenses; and
(v) any expert opinion testimony given or considered in connection
with a determination of the fair market value of the Trust Property
must be given by persons having at least five (5) years experience in
appraising similarly improved property in the vicinity where the Trust
Property is located and being actively engaged therein at the time of
such testimony.
ARTICLE 4
MISCELLANEOUS
4.1 Severability. The invalidity or unenforceability of any one or
more provisions of this Deed of Trust will in no way affect any other
provision.
4.2 Beneficiary Statements. Trustor agrees to pay Beneficiary a
reasonable charge, not to exceed the maximum allowed by law, for giving any
statement of the status of the obligations secured by this Deed of Trust.
4.3 Notices. All notices given under this Deed of Trust must be in
writing and will be effectively served upon personal delivery or, if
mailed, no later than three (3) business days mailing by United States
certified mail, postage prepaid, return receipt requested, sent to the
following addresses:
"Beneficiary": Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Director of Investments
With copies to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Law Department
and sent to Trustor at its address appearing on the signature page hereof.
Such addresses may be changed by written notice. However, the service of
any notice of default or notice of sale under this Deed of Trust as
required by law will be effective on the date of recordation, and will be
effective if served upon Trustor at its address appearing below.
4.4 Reconveyance. Upon the payment and performance in full of all
sums and obligations secured by this Deed of Trust, Beneficiary agrees to
request Trustee to reconvey the Trust Property, and upon payment of its
fees and all other sums owing to it under this Deed of Trust, Trustee will
reconvey the Trust Property without warranty to the person or persons
legally entitled to it. Such person or persons must pay all costs and
expenses in connection therewith, including all costs of recordation. The
recitals in the reconveyance of any facts will be conclusive on all
persons. The grantee in the reconveyance may be described as "the person
or persons legally entitled thereto."
4.5 Statutes of Limitations. Trustor waives all present and future
statutes of limitations as a defense to any action to enforce the
provisions of this Deed of Trust or to collect any indebtedness secured by
this Deed of Trust to the fullest extent permitted by law.
4.6 Trustor/Beneficiary Defined. The term "Trustor" includes both
the original Trustor and any subsequent owner or owners of any of the Trust
Property, and the term "Beneficiary" includes the original Beneficiary and
also any future owner or holder, including pledgees and participants, of
the Note or any interest therein.
4.7 Construction. This Deed of Trust and the other Security
Documents shall be construed without regard to any presumption or rule
requiring construction against the party causing such instruments to be
drafted. All terms and words used in this Deed of Trust, whether singular
or plural and regardless of the gender thereof, shall be deemed to include
any other number and any other gender as the context may require.
4.8 Captions. The captions and headings of the articles and sections
of this Deed of Trust are for convenience only and are not to be used in
construing this Deed of Trust.
4.9 Amendment. Neither this Deed of Trust nor any term, covenant, or
condition contained herein may be amended, modified, or terminated, except
by an agreement in writing, signed by the party charged therewith.
4.10 Successors and Assigns. The terms of this Deed of Trust will
bind the legal representatives, successors, heirs, legatees, devisees,
assigns, conservators, guardians, beneficiaries, or administrators of
Trustor and Beneficiary and the successors in trust of Trustee. This
provision shall not limit or restrict the effect of the transfer
restrictions contained herein.
4.11 Substitution of Trustee. Beneficiary may remove Trustee or any
successor Trustee at any time or times and appoint a successor Trustee by
recording a written substitution in the county where the real property
covered by this Deed of Trust is located, or in any other manner permitted
by law. Upon that appointment, all of the powers, rights and authority of
Trustee will immediately become vested in its successor.
4.12 Waivers.
4.12.1 To the fullest extent permitted by law, Trustor waives
the benefit of all laws now existing or that hereafter may be enacted
providing for (i) any appraisement before sale of any portion of the Trust
Property and (ii) the benefit of all laws now existing or that may be
hereafter enacted in any way extending the time for the enforcement or the
collection of the Note or the debt evidenced thereby or creating or
extending a period of redemption from any sale made in collecting said
debt. To the fullest extent Trustor may do so, Trustor agrees that Trustor
will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, and Trustor, for
Trustor, Trustor's representatives, successors, heirs, legatees, devisees,
assigns, beneficiaries, conservators, administrators or guardians, and for
any and all persons ever claiming any interest in the Trust Property, to
the fullest extent permitted by law hereby waives and releases all rights
of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the liens hereby created. If
any law referred to in this paragraph and now in force, of which Trustor,
Trustor's representatives, successors, heirs, legatees, devisees, assigns,
beneficiaries, conservators, administrators, guardians, or other person
might take advantage despite this paragraph, shall hereafter be repealed or
cease to be in force, such law shall not thereafter be deemed to preclude
the application of this paragraph. Trustor expressly waives and
relinquishes any and all rights and remedies that Trustor may have or be
able to assert by reason of the laws of the State of California pertaining
to the rights and remedies of sureties.
4.12.2 TRUSTOR EXPRESSLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN
ANY ACTION, COUNTERCLAIM OR PROCEEDING BASED UPON, OR RELATED TO, THE
SUBJECT MATTER OF THIS DEED OF TRUST. THIS WAIVER APPLIES TO ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS AND PROCEEDINGS, INCLUDING PARTIES WHO
ARE NOT PARTIES TO THIS DEED OF TRUST. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY TRUSTOR, AND TRUSTOR EXPRESSLY
ACKNOWLEDGES THAT NEITHER BENEFICIARY, NOR ANY PERSON ACTING ON BEHALF OF
BENEFICIARY HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TRUSTOR
FURTHER ACKNOWLEDGES THAT TRUSTOR HAS BEEN REPRESENTED (OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS DEED OF TRUST AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
TRUSTOR'S OWN FREE WILL, AND THAT TRUSTOR HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. TRUSTOR FURTHER ACKNOWLEDGES THAT
TRUSTOR HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS DEED
OF TRUST AND, SPECIFICALLY, THIS WAIVER PROVISION.
4.13 Taxation of Liens. In the event of the enactment after the date
hereof of any law deducting from the value of all or any portion of the
Trust Property for the purpose of taxation any lien thereon, or imposing
upon Beneficiary the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Trustor, or
changing in any way the law relating to the taxation of deeds of trust or
debts secured by deeds of trust or a beneficiary's interest in the
property, or the manner of collection of taxes, so as to affect
Beneficiary, this Deed of Trust or the debt secured hereby, then, and in
any such event, Trustor, upon demand by Beneficiary, shall pay such taxes
or assessments, or reimburse Beneficiary therefor; provided, however, that
if in the opinion of counsel for Beneficiary (a) it might be unlawful to
require Trustor to make such payment or (b) the making of such payment
might result in the imposition of interest beyond the maximum amount
permitted by law, then and in such event, Beneficiary may elect, in its
sole and absolute discretion, by notice in writing given to Trustor, to
declare all of the indebtedness secured hereby to be and become due and
payable thirty (30) days from the giving of such notice. In the event of a
prepayment of the Note pursuant to the provisions of this paragraph, no
prepayment privilege fee shall apply (notwithstanding anything to the
contrary in the Note).
4.14 Consents and Approvals. No waiver of any default or breach by
Trustor hereunder shall be implied from any omission by Beneficiary to take
action on account of such default even if such default persists or is
repeated, and no express waiver shall affect any default other than the
default specified in the waiver and any such waiver shall be operative only
for the time and to the extent therein stated. Inaction of Beneficiary
shall never be considered as a waiver of any right accruing to it on
account of any default on the part of Trustor. Waivers of any covenant,
term or condition contained herein shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition.
Beneficiary's consent to any act or omission by Trustor will not be a
consent to any other or subsequent act or omission or a waiver of the need
for such consent in any future or other instance and the consent or
approval by Beneficiary to or of any act by Trustor shall not be deemed to
waive or render unnecessary the consent or approval of Beneficiary to or of
any subsequent or similar act. The acceptance by Beneficiary of any
payment on the indebtedness secured hereby shall not be deemed or construed
as a waiver by Beneficiary of any breach of any covenant, term or condition
hereof except any relating to the payment accepted.
4.15 Costs of Nonperformance. If either Trustor or Beneficiary fails
to perform any of their respective covenants or agreements contained in
this Deed of Trust or any of the Security Documents, then the nonperforming
party shall pay all out-of-pocket expenses of the other party (including
but not limited to actual fees and disbursements of counsel) incurred by
reason of or in response to such nonperformance, together with interest
thereon at the rate of twelve and one-half percent (12.5%) per annum from
the date such expenses are incurred until paid.
4.16 Inconsistencies with Other Documents. In the event of any
inconsistency between the provisions of this Deed of Trust or any of the
Security Documents, the provisions of the Note shall control over those of
the Deed of Trust.
4.17 Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of California.
REQUESTS FOR NOTICES
Trustor requests that a copy of any notice of default and notice of
sale required by law be mailed to it at its address below:
Trustor: Optical Coating Laboratory, Inc.
Address: 2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: CFO
Executed in the State of California as of the day and year first above
written.
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
State of _______________ )
)ss
County of _____________ )
On _______________, 1996, before me, ________________________, a
notary public in and for said state, personally appeared
_______________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same
in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________ (Seal)
EXHIBIT A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
When recorded mail to:
Aid Association for Lutherans
Law Department
4321 North Ballard Road
Appleton, WI 54919
Attn: Kenneth E. Podell, Esq.
DEED OF TRUST, FINANCING STATEMENT,
FIXTURE FILING AND SECURITY AGREEMENT
(WITH ASSIGNMENT OF RENTS)
This DEED OF TRUST, FINANCING STATEMENT, FIXTURE FILING AND SECURITY
AGREEMENT (With Assignment of Rents) (this "Deed of Trust") is dated as of
March 15, 1996, by and among OPTICAL COATING LABORATORY, INC., a Delaware
corporation (hereinafter called "Trustor"), North American Title Company
(hereinafter called "Trustee"), and AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation (hereinafter called "Beneficiary").
W I T N E S S E T H
WHEREAS, for value received, Trustor has executed and delivered to
Beneficiary its original promissory note of even date herewith payable to
the order of Beneficiary in the principal amount of Three Million and
No/100 Dollars ($3,000,000.00), and Trustor has agreed to execute and
deliver to Beneficiary, as security for the payment of said note and any
and all extensions, substitutions, replacements, rearrangements,
modifications, and/or renewals thereof (the "Note"), this Deed of Trust
respecting the Trust Property (as hereinafter defined); and
WHEREAS, all things necessary have been done and performed to make the
Note the duly authorized, valid and legally binding obligation of Trustor
and to constitute this instrument the duly authorized and, when executed
and delivered by Trustor, valid and legally binding first Deed of Trust on
the Trust Property, in order to secure the Note as hereinafter provided;
NOW, THEREFORE, Trustor, in consideration of the loan of the principal
sum of Three Million and No/100 Dollars ($3,000,000.00) to Trustor (the
"Loan"), receipt of which is hereby acknowledged, and in order to secure
repayment of all indebtedness evidenced by the Note with interest,
according to its tenor and effect, to secure the performance and observance
by Trustor of all covenants, representations, warranties, conditions and
agreements contained in the Note, and to secure the performance and
observance by Trustor of all covenants, representations, warranties,
conditions and agreements herein contained, does hereby irrevocably grant,
transfer, assign, exercise, release, alienate, convey and pledge to Trustee
in trust, with power of sale and right of entry and possession as provided
below, all of its present and future estate (whether now owned or hereafter
acquired), right, title and interest in and to the following described
property and all rents, additional rents, issues, payments and profits
thereof:
A. The real property (the "Property") described in the attached
Exhibit A which is hereby incorporated into this Deed of Trust by
reference, and all minerals, oil, gas and other hydrocarbon substances on,
in and under the Property, as well as all development rights, air rights,
water, water rights, water stock, parking rights and general intangibles
relating to, generated from, arising out of or incidental to the Property,
its ownership, development or use. The Property described in the attached
Exhibit A is commonly known as 1402 Mariner Way, Santa Rosa, California;
B. All structures, buildings, improvements and fixtures of any kind
now or hereafter located on the Property, including, without limitation,
all apparatus, equipment and appliances used to supply air cooling, air
conditioning, heat, gas, water, light, power, refrigeration, ventilation,
laundry, drying, dishwashing, garbage disposal, waste removal, recreation
or other services on the Property; and all elevators, escalators, and
related machinery and equipment, fire prevention and extinguishing
apparatus, security and access control apparatus, partitions, ducts,
compressors, plumbing, ovens, refrigerators, dishwashers, disposals,
washers, dryers, awnings, storm windows, storm doors, screens, blinds,
shades, curtains and curtain rods, mirrors, cabinets, paneling, rugs,
attached floor coverings, furniture, pictures, antennas, pools and spas and
pool and spa operation and maintenance equipment and apparatus; and all
trees and plants located on the Property (collectively, the
"Improvements"), all of which, including replacements and additions
thereto, shall conclusively be deemed to be affixed to and be part of the
real property conveyed to Trustee under this Deed of Trust;
C. All easements, rights-of-way and rights used in connection with
the Property or as a means of access thereto, and all tenements,
hereditaments and appurtenances of and to the Property;
D. All of the rents, additional rents, revenues, issues, earnings,
products, royalties, profits and income of the Property and/or the
Improvements, subject to the limited and revocable right, power and
authority hereinafter given to and conferred upon Trustor to collect and
apply such rents, revenues, issues, earnings, products, royalties, profits,
incomes and other benefits;
E. All present and future leases, subleases and tenancy agreements
affecting the Property and/or Improvements, including, without limitation,
any security deposits, advance rentals and deposits or payments of a
similar nature;
F. All proceeds, causes of action and claims, both in law and in
equity, arising on account of any damage to or taking of the Property
and/or the Improvements, including but not limited to insurance proceeds
and condemnation proceeds, and all claims arising on account of any damage
to or taking of the Property or the Improvements, and all proceeds, causes
of action and claims for any loss or diminution in value of the Property
and/or the Improvements;
G. All "Equipment," "Farm Products," "Inventory," "Documents,"
"Instruments," "Chattel Paper," "Accounts," and "General Intangibles" (as
such terms are defined in the California Uniform Commercial Code) relating
to, generated from, arising out of or incidental to the ownership,
development, use or operation of the Property or the Improvements (whether
or not subsequently removed from the Property or the Improvements),
including, without limitation, all
(i) machinery and tools; (ii) rugs, carpets and other floor
coverings; (iii) draperies and drapery rods and brackets, awnings,
window shades, venetian blinds and curtains; (iv) lamps, chandeliers
and other lighting fixtures; (v) office maintenance and other
supplies; (vi) apparatus, appliances, furniture and furnishings,
building service equipment, and building materials, supplies and
equipment; (vii) rights, royalties, rents, security deposits, advance
rentals, revenues, profits and benefits; (viii) leases, lease
guarantees, contracts, contract rights, licenses, permits and
certificates; (ix) deposits, funds, money and deposit accounts;
(x) tenements, hereditaments and appurtenances; (xi) approvals and
parcel maps (whether tentative or final), building permits and
certificates of occupancy; (xii) names under or by which the Property
or any of the Improvements may at any time be operated or known and
rights to carry on business under any such names or any variant
thereof; (xiii) trademarks and good will; (xiv) management agreements,
service contracts, supply contracts or other contracts or agreements;
(xv) warranties; (xvi) water stock; (xvii) shares of stock or other
evidence of ownership of any part of the Property or Improvements that
is owned by Trustor in common with others, and all documents of
membership in any owners' or members' association or similar group
having responsibility for managing, maintaining or operating any part
of the Property or Improvements; (xviii) plans and specifications
prepared for construction of improvements on the Property, or any part
thereof, and studies, data and drawings related thereto, including,
without limitation, studies, data or reports relating to toxic or
hazardous wastes or materials located on the Property and/or
Improvements, and contracts and agreements of Trustor relating to the
aforesaid plans and specifications or to the aforesaid studies, data,
reports and drawings or to the construction of improvements on the
Property; (xix) sales agreements, deposit receipts, escrow agreements
and other ancillary documents and agreements entered into respecting
the sale to any purchasers of any part of the Property, and/or
Improvements, together with all deposits and other proceeds of the
sale thereof; (xx) damages, royalties and revenue of every kind,
nature and description whatsoever that Trustor may be entitled to
receive from any person or entity owning or having or hereafter
acquiring a right to the oil, gas or mineral rights and reservations
of the Property; (xxi) deposits made with or other security given to
utility companies by Trustor with respect to the Property and/or
Improvements; (xxii) advance payments of insurance premiums made by
Trustor with respect to, and all claims or demands with respect to,
insurance; (xxiii) negotiable certificates of deposit of Trustor in
Beneficiary's possession and all accounts of Trustor maintained with
Beneficiary and each deposit account of Trustor assigned to
Beneficiary pursuant to any agreement; (xxiv) insurance proceeds;
(xxv) condemnation awards; (xxvi) causes of action, claims,
compensation, awards and recoveries for any damage or injury to the
Property and/or Improvements or for any loss or diminution in value of
the Property and/or Improvements; (xxvii) books and records,
including, without limitation, all computer records, computer tapes
and electronic and electromagnetic representations and reproductions
thereof; (xxviii) guaranties of and security for any of the foregoing;
(xxix) all substitutions, renewals, improvements, attachments,
accessions, additions and replacements to any of the foregoing; and
H. All "Proceeds" (as such term is defined in the California Uniform
Commercial Code), collections, insurance proceeds and products of any of
the property listed in the preceding paragraph G, including without
limitation, proceeds of any voluntary or involuntary disposition or claim
respecting any part thereof (pursuant to judgment, condemnation award or
otherwise) and all documents, instruments, general intangibles, goods,
equipment, inventory, chattel paper, monies, accounts, deposit accounts and
other personal property that may arise from the sale or disposition of any
of the foregoing, all guaranties of and security for any of the foregoing,
and all books and records, including, without limitation, all computer
records, computer tapes and electronic and electromagnetic representations
and reproductions thereof, relating to any of the foregoing.
