<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): December 20, 1996
Commission file number: 0-14271
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 94-2949474
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, New York 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 214-1016
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
<PAGE>
Item 5. Other Events.
Loans held by American General Life & Accident Insurance Company on two of
the Registrant's properties, viz., Poplar Towers in Memphis, Tennessee and
Montrose Office Park in Rockville, Maryland matured on October 1, 1996 and
December 31, 1996, respectively. As a result, Registrant, on December 20, 1996,
pursuant to a loan agreement dated December 13, 1996 with Wells Fargo Bank, N.A.
(``WFB''), consolidated and refinanced all of the existing loans on the five
properties owned by the Registrant (the ``Loan''). WFB held mortgages on
Registrant's three remaining properties (Totem Valley in Kirkland, Washington;
Gateway and Park Plaza in Sacramento, California).
The Loan from WFB is in the amount of $26,650,000 (which approximates the
total amount of the individual loans on each of the five properties). The Loan
will mature on December 9, 1997 and bears interest at LIBOR + 3.5% reset
monthly. The Loan is secured by Deeds of Trust on each of the respective
properties and by security interests in the respective property's lease and
rent, and equipment and fixtures contained therein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
10(e) Loan Agreement by and among Registrant and Montrose Office Park Joint
Venture (a joint venture which is indirectly wholly-owned by the Registrant),
and Wells Fargo Bank, National Association, executed as of December 13, 1996.
10(f) Amended, Restated and Consolidated Promissory Note dated December 13,
1996 in the amount of $26,650,000.00 by and among Registrant and Montrose Office
Park Joint Venture and Wells Fargo Bank, National Association.
10(g) Deed of Trust, With Absolute Assignment of Leases and Rents, Security
Agreement, Assignment of Equipment Leases, Assignment of Permits and Fixture
Filing dated December 13, 1996 by and among Registrant, American Securities
Company, a corporation and Wells Fargo Bank, National Association relating to
the property known as Park Plaza Professional Center, 1303 J Street, Sacramento,
Sacramento County, California and to the property known as Gateway Executive
Center, 801 12th Street, Sacramento, Sacramento County, California.
10(h) Deed of Trust, With Absolute Assignment of Leases and Rents, Security
Agreement, Assignment of Equipment Leases, Assignment of Permits and Fixture
Filing dated December 13, 1996 by and among Registrant, Chicago Title Insurance
Company, a Missouri corporation and Wells Fargo Bank, National Association
relating to the property known as Totem Valley Business Center, 12800 N.E. 126th
Place, Kirkland, King County, Washington.
10(i) Amended and Restated Deed of Trust, With Absolute Assignment of Leases
and Rents, Security Agreement, Assignment of Equipment Leases, Assignment of
Permits and Fixture Filing dated December 13, 1996 by and among Montrose Office
Park Joint Venture, Chicago Title Insurance Company,a Missouri corporation and
Wells Fargo Bank, National Association relating to the property known as
Montrose Office Park, 3200-3206 Tower Oaks Boulevard, Rockville, Montgomery
County, Maryland.
10(j) Deed of Trust, With Absolute Assignment of Leases and Rents, Security
Agreement, Assignment of Equipment Leases, Assignment of Permits and Fixture
Filing dated December 13, 1996 by and among Registrant, J. Richard Rossie, a
resident of Shelby County, Tennessee and Wells Fargo Bank, National Association
relating to the property known as Poplar Towers, 6263 Poplar Avenue, Memphis,
Tennessee.
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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 hereunto duly authorized.
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP
(Registrant)
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ C. A. Piskorowski Date: January 21, 1997
----------------------------------------
C. A. Piskorowski
Senior Vice President
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Loan No. 1285TZL
LOAN AGREEMENT
by and among
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
a California limited partnership
and
MONTROSE OFFICE PARK JOINT VENTURE,
a Maryland joint venture
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
Executed as of December 13, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . .1
1.2 Exhibits and Schedules Incorporated. . . . . . . . . .6
ARTICLE II. LOAN . . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Loan . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Loan Documents . . . . . . . . . . . . . . . . . . . .6
2.3 Effective Date . . . . . . . . . . . . . . . . . . . .6
2.4 Maturity Date. . . . . . . . . . . . . . . . . . . . .7
2.5 Credit for Principal Payments. . . . . . . . . . . . .7
2.6 Full Repayment and Reconveyance. . . . . . . . . . . .7
2.7 Voluntary Prepayment . . . . . . . . . . . . . . . . .7
2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Limitation on Partners' Liability . . . . . . . . . . . . .7
ARTICLE III. DISBURSEMENT . . . . . . . . . . . . . . . . . . .9
3.1 Conditions Precedent . . . . . . . . . . . . . . . . .9
3.2 Disbursement of the Loan . . . . . . . . . . . . . . 10
ARTICLE IV. INSURANCE . . . . . . . . . . . . . . . . . . . . 10
4.1 Property Insurance . . . . . . . . . . . . . . . . . 10
4.2 Flood Hazard Insurance . . . . . . . . . . . . . . . 10
4.3 Liability Insurance. . . . . . . . . . . . . . . . . 10
4.4 General. . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Flood Zone Notification. . . . . . . . . . . . . . . 11
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 11
5.1 Authority/Enforceability . . . . . . . . . . . . . . 11
5.2 Binding Obligations. . . . . . . . . . . . . . . . . 11
5.3 Formation and Organizational Documents . . . . . . . 11
5.4 No Violation . . . . . . . . . . . . . . . . . . . . 11
5.5 Compliance with Laws . . . . . . . . . . . . . . . . 12
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . 12
5.7 Financial Condition. . . . . . . . . . . . . . . . . 12
5.8 No Material Adverse Change . . . . . . . . . . . . . 12
5.9 Accuracy . . . . . . . . . . . . . . . . . . . . . . 12
5.10 Tax Liability . . . . . . . . . . . . . . . . . . . 12
5.11 No Defaults . . . . . . . . . . . . . . . . . . . . 13
5.12 Management Agreements . . . . . . . . . . . . . . . 13
5.13 Chief Executive Office. . . . . . . . . . . . . . . 13
5.14 Ownership Structure . . . . . . . . . . . . . . . . 13
5.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . 13
5.16 Leases. . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Equipment Leases. . . . . . . . . . . . . . . . . . 14
5.18 Required Permits. . . . . . . . . . . . . . . . . . 15
ARTICLE VI. HAZARDOUS MATERIALS . . . . . . . . . . . . . . . 15
6.1 Special Representations and Warranties . . . . . . . 15
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(a) Hazardous Materials . . . . . . . . . . . . . . 16
(b) Hazardous Materials Laws. . . . . . . . . . . . 16
(c) Hazardous Materials Claims. . . . . . . . . . . 16
6.2 Hazardous Materials Covenants. . . . . . . . . . . . 16
(a) No Hazardous Activities . . . . . . . . . . . . 16
(b) Compliance. . . . . . . . . . . . . . . . . . . 17
(c) Notices . . . . . . . . . . . . . . . . . . . . 17
(d) Remedial Action . . . . . . . . . . . . . . . . 17
6.3 Inspection By Lender . . . . . . . . . . . . . . . . 17
6.4 Hazardous Materials Indemnity. . . . . . . . . . . . 17
6.5 Legal Effect of Section. . . . . . . . . . . . . . . 18
ARTICLE VII. COVENANTS OF BORROWERS . . . . . . . . . . . . . 18
7.1 Expenses . . . . . . . . . . . . . . . . . . . . . . 18
7.2 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Indebtedness . . . . . . . . . . . . . . . . . . . . 21
7.5 Conduct of Business. . . . . . . . . . . . . . . . . 21
7.6 Performance by Third Parties . . . . . . . . . . . . 21
7.7 Distributions to Partners and Affiliates . . . . . . 21
7.8 Leases . . . . . . . . . . . . . . . . . . . . . . . 22
7.9 Management Agreements. . . . . . . . . . . . . . . . 22
7.10 Insurance and Condemnation Proceeds . . . . . . . . 22
7.11 Use of the Property . . . . . . . . . . . . . . . . 23
7.12 ADA Compliance. . . . . . . . . . . . . . . . . . . 24
7.13 Required Notices. . . . . . . . . . . . . . . . . . 24
7.14 Chief Executive Office. . . . . . . . . . . . . . . 24
7.15 Ownership Structure . . . . . . . . . . . . . . . . 24
7.16 . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Further Assurances. . . . . . . . . . . . . . . . . . . . 24
7.17 Assignment. . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII. REPORTING COVENANTS . . . . . . . . . . . . . . 25
8.1 Financial Information. . . . . . . . . . . . . . . . 25
8.2 Operating Budgets. . . . . . . . . . . . . . . . . . 26
8.3 Books and Records. . . . . . . . . . . . . . . . . . 26
ARTICLE IX. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . 26
9.1 Default. . . . . . . . . . . . . . . . . . . . . . . 26
(a) Monetary. . . . . . . . . . . . . . . . . . . . 26
(b) Performance of Obligations. . . . . . . . . . . 27
(c) Attachment. . . . . . . . . . . . . . . . . . . 27
(d) Representations and Warranties. . . . . . . . . 27
(e) Voluntary Bankruptcy; Insolvency; Dissolution . 27
(f) Involuntary Bankruptcy. . . . . . . . . . . . . 28
(g) Partners and Guarantors . . . . . . . . . . . . 28
(h) Loss of Priority. . . . . . . . . . . . . . . . 28
(i) Change in Control . . . . . . . . . . . . . . . 28
(j) Due on Sale . . . . . . . . . . . . . . . . . . 28
(k) Benefit Plans . . . . . . . . . . . . . . . . . 29
(l) ERISA . . . . . . . . . . . . . . . . . . . . . 29
(m) Additional Defaults . . . . . . . . . . . . . . 29
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9.2 Acceleration Upon Default; Remedies. . . . . . . . . 29
9.3 Disbursements to Third Parties . . . . . . . . . . . 30
9.4 Repayment of Funds Advanced. . . . . . . . . . . . . 30
9.5 Rights Cumulative, No Waiver . . . . . . . . . . . . 30
ARTICLE X. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . 30
10.1 Indemnity . . . . . . . . . . . . . . . . . . . . . 30
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Attorney-in-Fact. . . . . . . . . . . . . . . . . . 31
10.4 Actions . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Relationship of Parties . . . . . . . . . . . . . . 32
10.6 Delay Outside Lender's Control. . . . . . . . . . . 32
10.7 Attorneys' and Paralegals' Fees and Expenses;
Enforcement. . . . . . . . . . . . . . . . . . . . . 32
10.8 Immediately Available Funds . . . . . . . . . . . . 32
10.9 Lender's Consent. . . . . . . . . . . . . . . . . . 32
10.10 Loan Sales and Participations; Disclosure of
Information. . . . . . . . . . . . . . . . . . . . . 33
10.11 Lender's Agents. . . . . . . . . . . . . . . . . . 33
10.12 . . . . . . . . . . . . . . . . . . . . . . . . . 33
WAIVER OF RIGHT TO TRIAL BY JURY. . . . . . . . . . . . . 33
10.13 Severability . . . . . . . . . . . . . . . . . . . 34
10.14 Successors and Assigns . . . . . . . . . . . . . . 34
10.15 Time . . . . . . . . . . . . . . . . . . . . . . . 34
10.16 Headings . . . . . . . . . . . . . . . . . . . . . 34
10.17 Governing Law. . . . . . . . . . . . . . . . . . . 34
10.18 Integration; Interpretation. . . . . . . . . . . . 35
10.19 Counterparts . . . . . . . . . . . . . . . . . . . 35
10.20 Joint and Several Liability. . . . . . . . . . . . 35
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EXHIBITS AND SCHEDULES
EXHIBIT A - LEGAL DESCRIPTION OF THE GATEWAY PROPERTY
EXHIBIT B - LEGAL DESCRIPTION OF THE PARK PLAZA PROPERTY
EXHIBIT C - LEGAL DESCRIPTION OF THE MEMPHIS PROPERTY
EXHIBIT D - LEGAL DESCRIPTION OF THE SEATTLE PROPERTY
EXHIBIT E - LEGAL DESCRIPTION OF THE ROCKVILLE PROPERTY
EXHIBIT F - DOCUMENTS
EXHIBIT G - OWNERSHIP STRUCTURE
EXHIBIT H - LEASES
EXHIBIT I - EQUIPMENT LEASES
EXHIBIT J - REQUIRED PERMITS
SCHEDULE 5.6 - LITIGATION
SCHEDULE 6.1 - HAZARDOUS MATERIALS
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is executed as of
December 13, 1996, by and among PRUDENTIAL-BACHE/EQUITEC
REAL ESTATE PARTNERSHIP, a California limited partnership
("Borrower A") and MONTROSE OFFICE PARK JOINT VENTURE, a
Maryland joint venture ("Borrower B"; Borrower A and
Borrower B are hereinafter sometimes collectively referred
to as "Borrowers" and each individually as a "Borrower"),
and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender").
RECITALS
A. Borrower A owns the property commonly known as the
Gateway Building, Sacramento, California and described on
Exhibit A attached hereto and made a part hereof (the
"Gateway Property").
B. Borrower A owns the property commonly known as Park
Plaza, Sacramento, California and described on Exhibit B
attached hereto and made a part hereof (the "Park Plaza
Property").
C. Borrower A owns the property commonly known as
Poplar Towers, Memphis, Tennessee and described on Exhibit C
attached hereto and made a part hereof (the "Memphis
Property").
D. Borrower A owns the property commonly known as
Totem Valley, Seattle, Washington and described on Exhibit D
attached hereto and made a part hereof (the "Seattle
Property").
E. Borrower B owns the property commonly known as the
Montrose Office Building, Rockville, Maryland and described
on Exhibit E attached hereto and made a part hereof (the
"Rockville Property").
F. Borrowers desire to borrow from Lender, and Lender
agrees to loan to Borrowers, the amounts described below.
NOW, THEREFORE, Borrowers and Lender hereby agree as
follows:
ARTICLE I. DEFINITIONS
1.1 Defined Terms. The following capitalized terms
used in this Agreement shall have the meanings defined or
referenced below. Certain other capitalized terms used only
in specific sections of this Agreement are defined in such
sections.
<PAGE>
"ADA" - means the Americans with Disabilities Act, 42 U.S.C.
S 12101, et. seq. as hereinafter amended or modified.
"Affiliate" - means, as applied to any person or entity, any
other person or entity directly or indirectly controlling,
controlled by, or under common control with, that person or
entity. For purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control
with"), as applied to any person or entity, means (i) the
possession, directly or indirectly, of the power to vote 5%
or more of the stock, voting trust certificates or other
securities having voting power for the election of directors
of such person or entity, (ii) the status of a general
partner of a general or limited partnership, (iii) the
status of member of a limited liability company, or (iv) the
possession of the power to otherwise direct or cause the
direction of the management and policies of that person or
entity, whether through the ownership of voting stock,
voting trust certificates or other securities or of
partnership interests or by contract or otherwise.
"Agreement" - means this Agreement, as it may hereafter be
amended, supplemented, restated, replaced or modified from
time to time.
"Bankruptcy Code" - means the Bankruptcy Reform Act of 1978
(11 USC S 101-1330) as hereinafter amended or recodified.
"Benefit Plan" - means a "defined benefit plan" as defined
in Section 3(35) of ERISA, and any other "pension plan" as
defined in Section 3(2) of ERISA, subject to Section 302 of
ERISA.
"Borrower A" - means Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership.
"Borrower B" - means Montrose Office Park Joint Venture, a
Maryland joint venture.
"Borrowers" - means (a) collectively, Borrower A and
Borrower B and (b) individually, either one of the foregoing
entities.
"Business Day" - means a day of the week (but not a
Saturday, Sunday or holiday) on which the offices of Lender
are open to the public for carrying on substantially all of
Lender's business functions. Unless specifically referenced
in this Agreement as a Business Day, all references to
"days" shall be to calendar days.
"Code" - means the Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter, any
successor statute and any regulations or guidance
promulgated thereunder.
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"Default" - shall have the meaning ascribed to such term in
Section 9.1.
"Distributions" - shall have the meaning ascribed to such
term in Section 7.7.
"Effective Date" - means the date the Loan (or any part
thereof) is disbursed to Borrowers or as Borrowers may
otherwise direct.
"Equipment Leases" - shall have the meaning ascribed to such
term in Section 5.17.
"ERISA" - means the Employee Retirement Income Security Act
of 1974, as amended to the date hereof and from time to time
hereafter, any successor statute and any applicable
regulations or guidance promulgated thereunder.
"ERISA Affiliate" - means (i) any corporation which is or
was a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as
Borrowers or either one of them; (ii) a partnership or other
trade or business (whether or not incorporated) which is or
was under common control (within the meaning of Section
414(c) of the Code) with Borrowers or either one of them;
and (iii) any entity that is or was a member of the same
affiliated service group (within the meaning of Section
414(m) of the Code) as Borrowers or either one of them, any
corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above.
"ERISA Assumption" - means that, except for funds that
Lender may be considered to receive from Borrowers, no part
of the funds to be used by Lender for the Loan are, under
the Code, ERISA, any amendments thereto, any successor
statutes, any regulations or guidance promulgated
thereunder, or any other law, the assets of any Plan.
"Fixed Rate" - shall have the meaning ascribed to such term
in the Note.
"Fixed Rate Period" - shall have the meaning ascribed to
such term in the Note.
"Fixed Rate Price Adjustment" - shall have the meaning
ascribed to such term in the Note.
"Gateway Property" - shall have the meaning ascribed to such
term in Recital A.
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"Guarantors" - means (a) collectively, Glenborough
Corporation, a California corporation, and Robert Batinovich
and (b) individually, either one of the foregoing.
"Guaranty" - means that certain Guaranty of Non-Recourse
Exceptions dated as of the date hereof executed by
Guarantors.
"Hazardous Materials" - shall have the meaning ascribed to
such term in Section 6.1(a).
"Hazardous Materials Claims" - shall have the meaning
ascribed to such term in Section 6.1(c).
"Hazardous Materials Indemnity" - means that certain
Hazardous Materials Indemnity Agreement (Unsecured) dated as
of the date hereof executed by Guarantors.
"Hazardous Materials Laws" - shall have the meaning ascribed
to such term in Section 6.1(b).
"Leases" - means all agreements of any kind relating to the
use or occupancy of the Property or any portion thereof,
whether such leases, licenses and agreements are now
existing or entered into after the Effective Date, together
with all amendments and modifications thereto.
"Lender" - means Wells Fargo Bank, National Association, its
successors and assigns.
"Liabilities" - means the principal of, and all interest on,
the Loan, all fees, expense reimbursements, taxes,
indemnification obligations and all other amounts of any
kind or nature payable by Borrowers to Lender pursuant to
this Agreement or any other Loan Document.
"Loan" - means the aggregate principal sum that Lender
agrees to lend and that Borrowers agree to borrow pursuant
to the terms and conditions of this Agreement: Twenty-Six
Million Six Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00).
"Loan Documents" - means this Agreement and those documents,
as hereafter amended, supplemented, restated, replaced or
modified from time to time, properly executed and in
recordable form, if necessary, listed on Exhibit F as Loan
Documents, all in form and substance acceptable to Lender.
"Loan Year" - means, a one (1) year period of time
commencing on the Effective Date, and each one (1) year
period of time commencing on the anniversary of said date.
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"Maturity Date" - shall have the meaning ascribed to such
term in Section 2.4.
"Memphis Property" - shall have the meaning ascribed to such
term in Recital C.
"Note" - means that certain Amended, Restated and
Consolidated Promissory Note of even date herewith, in the
original principal amount of the Loan, executed by Borrowers
in favor of Lender, as hereafter amended, supplemented,
restated, replaced or modified from time to time. The Note,
among other things, amends, restates and consolidates the
indebtedness outstanding under that certain Promissory Note
dated as of December 17, 1986, in the original principal
amount of Fourteen Million Two Hundred Ten Thousand and
No/100s Dollars ($14,210,000.00) made and given by Borrower
B to and in favor of The Variable Life Insurance Company, a
Texas corporation (the "Original Maryland Note"), which
Original Maryland Note, and the indebtedness evidenced
thereby, has been assigned to Lender and the request of the
Borrowers.
"Other Related Documents" - means those documents, as
hereafter amended, supplemented, restated, replaced or
modified from time to time, properly executed and in
recordable form, if necessary, listed on Exhibit F as Other
Related Documents, all in form and substance acceptable to
Lender.
"Park Plaza Property" - shall have the meaning ascribed to
such term in Recital B.
"Permitted Encumbrances" means, as to each Property, (a) the
liens, encumbrances and other matters described on Schedule
B to the title insurance policies insuring the liens of the
deeds of trust listed on Exhibit F with respect to such
Property, (b) the liens, encumbrances and security interests
in favor of Lender under the Loan Documents, (c) the liens
and security interests created pursuant to the Equipment
Leases with respect to such Property, and (d) any other
liens, encumbrances or other similar matters which are
permitted under the Loan Documents or otherwise approved by
Lender.
"Plan" - means a "plan" as that term is defined in Section
3(3) of ERISA or Section 4975 of the Code.
"Plan Asset Regulation" - means the United States Department
of Labor regulations at 29 C.F.R. 2510.3-101.
"Properties" - means (a) collectively, the Gateway Property,
the Park Plaza Property, the Memphis Property, the Seattle Property
5
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and the Rockville Property and (b) individually,
any one of the foregoing.
"Property Proceeds" - shall have the meaning ascribed to
such term in Section 7.10.
"Required Permits" - shall have the meaning ascribed to such
term in Section 5.18.
"Rockville Property" - shall have the meaning ascribed to
such term in Recital E.
"Seattle Property" - shall have the meaning ascribed to such
term in Recital D.
1.2 Exhibits and Schedules Incorporated. Exhibits A,
B, C, D, E, F, G, H, I and J and Schedules 5.6 and 6.1, all
attached hereto are hereby incorporated into this Agreement.
ARTICLE II. LOAN
2.1 Loan. Subject to the terms of this Agreement,
Lender agrees to lend to Borrowers and Borrowers agree to
borrow from Lender the principal sum of Twenty-Six Million
Six Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), said sum to be evidenced by the Note. The
Loan shall be fully disbursed on the date that all of the
conditions contained in this Agreement are either satisfied
or waived by Lender.
2.2 Loan Documents. Borrowers shall deliver to Lender,
concurrently with this Agreement, each of the documents,
properly executed and in recordable form, as applicable,
described on Exhibit F as Loan Documents, together with
those documents described on Exhibit F as Other Related
Documents. Notwithstanding the foregoing, Borrowers shall
deliver to Lender within ninety (90) days after the date
hereof the Non-Disturbance, Attornment, Estoppel and
Subordination Agreements listed in Paragraph A. on
Exhibit F and Borrowers shall deliver to Lender within sixty
(60) days after the date hereof the consent of Burlington
Northern Railroad Company as listed in Paragraph A. on
Exhibit F.
2.3 Effective Date. The date of the Loan Documents is
for reference purposes only. The effective date of delivery
and transfer to Lender of the security under the Loan Docu-
ments and of Borrowers' and Lender's obligations under the
Loan Documents shall be the date (the "Effective Date") the
Loan (or any part thereof) is disbursed to Borrowers or as
Borrowers may otherwise direct.
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2.4 Maturity Date. Subject to Lender's rights to
accelerate the Loan in accordance with the terms and
provisions of the Loan Documents, the entire principal
balance of the Loan (together with all accrued and unpaid
interest and all other Liabilities) shall be due and payable
on December 9, 1997 (the "Maturity Date"). All payments due
to Lender under this Agreement, whether at the Maturity Date
or otherwise, shall be paid in immediately available funds.
2.5 Credit for Principal Payments. Any payment made
upon the outstanding principal balance of the Loan shall be
credited as of the Business Day received, provided such
payment is received by Lender no later than 11:00 a.m.
(Pacific Standard Time or Pacific Daylight Time, as
applicable) and constitutes immediately available funds.
2.6 Full Repayment and Reconveyance. Upon receipt of
all sums owing and outstanding under the Loan Documents
(other than the Guaranty and the Hazardous Materials
Indemnity), Lender shall issue a full reconveyance or
release (as applicable) of the Properties from the liens
created by the Loan Documents; provided, however, that as a
condition precedent to such reconveyance or release, Lender
shall have received all escrow, closing and recording costs,
the costs of preparing and delivering such reconveyance and
any sums then due and payable under the Loan Documents. In
no event shall Lender be required to issue a reconveyance or
release (as applicable) of any one or more of the Properties
until receipt by Lender of all sums owing and outstanding
under the Loan Documents and satisfaction of the foregoing
conditions precedent.
2.7 Voluntary Prepayment. The Loan (or any part
thereof) may be prepaid provided, that Borrowers pay Lender
(as a condition to Lender's acceptance of the prepayment)
the Fixed Rate Price Adjustment provided for in the Note.
No prepayment fees (other than the Fixed Rate Price
Adjustment provided for in the Note) shall be payable in
connection with any such prepayment.
2.8 Limitation on Partners' Liability. With the
exception of Non-Recourse Exception Matters (as defined
below), Lender's recovery against Borrowers under the Loan
Documents shall be limited solely to the collateral given to
Lender as security for Borrowers' performance under the Loan
Documents and to the general assets of Borrowers themselves.
Such recovery shall not be a lien, or the basis of a claim
of lien or levy of execution, against the general assets of
any partner (other than Borrower A) of any Borrower.
Notwithstanding the foregoing, any general partner of any
Borrower and the general assets of any general partner of
any Borrower shall be fully liable to Lender to the
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same extent that any Borrower would be liable absent the
foregoing limitation of this paragraph for the following
(collectively, the "Non-Recourse Exception Matters"): (a)
fraud or willful misrepresentation on the part of any
Borrower or any partner; (b) waste; (c) failure of any
Borrower or any partner to pay any income or other taxes,
assessments or other charges attributable to any Borrower or
any partner which can create liens on any portion of one or
more of the Properties (to the full extent of any such
taxes, assessments or other charges); (d) any
misrepresentation on the part of any Borrower with respect
to the matters set forth in Section 5.16 of this Agreement;
(e) any amounts received in contravention of any covenant
set forth in Section 7.7 of this Agreement, including,
without limitation, the amount of any money or value of any
property received by any Borrower or any partner as a
distribution from any Borrower if such distribution was
prohibited under the terms of this Agreement (to the full
extent of such distribution); (f) any breach by any Borrower
of any covenant under Article VI, any representation or
warranty of any Borrower under such Article proving to have
been untrue when made, or the presence of any Hazardous
Materials in, on or about any of the Properties; (g) any
failure by any Borrower to comply with any provision of any
Loan Document prohibiting the sale or further mortgaging or
voluntarily encumbering of any one or more of the Properties
(or any direct or indirect interest therein or any direct or
indirect interest in any Borrower); (h) any failure of any
Borrower after a Default has occurred and is continuing, to
apply on a current basis and prior to other application, the
proceeds of rents and other income of any of the Properties
or other collateral towards the payment of current costs
which at that time have been accrued and are unpaid in
connection with the maintenance or operation of any of the
Properties; (i) insurance and/or condemnation proceeds which
are received by any Borrower and which are not delivered to
Lender or otherwise applied as required under the terms of
the Loan Documents; (j) security deposits which are received
by any Borrower from tenants of any of the Properties and
which are not delivered to Lender following the foreclosure
or other transfer of any of the Properties to Lender or
otherwise applied as required under the terms of the Loan
Documents; (k) all loss, damage, cost and expense (including
attorneys' fees and expenses) incurred by Lender as a result
of an uninsured casualty or from a casualty or liability
that is not insured in the amount and to the extent required
under the Loan Documents; or (l) any breach by any Borrower
of any covenant under Section 7.2. In addition, the
limitations hereof shall not be deemed to limit: (i) any
right Lender might otherwise have to obtain injunctive
relief against one or both of the Borrowers, any partner of
one or both Borrowers or any other person or entity; (ii)
any suit or action in connection with the preservation,
enforcement or foreclosure of the liens, mortgages,
assignments and security interests now
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or at any time hereafter securing the payment and performance of all
Liabilities and other obligations under this Agreement or
any of the other Loan Documents; or (iii) the collection of
amounts which may become owing or payable under or on
account of insurance, condemnation awards or damages for
other public actions or surety bonds maintained or provided
by one or both Borrowers; provided, however, that the
assertion by Lender of any such right, suit, action or
collection of amounts shall not result in a monetary claim
upon the general assets of any partner of one or both
Borrowers except as otherwise provided herein. The parties
acknowledge that the terms "partner" or "general partner" or
similar terms when used in this Agreement or in the other
Loan Documents in connection with a joint venture shall be
deemed to include, without limitation, any joint venturer in
such joint venture.
ARTICLE III. DISBURSEMENT
3.1 Conditions Precedent. Lender's obligation to make
the Loan shall be subject to satisfaction of each of the
following conditions precedent:
(a) There shall exist no Default under this Agree-
ment or under any of the other Loan Documents or the Other
Related Documents, or any event, omission or failure of
condition which would constitute a Default after notice or
lapse of time, or both.
(b) Lender shall have received all of the Loan
Documents, the Other Related Documents and all other docu-
ments, instruments, policies, and forms of evidence or other
materials required by Lender under the terms of this
Agreement or any of the other Loan Documents.
(c) Lender shall have received and approved: (i) a
soils report for each of the Properties and (ii) an
environmental questionnaire and environmental site
assessment with respect to the presence, if any, of
Hazardous Materials on each of the Properties.
(d) Lender shall have received a commitment for an
ALTA mortgagee policy of title insurance with respect to
each of the Properties (i) issued by a title insurance
company acceptable to Lender, (ii) in an amount acceptable
to Lender (not to exceed in the aggregate the amount of the
Loan), (iii) subject only to matters approved by Lender in
writing, (iv) containing those endorsements required by
Lender and (v) otherwise in form and substance acceptable to
Lender. During the term of the Loan, Borrowers shall
deliver to Lender (at Borrowers' sole cost and
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<PAGE>
expense), within five (5) days of Lender's written request, such
endorsements to the title insurance policy as Lender may
reasonably require in connection with (A) any amendment or
modification to the Loan Documents, (B) any protective
advance of funds made by Lender (of any type or nature) or
(C) any advance of funds made by Lender after the occurrence
of a Default (whether as a protective advance, payment due
to third parties or otherwise).
3.2 Disbursement of the Loan. Any disbursements of the
Loan which are made by means of wire transfer shall be
subject to the provisions of any funds transfer agreement
which is identified on Exhibit F attached hereto.
ARTICLE IV. INSURANCE
Borrowers shall, while any obligation of Borrowers under
any Loan Document remains outstanding, maintain at
Borrowers' sole expense, with licensed insurers reasonably
approved by Lender, the following policies of insurance in
form and substance reasonably satisfactory to Lender:
4.1 Property Insurance. With respect to each of the
Properties, a hazard insurance policy, containing such
endorsements as Lender may reasonably require. Lender shall
be named on the policies under a Lender's Loss Payable
Endorsement (form #438BFU or equivalent).
4.2 Flood Hazard Insurance. With respect to each of
the Properties, a policy of flood insurance, as required by
applicable governmental regulations, or as deemed reasonably
necessary by Lender.
4.3 Liability Insurance. With respect to each of the
Properties, a policy of comprehensive general liability
insurance with limits as reasonably required by Lender,
insuring against liability for injury and/or death to any
person and/or damage to any property.
4.4 General. Borrowers shall provide to Lender the
originals of all required insurance policies, or other
evidence of insurance reasonably acceptable to Lender. All
insurance policies shall provide that the insurance shall
not be cancelable or materially changed without ten (10)
days prior written notice to Lender. Lender shall be named
under a Lender's Loss Payable Endorsement (form #438BFU or
equivalent) on all property insurance policies which
Borrowers maintain.
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4.5 Flood Zone Notification. If required by applicable
law, each Borrower, as lessor or seller of one or more of
the Properties (or any portion thereof) under any existing
or future Lease or sale agreement, shall promptly give
written notice to all lessees or purchasers of the fact that
said Property is located in a flood hazard area. Borrowers
acknowledge that such written notices, if required by
applicable law, have been given by them or will be promptly
given.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender's entry into this
Agreement, Borrowers represent and warrant to Lender as of
the Effective Date that:
5.1 Authority/Enforceability. Borrowers are in
compliance with all laws and regulations applicable to their
organization, existence and transaction of business (the
failure of which could adversely affect the value of one or
more of the Properties, the Lender's interest therein or the
ability of Borrowers to operate the Properties in a first
class manner) and Borrowers have all necessary rights and
powers to own the Properties and to perform their
obligations hereunder and under the other Loan Documents.
5.2 Binding Obligations. Borrowers are authorized to
execute, deliver and perform their obligations under the
Loan Documents, and such obligations shall be valid and
binding obligations of Borrowers.
5.3 Formation and Organizational Documents. To the
extent required by Lender, Borrowers have delivered to
Lender all formation and organizational documents of
Borrowers and of such other entities as provided for on
Exhibit F, and all such formation and organizational
documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender.
Borrowers shall promptly provide Lender with copies of any
amendments or modifications of the formation or organiza-
tional documents.
5.4 No Violation. Borrowers' execution, delivery and
performance under the Loan Documents do not: (a) require
any consent or approval not heretofore obtained under any
partnership agreement, joint venture agreement, articles of
incorporation, bylaws, operating agreement or other
document; (b) violate any governmental requirement or any
other statute, law, regulation or ordinance or any order or
ruling of any court or governmental entity; or (c) conflict
with, or constitute a breach or default or permit the
acceleration of obligations under any agreement, contract,
lease, or other document; in each case, by which one or
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both of the Borrowers, one or more partners of any Borrower or
one or more of the Properties is bound or affected.
5.5 Compliance with Laws. Borrowers have all permits,
licenses, exemptions and approvals necessary for the current
use of the Properties.
5.6 Litigation. Except as disclosed in Schedule 5.6
attached hereto and made a part hereof, there are no claims,
actions, suits or proceedings pending, or to either
Borrower's knowledge threatened, against one or both of the
Borrowers or affecting one or more of the Properties.
5.7 Financial Condition. All financial statements and
information heretofore delivered to Lender by Borrowers,
including, without limitation, information relating to the
financial condition of Borrowers, the Guarantors, the
Properties and the partners of Borrowers, fairly and
accurately represent the financial condition of the subject
thereof and have been prepared in accordance with generally
accepted accounting principles consistently applied.
Borrowers acknowledge and agree that Lender may request and
obtain additional information from third party credit
reporting agencies or any such similar service regarding any
of the above, including, without limitation, credit reports.
5.8 No Material Adverse Change. There has been no
material adverse change in the financial condition of either
of the Borrowers, either of the Guarantors or any partner of
either of the Borrowers since the dates of the latest
financial statements furnished to Lender by either of the
Borrowers and, except as otherwise disclosed to Lender in
writing, neither of the Borrowers, neither of the Guarantors
nor any partner of either of the Borrowers has entered into
any material transaction which is not disclosed in such
financial statements.
5.9 Accuracy. All reports, documents, instruments,
information and forms of evidence delivered to Lender by
either or both of the Borrowers concerning the Loan or
security for the Loan or required by the Loan Documents are
accurate and correct in all material respects and
sufficiently complete to give Lender true and accurate
knowledge of their subject matter, and do not contain any
material misrepresentation or omission.
5.10 Tax Liability. Borrowers have filed all required
federal, state, county and municipal tax returns and have
paid all taxes and assessments owed and payable, and neither
of the Borrowers has any knowledge of any basis for any
additional payment with respect to any such taxes and
assessments.
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5.11 No Defaults. Neither of the Borrowers, nor any
Guarantor, nor any partner of either of the Borrowers is in
default under any contract, agreement or other document by
which it or its property is bound, which default could
materially and adversely affect the ability of either of the
Borrowers or either of the Guarantors to perform their
obligations under the Loan Documents.
5.12 Management Agreements. There are no property
management or leasing agreements respecting any of the
Properties, and Glenborough Corporation acts as property
manager for the Borrowers under the terms of the partnership
agreement for Borrower A and the joint venture agreement of
Borrower B.
5.13 Chief Executive Office. The chief executive
office and principal place of business of both of the
Borrowers is located as follows:
Glenborough Corporation
400 South El Camino Real
11th Floor
San Mateo, California 94402
5.14 Ownership Structure. The ownership structure of
Borrowers and their partners (including the percentage
ownership interests) is set forth on Exhibit G attached
hereto and made a part hereof.
5.15 ERISA. (a) Borrowers do not maintain or have any
obligation or liability with respect to, and Borrowers have
never maintained or had any obligation or liability with
respect to, any Benefit Plan.
(b) Neither (i) the assets of any of the
Borrowers, nor (ii) the assets of any person or entity which
owns an equity interest in either of the Borrowers are
pursuant to ERISA or the Code considered for any purpose of
ERISA or Section 4975 of the Code to be assets of a Plan.
Neither the execution or delivery of this Agreement or of
any of the other Loan Documents by Borrowers, nor the
performance by Borrowers of their obligations under this
Agreement or under any of the other Loan Documents, nor any
transaction contemplated under this Agreement or under any
of the other Loan Documents, nor the exercise by Lender of
any of its rights or remedies under this Agreement or under
any of the other Loan Documents is or will be a "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code. For purposes of the preceding
representation and warranty, it is assumed that the ERISA
Assumption is accurate.
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5.16 Leases. The Leases listed on the rent roll
attached hereto as Exhibit H and made a part hereof are, as
of the date hereof, the only Leases of the Properties and
none of such Leases have been modified, altered or amended
except as set forth on Exhibit H. All information contained
on Exhibit H is true, accurate and complete. Except as
otherwise disclosed on Exhibit H, each of the Leases is in
full force and effect and is enforceable in accordance with
its terms, and no breach, default or event which would
constitute a breach or default after notice or the passage
of time, or both, exists under any of the Leases on the part
of any party thereto. Except as otherwise set forth on
Exhibit H: (a) the lessees under the Leases have accepted
and are in possession of their respective premises, all
leasehold improvements in such premises have been completed
and no additional work or payments with respect to the same
are required on the part of the lessors; (b) no party under
any of the Leases has any charge or claim of offset under
any Lease or otherwise, against rents or other amounts due
or to become due under the Leases; (c) no party under any of
the Leases has paid, or is entitled to any credit for, any
security deposit; (d) no party under any of the Leases has
any right to renew or extend the term of its Lease or to
terminate its Lease prior to the stated termination date;
(e) no party under any of the Leases has any right or option
to purchase all or any portion of any of the Properties or
to participate in the proceeds of any sale of the same; and
(f) no rent or other payment under any of the Leases has
been paid more than one (1) month in advance. None of either
Borrower's interest under any of the Leases has been
transferred or assigned.
5.17 Equipment Leases. (a) (i) one of the Borrowers or
its predecessor in interest as lessee, has heretofore
executed and delivered certain equipment leases described on
Exhibit I attached hereto and made a part hereof and (ii)
one or both of the Borrowers may hereafter execute and
deliver additional equipment leases for equipment to be used
at, on or in connection with one or more of the Properties
(the equipment leases referred to in clause (i) and clause
(ii) above are hereinafter collectively referred to as the
"Equipment Leases").
(b) Borrowers represent and warrant that (i) one
of the Borrowers is lessee under each Equipment Lease; (ii)
no Equipment Lease is in default (and no condition exists
that after the giving of notice, the passage of time or
both, would constitute a default); (iii) no Equipment Lease
has been heretofore sold, assigned, transferred or set over
by either Borrower and so long as any Liabilities shall
remain outstanding will not at any time be sold, assigned,
transferred or set over by either Borrower or by any person
or persons whomsoever; (iv) to the extent the Equipment
Leases are assignable, one of the
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Borrowers has good right to assign, transfer and set over the
Equipment Leases and to grant to and confer upon Lender the rights,
interests, powers and/or authorities granted and conferred in the deeds
of trust executed in connection herewith for each of the
Properties; (v) the equipment that is the subject of the
Equipment Leases will not be removed from the Property
relating to such Equipment Leases without consent of Lender,
unless said equipment is replaced with equipment of like or
better utility that is owned by one of the Borrowers (and
subject to the lien of the deed of trust relating to the
applicable Property) or leased (and subject to the
assignment set forth in the deed of trust for such
Property); and (vi) Exhibit I sets forth all of the
Equipment Leases that exist as of the Effective Date.
5.18 Required Permits. Certain governmental licenses,
permits and authorizations (herein called "Required
Permits") are required (or may be required from time to
time) for the lawful operation of each of the Properties.
Borrowers represent and warrant that (i) one of the
Borrowers is the licensee or permittee under each Required
Permit (and all of the Required Permits are in full force
and effect); (ii) each Required Permit has been duly issued
and all fees in connection therewith paid, and no default
exists thereunder; (iii) no Required Permit has been
heretofore sold, assigned, transferred or set over by any
instrument (other than other Loan Documents) now in force
and so long as any of the Liabilities shall remain
outstanding will not, without Lender's prior consent, at any
time be sold, assigned, transferred or set over by any of
the Borrowers or by any person or persons whomsoever; and
(iv) to the extent permitted by law, one of the Borrowers
has good right to assign, transfer and set over the
assignable Required Permits and to grant to and confer upon
Lender the rights, interests, powers and/or authorities
granted and conferred in the deeds of trust executed in
connection herewith for each of the Properties. Borrowers
hereby represent and warrant that the Required Permits
listed on Exhibit J attached hereto and made a part hereof
constitute all of the licenses, permits, authorizations and
approvals required to lawfully operate each of the
Properties for its full intended purpose and use.
ARTICLE VI. HAZARDOUS MATERIALS
6.1 Special Representations and Warranties. Without in
any way limiting the other representations and warranties
set forth in this Agreement, and after reasonable
investigation and inquiry, Borrowers hereby represent and
warrant, in each case, to the best of Borrowers' knowledge
as of the Effective Date, as follows:
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(a) Hazardous Materials. Except as disclosed on
Schedule 6.1 attached hereto and made a part hereof, none of
the Properties is (or has been) a site for the use,
generation, manufacture, storage, treatment, release,
threatened release, discharge, disposal, transportation or
presence of any oil, flammable explosives, asbestos, urea
formaldehyde insulation, radioactive materials, hazardous
wastes, toxic or contaminated substances or similar
materials, including, without limitation, any substances
which are "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under the
Hazardous Materials Laws, as described below, and/or under
any other applicable environmental laws, ordinances or
regulations (collectively, the "Hazardous Materials"),
except for any such Hazardous Materials that are used in the
ordinary course of business and in compliance with all
applicable Hazardous Materials Laws and all manufacturers'
specifications.
(b) Hazardous Materials Laws. Except as disclosed
on Schedule 6.1 attached hereto and made a part hereof, each
of the Properties is in compliance with all laws, ordinances
and regulations relating to Hazardous Materials ("Hazardous
Materials Laws"), including, without limitation: the Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 et seq.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the
Comprehensive Environment Response, Compensation and
Liability Act of 1980, as amended (including the Superfund
Amendments and Reauthorization Act of 1986, "CERCLA"), 42
U.S.C. Section 9601 et seq.; the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the
Occupational Safety and Health Act, as amended, 29 U.S.C.
Section 651, the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. Section 11001 et seq.; the Mine
Safety and Health Act of 1977, as amended, 30 U.S.C. Section
801 et seq.; the Safe Drinking Water Act, as amended, 42
U.S.C. Section 300f et seq.; and all applicable state and
local laws, orders and regulations.
(c) Hazardous Materials Claims. There are no
claims or actions ("Hazardous Materials Claims") pending or
threatened against either of the Borrowers or affecting any
one or more of the Properties by any governmental entity or
agency or by any other person or entity relating to
Hazardous Materials or pursuant to the Hazardous Materials
Laws.
6.2 Hazardous Materials Covenants. Borrowers covenant
and agree as follows:
(a) No Hazardous Activities. Except as disclosed
on Schedule 6.1, none of the Borrowers shall cause or permit any of
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the Properties to be used as a site for the use,
generation, manufacture, storage, treatment, release,
discharge, disposal, transportation or presence of any Haz-
ardous Materials, except for any such Hazardous Materials
that are used in the ordinary course of business and in
compliance with all applicable Hazardous Materials Laws and
all manufacturers' specifications.
(b) Compliance. Borrowers shall comply and cause
the Properties to comply with all Hazardous Materials Laws.
(c) Notices. Borrowers shall promptly notify
Lender in writing of: (i) any knowledge by Borrowers of any
Hazardous Materials on, under or about any of the
Properties; (ii) any knowledge by Borrowers that any of the
Properties do not comply with any Hazardous Materials Laws;
(iii) any Hazardous Materials Claims initiated or, to
Borrowers' knowledge, threatened; and (iv) any knowledge by
Borrowers of any Hazardous Materials on any real property
adjoining any of the Properties.
(d) Remedial Action. In response to the presence
of any Hazardous Materials on, under or about any of the
Properties, Borrowers shall immediately take, at Borrowers'
sole expense, all remedial action required by any Hazardous
Materials Laws and any judgment, consent decree, settlement
or compromise in respect to any Hazardous Materials Claims.
6.3 Inspection By Lender. Upon reasonable prior notice
to Borrowers, Lender, its employees and agents, may from
time to time (whether before or after the commencement of a
nonjudicial or judicial foreclosure proceeding) enter,
inspect and take samples of any one or more of the
Properties for the purpose of determining the existence,
location, nature and magnitude of any past or present
release or threatened release of any Hazardous Materials
into, onto, beneath or from any one or more of the
Properties.
6.4 Hazardous Materials Indemnity. Borrowers hereby
agree to defend, indemnify and hold harmless Lender, its
directors, officers, employees, agents, successors, assigns
and participants (collectively, the "Indemnified Parties")
from and against any and all losses, damages, liabilities,
claims, actions, judgments, court costs and legal or other
expenses (including, without limitation, reasonable
attorneys' and paralegals' fees and expenses, both internal
and external) which one or more of the Indemnified Parties
may incur as a direct or indirect consequence of the use,
generation, manufacture, storage, disposal, threatened
disposal, transportation or presence of Hazardous Materials
in, on, under or about any one or more of the Properties.
Borrowers shall promptly pay to the Indemnified Parties
(upon demand) any amounts owing under this indemnity,
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together with interest from the date of demand until paid at
the rate of interest applicable to the principal balance of
the Note. Notwithstanding the foregoing, this indemnity
shall not apply to, losses, damages, costs, expenses,
liabilities or claims arising out of any environmental
condition solely caused by or solely resulting from the
gross negligence or willful misconduct of any Indemnified
Party or its agents. BORROWER'S DUTY AND OBLIGATIONS TO
DEFEND, INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES
SHALL SURVIVE THE CANCELLATION OF THE NOTE AND THE RELEASE
OF THE LIENS CREATED BY ANY OF THE LOAN DOCUMENTS.
6.5 Legal Effect of Section. Borrowers and Lender
agree that Borrowers' duty to indemnify Lender hereunder
shall survive: (i) any judicial or non-judicial foreclosure
under any of the Loan Documents, or transfer of any one or
more of the Properties in lieu thereof; (ii) the release and
reconveyance or cancellation of any of the Loan Documents;
and (iii) the payment in full of the Liabilities.
ARTICLE VII. COVENANTS OF BORROWERS
7.1 Expenses. Borrowers shall promptly pay Lender upon
demand all reasonable costs and expenses (both internal and
external) incurred by Lender in connection with or as a
result of: (a) the preparation of the Loan Documents; (b)
the disbursement of the Loan; (c) the satisfaction of the
conditions to the disbursement of the Loan; (d) the
administration of the Loan; (e) any request by Borrowers or
their agents for approval, consent or any other action to be
taken by Lender under (or in connection with) any of the
Loan Documents or the transactions contemplated thereby;
(f) the enforcement or satisfaction by Lender of any of
Borrowers' obligations under this Agreement or the other
Loan Documents; and (g) any Default. For all purposes of
this Agreement, Lender's costs and expenses under this
Section 7.1 shall include, without limitation, all internal
and external appraisal fees, cost engineering and inspection
fees, reasonable legal and paralegal fees and expenses,
accounting fees, environmental consultant fees, auditor
fees, and the cost to Lender of any title insurance premiums
and title surveys, in each case incurred in connection with
the actions described in clauses (a) through (g) above.
Borrowers recognize and agree that (in addition to the
foregoing) formal written appraisals of one or more of the
Properties by a licensed independent appraiser may be
required by Lender's internal procedures and/or federal
regulatory reporting requirements on an annual and/or
specialized basis and that Lender may, at its option from
time to time, require an inspection and appraisal to be made
of one or more of the Properties by an appraiser selected by
Lender (provided, however,
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prior to the occurrence of a Default Borrower shall not be required
to pay for more than the initial appraisal performed for
each of the Properties).
7.2 ERISA. (a) Borrowers shall at all times comply with
all applicable provisions of ERISA with respect to any
retirement or other employee benefit plan to which either or
both of them are a party as employer, and as soon as
possible after either Borrower knows, or has reason to know,
that any Reportable Event (as defined in ERISA) with respect
to any such plan of either Borrower has occurred, it shall
furnish to Lender a written statement setting forth details
as to such Reportable Event and the action, if any, which
Borrowers propose to take with respect thereto, together
with a copy of the notice of such Reportable Event furnished
to the Pension Benefit Guaranty Corporation.
(b) Borrowers shall at no time maintain, or have
any obligation or liability with respect to, any Benefit
Plan. Borrowers shall take and cause to be taken all
necessary actions so that at no time shall any ERISA
Affiliate maintain, or have any obligation or liability with
respect to, any Benefit Plan.
(c) Borrowers shall take and cause to be taken all
necessary actions so that (i) at all times neither (A) the
assets of either or both of the Borrowers, nor (B) the
assets of any person or entity which directly or indirectly
owns an equity interest in either or both of the Borrowers
are pursuant to ERISA or the Code considered for any purpose
of ERISA or Section 4975 of the Code to be assets of a Plan,
and (ii) assuming the accuracy of the ERISA Assumption,
regardless of whether the ERISA Assumption is in fact
accurate, at all times neither the execution or delivery of
this Agreement or of any of the other Loan Documents by
Borrowers, nor the performance by Borrowers of their
obligations under this Agreement or under any other Loan
Document, nor any transaction contemplated under this
Agreement or under any other Loan Document, nor the exercise
by Lender of any of its rights or remedies under this
Agreement or under any of the other Loan Documents will be a
"prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code. Borrowers shall
deliver to Lender such certifications or other evidence from
time to time as reasonably requested by Lender that a
Default described in Section 9.1(l) has not occurred.
7.3 Liens. Borrowers covenant and agree that, except
for the Permitted Encumbrances and except as may otherwise
be expressly permitted under the Loan Documents (and subject
to the limitations provided for therein), Borrowers will not
create or permit to exist any lien upon or with respect to
any of the property that secures the Loan. Notwithstanding
anything to the
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contrary contained herein or in any of the
other Loan Documents, Borrowers shall have the right to
contest by appropriate legal proceedings diligently
prosecuted and in a manner that shall prevent interference
with the use of the Properties for their intended purpose
and foreclosure or other action adversely affecting Lender's
liens thereon (a) any governmental requirement, act or
action affecting any of the Properties, (b) any real estate
taxes and assessments imposed or assessed upon any of the
Properties or which may be or become a lien thereon, and
(c) any mechanic's, materialman's or other liens or claims
for lien (including subordinate liens) upon any of the
Properties (all herein called "Contested Items"), and the
existence of a Contested Item shall not constitute a Default
hereunder, if all of the following conditions are satisfied:
(i) Borrowers shall give notice of any
Contested Item to Lender at the time the same shall
be asserted.
(ii) Borrowers shall deposit with Lender (or
with the appropriate government authority, if
applicable) the full amount of such Contested Item
or which may be claimed by any governmental
authority or which might result from an adverse
conclusion of such contest, together with such
amount as Lender may reasonably estimate as
interest or penalties which might arise during the
period of contest; provided that in lieu of such
payment Borrowers may furnish to Lender a bond or
title indemnity in such amount and form, and issued
by a bond or title insurance company, as may be
reasonably satisfactory to Lender.
(iii) Borrowers shall diligently prosecute
the contest of any Contested Item by appropriate
legal proceedings having the effect of staying the
foreclosure or forfeiture of the Properties (and
any interference with the use of the Properties for
their intended purpose) and shall permit Lender to
be represented in any such contest and shall pay
all expenses incurred by Lender in so doing,
including, but not limited to, reasonable fees and
expenses of Lender's counsel (all of which shall
constitute so much additional Liabilities bearing
interest at the rate of interest applicable under
the Note until paid, and payable upon demand).
(iv) Borrowers shall pay such Contested Item
together with interest and penalties thereon (A) if
and to the extent that any such Contested Item
shall be determined adverse to Borrowers, or
(B) upon demand by
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Lender if, in the reasonable
opinion of Lender, and notwithstanding any such
contest any of the Properties shall be in jeopardy
or in danger of being forfeited or foreclosed;
provided, that if Borrowers shall fail to do so,
Lender may, but shall not be required to, pay such
Contested Item and interest and penalties thereon
and such other sums as may be necessary in the
judgment of Lender to obtain the release and
discharge of such item; and any amount expended by
Lender in so doing shall be so much additional
Liabilities bearing interest at the rate of
interest applicable under the Note until paid, and
payable upon demand; and provided further that
Lender may in such case use and apply for said
purpose the monies deposited as provided in
subsection (ii) above or may demand payment upon
any bond or title indemnity furnished as aforesaid.
7.4 Indebtedness. Borrowers covenant and agree that,
except as may be otherwise expressly permitted under the
Loan Documents (and subject to the limitations provided for
therein) or as otherwise approved in writing by Lender,
Borrowers shall not incur any indebtedness (which shall be
deemed to include, but not be limited to, guarantee
obligations and capital lease obligations) other than
indebtedness incurred in the normal day to day operation of
the Properties.
7.5 Conduct of Business. Borrowers covenant and agree
that they will not conduct any business other than the
operation of the Properties. Borrowers covenant and agree
that they will not acquire (whether directly or indirectly)
any interests in real estate that are not owned by Borrowers
on the Effective Date (said prohibition shall be deemed to
include, but shall not be limited to, the acquisition of an
interest in a partnership, corporation or limited liability
company that directly or indirectly owns an interest in real
estate).
7.6 Performance by Third Parties. To the extent that
any of the obligations of Borrowers hereunder (or under any
of the other Loan Documents) are obligations that need to be
performed by (or with the assistance or cooperation of)
third parties, Borrowers covenant and agree to cause such
third parties to perform said obligations.
7.7 Distributions to Partners and Affiliates.
Borrowers will retain all rents and other revenues, income
and receipts from the Properties in (i) accounts of Borrower
B, as to the Rockville Property, and (ii) accounts of
Borrower A, as to the other Properties, will not commingle
such rents and other revenues, income and receipts with
assets of any Affiliates of any Borrower, and will use such
rents and other revenues, income
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and receipts solely for Property operations and debt service
on the Loan, with any and all excess amounts being held in
reserve for the same. Borrowers covenant and agree that neither
Borrower will make any distributions, loans or payments (of any
type or nature) to or at the direction of any Affiliate of or
partner of either of the Borrowers or any Affiliate of any of the
foregoing (collectively, "Distributions"). Neither Borrower
shall pay to any Borrower, any partner of any Borrower or
any Affiliate of any of the foregoing any overhead fees,
leasing fees, management fees, marketing fees, consulting
fees (or any fees similar to any of the foregoing) during
the term of the Loan; provided, however, the foregoing
provision of this Section 7.7 shall not prohibit Borrowers
from paying (so long as no Default exists hereunder) the
partnership administration fees, asset management and
administration fees and property management fees expressly
provided to be paid to certain of the general partners of
the Borrowers (or to the general partners of such general
partners) under the partnership agreement of Borrower A and
the joint venture agreement of Borrower B.
7.8 Leases. Borrowers covenant and agree that
Borrowers shall not enter into any Lease: (i) for space of
ten thousand (10,000) or more square feet; (ii) for a term
of five (5) or more years; or (iii) at a rental rate of less
than fair market value or under other terms and conditions
that are less advantageous to the lessor than those
customary in leases of similar space for a similar term
under the then-current market conditions; in each case
unless Lender, in its reasonable discretion, has approved of
the transaction as a whole and all of the terms thereof.
Borrowers further covenant and agree that subject to the
limitations contained herein, Borrowers shall use their best
efforts to keep all of the space in the Properties leased at
all times at rentals that are not less than the market
rental value for the Properties.
7.9 Management Agreements. Borrowers covenant and
agree that except for the partnership agreement of Borrower
A and the joint venture agreement of Borrower B, neither of
which shall be amended without the prior written consent of
Lender (which consent shall not be unreasonably withheld or
delayed), Borrower shall not enter into any agreement for
the management, leasing or operation of the Properties (or
any portion thereof), without first obtaining Lender's prior
written consent (which consent shall not be unreasonably
withheld or delayed).
7.10 Insurance and Condemnation Proceeds. (a)
Borrowers covenant and agree that the following shall be
paid directly to Lender (i) all awards of damages and all
other compensation payable directly or indirectly by reason
of a condemnation affecting any of the Properties, (ii) all
other claims and awards
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for damages to, or decrease in value
of, any of the Properties, (iii) all proceeds of any
insurance policies payable by reason of a loss sustained to
any of the Properties and (iv) all interest which may accrue
on any of the foregoing (collectively, the "Property
Proceeds"). Borrowers covenant and agree to notify Lender
within five (5) Business Days of the occurrence of any event
that may result in Property Proceeds. Lender may (at its
discretion) apply all or any portion of the Property
Proceeds that it receives to its expenses in settling,
prosecuting and defending any claim related thereto and may
apply the balance of the Property Proceeds to the
Liabilities in any order, and/or Lender may release all or
any part of the Property Proceeds to Borrower upon any
conditions Lender may reasonably impose. Lender may
commence, appear in, defend and prosecute any action related
to the Property Proceeds and may adjust, compromise, settle
and collect all Property Proceeds.
(b) At its sole option, Lender may permit Property
Proceeds held by Lender to be used for repair or restoration
but may condition such application upon reasonable
conditions, including, without limitation: (i) that no
Default exists (and no event has occurred that with the
giving of notice or the passage of time (or both) would
constitute a Default), (ii) the deposit with Lender of such
additional funds which Lender reasonably determines are
needed to pay all costs of the repair or restoration, (iii)
the establishment of an arrangement for lien releases and
disbursement of funds reasonably acceptable to Lender, (iv)
the delivery to Lender of plans and specifications for the
work, a contract for the work signed by a contractor
reasonably acceptable to Lender, a cost breakdown for the
work and a payment and performance bond for the work, all of
which shall be reasonably acceptable to Lender and (v) the
delivery to Lender of evidence reasonably acceptable to
Lender (A) that after completion of the work the income from
the Property affected will be sufficient to pay all expenses
for such Property, (B) that upon completion of the work, the
size, capacity and total value of such Property will be at
least as great as it was before the damage or condemnation
occurred, (C) that there has been no material adverse change
in the financial condition or credit of Borrowers since the
Effective Date and (D) of the satisfaction of any additional
conditions that Lender may reasonably establish and that are
customarily imposed by Lender. Borrowers acknowledge that
the conditions described above are reasonable.
7.11 Use of the Property. Borrowers covenant and agree
(a) to continue the current use and operation of the
Properties, (b) not to change the use thereof without the
prior written consent of Lender and (c) subject to Section
7.3, to operate the Properties in compliance with all laws,
statutes, ordinances, rules and regulations applicable
thereto (the failure of which
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could adversely affect the
value of the Properties, the Lender's interest therein or
the ability of Borrowers to operate the Properties in a
first-class manner). Borrowers further covenant and agree
to maintain all of the licenses, permits and approvals
necessary for the current use of the Properties.
7.12 ADA Compliance. Borrowers shall make all changes
and alterations to the Properties as and when required by
the ADA.
7.13 Required Notices. Borrowers covenant and agree to
notify Lender, within five (5) Business Days from the
occurrence of any event known to either of the Borrowers (or
the receipt of any notice by either or the Borrowers) that
could have an adverse affect on either of the Borrowers,
either of the Guarantors, any partner of Borrowers or any of
the Properties (or any portion thereof), including, but not
limited to (a) the assertion of any claim (other than
insured claims) affecting any of the Borrowers, any of the
Guarantors, any partner of Borrowers or any of the
Properties, (b) the filing of any action or proceeding
affecting any of the Borrowers, any of the Guarantors, any
partner of Borrowers or any of the Properties, (c) the
occurrence of any damage to any of the Properties, (d) any
condemnation offer or action affecting any of the
Properties, (e) notices regarding violations of laws
affecting any of the Borrowers, any or the Guarantors, any
partner of Borrowers or any of the Properties, or (f)
notices alleging a default (by any party thereto) under
either the partnership agreement of Borrower A or the joint
venture agreement of Borrower B.
7.14 Chief Executive Office. Borrowers covenant and
agree that they will notify Lender of any change in the
location of the chief executive office of Borrowers or
either of them within five (5) days from the date of said
change.
7.15 Ownership Structure. From time to time and within
five (5) days after a request from Lender, Borrowers shall
deliver to Lender a certificate that sets forth (as of the
date of said certificate) any changes to Exhibit G.
7.16 Further Assurances. Upon Lender's request and at
Borrowers' sole cost and expense, Borrowers shall execute,
acknowledge and deliver any other instruments and perform
any other acts necessary or proper, as reasonably determined
by Lender, to carry out the purposes of this Agreement and
the other Loan Documents and to perfect and preserve any
liens created by the Loan Documents.
7.17 Assignment. Without the prior written consent of
Lender, Borrowers shall not assign Borrowers' interest under
any of the Loan Documents, or in any monies due or to become due
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thereunder, and any assignment without such consent
shall be void. In this regard, Borrowers acknowledge that
Lender would not make this Loan except in reliance on
Borrowers' expertise, reputation, prior experience and
Lender's knowledge of Borrowers.
ARTICLE VIII. REPORTING COVENANTS
8.1 Financial Information. (a) Borrowers shall furnish
(or cause to be furnished) to Lender, the following
financial statements and information at the following times:
(i) Within fifteen (15) days after the end of each
calendar month an operating statement for each
of the Properties (prepared in accordance with
generally accepted accounting principles
consistently applied) for the preceding
calendar month, certified as true and correct
by a senior financial officer of each of the
Borrowers or one of the partners of each of
the Borrowers.
(ii) Within fifteen (15) days after the end of
each calendar month, a rent roll for each
of the Properties certified by a senior
financial officer of each of the Borrowers
or one of the partners of each of the
Borrowers. The rent roll shall be in a
form acceptable to Lender and shall show
the following information with regard to
each tenant: the name of the tenant, the
space (and size of the space) that is
leased to the tenant, the monthly or other
periodic rental amounts, the status of the
rental payments, whether or not there is a
security deposit and the amount currently
held, the commencement date and expiration
date of the Lease and the existence and
nature of any options.
(iii) Within ninety (90) days after the end of each
fiscal year of each of the Borrower's
operation, an audited balance sheet and an
audited income and expense statement, prepared
in accordance with generally accepted
accounting principles consistently applied by
a certified public accountant of recognized
standing.
(iv) With respect to each of the Guarantors,
within ninety (90) days after the end of
each fiscal year of each such Guarantor's
operation, an audited balance sheet and an
audited income and expense statement,
prepared in accordance with generally
accepted accounting principles consistently
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<PAGE>
applied by a certified public
accountant of recognized standing.
(v) Such other financial information and reports
as Lender may from time to time reasonably
require.
(b) All financial statements shall be delivered in
duplicate. All financial statements shall be accompanied by
a certificate of a senior financial officer of the general
partner of each Borrower dated within five (5) days of the
date such statements are delivered to Lender, stating that
he (or she) knows of no Default nor of any event which has
occurred that after the giving of notice or passage of time,
or both, would constitute a Default, or if such Default has
occurred and is continuing, specifying the nature and period
of existence thereof and what action Borrowers have taken or
propose to take with respect thereto, and except as
otherwise specified, stating that Borrowers have fulfilled
all of their obligations under this Agreement and the other
Loan Documents which are required to be fulfilled on or
prior to the date of such certificate.
8.2 Operating Budgets. On or before the first day of
the calendar month that precedes the first calendar month of
a fiscal year, Borrowers shall provide Lender with an
operating budget for each of the Properties for the
immediately following fiscal year. Without limiting the
terms, provisions and limitations contained in this
Agreement and in the other Loan Documents, the budgets
provided to Lender under this paragraph are for Lender's
information only and are not subject to Lender's prior
approval (nor shall any changes thereto be subject to
Lender's prior approval). Subject to the terms, provisions
and limitations contained in this Agreement and in the other
Loan Documents, Borrowers covenant and agree to operate the
Properties substantially in accordance with said operating
budgets.
8.3 Books and Records. Borrowers shall maintain com-
plete books of account and other records for each of the
Properties, and the same shall be available for inspection
and copying by Lender at reasonable times and upon
reasonable prior notice.
ARTICLE IX. DEFAULTS AND REMEDIES
9.1 Default. The occurrence of any one or more of the
following shall constitute an event of default (hereinafter,
"Default") under this Agreement and the other Loan
Documents:
(a) Monetary. Borrowers' or any Guarantor's
failure to pay within five (5) days after receipt of written
notice that the same is due, any sums payable under the Note
or under any of
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the other Loan Documents (said written
notice shall be deemed to include any monthly invoice or
billing statement sent by Lender to Borrowers); or
(b) Performance of Obligations. Borrowers' or any
Guarantor's failure within thirty (30) days after written
notice to cure any non-monetary default hereunder (or under
any other Loan Document) for which no other grace period is
specifically provided herein or therein; provided, however,
that: (i) if such default is not susceptible of cure within
such thirty (30) day period, such thirty (30) day period
shall be extended to a ninety (90) day period, but only if
(A) Borrowers or such Guarantor shall commence such cure
within such thirty (30) day period and shall thereafter
prosecute such cure to completion, diligently and without
delay, and (B) no other Default (or event that after the
giving of notice, the passage of time or both would
constitute a Default) shall have occurred; and (ii) the
grace period provided in this section shall in no event
apply to any default relating to (1) maintaining the
insurance required hereunder, (2) the payment of money to
any person or entity, (3) the fraudulent or intentional
misapplication of any funds (including, but not limited to,
insurance and condemnation proceeds, rents and other
revenues received by Borrowers or any Guarantor), (4)
Sections 9.1(c) through (m) of this Agreement or (5) any
other Default for which this Agreement or the applicable
Loan Document specifically provides that no period of grace
shall be applicable; or
(c) Attachment. The sequestration or attachment
of, or any levy or execution upon, any of the Properties,
any other collateral provided by Borrowers under any of the
Loan Documents, or any substantial portion of the other
assets of Borrowers, which sequestration, attachment, levy
or execution is not released, expunged or dismissed prior to
the earlier of (A) thirty (30) days after the sequestration,
attachment, levy or execution or (B) the sale of the assets
affected thereby; or
(d) Representations and Warranties. (i) The
failure of any material representation or warranty made by
any Borrower, any partner of any Borrower or any Guarantor
in any of the Loan Documents and the continuation of such
failure for more than fifteen (15) days after written notice
from Lender requesting that Borrowers cure such failure; or
(ii) any material adverse change in the financial condition
of any Borrower, any partner of any Borrower or any
Guarantor from the financial condition represented to Lender
as of the Effective Date; or
(e) Voluntary Bankruptcy; Insolvency; Dissolution.
(i) The filing of a petition by any Borrower for relief
under the Bankruptcy Code, or under any other present or
future state or
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federal law regarding bankruptcy,
reorganization or other debtor relief law; (ii) the filing
of any pleading or an answer by any Borrower in any
involuntary proceeding under the Bankruptcy Code or other
debtor relief law which admits the jurisdiction of the court
or the petition's material allegations regarding said
Borrower's insolvency; (iii) a general assignment by any
Borrower for the benefit of creditors; or (iv) any Borrower
applying for, or the appointment of, a receiver, trustee,
custodian or liquidator of such Borrower or of any of its
property; or
(f) Involuntary Bankruptcy. The failure of any
Borrower to effect a full dismissal of any involuntary
petition under the Bankruptcy Code or under any other debtor
relief law that is filed against such Borrower, prior to the
earlier of the entry of any court order granting relief
sought in such involuntary petition, or thirty (30) days
after the date of filing of such involuntary petition; or
(g) Partners and Guarantors. The occurrence of
any of the events specified in Section 9.1(e) or (f) as to
any partner of any Borrower or as to any Guarantor; or
(h) Loss of Priority. Lender's loss of a valid
first lien on any collateral securing the Loan (other than
with respect to liens permitted under the Loan Documents or
otherwise approved by Lender); or
(i) Change in Control. If at any time all or any
portion of any direct or indirect ownership interest in any
Borrower, a partner of any Borrower (or a partner,
shareholder or member of a partner of any Borrower) is
conveyed, transferred, sold, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether
directly, indirectly, conditionally, unconditionally, by
operation of law or otherwise) (any of the foregoing being a
"Change in Control"). Notwithstanding the foregoing, the
following Change in Control shall not be deemed to be a
Default hereunder: a conveyance, transfer, sale, assignment
or other disposition (but not a pledge, hypothecation or
encumbrance) of any direct or indirect ownership interest in
any Borrower, a partner of any Borrower (or a partner,
shareholder or member of a partner of any Borrower) to an
affiliate of the transferor of said interest (provided that
said affiliate is directly or indirectly wholly-owned by the
same persons that own the transferor);
(j) Due on Sale. Except as may be expressly
permitted by this Agreement or the other Loan Documents, the
conveyance, transfer, sale or other disposition of any of
the Properties (or any portion thereof, other than obsolete
personal property or personal property that is replaced with
property of equivalent
28
<PAGE>
value and utility) or the mortgaging,
encumbering or pledging by any Borrower of any of the
Properties (or any portion thereof), all whether
voluntarily, involuntarily or by operation of law, and
without the prior written consent of Lender; or
(k) Benefit Plans. Any Borrower has any
obligation or liability, contingent or otherwise, which
could have a material adverse effect on its ability to make
payments to repay the Loan hereunder or a lien on any
property of such Borrower arises under ERISA or the Code
which is not released or otherwise satisfied to the
satisfaction of Lender within thirty (30) days, with respect
to any Benefit Plan; or
(l) ERISA. (i) At any time (A) the assets of any
Borrower, or (B) the assets of any person or entity which
owns an equity interest in any Borrower are pursuant to
ERISA or the Code considered for any purpose of ERISA or
Section 4975 of the Code to be assets of a Plan; provided,
however, that a Default shall not be considered to have
occurred as set forth in this clause (i) unless Lender
determines in good faith that, or Lender determines in its
sole discretion exercised in good faith upon consideration
of but not limited to the facts presented by such Borrower
and without any duty of investigation that Lender cannot
within fifteen (15) days of Lender learning of such Plan
asset status determine whether, such Plan asset status has,
or may reasonably be likely to have, an adverse effect on
the performance by such Borrower of its monetary obligations
under this Agreement or under any other Loan Document or the
exercise by Lender of any of its remedies under this
Agreement or under any of the other Loan Documents; or (ii)
at any time the performance by any Borrower of any of its
obligations under this Agreement or under any other Loan
Document, or any of the transactions contemplated under this
Agreement or under any other Loan Document, or the exercise
by Agent or Lender of any of its rights or remedies under
this Agreement or under any of the Loan Documents will be a
"prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code unless at such time the
ERISA Assumption is inaccurate; or
(m) Additional Defaults. If at any time there is
a violation of Section 7.4, 7.5, 7.7, 7.8, 7.10, 7.11(a),
7.11(b) or 7.18 of this Agreement or Section 14 or 19 of the
Guaranty.