Anything above or elsewhere in this Deed of Trust to the contrary
notwithstanding, the lien of this Deed of Trust shall not encumber or
attach to any items of equipment or machinery located in or attached to the
Property and used solely in connection with Trustor's manufacturing
operations (including, without limitation, the items of equipment attached
to the Property as of the date hereof known as Beta III and Beta V), even
if such equipment or machinery is or may be deemed a fixture or realty
under California law, but the lien of this Deed of Trust shall encumber and
attach to any items of equipment or machinery located in or attached to the
Property that are used for the operation or maintenance of any
Improvements. Upon Trustor's written request, Beneficiary shall execute
and deliver a written certificate or instrument (in recordable form
requested by Trustor and reasonably satisfactory to Beneficiary) confirming
that any equipment or machinery specifically identified in such certificate
or instrument is not subject to the lien or encumbrance of this Deed of
Trust, but Trustor shall promptly reimburse Beneficiary for any out-of-
pocket costs incurred by Beneficiary relating to the review and execution
of such certificate or instrument (including, without limitation,
attorneys' fees and costs). Trustor shall also have the right at any time
and from time to time to remove any or all equipment or machinery located
in or attached to the Property not encumbered by the lien of the Deed of
Trust, provided that Trustor shall be responsible for repairing any and all
damage to the Property caused by such removal and the failure to repair any
and all such damage shall be deemed to constitute bad-faith waste and
provided further that prior to removal of any such equipment or machinery
attached to the Property that Trustor furnishes Beneficiary with whatever
assurances and/or further security that Beneficiary requires in good faith
that any such damage shall be repaired.
The property listed above in paragraphs (G) and (H) above may be referred
to herein as the "Personal Property."
The Property together with the additional property listed above in
paragraphs A through H shall be referred to herein as the "Trust Property."
This Deed of Trust secures:
One: Payment by Trustor of an indebtedness in the principal sum
of Three Million and No/100 Dollars ($3,000,000.00), with interest
thereon, according to the terms of the Note (which, by reference, is
hereby made a part hereof), and the performance, observance and
discharge of each and every obligation, representation, warranty,
covenant and agreement of Trustor contained in the Note.
Two: Payment by Trustor of such additional sums with interest
thereon as may hereafter be loaned by Beneficiary to Trustor when
evidenced by a promissory note or notes of Trustor and stated by the
terms thereof to be secured hereby.
Three: The performance, observance and discharge of each and
every obligation, representation, warranty, covenant and agreement of
Trustor contained herein.
Four: Payment by Trustor of all other sums with interest thereon
becoming due or payable under the provisions hereof to either Trustee
or Beneficiary.
Five: Payment by Trustor of all real estate and personal
property taxes and assessments levied against the Trust Property.
Six: Payment of any and all sums advanced by Beneficiary to
protect the Trust Property, with interest thereon at an annual rate of
interest equal to twelve and one-half percent (12.5%).
Seven: Performance, observance and discharge of each and every
obligation, representation, warranty, covenant and agreement of
Trustor contained in the Assignment of Rents and Leases (the
"Assignment"), executed by Trustor, in favor of Beneficiary, and in
any and all pledges, agreements, security agreements, supplemental
agreements or other instruments of security executed by Trustor as of
even date herewith or at any time subsequent to the date hereof for
the purpose of further securing any indebtedness hereby secured, or
any part thereof, or any further advancements or further or additional
loans of any sums hereafter made by Beneficiary to Trustor during the
continuance of these trusts and secured hereby, or for the purpose of
supplementing or amending this Deed of Trust or any instrument secured
hereby.
Eight: The performance, observance and discharge of each and
every obligation, representation, warranty, covenant and agreement of
Trustor contained in the Borrower's Affidavit and Solvency Certificate
(the "Certificate"), executed by Borrower, in favor of Beneficiary,
and under all other present and future agreements executed by Trustor
in favor of Beneficiary relative to, evidencing, or securing the Loan
or the indebtedness evidenced by the Note (excluding the obligations,
representations, warranties, covenants and agreements contained in
that certain Environmental Indemnity Agreement of even date herewith
executed by Borrower as indemnitor in favor of Beneficiary, as
indemnitee, which obligations, representations, warranties, covenants
and agreements are not secured by this Deed of Trust or the other
Security Documents (as defined hereinafter) nor are they related in
any manner to any amounts owed to Beneficiary pursuant to the Note).
This Deed of Trust, the Note, the Certificate, the Assignment and any
other deeds of trust, mortgages, agreements or other instruments given
to evidence or further secure the payment and performance of any
obligation secured hereby (and any and all replacements,
rearrangements, modifications, substitutions, extensions, renewals
modifications or amendments thereto) are sometimes referred to
collectively herein as the "Security Documents."
ARTICLE 1
COVENANTS, WARRANTIES AND REPRESENTATIONS OF TRUSTOR
To protect the security of this Deed of Trust, Trustor hereby covenants,
warrants, represents and agrees as follows:
1.1 Ownership. Trustor is the lawful owner in fee of the Trust
Property. The Trust Property is free from any adverse lien, security
interest, encumbrance or adverse claim thereon (except for the lien created
by this Deed of Trust and those claims that are of record and have been
previously disclosed to Beneficiary in writing). Trustor has good right,
full power and lawful authority to convey the Trust Property pursuant to
and in accordance with this Deed of Trust. Trustor shall warrant and
forever defend said Trust Property and the quiet and peaceful possession
thereof against the claims of all persons whomsoever.
1.2 Secured Obligations. Trustor shall pay when due all indebtedness
and perform all obligations that are secured by this Deed of Trust in
accordance with their respective terms, pay when due any future advances
and perform all future obligations secured by this Deed of Trust.
1.3 Insurance Policies.
1.3.1 Trustor shall maintain in full force and effect, at
Trustor's sole cost and expense, (i) comprehensive public liability
insurance insuring Trustor and Beneficiary against loss, damage, or
liability for injury to, or death of, persons and loss or damage to
property occurring from any cause whatsoever in, upon, or about the
Property and the Improvements, (ii) fire, hazard and extended coverage
insurance on the Trust Property, (iii) loss of rental value, (iv) if
required by Beneficiary, boiler and machinery insurance covering pressure
vessels, air tanks, machinery, pressure piping, heating, air conditioning
and elevator and escalator equipment, provided the Improvements contain
equipment of such nature, and insurance against loss of occupancy, use or
rents arising from any such breakdown, in such amounts as are satisfactory
to Beneficiary, and (v) any other insurance required by law. The insurance
policies must be approved by Beneficiary in its reasonable discretion as to
amount, form, deductibles and insurer, and must cover all risks Beneficiary
requires and must be with A+, A or A- rated companies that have a financial
size of X or better as shown in a current Best's Key Rating Guide (or
comparable guide book acceptable to Beneficiary if Best's should become
unavailable); provided, however, that the above-referenced policy or
policies of comprehensive public liability insurance shall be maintained in
amounts not less than Two Million and No/100 Dollars ($2,000,000) combined
single limit; and provided further that the hazard, fire and extended
coverage insurance policies must contain a New York standard mortgagee or
lender clause endorsement making all losses payable to Beneficiary, must
contain cancellation provisions requiring not less than thirty (30) days'
written notice to Beneficiary as a condition precedent to any cancellation
thereof, must be for the full replacement value of the Improvements, and
must contain a "Replacement Cost Endorsement"; and provided further that
Loss of "rent value" insurance shall be in the amount of at least Four
Hundred Twenty Thousand and No/100 Dollars ($420,000.00) for each twelve
(12) month period (and pro rata for any portion thereof). The hazard, fire
and extended coverage insurance policies and a copy of all other insurance
policies, together with receipts for the payment of premiums, are to be
delivered to and held by the Beneficiary. All renewal and replacement
policies (or certificates or binders evidencing same) must be delivered to
the Beneficiary at least fifteen (15) days before expiration of the old
policies. Approval of any insurance by Beneficiary will not be a
representation of the solvency of any insurer or the sufficiency of any
amount of insurance. Anything above to the contrary notwithstanding, in no
event shall Trustor be required to insure against loss by earthquake, earth
movement or flood unless such coverage is available at commercially
reasonable rates. The deductible for fire, hazard and extended coverage
insurance may be One Hundred Thousand Dollars ($100,000).
1.3.2 All policies of insurance required to be maintained by
Trustor hereunder shall contain a waiver of subrogation against the Trustee
and Beneficiary, and an endorsement or agreement by the insurer that any
loss shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Trustor that might otherwise
result in forfeiture of said insurance and the further agreement of the
insurer waiving all rights of set-off, counterclaim or deductions against
Trustor.
1.3.3 Notwithstanding anything to the contrary herein, in the
event Trustor fails to provide, maintain, keep in full force and effect or
deliver and furnish to Beneficiary the policies of insurance required
hereunder, in addition to all other remedies available under this Deed of
Trust or any of the Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect thereto, may
procure such insurance or single-interest insurance for such risks covering
Beneficiary's interest, and Trustor will pay all premiums thereon (and
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date of expenditure by Beneficiary until the date of payment
by Trustor) promptly upon demand by Beneficiary, and until such payment is
made by Trustor the amount of all such premiums together with interest
thereon shall be secured by this Deed of Trust.
1.3.4 Notwithstanding anything to the contrary herein, in the
event of foreclosure of this Deed of Trust or other transfer of title or
assignment of the Trust Property in extinguishment, in whole or in part, of
the debt secured hereby, all right, title and interest of Trustor in and to
all policies of insurance required herein or the proceeds thereof shall
inure to the benefit of and pass to the successor-in-interest to Trustor or
the purchaser or grantee of the Trust Property.
1.4 Damage and Insurance Proceeds.
1.4.1 Trustor shall give prompt written notice to Beneficiary of
any damage or injury to the Trust Property costing in excess of $25,000 to
repair and Trustor shall give whatever notice to insurers of any such
damage, injury, loss or diminution of value as may be required. All
insurance proceeds on the Trust Property and all causes of action, claims,
compensation, awards and recoveries for any such damage or injury to the
Trust Property are hereby absolutely assigned to and shall be paid to
Beneficiary, and Trustor agrees to execute such further evidence of such
absolute assignment of such insurance proceeds, causes of action, claims,
compensation, awards and recoveries as Beneficiary or Trustee may require.
Beneficiary may (but shall not be obligated to) participate in any suits or
proceedings relating to any such proceeds, causes of action, claims,
compensation, awards or recoveries and may join with Trustor in adjusting
any loss covered by insurance. Subject to the terms and conditions of
Section 1.4.4 below, Beneficiary will apply any sums received by it under
this paragraph first to the payment of all of its costs and expenses
(including but not limited to legal fees and disbursements) incurred in
obtaining those sums, and then, in its sole and absolute discretion and
without regard to the adequacy of its security, to the payment of the
indebtedness and obligations secured by this Deed of Trust or to Trustor
for restoration or repair of the Trust Property under Beneficiary's
prescribed disbursement control procedures as hereinafter described.
1.4.2 In the event Beneficiary elects, subject to the terms and
conditions of Section 1.4.4 below, to apply any sums received under Section
1.4.1 above in whole or in part to the payment of the indebtedness and
obligations secured by this Deed of Trust, no prepayment privilege fee
shall apply (notwithstanding anything to the contrary in the Note). Any
sums applied to the payment of the indebtedness secured by this Deed of
Trust shall be applied first against disbursements by Beneficiary (and any
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date of expenditure by Beneficiary until the date of payment
by Trustor) chargeable to Trustor pursuant to the terms of this Deed of
Trust, then against accrued interest then due and owing under the Note, and
thereafter against the principal due under the Note in the inverse order of
principal payments as they mature.
1.4.3 Notwithstanding the foregoing, in the event of loss,
Beneficiary is hereby authorized either (a) to settle, adjust or compromise
any claim under the above insurance policies without consent of Trustor,
which consent is hereby expressly waived; or (b) to allow Trustor to agree
with the insurance company or companies on the amount to be paid upon the
loss. In either case, Beneficiary is authorized to collect and receive any
such insurance money. Notwithstanding anything to the contrary contained
herein, Trustor may, without the consent of Beneficiary, so long as Trustor
is not in default hereunder, settle, adjust or compromise any claim in an
original amount less than Twenty Five Thousand and No/100 Dollars
($25,000.00).
1.4.4 Notwithstanding anything to the contrary herein contained,
if (i) the insurers do not deny liability as to the insured; (ii) no Event
of Default (as hereinafter defined) exists and no event exists that, with
the passage of time or the giving of notice or both, would constitute such
an Event of Default; (iii) Beneficiary has received evidence, satisfactory
to Beneficiary in its good faith discretion, that there are sufficient
funds available and/or committed, including such insurance proceeds, to
effectuate such restoration and to cover the expenses of operating and
maintaining the Trust Property and servicing the debt secured hereby and
any other debt secured by the Trust Property until the Trust Property is
generating sufficient revenues to cover such expenses and debt service;
(iv) in Beneficiary's judgment, Beneficiary's security will not be
materially impaired by the application of the insurance proceeds to the
restoration of the Improvements; (v) Trustor has delivered to Beneficiary
financial plans and projections, including, without limitation, the status
of all tenancies or uses of the Trust Property, from which Beneficiary, in
its sole judgment, determines that after the completion of such restoration
the Trust Property will be economically viable; (vi) Beneficiary has
approved the plans and specifications to be used in connection with such
restoration; and (vii) the restoration will return the Improvements to
substantially the same condition, character and utility and to at least the
value that existed immediately prior to such casualty; then such insurance
proceeds, after deducting therefrom all expenses incurred by Beneficiary in
the collection and administration thereof, shall be used to pay Trustor for
the cost of rebuilding, replacing, restoring or repairing the Trust
Property so insured in accordance with the disbursement procedures herein
contained. In all other cases, such insurance proceeds may at
Beneficiary's discretion, either be applied in payment or reduction of the
indebtedness secured hereby (whether then due or not) in accordance with
Section 1.4.2 above, or be held by Beneficiary and used to reimburse
Trustor or any other party for the cost of the rebuilding, replacing,
restoring or repairing the Trust Property so insured.
1.4.5 In the event Trustor is entitled (whether pursuant to the
terms hereof or pursuant to Beneficiary's election or otherwise) to payment
out of insurance proceeds for any repair, rebuilding, restoration or
replacement, such proceeds shall be made available, from time to time, upon
Beneficiary being furnished with satisfactory evidence of progress in such
repair, rebuilding, restoration or replacement, together with satisfactory
evidence of the estimated cost of completion thereof and together with any
such architect's certificates, waivers of lien, contractors' sworn
statements and other evidence of cost and payments as Beneficiary may
reasonably require and approve. If the estimated cost of the work exceeds
ten percent (10%) of the original principal amount of the indebtedness
secured hereby, Beneficiary shall also be furnished with all plans and
specifications for such rebuilding, replacement, restoration or repair as
Beneficiary may reasonably require and approve. The aggregate amount of
all payments made prior to the final completion of the work shall never
exceed ninety percent (90%) of the value of the work performed, from time
to time, and at all times the undisbursed balance of said proceeds
remaining in the hands of Beneficiary shall be at least sufficient to pay
for the cost of completion of the work free and clear of liens. If the
amount of such insurance proceeds is insufficient to cover the cost of
repair, rebuilding, replacement or restoration, Trustor shall pay such cost
in excess of the insurance proceeds before being entitled to any payment
out of said insurance proceeds. Any surplus that may remain out of said
insurance proceeds after payment of such cost of repair, rebuilding,
restoration or replacement shall, at the option of Beneficiary, be applied
on account of the indebtedness (whether then due or not) secured hereby in
accordance with the terms of Section 1.4.2 above or be paid to any other
party entitled thereto.