9.2 Acceleration Upon Default; Remedies. Upon the
occurrence of any Default specified in this Article 9,
Lender may, at its sole option, declare all sums owing to
Lender under the Note, this Agreement and the other Loan
Documents immediately due and payable. Upon such accelera-
tion, Lender may, in addition to all other remedies
permitted under this Agreement and the other Loan Documents
and at law or equity, charge, setoff and
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<PAGE>
otherwise apply all or any part of the funds on deposit in the
Operating Account against the Liabilities or any part thereof.
To the extent permitted by applicable law, Lender may also exercise
all of the rights and remedies of a secured party under the
applicable Uniform Commercial Code.
9.3 Disbursements to Third Parties. Upon the
occurrence of a Default occasioned by Borrowers' failure to
pay money to a third party as required by this Agreement,
Lender may but shall not be obligated to make such payment
with Lender's funds or with funds from Borrowers that are on
deposit with Lender. Borrowers shall immediately repay such
funds upon written demand of Lender (together with interest
thereon at the rate set forth in the Note from the date of
the disbursement until the outstanding balance thereof is
paid in full). The Default with respect to which any such
payment has been made by Lender shall not be deemed cured
until such repayment has been made by Borrowers to Lender.
Any amounts advanced by Lender under this section shall be
deemed to be a protective advance that is fully secured by
the Loan Documents.
9.4 Repayment of Funds Advanced. Any funds expended by
Lender in the exercise of its rights or remedies under this
Agreement and the other Loan Documents shall be payable to
Lender upon demand, together with interest at the rate
applicable to the principal balance of the Note from the
date the funds were expended.
9.5 Rights Cumulative, No Waiver. All of Lender's
rights and remedies provided in this Agreement and the other
Loan Documents, together with those granted by law or at
equity, are cumulative and may be exercised by Lender at any
time. Lender's exercise of any right or remedy shall not
constitute a cure of any Default unless all sums then due
and payable to Lender under the Loan Documents are repaid
and Borrowers have cured all other Defaults. No waiver
shall be implied from any failure of Lender to take, or any
delay by Lender in taking, action concerning any Default or
failure of condition under the Loan Documents, or from any
previous waiver of any similar or unrelated Default or
failure of condition. Any waiver or approval under any of
the Loan Documents must be in writing and shall be limited
to its specific terms.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.1 Indemnity. Borrowers hereby agree to defend,
indemnify and hold harmless Lender, its directors, officers,
employees, agents, successors and assigns from and against
any and all losses, damages, liabilities, claims, actions,
judgments,
30
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court costs and legal or other expenses
(including, without limitation, reasonable attorneys' and
paralegals' fees and expenses, both internal and external)
which Lender may incur as a direct or indirect consequence
of: (a) the purpose to which Borrowers apply the Loan
proceeds, (b) the failure of Borrowers to perform any
obligations as and when required by this Agreement or any of
the other Loan Documents, (c) any failure at any time of any
of Borrowers' representations or warranties to be true and
correct or (d) any act or omission by Borrowers or a
constituent partner of Borrowers relating to the Loan, the
Properties or any of the obligations of Borrowers under the
Loan Documents. Borrowers shall immediately pay to Lender
upon demand any amounts owing under this indemnity, together
with interest from the date of demand until paid at the rate
of interest applicable to the principal balance of the Note.
BORROWERS' DUTIES AND OBLIGATIONS TO DEFEND, INDEMNIFY AND
HOLD HARMLESS LENDER SHALL SURVIVE CANCELLATION OF THE NOTE
AND THE RELEASE OF THE LIENS CREATED BY THE LOAN DOCUMENTS.
10.2 Notices. All notices, demands, or other
communications under this Agreement and the other Loan
Documents shall be in writing and shall be delivered to the
appropriate party at the address set forth on the signature
page of this Agreement (subject to change from time to time
by written notice to all other parties to this Agreement).
All communications shall be deemed served upon delivery of,
upon receipt of a telecopy, or if mailed, upon the first to
occur of receipt or the expiration of three (3) days after
the deposit in the United States Postal Service mail,
postage prepaid and addressed to the address of Borrowers or
Lender at the address specified; provided, however, that
non-receipt of any communication as the result of any change
of address of which the sending party was not notified or as
the result of a refusal to accept delivery shall be deemed
receipt of such communication.
10.3 Attorney-in-Fact. Borrowers hereby irrevocably
appoint and authorize Lender, as Borrowers'
attorney-in-fact, which agency is coupled with an interest,
to execute and/or record in Lender's or Borrowers' name, any
notices, instruments or documents that Lender deems
reasonably necessary to protect Lender's interest under any
of the Loan Documents. Copies of any such notices,
instruments or documents executed by Lender pursuant to such
power of attorney shall promptly be provided to Borrowers
(provided, however, the failure of Lender to promptly
provide any such notices, instruments or documents shall not
affect the validity of any such notices, instruments or
documents or the power of attorney provided for herein).
10.4 Actions. No person other than Lender and
Borrowers and their permitted successors and assigns shall
have any right
31
<PAGE>
of action under any of the Loan Documents.
Borrowers agree that Lender may commence, appear in and
defend any action or proceeding purporting to affect the
Loan Documents and Borrowers shall immediately reimburse
Lender upon demand for all such expenses so incurred or paid
by Lender, including, without limitation, reasonable
attorneys' and paralegals' fees and expenses (both internal
and external) and court costs.
10.5 Relationship of Parties. The relationship of
Borrowers and Lender under the Loan Documents is, and shall
at all times remain, solely that of borrower and lender, and
Lender neither undertakes nor assumes any responsibility or
duty to Borrowers or to any third party with respect to the
Properties.
10.6 Delay Outside Lender's Control. Lender shall not
be liable in any way to Borrowers or any third party for
Lender's failure to perform or delay in performing under the
Loan Documents (and Lender may suspend or terminate all or
any portion of Lender's obligations under the Loan
Documents) if such failure to perform or delay in performing
results directly or indirectly from, or is based upon, the
action, inaction, or purported action, of any governmental
or local authority, or because of war, rebellion, insurrec-
tion, strike, lock-out, boycott or blockade (whether
presently in effect, announced or in the sole judgment of
Lender deemed probable), or from any act of God or other
cause or event beyond Lender's control.
10.7 Attorneys' and Paralegals' Fees and Expenses;
Enforcement. If any attorney is engaged by Lender to
enforce, interpret or defend any provision of this
Agreement, any of the other Loan Documents or Other Related
Documents, or as a consequence of any Default under the Loan
Documents, with or without the filing of any legal action or
proceeding, Borrowers shall immediately pay to Lender, upon
demand, the amount of all reasonable attorneys' and
paralegals' fees and expenses (both internal and external)
and all costs incurred by Lender in connection therewith,
together with interest thereon from the date of such demand
until paid at the rate of interest applicable to the
principal balance of the Note as specified therein.
10.8 Immediately Available Funds. Unless otherwise
expressly provided for in this Agreement, all amounts
payable by Borrowers to Lender shall be payable only in
United States currency, immediately available funds.
10.9 Lender's Consent. Wherever in this Agreement
there is a requirement for Lender's consent and/or a
document to be provided or an action taken "to the
satisfaction of Lender", it is understood by such phrase
that Lender shall exercise its
32
<PAGE>
consent, right or judgment in
a reasonable manner given the specific facts and
circumstance applicable at the time.
10.10 Loan Sales and Participations; Disclosure of
Information. Borrowers agree that Lender may elect at any
time, to sell, assign, transfer or grant participations in
all or any portion of its rights and obligations under the
Loan Documents, and that any such sale, assignment, transfer
or participation may be to one or more financial
institutions, private investors, trusts and/or other
entities, at Lender's sole discretion. Borrowers further
agree that Lender may disseminate to any such actual or
potential purchaser(s), assignee(s), transferee(s) or
participant(s) all documents and information (including,
without limitation, all financial information) which has
been or is hereafter provided to or known to Lender with
respect to: (a) the Properties and their operation, (b) any
party connected with the Loan (including, without
limitation, Borrowers, any partner of either of the
Borrowers and any Guarantor) and/or (c) any lending
relationship other than the Loan which Lender may have with
any party connected with the Loan. In the event of any such
sale, assignment, transfer or participation, Lender and the
parties to such transaction shall share in the rights and
obligations of Lender as set forth in the Loan Documents
only as and to the extent they agree among themselves. In
connection with any such sale, assignment, transfer or
participation, Borrowers further agree that the Loan
Documents shall be sufficient evidence of the obligations of
Borrowers to each purchaser, assignee, transferee or
participant, and upon written request by Lender, Borrowers
shall enter into such amendments or modifications to the
Loan Documents as may be reasonably required in order to
evidence any such sale, assignment, transfer or
participation. The indemnity obligations of Borrowers under
the Loan Documents shall also apply with respect to any
purchaser, assignee, transferee or participant. Borrowers
covenant and agree that they will cooperate with Lender in
connection with any of the transactions contemplated by this
section (said cooperation shall be deemed to include, but
shall not be limited to, the execution and delivery of any
documents reasonably requested by Lender).
10.11 Lender's Agents. Lender may designate an agent
or independent contractor to exercise any of Lender's rights
under this Agreement and under any of the other Loan
Documents. Any reference to Lender in any of the Loan
Documents shall include Lender's agents, employees or
independent contractors.
10.12 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO
THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR
33
<PAGE>
FUTURE MODIFICATION THEREOF OR
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED)
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT
THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
10.13 Severability. If any provision or obligation
under this Agreement and the other Loan Documents shall be
determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity,
legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the
invalid, illegal, or unenforceable provision had never been
a part of the Loan Documents.
10.14 Successors and Assigns. Except as otherwise
expressly provided under the terms and conditions of this
Agreement, the terms of the Loan Documents shall bind and
inure to the benefit of the successors and assigns of the
parties.
10.15 Time. Time is of the essence of each and every
term of this Agreement.
10.16 Headings. All article, section or other headings
appearing in this Agreement and any of the other Loan
Documents are for convenience of reference only and shall be
disregarded in construing this Agreement and any of the
other Loan Documents.
10.17 Governing Law. (a) This Agreement and all of the
other Loan Documents (except as may otherwise be provided
for therein) shall be governed by, and construed and
enforced in accordance with the laws of the State of
California, except to the extent preempted by Federal laws.
Borrowers, Guarantors and all persons and entities in any
manner obligated to Lender under the Loan Documents consent
to the jurisdiction of any Federal or State Court within the
State of California or in any state where any collateral
securing the Loan is located having proper venue and also
consent to service of process by any means permitted by law.
34
<PAGE>
(b) Each of the Borrowers, each of the Guarantors
and any other persons and entities in any manner obligated
to Lender under the Loan Documents agree that Lender shall
have the right to proceed against any one or more of the
Borrowers, one or more of the Guarantors or such other
persons or entities in a court in any location selected by
Lender to enable Lender to realize on the collateral for the
Loan, or to enforce a judgment or other court order entered
in favor of Lender or to enforce any of Lender's other
rights hereunder or under any of the other Loan Documents.
(c) Each of the Borrowers, each of the Guarantors
and any other persons and entities in any manner obligated
to Lender under the Loan Documents waive any objection that
they may have to the location of the court in which Lender
has commenced a proceeding hereunder or under any of the
other Loan Documents or the transactions contemplated
thereby.
10.18 Integration; Interpretation. The Loan Documents
contain or expressly incorporate by reference the entire
agreement of the parties with respect to the matters contem-
plated therein and supersede all prior negotiations and
agreements, written or oral. The Loan Documents shall not
be modified except by written instrument executed by all
parties. Any reference in any of the Loan Documents to any
Property or Properties shall include all or any part of such
Property or Properties. Any reference to the Loan Documents
includes all amendments, restatements, renewals and
extensions now or hereafter approved by Lender in writing.
10.19 Counterparts. This Agreement, any of the other
Loan Documents (except for the Note), any Other Related
Documents and any subsequent modifications, amendments,
waivers, consents or supplements thereof, if any, may be
executed in any number of counterparts, each of which when
executed and delivered shall be deemed to be an original and
all such counterparts together, shall constitute one and the
same instrument.
10.20 Joint and Several Liability. The obligations of
the Borrowers hereunder and under the other Loan Documents
to which they are a party are joint and several. Lender may
release or settle with either of the Borrowers or either of
the Guarantors (or with respect to the assets of any one or
more of the foregoing) without affecting the continuing
liability of the other Borrowers. Lender may proceed
against any one or more of the Borrowers without proceeding
against any of the other Borrowers.
35
<PAGE>
IN WITNESS WHEREOF, Borrowers and Lender have executed
this Agreement as of the date appearing on the first page of
this Agreement.
"Lender"
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ David J. Weber
--------------------------
Its: SVP
Notices to Lender:
Wells Fargo Bank, National Association
555 Montgomery Street, MAC 0167-171
San Francisco, California 94111
Attention: David J. Weber
Telecopy No.: (415) 788-9421
Confirmation No.: (415) 396-8200
With a Copy to:
Wells Fargo Bank, National Association
Disbursement Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: Manager
Telecopy No.: (310) 610-1014
Confirmation No.: (310) 335-9465
With a Copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Lee M. Smolen
Telecopy No.:(312) 853-7036
Confirmation No.: (312) 853-7823
With a Copy to:
Wells Fargo Bank, National Association
333 South Grand Avenue
9th Floor, MAC 2064-092
Los Angeles, California 90071
Attention: Kathy Berg
Telecopy No.: (213) 626-6140
Confirmation No.: (213) 253-7386
36
<PAGE>
"Borrowers"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP, a
California limited partnership
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a California corporation,
its general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
-------------------------
By: /s/ Robert Batinovich
----------------------------
Robert Batinovich, its general partner
MONTROSE OFFICE PARK JOINT VENTURE, a Maryland joint venture
By: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, its joint venturer
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C.A. Piskorowski
------------------------
Its: Vice President
------------------------
By: Glenborough Corporation, a California
corporation,
its general partner
By: /s/ Andrew Batinovich
------------------------
Its: Chairman/CEO
------------------------
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general partner
AND
37
<PAGE>
By: Montrose Office Park Limited Partnership, a Maryland
limited partnership, its joint venturer
By: Prudential-Bache/Equitec Real Estate
Partnership, a
California limited partnership, its general
partner
By: Prudential-Bache Properties, Inc., a
Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
------------------------
Its: Vice President
------------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
------------------------
Its: Chairman/CEO
------------------------
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general partner
Notices to Borrowers:
c/o Glenborough Corporation
400 South El Camino Real
11th Floor
San Mateo, California 94402
Attention: Steven Saul
Telecopy No.: (415) 343-7438
Confirmation No.: (415) 343-9300
38
<PAGE>
<PAGE>
EXHIBIT A
GATEWAY PROPERTY
Gateway Executive Center
801 12th Street
Sacramento, Sacramento County, California
39
<PAGE>
<PAGE>
EXHIBIT B
PARK PLAZA PROPERTY
Park Plaza Professional Center
1303 J Street
Sacramento, Sacramento County, California
40
<PAGE>
<PAGE>
EXHIBIT C
MEMPHIS PROPERTY
Poplar Towers
6263 Poplar Avenue
Memphis, Tennessee
41
<PAGE>
<PAGE>
EXHIBIT D
SEATTLE PROPERTY
Totem Valley Business Center
12800 N.E. 126th Place
Kirkland, King County, Washington
42
<PAGE>
<PAGE>
EXHIBIT E
ROCKVILLE PROPERTY
Montrose Office Park
3200-3206 Tower Oaks Boulevard
Rockville, Montgomery County, Maryland
43
<PAGE>
<PAGE>
EXHIBIT F
DOCUMENTS
A. Loan Documents. The documents listed below, numbered 1
through 18 inclusive, and amendments, modifications and
supplements thereto which have received the prior
written consent of Lender, together with any documents
executed in the future that are approved by Lender and
that recite that they are "Loan Documents" for purposes
of this Agreement are collectively referred to herein as
the Loan Documents.
1. Loan Agreement.
2. Amended, Restated and Consolidated Promissory Note.
3. Letter regarding the Loan Fee.
4. Guaranty of the Non-Recourse Exceptions.
5. Hazardous Materials Indemnity Agreement.
6. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Gateway Property.
7. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Park Plaza Property.
8. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Memphis Property.
9. Deed of Trust, with Absolute Assignment of Leases and
Rents, Security Agreement, Assignment of Equipment
Leases, Assignment of Permits and Fixture Filing for the
Seattle Property (including leasehold Deed of Trust
component for parking lot leased from Burlington
Northern and with consent of Burlington Northern).
10. Amended and Restated Deed of Trust, with Absolute
Assignment of Leases and Rents, Security Agreement,
Assignment of Equipment Leases, Assignment of Permits
and Fixture Filing for the Rockville Property.
11. Assignment of Deed of Trust and Other Loan Documents,
with Allonge.
12. Deed of Appointment of Substitute Trustee.
13. Consent and Agreement of Partners.
F-1
<PAGE>
14. UCC Financing Statements (Personal Property), to be
filed with:
(a) the California Secretary of State (Borrower A and
Borrower B);
(b) the Department of Assessments and Taxation of the
State of Maryland (Borrower B);
(c) the Tennessee Secretary of State (Borrower A);
(d) the Department of Licensing of the State of
Washington (Borrower A);
(e) the New York Department of State (Borrower A and
Borrower B); and
(f) the City Register of New York County, New York
(Borrower A and Borrower B).
15. UCC Financing Statements (Fixture Filing), to be filed
with:
(a) the Recorder of Deeds for Sacramento County,
California (Borrower A);
(b) the Circuit Court Clerk for Montgomery County,
Maryland (Borrower B);
(c) the Register of Deeds of Shelby County, Tennessee
(Borrower A); and
(d) the County Auditor of King County, Washington
(Borrower A).
16. Assignment of existing Maryland UCC Financing
Statements.
17. Non-Disturbance, Attornment and Subordination Agreement
executed by each of the following:
(a) Memphis Property:
(i) First Commercial Bank;
(ii) Carty and Company;
(b) Park Plaza Property:
(i) California State USDA Office;
(ii) Allnet Communications Services;
(c) Gateway Property:
(i) California Optometric Association;
(ii) California Employment Development
Department;
(d) Seattle Property:
(i) Optical Vision;
(e) Montrose Property:
(i) PB Farradyne, Inc.;
(ii) Systems Flow, Inc.;
(iii) R.C. Publications;
(iv) SPC Financial;
(v) Technical Resources;
(vi) TAF Associates;
(vii) Registry;
(viii) BK Dynamics;
(ix) Dennisberg Advertising;
(x) Signal Transcription;
(xi) M-Cubed Information Systems;
F-2
<PAGE>
(xii) Analysis & Technology (Vector); and
(xiii) Toll Brothers.
18. Subordination, Standstill, Contribution and Indemnity
Agreement.
<PAGE>
F-3
<PAGE>
B. Other Related Documents (Which Are Not Loan Documents):
1. Funding documentation required by the Lender:
(a) Funds Transfer Agreement for Disbursement of Loan
Proceeds; and
(b) Disbursement Authorization.
2. Copies of the following documents, certified by the
Borrowers to be true, accurate, complete and in full
force and effect:
(a) Limited Partnership Agreement for Borrower A;
(b) Joint Venture Agreement for Borrower B;
(c) A rent roll in form and substance acceptable
to the Lender for each of the Properties;
(d) All of the leases for equipment at each of the
Properties;
(e) All of the licenses and permits required to operate
each of the Properties;
(f) All construction and other warranties and
guaranties covering each of the Properties or any
portion thereof;
(g) All maintenance and service agreements for each of
the Properties; and
(h) All labor agreements with any labor organizations
representing any employees at any of the
Properties.
3. Copy of the Limited Partnership Agreement for Montrose
Office Park Limited Partnership, a Maryland limited
partnership ("Montrose LP") certified by Montrose LP to
be true, accurate, complete and in full force and
effect.
4. Copies of the following documents, certified by the
Corporate Secretary for Prudential-Bache Properties,
Inc., a Delaware corporation ("PBP") to be true,
accurate, complete and in full force and effect:
(a) Certificate of Incorporation for PBP;
(b) By-laws of PBP;
(c) Corporate Resolutions for PBP; and
(d) Incumbency Certificate for PBP.
5. Copies of the following documents, certified by the
Corporate Secretary for Glenborough Corporation, a
California corporation ("Glenborough") to be true,
accurate, complete and in full force and effect:
(a) Articles of Incorporation for Glenborough;
(b) By-laws of Glenborough;
(c) Corporate Resolutions for Glenborough; and
(d) Incumbency Certificate for Glenborough.
6. Consent of the Investment Committee of Borrower A
necessary to authorize this transaction on behalf of
Borrower A and as a joint venturer of Borrower B.
F-4
<PAGE>
7. Certified copy of the Certificate of Limited Partnership
for Borrower A (filed with the California Secretary of
State).
8. Certified copy of the Amended Trade Name Designation for
Borrower B (filed with the Circuit Court Clerk for
Montgomery County, Maryland). [This requirement may be
deleted if local counsel confirms that it is
unnecessary.]
9. Certified copy of the Certificate of Limited Partnership
for Montrose LP (filed with the Department of
Assessments and Taxation of the State of Maryland.
10. Good Standing Certificate for Borrower A, issued by the
California Secretary of State.
11. Good Standing Certificate for PBP, issued by the
Delaware Secretary of State.
12. Good Standing Certificate for Glenborough, issued by the
California Secretary of State.
13. Good Standing Certificate for Montrose LP, issued by the
Department of Assessments and Taxation of the State of
Maryland.
14. Evidence that Borrower A is qualified to do business and
in good standing in the States of Tennessee, Washington
and Maryland.
15. Evidence that PBP is qualified to do business and in
good standing in the States of California, Tennessee,
Washington and Maryland.
16. Evidence that Glenborough is qualified to do business
and in good standing in the States of Tennessee,
Washington and Maryland.
17. Legal opinion(s) (including local counsel opinions) from
counsel to the Borrowers, the partners of Borrower A,
the joint venturers of Borrower B and the Guarantors.
F-5
<PAGE>
<PAGE>
EXHIBIT G
OWNERSHIP STRUCTURE
<PAGE>
EXHIBIT H
LEASES
<PAGE>
EXHIBIT I
EQUIPMENT LEASES
None.
<PAGE>
<PAGE>
EXHIBIT J
REQUIRED PERMITS
Occupancy certificates for the Properties.
<PAGE>
SCHEDULE 5.6
LITIGATION
None.
<PAGE>
<PAGE>
SCHEDULE 6.1
HAZARDOUS MATERIALS
Hazardous materials actually disclosed in the written
environmental assessment reports respecting the various
Properties provided to Lender by Lender's environmental
consultants prior to the date of execution of this
Agreement.
<PAGE>
287487.02 COGHLAN, DENNIS M. CH January 16, 1997 (10:24p)
F-12
<PAGE>
Loan No. 1285TZL
AMENDED, RESTATED AND CONSOLIDATED PROMISSORY NOTE
$26,650,000.00 December 13, 1996
FOR VALUE RECEIVED, the undersigned, PRUDENTIAL-BACHE/EQUITEC REAL ESTATE
PARTNERSHIP, a California limited partnership, and MONTROSE OFFICE PARK JOINT
VENTURE, a Maryland joint venture (collectively, "Borrowers"), promise to pay
to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender"), having an
office at 333 South Grand, Suite 900, Los Angeles, California 90071, the
principal sum of Twenty-Six Million Six Hundred Fifty Thousand and No/100
Dollars ($26,650,000.00) (the "Loan") or so much thereof as may
from time to time be owing hereunder by reason of advances by Lender to or
for the benefit or account of Borrowers, with interest thereon, per annum, at
the Effective Rate (as it may change from time to time) calculated in
accordance with the terms and provisions of the Fixed Rate Agreement attached
hereto and made a part hereof as Exhibit A (based on a 360-day year and
charged on the basis of actual days elapsed). All sums owing hereunder are
payable in lawful money of the United States of America, in immediately
available funds. All payments to be made hereunder shall be paid to Lender
at such place as may be designated in writing by Lender, or as Lender may
otherwise direct.
Interest accrued on this note ("Note") shall be due
and payable on the first day of each month commencing
with the first month after the date ("Initial
Disbursement Date") that Lender advances any funds
under this Note to the closing escrow maintained by
Chicago Title Insurance Company (or its affiliate,
Chicago Title & Trust Co.). Interest shall commence to
accrue on the Initial Disbursement Date,
notwithstanding the fact that Chicago Title Insurance
Company (or its affiliate, Chicago Title & Trust Co.)
may refund to Lender any funds advanced by Lender.
If any interest payment or principal payment
required hereunder is not received by Lender on or
before the fifteenth (15th) calendar day of the month
in which it becomes due, Borrowers shall pay, at
Lender's option, a late or collection charge equal to
four percent (4%) of the amount of such unpaid interest
or principal payment.
LENDER IS THE HOLDER OF THAT CERTAIN PROMISSORY NOTE
DATED AS OF DECEMBER 17, 1986, IN ORIGINAL PRINCIPAL
AMOUNT OF FOURTEEN MILLION TWO HUNDRED TEN THOUSAND AND
NO/100S DOLLARS ($14,210,000.00) MADE AND GIVEN BY
MONTROSE OFFICE PARK JOINT VENTURE, A MARYLAND JOINT
VENTURE TO AND IN FAVOR OF THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY, A TEXAS CORPORATION ("ORIGINAL
NOTE"). THIS NOTE IS, AMONG OTHER THINGS, AN
AMENDMENT, RESTATEMENT AND CONSOLIDATION OF THE
ORIGINAL NOTE IN ITS ENTIRETY.
<PAGE>
Loan No. 1285TZL
Subject to Lender's right to accelerate the entire
principal balance of this Note upon the occurrence of a
Default (as defined in the Loan Agreement), the
outstanding principal balance of this Note, together
with all accrued and unpaid interest, shall be due and
payable in full on the Maturity Date (as defined in the
Loan Agreement).
This Note is secured by, among other things,
certain deeds of trust (collectively, the "Security
Documents"), all as more specifically provided for in
the Loan Agreement.
If: (a) Borrowers shall fail to pay any sum due
hereunder or under any other Loan Document (as defined
in the Loan Agreement) within five (5) days after
receipt of written notice that the same is due (said
written notice shall be deemed to include any monthly
invoice or billing statement sent by Lender to
Borrowers); or (b) a Default shall occur under the Loan
Agreement, any of the Security Documents or any other
Loan Document; THEN Lender may, at its sole option,
declare all sums owing under this Note immediately due
and payable; provided, however, that if any Loan
Document provides for automatic acceleration of payment
of sums owing hereunder, all sums owing hereunder shall
be automatically due and payable in accordance with the
terms of that Loan Document.
If any attorney is engaged by Lender to enforce,
defend or otherwise render advice with respect to any
provision of this Note, any of the Security Documents,
the Loan Agreement or any other Loan Document or as a
consequence of any breach or Default under this Note,
any of the Security Documents, the Loan Agreement or
any other Loan Document, with or without the filing of
any legal action or proceeding, then Borrowers shall
pay to Lender (immediately upon demand) all reasonable
attorneys' and paralegals' fees and expenses (both
internal and external) and court costs, and all other
costs incurred by Lender in connection therewith,
together with interest thereon from the date of such
demand until paid at the rate of interest applicable to
the principal balance owing hereunder as if such unpaid
attorneys' and paralegals' fees and expenses and court
costs had been added to the principal.
No previous waiver and no failure or delay by
Lender in acting with respect to the terms of this
Note, the Loan Agreement, any of the Security Documents
or any other Loan Document shall constitute a waiver of
any breach, default, or failure of condition under this
Note, the Loan Agreement, any of the Security Documents
or any other Loan Document. A waiver of any term of
this Note, the Loan Agreement, any of the Security
Documents or any other Loan Document must be made in
writing and shall be limited to the express written
terms of such waiver. In the event of any
inconsistencies between the terms of this Note and the
terms of any other Loan Document, the terms of this
Note shall prevail.
2
<PAGE>
Loan No. 1285TZL
Except as otherwise provided in any of the Loan
Documents, Borrowers waive: presentment; demand; notice
of any change in the rate of interest applicable
hereunder, including any change under the terms of the
Fixed Rate Agreement; notice of dishonor; notice of
default or delinquency; notice of acceleration; notice
of protest and nonpayment; notice of costs, expenses or
losses and interest thereon; notice of late charges;
and diligence in taking any action to collect any sums
owing under this Note or the Guaranty or in any
proceeding against any of the rights or interests in or
to properties securing payment of this Note.
BORROWERS HEREBY EXPRESSLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS NOTE OR ANY OTHER LOAN
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT
OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND BORROWERS HEREBY
AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF BORROWERS TO THE
WAIVER OF ANY RIGHT BORROWERS MIGHT OTHERWISE HAVE TO
TRIAL BY JURY.
IN CONSIDERATION FOR LENDER MAKING THE LOAN,
BORROWERS (INDIVIDUALLY AND COLLECTIVELY) FOR
THEMSELVES, THEIR AGENTS, SUCCESSORS AND ASSIGNS,
HEREBY UNCONDITIONALLY AND ABSOLUTELY WAIVE, RELEASE
AND FOREVER DISCHARGE LENDER, ITS AFFILIATES, OFFICERS,
DIRECTORS, AGENTS, SUCCESSORS AND ASSIGNS FROM ALL
MANNER OF CLAIMS, DEMANDS, DAMAGES, LOSSES, CAUSES OF
ACTION (ALL OF WHATEVER KIND OR NATURE) WHICH EITHER OR
BOTH OF THE BORROWERS MAY HAVE (OR CLAIM TO HAVE) UNDER
OR IN CONNECTION WITH OR ARISING FROM THE ORIGINAL
NOTE, ANY OF THE LOAN DOCUMENTS EXECUTED IN CONNECTION
THEREWITH OR ANY OF THE TRANSACTIONS THAT ARE THE
SUBJECT THEREOF.
Time is of the essence with respect to every provision
hereof. This Note shall be construed and enforced
in accordance with the laws of the State of California,
except to the extent that Federal laws preempt the laws
of the State of California, and all persons and
entities in any manner obligated under this Note
consent to the jurisdiction of any Federal or State
Court within the State of California or in any State
where any collateral securing the Loan is located
having proper venue and also consent to service of
process by any means authorized by law.
3
<PAGE>
Loan No. 1285TZL
This Note may be voluntarily prepaid in whole or in
part. The limitations on liability set forth in
Section 2.8 of the Loan Agreement shall apply with
equal force to this Note and the Fixed Rate Agreement
attached hereto, and said limitations are incorporated
herein by reference as fully and with the same effect
as if recited herein at length.
The obligations of the Borrowers hereunder and
under the other Loan Documents to which they are a
party are joint and several. Lender may release or
settle with either of the Borrowers or its collateral
given for the Loan without affecting the continuing
liability of the other Borrower. Lender may proceed
against either of the Borrowers or its collateral or
other assets without proceeding against the other
Borrower or affecting the continuing liability of the
other Borrower. Lender may proceed against or release
any collateral for the Loan or any guarantor of the
obligations of the Borrowers without proceeding against
either or both of the Borrowers or affecting the
continuing liability of the Borrowers.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, MODIFY LOAN TERMS OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, Borrowers have executed this
Note by a duly authorized signatory on the date first
above written.
BORROWERS:
Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
-------------------------
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general partner
AND
4
<PAGE>
Loan No. 1285TZL
Montrose Office Park Joint Venture, a Maryland joint venture
By: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, its joint venturer
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
---------------------
Its: Vice President
---------------------
By: Glenborough Corporation, a California corporation,
its general partner
By: /s/ Andrew Batinovich
---------------------
Its: Chairman/CEO
---------------------
By: /s/ Robert Batinovich
---------------------
Robert Batinovich, its general partner
By: Montrose Office Park Limited Partnership, a Maryland
limited partnership, its joint venturer
By: Prudential-Bache/Equitec Real Estate Partnership,
a California limited partnership, its general partner
By: Prudential-Bache Properties, Inc., a Delaware corporation,
its general partner
By: /s/ C. A. Piskorowski
---------------------
Its: Vice President
---------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
---------------------
Its: Chairman/CEO
---------------------
By: /s/ Robert Batinovich
-------------------------
Robert Batinovich, its general partner
5
<PAGE>
Loan No. 1285TZL
EXHIBIT A
(FIXED RATE AGREEMENT)
Exhibit A to Amended, Restated and Consolidated
Promissory Note ("Note"), dated December __, 1996, made
by PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP, a
California limited partnership, and MONTROSE OFFICE
PARK JOINT VENTURE, a Maryland joint venture, as
Borrowers, to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender.
RECITALS
Borrowers have requested and Lender has agreed to
provide a fixed rate option as a basis for calculating
the effective rate of interest on amounts owing under
this Note. Borrowers acknowledge the following:
(i) Borrowers understand the fixed rate option as
provided herein; and (ii) absent the terms and
conditions hereof, it would be extremely difficult to
calculate Lender's additional costs, expenses, and
damages in the event of a breach or Default under any
of the Loan Documents or prepayment by Borrowers
hereunder. Given the above, Borrowers agree that the
provisions herein (including, without limitation, the
Fixed Rate Price Adjustment defined below) provide for
a reasonable and fair method for Lender to recover its
additional costs, expenses and damages in the event of
a breach hereunder or any Default under this Note or
under any of the other Loan Documents or prepayment by
Borrowers.
1. Rates and Terms Defined. Various rates and
terms not otherwise defined herein are defined and
described as follows:
"Alternate Rate" is the rate of interest equal
to five percent (5%) in excess of what the
Effective Rate would have been had one or more
of the events specified in Section 2(b) of this
Fixed Rate Agreement not occurred.
"Fixed Rate" is the rate of interest, rounded
upward to the nearest whole multiple of
one-hundredth of one percent (.01%), equal to
the sum of: (a) the Spread plus (b) the LIBO
Rate, which LIBO Rate is divided by one (1.00)
minus the Reserve Percentage:
LIBO Rate
-----------------------
Fixed Rate = the Spread + (1 - Reserve Percentage)
"Fixed Rate Period" shall mean a period of one
(1) month, in the case of the first such
period, commencing on the Initial Disbursement
Date, and otherwise commencing on the last day
of the immediately preceding Fixed Rate Period.
Each Fixed Rate Period shall end on (but
exclude) the day which corresponds numerically to
1
<PAGE>
Loan No. 1285TZL
the commencement date of such Fixed Rate
Period in the immediately succeeding month,
provided, however, if there is no such
numerically corresponding day in the
immediately succeeding month, said Fixed Rate
Period shall end on the last Business Day of
said immediately succeeding month. If a Fixed
Rate Period would otherwise end on a day which
is not a Business Day, such Fixed Rate Period
shall end on the next succeeding Business Day,
provided, however, that if said next succeeding
Business Day falls in a new calendar month,
said Fixed Rate Period shall end on the
immediately preceding Business Day.
"LIBO Rate" is the rate of interest, rounded
upward to the nearest whole multiple of
one-sixteenth of one percent (.0625%), quoted
by Lender as the London Interbank Offered Rate
for deposits in U.S. Dollars at approximately
11:00 a.m. London time, two (2) Business Days
prior to the first day of a Fixed Rate Period
or a Price Adjustment Date, as appropriate, for
purposes of calculating effective rates of
interest for loans or obligations making
reference thereto for an amount approximately
equal to the then outstanding principal amount
under this Note (or, as applicable, amounts
paid or prepaid and subject to the provisions
of Section 4 hereof) and for a period of time
approximately equal to a Fixed Rate Period or
the time remaining in a Fixed Rate Period on a
Price Adjustment Date, as appropriate.