1.4.6 Nothing herein contained shall be deemed to excuse Trustor
from repairing or maintaining the Trust Property as provided in Section 1.9
hereof or from restoring all damage or destruction to the Trust Property,
regardless of whether there are insurance proceeds available or whether any
such proceeds are sufficient in amount. The application or release by
Beneficiary of any insurance proceeds shall not cure or waive any default
or notice of default under this Deed of Trust or invalidate any act done
pursuant to such notice.
1.5 Waiver of Claims. Trustor waives any and all right to claim or
to recover against Beneficiary, its officers, employees, agents, attorneys
and representatives, for loss of or damage to Trustor, the Trust Property,
Trustor's other property or the property of others under Trustor's control
from any cause insured against or required to be insured against by the
provisions of this Deed of Trust.
1.6 Taxes and Assessments.
1.6.1 Trustor agrees to pay prior to delinquency all taxes and
assessments that are or may become a lien on the Trust Property or that are
assessed against the Trust Property or its rents, royalties, profits and
income. Trustor shall furnish to Beneficiary satisfactory evidence
respecting the payment of any and all taxes and assessments. Trustor also
agrees to pay when due all lawful claims and demands of mechanics,
materialmen, laborers and others for any work performed or materials
delivered for the Trust Property. Trustor also agrees to pay when due all
utility charges that are incurred by Trustor for the benefit of the Trust
Property or that may become a charge or lien against the Trust Property for
gas, electricity, water, telephone or sewer services furnished to the Trust
Property and all other charges or assessments of a similar nature, whether
public or private, affecting the Trust Property or any portion thereof,
whether or not such taxes, assessments or charges are liens thereon.
Notwithstanding anything to the contrary herein, in the event Trustor fails
to pay any of the foregoing when due or prior to delinquency as required
herein, in addition to all other remedies available under this Deed of
Trust or any other Security Documents, Beneficiary, in its sole and
absolute discretion and without obligation with respect thereto, may pay
any or all such amounts, and Trustor will pay such amounts advanced (and
interest thereon at the rate of twelve and one-half percent (12.5%) per
annum from the date incurred by Beneficiary until the date of payment by
Trustor) promptly upon demand by Beneficiary, and until such payment is
made by Trustor, the amount of all such advances together with interest
thereon shall be secured by this Deed of Trust. Notwithstanding the
forgoing provisions of this Section 1.6.1, Trustor shall have the right to
contest in good faith any taxes, assessments, claims or demands at any time
affecting the Trust Property, provided that such contest is diligently
prosecuted and provided further that during the course of such contest
Trustor furnishes Beneficiary with whatever assurances and/or further
security that Beneficiary reasonably requires that its security will not be
impaired by virtue of the contest.
1.6.2 Unless waived in writing upon such terms and conditions as
Beneficiary in its sole discretion may determine, Trustor shall deposit
with such party and at such place as Beneficiary may from time to time in
writing appoint, commencing on the "Adjustment Date" (as defined in the
Note), and on the day monthly installments of principal and interest are
payable under the Note until the indebtedness secured by this Deed of Trust
is fully paid, a sum equal to one-twelfth of the estimated total annual
real property taxes and assessments on the Trust Property and of the
estimated total annual premiums on insurance policies required to be
maintained with respect to the Trust Property pursuant to the Deed of
Trust, such estimate to be made from time to time in Beneficiary's
reasonable discretion, with notice of any change in such estimate to be
given in writing by Beneficiary to Trustor at least thirty (30) days in
advance, and such deposit to be held without any allowance of interest and
to be used for the payment of taxes, assessments and insurance renewal
premiums relating to the Trust Property prior to delinquency. If the funds
so deposited are insufficient to pay any such tax, assessment and insurance
renewal premium prior to delinquency, Trustor shall, within five (5) days
after receipt of demand therefor, deposit such additional funds as may be
necessary to pay such taxes, assessments and insurance renewal premiums in
full. Upon the occurrence and during the continuance of an Event of
Default, Beneficiary may at its own option, without being required to do
so, apply any monies at the time on deposit pursuant hereto on any of
Trustor's obligations contained in the Note and/or secured by this Deed of
Trust, in such order and manner as Beneficiary in its sole and absolute
discretion may elect. Such deposits shall be held to be irrevocably
applied by Beneficiary or by any depository appointed pursuant hereto for
the purposes for which the deposits are made hereunder and shall not be
subject to the direction and control of Trustor; provided, however, that
neither Beneficiary nor any such depository appointed pursuant hereto,
shall be liable for any failure to apply to the payment of taxes,
assessments and insurance renewal premiums any amount so deposited unless
Trustor, while not in default under the Note or this Deed of Trust, shall
have requested Beneficiary or said depository in writing, sent by certified
mail return receipt requested, to make application of such funds to the
payment of particular taxes, assessments and/or insurance renewal premiums
accompanied by the bills or invoices for such taxes, assessments and/or
insurance renewal premiums, at least thirty (30) days prior to the date
when any such payment is delinquent. Trustor hereby grants to Beneficiary
a security interest in any such deposits to secure Trustor's obligation
under this Deed of Trust and agrees to execute such financing statements
and take such other actions as are required by Beneficiary to create and
perfect its security interest in such deposits.
1.7 Assignment of Rents.
1.7.1 Trustor hereby presently and absolutely conveys, transfers
and assigns to Beneficiary, its successors and assigns, all the rights,
interest and privileges that Trustor as lessor has and may have in any
leases now existing or hereafter made and affecting the Trust Property or
any part thereof, with all of the existing and future rents, additional
rents, revenues, issues, earnings, products, royalties, income and profits
of the Trust Property that arise from any lease or occupancy agreement
pertaining to the Trust Property. Anything to the contrary herein
notwithstanding, Trustor also hereby assigns to Beneficiary any award made
hereafter to Trustor in any court proceeding involving any of the lessees
(specifically including, without limitation, in any bankruptcy, insolvency
or reorganization proceeding in any state or federal court) and any and all
payments made by or on behalf of any lessee in lieu of rent. Trustor
hereby appoints Beneficiary as its irrevocable attorney-in-fact to appear
in any action and/or to collect any such award or payment.
1.7.2 Anything to the contrary herein notwithstanding, unless
and until there occurs an Event of Default under this Deed of Trust or any
other Security Documents, Trustor will have a license to collect and
receive those rents, additional rents, royalties, income and profits as
they become due. Upon the occurrence of an Event of Default under this
Deed of Trust or any other Security Documents, Beneficiary may terminate
Trustor's license in Beneficiary's sole and absolute discretion at any
time, and may thereafter collect the rents, additional rents, royalties,
income and profits itself or by an agent or receiver. Notwithstanding the
foregoing, no action taken by Beneficiary to collect any rents, additional
rents, royalties, income or profits will make Beneficiary a mortgagee-in-
possession of the Trust Property, unless Beneficiary personally or by
authorized agent enters into actual possession of the Trust Property.
Possession by a court appointed receiver will not be considered possession
by Beneficiary.
1.7.3 Trustor hereby agrees to indemnify Beneficiary against,
and to hold Beneficiary harmless from, any and all liability, claim,
demand, damage, loss, cost or expense (including actual attorneys' fees and
expenses) arising from any of said leases or from this assignment (other
than as arising from Beneficiary's gross negligence, wilful misconduct or
breach of lease after taking possession of the Property), and this
assignment shall not place responsibility for the control, care, management
or repair of said premises upon Beneficiary, or make Beneficiary
responsible or liable for any negligence in the management, operation,
upkeep, repair or control of the Trust Property resulting in loss or injury
or death to any tenant, licensee, employee or stranger. Any expenditures
made by Beneficiary to cure any default by Trustor under any term of any
lease (and interest thereon at the rate of twelve and one-half percent
(12.5%) per annum from the date incurred by Beneficiary until the date of
payment by Trustor) will be paid by Trustor promptly upon demand by
Beneficiary and will be additional indebtedness secured by this Deed of
Trust.
1.7.4 The receipt by Beneficiary of any rents, additional rents,
issues, royalties, income or profits pursuant hereto after the institution
of foreclosure proceedings hereunder shall not cure such default nor affect
such proceedings or any sale pursuant hereto unless the sums collected
equal or exceed all sums then owed by Trustor. All rents, additional
rents, issues, royalties, income and profits collected by Beneficiary or a
receiver will be applied first to pay all expenses of collection, and then
to the payment of all costs of operation and management of the Trust
Property, and then to the payment of the indebtedness and obligations
secured by this Deed of Trust in whatever order Beneficiary directs in its
sole and absolute discretion and without regard to the adequacy of its
security.
1.7.5 Concurrently with the recordation of this Deed of Trust,
the Assignment shall also be recorded. To the extent of any inconsistency
between this Article 1, Section 1.7 of this Deed of Trust and the
Assignment, the terms and provisions of the Assignment shall be
controlling.
1.8 Transfer of Trust Property.
1.8.1 Without the prior written consent of Beneficiary, which
consent or the denial thereof shall be in Beneficiary's sole and absolute
discretion, Trustor shall not hypothecate, pledge, grant a security
interest in or otherwise encumber (whether voluntarily or by operation of
law) all or any portion of the Trust Property (a "Prohibited Encumbrance").
1.8.2 Without the prior written consent of Beneficiary, which
consent or the denial thereof shall be in Beneficiary's sole and absolute
discretion, (i) Trustor (or any subsequent holder of an interest in the
Trust Property following a transfer to which Beneficiary consents or that
is otherwise permitted hereby (a "Subsequent Owner")) shall not sell,
assign, convey, contract to sell, lease (other than pursuant to any
existing leases of the Trust Property that have been approved by
Beneficiary (Beneficiary approves of the lease with Flex Products, Inc.
dated June 30, 1995)) or otherwise transfer all or any portion of the Trust
Property or any interest or estate therein (whether possessory or
nonpossessory), whether voluntarily or by operation of law; or (ii) there
shall occur a transfer in the aggregate of more than fifty percent (50%) of
the shares in Trustor to one person or entity and any affiliates of any
such person or entity (the occurrence of an event described above in (i) or
(ii) that occurs without Beneficiary's consent being referred to herein as
a "Prohibited Transfer"). Notwithstanding the preceding provisions of this
Section 1.8.2, Trustor may, in good faith and by appropriate proceedings,
contest any lien or encumbrance without cost or expense to Trustee or
Beneficiary, but only upon posting, and concurrently supplying to
Beneficiary a certified copy of, a statutory bond or other security
sufficient under applicable law or causing the issuance of title insurance
satisfactory to Beneficiary, fully to protect any and all of the Trust
Property encumbered by such claim of lien and otherwise sufficient in
Beneficiary's sole judgment to protect Trustee and Beneficiary against any
judgment in favor of lien claimant. If the conditions of the preceding
sentence are satisfied within twenty (20) days after Trustor receives
notice of such lien or encumbrance, such lien or encumbrance shall not be
deemed to be a Prohibited Encumbrance or a Prohibited Transfer.
1.8.3 Notwithstanding anything to the contrary contained in this
Section 1.8, Beneficiary shall consent to a one-time transfer of fee
interest in the Trust Property, provided, however, that it is established
to the satisfaction of Beneficiary in its good faith discretion that all of
the following requirements have been satisfied:
(i) not less than thirty (30) days prior to the proposed
transfer, Trustor shall have delivered to Beneficiary (A) a written request
for approval of the proposed transfer; (B) if the proposed transferee is a
limited partnership, a true and complete copy of the such limited
partnership's Agreement of Limited Partnership and Certificate of Limited
Partnership (Form LP-1), and a good standing certificate for such limited
partnership; (C) if the proposed transferee is a general partnership, a
true and complete copy of the Agreement of Partnership and the Statement of
Partnership of such partnership; (D) if the proposed transferee is a
corporation, a true and complete copy of such corporation's Articles of
Incorporation and Bylaws and a good standing certificate for such
corporation; and (E) true and complete copies of all agreements and
documentation relating to the transfer;
(ii) the proposed purchaser must be an experienced owner of
commercial real estate for properties similar to the Trust Property and
must have internal property management personnel with demonstrated
capability in the management of such properties such that the managerial
and operational skills of the proposed purchaser are as good as Trustor's
as of the date hereof and as of the date of the proposed transfer;
(iii) as of the date of the proposed transfer, the
proposed purchaser must be at least as creditworthy as Trustor as of the
date hereof and as of the date of the proposed transfer;
(iv) all documentation relating to the transfer must be good
faith satisfactory to Beneficiary;
(v) no Event of Default and no event, that with the passage
of time and/or the giving of notice would constitute such an Event of
Default, exists and no other event or condition exists that could cause the
Loan to be in jeopardy of default at the time Trustor requests approval of
the proposed transfer and at the time of the transfer;
(vi) at the time of the request for approval of the proposed
transfer, Trustor shall have paid to Beneficiary a nonrefundable transfer
privilege fee equal to one percent (1%) of the then outstanding principal
balance under the Note;
(vii) Trustor shall have obtained an endorsement to
Beneficiary's policy of title insurance, if required by Beneficiary,
insuring the continued priority, without additional exceptions other than
current real property taxes and other matters approved by Beneficiary, of
the lien of this Deed of Trust;
(viii) Trustor and the transferee shall have satisfied
all other good faith requirements of Beneficiary for providing its consent
to such transfers, including, without limitation, the execution and
delivery of an assumption agreement, a security agreement and financing
statement;
(ix) the use of the Trust Property shall remain the same
(that is, for general office and industrial purposes) after the transfer;
and
(x) Trustor shall pay all actual fees and expenses incurred
by Beneficiary or its counsel in connection with the proposed transfer,
including, without limitation, all legal, recording and title insurance
fees and expenses. Trustor acknowledges and agrees that Trustor shall be
liable to Beneficiary for such fees and expenses regardless of whether the
proposed transfer actually occurs, and such liability shall be secured by
the Deed of Trust and shall bear interest at the rate of twelve and one-
half percent (12.5%) per annum from the date incurred by Beneficiary until
paid.
The right described in this Section 1.8. shall be available only with
respect to a single transfer by the original Trustor and not with respect
to subsequent transfers. (A transfer in accordance with such one-time
right is hereinafter referred to as a "One-Time Third Party Transfer.")
For the purposes of this provision, a transfer shall not be deemed to have
occurred if, following notice or request for consent to Beneficiary, such
transfer is not completed for any reason whatsoever. The right to make a
One-Time Third Party Transfer by the original Trustor may be exercised only
with Beneficiary's prior approval of the matters that require its approval,
or as to which it is required to be satisfied, as provided above.
1.8.4 In the event of a Prohibited Transfer, then, at
Beneficiary's election in its sole and absolute discretion, upon notice to
Trustor, Beneficiary may declare the whole of the principal balance of the
Note and all accrued but unpaid interest thereon immediately due and
payable, together with a transfer privilege fee of (i) four percent (4%) of
said principal balance if such Prohibited Transfer occurs during the first
four (4) Loan Years (as defined in the Note) or (ii) the greater of (A) one
half (1/2) of the amount that would be the Prepayment Privilege Fee (as
provided in the Note) and (B) one percent (1%) of said principal balance,
if such Prohibited Transfer occurs at any time during the fifth (5th) Loan
Year through the sixth (6th) month of the fifteenth (15th) Loan Year.
Commencing with the seventh (7th) month of the fifteenth (15th) Loan Year,
there will be no transfer privilege fee.
1.8.5 Notwithstanding anything to the contrary contained in this
Section 1.8, the occurrence of (a) a Prohibited Encumbrance, or (b) a
Prohibited Transfer where (i) Trustor or any Related Party retains any
interest in the property so transferred, (ii) Trustor or any Related Party
has any agreement or understanding with the transferee of such property
with respect to the retransfer of such property to Trustor or to any
Related Party, or (iii) Trustor or any Related Party has any interest in
the transferee of such property, shall be deemed an Event of Default, and
Beneficiary shall have all of its rights and remedies in such event,
including, without limitation, the right to declare the entire unpaid
principal balance of the Note and all accrued but unpaid interest thereon
immediately due and payable, together with the prepayment privilege fee due
pursuant to the terms of the Note upon the occurrence of an Event of
Default followed by acceleration of the maturity of the Note, and to charge
interest at the rate of twelve and one-half percent (12.5%) per annum on
such sum from the date of such Prohibited Transfer or Prohibited
Encumbrance until such sum is paid in full.
1.9 Maintenance, Repair, Alteration.
1.9.1 Trustor will not commit any waste on the Trust Property or
take any actions that would invalidate or give cause for the cancellation
of any insurance carried on the Trust Property. Trustor will maintain the
Trust Property in good condition and repair. Trustor will keep the Trust
Property free from mechanics' liens or other liens or claims for liens not
expressly subordinated to the lien hereof. Notwithstanding the preceding
sentence, Trustor may, in good faith and by appropriate proceedings,
contest any lien or encumbrance without cost or expense to Trustee or
Beneficiary, but only upon posting, and concurrently supplying to
Beneficiary a certified copy of, a statutory bond or other security
sufficient under applicable law or causing the issuance of title insurance
satisfactory to Beneficiary, fully to protect any and all of the Property
encumbered by such claim of lien and otherwise sufficient in Beneficiary's
sole judgment to protect Trustee and Beneficiary against any judgment in
favor of the lien claimant. If the conditions of the preceding sentence
are satisfied within twenty (20) days after Trustor receives notice of such
lien or claim, such lien or claim shall not be deemed to be an Event of
Default hereunder. Trustor will pay when due any indebtedness that may be
secured by a lien or charge on the Trust Property or any part thereof
(other than liens for taxes and assessments, which shall be paid prior to
delinquency) and will, upon request, exhibit satisfactory evidence of the
discharge of any such liens to Beneficiary. No Improvements located on the
Trust Property may be removed, demolished or materially altered without the
prior written consent of Beneficiary. No personal property in which
Beneficiary has a security interest hereunder may be removed from the Trust
Property unless it is immediately replaced by similar property of at least
equivalent value on which Beneficiary will immediately have a valid and
perfected first lien and security interest, ranking senior in priority to
any and all other liens, security interests, encumbrances, or charges
thereon. Trustor shall complete promptly and in good and workmanlike
manner any building or buildings or any improvements now or at any time in
the process of erection upon the Property and to restore promptly in like
manner any Improvement that may be damaged or destroyed thereon. Without
Beneficiary's prior written consent, Trustor will make no material
alterations to the Trust Property except as required by law or municipal
ordinance. Trustor will suffer or permit no change in the general nature
of the occupancy or use of the Trust Property without Beneficiary's prior
written consent.
1.9.2 Without the prior written consent of Beneficiary, Trustor
will not seek, make or consent to any change in the zoning or conditions of
use of the Trust Property. Trustor will comply with and make all payments
required under the provisions of any and all laws, ordinances, regulations,
resolutions, covenants, conditions, and restrictions now or hereafter
affecting the Trust Property or any part thereof or the business or the
activity conducted thereon. Trustor will comply with all existing and
future requirements of all governmental authorities having jurisdiction
over the Trust Property or the use thereof and will not commit, suffer,
permit, or allow any act to be done in and upon the Trust Property in
violation of any existing or future law, ordinance, resolution or
regulation. Trustor will comply with all restrictions of record with
respect to the Trust Property or use thereof. Notwithstanding the forgoing
provisions of this Section 1.9.2, Trustor shall have the right to contest
in good faith any laws, ordinances, regulations, resolutions, covenants,
conditions, and restrictions any time affecting the Trust Property,
provided that such contest is diligently prosecuted and provided further
that during the course of such contest Trustor furnishes Beneficiary with
whatever assurances and/or further security that Beneficiary requires in
good faith that its security will not be impaired by virtue of the contest.
1.9.3 Beneficiary, at any time, is authorized to engage an
independent inspector to survey the adequacy of the maintenance of the
Trust Property and/or to conduct an environmental audit of the Trust
Property to determine whether the Trust Property is in compliance with
and/or whether any conditions exist that may cause the Trust Property to be
in violation of any "Environmental Laws" (as defined hereinafter). The
scope and type of a survey or environmental audit shall be in Beneficiary's
sole and absolute discretion, and Trustor acknowledges that an
environmental audit may include, without limitation, air, soil and ground
water sampling. Provided that an Event of Default has occurred and is
continuing when the work on any such survey or audit commenced or
Beneficiary has a good faith belief that the Property may be in violation
of Environmental Laws, Trustor shall pay the cost incurred by Beneficiary
for any such survey or environmental audit (and interest thereon at the
rate of twelve and one-half percent (12.5%) per annum from the date
incurred by Beneficiary until repayment by Trustor), and all such costs
with interest thereon shall be secured by this Deed of Trust. If the Trust
Property is found to be in violation of any Environmental Laws or any
conditions exist that may make the Trust Property be in violation of any
Environmental Laws or if the maintenance of the Trust Property is found to
be in violation of this Deed of Trust, such inspector shall make
recommendations to, and determine the estimated cost to, bring the Trust
Property into compliance with such laws, correct such conditions or make
such repairs and replacements necessary to comply with this Deed of Trust.
In such event Trustor shall commence implementation of such recommendations
at its own cost and expense within thirty (30) days, and shall thereafter
with diligence, complete such recommendations and Trustor shall provide
Beneficiary with bonds or other assurances required by Beneficiary in its
sole and absolute discretion that said recommendations will be
satisfactorily completed. Trustor acknowledges that any survey or
environmental audit shall be conducted solely for the benefit of
Beneficiary and that in no manner should the completion of such a survey or
environmental audit be deemed to be a representation by Beneficiary as to
the Property's compliance with any Environmental Laws or as to the adequacy
of the maintenance of the Trust Property.
1.10 Books and Records.
1.10.1 Trustor will keep adequate books and records of account
of the Trust Property and of Trustor's own financial affairs sufficient to
permit the preparation of financial statements therefrom in accordance with
generally accepted accounting principles. Beneficiary and its agents will
have the right to examine, copy and audit the records and books of account
of the Trust Property at all reasonable times. If Trustor shall be in
default under this Deed of Trust or under any other Security Documents,
Trustor shall deliver to Beneficiary, upon demand, audited financial
statements and profit-and-loss statements for the Trust Property prepared
by an independent certified public accountant in accordance with generally
accepted accounting principles consistently applied. In addition to the
foregoing, Trustor shall, within one hundred twenty (120) days of the first
day of each calendar year, furnish to Beneficiary financial statements of
Trustor statements of income and expenses of the Trust Property for the
preceding calendar year, a balance sheet of the Trust Property as of the
first day of the calendar year, and a current rent roll (if any part of the
Trust Property is then subject to lease), each shall be certified as to
truth and accuracy by Trustor and shall be satisfactory in form and
substance to Beneficiary in its good faith and absolute discretion and
disclose a solvent condition.
1.10.2 Beneficiary, or its agents, representatives or workmen,
are authorized to enter at any reasonable time (and upon reasonable advance
notice to Trustor) upon or in any part of the Trust Property for the
purpose of inspecting the Trust Property and for the purpose of performing
any of the acts it is authorized to perform under the terms of this Deed of
Trust or any other Security Documents or any other agreement between the
parties.
1.10.3 Trustor will promptly furnish, upon Beneficiary's
request, a duly acknowledged written statement setting forth all amounts
due on the indebtedness secured by this Deed of Trust and stating that no
offsets or defenses exist, and containing such other matters as Beneficiary
may reasonably require.
1.10.4 Trustor hereby represents, warrants and certifies that
all financial statements, information and certificates previously or
contemporaneously delivered to Beneficiary concerning Trustor, and/or the
Trust Property are true, complete and correct in all material respects.
1.11 Management of the Trust Property. Trustor will provide for
competent management of the Trust Property. Any third party manager of the
Trust Property and their management contracts (including any modification,
extension or renewal thereof) shall be approved by Beneficiary in its sole
and absolute discretion. All rights of any person or entity to
compensation or fees pursuant to any such management contract shall be
subordinate to Beneficiary's rights under this Deed of Trust and any other
Security Documents. Any such management contracts shall be terminable upon
the occurrence of an Event of Default, at the option of Beneficiary in
Beneficiary's sole and absolute discretion, upon thirty (30) days' written
notice to the manager thereunder.
1.12 Actions Affecting Trust Property.
1.12.1 Trustor will, at its own expense, appear in and defend
any action or proceeding that would affect Beneficiary's security or the
rights or powers of Beneficiary or Trustee or that purports to affect any
of the Trust Property. If Trustor fails to perform any of its covenants or
agreements contained in this Deed of Trust or in any of the Security
Documents, or if any action or proceeding of any kind (including, but not
limited to any condemnation proceeding or any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding) is commenced
or if there occurs any other event that might affect Beneficiary's,
Trustor's or Trustee's interest in the Trust Property or Beneficiary's
right to enforce its security, then Beneficiary and/or Trustee may, without
notice, any right to such prior notice which is hereby expressly waived, at
their option and without obligation to do so, make any appearances,
disburse any sums and take any actions as may be necessary or desirable to
protect the Trust Property, to protect or enforce the security of this Deed
of Trust or to remedy the failure of Trustor to perform its covenants and
agreements (without, however, waiving any default of Trustor). Trustor
agrees to pay all out-of-pocket expenses of Beneficiary and Trustee thus
incurred (including, without limitation, all actual attorneys' fees and
costs). Any sums so disbursed by Beneficiary or Trustee (and interest
thereon) will be additional indebtedness of Trustor secured by this Deed of
Trust, will bear interest from the date incurred by Beneficiary or Trustee
until paid by Trustor at the rate of twelve and one-half percent (12.5%)
per annum, and will be payable by Trustor upon demand. This paragraph will
not be construed to require Beneficiary or Trustee to incur any expenses,
make any appearances, or take any actions.
1.12.2 If Beneficiary is made or becomes a party to any
litigation concerning this Deed of Trust, the other Security Documents or
the Trust Property or any part thereof or interest therein, or the
occupancy thereof by Trustor, then Trustor shall indemnify, defend and hold
Beneficiary harmless from all liability, claims, demands, obligations,
losses, costs and expenses, incurred by reason of said litigation,
including, without limitation, all actual attorneys' fees and expenses
incurred by Beneficiary in such litigation, whether or not any such
litigation is prosecuted to judgment. If Beneficiary commences an action
against Trustor or appears in any bankruptcy, insolvency, reorganization or
other proceeding for debtor relief to enforce any of the terms hereof or
because of the breach by Trustor of any of the terms hereof, or for the
recovery of any sum secured hereby, Trustor shall pay to Beneficiary, upon
demand, all actual attorneys' fees and expenses, and the right to such
attorneys' fees and expenses shall be deemed to have accrued on the
commencement of such action, shall be enforceable whether or not such
action is prosecuted to judgment, will be additional indebtedness of
Trustor secured by this Deed of Trust and will bear interest at the rate of
twelve and one-half percent (12.5%) per annum from the date incurred until
paid in full.
1.12.3 In the event Trustor requests (i) any changes to this
Deed of Trust or any other documents relating to the Loan, (ii) releases of
any part of the Trust Property or any additional property upon which a
security interest has been granted to secure the indebtedness secured
hereby, or (iii) any waivers by Beneficiary, then Trustor shall reimburse
Beneficiary for all resulting actual attorneys' fees and expenses incurred
by Beneficiary. The need for legal review and preparation of any
documentation shall be in the sole discretion of Beneficiary.
1.13 Security Agreement and Fixture Filing.
1.13.1 Trustor hereby grants to Beneficiary a security interest
in the Personal Property to secure all of Trustor's obligations to
Beneficiary contained in this Deed of Trust and any other Security
Documents. This Deed of Trust constitutes a Security Agreement with
respect to all personal property in which Beneficiary is granted a security
interest hereunder, and Beneficiary shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
California (the "Uniform Commercial Code") as well as all other rights and
remedies available at law or in equity.
1.13.2 Trustor will execute, acknowledge, deliver and cause to
be recorded or filed, in the manner and place required by any present or
future law, any instrument that may be requested by Beneficiary to publish
notice or protect, perfect, preserve, continue, extend, or maintain the
security interest and lien, and the priority thereof, of this Deed of Trust
or the interest of Beneficiary in the Trust Property, including, without
limitation by reason of specification, deeds of trust, security agreements,
financing statements, continuation statements, and instruments of similar
character, and Trustor shall pay or cause to be paid (i) all filing and
recording taxes and fees incident to each such filing or recording, (ii)
all expenses, including without limitation, actual attorneys' fees and
costs, incurred by Beneficiary in connection with the preparation,
execution, and acknowledgement of all such instruments, and (iii) all
federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments, and charges arising out of or in connection with the
execution and delivery of such instruments. Trustor hereby irrevocably
constitutes and appoints Beneficiary the attorney-in-fact of Trustor, to
execute, deliver and, if appropriate, to file with the appropriate filing
officer or office any such instruments if Trustor should fail to do so.
1.13.3 Upon the occurrence and during the continuance of any
Event of Default, Beneficiary shall have the right to cause any of the
Trust Property that is Personal Property and subject to the security
interest of Beneficiary hereunder to be sold at any one or more public or
private sales as permitted by applicable law, and Beneficiary shall further
have all other rights and remedies, whether at law, in equity, or by
statute, as are available to secured creditors under applicable law,
specifically including, without limitation, the right to proceed as to both
the real property and the personal property contained within the Trust
Property as permitted by Uniform Commercial Code Section 9501(4). Any such
disposition may be conducted by an employee or agent of Beneficiary or
Trustee. Any person, including both Trustee and Beneficiary, shall be
eligible to purchase any part or all of such property at any such
disposition.
1.13.4 Expenses of retaking, holding, preparing for sale,
selling or the like shall be borne by Trustor and shall include, without
limitation, Beneficiary's and Trustee's actual attorneys' fees and legal
expenses. Trustor, upon demand of Beneficiary, shall assemble such
personal property and make it available to Beneficiary at such place as
shall be required by Beneficiary in its sole discretion. Beneficiary shall
give Trustor at least five (5) days' prior written notice of the time and
place of any public sale or other disposition of such personal property or
of the time of or after which any private sale or any other intended
disposition is to be made, and if such notice is sent to Trustor, at the
same address as is provided for the mailing of notices herein, it is hereby
deemed that such notice shall be and is reasonable notice to Trustor.
1.13.5 Trustor maintains a place of business in the State of
California, as set forth as the address of Trustor provided herein under
"Requests for Notices" below, and Trustor will immediately notify
Beneficiary in writing of any change in its place of business.
1.13.6 Portions of the Trust Property are goods that are or are
to become fixtures relating to the Property, and Trustor covenants and
agrees that the filing of this Deed of Trust in the real estate records of
the county where the Trust Property is located shall also operate from the
time of filing as a fixture filing in accordance with Sections 9313 and
9402(6) of the Uniform Commercial Code.
1.14 Payments. All sums payable by Trustor hereunder or secured
hereby shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment,
diminution or reduction, and the obligations and liabilities of Trustor
hereunder shall in no way be released, discharged or otherwise affected
(except as expressly provided herein or in the Note) by reason of: (i) any
damage to or destruction of or any condemnation or similar taking of the
Trust Property or any part thereof; (ii) any restriction or prevention of
or interference with any use of the Trust Property or any part thereof;
(iii) any defect in title to or encumbrance on the Property or the
Improvements or any part thereof or any eviction from the Property or any
part thereof by title paramount or otherwise; (iv) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to Beneficiary, or any action
taken with respect to this Deed of Trust by any trustee or receiver of
Beneficiary, or by any court, in any such proceeding; (v) any claim that
Trustor has or might have against Beneficiary; (vi) any default or failure
on the part of Beneficiary to perform or comply with any of the terms
hereof or of any other agreement with Trustor; or (vii) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, and
whether or not Trustor shall have notice or knowledge of any of the
foregoing. Trustor waives all rights now or hereafter conferred by statute
or otherwise to any abatement, suspension, deferment, diminution or
reduction of any sum secured hereby and payable by Trustor.
1.15 Condemnation.
1.15.1 Should the Trust Property, or any part thereof or
interest therein, be taken or damaged by reason of any public improvement
or condemnation proceeding, or in any other manner or should Trustor
receive any notice or other information regarding such proceeding, Trustor
shall give prompt written notice thereof to Beneficiary.
1.15.2 Beneficiary shall be entitled to all compensation, awards
and other payments or relief therefor, and shall be entitled at its option
to commence, appear in and prosecute in its own name any action or
proceedings. Beneficiary shall also be entitled to make any compromise or
settlement in connection with such taking or damage. All such
compensation, awards, damages, rights of action and proceeds awarded to
Trustor (the "Proceeds") are hereby assigned to and shall be paid to
Beneficiary, and Trustor agrees to execute such further assignments of the
Proceeds as Beneficiary or Trustee may require.