"Loan Agreement" is that certain Loan Agreement
dated as of the date hereof by and among
Borrowers and Lender, as said agreement may be
modified, amended, restated or supplemented
from time to time. All capitalized terms not
otherwise defined herein shall have the meaning
ascribed to such terms in the Loan Agreement.
"Prime Rate" is a base rate of interest which
Lender establishes from time to time and which
serves as the basis upon which effective rates
of interest are calculated for those loans
making reference thereto. Any change in an
Effective Rate due to a change in the Prime
Rate shall become effective on the day each
such change is announced by Lender.
"Regulatory Costs" are, collectively, future,
supplemental, emergency or other changes in
Reserve Percentages, assessment rates imposed
by the FDIC, or similar requirements or costs
imposed by any domestic or foreign governmental
authority and related in any
Exhibit A
2
<PAGE>
Loan No. 1285TZL
manner to the Fixed Rate, provided, said amounts are
actually paid by (or on behalf of) Lender.
"Reserve Percentage" is at any time the
percentage announced by Lender as the reserve
percentage under Regulation D for loans and
obligations making reference to a Fixed Rate
for a Fixed Rate Period or time remaining in a
Fixed Rate Period on a Price Adjustment Date,
as appropriate. The Reserve Percentage shall
be based on Regulation D or other regulations
from time to time in effect concerning reserves
for Eurocurrency Liabilities from related
institutions as though Lender were in a net
borrowing position, as promulgated by the Board
of Governors of the Federal Reserve System, or
its successor.
"Spread" shall mean three and one-half percent
(3.50%).
"Taxes" are, collectively, all withholdings,
interest equalization taxes, stamp taxes or
other taxes (except income and franchise taxes)
imposed by any domestic or foreign governmental
authority and related in any manner to the
Effective Rate, provided, said amounts are
actually paid by (or on behalf of) Lender.
"Variable Rate" is a floating rate of interest
per annum equal to one and one-half percent
(1.5%) in excess of the Prime Rate.
2. Effective Rate. The "Effective Rate" upon
which interest shall be calculated for this Note shall
be equal to the rate described in either paragraph (a)
or (b) below, as applicable:
(a) Provided no Default exists under the Loan
Agreement or any of the other Loan Documents (this
Note is one of the Loan Documents), the Effective
Rate for each Fixed Rate Period shall be the Fixed
Rate set in accordance with the provisions hereof,
provided, however, if any of the transactions
necessary for the calculation of interest at the
Fixed Rate should be or become prohibited or
unavailable to Lender, or, if in Lender's good
faith judgment, it is not possible for Lender to
set a Fixed Rate for a Fixed Rate Period, the
Effective Rate shall revert to the Variable Rate.
(b) During such time as a Default exists under
the Loan Agreement or any of the other Loan
Documents (which shall include the expiration of
any cure periods provided for in said documents);
or from and after the date on which
Exhibit A
3
<PAGE>
Loan No. 1285TZL
all sums owing under this Note become due and payable by
acceleration or otherwise; or from and after the
Maturity Date, then at the option of Lender, the
interest rate applicable to the then outstanding
principal balance of this Note shall be the
Alternate Rate.
3. Taxes, Regulatory Costs and Reserve
Percentages. Except as provided for below, upon
Lender's demand, Borrowers shall pay to Lender, in
addition to all other amounts which may be, or become,
due and payable under this Note and the other Loan
Documents, any and all Taxes and Regulatory Costs, to
the extent they are not internalized by the calculation
of a Fixed Rate. Further, at Lender's option, the
Fixed Rate shall be automatically adjusted by adjusting
the Reserve Percentage, as determined by Lender in its
prudent banking judgment, from the date of imposition
(or subsequent date selected by Lender) of any such
Regulatory Costs. Lender shall give Borrowers notice
of any Taxes and Regulatory Costs as soon as practi-
cable after their occurrence, but Borrowers shall be
liable for all Taxes and Regulatory Costs regardless of
whether or when notice is so given.
4. Fixed Rate Price Adjustment. Borrowers
acknowledge that prepayment or acceleration of any
principal amounts evidenced by this Note during a Fixed
Rate Period shall result in Lender's incurring additional
costs, expenses and/or liabilities and that it
is extremely difficult and impractical to ascertain the
extent of such costs, expenses and/or liabilities.
Therefore, except for the payment to be made on the
Maturity Date (unless the payment to be made on said
date is the result of an acceleration of the amounts
owing hereunder), on the date amounts are prepaid and
on the date (if any) all sums payable hereunder become
due and payable by reason of acceleration ("Price
Adjustment Date"), Borrowers will pay Lender (in
addition to all other sums then owing to Lender) an
amount ("Fixed Rate Price Adjustment") equal to the
then present value of (a) the amount of interest that
would have accrued on the amounts paid for the remainder
of the applicable Fixed Rate Period at the
applicable Fixed Rate, less (b) the amount of interest
that would accrue on the same amounts paid if the Fixed
Rate were set on the Price Adjustment Date (and for a
Fixed Rate Period equal to the remainder of the
applicable Fixed Rate Period). The present value shall
be calculated by using as a discount rate the LIBO Rate
quoted on the Price Adjustment Date. Notwithstanding
the terms and provisions of this section, this section
shall not constitute the consent of Lender for
Borrowers to make any prepayments of any amounts
evidenced by this Note, to the extent said prepayments
are otherwise prohibited (or subject to limitations or
conditions) under the terms of any of the Loan
Documents.
Exhibit A
4
<PAGE>
Loan No. 1285TZL
By initialing this provision where
indicated below, Borrowers confirm
that Lender's agreement to make the
Loan evidenced by this Note at the
interest rates and on the other terms
set forth herein and in the other Loan
Documents constitutes adequate and
valuable consideration, given
individual weight by Borrowers, for
this agreement.
BORROWERS' INITIALS: /s/ CAP /s/ AB /s/ RB
5. Purchase, Sale and Matching of Funds.
Borrowers understand, agree and acknowledge the
following: (a) Lender has no obligation to purchase,
sell and/or match funds in connection with the use of a
LIBO Rate as a basis for calculating a Fixed Rate or
Fixed Rate Price Adjustment; (b) a LIBO Rate is used
merely as a reference in determining a Fixed Rate and
Fixed Rate Price Adjustment; and (c) Borrowers have
accepted a LIBO Rate as a reasonable and fair basis for
calculating a Fixed Rate and a Fixed Rate Price
Adjustment. Borrowers further agree to pay the Fixed
Rate Price Adjustment, Taxes and Regulatory Costs, if
any, whether or not Lender elects to purchase, sell
and/or match funds.
6. Payment in Excess of the Maximum Amount
Permitted by Law. If under any circumstances Lender
shall ever receive an amount deemed interest by
applicable law, which would exceed the maximum amount
permissible under applicable usury or such other laws,
such amount that would be excessive interest under
applicable usury laws or such other laws shall be
deemed a payment in reduction of the outstanding
principal balance of the Loan and shall be so applied,
and shall not be deemed to be the payment of interest;
or if such excessive interest exceeds the outstanding
principal balance of the Loan, the excess shall be
deemed to have been a payment made by mistake and shall
be refunded to Borrowers or to any other person making
such payment on Borrowers' behalf.
7. Joint and Several Liability. The obligations
of the Borrowers hereunder and under the other Loan
Documents to which they are a party are joint and
several. Lender may release or settle with either of
the Borrowers or its collateral given for the Loan
without affecting the continuing liability of the other
Borrower. Lender may proceed against either of the
Borrowers or its collateral or other assets without
proceeding against the other Borrower or affecting the
continuing liability of the other Borrower. Lender may
proceed against or release any collateral for the Loan
or any guarantor of the obligations of the Borrowers
without proceeding against either or both of the
Borrowers or affecting the continuing liability of the
Borrowers.
Exhibit A
5
<PAGE>
Loan No. 1285TZL
8. Miscellaneous. As used in this Exhibit, the
plural shall mean the singular and the singular shall
mean the plural as the context requires.
This Fixed Rate Agreement is executed concurrently
with and as part of the Note referred to and described
first above.
Exhibit A
6
<PAGE>
Loan No. 1285TZL
IN WITNESS WHEREOF, Borrowers have executed this
Fixed Rate Agreement by a duly authorized signatory on
the date first above written.
BORROWERS:
Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
---------------------
Its: Vice President
---------------------
By: Glenborough Corporation, a California corporation,
its general partner
By: /s/ Andrew Batinovich
---------------------
Its: Chairman/CEO
---------------------
By: /s/ Robert Batinovich
------------------------
Robert Batinovich, its general partner
AND
Exhibit A
7
<PAGE>
Loan No. 1285TZL
Montrose Office Park Joint Venture, a Maryland joint venture
By: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, its joint venturer
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
---------------------
Its: Vice President
---------------------
By: Glenborough Corporation, a California corporation,
its general partner
By: /s/ Andrew Batinovich
---------------------
Its: Chairman/CEO
---------------------
By: /s/ Robert Batinovich
-------------------------
Robert Batinovich, its general partner
By: Montrose Office Park Limited Partnership, a Maryland
limited partnership, its joint venturer
By: Prudential-Bache/Equitec Real Estate Partnership,
a California limited partnership, its general partner
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
---------------------
Its: Vice President
---------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
-------------------------
By: /s/ Robert Batinovich
-------------------------
Robert Batinovich, its general partner
Exhibit A
8
<PAGE>
THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING SHOULD BE
RETURNED TO:
Lee M. Smolen
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
City of Sacramento, California
DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST, WITH ABSOLUTE
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT,
ASSIGNMENT OF EQUIPMENT LEASES, ASSIGNMENT OF PERMITS
AND FIXTURE FILING ("Deed of Trust"), made as of
December 13, 1996, are PRUDENTIAL-BACHE/EQUITEC REAL
ESTATE PARTNERSHIP, a California limited partnership
("Trustor"), having its chief executive office at c/o
Glenborough Corporation, 400 South El Camino Real, 11th
Floor, San Mateo, California 94402, American
Securities Company, a corporation ("Trustee"), having
an office at 111 Sutter Street, 18th Floor, San
Francisco, California 94163, and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Beneficiary"), having an office
at 333 South Grand, Suite 900, Los Angeles, California
90071, (as may be modified, amended, supplemented or
restated from time to time the "Deed of Trust").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms
and conditions in this Deed of Trust, Trustor
irrevocably grants, conveys and assigns to
Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of
entry and possession, all of Trustor's right,
title and interest in all of the real property
located in the City of Sacramento, California
and described on Exhibit A attached hereto and
made a part hereof, together with all of
Trustor's right, title and interest in all
development rights or credits, air rights,
water, water rights and water stock related to
the real property, and all minerals, oil and
gas, and other hydrocarbon substances in, on or
under the real property, and all appurtenances,
easements, rights and rights of way appurtenant
or related thereto; all streets, roads and
alleys (whether open, proposed or vacated); all
buildings, other improvements and
<PAGE>
fixtures now or hereafter located on the real property,
including, but not limited to, all apparatus,
equipment, and appliances used in the operation
or occupancy of the real property, it being
intended by the parties that all such items
shall be conclusively considered to be a part
of the real property, whether or not attached
or affixed to the real property (collectively,
the "Improvements"); all interest or estate
which Trustor may hereafter acquire in the
property described above, and all additions and
accretions thereto, and the proceeds of any of
the foregoing (all of the foregoing being
collectively referred to as the "Subject
Property"). The listing of specific rights or
property shall not be interpreted as a limit of
general terms.
1.2 NON-AGRICULTURAL USE. Trustor represents and
warrants to Beneficiary and Trustee that the
Subject Property is not used principally for
agricultural or farming purposes.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant
and assignment for the purpose of securing the
following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any
time owing under that certain Amended,
Restated and Consolidated Promissory Note,
of even date herewith, in the aggregate
principal amount of Twenty-Six Million Six
Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), executed by Trustor and
Montrose Office Park Joint Venture, a
Maryland joint venture ("Co-Borrower";
Trustor and Co-Borrower collectively,
"Borrowers") and payable to the order of
Beneficiary (as may be modified, amended,
supplemented, replaced or restated from
time to time, the "Note"); and
(b) Payment and performance of all covenants
and obligations of Trustor under this Deed
of Trust; and
(c) Payment and performance of all covenants
and obligations on the part of Trustor
under that certain Loan Agreement, of even
date herewith, by and between Trustor and
Co-Borrower and Beneficiary (as may be
modified, amended, supplemented or
restated from time to time, the "Loan
Agreement") (capitalized terms used herein
but not defined herein shall have the
meaning
2
<PAGE>
provided for such terms in the Loan Agreement);
and
(d) Payment and performance of all covenants
and obligations on the part of each of the
Borrowers under all of the Loan Documents;
and
(e) Payment and performance of all future
advances and other obligations that the
then record owner of all or part of the
Subject Property may agree to pay and/or
perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary,
when such future advance or obligation is
evidenced by a writing which recites that
it is secured by this Deed of Trust; and
(f) All modifications, extensions and renewals
of any of the obligations secured hereby,
however evidenced, including, without
limitation: (i) modifications of the
required principal payment dates or
interest payment dates or both, as the
case may be, deferring or accelerating
payment dates wholly or partly; and (ii)
modifications, extensions or renewals at a
different rate of interest whether or not
in the case of the Note, the modification,
extension or renewal is evidenced by a new
or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used
herein in its broadest and most comprehensive
sense and shall be deemed to include, without
limitation, all protective advances and all
sums advanced to protect the Subject Property
or the lien of this Deed of Trust or otherwise
disbursed or incurred under the terms of the
Loan Documents, all interest and charges,
prepayment charges (if any), late charges and
loan fees at any time accruing or assessed on
any of the Secured Obligations; provided,
however, that the terms "obligations" and
"Secured Obligations" as used herein shall in
no event include any obligations arising under
the Guaranty or the Hazardous Materials
Indemnity.
2.3 INCORPORATION. All terms of the Secured
Obligations and the documents evidencing such
obligations are incorporated herein by this
reference. All persons who may have or acquire
an interest in the Subject Property shall be
deemed to have notice of the terms of the
Secured Obligations and to have notice that the
rate of interest on one or more Secured
Obligations may vary from time to time.
3
<PAGE>
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Trustor hereby irrevocably assigns
to Beneficiary all of Trustor's right, title
and interest in, to and under: (a) all leases
of the Subject Property or any portion thereof,
and all other agreements of any kind relating
to the use or occupancy of the Subject Property
or any portion thereof, whether now existing or
entered into after the date hereof ("Leases");
and (b) the rents, issues, deposits, profits
and revenues of the Subject Property and the
operations conducted thereon, including,
without limitation, all amounts payable and all
rights and benefits accruing to Trustor under
the Leases ("Payments"). The term "Leases"
shall also include all guarantees of and
security for the lessees' performance
thereunder, and all amendments, extensions,
renewals or modifications thereto which are
permitted hereunder. This is a present and
absolute assignment, not an assignment for
security purposes only, and Beneficiary's right
to the Leases and Payments is not contingent
upon, and may be exercised without possession
of, the Subject Property, and without the
commencement of a foreclosure action or the
appointment of a receiver. Furthermore, upon
any Default, Beneficiary shall be entitled to
receive pursuant to the foregoing assignment,
and Trustor shall be obligated to deliver to
Beneficiary or its designee (including any
receiver), any and all Payments collected by
Trustor which remain in the possession or
control of Trustor, whether or not commingled
with other funds or Trustor, and whether
collected by Trustor before or after the
occurrence of the Default.
3.2 GRANT OF LICENSE. Beneficiary confers upon
Trustor a license ("License") to collect and
retain the Payments as they become due and
payable, until the occurrence of a Default.
Upon a Default, the License shall be
automatically revoked and Beneficiary may
collect and apply the Payments pursuant to
Section 6.4 without notice and without taking
possession of the Subject Property. Trustor
hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and
comply with any notice or demand by Beneficiary
for the payment to Beneficiary of any rental or
other sums which may at any time become due
under the Leases, or for the performance of any
of the lessees' undertakings under the Leases,
and the lessees shall have no right or duty to
inquire as to whether any Default has actually
occurred or is then existing hereunder.
Trustor hereby relieves the lessees from any
liability
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to Trustor by reason of relying upon and complying with
any such notice or demand by Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing
irrevocable assignment shall (in and of itself)
not cause Beneficiary to be: (a) a mortgagee
in possession; (b) responsible or liable for
the control, care, management or repair of the
Subject Property or for performing any of the
terms, agreements, undertakings, obligations,
representations, warranties, covenants and
conditions of the Leases; (c) responsible or
liable for any waste committed on the Subject
Property by the lessees under any of the Leases
or any other parties; (d) responsible or liable
for any dangerous or defective condition of the
Subject Property; or (e) responsible or liable
for any negligence in the management, upkeep,
repair or control of the Subject Property
resulting in loss or injury or death to any
lessee, licensee, employee, invitee or other
person. Beneficiary shall not directly or
indirectly be liable to Trustor or any other
person as a consequence of: (i) the exercise
or failure to exercise any of the rights,
remedies or powers granted to Beneficiary
hereunder; or (ii) the failure or refusal of
Beneficiary to perform or discharge any
obligation, duty or liability of Trustor
arising under the Leases.
3.4 COVENANTS. Trustor covenants and agrees at
Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in
the Leases and enforce by all available
remedies performance by the lessees of the
obligations of the lessees contained in the
Leases; (b) deliver to Beneficiary fully
executed, counterpart original(s) of each and
every Lease if requested to do so; and (c)
execute and record (or cause to be executed and
recorded) such additional assignments of any
Lease or specific subordinations of any Lease
to this Deed of Trust, in form and substance
acceptable to Beneficiary, as Beneficiary may
reasonably request. Trustor shall not, without
Beneficiary's prior written consent or as
otherwise permitted by any provision of the
Loan Agreement or as otherwise permitted above:
(i) execute any other assignment relating to
any of the Leases; (ii) discount any rent or
other sums due under the Leases or collect the
same in advance, other than to collect rent one
(1) month in advance of the time when it
becomes due; (iii) modify, amend (if such
modification or amendment would result in the
Lease being less favorable to Trustor or
Beneficiary than presently existing) or
terminate any of the Leases or in any manner
release or discharge the lessees from any
obligations thereunder; (iv) consent to any
assignment or subletting by any lessee; or (v)
subordinate or
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agree to subordinate any of the Leases to any other
deed of trust or encumbrance. Any such attempted
action in violation of the provisions of this Section
3.4 shall be null and void.
3.5 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request by Beneficiary, Trustor shall use
its reasonable efforts to deliver to
Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by
Trustor and by the lessees, certifying: (i)
that the foregoing assignment and the Leases
are in full force and effect; (ii) the date of
each lessee's most recent payment of rent;
(iii) that there are no defenses or offsets
outstanding, or stating those claimed by
Trustor or the lessees under said Leases; (iv)
that no default exists under any of the Leases
and no condition exists that after the giving
of notice, the passage of time or both would
constitute a default under any of the Leases;
and (v) any other information reasonably
requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and
assigns to Beneficiary, as of the Effective
Date, a security interest, to secure payment
and performance of all of the Secured
Obligations, in all of the following described
personal property in which Trustor now or at
any time hereafter has any interest
(collectively, the "Collateral"):
All goods, building and other
materials, supplies, work in process,
equipment, machinery, fixtures,
furniture, furnishings, signs and
other personal property, wherever
situated, which are or are to be
incorporated into, used in connection
with, or appropriated for use on the
real property described on Exhibit A
attached hereto and incorporated by
reference herein (to the extent the
same are not effectively made a part
of the real property pursuant to
Section 1.1 above); together with all
rents, issues, deposits and profits of
the Subject Property; all inventory,
accounts, cash receipts, deposit
accounts, accounts receivable,
contract rights, general intangibles,
judgments, chattel paper, instruments,
documents, notes, drafts, letters of
credit, insurance policies, insurance
and condemnation awards and proceeds, any other
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rights to the payment of
money, trade names, trademarks and
service marks arising from or related
to the Subject Property or any
business now or hereafter conducted
thereon by Trustor; subject to Section
4.8, all permits, consents, approvals,
licenses, authorizations and other
rights granted by, given by or
obtained from, any governmental entity
with respect to the Subject Property;
all deposits or other security now or
hereafter made with or given to
utility companies by Trustor with
respect to the Subject Property; all
advance payments of insurance premiums
made by Trustor with respect to the
Subject Property; all plans, drawings
and specifications relating to the
Subject Property; all loan funds held
by Beneficiary, whether or not
disbursed; all funds deposited with
Beneficiary pursuant to any loan
agreement or any other document or
right of Beneficiary; all reserves,
deferred payments, deposits, accounts,
refunds, cost savings and payments of
any kind related to the Subject
Property or any portion thereof; all
other items of personal property (of
whatever kind or nature) used in the
operation of the Subject Property; all
of the rights and interest of Trustor
in and under all management
agreements, franchise agreements and
leasing agreements affecting all or
any portion of the Subject Property;
all of the rights and interest of
Trustor in and to those accounts that
have been (or may hereafter be)
established with Beneficiary; all of
the rights and interest of Trustor in
and to any interest rate protection
agreement that may have been (or may
hereafter be) entered into by Trustor
in connection with the Loan; all
rents, revenues, issues, profits and
income generated from the operation of
the Subject Property; subject to
Section 4.7, all rights of Trustor as
lessee under all chattel leases
relating to furniture, fixtures,
equipment or any other item used in
connection with the operation of the
Subject Property; together with all
replacements and proceeds of, and
additions and accessions to, any of
the foregoing; together with all
books, records and files relating to
any of the foregoing.
As to all of the above described personal
property which is or which hereafter becomes a
"fixture" under
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applicable law, this Deed of
Trust constitutes a fixture filing under the
California Uniform Commercial Code, as amended
or recodified from time to time ("UCC").
4.2 REPRESENTATIONS AND WARRANTIES. Trustor
represents and warrants that (subject to the
Permitted Encumbrances): (a) Trustor has good
title to the Collateral; and (b) Trustor has
not previously assigned or encumbered the
Collateral, and no financing statement covering
any of the Collateral has been delivered by
Trustor to any other person or entity.
4.3 RIGHTS OF BENEFICIARY. In addition to
Beneficiary's rights as a "Secured Party" under
the UCC, Beneficiary may, but shall not be
obligated to, at any time without notice
(except as provided below) and at the expense
of Trustor: (a) give notice to any person of
Beneficiary's rights hereunder and enforce such
rights at law or in equity; (b) insure,
protect, defend and preserve the Collateral or
any rights or interests of Beneficiary therein;
and (c) inspect the Collateral at reasonable
times and upon reasonable prior notice.
Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any
obligation of Trustor to Beneficiary unless
Beneficiary shall make an express written
election of said remedy under the UCC, or other
applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the
occurrence of a Default, in addition to all of
Beneficiary's rights as a "Secured Party" under
the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice,
require Trustor to assemble any or all of
the Collateral and make it available to
Beneficiary at a place designated by
Beneficiary; (ii) without prior notice,
enter upon the Subject Property or other
place where any of the Collateral may be
located and take possession of, collect,
sell, and dispose of any or all of the
Collateral, and store the same at
locations acceptable to Beneficiary at
Trustor's expense; and (iii) sell, assign
and deliver at any place or in any lawful
manner all or any part of the Collateral
and bid and become purchaser at any such
sales; and
(b) Beneficiary may, for the account of
Trustor and at Trustor's expense: (i)
operate, use, consume, sell or dispose of
the Collateral as Beneficiary deems
appropriate for the purpose of performing any or
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all of the Secured Obligations;
(ii) enter into any agreement, compromise,
or settlement, including insurance claims,
which Beneficiary may deem desirable or
proper with respect to any of the
Collateral; (iii) endorse, collect and
receive any right to payment of money
owing to Trustor under or from the
Collateral; and (iv) endorse and deliver
evidences of title for, and receive,
enforce and collect by legal action or
otherwise, all indebtedness and
obligations now or hereafter owing to
Trustor in connection with or on account
of any or all of the Collateral.
Trustor acknowledges and agrees that a
disposition of the Collateral in accordance
with Beneficiary's rights and remedies as
heretofore provided is a disposition thereof in
a commercially reasonable manner and that five
(5) days prior notice of such disposition is
commercially reasonable notice.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably
appoints Beneficiary as Trustor's
attorney-in-fact (such agency being coupled
with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do
so, in Beneficiary's name, or in the name of
Trustor, prepare, execute and file or record
financing statements, continuation statements,
applications for registration and like papers
necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in
or to any of the Collateral, and, upon a
Default hereunder, take any other action
required of Trustor; provided, however, that
Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually
received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as
otherwise provided in this Article or in the
other Loan Documents, so long as no Default
exists under this Deed of Trust or any of the
Loan Documents, Trustor may possess, use, move,
transfer or dispose of any of the Collateral in
the ordinary course of Trustor's business and
in accordance with the Loan Agreement.
4.7 ASSIGNMENT OF EQUIPMENT LEASES. To secure the
payment and performance of the Secured
Obligations, Trustor (to the extent assignable)
hereby sells, assigns, grants, transfers and
sets over to Beneficiary all of Trustor's
right, title and interest in and to the
Equipment Leases relating to the Subject
Property and in and to the furniture, fixtures,
equipment and other items (herein called the
"Leased Equipment") and any rights to acquire
the Leased Equipment as set forth in the
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Equipment Leases relating thereto, or
otherwise, and any and all extensions and
renewals thereof and any and all substitutions
therefor. Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due and promptly perform all covenants and
obligations required of the lessee under each
Equipment Lease, including, to the extent
required by the lessor under any Equipment
Lease, keeping the Leased Equipment in good
condition and repair, and making all necessary
replacements or renewals thereof. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Equipment Lease,
including, but not limited to, the payment of
rent, until such time as Beneficiary takes
actual possession of the Leased Equipment and
the Subject Property. So long as there shall
exist no Default, Beneficiary shall not demand
from the lessor under any Equipment Lease any
rights of Trustor thereunder, nor shall
Beneficiary be entitled to the use and
possession of the Leased Equipment. Upon or at
any time after a Default, Trustor agrees to
turn over and give up possession of the Leased
Equipment to Beneficiary at the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, manage and operate the Leased
Equipment, and in connection therewith: (x)
Beneficiary may make, cancel, enforce or modify
any Equipment Lease, repair, maintain and
improve the Leased Equipment, employ agents,
attorneys and accountants in connection with
the enforcement of Beneficiary's rights
hereunder and pay the reasonable fees and
expenses thereof, and otherwise do and perform
any and all acts and things which Beneficiary
may deem necessary or appropriate in the
protection of the Leased Equipment or the
enforcement of Beneficiary's rights hereunder
or under the Loan Agreement or any other Loan
Document; and any and all amounts expended by
Beneficiary in connection with the exercise of
any rights granted under this Section 4.7 shall
constitute additional Secured Obligations
secured by this Deed of Trust; (y) the entering
upon the Subject Property and taking possession
of the Leased Equipment and the exercise of any
of the rights hereinabove specified shall not
cure, waive, modify or affect any Default
hereunder or under the Loan Agreement or any
other Loan Document; and (z) Beneficiary may acquire the
Leased Equipment in accordance with the provisions of any
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Equipment Lease. Except as otherwise
permitted hereunder and except for
amendments that do not result in an Equipment
Lease being less favorable to Trustor or
Beneficiary, Trustor shall keep each Equipment
Lease in full force and effect and will not
modify, change, alter, supplement or amend any
Equipment Lease. Trustor hereby warrants and
represents that, with respect to each of the
Equipment Leases, the execution and delivery of
this Deed of Trust (and the performance of
Trustor's obligations hereunder) do not cause
or create a default under any Equipment Lease,
a right to terminate any Equipment Lease or any
other event that after the giving of notice,
the passage of time or both could constitute a
default (or provide the lessor under an
Equipment Lease with a right to terminate). At
the request of Beneficiary, Trustor shall cause
this Deed of Trust to be served upon the lessor
under any Equipment Lease and shall use
reasonable efforts to cause such lessor to
acknowledge receipt of such notice. Without
limiting anything herein contained, this Deed
of Trust shall vest in Beneficiary a security
interest in each Equipment Lease and Trustor's
interest in the Leased Equipment (subject to
the ownership and security interest in the
Leased Equipment of lessor, as provided for in
the Equipment Lease). The Equipment Leases and
Leased Equipment shall constitute "Collateral"
hereunder.
4.8 ASSIGNMENT OF PERMITS. To secure the payment
and performance of the Secured Obligations,
Trustor hereby sells, assigns, grants,
transfers and sets over to Beneficiary all of
Trustor's right, title and interest in and to
all Required Permits now or hereafter in
effect, but only to the extent that the
Required Permits may be lawfully assigned; and
any and all substitutions therefor (and said
Required Permits shall constitute "Collateral"
hereunder). Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due under each Required Permit relating to the
Subject Property and promptly perform all
covenants and obligations required of the
licensee or permittee, as the case may be,
under each such Required Permit. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Required Permit,
including, but not limited to, the payment of
fees, until such time as Beneficiary takes
actual possession of the Subject Property and
the Required Permits relating thereto. Upon or
at any time after a Default, Trustor agrees (to
the extent not prohibited by law) to turn over
and give up possession
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of the assignable Required Permits relating to
the Subject Property, and Beneficiary may without
notice, either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, and manage and operate the
Subject Property; and in connection therewith:
(x) Beneficiary may make, cancel, enforce or
modify any Required Permit relating to the
Subject Property or cause the same to be issued
or reissued in its own name or the name of its
designee or operator of the Subject Property or
receiver, and otherwise do and perform any and
all acts and things which Beneficiary may deem
necessary or appropriate in the protection of
such Required Permits or the enforcement of
Beneficiary's rights hereunder or under the
Loan Agreement or any other Loan Document; and
any and all amounts expended by Beneficiary in
connection with the foregoing shall constitute
additional Secured Obligations secured by this
Deed of Trust; and (y) the entering upon the
Subject Property and taking possession of the
same and the operation thereof under the
assignable Required Permits relating thereto,
and the exercise of any of the rights
hereinabove specified shall not cure, waive,
modify or affect any Default hereunder or under
the Loan Agreement or any other Loan Document.
Trustor shall keep each Required Permit
relating to the Subject Property in full force
and effect and will renew the same prior to
expiration and pay all fees in connection
therewith. Trustor hereby warrants and
represents that with respect to each Required
Permit relating to the Subject Property, the
execution and delivery of this Deed of Trust
(and the performance of Trustor's obligations
hereunder) do not cause or create (1) a default
with respect to any such Required Permit, (2) a
right to terminate or revoke any such Required
Permit or (3) any other event that after the
giving of notice, the passage of time or both
could constitute a default (or give rise to a
right to terminate). At the request of
Beneficiary, Trustor shall cause this Deed of
Trust to be served upon the issuer of each
assignable Required Permit relating to the
Subject Property and shall use its best efforts
to cause such issuer to acknowledge receipt of
such notice. Without limiting anything
contained herein, this Deed of Trust shall vest
in Beneficiary a security interest in each such
assignable Required Permit.
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ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Trustor represents and warrants that,
except as disclosed to Beneficiary in a writing
which refers to this warranty and except for
the Permitted Encumbrances, Trustor lawfully
holds and possesses fee simple title to the
Subject Property without limitation on the
right to encumber, and that this Deed of Trust
is a first and prior lien on the Subject
Property.
5.2 TAXES AND ASSESSMENTS. Subject to Section 7.3
of the Loan Agreement, Trustor shall pay prior
to delinquency, all taxes, assessments, levies
and charges imposed by any public or
quasi-public authority or utility company which
are or which may become a lien upon or cause a
loss in value of the Subject Property or any
interest therein. Trustor shall also pay prior
to delinquency all taxes, assessments, levies
and charges imposed by any public authority
upon Beneficiary by reason of its interest in
any Secured Obligation or in the Subject
Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation;
provided, however, Trustor shall have no
obligation to pay taxes which may be imposed
from time to time upon Beneficiary and which
are measured by and imposed upon Beneficiary's
capital or net income.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's
election and demand, Trustor shall, until all
Secured Obligations have been paid in full, pay
to Beneficiary monthly, annually or as
otherwise directed by Beneficiary an amount
estimated by Beneficiary to be equal to: (i)
all taxes, assessments and levies imposed by
any public or quasi-public authority or utility
company which are or may become a lien upon the
Subject Property and will become due for the
tax year during which such payment is so
directed; and (ii) premiums for fire and other
hazard insurance next due. If Beneficiary
determines that any amounts paid by Trustor are
insufficient for the payment in full of such
taxes, assessments, levies and/or insurance
premiums, Beneficiary shall notify Trustor of
the increased amounts required to pay all
amounts due, whereupon Trustor shall pay to
Beneficiary within thirty (30) days thereafter
the additional amount as stated in
Beneficiary's notice. All sums so paid shall
earn interest at the rate then paid on current
market rate accounts maintained with
Beneficiary. The funds deposited with
Beneficiary may be commingled by Beneficiary
with its general funds. Beneficiary shall,
unless Trustor is otherwise in Default
hereunder or under any Secured Obligation,
apply said funds to the payment of, or at the
sole option of Beneficiary
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release said funds to Trustor for the application to
and payment of, such sums, taxes, assessments, levies,
charges, and insurance premiums. Upon Default
by Trustor hereunder or under any Secured
Obligation, Beneficiary may apply all or any
part of said sums to any Secured Obligation
and/or to cure such Default, in which event
Trustor shall be required to restore all
amounts so applied, as well as to cure any
other events or conditions of Default not cured
by such application. Upon assignment of this
Deed of Trust, Beneficiary shall have the right
to assign all amounts collected and in its
possession to its assignee whereupon
Beneficiary shall be released from all
liability with respect thereto. Within ninety-five (95)
days following full repayment of the
Secured Obligations (other than full repayment
of the Secured Obligations as a consequence of
a foreclosure or conveyance in lieu of
foreclosure of the liens and security interests
securing the Secured Obligations) or at such
earlier time as Beneficiary may elect, the
balance of all amounts collected and in
Beneficiary's possession shall be paid to
Trustor and no other party shall have any right
or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor
shall promptly pay and perform each Secured
Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Subject to
Section 7.3 of the Loan Agreement, Trustor
shall immediately discharge any lien not
approved by Beneficiary in writing that has or
may attain priority over this Deed of Trust.
Subject to Section 7.3 of the Loan Agreement,
Trustor shall pay when due all obligations
secured by or reducible to liens and
encumbrances which shall now or hereafter
encumber or appear to encumber all or any part
of the Subject Property or any interest
therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
All insurance and condemnation proceeds shall
be paid and applied in accordance with the
terms contained in the Loan Agreement.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the
Loan Agreement, Trustor covenants:
(a) to maintain the insurance provided for in
the Loan Agreement, and to comply with the
requirements of any insurance companies
insuring the Subject Property; provided,
however, neither Beneficiary nor Trustee,
by reason of accepting, rejecting,
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approving or obtaining insurance shall
incur any liability for (x) the existence,
nonexistence, form or legal sufficiency of
any insurance, (y) the solvency of any
insurer, or (z) the payment of claims;
(b) to keep the Subject Property in good
condition and repair, reasonable wear and
tear excepted;
(c) except as otherwise permitted under the
Loan Documents, not to remove or demolish
the Subject Property or any part thereof,
not to alter, restore or add to the
Subject Property and not to initiate or
acquiesce in any change in any zoning or
other land classification which affects
the Subject Property without Beneficiary's
prior written consent (which consent shall
not be unreasonably withheld or delayed);
(d) to complete or restore promptly and in
good and workmanlike manner the Subject
Property, or any part thereof which may be
damaged or destroyed, without regard to
whether Beneficiary elects to require that
insurance proceeds be used to reduce the
Secured Obligations as provided in the
Loan Agreement;
(e) to comply with all laws, ordinances,
regulations and standards, and all
covenants, conditions, restrictions and
equitable servitudes, whether public or
private, of every kind and character which
affect the Subject Property and pertain to
acts committed or conditions existing
thereon, including, without limitation,
any work, alteration, improvement or
demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the
Subject Property; and
(g) to do all other acts which from the
character or use of the Subject Property
may be necessary to maintain and preserve
its value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND
ACTIONS. At Trustor's sole expense, Trustor
shall protect, preserve and defend the Subject
Property and title to and right of possession
of the Subject Property, the security hereof
and the rights and powers of Beneficiary and
Trustee hereunder against all adverse claims.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF
TRUSTEE. Trustee accepts this trust when this
Deed of Trust is
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recorded. From time to time upon written request
of Beneficiary and presentation
of this Deed of Trust or a certified
copy thereof for endorsement, and without
affecting the personal liability of any person
for payment of any indebtedness or performance
of any obligations secured hereby, Trustee may,
without liability therefor and without notice:
(i) release all or any part of the Subject
Property from the lien of this Deed of Trust;
(ii) consent to the making of any map or plat
thereof; and (iii) join in any grant of
easement thereon, any declaration of covenants
and restrictions, or any extension agreement or
any agreement subordinating the lien or charge
of this Deed of Trust. Except as may be
required by applicable law, Trustee or
Beneficiary may from time to time apply to any
court of competent jurisdiction for aid and
direction in the execution of the trust
hereunder and the enforcement of the rights and
remedies available hereunder, and may obtain
orders or decrees directing or confirming or
approving acts in the execution of said trust
and the enforcement of said remedies. Trustee
has no obligation to notify any party of any
pending sale or any action or proceeding,
including, without limitation, actions in which
Trustor, Beneficiary or Trustee shall be a
party unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee
shall not be obligated to perform any act
required of it hereunder unless the performance
of the act is requested in writing and Trustee
is reasonably indemnified and held harmless
against loss, cost, liability or expense.