1.15.3 Subject to the terms and conditions of Section 1.15.4
below, in the event any portion of the Trust Property is so taken or
damaged, Beneficiary shall have the option, in its sole and absolute
discretion, to apply all such Proceeds, after deducting therefrom all costs
and expenses (whether incurred with or without suit), including actual
attorneys' fees and costs, incurred by it in connection with such Proceeds,
to any indebtedness (whether due or not) secured hereby and in such order
as Beneficiary may determine, or to require Trustor to restore and rebuild
and to apply all such Proceeds, after such deductions, to the restoration
of the Trust Property. Such application or release shall not cure or waive
any default or notice of default hereunder or invalidate any act done
pursuant to such notice. Notwithstanding the foregoing, if (i) no Event of
Default exists and no event exists that, with the passage of time or the
giving of notice or both, would constitute such an Event of Default; (ii)
Beneficiary has received evidence, satisfactory to Beneficiary in its good
faith judgment, that there are sufficient funds available and/or committed,
including such condemnation proceeds, to effectuate such restoration and to
cover the expenses of operating and maintaining the Trust Property and
servicing the debt secured hereby and any other debt secured by the Trust
Property until the Trust Property is generating sufficient revenues to
cover such expenses and debt service; (iii) in Beneficiary's judgment,
Beneficiary's security will not be materially impaired by the application
of the condemnation proceeds to the restoration of the Improvements;
(iv) Trustor has delivered to Beneficiary financial plans and projections
from which Beneficiary, in its good faith judgment, determines that after
the completion of such restoration the Trust Property will be economically
viable; (v) Beneficiary has approved the plans and specifications to be
used in connection with such restoration; and (vi) the restoration will
return the Improvements to substantially the same condition, character and
utility that existed immediately prior to such taking; then the Proceeds,
after the deductions provided for above, shall be used to pay Trustor for
the cost of the rebuilding or restoring of the buildings or improvements.
1.15.4 In the event Trustor is required by Beneficiary's option
or otherwise entitled to rebuild or restore as aforesaid, the Proceeds,
after said deductions, shall be paid out in the same manner as provided in
Section 1.4.5 hereof for the payment of insurance proceeds toward the cost
of rebuilding or restoration. If the amount of such Proceeds is
insufficient to cover the cost of rebuilding or restoration, Trustor shall
pay such cost in excess of the Proceeds before being entitled to any
payment out of said Proceeds.
1.15.5 Any surplus that may remain out of said Proceeds after
payment of such cost of rebuilding or restoration shall, at the option of
Beneficiary, be applied on account of the indebtedness (whether then due or
not) secured hereby in such order as Beneficiary may determine or be paid
to any other party entitled thereto. In applying any Proceeds on account
of the indebtedness secured hereby, a prepayment privilege fee shall be
assessed based on the Privilege Rate as defined in the Note. To the extent
that any applicable prepayment fee results from the application of the
award to the prepayment of the indebtedness secured hereby, such amount
shall be paid by the condemning authority as part of the award and not by
Trustor as an amount in addition to the award, and if no such award for
prepayment fees is granted, Trustor shall have no liability for any such
fees (anything to the Note to the contrary notwithstanding).
1.16 Additional Security. In the event Beneficiary at any time holds
additional security for any of the obligations secured hereby, it may
enforce the sale thereof or otherwise realize upon the same, at its option,
either before or concurrently herewith or after a sale is made hereunder.
1.17 Trustee Actions. At any time, or from time to time, without
liability therefor and without notice to Trustor, upon written request of
Beneficiary and presentation of this Deed of Trust and the Note secured
hereby for endorsement, and without affecting the personal liability of any
person for payment of the indebtedness secured hereby or the effect of this
Deed of Trust upon the remainder of said Trust Property, Trustee may (i)
reconvey all or any part of said Trust Property, (ii) consent in writing to
the making of any map or plan thereof, (iii) join in granting any easement
thereon, or (iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof or other agreement affecting this
Deed of Trust.
1.18 Release or Discharge. Without affecting the liability of any
other person liable for the payment of any obligation herein mentioned, and
without affecting the lien or charge of this Deed of Trust upon any portion
of the Trust Property not then or theretofore released as security for the
full amount of all unpaid obligations, Beneficiary may, from time to time
and without notice (i) release any person so liable, (ii) extend the
maturity or alter any of the terms of any such obligation, (iii) grant
other indulgences, (iv) release or reconvey, or cause to be released or
reconveyed at any time at Beneficiary's option any parcel, portion or all
of the Trust Property, (v) take or release any other or additional
security for any obligation herein mentioned, or (vi) make compositions or
other arrangements with debtors in relation thereto.
1.19 Taxes. If, by the laws of the United States of America, or of
any state having jurisdiction over Trustor, any tax is due or becomes due
in respect of the issuance of this Deed of Trust or any other Security
Documents, or the recording of all or any of the foregoing or of any
security interest created thereby, Trustor will pay such tax in the manner
required by such law. Trustor shall also hold harmless and indemnify
Trustee or Beneficiary against any liability incurred by reason of the
imposition of any tax on the issuance of this Deed of Trust or any other
Security Documents, or on the recording of this Deed of Trust or any other
Security Documents or of any security interest created hereby or thereby.
1.20 Regulated Substances.
1.20.1 As used herein, "Regulated Substance" means any
substance, material, or matter including, without limitation, medical waste
that may give rise to liability under any Environmental Laws (as defined
herein). As used herein, "Environmental Laws" means (a) any local, state
or federal laws, rules, ordinances or regulations, either in existence as
of the date hereof, or enacted or promulgated after the date of this Deed
of Trust, that concern the existence, management, control, discharge,
treatment, containment, and/or removal of substances or materials that are
or may become a threat to public health or the environment; or (b) any
common law theory based on nuisance, trespass, negligence, strict
liability, aiding and abetting or other tortious conduct.
1.20.2 Trustor represents and warrants that (i) there has been
no deposit, storage, seepage or filtration of any Regulated Substances
(including, without limitation, asbestos, oil, petroleum or chemical
liquids or solids, liquids or gaseous products) at, upon, under or within
the Trust Property or any contiguous real estate in violation of any
Environmental Laws, and (ii) Trustor has not caused or permitted to occur,
and shall not permit to exist, any condition that may cause a discharge of
any Regulated Substances at, upon, under or within the Property or on any
contiguous real estate.
1.20.3 Trustor further represents and warrants that (i) neither
Trustor nor any other party has been, is or will be involved in operations
at or near the Trust Property, which operations could lead to (A) the
imposition of liability under the Environmental Laws on Trustor, or on any
subsequent or former owner of the Trust Property, or (B) the creation of a
lien on the Trust Property under the Environmental Laws or under any
similar laws or regulations; and (ii) Trustor has not permitted, and
Trustor will not permit, any tenant or occupant of the Property to engage
in any activity that could impose liability under the Environmental Laws on
such tenant or occupant, on Trustor or on any other owner of any of the
Trust Property.
1.20.4 Trustor and the Trust Property shall comply strictly and
in all respects with the requirements of the Environmental Laws and related
regulations and with all similar laws and regulations and shall notify
Beneficiary immediately in the event of any discharge or discovery of any
Regulated Substance at, upon, under or within the Trust Property of which
Trustor has notice. Trustor shall promptly forward to Beneficiary copies
of all orders, notices, permits, applications or other communications and
reports of which Trustor has notice in connection with any discharge or the
presence of any Regulated Substance or any other matters relating to the
Environmental Laws or any similar laws or regulations, as they may affect
the Trust Property.
1.21 Forfeiture. Trustor hereby represents and warrants to
Beneficiary that there has not been committed by Trustor or any other
person involved with the Trust Property any act or omission affording the
federal government or any state or local government the right of forfeiture
as against the Trust Property or any part thereof or any monies paid in
performance of Trustor's obligations under this Deed of Trust and the other
Security Documents, and each agreement and/or obligation of Trustor
incorporated by reference therein or herein, and any modifications or
amendments thereof. Trustor hereby covenants and agrees not to commit,
permit or suffer to exist any act or omission affording such right of
forfeiture. In furtherance thereof, Trustor hereby indemnifies Beneficiary
and agrees to defend and hold Beneficiary harmless from and against any
loss, damage or injury by reason of the breach of the covenants and
agreements or the warranties and representations set forth in this Section
1.21. Without limiting the generality of the foregoing, the filing of
formal charges or the commencement of proceedings against Trustor,
Beneficiary or all or any part of the Trust Property under any federal or
state law for which a potential result is forfeiture of (a) the Trust
Property or any part thereof or (b) any monies paid in performance of
Trustor's obligations under this Deed of Trust or the other Security
Documents shall, at the election of Beneficiary, constitute an Event of
Default hereunder without notice or opportunity to cure.
1.22 Continuing Obligations. Trustor agrees to fully and faithfully
satisfy and perform the obligations of Trustor contained in this Deed of
Trust and the other Security Documents, and each agreement and/or
obligation of Trustor incorporated by reference therein or herein, and any
modifications or amendments thereof. All representations, agreements,
obligations, covenants and warranties of Trustor contained in any of the
Security Documents incorporated by reference therein, or contained herein
or in any other Security Documents, or otherwise made by Trustor to or with
Beneficiary at any time whether or not contained in any of the foregoing
documents, shall survive the funding of the Loan and shall remain
continuing obligations, agreements, covenants, warranties and
representations of Trustor during any time when any portion of the
obligations secured by this Deed of Trust remain outstanding (it being
understood, however, that statements in any representation or warranty are
represented or warranted to be true and correct only as of the date made
except for representations or warranties pertaining to future conduct,
which such representations and warranties pertaining to the future shall be
deemed to be covenants for purposes of Section 2.1 hereof).
1.23 Americans With Disabilities Act. Trustor hereby represents to
Beneficiary that the Trust Property is in full compliance with the
Americans With Disabilities Act (the "ADA") to the extent that the ADA
applies to the Trust Property. Trustor hereby covenants and agrees not to
permit, commit or suffer to exist any condition which might result in a
violation of the ADA, and if any such condition should occur to immediately
remedy any such condition. Trustor hereby indemnifies and agrees to defend
and hold Beneficiary harmless from and against any loss, damage, injury,
claim, liability, cost or expense (including actual attorneys' fees and
expenses) by reason of the breach of the covenants, agreements and
indemnities set forth in this Section 1.23.
ARTICLE 2
DEFAULT
2.1 Events of Default. Trustor will be in default under this Deed
of Trust if any of the following events should occur, any one or all of
which events shall be an event of default ("Event of Default") hereunder:
(a) Trustor fails to make any payment of principal and/or
interest under the Note within ten (10) days after the date when due;
(b) There occurs either a Prohibited Encumbrance or a Prohibited
Transfer;
(c) Trustor fails to perform any other covenant or obligation or
breaches any other agreements or warranties contained in this Deed of Trust
or incorporated into any other Security Document and such failure or breach
(and the consequences that the delay in such performance may have caused)
are not cured and/or remedied within fifteen (15) days after notice of such
failure or breach is given to Trustor from Beneficiary; provided, however,
if such failure or breach cannot, in the sole and absolute discretion of
Beneficiary exercised in good faith, reasonably be cured and/or remediated
within said fifteen (15) day period, Trustor shall have an additional sixty
(60) days to cure such failure or breach so long as Trustor is diligently
pursuing such cure and/or remediation; provided, further, that in no event
shall any cure and/or remediation period exceed seventy five (75) days.
Notwithstanding the foregoing, any such failure or breach shall be deemed
an Event of Default upon the occurrence thereof (for which no notice shall
be required and no cure period shall be available to Trustor) if (a) such
failure or breach is the third (3rd) default to occur within any period of
twelve (12) consecutive months and notice of the first two (2) defaults has
been sent to Trustor, regardless of whether the same or different defaults
are involved and notwithstanding that Trustor may have cured within any
applicable cure period any previous defaults occurring within such twelve
(12) month period or (b) in the reasonable discretion of Beneficiary, such
failure or breach constitutes or creates a clear and present emergency or
threat to the Trust Property;
(d) Any representation by Trustor or disclosure or certification
made to the Beneficiary by or on behalf of Trustor proves to be false or
misleading in any material respect on the date as of which made, whether or
not that representation, disclosure or certification appears in this Deed
of Trust or in any other Security Documents;
(e) The filing of any claim or lien or notice to withhold
against the Trust Property or any part thereof or of any interest or right
made appurtenant thereto and the continued maintenance of said claim or
lien or notice to withhold for a period of thirty (30) days after discovery
thereof without discharge or satisfaction thereof or provision therefor
satisfactory to Beneficiary in its good faith discretion;
(f) Any failure or breach of any covenant or condition on
Trustor's part to be performed under any other loan agreement, note, deed
of trust or assignment applicable to the Trust Property and such failure or
breach continues for twenty (20) days after notice from Beneficiary;
(g) Any of the following:
(1) A general assignment by Trustor or, if Trustor is a
partnership, by any of the general partners of Trustor, or if Trustor is a
corporation, by any of the shareholders that control Trustor, for the
benefit of creditors;
(2) The filing of a voluntary petition by Trustor or, if
Trustor is a partnership, by any of the general partners of Trustor, or if
Trustor is a corporation, by any of the shareholders that control Trustor,
in bankruptcy or any other petition under any section or chapter of the
Bankruptcy Code or any similar law, whether state, federal, foreign,
provincial or otherwise, for the relief of debtors;
(3) The filing of an involuntary petition or any other
petition under any section or chapter of the Bankruptcy Code or any similar
law, whether state, federal, foreign, provincial or otherwise, for the
relief of debtors against Trustor or any of the general partners of Trustor
if Trustor is a partnership, or any of the shareholders that control
Trustor if Trustor is a corporation, by the creditors of any of the
aforementioned, said petition remaining undischarged or the party subject
thereof failing to obtain vacation thereof for a period of sixty (60) days;
(4) The appointment by any court of a receiver to take
possession of the Trust Property (or any portion thereof) or of any asset
or assets of Trustor or any of the general partners of Trustor if Trustor
is a partnership or any of the shareholders that control Trustor if Trustor
is a corporation, such asset or assets having a value in excess of One
Hundred Thousand Dollars ($100,000) and said receivership remaining
undischarged for a period of sixty (60) days;
(5) Attachment, execution or judicial seizure of the Trust
Property (or any portion thereof) or of all or any part of the assets of
Trustor or any of the general partners of Trustor if Trustor is a
partnership, or any of the shareholders that control Trustor if Trustor is
a corporation, such attachment, execution or other seizure remaining
undismissed or undischarged for a period of sixty (60) days after the levy
thereof;
(h) Trustor fails to pay, with respect to the Trust Property,
any installment of special assessments, or any installment of general real
estate taxes, or any installment of personal property taxes, or any
insurance renewal premiums, prior to delinquency, unless the same is being
contested in good faith pursuant to the last sentence of section 1.6.1
hereto; or
(i) Any default by Trustor under any leases of the Trust
Property or any termination, modification, surrender, merger or other
change of any leases of the Trust Property (or any portion thereof),
without the prior written consent of Beneficiary or as otherwise permitted
under any Security Document.
ARTICLE 3
REMEDIES
3.1 Remedies Upon Default. If Trustor is in default, Beneficiary
may, at its sole option, without notice to Trustor, which notice is hereby
expressly waived, do any one or more of the following:
(a) Declare any or all indebtedness secured by this Deed of
Trust to be due and payable immediately (in which event, all such
indebtedness shall thereafter bear interest at the rate of twelve and one-
half percent (12.5%) per annum until paid);
(b) Enter into the Trust Property, in person, by agent or by
court- appointed receiver; take any and all steps that may be desirable in
Beneficiary's judgment to preserve and enhance the value, marketability or
rentability of the Trust Property; complete any unfinished development;
manage and operate the Trust Property; and apply any rents, additional
rents, royalties, income or profits collected against the indebtedness
secured by this Deed of Trust without in any way curing or waiving any
default of Trustor;
(c) Bring a court action to foreclose this Deed of Trust or to
enforce its provisions or any of the indebtedness or obligations secured by
this Deed of Trust;
(d) Cause any or all of the Trust Property to be sold under the
power of sale granted hereby (pursuant to California Civil Code Section
2924 et seq. and/or any other provision of applicable law) in any manner
permitted by applicable law; and
(e) Exercise any other right or remedy available under law or in
equity, specifically including, without limitation, any or all of the
remedies available to a secured party under the Uniform Commercial Code as
enacted in California as respects personal property subject to any security
interest granted hereunder.
Nothing herein contained shall be construed as constituting
Beneficiary a "mortgagee-in-possession" in the absence of the taking of
actual possession of the Property by Beneficiary pursuant to the terms
hereof. In the exercise of the powers herein granted Beneficiary, no
liability shall be asserted or enforced against Beneficiary, all such
liability being expressly waived and released by Trustor.