5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Trustor shall pay Trustee's fees and
reimburse Trustee and Beneficiary for
expenses in the administration of this
trust, including attorneys' fees.
Beneficiary shall not directly or
indirectly be liable to Trustor or any
other person as a consequence of (i) the
exercise of the rights, remedies or powers
granted to Beneficiary in this Deed of
Trust (unless the loss is caused by the
gross negligence or willful misconduct of
Beneficiary); (ii) the failure or refusal
of Beneficiary to perform or discharge any
obligation or liability of Trustor under
any agreement related to the Subject
Property or under this Deed of Trust; or
(iii) any loss sustained by Trustor or any
third party resulting from Beneficiary's
failure to lease the Subject Property
after a Default or from any other act or
omission of Beneficiary in managing the
Subject Property after a Default (unless
the loss is caused by the gross
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negligence or willful misconduct of Beneficiary)
and no such liability shall be asserted
against or imposed upon Beneficiary, and
all such liability is hereby expressly
waived and released by Trustor.
(b) Trustor indemnifies Trustee and
Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses,
damages, liabilities, claims, causes of
action, judgments, court costs, reasonable
attorneys' fees and other legal expenses,
cost of evidence of title, cost of
evidence of value, and other expenses
which either may suffer or incur: (i) by
reason of this Deed of Trust; (ii) by
reason of the execution of this trust or
in performance of any act required or
permitted hereunder or by law; (iii) as a
result of any failure of Trustor to
perform Trustor's obligations hereunder or
under any other Loan Documents; or (iv) by
reason of any alleged obligation or
undertaking on Beneficiary's part to
perform or discharge any of the
representations, warranties, conditions,
covenants or other obligations contained
in any other document related to the
Subject Property. The above obligation of
Trustor to indemnify and hold harmless
Trustee and Beneficiary shall survive the
release and cancellation of the Secured
Obligations and the release and
reconveyance or partial release and
reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts and
indebtedness arising under this Section
5.10 immediately upon demand by Trustee or
Beneficiary together with interest thereon
from the date the indebtedness arises at
the rate of interest then applicable to
the principal balance of the Note as
specified therein.
5.11 PROHIBITION OF TRANSFER OF SUBJECT PROPERTY
OR INTERESTS IN TRUSTOR. Trustor
acknowledges that Beneficiary has relied
upon the principals of Trustor and Co-Borrower
and their experience in owning
and operating properties similar to the
Subject Property in connection with the
closing of the Loan. Accordingly, except
with the prior written consent of
Beneficiary or as otherwise expressly
permitted in the Note, Trustor shall not
cause or permit any sale, exchange,
mortgage, pledge, hypothecation,
assignment, encumbrance or other transfer,
conveyance or disposition, whether
voluntarily, involuntarily, conditionally,
unconditionally or by operation of law ("Transfer") of
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all or any part of, or all or any direct or
indirect interest in, the Subject Property or
the Collateral (except for
equipment and inventory in the
ordinary course of its business), or cause
or permit a Transfer of any direct or
indirect interest (whether general or
limited partnership interest, stock,
limited liability company interest, trust,
or otherwise) in Trustor or Co-Borrower.
In the event of any Transfer that is not
expressly permitted in the Note and is
without the prior written consent of
Beneficiary, Beneficiary shall have the
absolute right at its option, without
prior demand or notice, to declare all of
the Secured Obligations immediately due
and payable, except to the extent
prohibited by law, and pursue its rights
and remedies under Section 6.2 herein.
Trustor agrees to pay any prepayment fee
as set forth in the Note in the event the
Secured Obligations are accelerated
pursuant to the terms of this Section.
Consent to one such Transfer shall not be
deemed to be a waiver of the right to
require the consent to future or
successive Transfers.
5.12 RELEASES, EXTENSIONS, MODIFICATIONS AND
ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any
persons or entities having any interest at
any time in the Subject Property or in any
manner obligated under the Secured
Obligations ("Interested Parties"),
Beneficiary may, from time to time,
release any person or entity from
liability for the payment or performance
of any Secured Obligation, take any action
or make any agreement extending the
maturity or otherwise altering the terms
or increasing the amount of any Secured
Obligation, or accept additional security
or release all or a portion of the Subject
Property and other security for the
Secured Obligations. None of the
foregoing actions shall release or reduce
the personal liability of any of said
Interested Parties, or release or impair
the priority of the lien of this Deed of
Trust upon the Subject Property.
5.13 RECONVEYANCE. Upon Beneficiary's written
request, and upon surrender to Trustee for
cancellation of this Deed of Trust or a
certified copy thereof, Trustee shall
reconvey or release, without warranty, the
Subject Property or that portion thereof
then held hereunder. To the extent
permitted by law, the reconveyance or
release may describe the grantee as "the
person or persons legally entitled
thereto" and the recitals of any matters
or facts in any reconveyance or release
executed hereunder shall be conclusive
proof of the truthfulness thereof.
Neither Beneficiary nor Trustee
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shall have any duty to determine the rights of
persons claiming to be rightful grantees
of any reconveyance or release. When the
Subject Property has been fully reconveyed
or released, the last such reconveyance or
release shall operate as a reassignment of
all future rents, issues and profits of
the Subject Property to the person or
persons legally entitled thereto.
5.14 SUBROGATION. Beneficiary shall be
subrogated to the lien of all
encumbrances, whether released of record
or not, paid in whole or in part by
Beneficiary pursuant to this Deed of Trust
or by the proceeds of any loan secured by
this Deed of Trust.
5.15 RIGHT OF INSPECTION. Beneficiary, its
agents and employees, may enter the
Subject Property at any reasonable time,
upon reasonable advance notice, for the
purpose of inspecting the Subject Property
and ascertaining Trustor's compliance with
the terms hereof.
5.16 SUBSTITUTION OF TRUSTEES. From time to
time, by a writing, signed and
acknowledged by Beneficiary and recorded
in the Office of the Recorder of the
County in which the Subject Property is
situated, Beneficiary may appoint another
trustee to act in the place and stead of
Trustee or any successor. Such writing
shall set forth any information required
by law. The recordation of such
instrument of substitution shall discharge
Trustee herein named and shall appoint the
new trustee as the trustee hereunder with
the same effect as if originally named
Trustee herein. A writing recorded
pursuant to the provisions of this Section
5.16 shall be conclusive proof of the
proper substitution of such new Trustee.
5.17 HAZARDOUS MATERIALS. Without limiting any
other provision of this Deed of Trust,
Trustor agrees as follows:
(a) Prohibited Activities. Trustor shall not
cause or permit the Subject Property to be
used as a site for the use, generation,
manufacture, storage, treatment, release,
discharge, disposal, transportation or
presence of any Hazardous Materials. The
foregoing to the contrary notwithstanding:
(i) Trustor may store, maintain and use on
the Subject Property janitorial and
maintenance supplies, paint and other
Hazardous Materials of a type and in a
quantity readily available for purchase by
the general public and normally stored,
maintained and used by owners and managers
of properties of a type similar to the
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Subject Property; and (ii) tenants of the
Subject Property may store, maintain and
use on the Subject Property (and, if any
tenant is a retail business, hold in
inventory and sell in the ordinary course
of such tenant's business) Hazardous
Materials of a type and quantity readily
available for purchase by the general
public and normally stored, maintained and
used (and, if tenant is a retail business,
sold) by tenants in similar lines of
business on properties similar to the
Subject Property.
(b) Hazardous Materials Laws. Trustor shall
comply and cause the Subject Property to
comply with all Hazardous Materials Laws.
(c) Notices. Trustor shall immediately notify
Beneficiary in writing of: (i) the
discovery of any Hazardous Materials on,
under or about the Subject Property (other
than Hazardous Materials permitted under
Section 6.2 (a)); (ii) any knowledge by
Trustor that the Subject Property does not
comply with any Hazardous Materials Laws;
(iii) any Hazardous Materials Claims
pending or threatened against Trustor or
the Subject Property by any governmental
entity or agency or any other person or
entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws;
and (iv) the discovery of any occurrence
or condition on any real property
adjoining or in the vicinity of the
Subject Property that could cause the
Subject Property or any part thereof to be
designated as "border zone property" under
the provisions of California Health and
Safety Code Sections 25220 et seq. or any
regulation adopted in accordance
therewith.
(d) Remedial Action. In response to the
presence of any Hazardous Materials on,
under or about the Subject Property,
Trustor shall immediately take, at
Trustor's sole expense, all remedial
action required by any Hazardous Materials
Laws or any judgment, consent decree,
settlement or compromise in respect to any
Hazardous Materials Claims.
(e) Inspection By Beneficiary. Upon
reasonable prior notice to Trustor,
Beneficiary, its employees and agents, may
from time to time (whether before or after
the commencement of a nonjudicial or
judicial foreclosure proceeding), enter
and inspect the Subject Property for the
purpose of determining the existence,
location, nature and magnitude of any past
or present release or
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threatened release of any Hazardous Materials
into, onto, beneath or from the Subject Property.
(f) Legal Effect of Section. Trustor and
Beneficiary agree that: (i) this
Hazardous Materials Section is intended as
Beneficiary's written request for
information (and Trustor's response)
concerning the environmental condition of
the real property security as required by
California Code of Civil Procedure Section
726.5; and (ii) each representation and
warranty and covenant in this Section
(together with any indemnity applicable to
a breach of any such representation and
warranty) with respect to the
environmental condition of the Subject
Property is intended by Beneficiary and
Trustor to be an "environmental provision"
for purposes of California Code of Civil
Procedure Section 736.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term
"Default" shall mean the existence of any
Default as defined in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after
Default, Beneficiary and Trustee shall each
have all the following rights and remedies (in
addition to (and without limiting) any rights
and remedies that are available under
applicable law):
(a) With or without prior notice, to declare
all Secured Obligations immediately due
and payable;
(b) With or without notice, and without
releasing Trustor from any Secured
Obligation, and without becoming a
mortgagee in possession, to enter upon the
Subject Property from time to time and to
do such acts and things as Beneficiary or
Trustee deem necessary or desirable in
order to inspect, investigate, assess and
protect the security hereof or to cure any
Default, including, without limitation:
(i) to appear in and defend any action or
proceeding purporting to affect the
security of this Deed of Trust or the
rights or powers of Beneficiary or Trustee
under this Deed of Trust; (ii) to pay,
purchase, contest or compromise any encumbrance,
charge, lien or claim of lien
which, in the sole judgment of either
Beneficiary or Trustee, is or may be
senior in priority to this Deed of Trust,
the judgment of Beneficiary or Trustee
being conclusive as between
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<PAGE>
the parties hereto; (iii) to obtain insurance;
(iv) to pay any premiums or charges with respect
to insurance required to be carried under
the Loan Documents; (v) to obtain a court
order to enforce Beneficiary's right to
enter and inspect the Subject Property
pursuant to California Civil Code Section
2929.5, in which regard the decision of
Beneficiary as to whether there exists a
release or threatened release of Hazardous
Materials onto the Subject Property shall
be deemed reasonable and conclusive as
between the parties hereto; (vi) to have a
receiver appointed pursuant to California
Code of Civil Procedure Section 564 to
enforce Beneficiary's rights to enter and
inspect the Subject Property for Hazardous
Materials; and/or (vii) to employ legal
counsel, accountants, engineers,
consultants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or
actions in any court of competent
jurisdiction to foreclose this instrument
as a mortgage or to obtain specific
enforcement of the covenants of Trustor
hereunder, and Trustor agrees that such
covenants shall be specifically
enforceable by injunction or any other
appropriate equitable remedy and that for
the purposes of any suit brought under
this subparagraph, Trustor waives the
defense of laches and any applicable
statute of limitations;
(d) To apply to a court of competent
jurisdiction for and obtain appointment of
a receiver of the Subject Property as a
matter of strict right, ex parte and
without notice to Trustor (Trustor hereby
waiving any notice), and without regard to
the adequacy of the security for the
Secured Obligations, the existence of a
declaration that the Secured Obligations
are immediately due and payable, the
filing of a notice of default, or the
commencement of any foreclosure, and
Trustor hereby consents to such
appointment. Such receiver shall have the
right to take possession of and protect
the Subject Property and operate the same
and collect the rents, issues, profits,
revenues and Payments therefrom, which
receiver shall have the right to remain in
possession of the Subject Property
thereafter, during the pendency of any
foreclosure proceeding and all redemption
periods until the issuance of a Trustee's
deed. All expenses and costs incurred by
the receiver or its agents shall
constitute a part of the Secured
Obligations;
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(e) To enter upon, possess, manage and operate
the Subject Property or any part thereof,
to take and possess all documents, books,
records, papers and accounts of Trustor or
the then owner of the Subject Property, to
make, terminate, enforce or modify Leases
of the Subject Property upon such terms
and conditions as Beneficiary deems
proper, to make repairs, alterations and
improvements to the Subject Property as
necessary, in Trustee's or Beneficiary's
sole judgment, all to protect or enhance
the security hereof;
(f) To execute a written notice of such
Default and of its election to cause the
Subject Property to be sold to satisfy the
Secured Obligations. As a condition
precedent to any such sale, Trustee and/or
Beneficiary shall give and record such
notices as the law then requires. When
the minimum period of time required after
such notices has elapsed, Trustee, without
notice to or demand upon Trustor, except
as required by law, shall sell the Subject
Property at the time and place of sale
fixed by it in the notice of sale, at one
or several sales, either as a whole or in
separate parcels and in such manner and
order, all as Beneficiary in its sole
discretion may determine, at public
auction to the highest bidder for cash, in
lawful money of the United States, payable
at time of sale. Neither Trustor nor any
other person or entity other than
Beneficiary shall have the right to direct
the order in which the Subject Property is
sold. Subject to requirements and limits
imposed by law, Trustee may from time to
time postpone sale of all or any portion
of the Subject Property by public
announcement at such time and place of
sale. Trustee shall deliver to the purchaser
at such sale a deed conveying the
Subject Property or portion thereof so
sold, but without any covenant or
warranty, express or implied. The
recitals in the deed of any matters or
facts shall be conclusive proof of the
truthfulness thereof. Any person (other
than Trustee), including Trustor or
Beneficiary may purchase at the sale;
(g) To resort to and realize upon the security
hereunder and any other security now or
later held by Beneficiary concurrently or
successively and in one or several
consolidated or independent judicial
actions or lawfully taken non-judicial
proceedings, or both, and to apply the
proceeds received upon the Secured Obligations
all in such order and manner as
Trustee and Beneficiary, or
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<PAGE> either of them, determine in their sole
discretion;
(h) Upon sale of the Subject Property at any
judicial or non-judicial foreclosure,
Beneficiary or any Affiliate or designee
of Beneficiary may credit bid (as
determined by Beneficiary in its sole and
absolute discretion) all or any portion of
the Secured Obligations. In determining
such credit bid, Beneficiary may, but is
not obligated to, take into account all or
any of the following: (i) appraisals of
the Subject Property as such appraisals
may be discounted or adjusted by
Beneficiary in its sole and absolute
underwriting discretion; (ii) expenses and
costs incurred by Beneficiary with respect
to the Subject Property prior to
foreclosure; (iii) expenses and costs
which Beneficiary anticipates will be
incurred with respect to the Subject
Property after foreclosure, but prior to
resale, including, without limitation,
costs of structural reports and other due
diligence, costs to carry the Subject
Property prior to resale, costs of resale
(e.g. commissions, attorneys' fees, and
taxes), costs of any hazardous materials
clean-up and monitoring, costs of deferred
maintenance, repair, refurbishment and
retrofit, costs of defending or settling
litigation affecting the Subject Property,
and lost opportunity costs (if any),
including the time value of money during
any anticipated holding period by
Beneficiary; (iv) declining trends in real
property values generally and with respect
to properties similar to the Subject
Property; (v) anticipated discounts upon
resale of the Subject Property as a
distressed or foreclosed property; (vi)
the fact of additional collateral (if
any), for the Secured Obligations; and
(vii) such other factors or matters that
Beneficiary (in its sole and absolute
discretion) deems appropriate. In regard
to the above, Trustor acknowledges and
agrees that: (w) Beneficiary is not
required to use any or all of the
foregoing factors to determine the amount
of its credit bid; (x) this Section does
not impose upon Beneficiary any additional
obligations that are not imposed by law at
the time the credit bid is made; (y) the
amount of Beneficiary's credit bid need
not have any relation to any loan-to-value
ratios specified in the Loan Documents or
previously discussed between Trustor and
Beneficiary; and (z) Beneficiary's credit
bid may be (at Beneficiary's sole and
absolute discretion)
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higher or lower than any appraised value of the
Subject Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS.
After deducting all costs, fees and expenses of
Trustee, and of this trust (including, without
limitation, the payment of the Trustee's fees
and attorneys' fees permitted pursuant to
subdivision (b) of California Civil Code
Section 2924d and subdivision (b) of Section
2924k, the cost of evidence of title in
connection with sale and costs and expenses of
sale and of any judicial proceeding wherein
such sale may be made), Trustee shall apply all
proceeds of any foreclosure sale: (i) to
discharge all taxes, levies and assessments,
with costs and interest if they have priority
over the lien of this Deed of Trust, including
the pro rata portion thereof due for the
current year; (ii) to payment of all sums
expended by Beneficiary under the terms hereof
and not then repaid, with accrued interest at
the rate of interest specified in the Note to
be applicable on or after maturity or
acceleration of the Note; (iii) to payment of
all other Secured Obligations; and (iv) the
remainder, if any, to Trustor or Trustor's
assigns.
6.4 ORDER OF APPLICATION OF PROCEEDS. All sums
received by Beneficiary under Section 6.2
(subject to Section 6.3) or Section 3.2, less
all costs and expenses incurred by Beneficiary
or any receiver under Section 6.2 or
Section 3.2, including, without limitation,
attorneys' fees, shall be applied in payment of
the Secured Obligations in such order as
Beneficiary shall determine in its sole
discretion; provided, however, Beneficiary
shall have no liability for funds not actually
received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor
Trustee's nor any receiver's entry upon and
taking possession of all or any part of the
Subject Property, nor any collection of rents,
issues, profits, insurance proceeds,
condemnation proceeds or damages, other
security or proceeds of other security, or
other sums, nor the application of any
collected sum to any Secured Obligation, nor
the exercise or failure to exercise of any
other right or remedy by Beneficiary or Trustee
or any receiver shall cure or waive any breach,
Default or notice of default under this Deed of
Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations
then due have been paid and performed and
Trustor has cured all other defaults), or
impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any
right or remedy, or be construed as an
affirmation by
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Beneficiary of any tenancy, lease or option or a
subordination of the lien of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S FEES.
Trustor agrees to pay to Beneficiary
immediately and without demand all reasonable
costs and expenses incurred by Trustee and
Beneficiary in connection with the exercise of
the rights and remedies provided for herein
and/or in any of the other Loan Documents
(including, without limitation, court costs,
appraisal fees and reasonable attorneys' fees,
whether incurred in litigation or not) with
interest from the date of expenditure until
said sums have been paid at the rate of
interest then applicable to the principal
balance of the Note as specified therein. In
addition, Trustor shall pay to Trustee and/or
Beneficiary all Trustee's fees hereunder and
shall reimburse Trustee for all reasonable
expenses incurred in the administration of this
trust, including, without limitation, any
attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS.
Trustor hereby irrevocably appoints Beneficiary
and its successors and assigns, as its
attorney-in-fact, which agency is coupled with
an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or
any other notices that Beneficiary deems
appropriate to protect Beneficiary's interest,
(b) upon the issuance of a deed pursuant to the
foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment or
further assurance with respect to the Leases
and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for
such purpose, (c) to prepare, execute and file
or record financing statements, continuation
statements, applications for registration and
like papers necessary to create, perfect or
preserve Beneficiary's security interests and
rights in or to any of the Collateral and any
other property or interests securing the
payment and the performance of the Secured
Obligations, and (d) upon the occurrence of a
Default, Beneficiary may perform any obligation
of Trustor hereunder; provided, however, that:
(i) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are
actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or
any other person or entity for any failure to
act under this Section.
6.8 REMEDIES CUMULATIVE. All rights and remedies
of Beneficiary and Trustee provided hereunder
are cumulative and are in addition to all
rights and remedies provided by applicable law (including
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specifically that of foreclosure of this
instrument as though it were a mortgage)
or in any other agreements between Trustor and
Beneficiary. Beneficiary may enforce any one
or more remedies or rights hereunder
successively or concurrently.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents
contain or incorporate by reference the entire
agreement of the parties with respect to
matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant
further rights to Beneficiary and contain
further agreements and affirmative and negative
covenants by Trustor which apply to this Deed
of Trust and to the Subject Property and such
further rights and agreements are incorporated
herein by this reference.
7.2 MERGER. No merger shall occur as a result of
Beneficiary's acquiring any other estate in, or
any other lien on, the Subject Property unless
Beneficiary consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for
itself and for all parties claiming through or
under Trustor, and for all parties who may
acquire a lien on or interest in the Subject
Property, hereby waives all rights to have the
Subject Property and/or any other property,
including, without limitation, the Collateral,
which is now or later may be security for any
Secured Obligation ("Other Property")
marshalled upon any foreclosure of this Deed of
Trust or on a foreclosure of any Other
Property. Beneficiary shall have the right to
sell, and any court in which foreclosure proceedings
may be brought shall have the right to
order a sale of, the Subject Property and any
or all of the Collateral or Other Property as a
whole or in separate parcels, in any order that
Beneficiary may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND
REINSTATEMENT. To the fullest extent permitted
by applicable law, Trustor, for itself and for
all parties claiming through or under Trustor,
and for all parties who may acquire a lien on
or interest in the Subject Property, hereby
waives any and all rights of redemption and
reinstatement under law and under any order or
decree of foreclosure of this Deed of Trust,
and all such rights of redemption and
reinstatement of Trustor and of all other
persons, are and shall be deemed to be hereby
waived to the full extent permitted by the
provisions of the applicable law.
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7.5 EXERCISE OF REMEDIES. Notwithstanding any of
the terms or provisions contained in this Deed
of Trust (or in any of the other Loan
Documents), if at any time after the occurrence
of a Default under any of the Loan Documents
(but prior to the time (if any) that said
Default has been cured to the satisfaction of
Beneficiary), Beneficiary has commenced to
exercise one or more of its remedies provided
for herein (or provided in any of the other
Loan Documents or available at law or in
equity), Beneficiary will not be precluded from
continuing to exercise all of its rights and
remedies upon said Default (notwithstanding the
fact that Trustor may have cured, attempted to
cure or be in the process of curing said
Default). It is the intention of the parties
hereto that (to the extent permitted by law)
once Beneficiary has commenced to exercise one
or more of its rights or remedies (upon a
Default), said Default cannot be cured, unless
Beneficiary expressly agrees in writing to
accept said cure and to cease the exercise of
said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term "Subject
Property" means all and any part of the Subject
Property and any interest in the Subject
Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants,
and conditions herein contained shall be
binding upon and inure to the benefit of the
successors and assigns of the parties hereto;
provided, however, that this section does not
waive or modify any restrictions on transfer
contained herein or in any of the other Loan
Documents.
7.8 GOVERNING LAW. This Deed of Trust shall be
governed by and construed in accordance with
the laws of the State of California.
7.9 INCORPORATION. Exhibit A as attached, is
incorporated into this Deed of Trust by this
reference.
7.10 NOTICES. All notices, reports, demands,
requests and other communications
authorized or required under this Deed of
Trust to be given to Trustor or
Beneficiary, shall be given in the manner
and to the addresses specified in the Loan
Agreement for the giving of notices.
Trustor shall forward to Beneficiary,
without delay, any notices, letters or
other communications delivered to the
Subject Property or to Trustor naming
Beneficiary, "Lender" or any similar
designation as addressee, or which could
reasonably be deemed to affect the ability
of Trustor to perform its
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obligations to Beneficiary under the Note, the Loan
Agreement or any other Loan Documents.
7.11 LIMITATION OF LIABILITY. The limitations
on liability set forth in Section 2.8 of
the Loan Agreement shall apply with equal
force to this Deed of Trust, and said
limitations are incorporated herein by
reference as fully and with the same
effect as if recited herein at length.
7.12 SEVERABILITY. If any provision or
obligation under this Deed of Trust shall
be determined by a court of competent
jurisdiction to be invalid, illegal or
unenforceable, that provision shall be
deemed severed from the Deed of Trust and
the validity, legality and enforceability
of the remaining provisions or obligations
shall remain in full force as though the
invalid, illegal or unenforceable
provision had never been a part of the
Deed of Trust.
7.13 TIME. Time is of the essence of each and
every term of this Deed of Trust.
7.14 RELATIONSHIP. The relationship of Trustor
and Beneficiary under this Deed of Trust
and the other Loan Documents is, and shall
at all times remain, solely that of
borrower and lender; and Beneficiary
neither undertakes nor assumes any
responsibility or duty to Trustor or to
any third party with respect to the
Subject Property. Notwithstanding any
other provisions of this Deed of Trust and
the other Loan Documents: (i) Beneficiary
is not, and shall not be construed to be,
a partner, joint venturer, member, alter
ego, manager, controlling person or other
business associate or participant of any
kind of Trustor, and Beneficiary does not
intend to ever assume such status; (ii)
Beneficiary's activities in connection
with this Deed of Trust and the other Loan
Documents shall not be "outside the scope
of activities of a lender of money" within
the meaning of California Civil Code
Section 3434, as amended or recodified
from time to time, and Beneficiary does
not intend to ever assume any
responsibility to any person for the
quality, suitability, safety or condition
of the Subject Property; and (iii)
Beneficiary shall not be deemed
responsible for or a participant in any
acts, omissions or decisions of Trustor.
7.15 EXECUTION IN COUNTERPARTS. This Deed of
Trust may be executed in any number of
counterparts, each of which when executed
and delivered shall be deemed to be an
original and all such counterparts
together, shall constitute one and the
same instrument.
29
<PAGE>
7.16 REQUEST FOR NOTICES. Trustor hereby
requests that a copy of any notice of any
default and any notice of sale as may be
required by law, be mailed to Trustor at
the address for notices as set forth in
Section 7.10 hereof.
30
<PAGE>
IN WITNESS WHEREOF, Trustor has executed this Deed of
Trust as of the day and year set forth above.
"TRUSTOR"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE
PARTNERSHIP, a California limited
partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation, its general
partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a
California corporation, its general
partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general
partner
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
- ---------------------------
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
EXHIBIT A
Gateway and Park Plaza Propeties
Gateway Executive Center
801 12th Street
Sacramento, Sacramento County, California
AND
Park Plaza Professional Center
1303 J Street
Sacramento, Sacramento County, California
<PAGE>
274456.05 COGHLAN, DENNIS M. CH January 8, 1997 (5:31p)
<PAGE>
THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING SHOULD BE
RETURNED TO:
Lee M. Smolen
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
City of Seattle, Washington
DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST, WITH ABSOLUTE
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT,
ASSIGNMENT OF EQUIPMENT LEASES, ASSIGNMENT OF PERMITS
AND FIXTURE FILING ("Deed of Trust"), made as of
December 13, 1996, are PRUDENTIAL-BACHE/EQUITEC REAL
ESTATE PARTNERSHIP, a California limited partnership
("Trustor"), having its chief executive office at c/o
Glenborough Corporation, 400 South El Camino Real, 11th
Floor, San Mateo, California 94402, Chicago Title
Insurance Company, a Missouri corporation ("Trustee"),
having an office at 701 Fifth Avenue, Suite 1800,
Seattle, Washington 98104, and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Beneficiary"), having an office
at 333 South Grand, Suite 900, Los Angeles, California
90071, (as may be modified, amended, supplemented or
restated from time to time the "Deed of Trust").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms
and conditions in this Deed of Trust, Trustor
irrevocably grants, conveys and assigns to
Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of
entry and possession, all of Trustor's right,
title and interest in all of the real property
located in the City of Seattle, Washington and
described on Exhibit A attached hereto and made
a part hereof, together with all of Trustor's
right, title and interest in all development
rights or credits, air rights, water, water
rights and water stock related to the real
property, and all minerals, oil and gas, and
other hydrocarbon substances in, on or under
the real property, and all appurtenances,
easements, rights and rights of way appurtenant
or related thereto; all streets, roads and
alleys (whether open, proposed or vacated); all
of Trustor's right, title and interest as
<PAGE>
lessee under that certain Lease Agreement dated
March 5, 1987, by and between Burlington
Northern Railroad Company ("Ground Lessor"), as
lessor, and Trustor, as lessee, a memorandum of
which was recorded under Recording Number
8801211404 (the "Original Ground Lease") (the
Original Ground Lease as the same may
heretofore have been, or may hereafter be,
amended, restated, modified, supplemented or
extended from time to time, together with any
and all consents of the Ground Lessor to the
encumbrance of the Ground Leased Property (as
hereinafter defined) by this Deed of Trust, are
collectively referred to herein as the "Ground
Lease"), which Ground Lease confers upon
Trustor certain rights to use that certain real
property located adjacent to the real estate in
the City of Seattle, County of King, State of
Washington, and legally described on Exhibit A-1
attached hereto (together with all
improvements, fixtures, appurtenances,
hereditaments, easements, rights-of-way and
other rights or privileges attached, upon,
appurtenant or relating thereto, the "Ground
Leased Property"), together with any after-acquired
right, title and interest of Trustor,
its successors and assigns in and to the Ground
Leased Property (provided, however, that if and
to the extent the Trustor's grant, conveyance
and assignment hereinabove with respect to the
Ground Lease and the Ground Leased Property
only results in a breach of the Ground Lease
because such grant, conveyance and assignment
requires the consent of the Ground Lessor and
such consent has not been given or deemed
given, such grant, conveyance and assignment
shall not be effective (to the extent necessary
to avoid any such breach, such breach not being
intended hereby) unless and until the Ground
Lessor's consent is given or deemed given); all
buildings, other improvements and fixtures now
or hereafter located on the real property,
including, but not limited to, all apparatus,
equipment, and appliances used in the operation
or occupancy of the real property or the Ground
Leased Property, it being intended by the
parties that all such items shall be
conclusively considered to be a part of the
real property, whether or not attached or
affixed to the real property (collectively, the
"Improvements"); all interest or estate which
Trustor may hereafter acquire in the property
described above, and all additions and
accretions thereto, and the proceeds of any of
the foregoing (all of the foregoing being
collectively referred to as the "Subject
Property"). The listing of specific rights or
property shall not be interpreted as a limit of
general terms.
1
<PAGE>
1.2 NON-AGRICULTURAL USE. Trustor represents and
warrants to Beneficiary and Trustee that the
Subject Property is not used principally for
agricultural or farming purposes.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant
and assignment for the purpose of securing the
following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any
time owing under that certain Amended,
Restated and Consolidated Promissory Note,
of even date herewith, in the aggregate
principal amount of Twenty-Six Million Six
Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), executed by Trustor and
Montrose Office Park Joint Venture, a
Maryland joint venture ("Co-Borrower";
Trustor and Co-Borrower collectively,
"Borrowers") and payable to the order of
Beneficiary (as may be modified, amended,
supplemented, replaced or restated from
time to time, the "Note"); and
(b) Payment and performance of all covenants
and obligations of Trustor under this Deed
of Trust; and
(c) Payment and performance of all covenants
and obligations on the part of Trustor
under that certain Loan Agreement, of even
date herewith, by and between Trustor and
Co-Borrower and Beneficiary (as may be
modified, amended, supplemented or
restated from time to time, the "Loan
Agreement") (capitalized terms used herein
but not defined herein shall have the
meaning provided for such terms in the
Loan Agreement); and
(d) Payment and performance of all covenants
and obligations on the part of each of the
Borrowers under all of the Loan Documents;
and
(e) Payment and performance of all future
advances and other obligations that the
then record owner of all or part of the
Subject Property may agree to pay and/or
perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary,
when such future advance or obligation is
evidenced by a writing which recites that
it is secured by this Deed of Trust; and
3
<PAGE>
(f) All modifications, extensions and renewals
of any of the obligations secured hereby,
however evidenced, including, without
limitation: (i) modifications of the
required principal payment dates or
interest payment dates or both, as the
case may be, deferring or accelerating
payment dates wholly or partly; and (ii)
modifications, extensions or renewals at a
different rate of interest whether or not
in the case of the Note, the modification,
extension or renewal is evidenced by a new
or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used
herein in its broadest and most comprehensive
sense and shall be deemed to include, without
limitation, all protective advances and all
sums advanced to protect the Subject Property
or the lien of this Deed of Trust or otherwise
disbursed or incurred under the terms of the
Loan Documents, all interest and charges,
prepayment charges (if any), late charges and
loan fees at any time accruing or assessed on
any of the Secured Obligations; provided,
however, that the terms "obligations" and
"Secured Obligations" as used herein shall in
no event include any obligations arising under
the Guaranty or the Hazardous Materials
Indemnity.
2.3 INCORPORATION. All terms of the Secured
Obligations and the documents evidencing such
obligations are incorporated herein by this
reference. All persons who may have or acquire
an interest in the Subject Property shall be
deemed to have notice of the terms of the
Secured Obligations and to have notice that the
rate of interest on one or more Secured
Obligations may vary from time to time.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Trustor hereby irrevocably assigns
to Beneficiary all of Trustor's right, title
and interest in, to and under: (a) all leases
of the Subject Property or any portion thereof,
and all other agreements of any kind relating
to the use or occupancy of the Subject Property
or any portion thereof, whether now existing or
entered into after the date hereof ("Leases");
and (b) the rents, issues, deposits, profits
and revenues of the Subject Property and the
operations conducted thereon, including,
without limitation, all amounts payable and all
rights and benefits accruing to Trustor under
the Leases ("Payments"). The term "Leases"
shall also include all guarantees of and
security for the lessees' performance
thereunder, and all amendments, extensions,
renewals or
4
<PAGE>
modifications thereto which are
permitted hereunder. This is a present and
absolute assignment, not an assignment for
security purposes only, and Beneficiary's right
to the Leases and Payments is not contingent
upon, and may be exercised without possession
of, the Subject Property, and without the
commencement of a foreclosure action or the
appointment of a receiver. Furthermore, upon
any Default, Beneficiary shall be entitled to
receive pursuant to the foregoing assignment,
and Trustor shall be obligated to deliver to
Beneficiary or its designee (including any
receiver), any and all Payments collected by
Trustor which remain in the possession or
control of Trustor, whether or not commingled
with other funds or Trustor, and whether
collected by Trustor before or after the
occurrence of the Default.
3.2 GRANT OF LICENSE. Beneficiary confers upon
Trustor a license ("License") to collect and
retain the Payments as they become due and
payable, until the occurrence of a Default.
Upon a Default, the License shall be
automatically revoked and Beneficiary may
collect and apply the Payments pursuant to
Section 6.4 without notice and without taking
possession of the Subject Property. Trustor
hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and
comply with any notice or demand by Beneficiary
for the payment to Beneficiary of any rental or
other sums which may at any time become due
under the Leases, or for the performance of any
of the lessees' undertakings under the Leases,
and the lessees shall have no right or duty to
inquire as to whether any Default has actually
occurred or is then existing hereunder.
Trustor hereby relieves the lessees from any
liability to Trustor by reason of relying upon
and complying with any such notice or demand by
Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing
irrevocable assignment shall (in and of itself)
not cause Beneficiary to be: (a) a mortgagee
in possession; (b) responsible or liable for
the control, care, management or repair of the
Subject Property or for performing any of the
terms, agreements, undertakings, obligations,
representations, warranties, covenants and
conditions of the Leases; (c) responsible or
liable for any waste committed on the Subject
Property by the lessees under any of the Leases
or any other parties; (d) responsible or liable
for any dangerous or defective condition of the
Subject Property; or (e) responsible or liable
for any negligence in the management, upkeep,
repair or control of the Subject Property
resulting in loss or injury or death to any
lessee, licensee, employee, invitee or other
person. Beneficiary shall not
5
<PAGE>
directly or indirectly be liable to Trustor or any
other person as a consequence of: (i) the exercise
or failure to exercise any of the rights,
remedies or powers granted to Beneficiary
hereunder; or (ii) the failure or refusal of
Beneficiary to perform or discharge any
obligation, duty or liability of Trustor
arising under the Leases.
3.4 COVENANTS. Trustor covenants and agrees at
Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in
the Leases and enforce by all available
remedies performance by the lessees of the
obligations of the lessees contained in the
Leases; (b) deliver to Beneficiary fully
executed, counterpart original(s) of each and
every Lease if requested to do so; and (c)
execute and record (or cause to be executed and
recorded) such additional assignments of any
Lease or specific subordinations of any Lease
to this Deed of Trust, in form and substance
acceptable to Beneficiary, as Beneficiary may
reasonably request. Trustor shall not, without
Beneficiary's prior written consent or as
otherwise permitted by any provision of the
Loan Agreement or as otherwise permitted above:
(i) execute any other assignment relating to
any of the Leases; (ii) discount any rent or
other sums due under the Leases or collect the
same in advance, other than to collect rent one
(1) month in advance of the time when it
becomes due; (iii) modify, amend (if such
modification or amendment would result in the
Lease being less favorable to Trustor or
Beneficiary than presently existing) or
terminate any of the Leases or in any manner
release or discharge the lessees from any
obligations thereunder; (iv) consent to any
assignment or subletting by any lessee; or (v)
subordinate or agree to subordinate any of the
Leases to any other deed of trust or encumbrance.
Any such attempted action in violation
of the provisions of this Section 3.4 shall be
null and void.
3.5 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request by Beneficiary, Trustor shall use
its reasonable efforts to deliver to
Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by
Trustor and by the lessees, certifying: (i)
that the foregoing assignment and the Leases
are in full force and effect; (ii) the date of
each lessee's most recent payment of rent;
(iii) that there are no defenses or offsets
outstanding, or stating those claimed by
Trustor or the lessees under said Leases; (iv)
that no default exists under any of the Leases
and no condition exists that after the giving
of notice, the passage of time or both would
constitute a default
6
<PAGE>
under any of the Leases; and (v) any other information
reasonably requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and
assigns to Beneficiary, as of the Effective
Date, a security interest, to secure payment
and performance of all of the Secured
Obligations, in all of the following described
personal property in which Trustor now or at
any time hereafter has any interest
(collectively, the "Collateral"):
All goods, building and other
materials, supplies, work in process,
equipment, machinery, fixtures,
furniture, furnishings, signs and
other personal property, wherever
situated, which are or are to be
incorporated into, used in connection
with, or appropriated for use on the
real property described on Exhibit A
attached hereto and incorporated by
reference herein (to the extent the
same are not effectively made a part
of the real property pursuant to
Section 1.1 above); together with all
rents, issues, deposits and profits of
the Subject Property; all inventory,
accounts, cash receipts, deposit
accounts, accounts receivable,
contract rights, general intangibles,
judgments, chattel paper, instruments,
documents, notes, drafts, letters of
credit, insurance policies, insurance
and condemnation awards and proceeds,
any other rights to the payment of
money, trade names, trademarks and
service marks arising from or related
to the Subject Property or any
business now or hereafter conducted
thereon by Trustor; subject to Section
4.8, all permits, consents, approvals,
licenses, authorizations and other
rights granted by, given by or
obtained from, any governmental entity
with respect to the Subject Property;
all deposits or other security now or
hereafter made with or given to
utility companies by Trustor with
respect to the Subject Property; all
advance payments of insurance premiums
made by Trustor with respect to the
Subject Property; all plans, drawings
and specifications relating to the
Subject Property; all loan funds held
by Beneficiary, whether or not
disbursed; all funds deposited
7
<PAGE>
with Beneficiary pursuant to any loan
agreement or any other document or
right of Beneficiary; all reserves,
deferred payments, deposits, accounts,
refunds, cost savings and payments of
any kind related to the Subject
Property or any portion thereof; all
other items of personal property (of
whatever kind or nature) used in the
operation of the Subject Property; all
of the rights and interest of Trustor
in and under all management
agreements, franchise agreements and
leasing agreements affecting all or
any portion of the Subject Property;
all of the rights and interest of
Trustor in and to those accounts that
have been (or may hereafter be)
established with Beneficiary; all of
the rights and interest of Trustor in
and to any interest rate protection
agreement that may have been (or may
hereafter be) entered into by Trustor
in connection with the Loan; all
rents, revenues, issues, profits and
income generated from the operation of
the Subject Property; subject to
Section 4.7, all rights of Trustor as
lessee under all chattel leases
relating to furniture, fixtures,
equipment or any other item used in
connection with the operation of the
Subject Property; together with all
replacements and proceeds of, and
additions and accessions to, any of
the foregoing; together with all
books, records and files relating to
any of the foregoing.
As to all of the above described personal
property which is or which hereafter becomes a
"fixture" under applicable law, this Deed of
Trust constitutes a fixture filing under the
Washington Uniform Commercial Code, as amended
or recodified from time to time ("UCC").
4.2 REPRESENTATIONS AND WARRANTIES. Trustor
represents and warrants that (subject to the
Permitted Encumbrances): (a) Trustor has good
title to the Collateral; and (b) Trustor has
not previously assigned or encumbered the
Collateral, and no financing statement covering
any of the Collateral has been delivered by
Trustor to any other person or entity.
4.3 RIGHTS OF BENEFICIARY. In addition to
Beneficiary's rights as a "Secured Party" under
the UCC, Beneficiary may, but shall not be
obligated to, at any time without notice
(except as provided below) and at the expense
of Trustor: (a) give notice to any person of
Beneficiary's
8
<PAGE>
rights hereunder and enforce such
rights at law or in equity; (b) insure,
protect, defend and preserve the Collateral or
any rights or interests of Beneficiary therein;
and (c) inspect the Collateral at reasonable
times and upon reasonable prior notice.
Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any
obligation of Trustor to Beneficiary unless
Beneficiary shall make an express written
election of said remedy under the UCC, or other
applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the
occurrence of a Default, in addition to all of
Beneficiary's rights as a "Secured Party" under
the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice,
require Trustor to assemble any or all of
the Collateral and make it available to
Beneficiary at a place designated by
Beneficiary; (ii) without prior notice,
enter upon the Subject Property or other
place where any of the Collateral may be
located and take possession of, collect,
sell, and dispose of any or all of the
Collateral, and store the same at
locations acceptable to Beneficiary at
Trustor's expense; and (iii) sell, assign
and deliver at any place or in any lawful
manner all or any part of the Collateral
and bid and become purchaser at any such
sales; and
(b) Beneficiary may, for the account of
Trustor and at Trustor's expense: (i)
operate, use, consume, sell or dispose of
the Collateral as Beneficiary deems
appropriate for the purpose of performing
any or all of the Secured Obligations;
(ii) enter into any agreement, compromise,
or settlement, including insurance claims,
which Beneficiary may deem desirable or
proper with respect to any of the
Collateral; (iii) endorse, collect and
receive any right to payment of money
owing to Trustor under or from the
Collateral; and (iv) endorse and deliver
evidences of title for, and receive,
enforce and collect by legal action or
otherwise, all indebtedness and
obligations now or hereafter owing to
Trustor in connection with or on account
of any or all of the Collateral.
Trustor acknowledges and agrees that a
disposition of the Collateral in accordance
with Beneficiary's rights and remedies as
heretofore provided is a disposition thereof in
a commercially reasonable manner and that
9
<PAGE>
five (5) days prior notice of such disposition is
commercially reasonable notice.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably
appoints Beneficiary as Trustor's
attorney-in-fact (such agency being coupled
with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do
so, in Beneficiary's name, or in the name of
Trustor, prepare, execute and file or record
financing statements, continuation statements,
applications for registration and like papers
necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in
or to any of the Collateral, and, upon a
Default hereunder, take any other action
required of Trustor; provided, however, that
Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually
received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as
otherwise provided in this Article or in the
other Loan Documents, so long as no Default
exists under this Deed of Trust or any of the
Loan Documents, Trustor may possess, use, move,
transfer or dispose of any of the Collateral in
the ordinary course of Trustor's business and
in accordance with the Loan Agreement.
4.7 ASSIGNMENT OF EQUIPMENT LEASES. To secure the
payment and performance of the Secured
Obligations, Trustor (to the extent assignable)
hereby sells, assigns, grants, transfers and
sets over to Beneficiary all of Trustor's
right, title and interest in and to the
Equipment Leases relating to the Subject
Property and in and to the furniture, fixtures,
equipment and other items (herein called the
"Leased Equipment") and any rights to acquire
the Leased Equipment as set forth in the
Equipment Leases relating thereto, or
otherwise, and any and all extensions and
renewals thereof and any and all substitutions
therefor. Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due and promptly perform all covenants and
obligations required of the lessee under each
Equipment Lease, including, to the extent
required by the lessor under any Equipment
Lease, keeping the Leased Equipment in good
condition and repair, and making all necessary
replacements or renewals thereof. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Equipment Lease,
including, but not limited to, the payment of
rent, until such time as Beneficiary takes
actual possession
10
<PAGE>
of the Leased Equipment and the Subject Property.
So long as there shall exist no Default,
Beneficiary shall not demand from the
lessor under any Equipment Lease any
rights of Trustor thereunder, nor shall
Beneficiary be entitled to the use and
possession of the Leased Equipment. Upon or at
any time after a Default, Trustor agrees to
turn over and give up possession of the Leased
Equipment to Beneficiary at the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, manage and operate the Leased
Equipment, and in connection therewith: (x)
Beneficiary may make, cancel, enforce or modify
any Equipment Lease, repair, maintain and
improve the Leased Equipment, employ agents,
attorneys and accountants in connection with
the enforcement of Beneficiary's rights
hereunder and pay the reasonable fees and
expenses thereof, and otherwise do and perform
any and all acts and things which Beneficiary
may deem necessary or appropriate in the
protection of the Leased Equipment or the
enforcement of Beneficiary's rights hereunder
or under the Loan Agreement or any other Loan
Document; and any and all amounts expended by
Beneficiary in connection with the exercise of
any rights granted under this Section 4.7 shall
constitute additional Secured Obligations
secured by this Deed of Trust; (y) the entering
upon the Subject Property and taking possession
of the Leased Equipment and the exercise of any
of the rights hereinabove specified shall not
cure, waive, modify or affect any Default
hereunder or under the Loan Agreement or any
other Loan Document; and (z) Beneficiary may
acquire the Leased Equipment in accordance with
the provisions of any Equipment Lease. Except
as otherwise permitted hereunder and except for
amendments that do not result in an Equipment
Lease being less favorable to Trustor or
Beneficiary, Trustor shall keep each Equipment
Lease in full force and effect and will not
modify, change, alter, supplement or amend any
Equipment Lease. Trustor hereby warrants and
represents that, with respect to each of the
Equipment Leases, the execution and delivery of
this Deed of Trust (and the performance of
Trustor's obligations hereunder) do not cause
or create a default under any Equipment Lease,
a right to terminate any Equipment Lease or any
other event that after the giving of notice,
the passage of time or both could constitute a
default (or provide the lessor under an
Equipment Lease with a right to terminate). At
the request of Beneficiary, Trustor shall cause
this Deed of Trust to be served upon the lessor
under any
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Equipment Lease and shall use
reasonable efforts to cause such lessor to
acknowledge receipt of such notice. Without
limiting anything herein contained, this Deed
of Trust shall vest in Beneficiary a security
interest in each Equipment Lease and Trustor's
interest in the Leased Equipment (subject to
the ownership and security interest in the
Leased Equipment of lessor, as provided for in
the Equipment Lease). The Equipment Leases and
Leased Equipment shall constitute "Collateral"
hereunder.
4.8 ASSIGNMENT OF PERMITS. To secure the payment
and performance of the Secured Obligations,
Trustor hereby sells, assigns, grants,
transfers and sets over to Beneficiary all of
Trustor's right, title and interest in and to
all Required Permits now or hereafter in
effect, but only to the extent that the
Required Permits may be lawfully assigned; and
any and all substitutions therefor (and said
Required Permits shall constitute "Collateral"
hereunder). Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due under each Required Permit relating to the
Subject Property and promptly perform all
covenants and obligations required of the
licensee or permittee, as the case may be,
under each such Required Permit. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Required Permit,
including, but not limited to, the payment of
fees, until such time as Beneficiary takes
actual possession of the Subject Property and
the Required Permits relating thereto. Upon or
at any time after a Default, Trustor agrees (to
the extent not prohibited by law) to turn over
and give up possession of the assignable
Required Permits relating to the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, and manage and operate the
Subject Property; and in connection therewith:
(x) Beneficiary may make, cancel, enforce or
modify any Required Permit relating to the
Subject Property or cause the same to be issued
or reissued in its own name or the name of its
designee or operator of the Subject Property or
receiver, and otherwise do and perform any and
all acts and things which Beneficiary may deem
necessary or appropriate in the protection of
such Required Permits or the enforcement of
Beneficiary's rights hereunder or under the
Loan Agreement or any
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other Loan Document; and
any and all amounts expended by Beneficiary in
connection with the foregoing shall constitute
additional Secured Obligations secured by this
Deed of Trust; and (y) the entering upon the
Subject Property and taking possession of the
same and the operation thereof under the
assignable Required Permits relating thereto,
and the exercise of any of the rights
hereinabove specified shall not cure, waive,
modify or affect any Default hereunder or under
the Loan Agreement or any other Loan Document.
Trustor shall keep each Required Permit
relating to the Subject Property in full force
and effect and will renew the same prior to
expiration and pay all fees in connection
therewith. Trustor hereby warrants and
represents that with respect to each Required
Permit relating to the Subject Property, the
execution and delivery of this Deed of Trust
(and the performance of Trustor's obligations
hereunder) do not cause or create (1) a default
with respect to any such Required Permit, (2) a
right to terminate or revoke any such Required
Permit or (3) any other event that after the
giving of notice, the passage of time or both
could constitute a default (or give rise to a
right to terminate). At the request of
Beneficiary, Trustor shall cause this Deed of
Trust to be served upon the issuer of each
assignable Required Permit relating to the
Subject Property and shall use its best efforts
to cause such issuer to acknowledge receipt of
such notice. Without limiting anything
contained herein, this Deed of Trust shall vest
in Beneficiary a security interest in each such
assignable Required Permit.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Trustor represents and warrants that,
except as disclosed to Beneficiary in a writing
which refers to this warranty and except for
the Permitted Encumbrances, Trustor lawfully
holds and possesses fee simple title to the
Subject Property without limitation on the
right to encumber, and that this Deed of Trust
is a first and prior lien on the Subject
Property.
5.2 TAXES AND ASSESSMENTS. Subject to Section 7.3
of the Loan Agreement, Trustor shall pay prior
to delinquency, all taxes, assessments, levies
and charges imposed by any public or
quasi-public authority or utility company which
are or which may become a lien upon or cause a
loss in value of the Subject Property or any
interest therein. Trustor shall also pay prior
to delinquency all taxes, assessments, levies
and charges imposed by any public authority
upon Beneficiary by reason of its interest in
any Secured Obligation or in the Subject
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Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation;
provided, however, Trustor shall have no
obligation to pay taxes which may be imposed
from time to time upon Beneficiary and which
are measured by and imposed upon Beneficiary's
capital or net income.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's
election and demand, Trustor shall, until all
Secured Obligations have been paid in full, pay
to Beneficiary monthly, annually or as
otherwise directed by Beneficiary an amount
estimated by Beneficiary to be equal to: (i)
all taxes, assessments and levies imposed by
any public or quasi-public authority or utility
company which are or may become a lien upon the
Subject Property and will become due for the
tax year during which such payment is so
directed; and (ii) premiums for fire and other
hazard insurance next due. If Beneficiary
determines that any amounts paid by Trustor are
insufficient for the payment in full of such
taxes, assessments, levies and/or insurance
premiums, Beneficiary shall notify Trustor of
the increased amounts required to pay all
amounts due, whereupon Trustor shall pay to
Beneficiary within thirty (30) days thereafter
the additional amount as stated in
Beneficiary's notice. All sums so paid shall
earn interest at the rate then paid on current
market rate accounts maintained with
Beneficiary. The funds deposited with
Beneficiary may be commingled by Beneficiary
with its general funds. Beneficiary shall,
unless Trustor is otherwise in Default
hereunder or under any Secured Obligation,
apply said funds to the payment of, or at the
sole option of Beneficiary release said funds
to Trustor for the application to and payment
of, such sums, taxes, assessments, levies,
charges, and insurance premiums. Upon Default
by Trustor hereunder or under any Secured
Obligation, Beneficiary may apply all or any
part of said sums to any Secured Obligation
and/or to cure such Default, in which event
Trustor shall be required to restore all
amounts so applied, as well as to cure any
other events or conditions of Default not cured
by such application. Upon assignment of this
Deed of Trust, Beneficiary shall have the right
to assign all amounts collected and in its
possession to its assignee whereupon
Beneficiary shall be released from all
liability with respect thereto. Within ninety-five
(95) days following full repayment of the
Secured Obligations (other than full repayment
of the Secured Obligations as a consequence of
a foreclosure or conveyance in lieu of
foreclosure of the liens and security interests
securing the Secured Obligations) or at such
earlier time as Beneficiary may elect, the
balance of all
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amounts collected and in Beneficiary's possession shall
be paid to Trustor and no other party shall have any
right or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor
shall promptly pay and perform each Secured
Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Subject to
Section 7.3 of the Loan Agreement, Trustor
shall immediately discharge any lien not
approved by Beneficiary in writing that has or
may attain priority over this Deed of Trust.
Subject to Section 7.3 of the Loan Agreement,
Trustor shall pay when due all obligations
secured by or reducible to liens and
encumbrances which shall now or hereafter
encumber or appear to encumber all or any part
of the Subject Property or any interest
therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
All insurance and condemnation proceeds shall
be paid and applied in accordance with the
terms contained in the Loan Agreement.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the
Loan Agreement, Trustor covenants:
(a) to maintain the insurance provided for in
the Loan Agreement, and to comply with the
requirements of any insurance companies
insuring the Subject Property; provided,
however, neither Beneficiary nor Trustee,
by reason of accepting, rejecting,
approving or obtaining insurance shall
incur any liability for (x) the existence,
nonexistence, form or legal sufficiency of
any insurance, (y) the solvency of any
insurer, or (z) the payment of claims;
(b) to keep the Subject Property in good
condition and repair, reasonable wear and
tear excepted;
(c) except as otherwise permitted under the
Loan Documents, not to remove or demolish
the Subject Property or any part thereof,
not to alter, restore or add to the
Subject Property and not to initiate or
acquiesce in any change in any zoning or
other land classification which affects
the Subject Property without Beneficiary's
prior written consent (which consent shall
not be unreasonably withheld or delayed);
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(d) to complete or restore promptly and in
good and workmanlike manner the Subject
Property, or any part thereof which may be
damaged or destroyed, without regard to
whether Beneficiary elects to require that
insurance proceeds be used to reduce the
Secured Obligations as provided in the
Loan Agreement;
(e) to comply with all laws, ordinances,
regulations and standards, and all
covenants, conditions, restrictions and
equitable servitudes, whether public or
private, of every kind and character which
affect the Subject Property and pertain to
acts committed or conditions existing
thereon, including, without limitation,
any work, alteration, improvement or
demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the
Subject Property; and
(g) to do all other acts which from the
character or use of the Subject Property
may be necessary to maintain and preserve
its value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND
ACTIONS. At Trustor's sole expense, Trustor
shall protect, preserve and defend the Subject
Property and title to and right of possession
of the Subject Property, the security hereof
and the rights and powers of Beneficiary and
Trustee hereunder against all adverse claims.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF
TRUSTEE. Trustee accepts this trust when this
Deed of Trust is recorded. From time to time
upon written request of Beneficiary and presentation
of this Deed of Trust or a certified
copy thereof for endorsement, and without
affecting the personal liability of any person
for payment of any indebtedness or performance
of any obligations secured hereby, Trustee may,
without liability therefor and without notice:
(i) release all or any part of the Subject
Property from the lien of this Deed of Trust;
(ii) consent to the making of any map or plat
thereof; and (iii) join in any grant of
easement thereon, any declaration of covenants
and restrictions, or any extension agreement or
any agreement subordinating the lien or charge
of this Deed of Trust. Except as may be
required by applicable law, Trustee or
Beneficiary may from time to time apply to any
court of competent jurisdiction for aid and
direction in the execution of the trust
hereunder and the enforcement of the rights and
remedies available hereunder, and may obtain
orders or decrees directing
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or confirming or approving acts in the execution
of said trust and the enforcement of said remedies.
Trustee has no obligation to notify any party of any
pending sale or any action or proceeding,
including, without limitation, actions in which
Trustor, Beneficiary or Trustee shall be a
party unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee
shall not be obligated to perform any act
required of it hereunder unless the performance
of the act is requested in writing and Trustee
is reasonably indemnified and held harmless
against loss, cost, liability or expense.
5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Trustor shall pay Trustee's fees and
reimburse Trustee and Beneficiary for
expenses in the administration of this
trust, including attorneys' fees.
Beneficiary shall not directly or
indirectly be liable to Trustor or any
other person as a consequence of (i) the
exercise of the rights, remedies or powers
granted to Beneficiary in this Deed of
Trust (unless the loss is caused by the
gross negligence or willful misconduct of
Beneficiary); (ii) the failure or refusal
of Beneficiary to perform or discharge any
obligation or liability of Trustor under
any agreement related to the Subject
Property or under this Deed of Trust; or
(iii) any loss sustained by Trustor or any
third party resulting from Beneficiary's
failure to lease the Subject Property
after a Default or from any other act or
omission of Beneficiary in managing the
Subject Property after a Default (unless
the loss is caused by the gross negligence
or willful misconduct of Beneficiary) and
no such liability shall be asserted
against or imposed upon Beneficiary, and
all such liability is hereby expressly
waived and released by Trustor.
(b) Trustor indemnifies Trustee and
Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses,
damages, liabilities, claims, causes of
action, judgments, court costs, reasonable
attorneys' fees and other legal expenses,
cost of evidence of title, cost of
evidence of value, and other expenses
which either may suffer or incur: (i) by
reason of this Deed of Trust; (ii) by
reason of the execution of this trust or
in performance of any act required or
permitted hereunder or by law; (iii) as a
result of any failure of Trustor to
perform Trustor's obligations hereunder or
under any other Loan
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Documents; or (iv) by
reason of any alleged obligation or
undertaking on Beneficiary's part to
perform or discharge any of the
representations, warranties, conditions,
covenants or other obligations contained
in any other document related to the
Subject Property. The above obligation of
Trustor to indemnify and hold harmless
Trustee and Beneficiary shall survive the
release and cancellation of the Secured
Obligations and the release and
reconveyance or partial release and
reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts and
indebtedness arising under this Section
5.10 immediately upon demand by Trustee or
Beneficiary together with interest thereon
from the date the indebtedness arises at
the rate of interest then applicable to
the principal balance of the Note as
specified therein.
5.11 PROHIBITION OF TRANSFER OF SUBJECT
PROPERTY OR INTERESTS IN TRUSTOR. Trustor
acknowledges that Beneficiary has relied
upon the principals of Trustor and Co-Borrower
and their experience in owning
and operating properties similar to the
Subject Property in connection with the
closing of the Loan. Accordingly, except
with the prior written consent of
Beneficiary or as otherwise expressly
permitted in the Note, Trustor shall not
cause or permit any sale, exchange,
mortgage, pledge, hypothecation,
assignment, encumbrance or other transfer,
conveyance or disposition, whether
voluntarily, involuntarily, conditionally,
unconditionally or by operation of law
("Transfer") of all or any part of, or all
or any direct or indirect interest in, the
Subject Property or the Collateral (except
for equipment and inventory in the
ordinary course of its business), or cause
or permit a Transfer of any direct or
indirect interest (whether general or
limited partnership interest, stock,
limited liability company interest, trust,
or otherwise) in Trustor or Co-Borrower.
In the event of any Transfer that is not
expressly permitted in the Note and is
without the prior written consent of
Beneficiary, Beneficiary shall have the
absolute right at its option, without
prior demand or notice, to declare all of
the Secured Obligations immediately due
and payable, except to the extent
prohibited by law, and pursue its rights
and remedies under Section 6.2 herein.
Trustor agrees to pay any prepayment fee
as set forth in the Note in the event the
Secured Obligations are accelerated
pursuant to the terms of this Section.
Consent to one such Transfer shall not be
deemed to be a waiver of the
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right to require the consent to future or successive
Transfers.
5.12 RELEASES, EXTENSIONS, MODIFICATIONS AND
ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any
persons or entities having any interest at
any time in the Subject Property or in any
manner obligated under the Secured
Obligations ("Interested Parties"),
Beneficiary may, from time to time,
release any person or entity from
liability for the payment or performance
of any Secured Obligation, take any action
or make any agreement extending the
maturity or otherwise altering the terms
or increasing the amount of any Secured
Obligation, or accept additional security
or release all or a portion of the Subject
Property and other security for the
Secured Obligations. None of the
foregoing actions shall release or reduce
the personal liability of any of said
Interested Parties, or release or impair
the priority of the lien of this Deed of
Trust upon the Subject Property.
5.13 RECONVEYANCE. Upon Beneficiary's written
request, and upon surrender to Trustee for
cancellation of this Deed of Trust or a
certified copy thereof, Trustee shall
reconvey or release, without warranty, the
Subject Property or that portion thereof
then held hereunder. To the extent
permitted by law, the reconveyance or
release may describe the grantee as "the
person or persons legally entitled
thereto" and the recitals of any matters
or facts in any reconveyance or release
executed hereunder shall be conclusive
proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have
any duty to determine the rights of
persons claiming to be rightful grantees
of any reconveyance or release. When the
Subject Property has been fully reconveyed
or released, the last such reconveyance or
release shall operate as a reassignment of
all future rents, issues and profits of
the Subject Property to the person or
persons legally entitled thereto.
5.14 SUBROGATION. Beneficiary shall be
subrogated to the lien of all
encumbrances, whether released of record
or not, paid in whole or in part by
Beneficiary pursuant to this Deed of Trust
or by the proceeds of any loan secured by
this Deed of Trust.
5.15 RIGHT OF INSPECTION. Beneficiary, its
agents and employees, may enter the
Subject Property at any reasonable time,
upon reasonable advance notice, for the
purpose of inspecting the Subject Property
and
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ascertaining Trustor's compliance with the terms
hereof.
5.16 SUBSTITUTION OF TRUSTEES. From time to
time, by a writing, signed and
acknowledged by Beneficiary and recorded
in the Office of the Recorder of the
County in which the Subject Property is
situated, Beneficiary may appoint another
trustee to act in the place and stead of
Trustee or any successor. Such writing
shall set forth any information required
by law. The recordation of such
instrument of substitution shall discharge
Trustee herein named and shall appoint the
new trustee as the trustee hereunder with
the same effect as if originally named
Trustee herein. A writing recorded
pursuant to the provisions of this Section
5.16 shall be conclusive proof of the
proper substitution of such new Trustee.
5.17 HAZARDOUS MATERIALS. Without limiting any
other provision of this Deed of Trust,
Trustor agrees as follows:
(a) Prohibited Activities. Trustor shall not
cause or permit the Subject Property to be
used as a site for the use, generation,
manufacture, storage, treatment, release,
discharge, disposal, transportation or
presence of any Hazardous Materials. The
foregoing to the contrary notwithstanding:
(i) Trustor may store, maintain and use on
the Subject Property janitorial and
maintenance supplies, paint and other
Hazardous Materials of a type and in a
quantity readily available for purchase by
the general public and normally stored,
maintained and used by owners and managers
of properties of a type similar to the
Subject Property; and (ii) tenants of the
Subject Property may store, maintain and
use on the Subject Property (and, if any
tenant is a retail business, hold in
inventory and sell in the ordinary course
of such tenant's business) Hazardous
Materials of a type and quantity readily
available for purchase by the general
public and normally stored, maintained and
used (and, if tenant is a retail business,
sold) by tenants in similar lines of
business on properties similar to the
Subject Property.
(b) Hazardous Materials Laws. Trustor shall
comply and cause the Subject Property to
comply with all Hazardous Materials Laws.
(c) Notices. Trustor shall immediately notify
Beneficiary in writing of: (i) the
discovery of
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any Hazardous Materials on,
under or about the Subject Property (other
than Hazardous Materials permitted under
Section 6.2 (a)); (ii) any knowledge by
Trustor that the Subject Property does not
comply with any Hazardous Materials Laws;
and (iii) any Hazardous Materials Claims
pending or threatened against Trustor or
the Subject Property by any governmental
entity or agency or any other person or
entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) Remedial Action. In response to the
presence of any Hazardous Materials on,
under or about the Subject Property,
Trustor shall immediately take, at
Trustor's sole expense, all remedial
action required by any Hazardous Materials
Laws or any judgment, consent decree,
settlement or compromise in respect to any
Hazardous Materials Claims.
(e) Inspection By Beneficiary. Upon
reasonable prior notice to Trustor,
Beneficiary, its employees and agents, may
from time to time (whether before or after
the commencement of a nonjudicial or
judicial foreclosure proceeding), enter
and inspect the Subject Property for the
purpose of determining the existence,
location, nature and magnitude of any past
or present release or threatened release
of any Hazardous Materials into, onto,
beneath or from the Subject Property.
5.18 GROUND LEASE PROVISIONS. Trustor covenants
and agrees as follows:
(a) Trustor represents and warrants to
Beneficiary and Trustee that: (i) the
Ground Lease has not been amended,
modified, supplemented or assigned; and
(ii) no defaults by the lessee under the
Ground Lease or Ground Lessor of any
obligations under the Ground Lease have
occurred, and the Ground Lease is in full
force and effect. Trustor agrees that it
will not amend, modify, supplement or
assign or sublet its rights, title or
interest in the Ground Lease, or take any
actions to enforce, or give any notice,
approval or consent to exercise, waive or
modify any rights under or in respect to
the Ground Lease without Beneficiary's
prior written consent.
(b) Trustor shall pay all rent and other
charges required under the Ground Lease as
and when the same are due. Trustor shall
keep, observe and
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perform all of the other
terms, covenants, provisions and
agreements of the Ground Lease on its part
thereunder to be kept, observed and
performed, and shall not cancel, terminate
or surrender, or permit any cancellation,
termination of surrender of the Ground
Lease, in whole or in part.
(c) Trustor covenants and agrees that unless
Beneficiary shall otherwise expressly
consent in writing, the fee title to the
Ground Leased Property and the leasehold
estate created by the Ground Lease or any
subleasehold estate derived therefrom
shall not merge but shall always remain
separate and distinct, notwithstanding the
union of said estates either in the lessor
under the Ground Lease, Trustor, or a
third party by purchase or otherwise. In
the event Trustor acquires the fee title
or any other estate, title or interest in
the Ground Leased Property, this Deed of
Trust shall attach to and cover and be a
lien upon the fee title or such other
estate so acquired, and such fee title or
other estate shall, without further
assignment, mortgage or conveyance, become
due and be subject to the lien of and
covered by this Deed of Trust.
(d) Trustor shall do all things necessary to
preserve and keep unimpaired the rights of
the lessee under the Ground Lease.
Trustor will enforce the material
obligations of the lessor under the Ground
Lease to the end that Trustor may enjoy
all of the rights granted under the Ground
Lease, and will promptly notify Trustor in
writing of any material default known to
Trustor by the lessor under the Ground
Lease in the performance or observance of
any of the terms, covenants and conditions
on the part of the lessor to be performed
or observed under the Ground Lease.
Trustor will promptly advise Beneficiary
in writing of the occurrence of any
default under the Ground Lease known to
Trustor and of the giving of any notice by
the lessor under the Ground Lease to
Trustor of any alleged default by the
lessee under the Ground Lease in
performance or observance of any of the
terms, covenants or conditions of the
Ground Lease, on the part of the lessee to
be performed or observed, and of which
notice Trustor shall have knowledge, and
will immediately upon receipt thereof
deliver to Beneficiary a true copy of each
such notice. If, pursuant to the Ground
Lease, the lessor under the Ground Lease
shall deliver to Beneficiary a copy of any
notice of
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default given to Trustor, such
notice shall constitute full authority and
protection to Beneficiary for any action
taken or omitted to be taken by
Beneficiary in good faith in reliance
thereon to cure such default.
<PAGE>
(e) If any action or proceeding shall be
instituted to terminate the Ground Lease
or to recover possession of the
Improvements or any portion thereof, or
for any other purpose affecting the Ground
Lease or this Deed of Trust, Trustor will,
immediately upon service thereof on or to
Trustor, deliver to Beneficiary a true
copy of each petition, summons, complaint,
notice of motion, order to show cause and
all of the other provisions, pleadings,
and papers, however designated, served in
any such action of proceeding.
(f) No release or forbearance, by the lessor
under the Ground Lease or otherwise, of
any of the Trustor's obligations under the
Ground Lease, shall release Trustor from
its obligations under this Deed of Trust.
(g) Trustor represents and warrants to
Beneficiary and Trustee that this Deed of
Trust is lawfully executed and delivered
in conformity with, and shall not create a
default under, the Ground Lease and is and
will be kept a valid lien on the interest
of Trustor in and to the Ground Leased
Property.