3.2 Foreclosure by Power of Sale. For any sale under the power of
sale granted by this Deed of Trust, Trustee shall record and give all
notices required by law and then, upon the expiration of such time as is
required by law, may sell the Trust Property upon any terms and conditions
specified by Beneficiary and permitted by applicable law. Trustee may
postpone any sale by public announcement at the time and place noticed for
the sale. If the Trust Property consists of several lots or parcels,
Beneficiary in its sole and absolute discretion may designate their order
of sale or may elect to sell all of them as an entirety, whether or not
Trustor objects. Any person, including Trustee and Beneficiary, may
purchase at any sale. Upon any sale, Trustee will execute and deliver to
the purchaser or purchasers a deed or deeds conveying the property sold,
but without any covenant or warranty, express or implied, and the recitals
in the deed or deeds of any facts affecting the regularity or validity of
the sale will be conclusive against all persons.
3.3 Proceeds of Foreclosure Sale. The proceeds of any sale under
this Deed of Trust will be applied in the following manner:
FIRST: Payment of the costs and expenses of the sale, including
but not limited to Trustee's actual fees, actual attorneys' fees and costs
for disbursements, title charges, transfer taxes, the cost of surveys,
engineering reports, appraisals, and environmental audits of the Trust
Property, all expenses, liabilities and advances of Trustee, as well as all
allowances, costs and fees provided by law, together with interest thereon
at the maximum rate of interest permitted by applicable law on all advances
made by Trustee;
SECOND: Payment of all sums expended by Beneficiary under the
terms of this Deed of Trust and not yet repaid, together with interest
thereon at the rate of twelve and one-half percent (12.5%) per annum from
the date incurred until paid;
THIRD: Payment of the indebtedness and obligations of Trustor
secured by this Deed of Trust in any order that Beneficiary may choose in
its sole and absolute discretion; and
FOURTH: The remainder, if any, to the person or persons legally
entitled to it.
3.4 Marshalling. Trustor waives all rights to direct the order in
which any of the Trust Property will be sold in the event of any sale under
this Deed of Trust, and also any right to have any of the Trust Property
marshalled upon any sale.
3.5 Remedies are Cumulative. All remedies contained in this Deed of
Trust are cumulative, and Beneficiary shall also have all other remedies
provided by law or in any other agreement between Trustor and Beneficiary.
No delay or failure by Beneficiary to exercise any right or remedy under
this Deed of Trust will be construed to be a waiver of that right or remedy
or of any default by Trustor. Beneficiary may exercise any one or more of
its rights and remedies at its option without regard to the adequacy of its
security.
3.6 Fair Market Value. In consideration of the limitation on
personal liability as provided in the Note, Trustor agrees that to the
extent Trustor is entitled to present competent evidence of the fair market
value of the Trust Property as of the date of foreclosure or sale under
this Deed of Trust or in connection with a bankruptcy proceeding affecting
Trustor and/or the Trust Property, the following shall be considered
competent evidence for the fact finder's determination of the fair market
value of the Trust Property as of the date of the sale:
(i) the Trust Property shall be valued in an "as is" condition as of
the date of the sale, without any assumption or expectation that the
Trust Property will be repaired or improved in any manner before a
resale of the Trust Property after sale;
(ii) the valuation shall be based upon an assumption that the
purchaser desires a prompt resale of the Trust Property for cash
promptly (but no later than twelve (12) months) following the sale;
(iii) all expenses to be incurred when the purchaser at the sale
resells the Trust Property, including reasonable closing costs
customarily borne by the seller in a commercial real estate
transaction, should be taken into account in such valuation,
including, without limitation, brokerage commissions, title insurance,
a survey of the Trust Property, tax prorations, attorneys' fees, and
marketing costs;
(iv) the gross fair market value of the Trust Property shall be
further discounted to account for any estimated holding costs
associated with maintaining the Trust Property pending sale,
including, without limitation, utilities expenses, property management
fees, taxes and assessments, and other maintenance expenses; and
(v) any expert opinion testimony given or considered in connection
with a determination of the fair market value of the Trust Property
must be given by persons having at least five (5) years experience in
appraising similarly improved property in the vicinity where the Trust
Property is located and being actively engaged therein at the time of
such testimony.
ARTICLE 4
MISCELLANEOUS
4.1 Severability. The invalidity or unenforceability of any one or
more provisions of this Deed of Trust will in no way affect any other
provision.
4.2 Beneficiary Statements. Trustor agrees to pay Beneficiary a
reasonable charge, not to exceed the maximum allowed by law, for giving any
statement of the status of the obligations secured by this Deed of Trust.
4.3 Notices. All notices given under this Deed of Trust must be in
writing and will be effectively served upon personal delivery or, if
mailed, no later than three (3) business days mailing by United States
certified mail, postage prepaid, return receipt requested, sent to the
following addresses:
"Beneficiary": Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Director of Investments
With copies to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Law Department
and sent to Trustor at its address appearing on the signature page hereof.
Such addresses may be changed by written notice. However, the service of
any notice of default or notice of sale under this Deed of Trust as
required by law will be effective on the date of recordation, and will be
effective if served upon Trustor at its address appearing below.
4.4 Reconveyance. Upon the payment and performance in full of all
sums and obligations secured by this Deed of Trust, Beneficiary agrees to
request Trustee to reconvey the Trust Property, and upon payment of its
fees and all other sums owing to it under this Deed of Trust, Trustee will
reconvey the Trust Property without warranty to the person or persons
legally entitled to it. Such person or persons must pay all costs and
expenses in connection therewith, including all costs of recordation. The
recitals in the reconveyance of any facts will be conclusive on all
persons. The grantee in the reconveyance may be described as "the person
or persons legally entitled thereto."
4.5 Statutes of Limitations. Trustor waives all present and future
statutes of limitations as a defense to any action to enforce the
provisions of this Deed of Trust or to collect any indebtedness secured by
this Deed of Trust to the fullest extent permitted by law.
4.6 Trustor/Beneficiary Defined. The term "Trustor" includes both
the original Trustor and any subsequent owner or owners of any of the Trust
Property, and the term "Beneficiary" includes the original Beneficiary and
also any future owner or holder, including pledgees and participants, of
the Note or any interest therein.
4.7 Construction. This Deed of Trust and the other Security
Documents shall be construed without regard to any presumption or rule
requiring construction against the party causing such instruments to be
drafted. All terms and words used in this Deed of Trust, whether singular
or plural and regardless of the gender thereof, shall be deemed to include
any other number and any other gender as the context may require.
4.8 Captions. The captions and headings of the articles and sections
of this Deed of Trust are for convenience only and are not to be used in
construing this Deed of Trust.
4.9 Amendment. Neither this Deed of Trust nor any term, covenant, or
condition contained herein may be amended, modified, or terminated, except
by an agreement in writing, signed by the party charged therewith.
4.10 Successors and Assigns. The terms of this Deed of Trust will
bind the legal representatives, successors, heirs, legatees, devisees,
assigns, conservators, guardians, beneficiaries, or administrators of
Trustor and Beneficiary and the successors in trust of Trustee. This
provision shall not limit or restrict the effect of the transfer
restrictions contained herein.
4.11 Substitution of Trustee. Beneficiary may remove Trustee or any
successor Trustee at any time or times and appoint a successor Trustee by
recording a written substitution in the county where the real property
covered by this Deed of Trust is located, or in any other manner permitted
by law. Upon that appointment, all of the powers, rights and authority of
Trustee will immediately become vested in its successor.
4.12 Waivers.
4.12.1 To the fullest extent permitted by law, Trustor waives
the benefit of all laws now existing or that hereafter may be enacted
providing for (i) any appraisement before sale of any portion of the Trust
Property and (ii) the benefit of all laws now existing or that may be
hereafter enacted in any way extending the time for the enforcement or the
collection of the Note or the debt evidenced thereby or creating or
extending a period of redemption from any sale made in collecting said
debt. To the fullest extent Trustor may do so, Trustor agrees that Trustor
will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, extension or redemption, and Trustor, for
Trustor, Trustor's representatives, successors, heirs, legatees, devisees,
assigns, beneficiaries, conservators, administrators or guardians, and for
any and all persons ever claiming any interest in the Trust Property, to
the fullest extent permitted by law hereby waives and releases all rights
of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the liens hereby created. If
any law referred to in this paragraph and now in force, of which Trustor,
Trustor's representatives, successors, heirs, legatees, devisees, assigns,
beneficiaries, conservators, administrators, guardians, or other person
might take advantage despite this paragraph, shall hereafter be repealed or
cease to be in force, such law shall not thereafter be deemed to preclude
the application of this paragraph. Trustor expressly waives and
relinquishes any and all rights and remedies that Trustor may have or be
able to assert by reason of the laws of the State of California pertaining
to the rights and remedies of sureties.
4.12.2 TRUSTOR EXPRESSLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN
ANY ACTION, COUNTERCLAIM OR PROCEEDING BASED UPON, OR RELATED TO, THE
SUBJECT MATTER OF THIS DEED OF TRUST. THIS WAIVER APPLIES TO ALL CLAIMS
AGAINST ALL PARTIES TO SUCH ACTIONS AND PROCEEDINGS, INCLUDING PARTIES WHO
ARE NOT PARTIES TO THIS DEED OF TRUST. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY TRUSTOR, AND TRUSTOR EXPRESSLY
ACKNOWLEDGES THAT NEITHER BENEFICIARY, NOR ANY PERSON ACTING ON BEHALF OF
BENEFICIARY HAS MADE ANY REPRESENTATIONS OF FACT TO INCLUDE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TRUSTOR
FURTHER ACKNOWLEDGES THAT TRUSTOR HAS BEEN REPRESENTED (OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS DEED OF TRUST AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF
TRUSTOR'S OWN FREE WILL, AND THAT TRUSTOR HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL. TRUSTOR FURTHER ACKNOWLEDGES THAT
TRUSTOR HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS DEED
OF TRUST AND, SPECIFICALLY, THIS WAIVER PROVISION.
4.13 Taxation of Liens. In the event of the enactment after the date
hereof of any law deducting from the value of all or any portion of the
Trust Property for the purpose of taxation any lien thereon, or imposing
upon Beneficiary the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Trustor, or
changing in any way the law relating to the taxation of deeds of trust or
debts secured by deeds of trust or a beneficiary's interest in the
property, or the manner of collection of taxes, so as to affect
Beneficiary, this Deed of Trust or the debt secured hereby, then, and in
any such event, Trustor, upon demand by Beneficiary, shall pay such taxes
or assessments, or reimburse Beneficiary therefor; provided, however, that
if in the opinion of counsel for Beneficiary (a) it might be unlawful to
require Trustor to make such payment or (b) the making of such payment
might result in the imposition of interest beyond the maximum amount
permitted by law, then and in such event, Beneficiary may elect, in its
sole and absolute discretion, by notice in writing given to Trustor, to
declare all of the indebtedness secured hereby to be and become due and
payable thirty (30) days from the giving of such notice. In the event of a
prepayment of the Note pursuant to the provisions of this paragraph, no
prepayment privilege fee shall apply (notwithstanding anything to the
contrary in the Note).
4.14 Consents and Approvals. No waiver of any default or breach by
Trustor hereunder shall be implied from any omission by Beneficiary to take
action on account of such default even if such default persists or is
repeated, and no express waiver shall affect any default other than the
default specified in the waiver and any such waiver shall be operative only
for the time and to the extent therein stated. Inaction of Beneficiary
shall never be considered as a waiver of any right accruing to it on
account of any default on the part of Trustor. Waivers of any covenant,
term or condition contained herein shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition.
Beneficiary's consent to any act or omission by Trustor will not be a
consent to any other or subsequent act or omission or a waiver of the need
for such consent in any future or other instance and the consent or
approval by Beneficiary to or of any act by Trustor shall not be deemed to
waive or render unnecessary the consent or approval of Beneficiary to or of
any subsequent or similar act. The acceptance by Beneficiary of any
payment on the indebtedness secured hereby shall not be deemed or construed
as a waiver by Beneficiary of any breach of any covenant, term or condition
hereof except any relating to the payment accepted.
4.15 Costs of Nonperformance. If either Trustor or Beneficiary fails
to perform any of their respective covenants or agreements contained in
this Deed of Trust or any of the Security Documents, then the nonperforming
party shall pay all out-of-pocket expenses of the other party (including
but not limited to actual fees and disbursements of counsel) incurred by
reason of or in response to such nonperformance, together with interest
thereon at the rate of twelve and one-half percent (12.5%) per annum from
the date such expenses are incurred until paid.
4.16 Inconsistencies with Other Documents. In the event of any
inconsistency between the provisions of this Deed of Trust or any of the
Security Documents, the provisions of the Note shall control over those of
the Deed of Trust.
4.17 Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of California.
REQUESTS FOR NOTICES
Trustor requests that a copy of any notice of default and notice of
sale required by law be mailed to it at its address below:
Trustor: Optical Coating Laboratory, Inc.
Address: 2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: CFO
Executed in the State of California as of the day and year first above
written.
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
State of _______________ )
)ss
County of _____________ )
On _______________, 1996, before me, ________________________, a
notary public in and for said state, personally appeared
_______________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same
in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________ (Seal)
EXHIBIT A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
ENVIRONMENTAL INDEMNITY AGREEMENT
This ENVIRONMENTAL INDEMNITY AGREEMENT (the "AGREEMENT") is entered
into as of March 15, 1996 by and between AID ASSOCIATION FOR LUTHERANS, a
Wisconsin corporation ("AAL"), and OPTICAL COATING LABORATORY, INC., a
Delaware corporation (individually and collectively, "INDEMNITOR"). The
parties hereto enter into this contract with reference to the following
facts:
A. AAL has agreed to make a loan to Indemnitor in the amount of
Three Million and No/100 Dollars ($3,000,000.00) (the "LOAN") (AAL Loan No.
75650). The Loan is to be evidenced by a Secured Promissory Note (the
"NOTE"), and the Note is to be secured by a Deed of Trust, Financing
Statement, Fixture Filing and Security Agreement (With Assignment of
Rents), Assignment of Rents and Leases and Financing Statements (the "LOAN
DOCUMENTS") creating a lien on certain real property, and all improvements
thereon, located in the City of Santa Rosa, County of Sonoma, State of
California (the "PROPERTY"), as more particularly described in Exhibit A
attached hereto. (The Note, the Deed of Trust and any other documents
relating to the Loan other than this Agreement may be referred to herein
collectively as the "LOAN DOCUMENTS"). The making of the Loan is subject
to a condition precedent that Indemnitor make and deliver this Agreement to
AAL.
B. Indemnitor acknowledges that AAL would not make the Loan in the
absence of this Agreement.
C. Indemnitor acknowledges that AAL may sustain "LOSSES" (as defined
herein) should AAL become an owner of the Property, whether by foreclosure
of the Deed of Trust, judicial or nonjudicial, by the acceptance of a deed
in lieu of foreclosure, or otherwise, or after the reconveyance of the Deed
of Trust in amounts that have no relationship to the amounts owed to AAL
pursuant to the Note or any of the other Loan Documents.
D. Indemnitor acknowledges and agrees that any amounts owed to AAL
by Indemnitor pursuant to the provisions of this Agreement are not secured
by the Loan Documents nor are they related in any manner to any amounts
owed to AAL pursuant to the Note and that said liabilities shall survive
and continue to be of full force and effect notwithstanding satisfaction of
the Loan Documents, a foreclosure conducted pursuant to the Loan Documents,
the making of a deed in lieu of foreclosure in favor of AAL or a transfer
of any other interest in the Property, whether by Indemnitor or AAL or by
any successor or assignee of Indemnitor or AAL.
NOW, THEREFORE, in consideration of the foregoing recitals, which
recitals are hereby incorporated herein by this reference, and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. REGULATED SUBSTANCES. As used herein, "REGULATED SUBSTANCE"
means any substance, material or matter that may give rise to liability
under any Environmental Laws. "ENVIRONMENTAL LAWS" shall mean any local,
state or federal laws, rules, ordinances or regulations either in existence
as of the date hereof, or enacted or promulgated after the date of this
Agreement, that concern the existence, management, control, discharge,
treatment, containment and/or removal of substances or materials that are
or may become a threat to public health or the environment; or any common
law theory based on nuisance, trespass, negligence, strict liability,
aiding and abetting or other tortious conduct.
2. COVENANTS. Promptly upon the written and good faith request of
AAL from time to time, Indemnitor shall provide AAL, at Indemnitor's
expense, with an environmental site assessment or environmental audit
report prepared by an environmental engineering firm acceptable to AAL, to
assess with a reasonable degree of certainty the presence or absence of any
Regulated Substances and the potential costs in connection with abatement,
cleanup or removal of any Regulated Substances in violation of
Environmental Laws found at, upon, under or within the Property; provided,
however, that Indemnitor shall not be responsible for the costs of such an
assessment or audit unless an "EVENT OF DEFAULT" (as defined in the Deed of
Trust) has occurred and is continuing when the work on an environmental
site assessment or environmental audit report is commenced or AAL has a
good faith belief that the Property may be in violation of Environmental
Laws.