(h) Without the prior written consent of
Beneficiary, Trustor will not consent to
the subordination of the Ground Lease to
any mortgage or deed of trust on or of the
interest of the lessor under the Ground
Lease in any of the real property demised
by the Ground Lease.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term
"Default" shall mean the existence of any
Default as defined in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after
Default, Beneficiary and Trustee shall each
have all the following rights and remedies (in
addition to (and without limiting) any rights
and remedies that are available under
applicable law):
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(a) With or without prior notice, to declare
all Secured Obligations immediately due
and payable;
(b) With or without notice, and without
releasing Trustor from any Secured
Obligation, and without becoming a
mortgagee in possession, to enter upon the
Subject Property from time to time and to
do such acts and things as Beneficiary or
Trustee deem necessary or desirable in
order to inspect, investigate, assess and
protect the security hereof or to cure any
Default, including, without limitation:
(i) to appear in and defend any action or
proceeding purporting to affect the
security of this Deed of Trust or the
rights or powers of Beneficiary or Trustee
under this Deed of Trust; (ii) to pay,
purchase, contest or compromise any encumbrance,
charge, lien or claim of lien
which, in the sole judgment of either
Beneficiary or Trustee, is or may be
senior in priority to this Deed of Trust,
the judgment of Beneficiary or Trustee
being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to
pay any premiums or charges with respect
to insurance required to be carried under
the Loan Documents; and (v) to employ
legal counsel, accountants, engineers,
consultants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or
actions in any court of competent
jurisdiction to foreclose this instrument
as a mortgage or to obtain specific
enforcement of the covenants of Trustor
hereunder, and Trustor agrees that such
covenants shall be specifically
enforceable by injunction or any other
appropriate equitable remedy and that for
the purposes of any suit brought under
this subparagraph, Trustor waives the
defense of laches and any applicable
statute of limitations;
(d) To apply to a court of competent
jurisdiction for and obtain appointment of
a receiver of the Subject Property as a
matter of strict right, ex parte and
without notice to Trustor (Trustor hereby
waiving any notice), and without regard to
the adequacy of the security for the
Secured Obligations, the existence of a
declaration that the Secured Obligations
are immediately due and payable, the
filing of a notice of default, or the
commencement of any foreclosure, and
Trustor hereby consents to such
appointment. Such receiver shall have the
right to take possession of and protect
the Subject Property and operate the same
and collect the rents, issues, profits,
24
<PAGE>
revenues and Payments therefrom, which
receiver shall have the right to remain in
possession of the Subject Property
thereafter, during the pendency of any
foreclosure proceeding and all redemption
periods until the issuance of a Trustee's
deed. All expenses and costs incurred by
the receiver or its agents shall
constitute a part of the Secured
Obligations;
(e) To enter upon, possess, manage and operate
the Subject Property or any part thereof,
to take and possess all documents, books,
records, papers and accounts of Trustor or
the then owner of the Subject Property, to
make, terminate, enforce or modify Leases
of the Subject Property upon such terms
and conditions as Beneficiary deems
proper, to make repairs, alterations and
improvements to the Subject Property as
necessary, in Trustee's or Beneficiary's
sole judgment, all to protect or enhance
the security hereof;
(f) To execute a written notice of such
Default and of its election to cause the
Subject Property to be sold to satisfy the
Secured Obligations. As a condition
precedent to any such sale, Trustee and/or
Beneficiary shall give and record such
notices as the law then requires. When
the minimum period of time required after
such notices has elapsed, Trustee, without
notice to or demand upon Trustor, except
as required by law, shall sell the Subject
Property at the time and place of sale
fixed by it in the notice of sale, at one
or several sales, either as a whole or in
separate parcels and in such manner and
order, all as Beneficiary in its sole
discretion may determine, at public
auction to the highest bidder for cash, in
lawful money of the United States, payable
at time of sale. Neither Trustor nor any
other person or entity other than
Beneficiary shall have the right to direct
the order in which the Subject Property is
sold. Subject to requirements and limits
imposed by law, Trustee may from time to
time postpone sale of all or any portion
of the Subject Property by public
announcement at such time and place of
sale. Trustee shall deliver to the purchaser
at such sale a deed conveying the
Subject Property or portion thereof so
sold, but without any covenant or
warranty, express or implied. The
recitals in the deed of any matters or
facts shall be conclusive proof of the
truthfulness thereof. Any person (other
than Trustee), including Trustor or
Beneficiary may purchase at the sale;
25
<PAGE>
(g) To resort to and realize upon the security
hereunder and any other security now or
later held by Beneficiary concurrently or
successively and in one or several
consolidated or independent judicial
actions or lawfully taken non-judicial
proceedings, or both, and to apply the
proceeds received upon the Secured Obligations
all in such order and manner as
Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any
judicial or non-judicial foreclosure,
Beneficiary or any Affiliate or designee
of Beneficiary may credit bid (as
determined by Beneficiary in its sole and
absolute discretion) all or any portion of
the Secured Obligations. In determining
such credit bid, Beneficiary may, but is
not obligated to, take into account all or
any of the following: (i) appraisals of
the Subject Property as such appraisals
may be discounted or adjusted by
Beneficiary in its sole and absolute
underwriting discretion; (ii) expenses and
costs incurred by Beneficiary with respect
to the Subject Property prior to
foreclosure; (iii) expenses and costs
which Beneficiary anticipates will be
incurred with respect to the Subject
Property after foreclosure, but prior to
resale, including, without limitation,
costs of structural reports and other due
diligence, costs to carry the Subject
Property prior to resale, costs of resale
(e.g. commissions, attorneys' fees, and
taxes), costs of any hazardous materials
clean-up and monitoring, costs of deferred
maintenance, repair, refurbishment and
retrofit, costs of defending or settling
litigation affecting the Subject Property,
and lost opportunity costs (if any),
including the time value of money during
any anticipated holding period by
Beneficiary; (iv) declining trends in real
property values generally and with respect
to properties similar to the Subject
Property; (v) anticipated discounts upon
resale of the Subject Property as a
distressed or foreclosed property; (vi)
the fact of additional collateral (if
any), for the Secured Obligations; and
(vii) such other factors or matters that
Beneficiary (in its sole and absolute
discretion) deems appropriate. In regard
to the above, Trustor acknowledges and
agrees that: (w) Beneficiary is not
required to use any or all of the
foregoing factors to determine the amount
of its credit bid; (x) this Section does
not impose
26
<PAGE>
upon Beneficiary any additional
obligations that are not imposed by law at
the time the credit bid is made; (y) the
amount of Beneficiary's credit bid need
not have any relation to any loan-to-value
ratios specified in the Loan Documents or
previously discussed between Trustor and
Beneficiary; and (z) Beneficiary's credit
bid may be (at Beneficiary's sole and
absolute discretion) higher or lower than
any appraised value of the Subject
Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS.
After deducting all costs, fees and expenses of
Trustee, and of this trust (including, without
limitation, the payment of the Trustee's fees
and attorneys' fees, the cost of evidence of
title in connection with sale and costs and
expenses of sale and of any judicial proceeding
wherein such sale may be made), Trustee shall
apply all proceeds of any foreclosure sale:
(i) to discharge all taxes, levies and
assessments, with costs and interest if they
have priority over the lien of this Deed of
Trust, including the pro rata portion thereof
due for the current year; (ii) to payment of
all sums expended by Beneficiary under the
terms hereof and not then repaid, with accrued
interest at the rate of interest specified in
the Note to be applicable on or after maturity
or acceleration of the Note; (iii) to payment
of all other Secured Obligations; and (iv) the
remainder, if any, to Trustor or Trustor's
assigns.
6.4 ORDER OF APPLICATION OF PROCEEDS. All sums
received by Beneficiary under Section 6.2
(subject to Section 6.3) or Section 3.2, less
all costs and expenses incurred by Beneficiary
or any receiver under Section 6.2 or
Section 3.2, including, without limitation,
attorneys' fees, shall be applied in payment of
the Secured Obligations in such order as
Beneficiary shall determine in its sole
discretion; provided, however, Beneficiary
shall have no liability for funds not actually
received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor
Trustee's nor any receiver's entry upon and
taking possession of all or any part of the
Subject Property, nor any collection of rents,
issues, profits, insurance proceeds,
condemnation proceeds or damages, other
security or proceeds of other security, or
other sums, nor the application of any
collected sum to any Secured Obligation, nor
the exercise or failure to exercise of any
other right or remedy by Beneficiary or Trustee
or any receiver shall cure or waive any breach,
Default or notice of default under this Deed of
Trust, or nullify the effect of any notice of
default or sale (unless all
27
<PAGE>
Secured Obligations then due have been paid and
performed and Trustor has cured all other defaults),
or impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any
right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy,
lease or option or a subordination of the lien
of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S FEES.
Trustor agrees to pay to Beneficiary
immediately and without demand all reasonable
costs and expenses incurred by Trustee and
Beneficiary in connection with the exercise of
the rights and remedies provided for herein
and/or in any of the other Loan Documents
(including, without limitation, court costs,
appraisal fees and reasonable attorneys' fees,
whether incurred in litigation or not) with
interest from the date of expenditure until
said sums have been paid at the rate of
interest then applicable to the principal
balance of the Note as specified therein. In
addition, Trustor shall pay to Trustee and/or
Beneficiary all Trustee's fees hereunder and
shall reimburse Trustee for all reasonable
expenses incurred in the administration of this
trust, including, without limitation, any
attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS.
Trustor hereby irrevocably appoints Beneficiary
and its successors and assigns, as its
attorney-in-fact, which agency is coupled with
an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or
any other notices that Beneficiary deems
appropriate to protect Beneficiary's interest,
(b) upon the issuance of a deed pursuant to the
foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment or
further assurance with respect to the Leases
and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for
such purpose, (c) to prepare, execute and file
or record financing statements, continuation
statements, applications for registration and
like papers necessary to create, perfect or
preserve Beneficiary's security interests and
rights in or to any of the Collateral and any
other property or interests securing the
payment and the performance of the Secured
Obligations, and (d) upon the occurrence of a
Default, Beneficiary may perform any obligation
of Trustor hereunder; provided, however, that:
(i) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are
actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or
any other person or entity for any failure to
act under this Section.
28
<PAGE>
6.8 REMEDIES CUMULATIVE. All rights and remedies
of Beneficiary and Trustee provided hereunder
are cumulative and are in addition to all
rights and remedies provided by applicable law
(including specifically that of foreclosure of
this instrument as though it were a mortgage)
or in any other agreements between Trustor and
Beneficiary. Beneficiary may enforce any one
or more remedies or rights hereunder
successively or concurrently.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents
contain or incorporate by reference the entire
agreement of the parties with respect to
matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant
further rights to Beneficiary and contain
further agreements and affirmative and negative
covenants by Trustor which apply to this Deed
of Trust and to the Subject Property and such
further rights and agreements are incorporated
herein by this reference.
7.2 MERGER. No merger shall occur as a result of
Beneficiary's acquiring any other estate in, or
any other lien on, the Subject Property unless
Beneficiary consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for
itself and for all parties claiming through or
under Trustor, and for all parties who may
acquire a lien on or interest in the Subject
Property, hereby waives all rights to have the
Subject Property and/or any other property,
including, without limitation, the Collateral,
which is now or later may be security for any
Secured Obligation ("Other Property")
marshalled upon any foreclosure of this Deed of
Trust or on a foreclosure of any Other
Property. Beneficiary shall have the right to
sell, and any court in which foreclosure proceedings
may be brought shall have the right to
order a sale of, the Subject Property and any
or all of the Collateral or Other Property as a
whole or in separate parcels, in any order that
Beneficiary may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND
REINSTATEMENT. To the fullest extent permitted
by applicable law, Trustor, for itself and for
all parties claiming through or under Trustor,
and for all parties who may acquire a lien on
or interest in the Subject Property, hereby
waives any and all rights of redemption and
reinstatement under law and under any order or decree
29
<PAGE>
of foreclosure of this Deed of Trust,
and all such rights of redemption and
reinstatement of Trustor and of all other
persons, are and shall be deemed to be hereby
waived to the full extent permitted by the
provisions of the applicable law.
7.5 EXERCISE OF REMEDIES. Notwithstanding any of
the terms or provisions contained in this Deed
of Trust (or in any of the other Loan
Documents), if at any time after the occurrence
of a Default under any of the Loan Documents
(but prior to the time (if any) that said
Default has been cured to the satisfaction of
Beneficiary), Beneficiary has commenced to
exercise one or more of its remedies provided
for herein (or provided in any of the other
Loan Documents or available at law or in
equity), Beneficiary will not be precluded from
continuing to exercise all of its rights and
remedies upon said Default (notwithstanding the
fact that Trustor may have cured, attempted to
cure or be in the process of curing said
Default). It is the intention of the parties
hereto that (to the extent permitted by law)
once Beneficiary has commenced to exercise one
or more of its rights or remedies (upon a
Default), said Default cannot be cured, unless
Beneficiary expressly agrees in writing to
accept said cure and to cease the exercise of
said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term "Subject
Property" means all and any part of the Subject
Property and any interest in the Subject
Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants,
and conditions herein contained shall be
binding upon and inure to the benefit of the
successors and assigns of the parties hereto;
provided, however, that this section does not
waive or modify any restrictions on transfer
contained herein or in any of the other Loan
Documents.
7.8 GOVERNING LAW. This Deed of Trust shall be
governed by and construed in accordance with
the laws of the State of Washington.
7.9 INCORPORATION. Exhibits A and A-1 as attached,
are incorporated into this Deed of Trust by
this reference.
7.10 NOTICES. All notices, reports, demands,
requests and other communications
authorized or required under this Deed of
Trust to be given to Trustor or
Beneficiary, shall be given in the manner
and to the addresses specified in the Loan
Agreement for the giving of notices.
Trustor shall forward to Beneficiary, without
30
<PAGE>
delay, any notices, letters or
other communications delivered to the
Subject Property or to Trustor naming
Beneficiary, "Lender" or any similar
designation as addressee, or which could
reasonably be deemed to affect the ability
of Trustor to perform its obligations to
Beneficiary under the Note, the Loan
Agreement or any other Loan Documents.
7.11 LIMITATION OF LIABILITY. The limitations
on liability set forth in Section 2.8 of
the Loan Agreement shall apply with equal
force to this Deed of Trust, and said
limitations are incorporated herein by
reference as fully and with the same
effect as if recited herein at length.
7.12 SEVERABILITY. If any provision or
obligation under this Deed of Trust shall
be determined by a court of competent
jurisdiction to be invalid, illegal or
unenforceable, that provision shall be
deemed severed from the Deed of Trust and
the validity, legality and enforceability
of the remaining provisions or obligations
shall remain in full force as though the
invalid, illegal or unenforceable
provision had never been a part of the
Deed of Trust.
7.13 TIME. Time is of the essence of each and
every term of this Deed of Trust.
7.14 RELATIONSHIP. The relationship of Trustor
and Beneficiary under this Deed of Trust
and the other Loan Documents is, and shall
at all times remain, solely that of
borrower and lender; and Beneficiary
neither undertakes nor assumes any
responsibility or duty to Trustor or to
any third party with respect to the
Subject Property. Notwithstanding any
other provisions of this Deed of Trust and
the other Loan Documents: (i) Beneficiary
is not, and shall not be construed to be,
a partner, joint venturer, member, alter
ego, manager, controlling person or other
business associate or participant of any
kind of Trustor, and Beneficiary does not
intend to ever assume such status; (ii)
Beneficiary does not intend to ever assume
any responsibility to any person for the
quality, suitability, safety or condition
of the Subject Property; and (iii)
Beneficiary shall not be deemed
responsible for or a participant in any
acts, omissions or decisions of Trustor.
7.15 RIGHT TO DEFICIENCY JUDGMENT. If
Beneficiary, in the event of a Default,
elects to proceed by the summary extra-judicial
foreclosure method of sale by
Trustee, a deficiency judgment shall not
be entered against either maker of the
Note secured by this Deed of Trust.
31
<PAGE>
However if, in the event of a default,
Beneficiary elects to (a) judicially
foreclosure this Deed of Trust as a lien
or mortgage or (b) commence an action on
the Secured Obligations secured by this
Deed of Trust, Beneficiary shall be
entitled to a personal judgment against
either or both of the makers, the surety
or any guarantor of such Secured
Obligations.
7.16 EXECUTION IN COUNTERPARTS. This Deed of
Trust may be executed in any number of
counterparts, each of which when executed
and delivered shall be deemed to be an
original and all such counterparts
together, shall constitute one and the
same instrument.
7.17 ORAL AGREEMENTS NOTICE. ORAL AGREEMENTS OR
ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, MODIFY LOAN TERMS OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
32
<PAGE>
IN WITNESS WHEREOF, Trustor has executed this Deed of
Trust as of the day and year set forth above.
"TRUSTOR"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE
PARTNERSHIP, a California limited partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation, its general partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a
California corporation, its
general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general
partner
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared _________________________,
personally known to me to be the ___________________ of
Prudential-Bache Properties, Inc., a Delaware
corporation, a general partner of Prudential-Bache/Equitec
Real Estate Partnership, a California
limited partnership, the limited partnership that
executed the foregoing instrument, and acknowledged the
said instrument to be the free and voluntary act and
deed of said limited partnership, for the uses and
purposes therein mentioned, and on oath stated that
he/she is authorized to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared _________________________,
personally known to me to be the ___________________ of
Glenborough Corporation, a California corporation, a
general partner of Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership, the
limited partnership that executed the foregoing
instrument, and acknowledged the said instrument to be
the free and voluntary act and deed of said limited
partnership, for the uses and purposes therein
mentioned, and on oath stated that he/she is authorized
to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared Robert Batinovich, personally known
to me to be a general partner of Prudential-Bache/Equitec
Real Estate Partnership, a California
limited partnership, the limited partnership that
executed the foregoing instrument, and acknowledged the
said instrument to be the free and voluntary act and
deed of said limited partnership, for the uses and
purposes therein mentioned, and on oath stated that he
is authorized to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
<PAGE>
EXHIBIT A
Seattle Property
Totem Valley Business Center
12800 N.E. 126th Place
Kirkland, King County, Washington
<PAGE>
EXHIBIT A-1
GROUND LEASED PROPERTY
<PAGE>
283769.03 COGHLAN, DENNIS M. CH January 8, 1997 (6:5p)
<PAGE>
THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING SHOULD BE
RETURNED TO:
Lee M. Smolen
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Montgomery County, Maryland
AMENDED AND RESTATED DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
THE PARTIES TO THIS AMENDED AND RESTATED DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES, ASSIGNMENT
OF PERMITS AND FIXTURE FILING ("Deed of Trust"), made
as of December 13, 1996, are MONTROSE OFFICE PARK JOINT
VENTURE, a Maryland joint venture ("Grantor"), having
its chief executive office at c/o Glenborough
Corporation, 400 South El Camino Real, 11th Floor, San
Mateo, California 94402, CHICAGO TITLE INSURANCE
COMPANY, a Missouri corporation ("Trustee"), having an
office at 171 North Clark Street, Chicago, Illinois
60601, and WELLS FARGO
BANK, NATIONAL ASSOCIATION ("Beneficiary"), having an
office at 333 South Grand, Suite 900, Los Angeles,
California 90071, (as may be modified, amended,
supplemented or restated from time to time the "Deed of
Trust").
Recitals
A. Grantor is the present owner of the fee simple
interest in and to all the land and premises situate in
Montgomery County, Maryland (the "Land"), as more
particularly described on Exhibit A attached hereto and
made a part hereof.
B. Grantor is the obligor of that certain
Promissory Note, dated as of December 17, 1986, in
original principal amount of Fourteen Million Two
Hundred Ten Thousand and No/100s Dollars
($14,210,000.00)(as heretofore modified, the "Original
Note") made and given by Grantor to and in favor of The
Variable Annuity Life Insurance Company, a Texas
corporation ("Original Lender"), which Original Note
was modified pursuant to that certain Note Modification
Agreement between Grantor and Original Lender filed of
record December 31, 1991, in the
<PAGE>
Clerk's Office of Montgomery County, Maryland, in Liber
10102, Folio 144 (the "Modification Agreement").
C. The Original Note is secured by, inter alia,
(i) that certain Deed of Trust and Security Agreement
dated as of December 17, 1986, made and given by
Grantor, to Paul A. Patrick ("Original Trustee"), for
the benefit of Original Lender, as Beneficiary, filed
of record December 17, 1986, in the Clerk's Office of
Montgomery County, Maryland, in Liber 7449, Folio 416
(as modified by the Modification Agreement, the
"Original Deed of Trust"), and (ii) that certain
Assignment of Lessor's Interest in Lease dated as of
December 17, 1986, made and given by Borrower, as
Assignor, to Original Lender, as Assignee, filed of
record December 17, 1986, in the Clerk's Office of
Montgomery County, Maryland, in Liber 7449, Folio 455
(as modified by the Modification Agreement, the
"Original Assignment of Leases").
D. At the request of Grantor, Beneficiary has
purchased the Original Note from the Original Lender,
and received an assignment of the Original Note, the
Original Deed of Trust, the Original Assignment of
Leases and the other documents securing the Original
Note (collectively, the "Original Loan Documents") by
virtue of that certain Assignment of Deed of Trust and
Other Loan Documents dated of even date herewith and
recorded in the Land Records; provided that
Beneficiary's purchase of the Original Loan Documents
was conditioned upon the modification of the terms of
the Original Note as set forth in that certain Amended,
Restated and Consolidated Promissory Note of even date
herewith, in the aggregate principal amount of Twenty-Six
Million Six Hundred Fifty Thousand and No/100s
Dollars ($26,650,000.00), executed by Grantor and
Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership ("Co-Borrower; Grantor
and Co-Borrower being collectively referred to herein
as "Borrowers") and payable to the order of Beneficiary
(as the same may be modified, amended, supplemented,
replaced or restated from time to time, the "Note"),
and Grantor has agreed to such amendments.
E. Grantor desires to (i) modify the Original Deed
of Trust and Original Assignment of Leases for the
purpose of securing the Note and (ii) affirm its
intention that the Original Deed of Trust and Original
Assignment of Leases, as amended and restated by this
Deed of Trust, shall continue as a valid lien on the
Subject Property hereinafter described.
F. By a Deed of Appointment of Substitute Trustees
dated of even date herewith and recorded among the Land
Records, Beneficiary has appointed the Trustee to act
in place of the Original Trustee under the Original
Deed of Trust.
G. This Deed of Trust is not intended to be a
release or discharge of the lien of the Original Deed
of Trust.
H. These recitals are intended by the parties to
be and are hereby made a material part of this Deed of
Trust.
I. In order to secure to the Beneficiary the full
repayment of the Note, Grantor now wishes to modify and
restate the Original Deed of Trust, as hereinafter set
forth.
2
<PAGE>
Agreement
NOW THEREFORE, in order to induce Beneficiary to
modify the Original Note, and to secure repayment to
Beneficiary by Borrowers of the total principal amount
of the Note, and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor hereby modifies, reaffirms
and restates the Original Deed of Trust and the
Original Assignment of Leases in its entirety, in the
form and manner stated below, including as an integral
part thereof, the foregoing Recitals:
NOW, THEREFORE, THIS DEED OF TRUST WITNESSETH:
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms
and conditions in this Deed of Trust, Grantor
irrevocably grants, conveys and assigns to
Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of
entry and possession, all of Grantor's right,
title and interest in all of the real property
located in Montgomery County, Maryland and
described on Exhibit A attached hereto and made
a part hereof, together with all of Grantor's
right, title and interest in all development
rights or credits, air rights, water, water
rights and water stock related to the real
property, and all minerals, oil and gas, and
other hydrocarbon substances in, on or under
the real property, and all appurtenances,
easements, rights and rights of way appurtenant
or related thereto; all streets, roads and
alleys (whether open, proposed or vacated); all
buildings, other improvements and fixtures now
or hereafter located on the real property,
including, but not limited to, all apparatus,
equipment, and appliances used in the operation
or occupancy of the real property, it being
intended by the parties that all such items
shall be conclusively considered to be a part
of the real property, whether or not attached
or affixed to the real property (collectively,
the "Improvements"); all interest or estate
which Grantor may hereafter acquire in the
property described above, and all additions and
accretions thereto, and the proceeds of any of
the foregoing (all of the foregoing being
collectively referred to as the "Subject
Property"). The listing of specific rights or
property shall not be interpreted as a limit of
general terms.
1.2 NON-AGRICULTURAL USE. Grantor represents and
warrants to Beneficiary and Trustee that the
Subject Property is not used principally for
agricultural or farming purposes.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Grantor makes this grant
and assignment for the purpose of securing the
following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any
time owing under the Note; and
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(b) Payment and performance of all covenants
and obligations of Grantor under this Deed
of Trust; and
(c) Payment and performance of all covenants
and obligations on the part of Grantor
under that certain Loan Agreement, of even
date herewith, by and between Grantor and
Co-Borrower and Beneficiary (as may be
modified, amended, supplemented or
restated from time to time, the "Loan
Agreement") (capitalized terms used herein
but not defined herein shall have the
meaning provided for such terms in the
Loan Agreement); and
(d) Payment and performance of all covenants
and obligations on the part of each of the
Borrowers under all of the Loan Documents;
and
(e) Payment and performance of all future
advances and other obligations that the
then record owner of all or part of the
Subject Property may agree to pay and/or
perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary,
when such future advance or obligation is
evidenced by a writing which recites that
it is secured by this Deed of Trust; and
(f) All modifications, extensions and renewals
of any of the obligations secured hereby,
however evidenced, including, without
limitation: (i) modifications of the
required principal payment dates or
interest payment dates or both, as the
case may be, deferring or accelerating
payment dates wholly or partly; and (ii)
modifications, extensions or renewals at a
different rate of interest whether or not
in the case of the Note, the modification,
extension or renewal is evidenced by a new
or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used
herein in its broadest and most comprehensive
sense and shall be deemed to include, without
limitation, all protective advances and all
sums advanced to protect the Subject Property
or the lien of this Deed of Trust or otherwise
disbursed or incurred under the terms of the
Loan Documents, all interest and charges,
prepayment charges (if any), late charges and
loan fees at any time accruing or assessed on
any of the Secured Obligations; provided,
however, that the terms "obligations" and
"Secured Obligations" as used herein shall in
no event include any obligations arising under
the Guaranty or the Hazardous Materials
Indemnity.
2.3 INCORPORATION. All terms of the Secured
Obligations and the documents evidencing such
obligations are incorporated herein by this
reference. All persons who may have or acquire
an interest in the Subject Property shall be
deemed to have notice of the terms of the
Secured Obligations and to have notice that the
rate of interest on one or more Secured
Obligations may vary from time to time.
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ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Grantor hereby irrevocably assigns
to Beneficiary all of Grantor's right, title
and interest in, to and under: (a) all leases
of the Subject Property or any portion thereof,
and all other agreements of any kind relating
to the use or occupancy of the Subject Property
or any portion thereof, whether now existing or
entered into after the date hereof ("Leases");
and (b) the rents, issues, deposits, profits
and revenues of the Subject Property and the
operations conducted thereon, including,
without limitation, all amounts payable and all
rights and benefits accruing to Grantor under
the Leases ("Payments"). The term "Leases"
shall also include all guarantees of and
security for the lessees' performance
thereunder, and all amendments, extensions,
renewals or modifications thereto which are
permitted hereunder. This is a present and
absolute assignment, not an assignment for
security purposes only, and Beneficiary's right
to the Leases and Payments is not contingent
upon, and may be exercised without possession
of, the Subject Property, and without the
commencement of a foreclosure action or the
appointment of a receiver. Furthermore, upon
any Default, Beneficiary shall be entitled to
receive pursuant to the foregoing assignment,
and Grantor shall be obligated to deliver to
Beneficiary or its designee (including any
receiver), any and all Payments collected by
Grantor which remain in the possession or
control of Grantor, whether or not commingled
with other funds or Grantor, and whether
collected by Grantor before or after the
occurrence of the Default.
3.2 GRANT OF LICENSE. Beneficiary confers upon
Grantor a license ("License") to collect and
retain the Payments as they become due and
payable, until the occurrence of a Default.
Upon a Default, the License shall be
automatically revoked and Beneficiary may
collect and apply the Payments pursuant to
Section 6.4 without notice and without taking
possession of the Subject Property. Grantor
hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and
comply with any notice or demand by Beneficiary
for the payment to Beneficiary of any rental or
other sums which may at any time become due
under the Leases, or for the performance of any
of the lessees' undertakings under the Leases,
and the lessees shall have no right or duty to
inquire as to whether any Default has actually
occurred or is then existing hereunder.
Grantor hereby relieves the lessees from any
liability to Grantor by reason of relying upon
and complying with any such notice or demand by
Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing
irrevocable assignment shall (in and of itself)
not cause Beneficiary to be: (a) a mortgagee
in possession; (b) responsible or liable for
the control, care, management or repair of the
Subject Property or for performing any of the
terms, agreements, undertakings, obligations,
representations, warranties, covenants and
conditions of the Leases; (c) responsible or
liable for any waste committed on the Subject
Property by the
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lessees under any of the Leases
or any other parties; (d) responsible or liable
for any dangerous or defective condition of the
Subject Property; or (e) responsible or liable
for any negligence in the management, upkeep,
repair or control of the Subject Property
resulting in loss or injury or death to any
lessee, licensee, employee, invitee or other
person. Beneficiary shall not directly or
indirectly be liable to Grantor or any other
person as a consequence of: (i) the exercise
or failure to exercise any of the rights,
remedies or powers granted to Beneficiary
hereunder; or (ii) the failure or refusal of
Beneficiary to perform or discharge any
obligation, duty or liability of Grantor
arising under the Leases.
3.4 COVENANTS. Grantor covenants and agrees at
Grantor's sole cost and expense to: (a)
perform the obligations of lessor contained in
the Leases and enforce by all available
remedies performance by the lessees of the
obligations of the lessees contained in the
Leases; (b) deliver to Beneficiary fully
executed, counterpart original(s) of each and
every Lease if requested to do so; and (c)
execute and record (or cause to be executed and
recorded) such additional assignments of any
Lease or specific subordinations of any Lease
to this Deed of Trust, in form and substance
acceptable to Beneficiary, as Beneficiary may
reasonably request. Grantor shall not, without
Beneficiary's prior written consent or as
otherwise permitted by any provision of the
Loan Agreement or as otherwise permitted above:
(i) execute any other assignment relating to
any of the Leases; (ii) discount any rent or
other sums due under the Leases or collect the
same in advance, other than to collect rent one
(1) month in advance of the time when it
becomes due; (iii) modify, amend (if such
modification or amendment would result in the
Lease being less favorable to Grantor or
Beneficiary than presently existing) or
terminate any of the Leases or in any manner
release or discharge the lessees from any
obligations thereunder; (iv) consent to any
assignment or subletting by any lessee; or (v)
subordinate or agree to subordinate any of the
Leases to any other deed of trust or encum-
brance. Any such attempted action in violation
of the provisions of this Section 3.4 shall be
null and void.
3.5 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request by Beneficiary, Grantor shall use
its reasonable efforts to deliver to
Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by
Grantor and by the lessees, certifying: (i)
that the foregoing assignment and the Leases
are in full force and effect; (ii) the date of
each lessee's most recent payment of rent;
(iii) that there are no defenses or offsets
outstanding, or stating those claimed by
Grantor or the lessees under said Leases; (iv)
that no default exists under any of the Leases
and no condition exists that after the giving
of notice, the passage of time or both would
constitute a default under any of the Leases;
and (v) any other information reasonably
requested by Beneficiary.
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ARTICLE 4. SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
4.1 SECURITY INTEREST. Grantor hereby grants and
assigns to Beneficiary, as of the Effective
Date, a security interest, to secure payment
and performance of all of the Secured
Obligations, in all of the following described
personal property in which Grantor now or at
any time hereafter has any interest
(collectively, the "Collateral"):
All goods, building and other
materials, supplies, work in process,
equipment, machinery, fixtures,
furniture, furnishings, signs and
other personal property, wherever
situated, which are or are to be
incorporated into, used in connection
with, or appropriated for use on the
real property described on Exhibit A
attached hereto and incorporated by
reference herein (to the extent the
same are not effectively made a part
of the real property pursuant to
Section 1.1 above); together with all
rents, issues, deposits and profits of
the Subject Property; all inventory,
accounts, cash receipts, deposit
accounts, accounts receivable,
contract rights, general intangibles,
judgments, chattel paper, instruments,
documents, notes, drafts, letters of
credit, insurance policies, insurance
and condemnation awards and proceeds,
any other rights to the payment of
money, trade names, trademarks and
service marks arising from or related
to the Subject Property or any
business now or hereafter conducted
thereon by Grantor; subject to Section
4.8, all permits, consents, approvals,
licenses, authorizations and other
rights granted by, given by or
obtained from, any governmental entity
with respect to the Subject Property;
all deposits or other security now or
hereafter made with or given to
utility companies by Grantor with
respect to the Subject Property; all
advance payments of insurance premiums
made by Grantor with respect to the
Subject Property; all plans, drawings
and specifications relating to the
Subject Property; all loan funds held
by Beneficiary, whether or not
disbursed; all funds deposited with
Beneficiary pursuant to any loan
agreement or any other document or
right of Beneficiary; all reserves,
deferred payments, deposits, accounts,
refunds, cost savings and payments of
any kind related to the Subject
Property or any portion thereof; all
other items of personal property (of
whatever kind or nature) used in the
operation of the Subject Property; all
of the rights and interest of Grantor
in and under all management
agreements, franchise agreements and
leasing agreements affecting all or
any portion of the Subject Property;
all of the rights and interest of
Grantor in and to those accounts that
have been (or may hereafter be)
established with Beneficiary; all of
the rights and interest of Grantor in
and to any interest rate protection
agreement that may
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have been (or may
hereafter be) entered into by Grantor
in connection with the Loan; all
rents, revenues, issues, profits and
income generated from the operation of
the Subject Property; subject to
Section 4.7, all rights of Grantor as
lessee under all chattel leases
relating to furniture, fixtures,
equipment or any other item used in
connection with the operation of the
Subject Property; together with all
replacements and proceeds of, and
additions and accessions to, any of
the foregoing; together with all
books, records and files relating to
any of the foregoing.
As to all of the above described personal
property which is or which hereafter becomes a
"fixture" under applicable law, this Deed of
Trust constitutes a fixture filing under the
Maryland Uniform Commercial Code, as amended or
recodified from time to time ("UCC").
4.2 REPRESENTATIONS AND WARRANTIES. Grantor
represents and warrants that (subject to the
Permitted Encumbrances): (a) Grantor has good
title to the Collateral; and (b) Grantor has
not previously assigned or encumbered the
Collateral, and no financing statement covering
any of the Collateral has been delivered by
Grantor to any other person or entity.
4.3 RIGHTS OF BENEFICIARY. In addition to
Beneficiary's rights as a "Secured Party" under
the UCC, Beneficiary may, but shall not be
obligated to, at any time without notice
(except as provided below) and at the expense
of Grantor: (a) give notice to any person of
Beneficiary's rights hereunder and enforce such
rights at law or in equity; (b) insure,
protect, defend and preserve the Collateral or
any rights or interests of Beneficiary therein;
and (c) inspect the Collateral at reasonable
times and upon reasonable prior notice.
Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any
obligation of Grantor to Beneficiary unless
Beneficiary shall make an express written
election of said remedy under the UCC, or other
applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the
occurrence of a Default, in addition to all of
Beneficiary's rights as a "Secured Party" under
the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice,
require Grantor to assemble any or all of
the Collateral and make it available to
Beneficiary at a place designated by
Beneficiary; (ii) without prior notice,
enter upon the Subject Property or other
place where any of the Collateral may be
located and take possession of, collect,
sell, and dispose of any or all of the
Collateral, and store the same at
locations acceptable to Beneficiary at
Grantor's expense; and (iii) sell, assign
and deliver at any place or in any lawful
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manner all or any part of the Collateral
and bid and become purchaser at any such
sales; and
(b) Beneficiary may, for the account of
Grantor and at Grantor's expense: (i)
operate, use, consume, sell or dispose of
the Collateral as Beneficiary deems
appropriate for the purpose of performing
any or all of the Secured Obligations;
(ii) enter into any agreement, compromise,
or settlement, including insurance claims,
which Beneficiary may deem desirable or
proper with respect to any of the
Collateral; (iii) endorse, collect and
receive any right to payment of money
owing to Grantor under or from the
Collateral; and (iv) endorse and deliver
evidences of title for, and receive,
enforce and collect by legal action or
otherwise, all indebtedness and
obligations now or hereafter owing to
Grantor in connection with or on account
of any or all of the Collateral.