3. INDEMNITY.
3.1 Scope of Indemnity. Indemnitor hereby agrees to indemnify,
save, defend (at Indemnitor's cost and sole expense) and hold harmless AAL
and the officers, directors, agents and employees of AAL, and the
successors and assigns of each of the foregoing (all of such persons or
entities being collectively referred to herein as "INDEMNIFIED PERSONS" and
each such reference shall refer jointly and severally to each such person),
from and against the full amount of any and all Losses, regardless of the
negligence of Indemnified Persons except as hereinafter specifically
excepted. "LOSSES" shall mean any and all liabilities, obligations,
losses, damages, injuries, penalties, claims, actions, suits, costs,
expenses and disbursements (including, but not limited to, all actual
attorneys' fees and expenses (including, without limitation, the allocated
costs for services of in-house counsel)) and all other professional or
consultants' expenses incurred in investigating, preparing for, serving as
a witness in or defending against any action or proceeding, whether
actually commenced or threatened, which may be asserted against any
Indemnified Person, arising from, in respect of, as a consequence of, or in
connection with any of the following: (a) the removal of any Regulated
Substance on, within or released from the Property, whether such removal is
done or completed by Indemnitor, AAL, or any other person or entity and
regardless of whether or not such removal is rendered pursuant to a court
order or the order of an administrative agency; (b) claims asserted by any
person or entity (including, without limitation, any governmental agency or
quasi-governmental authority, board, bureau, commission, department,
instrumentality or public body, court, or administrative tribunal (a
"GOVERNMENTAL AGENCY")), in connection with or in any way arising out of
the presence, storage, use, disposal, generation, transportation or
treatment of any Regulated Substance at, upon, under or within the
Property, either prior to or after the date of this Agreement and either
prior to or after the time that Indemnitor became owner of the Property;
(c) the violation or claimed violation of any Environmental Laws in regard
to the Property, whether such violation or claimed violation occurred prior
to or after the date of this Agreement and regardless of whether such
violation occurred prior to or after the time that Indemnitor became owner
of the Property; or (d) the preparation of an environmental audit on the
Property, whether conducted or authorized by Indemnitor, AAL or a third
party or the implementation of any environmental audit's recommendations.
AAL may employ the attorneys and/or consultants of its choice.
Notwithstanding the foregoing provisions of this Section 3.1, (a)
Indemnitor shall not be required to indemnify any Indemnified Person to the
extent that any Losses result from Regulated Substances being brought onto
the Property by such Indemnified Persons, and (b) if the Property is
transferred to AAL or any of its successors or assigns, then Indemnitor
shall not be liable for any Losses that a final decree of a court of
competent jurisdiction holds arise solely due to conditions that did not
exist on the Property prior to the transfer of the Property to AAL or its
successors or assigns.
3.2 Claim Settlement. So long as AAL is beneficiary under the
Loan Documents or if AAL at any time shall have become a mortgagee in
possession or a successor in interest to Indemnitor by foreclosure or deed
in lieu of foreclosure with respect to all or part of the Property,
Indemnitor shall not settle any claim under or on account of the
Environmental Laws without AAL's prior written consent, which consent may
be withheld in AAL's sole and absolute discretion; provided, however, that
if the proposed settlement involves (i) no admission of guilt or liability
on the part of AAL, (ii) no adverse financial impact on AAL, and (iii) no
adverse impact on the value of the Property, then such consent shall not be
unreasonably withheld or delayed.
4. PAYMENTS. Payments under this Agreement in respect of all Losses
shall be due and payable as such Losses are incurred. Within a reasonable
time after any such Losses are incurred, the Indemnified Person shall give
notice to Indemnitor; provided, however, that failure by an Indemnified
Person to give such notice shall not relieve Indemnitor from any liability,
duty or obligation hereunder. Indemnitor will pay interest on any amount
not paid from the time such Losses are incurred regardless of date of
notice, at the interest rate equal to the One-Year Treasury Rate then in
effect plus five percent (5%), but in no event to exceed the maximum
interest rate allowed by law.
5. OBLIGATION TO DEFEND.
5.1 Assumption of Defense. Upon request of any Indemnified
Person, Indemnitor shall defend any and all actions or proceedings that
may be brought against such Indemnified Person in connection with or
arising out of the matters covered by this Agreement. In the event that
Indemnitor is defending an Indemnified Person, Indemnitor may settle the
claim only with the Indemnified Person's prior written consent, said
consent or the denial thereof to be in the Indemnified Person's sole and
absolute discretion.
5.2 Delivery of Acknowledgement. Within thirty (30) days from
the date of receipt by Indemnitor from Indemnified Person of a request to
defend, Indemnitor must acknowledge in a writing, satisfactory to the
Indemnified Person in its good faith discretion, its duty to defend and
that such claim is covered in its entirety by this Agreement (the
"ACKNOWLEDGEMENT"); provided, however, that until the Indemnified Person
receives the Acknowledgement, the Indemnified Person shall be entitled to
defend such claim and Indemnitor shall be bound in the manner set forth in
subparagraph 5.4 hereof.
5.3 Conduct of Defense; Participation by Indemnified Person. If
Indemnitor defends an Indemnified Person, the defense must be conducted by
reputable attorneys satisfactory to Indemnified Person, retained and paid
solely by Indemnitor. Indemnified Person may participate in the
proceedings and retain a separate counsel at its own expense. But if the
Indemnified Person concludes in its sole discretion exercised in good faith
that there is a conflict of interest - consistent with applicable standards
of professional responsibility - between itself and Indemnitor, then
Indemnitor will be conclusively liable for the results, including the
amount of any judgment, compromise, or good faith, out-of-court settlement.
5.4 Indemnitor's Failure to Defend. If Indemnitor fails to
deliver the Acknowledgment or fails to choose counsel satisfactory to the
Indemnified Person, Indemnitor shall not thereafter be entitled to elect to
defend, and Indemnitor shall be bound by and shall be conclusively liable
for the results obtained by the Indemnified Person, including without
limitation, the amount of any judgment or good faith out-of-court
settlement or compromise and all costs and actual fees of counsel incurred
by the Indemnified Person in connection therewith.
6. NOTIFICATION BY INDEMNITOR. Indemnitor agrees promptly to notify
AAL of the commencement of any litigation or proceedings pending,
threatened or commenced (whether or not served) against Indemnitor or any
other party in connection with Regulated Substances and the Property and of
the receipt of any notice from any Governmental Agency in regard to
Regulated Substances and the Property. Indemnitor shall promptly upon
receipt provide the Indemnified Person with true, complete and correct
copies of all such notices and other documentation related to said notices,
litigation or proceedings.
7. INVALIDITY. If any terms of this Agreement shall be held
invalid, illegal or unenforceable, such provisions shall be severable from
the rest of this Agreement and the validity, legality, or enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby.
8. ATTORNEYS' FEES. In any action to enforce or interpret this
Agreement, the prevailing party shall be entitled to receive from the
losing party its reasonable attorneys' fees and costs incurred in
connection therewith.
9. NO TIME LIMIT. There is no time limitation on Indemnitor's
obligations hereunder, and Indemnitor waives all present and future
statutes of limitations as a defense to any action to enforce the
provisions of this Agreement.
10. NOTICE. Any notice that Indemnitor or AAL may be required or
entitled to give to the other party hereunder shall be in writing and shall
be deemed given three (3) days after being sent by certified mail, return
receipt requested, postage prepaid, at the addresses specified below:
"AAL" or "Indemnified Persons"
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Law Department
With a copy to:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Investment Department
"Indemnitor"
Optical Coating Laboratory, Inc.
2789 North Point Parkway
Santa Rosa, California 95407-7397
Attention: Mr. Jeff Ryan, Assistant Treasurer
The addresses set forth above may be changed as to any party by such
party delivering to the other parties written notice as to such change of
address.
11. CAPTIONS, GENDER, AND NUMBER. Any section or paragraph, title or
caption contained in this Agreement is for convenience only and shall not
be deemed a part of this Agreement. As used in this Agreement, the
masculine, feminine or neuter gender, and the singular or plural number,
shall each be deemed to include the others whenever the context so
indicates.
12. INDEMNIFIED PERSONS' RIGHTS. The parties hereto expressly
acknowledge that this Agreement is made expressly for the benefit of the
Indemnified Persons.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and inure to the benefit of, the parties named herein and their respective
successors and assigns. Indemnitor's obligations hereunder shall survive
and continue to be of full force and effect notwithstanding a foreclosure
conducted pursuant to the Loan Documents, the making of a deed in lieu of
foreclosure by Indemnitor in favor of AAL or a transfer of any other
interest in the Property, whether by Indemnitor, Indemnitor or AAL or by
any successor or assignee of Indemnitor, Indemnitor or AAL.
14. WAIVERS, FAILURE OR INDULGENCES NOT WAIVER. INDEMNITOR WAIVES
TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE OF THIS
AGREEMENT AND WAIVES ANY RIGHT TO REQUIRE AAL AT ANY TIME TO PURSUE ANY
REMEDY IN AAL'S POWER WHATSOEVER. No failure or delay on the part of an
Indemnified Person in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any power, right or privilege preclude any other or
further exercise of any such power, right or privilege. All powers, rights
and privileges hereunder are cumulative to, and not exclusive of, any
powers, rights or privileges otherwise available.
15. JOINT AND SEVERAL LIABILITY. The obligations and liabilities of
the persons constituting Indemnitor are joint and several.
16. COMPLETE AGREEMENT. This Agreement supersedes any prior
negotiations, discussions or communications between AAL and Indemnitor and
constitutes the entire agreement between AAL and Indemnitor with respect to
this Agreement.
17. NO AMENDMENT OR WAIVER EXCEPT IN WRITING. This Agreement may be
amended or modified only by a writing duly executed by Indemnitor and AAL,
which expressly refers to this Agreement and the intent of the parties so
to amend this Agreement.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Wisconsin (without regard to
conflicts of law).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
"Indemnitor"
OPTICAL COATING LABORATORY, INC.,
a Delaware corporation
By: ___________________________
Name: _____________________
Title: ____________________
"AAL"
Aid Association for Lutherans,
a Wisconsin corporation
By: __________________________
Wayne C. Streck
Vice President -
Mortgages and Real Estate
By: __________________________
Kenneth E. Podell
Assistant Secretary
Exhibit A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND
LOT 21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS
PARK", ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS,
SAID PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND
RUNNING THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02"
WEST 391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS
SAID LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE
IN BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS
SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE
COMMON LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING
SAID COMMON LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH
AND 27.50 FEET EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94
FEET; THENCE ON A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH
BEARS SOUTH 530 20' 25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A
CENTRAL ANGLE OF 1210 03' 33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH
050 36' 02" WEST 37.41 FEET TO THE NORTHERLY LINE OF SAID LOT 20; THENCE
ALONG SAID NORTH LINE SOUTH 840 23' 58" WEST 17.50 FEET TO THE TRUE POINT
OF BEGINNING.
A.P. NOS. 035-530-018 & 019
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919
Attention: Law Department
SPECIFIC ASSIGNMENT, SUBORDINATION,
AND ATTORNMENT AGREEMENT
THIS SPECIFIC ASSIGNMENT, SUBORDINATION, AND ATTORNMENT AGREEMENT
("Agreement") is entered into as of the 15th day of March, 1996, by and
among FLEX PRODUCTS, INC., A DELAWARE CORPORATION ("Tenant"), OPTICAL
COATING LABORATORY, INC., A DELAWARE CORPORATION ("Borrower"), and AID
ASSOCIATION FOR LUTHERANS, A WISCONSIN CORPORATION ("Lender").
RECITALS
A. Tenant is the lessee and Borrower is the lessor under that Certain
Lease Agreement dated June 30, 1995 (the "Lease").
B. Borrower has requested that Lender make a loan to Borrower to be
secured by a Deed of Trust, Financing Statement, Fixture Filing and
Security Agreement (With Assignment of Rents) from Borrower to Lender (the
"Deed of Trust"), and an Assignment of Rents and Leases from Borrower to
Lender (the "Assignment"), covering the property wherein the premises (the
"Premises") covered by the Lease are located, which property is described
more fully in Exhibit A attached hereto (the "Property").
C. Lender is willing to make the requested loan, provided that, as
one of the conditions precedent thereto, Borrower and Tenant execute this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and to induce
Lender to make the requested loan, Tenant, Borrower, and Lender hereby
agree and covenant as follows:
1. Assignment. Borrower does hereby absolutely and presently grant,
transfer, and assign to Lender the Lease and all rents and other sums
payable under the Lease; provided, however, that until written demand is
made by Lender to Tenant, all rents and other sums payable under the Lease
shall be paid to Borrower, but only as they accrue. Borrower covenants and
agrees that upon Tenant's receipt of written notice from Lender to pay the
rent to Lender and its successors and assigns, Tenant shall pay the rent
and all other sums due under the Lease as such rent and other sums become
due to the Lender and shall have no liability to Borrower for such rent and
other sums due under the Lease which are paid to Lender and its successors
and assigns. Tenant hereby recognizes the Assignment of the Lease made by
Borrower to Lender and agrees to pay, upon receipt of written demand from
Lender, all rents and other sums as directed by Lender. Nothing herein is
intended to limit the rights or obligations of Borrower under that Certain
Assignment of Rents and Leases.
2. Subordination. Borrower, Tenant and Lender hereby agree that the
Lease and all of its terms and provisions (including, without limitation,
any option or options to purchase or rights of first refusal affecting the
Property, or any portion thereof, contained therein) is and shall at all
times be subject and subordinate in all respects to the Deed of Trust and
to all supplements, amendments and modifications thereto, and to all
extensions, substitutions, rearrangements and/or replacements thereof.
3. Attornment. If the interest of Borrower in the Property is
acquired by a transferee (including, but not limited to, Lender) as a
result of a foreclosure, trustee's sale, deed in lieu of foreclosure or
other proceeding for the enforcement of the Deed of Trust, such transferee
and such transferee's successors and assigns (such transferee, its
successors and assigns, including, but not limited to, Lender being
hereinafter referred to as "Purchaser"), shall have the option to elect
either to (a) terminate the Lease and the rights of Tenant thereunder or
(b) allow the Lease and the rights of Tenant thereunder to continue in full
force and effect (except as provided in Section 4 hereof). If Purchaser
elects to allow the Lease and the rights of Tenant thereunder to continue
in full force and effect, any Purchaser shall be bound to tenant (except as
provided in Section 4 hereof), and Tenant shall be bound to any Purchaser,
under all of the terms, covenants and conditions of the Lease, for the
balance of the terms thereof, and any extensions or renewals thereof that
may be effected in accordance with any option therefor in the Lease, with
the same force and effect as if such Purchaser were the original landlord
under the Lease. Tenant does hereby attorn to such Purchaser, including
Lender if Lender is such Purchaser, as the landlord under the Lease, said
attornment to be effective and self-operative without the execution of any
further instruments upon Purchaser's succeeding to the interest of the
landlord under the Lease. Anything above to the contrary notwithstanding,
Tenant agrees that its option rights in Section 2.04 of the Lease shall not
be exercised or exercisable in the event of or in connection with any
transfer (by means of foreclosure, trustee's sale, deed in lieu of
foreclosure or other proceeding for the enforcement of the Deed of Trust)
to Purchaser; provided, however, that such rights shall remain in full
force and effect as to any subsequent sale by Purchaser.
Notwithstanding the foregoing, Purchaser agrees that so long as Flex
Products, Inc. remains as Tenant in possession, has not modified or amended
the lease in any material way without Lender's prior consent, and is not in
default on the date Purchaser takes possession of the property as a result
of foreclosure, trustee's sale, deed in lieu of foreclosure or other
proceeding, Purchaser will allow the Lease and the rights of the Tenant
thereunder to continue in full force and effect.
4. Limitation on Purchaser Obligations. Notwithstanding anything to
the contrary contained in Section 3 hereof, a Purchaser shall not be:
4.1 liable for any damages or other relief
attributable to any act or omission of any prior lessor
under the Lease (including, without limitation, Borrower);
4.2 subject to any offsets or defenses that Tenant may
have against a prior lessor under the lease (including,
without limitation, Borrower);
4.3 liable for any damages or other relief
attributable to any latent or patent defects in construction
with respect to the Property;
4.4 liable for the return of any security deposit
under the Lease unless such security deposit shall have been
actually deposited with Purchaser;
4.5 bound by any rent or additional rent that Tenant
might have paid in advance to any prior lessor under the
Lease (including, without limitation, Borrower), for any
period beyond the month in which Purchaser succeeds to the
interest of Borrower under the Lease;
4.6 bound by any waiver or forbearance by any prior
lessor under the Lease (including, without limitation,
Borrower) or bound by any agreement or modification of the
Lease made without the prior written consent of Lender; or
4.7 bound by any covenant made by any prior lessor
under the Lease (including, without limitation, Borrower) to
complete any construction on the Property covered by the
lease or to pay any sums to Tenant in connection therewith,
unless Purchaser shall have expressly consented thereto in
writing.
5. Further Actions. Tenant covenants and agrees from time to time to
do all acts and execute such instruments as it shall be reasonably
requested by Lender to do or execute for the purposes of carrying out and
effectuating this Agreement and the intent hereof, and evidencing this
Agreement, whether by filing with any public office, or agency or
otherwise.
6. Covenants of Tenant. Tenant agrees that during the term of the
Lease, Tenant will not:
6.1 pay any rent or additional rent more than one (l)
month in advance to any lessor (including, but not limited
to, Borrower); or
6.2 cancel, surrender, amend or modify the Lease
without Lender's prior written consent nor terminate the
Lease because of a default thereunder by Borrower unless
Tenant shall have first given Lender written notice thereof
and a reasonable opportunity to cure such default.
In the event the Lease is rejected or deemed rejected in any
bankruptcy proceeding with respect to landlord, Tenant shall not exercise
any right it may have to treat the Lease as terminated under 11 U.S.C.
Section 365(h), as amended.
7. Merger. Borrower, Tenant and Lender agree that unless Lender
shall otherwise consent in writing, the fee title to the Property and the
leasehold estate created by the Lease shall not merge but shall remain
separate and distinct, notwithstanding the union of said estates either in
Borrower or Tenant or any third-party by purchase, assignment or otherwise.
8. Limitation on Liability. Notwithstanding anything to the contrary
contained herein or in the Lease, in the event that any Lender shall
acquire title to the Property, such Lender shall have no obligation, nor
incur any liability, beyond the then interest if any, of such Lender in the
Property, and Tenant shall look exclusively to such interest of such Lender
if any, in the Property for the payment and discharge of any obligations
imposed upon such Lender hereunder or under the Lease, and such Lender is
hereby released and relieved of any other liability hereunder and under the
Lease. As regards such Lender, Tenant shall look solely to the estate or
interest owned by such Lender in the Property and Tenant will not collect
or attempt to collect any such obligation or liabilities or any judgment
therefor, out of any other assets of Lender. By executing this Agreement,
Borrower specifically acknowledges and agrees that nothing contained in
this paragraph shall impair, limit, offset, lessen, abrogate or otherwise
modify the obligations of Borrower to Tenant under the Lease.
9. Modification of Agreement. This agreement may not be modified
orally or in any other manner except by an agreement in writing signed by
the parties hereto or their respective successors in interest.
10. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
heirs, successors and assigns.
11. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California.
12. Certification Relating to Lease. Tenant and Borrower hereby
certify that, as of the date hereof, there are no defaults (or events that
with the giving of notice and/or the passage of time could become a
default) on the part of the other party under the Lease, that the Lease is
a complete statement of the agreement of the parties under the Lease with
respect to the leasing of the Premises, that the Lease is in full force and
effect, and that all conditions to the effectiveness or continuing
effectiveness thereof required to be satisfied as of the date hereof have
been satisfied. Tenant and Borrower further certify:
12.1 All conditions under the Lease have been satisfied, the
twenty (20) year term of the Lease commenced on _____________,
1996, expires on _____________, 2016, and Tenant is now in
possession of the Premises (________ square feet) in accordance
with the terms of the Lease.
12.2 The Lease provides for the following:
Tenant has the right to extend the term of the
Lease for two (2) additional periods of five (5) years each
in accordance with the terms as set forth in Section 2.03 of
the Lease.
Tenant has the right of first offer to purchase
the Premises in accordance with the terms as set forth in
Section 2.04 of the Lease.
12.3 Tenant has neither assigned, transferred, nor encumbered the
Lease, or any interest therein, nor sublet the Premises, or any
portion thereof.
12.4 All required common areas have been completed and all
required parking spaces have been furnished.
12.5 The total annual minimum rent under the Lease is
$______________, no rent or other sum payable by Tenant under the
Lease has been prepaid, and Tenant shall not prepay any such rent
or other sum more than one (1) month in advance, except with your
prior written consent.
13. Integration. This Agreement shall be the whole and only
agreement with regard to the subjection and subordination of the Lease and
the leasehold estate created thereby, together with all rights and
privileges of Tenant thereunder, to the lien or charge of the Deed of Trust
and shall supersede and cancel, but only insofar as would affect the
priority between the Lease and the Deed of Trust any prior agreements as to
such subjection or subordination, including, but not limited to, those
provisions contained in the Lease that provide for the subjection or
subordination of the Lease and the leasehold estate created thereby to a
deed or deeds of trust or to a mortgage or mortgages.
14. Notices. All notices and demands that may or are required to be
given by any party to any other party hereunder shall be given in writing
and shall be deemed to have been fully given on the date telecopied or
personally delivered or within three (3) business days after being
deposited in the United States mail, first class, certified or registered,
postage prepaid, and addressed to such party at the address set forth below
beside its signature. The parties may change their addresses by giving
notice to the other parties in the same manner as above provided. Tenant
agrees that it shall send a copy of any notice of default or similar
statement under the Lease to Lender at the same time such notice or
statement is sent to the lessor under the Lease.
15. Captions. The captions and headings of the paragraphs of this
Agreement are for convenience only and are not to be used in construing
this Agreement.
16. Counterparts. This Agreement may be executed in counterparts,
and all counterparts together shall be construed as one document.
In WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
Address: TENANT:
2793 Northpoint Parkway FLEX PRODUCTS, INC.,
Santa Rosa, CA 95407-7350 A DELAWARE CORPORATION
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
Address: LENDER:
4321 North Ballard Road AID ASSOCIATION FOR LUTHERANS,
Appleton, Wisconsin 54919 A WISCONSIN CORPORATION
Attn: Investment Department
Loan No. 75650 By: _________________________
Wayne C. Streck
Vice President -
Mortgages and Real Estate
By: _________________________
Kenneth E. Podell
Assistant Secretary
Address: BORROWER:
2789 Northpoint Parkway OPTICAL COATING LABORATORY, INC.,
Santa Rosa, CA 95407-7397 A DELAWARE CORPORATION
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _____________, 1996, before me, ____________________, personally
appeared _______________________ and ________________________, 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.
(SEAL)
____________________________________
Notary Public
My commission expires ____________.
STATE OF WISCONSIN )
) ss.
COUNTY OF OUTAGAMIE )
On _____________, 1996, before me, ____________________, personally
appeared Wayne C. Streck and Kenneth E. Podell, 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.
(SEAL)
____________________________________
Notary Public
My commission expires ____________.
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On _____________, 1996, before me, ____________________, personally
appeared _______________________ and ________________________, 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.
(SEAL)
____________________________________
Notary Public
My commission expires ____________.
Exhibit A
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
Optical Coating Laboratory, Inc.
2789 North Point Parkway
Santa Rosa, CA 95407-7397
Attn: Jeff Ryan, Assistant Treasurer
Subject: Our Loan No. 75650
Dear Ladies & Gentlemen:
This letter shall constitute our written waiver, only on the terms and
conditions herein set forth, regarding your obligation to make monthly
deposits for real property taxes and insurance premiums. So long as (a)
you maintain a Type H tax service contract for our benefit that will notify
us during the duration of the loan of any nonpayment of real property taxes
with respect to the property securing the above referenced loan within
sixty (60) days of such taxes being delinquent; (b) you pay all real
property taxes and assessments on the property prior to delinquency and all
premiums on insurance policies required to be maintained with respect to
the property on or before the due date; (c) there is no default; and (d)
there does not occur and is continuing any event that, in our sole
discretion, adversely affects (i) your ability to perform your obligations;
(ii) the priority or security of our first lien on the property; (iii) your
business or financial condition; (iv) the business, financial condition,
operations, or value of the property; ((a), (b), (c), and (d) collectively,
the "Conditions"), the requirements that you pay monthly deposits to be
applied to the payment of real property taxes and insurance premiums in
connection with the property, is hereby waived. If any of the Conditions
are not met for so long as they remain unmet, this waiver will be of no
force or effect, and the monies required to be paid to us monthly for real
property taxes and insurance premiums will be without written notice,
thereafter payable on a continuing basis.
Sincerely,
AID ASSOCIATION FOR LUTHERANS
By: ____________________________ By: ____________________________
Wayne C. Streck Kenneth E. Podell
Vice President - Assistant Secretary
Mortgages and Real Estate
March 15, 1996
cc Martell J. Glommen
Exhibit A
UCC-1 Financing Statement
Item No. 6 cont.
All properties now owned and hereafter acquired by Debtor and used in
the operation or maintenance of the buildings and real property commonly
known as 1402 Mariner Way, Santa Rosa, Sonoma County, State of California
and more particularly described on Exhibit B attached hereto and hereby
incorporated herein by this reference (the "Property"); including but not
limited to:
A. All proceeds, causes of action and claims, both in law and
in equity, arising on account of any damage to or taking of the
Property, including but not limited to insurance proceeds and
condemnation proceeds, and all claims arising on account of any damage
to or taking of the Property, and all proceeds, causes of action and
claims for any loss or diminution in value of the Property;
B. All "Equipment," "Farm Products," "Inventory," "Documents,"
"Instruments," "Chattel Paper," "Accounts," and "General Intangibles"
(as such terms are defined in the California Uniform Commercial Code)
relating to, generated from, arising out of or incidental to the
ownership, development, use or operation of the Property (whether or
not subsequently removed from the Property), including, without
limitation, all (i) machinery and tools; (ii) rugs, carpets and other
floor coverings; (iii) draperies and drapery rods and brackets,
awnings, window shades, venetian blinds and curtains; (iv) lamps,
chandeliers and other lighting fixtures; (v) office maintenance and
other supplies; (vi) apparatus, appliances, furniture and furnishings,
building service equipment, and building materials, supplies and
equipment; (vii) rights, royalties, rents, security deposits, advance
rentals, revenues, profits and benefits; (viii) leases, lease
guarantees, contracts, contract rights, licenses, permits and
certificates; (ix) deposits, funds, money and deposit accounts;
(x) tenements, hereditaments and appurtenances; (xi) approvals and
parcel maps (whether tentative or final), building permits and
certificates of occupancy; (xii) names under or by which the Property
may at any time be operated or known and rights to carry on business
under any such names or any variant thereof; (xiii) trademarks and
good will; (xiv) management agreements, service contracts, supply
contracts or other contracts or agreements; (xv) warranties;
(xvi) water stock; (xvii) shares of stock or other evidence of
ownership of any part of the Property that is owned by Debtor in
common with others, and all documents of membership in any owners' or
members' association or similar group having responsibility for
managing, maintaining or operating any part of the Property;
(xviii) plans and specifications prepared for construction of
improvements on the Property, or any part thereof, and studies, data
and drawings related thereto, including, without limitation, studies,
data or reports relating to toxic or hazardous wastes or materials
located on the Property and contracts and agreements of Trustor
relating to the aforesaid plans and specifications or to the aforesaid
studies, data, reports and drawings or to the construction of
improvements on the Property; (xix) sales agreements, deposit
receipts, escrow agreements and other ancillary documents and
agreements entered into respecting the sale to any purchasers of any
part of the Property, together with all deposits and other proceeds of
the sale thereof; (xx) damages, royalties and revenue of every kind,
nature and description whatsoever that Debtor may be entitled to
receive from any person or entity owning or having or hereafter
acquiring a right to the oil, gas or mineral rights and reservations
of the Property; (xxi) deposits made with or other security given to
utility companies by Debtor with respect to the Property and/or
Improvements; (xxii) advance payments of insurance premiums made by
Debtor with respect to, and all claims or demands with respect to,
insurance; (xxiii) negotiable certificates of deposit of Debtor in
Secured Party's possession and all accounts of Debtor maintained with
Beneficiary and each deposit account of Trustor assigned to Secured
Party pursuant to any agreement; (xxiv) insurance proceeds;
(xxv) condemnation awards; (xxvi) causes of action, claims,
compensation, awards and recoveries for any damage or injury to the
Property or for any loss or diminution in value of the Property;
(xxvii) books and records, including, without limitation, all computer
records, computer tapes and electronic and electromagnetic
representations and reproductions thereof; (xxviii) guaranties of and
security for any of the foregoing; (xxix) all substitutions, renewals,
improvements, attachments, accessions, additions and replacements to
any of the foregoing; and
C. All "Proceeds" (as such term is defined in the California
Uniform Commercial Code), collections, insurance proceeds and products
of any of the property listed in the preceding paragraph, including
without limitation, proceeds of any voluntary or involuntary
disposition or claim respecting any part thereof (pursuant to
judgment, condemnation award or otherwise) and all documents,
instruments, general intangibles, goods, equipment, inventory, chattel
paper, monies, accounts, deposit accounts and other personal property
that may arise from the sale or disposition of any of the foregoing,
all guaranties of and security for any of the foregoing, and all books
and records, including, without limitation, all computer records,
computer tapes and electronic and electromagnetic representations and
reproductions thereof, relating to any of the foregoing.
Exhibit B
The land referred to herein is situated in the State of California, County
of Sonoma, CITY OF SANTA ROSA, described as follows:
PARCEL ONE:
LOTS 18, AND 19, AS SHOWN AND DESIGNATED UPON THE MAP OF NORTHPOINT
BUSINESS PARK, FILED FOR RECORD FEBRUARY 23, 1984, IN THE OFFICE OF THE
COUNTY RECORDER IN BOOK 354 OF MAPS, AT PAGE 32 THROUGH 36, SONOMA COUNTY
RECORDS.
PARCEL TWO:
AN EASEMENT FOR PRIVATE STORM DRAIN LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AND LOT
21 AS SAID LOTS ARE SHOWN ON THE MAP ENTITLED "NORTHPOINT BUSINESS PARK",
ON FILE IN BOOK 354 OF MAPS, PAGES 32 - 36, SONOMA COUNTY RECORDS, SAID
PORTION BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEING A 10.00 FOOT WIDE STRIP OF LAND THE WESTERLY LINE OF WHICH IS
DESCRIBED AS FOLLOWS:
BEGINNING AT AN 1/2 INCH IRON PIPE MARKING THE SOUTHERLY CORNER COMMON TO
LOTS 18 AND 21 AS SHOWN ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING
THENCE ALONG THE WESTERLY LINE OF LOTS 20 AND 21 NORTH 050 36' 02" WEST
391.73 FEET TO THE TERMINUS OF SAID LINE.
PARCEL THREE:
AN EASEMENT FOR INGRESS AND EGRESS LYING WITHIN THE CITY OF SANTA ROSA,
COUNTY OF SONOMA, STATE OF CALIFORNIA AND BEING A PORTION OF LOT 20 AS SAID
LOT IS SHOWN ON THAT MAP ENTITLED "NORTHPOINT BUSINESS PARK" ON FILE IN
BOOK 354 OF MAPS, PAGE 32 - 36, SONOMA COUNTY RECORDS, SAID PORTION BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER COMMON TO SAID LOT 20 AND LOT 19 AS SHOWN
ON SAID MAP OF NORTHPOINT BUSINESS PARK AND RUNNING THENCE ALONG THE COMMON
LINE THEREOF SOUTH 050 36' 02" EAST 202.00 FEET; THENCE LEAVING SAID COMMON
LINE NORTH 840 23' 58" EAST 27.50 FEET; THENCE PARALLEL WITH AND 27.50 FEET
EASTERLY OF SAID COMMON LINE NORTH 050 36' 02" WEST 158.94 FEET; THENCE ON
A NON-TANGENT CURVE TO THE RIGHT FROM A TANGENT WHICH BEARS SOUTH 530 20'
25" WEST, WITH A RADIUS OF 6.60 FEET, THROUGH A CENTRAL ANGLE OF 1210 03'
33", FOR A LENGTH OF 13.93 FEET; THENCE NORTH 050 36' 02" WEST 37.41 FEET
TO THE NORTHERLY LINE OF SAID LOT 20; THENCE ALONG SAID NORTH LINE SOUTH
840 23' 58" WEST 17.50 FEET TO THE TRUE POINT OF BEGINNING.
A.P. NOS. 035-530-018 & 019
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<PERIOD-END> APR-28-1996
<CASH> 1578
<SECURITIES> 2921
<RECEIVABLES> 31311
<ALLOWANCES> 1392
<INVENTORY> 18294
<CURRENT-ASSETS> 62724
<PP&E> 95969
<DEPRECIATION> 78903
<TOTAL-ASSETS> 174755
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<TOTAL-LIABILITY-AND-EQUITY> 174755
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<OTHER-EXPENSES> 12994
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