Any disposition of so much of the Collateral as
may constitute personal property subject to the
security interest created by this Deed of Trust
shall be considered commercially reasonable if
made pursuant to a public sale which is
advertised at least twice in a newspaper of
local circulation in the community where the
Collateral is located. Any notice required by
Section 9-504 of the Commercial Law Article of
the Annotated Code of Maryland, as amended, to
be given to the Grantor shall be considered
reasonable and properly given if given in the
manner and at the address provided in the
notice provisions of this Deed of Trust at
least ten (10) calendar days prior to the date
of any scheduled public sale.
4.5 POWER OF ATTORNEY. Grantor hereby irrevocably
appoints Beneficiary as Grantor's
attorney-in-fact (such agency being coupled
with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do
so, in Beneficiary's name, or in the name of
Grantor, prepare, execute and file or record
financing statements, continuation statements,
applications for registration and like papers
necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in
or to any of the Collateral, and, upon a
Default hereunder, take any other action
required of Grantor; provided, however, that
Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually
received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as
otherwise provided in this Article or in the
other Loan Documents, so long as no Default
exists under this Deed of Trust or any of the
Loan Documents, Grantor may possess, use, move,
transfer or dispose of any of the Collateral in
the ordinary course of Grantor's business and
in accordance with the Loan Agreement.
4.7 ASSIGNMENT OF EQUIPMENT LEASES. To secure the
payment and performance of the Secured
Obligations, Grantor (to the extent assignable) hereby
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sells, assigns, grants, transfers and
sets over to Beneficiary all of Grantor's
right, title and interest in and to the
Equipment Leases relating to the Subject
Property and in and to the furniture, fixtures,
equipment and other items (herein called the
"Leased Equipment") and any rights to acquire
the Leased Equipment as set forth in the
Equipment Leases relating thereto, or
otherwise, and any and all extensions and
renewals thereof and any and all substitutions
therefor. Grantor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Grantor agrees to pay all sums when
due and promptly perform all covenants and
obligations required of the lessee under each
Equipment Lease, including, to the extent
required by the lessor under any Equipment
Lease, keeping the Leased Equipment in good
condition and repair, and making all necessary
replacements or renewals thereof. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Grantor under any Equipment Lease,
including, but not limited to, the payment of
rent, until such time as Beneficiary takes
actual possession of the Leased Equipment and
the Subject Property. So long as there shall
exist no Default, Beneficiary shall not demand
from the lessor under any Equipment Lease any
rights of Grantor thereunder, nor shall
Beneficiary be entitled to the use and
possession of the Leased Equipment. Upon or at
any time after a Default, Grantor agrees to
turn over and give up possession of the Leased
Equipment to Beneficiary at the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, manage and operate the Leased
Equipment, and in connection therewith: (x)
Beneficiary may make, cancel, enforce or modify
any Equipment Lease, repair, maintain and
improve the Leased Equipment, employ agents,
attorneys and accountants in connection with
the enforcement of Beneficiary's rights
hereunder and pay the reasonable fees and
expenses thereof, and otherwise do and perform
any and all acts and things which Beneficiary
may deem necessary or appropriate in the
protection of the Leased Equipment or the
enforcement of Beneficiary's rights hereunder
or under the Loan Agreement or any other Loan
Document; and any and all amounts expended by
Beneficiary in connection with the exercise of
any rights granted under this Section 4.7 shall
constitute additional Secured Obligations
secured by this Deed of Trust; (y) the entering
upon the Subject Property and taking possession
of the Leased Equipment and the exercise of any
of the rights hereinabove specified shall not
cure, waive, modify or affect any Default
hereunder or under the Loan Agreement or any
other Loan Document; and (z) Beneficiary may
acquire the Leased Equipment in accordance with
the provisions of any Equipment Lease. Except
as otherwise permitted hereunder and except for
amendments that do not result in an Equipment
Lease being less favorable to Grantor or
Beneficiary, Grantor shall keep each Equipment
Lease in full force and effect and will not
modify, change, alter, supplement or amend any
Equipment Lease. Grantor hereby warrants and
represents that, with respect to each of the
Equipment Leases, the execution and
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delivery of this Deed of Trust (and the performance
of Grantor's obligations hereunder) do not cause
or create a default under any Equipment Lease,
a right to terminate any Equipment Lease or any
other event that after the giving of notice,
the passage of time or both could constitute a
default (or provide the lessor under an
Equipment Lease with a right to terminate). At
the request of Beneficiary, Grantor shall cause
this Deed of Trust to be served upon the lessor
under any Equipment Lease and shall use
reasonable efforts to cause such lessor to
acknowledge receipt of such notice. Without
limiting anything herein contained, this Deed
of Trust shall vest in Beneficiary a security
interest in each Equipment Lease and Grantor's
interest in the Leased Equipment (subject to
the ownership and security interest in the
Leased Equipment of lessor, as provided for in
the Equipment Lease). The Equipment Leases and
Leased Equipment shall constitute "Collateral"
hereunder.
4.8 ASSIGNMENT OF PERMITS. To secure the payment
and performance of the Secured Obligations,
Grantor hereby sells, assigns, grants,
transfers and sets over to Beneficiary all of
Grantor's right, title and interest in and to
all Required Permits now or hereafter in
effect, but only to the extent that the
Required Permits may be lawfully assigned; and
any and all substitutions therefor (and said
Required Permits shall constitute "Collateral"
hereunder). Grantor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Grantor agrees to pay all sums when
due under each Required Permit relating to the
Subject Property and promptly perform all
covenants and obligations required of the
licensee or permittee, as the case may be,
under each such Required Permit. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Grantor under any Required Permit,
including, but not limited to, the payment of
fees, until such time as Beneficiary takes
actual possession of the Subject Property and
the Required Permits relating thereto. Upon or
at any time after a Default, Grantor agrees (to
the extent not prohibited by law) to turn over
and give up possession of the assignable
Required Permits relating to the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, and manage and operate the
Subject Property; and in connection therewith:
(x) Beneficiary may make, cancel, enforce or
modify any Required Permit relating to the
Subject Property or cause the same to be issued
or reissued in its own name or the name of its
designee or operator of the Subject Property or
receiver, and otherwise do and perform any and
all acts and things which Beneficiary may deem
necessary or appropriate in the protection of
such Required Permits or the enforcement of
Beneficiary's rights hereunder or under the
Loan Agreement or any other Loan Document; and
any and all amounts expended by Beneficiary in
connection with the foregoing shall constitute
additional Secured Obligations secured by this
Deed of Trust; and (y) the entering upon the
Subject Property and
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taking possession of the
same and the operation thereof under the
assignable Required Permits relating thereto,
and the exercise of any of the rights
hereinabove specified shall not cure, waive,
modify or affect any Default hereunder or under
the Loan Agreement or any other Loan Document.
Grantor shall keep each Required Permit
relating to the Subject Property in full force
and effect and will renew the same prior to
expiration and pay all fees in connection
therewith. Grantor hereby warrants and
represents that with respect to each Required
Permit relating to the Subject Property, the
execution and delivery of this Deed of Trust
(and the performance of Grantor's obligations
hereunder) do not cause or create (1) a default
with respect to any such Required Permit, (2) a
right to terminate or revoke any such Required
Permit or (3) any other event that after the
giving of notice, the passage of time or both
could constitute a default (or give rise to a
right to terminate). At the request of
Beneficiary, Grantor shall cause this Deed of
Trust to be served upon the issuer of each
assignable Required Permit relating to the
Subject Property and shall use its best efforts
to cause such issuer to acknowledge receipt of
such notice. Without limiting anything
contained herein, this Deed of Trust shall vest
in Beneficiary a security interest in each such
assignable Required Permit.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Grantor represents and warrants that,
except as disclosed to Beneficiary in a writing
which refers to this warranty and except for
the Permitted Encumbrances, Grantor lawfully
holds and possesses fee simple title to the
Subject Property without limitation on the
right to encumber, and that this Deed of Trust
is a first and prior lien on the Subject
Property.
5.2 TAXES AND ASSESSMENTS. Subject to Section 7.3
of the Loan Agreement, Grantor shall pay prior
to delinquency, all taxes, assessments, levies
and charges imposed by any public or
quasi-public authority or utility company which
are or which may become a lien upon or cause a
loss in value of the Subject Property or any
interest therein. Grantor shall also pay prior
to delinquency all taxes, assessments, levies
and charges imposed by any public authority
upon Beneficiary by reason of its interest in
any Secured Obligation or in the Subject
Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation;
provided, however, Grantor shall have no
obligation to pay taxes which may be imposed
from time to time upon Beneficiary and which
are measured by and imposed upon Beneficiary's
capital or net income.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's
election and demand, Grantor shall, until all
Secured Obligations have been paid in full, pay
to Beneficiary monthly, annually or as
otherwise directed by Beneficiary an amount
estimated by Beneficiary to be equal to: (i)
all taxes, assessments and levies imposed by
any public or quasi-public authority or utility
company which are or
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may become a lien upon the
Subject Property and will become due for the
tax year during which such payment is so
directed; and (ii) premiums for fire and other
hazard insurance next due. If Beneficiary
determines that any amounts paid by Grantor are
insufficient for the payment in full of such
taxes, assessments, levies and/or insurance
premiums, Beneficiary shall notify Grantor of
the increased amounts required to pay all
amounts due, whereupon Grantor shall pay to
Beneficiary within thirty (30) days thereafter
the additional amount as stated in
Beneficiary's notice. All sums so paid shall
earn interest at the rate then paid on current
market rate accounts maintained with
Beneficiary. The funds deposited with
Beneficiary may be commingled by Beneficiary
with its general funds. Beneficiary shall,
unless Grantor is otherwise in Default
hereunder or under any Secured Obligation,
apply said funds to the payment of, or at the
sole option of Beneficiary release said funds
to Grantor for the application to and payment
of, such sums, taxes, assessments, levies,
charges, and insurance premiums. Upon Default
by Grantor hereunder or under any Secured
Obligation, Beneficiary may apply all or any
part of said sums to any Secured Obligation
and/or to cure such Default, in which event
Grantor shall be required to restore all
amounts so applied, as well as to cure any
other events or conditions of Default not cured
by such application. Upon assignment of this
Deed of Trust, Beneficiary shall have the right
to assign all amounts collected and in its
possession to its assignee whereupon
Beneficiary shall be released from all
liability with respect thereto. Within ninety-five
(95) days following full repayment of the
Secured Obligations (other than full repayment
of the Secured Obligations as a consequence of
a foreclosure or conveyance in lieu of
foreclosure of the liens and security interests
securing the Secured Obligations) or at such
earlier time as Beneficiary may elect, the
balance of all amounts collected and in
Beneficiary's possession shall be paid to
Grantor and no other party shall have any right
or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Grantor
shall promptly pay and perform each Secured
Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Subject to
Section 7.3 of the Loan Agreement, Grantor
shall immediately discharge any lien not
approved by Beneficiary in writing that has or
may attain priority over this Deed of Trust.
Subject to Section 7.3 of the Loan Agreement,
Grantor shall pay when due all obligations
secured by or reducible to liens and
encumbrances which shall now or hereafter
encumber or appear to encumber all or any part
of the Subject Property or any interest
therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
All insurance and condemnation proceeds shall
be paid and applied in accordance with the
terms contained in the Loan Agreement.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the
Loan Agreement, Grantor covenants:
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(a) to maintain the insurance provided for in
the Loan Agreement, and to comply with the
requirements of any insurance companies
insuring the Subject Property; provided,
however, neither Beneficiary nor Trustee,
by reason of accepting, rejecting,
approving or obtaining insurance shall
incur any liability for (x) the existence,
nonexistence, form or legal sufficiency of
any insurance, (y) the solvency of any
insurer, or (z) the payment of claims;
(b) to keep the Subject Property in good
condition and repair, reasonable wear and
tear excepted;
(c) except as otherwise permitted under the
Loan Documents, not to remove or demolish
the Subject Property or any part thereof,
not to alter, restore or add to the
Subject Property and not to initiate or
acquiesce in any change in any zoning or
other land classification which affects
the Subject Property without Beneficiary's
prior written consent (which consent shall
not be unreasonably withheld or delayed);
(d) to complete or restore promptly and in
good and workmanlike manner the Subject
Property, or any part thereof which may be
damaged or destroyed, without regard to
whether Beneficiary elects to require that
insurance proceeds be used to reduce the
Secured Obligations as provided in the
Loan Agreement;
(e) to comply with all laws, ordinances,
regulations and standards, and all
covenants, conditions, restrictions and
equitable servitudes, whether public or
private, of every kind and character which
affect the Subject Property and pertain to
acts committed or conditions existing
thereon, including, without limitation,
any work, alteration, improvement or
demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the
Subject Property; and
(g) to do all other acts which from the
character or use of the Subject Property
may be necessary to maintain and preserve
its value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND
ACTIONS. At Grantor's sole expense, Grantor
shall protect, preserve and defend the Subject
Property and title to and right of possession
of the Subject Property, the security hereof
and the rights and powers of Beneficiary and
Trustee hereunder against all adverse claims.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF
TRUSTEE. Trustee accepts this trust when this
Deed of Trust is recorded. From time to time
upon written request of Beneficiary and presen-
tation of this Deed of Trust or a
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certified copy thereof for endorsement, and without
affecting the personal liability of any person
for payment of any indebtedness or performance
of any obligations secured hereby, Trustee may,
without liability therefor and without notice:
(i) release all or any part of the Subject
Property from the lien of this Deed of Trust;
(ii) consent to the making of any map or plat
thereof; and (iii) join in any grant of
easement thereon, any declaration of covenants
and restrictions, or any extension agreement or
any agreement subordinating the lien or charge
of this Deed of Trust. Except as may be
required by applicable law, Trustee or
Beneficiary may from time to time apply to any
court of competent jurisdiction for aid and
direction in the execution of the trust
hereunder and the enforcement of the rights and
remedies available hereunder, and may obtain
orders or decrees directing or confirming or
approving acts in the execution of said trust
and the enforcement of said remedies. Trustee
has no obligation to notify any party of any
pending sale or any action or proceeding,
including, without limitation, actions in which
Grantor, Beneficiary or Trustee shall be a
party unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee
shall not be obligated to perform any act
required of it hereunder unless the performance
of the act is requested in writing and Trustee
is reasonably indemnified and held harmless
against loss, cost, liability or expense.
5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Grantor shall pay Trustee's fees and
reimburse Trustee and Beneficiary for
expenses in the administration of this
trust, including attorneys' fees.
Beneficiary shall not directly or
indirectly be liable to Grantor or any
other person as a consequence of (i) the
exercise of the rights, remedies or powers
granted to Beneficiary in this Deed of
Trust (unless the loss is caused by the
gross negligence or willful misconduct of
Beneficiary); (ii) the failure or refusal
of Beneficiary to perform or discharge any
obligation or liability of Grantor under
any agreement related to the Subject
Property or under this Deed of Trust; or
(iii) any loss sustained by Grantor or any
third party resulting from Beneficiary's
failure to lease the Subject Property
after a Default or from any other act or
omission of Beneficiary in managing the
Subject Property after a Default (unless
the loss is caused by the gross negligence
or willful misconduct of Beneficiary) and
no such liability shall be asserted
against or imposed upon Beneficiary, and
all such liability is hereby expressly
waived and released by Grantor.
(b) Grantor indemnifies Trustee and
Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses,
damages, liabilities, claims, causes of
action, judgments, court costs, reasonable
attorneys' fees and other legal expenses,
cost of evidence of title, cost of
evidence of value, and other expenses
which either may suffer or incur: (i) by
reason of this Deed of Trust; (ii) by
reason of the execution of this trust or
in performance of any act required or
permitted hereunder or by law; (iii) as a
result of any failure
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of Grantor to perform Grantor's obligations
hereunder or under any other Loan Documents; or
(iv) by reason of any alleged obligation or
undertaking on Beneficiary's part to
perform or discharge any of the
representations, warranties, conditions,
covenants or other obligations contained
in any other document related to the
Subject Property. The above obligation of
Grantor to indemnify and hold harmless
Trustee and Beneficiary shall survive the
release and cancellation of the Secured
Obligations and the release and
reconveyance or partial release and
reconveyance of this Deed of Trust.
(c) Grantor shall pay all amounts and
indebtedness arising under this Section
5.10 immediately upon demand by Trustee or
Beneficiary together with interest thereon
from the date the indebtedness arises at
the rate of interest then applicable to
the principal balance of the Note as
specified therein.
5.11 PROHIBITION OF TRANSFER OF SUBJECT
PROPERTY OR INTERESTS IN Grantor. Grantor
acknowledges that Beneficiary has relied
upon the principals of Grantor and Co-Borrower and
their experience in owning
and operating properties similar to the
Subject Property in connection with the
closing of the Loan. Accordingly, except
with the prior written consent of
Beneficiary or as otherwise expressly
permitted in the Note, Grantor shall not
cause or permit any sale, exchange,
mortgage, pledge, hypothecation,
assignment, encumbrance or other transfer,
conveyance or disposition, whether
voluntarily, involuntarily, conditionally,
unconditionally or by operation of law
("Transfer") of all or any part of, or all
or any direct or indirect interest in, the
Subject Property or the Collateral (except
for equipment and inventory in the
ordinary course of its business), or cause
or permit a Transfer of any direct or
indirect interest (whether general or
limited partnership interest, stock,
limited liability company interest, trust,
or otherwise) in Grantor or Co-Borrower.
In the event of any Transfer that is not
expressly permitted in the Note and is
without the prior written consent of
Beneficiary, Beneficiary shall have the
absolute right at its option, without
prior demand or notice, to declare all of
the Secured Obligations immediately due
and payable, except to the extent
prohibited by law, and pursue its rights
and remedies under Section 6.2 herein.
Grantor agrees to pay any prepayment fee
as set forth in the Note in the event the
Secured Obligations are accelerated
pursuant to the terms of this Section.
Consent to one such Transfer shall not be
deemed to be a waiver of the right to
require the consent to future or
successive Transfers.
5.12 RELEASES, EXTENSIONS, MODIFICATIONS AND
ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any
persons or entities having any interest at
any time in the Subject Property or in any
manner obligated under the Secured
Obligations ("Interested Parties"),
Beneficiary may, from time to time,
release any person or entity from
liability for the payment or performance
of any Secured Obligation, take any action
or make any agreement
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extending the maturity or otherwise altering
the terms or increasing the amount of any Secured
Obligation, or accept additional security
or release all or a portion of the Subject
Property and other security for the
Secured Obligations. None of the
foregoing actions shall release or reduce
the personal liability of any of said
Interested Parties, or release or impair
the priority of the lien of this Deed of
Trust upon the Subject Property.
5.13 RECONVEYANCE. Upon Beneficiary's written
request, and upon surrender to Trustee for
cancellation of this Deed of Trust or a
certified copy thereof, Trustee shall
reconvey or release, without warranty, the
Subject Property or that portion thereof
then held hereunder. To the extent
permitted by law, the reconveyance or
release may describe the grantee as "the
person or persons legally entitled
thereto" and the recitals of any matters
or facts in any reconveyance or release
executed hereunder shall be conclusive
proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have
any duty to determine the rights of
persons claiming to be rightful grantees
of any reconveyance or release. When the
Subject Property has been fully reconveyed
or released, the last such reconveyance or
release shall operate as a reassignment of
all future rents, issues and profits of
the Subject Property to the person or
persons legally entitled thereto.
5.14 SUBROGATION. Beneficiary shall be
subrogated to the lien of all
encumbrances, whether released of record
or not, paid in whole or in part by
Beneficiary pursuant to this Deed of Trust
or by the proceeds of any loan secured by
this Deed of Trust.
5.15 RIGHT OF INSPECTION. Beneficiary, its
agents and employees, may enter the
Subject Property at any reasonable time,
upon reasonable advance notice, for the
purpose of inspecting the Subject Property
and ascertaining Grantor's compliance with
the terms hereof.
5.16 SUBSTITUTION OF TRUSTEES. From time to
time, by a writing, signed and
acknowledged by Beneficiary and recorded
in the Land Records of the County in which
the Subject Property is situated,
Beneficiary may appoint another trustee to
act in the place and stead of Trustee or
any successor. Such writing shall set
forth any information required by law.
The recordation of such instrument of
substitution shall discharge Trustee
herein named and shall appoint the new
trustee as the trustee hereunder with the
same effect as if originally named Trustee
herein. A writing recorded pursuant to
the provisions of this Section 5.16 shall
be conclusive proof of the proper substi-
tution of such new Trustee.
5.17 HAZARDOUS MATERIALS. Without limiting any
other provision of this Deed of Trust,
Grantor agrees as follows:
(a) Prohibited Activities. Grantor shall not
cause or permit the Subject Property to be
used as a site for the use, generation,
manufacture, storage,
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treatment, release, discharge, disposal,
transportation or presence of any Hazardous Materials.
The foregoing to the contrary notwithstanding:
(i) Grantor may store, maintain and use on
the Subject Property janitorial and
maintenance supplies, paint and other
Hazardous Materials of a type and in a
quantity readily available for purchase by
the general public and normally stored,
maintained and used by owners and managers
of properties of a type similar to the
Subject Property; and (ii) tenants of the
Subject Property may store, maintain and
use on the Subject Property (and, if any
tenant is a retail business, hold in
inventory and sell in the ordinary course
of such tenant's business) Hazardous
Materials of a type and quantity readily
available for purchase by the general
public and normally stored, maintained and
used (and, if tenant is a retail business,
sold) by tenants in similar lines of
business on properties similar to the
Subject Property.
(b) Hazardous Materials Laws. Grantor shall
comply and cause the Subject Property to
comply with all Hazardous Materials Laws.
(c) Notices. Grantor shall immediately notify
Beneficiary in writing of: (i) the
discovery of any Hazardous Materials on,
under or about the Subject Property (other
than Hazardous Materials permitted under
Section 6.2 (a)); (ii) any knowledge by
Grantor that the Subject Property does not
comply with any Hazardous Materials Laws;
and (iii) any Hazardous Materials Claims
pending or threatened against Grantor or
the Subject Property by any governmental
entity or agency or any other person or
entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) Remedial Action. In response to the
presence of any Hazardous Materials on,
under or about the Subject Property,
Grantor shall immediately take, at
Grantor's sole expense, all remedial
action required by any Hazardous Materials
Laws or any judgment, consent decree,
settlement or compromise in respect to any
Hazardous Materials Claims.
(e) Inspection By Beneficiary. Upon
reasonable prior notice to Grantor,
Beneficiary, its employees and agents, may
from time to time (whether before or after
the commencement of a nonjudicial or
judicial foreclosure proceeding), enter
and inspect the Subject Property for the
purpose of determining the existence,
location, nature and magnitude of any past
or present release or threatened release
of any Hazardous Materials into, onto,
beneath or from the Subject Property.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term
"Default" shall mean the existence of any
Default as defined in the Loan Agreement.
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6.2 RIGHTS AND REMEDIES. At any time after
Default, Beneficiary and Trustee shall each
have all the following rights and remedies (in
addition to (and without limiting) any rights
and remedies that are available under
applicable law):
(a) With or without prior notice, to declare
all Secured Obligations immediately due
and payable;
(b) With or without notice, and without
releasing Grantor from any Secured
Obligation, and without becoming a
mortgagee in possession, to enter upon the
Subject Property from time to time and to
do such acts and things as Beneficiary or
Trustee deem necessary or desirable in
order to inspect, investigate, assess and
protect the security hereof or to cure any
Default, including, without limitation:
(i) to appear in and defend any action or
proceeding purporting to affect the
security of this Deed of Trust or the
rights or powers of Beneficiary or Trustee
under this Deed of Trust; (ii) to pay,
purchase, contest or compromise any encum-
brance, charge, lien or claim of lien
which, in the sole judgment of either
Beneficiary or Trustee, is or may be
senior in priority to this Deed of Trust,
the judgment of Beneficiary or Trustee
being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to
pay any premiums or charges with respect
to insurance required to be carried under
the Loan Documents; and (v) to employ
legal counsel, accountants, engineers,
consultants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or
actions in any court of competent
jurisdiction to foreclose this instrument
as a mortgage or to obtain specific
enforcement of the covenants of Grantor
hereunder, and Grantor agrees that such
covenants shall be specifically
enforceable by injunction or any other
appropriate equitable remedy and that for
the purposes of any suit brought under
this subparagraph, Grantor waives the
defense of laches and any applicable
statute of limitations. Grantor hereby,
upon the occurrence of a Default, (i)
declares its assent to the passing of a
decree for the sale of any or all of the
Subject Property or any estate or interest
therein in and by any equity court having
jurisdiction over the sale of the Subject
Property, and (ii) authorizes and empowers
the Beneficiary or such other person or
entity designated by Beneficiary to take
possession of any or all of the Subject
Property and to sell any or all of it or
any estate or interest therein in
accordance with the provisions of Rules
W70 and W77 of the Maryland Rules of
Procedure, as amended, and Section 7-105
of the Real Property Article of the
Annotated Code of Maryland (1988 Edition,
as amended), and/or any other applicable
general or local law, rule or regulation
of the United States of America or the
State of Maryland relating to or affecting
deeds of trust or security agreements,
including any amendments thereof or
additions thereto. Neither the foregoing
assent to decree nor the foregoing
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power of sale shall be exhausted in the event
that such proceeding or sale is dismissed
or canceled before the secured debt is
paid in full. In the event of a sale of
the Subject Property under either the
power of sale or assent to decree, such
sale may be made, at the option of
Beneficiary, subject to one or more of the
tenancies entered into subsequent to the
recording of this Deed of Trust, in
accordance with the provisions of Section
7-105(f)(2) of the Real Property Article
of the Annotated Code of Maryland, as
amended.
(d) To apply to a court of competent
jurisdiction for and obtain appointment of
a receiver of the Subject Property as a
matter of strict right, ex parte and
without notice to Grantor (Grantor hereby
waiving any notice), and without regard to
the adequacy of the security for the
Secured Obligations, the existence of a
declaration that the Secured Obligations
are immediately due and payable, the
filing of a notice of default, or the
commencement of any foreclosure, and
Grantor hereby consents to such
appointment. Such receiver shall have the
right to take possession of and protect
the Subject Property and operate the same
and collect the rents, issues, profits,
revenues and Payments therefrom, which
receiver shall have the right to remain in
possession of the Subject Property
thereafter, during the pendency of any
foreclosure proceeding and all redemption
periods until the issuance of a Trustee's
deed. All expenses and costs incurred by
the receiver or its agents shall
constitute a part of the Secured
Obligations;
(e) To enter upon, possess, manage and operate
the Subject Property or any part thereof,
to take and possess all documents, books,
records, papers and accounts of Grantor or
the then owner of the Subject Property, to
make, terminate, enforce or modify Leases
of the Subject Property upon such terms
and conditions as Beneficiary deems
proper, to make repairs, alterations and
improvements to the Subject Property as
necessary, in Trustee's or Beneficiary's
sole judgment, all to protect or enhance
the security hereof;
(f) To execute a written notice of such
Default and of its election to cause the
Subject Property to be sold to satisfy the
Secured Obligations. As a condition
precedent to any such sale, Trustee and/or
Beneficiary shall give and record such
notices as the law then requires. When
the minimum period of time required after
such notices has elapsed, Trustee, without
notice to or demand upon Grantor, except
as required by law, shall sell the Subject
Property at the time and place of sale
fixed by it in the notice of sale, at one
or several sales, either as a whole or in
separate parcels and in such manner and
order, all as Beneficiary in its sole
discretion may determine, at public
auction to the highest bidder for cash, in
lawful money of the United States, payable
at time of sale. Neither Grantor nor any
other person or entity other than
Beneficiary shall have the right to direct
the order in which the Subject Property is
sold. Subject to requirements and
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limits imposed by law, Trustee may from time to
time postpone sale of all or any portion
of the Subject Property by public
announcement at such time and place of
sale. Trustee shall deliver to the pur-
chaser at such sale a deed conveying the
Subject Property or portion thereof so
sold, but without any covenant or
warranty, express or implied. The
recitals in the deed of any matters or
facts shall be conclusive proof of the
truthfulness thereof. Any person (other
than Trustee), including Grantor or
Beneficiary may purchase at the sale;
(g) To resort to and realize upon the security
hereunder and any other security now or
later held by Beneficiary concurrently or
successively and in one or several
consolidated or independent judicial
actions or lawfully taken non-judicial
proceedings, or both, and to apply the
proceeds received upon the Secured Obliga-
tions all in such order and manner as
Trustee and Beneficiary, or either of
them, determine in their sole discretion.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS.
After deducting all costs, fees and expenses of
Trustee, and of this trust (including, without
limitation, the payment of the Trustee's fees
and attorneys' fees, the cost of evidence of
title in connection with sale and costs and
expenses of sale and of any judicial proceeding
wherein such sale may be made), Trustee,
subject to applicable law, shall apply all
proceeds of any foreclosure sale: (i) to
discharge all taxes, levies and assessments,
with costs and interest if they have priority
over the lien of this Deed of Trust, including
the pro rata portion thereof due for the
current year; (ii) to payment of all sums
expended by Beneficiary under the terms hereof
and not then repaid, with accrued interest at
the rate of interest specified in the Note to
be applicable on or after maturity or
acceleration of the Note; (iii) to payment of
all other Secured Obligations; and (iv) the
remainder, if any, to Grantor or Grantor's
assigns.
6.4 ORDER OF APPLICATION OF PROCEEDS. All sums
received by Beneficiary under Section 6.2
(subject to Section 6.3) or Section 3.2, less
all costs and expenses incurred by Beneficiary
or any receiver under Section 6.2 or
Section 3.2, including, without limitation,
attorneys' fees, shall be applied in payment of
the Secured Obligations in such order as
Beneficiary shall determine in its sole
discretion; provided, however, Beneficiary
shall have no liability for funds not actually
received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor
Trustee's nor any receiver's entry upon and
taking possession of all or any part of the
Subject Property, nor any collection of rents,
issues, profits, insurance proceeds,
condemnation proceeds or damages, other
security or proceeds of other security, or
other sums, nor the application of any
collected sum to any Secured Obligation, nor
the exercise or failure to exercise of any
other right or remedy by Beneficiary or Trustee
or any receiver shall cure or waive any breach,
Default or notice of default under this
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Deed of Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations
then due have been paid and performed and
Grantor has cured all other defaults), or
impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any
right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy,
lease or option or a subordination of the lien
of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S FEES.
Grantor agrees to pay to Beneficiary
immediately and without demand all reasonable
costs and expenses incurred by Trustee and
Beneficiary in connection with the exercise of
the rights and remedies provided for herein
and/or in any of the other Loan Documents
(including, without limitation, court costs,
appraisal fees and reasonable attorneys' fees,
whether incurred in litigation or not) with
interest from the date of expenditure until
said sums have been paid at the rate of
interest then applicable to the principal
balance of the Note as specified therein. In
addition, Grantor shall pay to Trustee and/or
Beneficiary all Trustee's fees hereunder and
shall reimburse Trustee for all reasonable
expenses incurred in the administration of this
trust, including, without limitation, any
attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS.
Grantor hereby irrevocably appoints Beneficiary
and its successors and assigns, as its
attorney-in-fact, which agency is coupled with
an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or
any other notices that Beneficiary deems
appropriate to protect Beneficiary's interest,
(b) upon the issuance of a deed pursuant to the
foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment or
further assurance with respect to the Leases
and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for
such purpose, (c) to prepare, execute and file
or record financing statements, continuation
statements, applications for registration and
like papers necessary to create, perfect or
preserve Beneficiary's security interests and
rights in or to any of the Collateral and any
other property or interests securing the
payment and the performance of the Secured
Obligations, and (d) upon the occurrence of a
Default, Beneficiary may perform any obligation
of Grantor hereunder; provided, however, that:
(i) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are
actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Grantor or
any other person or entity for any failure to
act under this Section.
6.8 REMEDIES CUMULATIVE. All rights and remedies
of Beneficiary and Trustee provided hereunder
are cumulative and are in addition to all
rights and remedies provided by applicable law
(including specifically that of foreclosure of
this instrument as though it were a mortgage)
or in any other agreements between Grantor and
Beneficiary. Beneficiary may enforce any one
or more remedies or rights hereunder
successively or concurrently.
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ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents
contain or incorporate by reference the entire
agreement of the parties with respect to
matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant
further rights to Beneficiary and contain
further agreements and affirmative and negative
covenants by Grantor which apply to this Deed
of Trust and to the Subject Property and such
further rights and agreements are incorporated
herein by this reference.
7.2 MERGER. No merger shall occur as a result of
Beneficiary's acquiring any other estate in, or
any other lien on, the Subject Property unless
Beneficiary consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Grantor, for
itself and for all parties claiming through or
under Grantor, and for all parties who may
acquire a lien on or interest in the Subject
Property, hereby waives all rights to have the
Subject Property and/or any other property,
including, without limitation, the Collateral,
which is now or later may be security for any
Secured Obligation ("Other Property")
marshalled upon any foreclosure of this Deed of
Trust or on a foreclosure of any Other
Property. Beneficiary shall have the right to
sell, and any court in which foreclosure pro-
ceedings may be brought shall have the right to
order a sale of, the Subject Property and any
or all of the Collateral or Other Property as a
whole or in separate parcels, in any order that
Beneficiary may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND
REINSTATEMENT. To the fullest extent permitted
by applicable law, Grantor, for itself and for
all parties claiming through or under Grantor,
and for all parties who may acquire a lien on
or interest in the Subject Property, hereby
waives any and all rights of redemption and
reinstatement under law and under any order or
decree of foreclosure of this Deed of Trust,
and all such rights of redemption and
reinstatement of Grantor and of all other
persons, are and shall be deemed to be hereby
waived to the full extent permitted by the
provisions of the applicable law.
7.5 EXERCISE OF REMEDIES. Notwithstanding any of
the terms or provisions contained in this Deed
of Trust (or in any of the other Loan
Documents), if at any time after the occurrence
of a Default under any of the Loan Documents
(but prior to the time (if any) that said
Default has been cured to the satisfaction of
Beneficiary), Beneficiary has commenced to
exercise one or more of its remedies provided
for herein (or provided in any of the other
Loan Documents or available at law or in
equity), Beneficiary will not be precluded from
continuing to exercise all of its rights and
remedies upon said Default (notwithstanding the
fact that Grantor may have cured, attempted to
cure or be in the process of curing said
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Default). It is the intention of the parties
hereto that (to the extent permitted by law)
once Beneficiary has commenced to exercise one
or more of its rights or remedies (upon a
Default), said Default cannot be cured, unless
Beneficiary expressly agrees in writing to
accept said cure and to cease the exercise of
said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term "Subject
Property" means all and any part of the Subject
Property and any interest in the Subject
Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants,
and conditions herein contained shall be
binding upon and inure to the benefit of the
successors and assigns of the parties hereto;
provided, however, that this section does not
waive or modify any restrictions on transfer
contained herein or in any of the other Loan
Documents.
7.8 GOVERNING LAW. This Deed of Trust shall be
governed by and construed in accordance with
the laws of the State of Maryland.
7.9 INCORPORATION. Exhibit A, as attached, is
incorporated into this Deed of Trust by this
reference.
7.10 NOTICES. All notices, reports, demands,
requests and other communications
authorized or required under this Deed of
Trust to be given to Grantor or
Beneficiary, shall be given in the manner
and to the addresses specified in the Loan
Agreement for the giving of notices.
Grantor shall forward to Beneficiary,
without delay, any notices, letters or
other communications delivered to the
Subject Property or to Grantor naming
Beneficiary, "Lender" or any similar
designation as addressee, or which could
reasonably be deemed to affect the ability
of Grantor to perform its obligations to
Beneficiary under the Note, the Loan
Agreement or any other Loan Documents.
7.11 LIMITATION OF LIABILITY. The limitations
on liability set forth in Section 2.8 of
the Loan Agreement shall apply with equal
force to this Deed of Trust, and said
limitations are incorporated herein by
reference as fully and with the same
effect as if recited herein at length.
7.12 SEVERABILITY. If any provision or
obligation under this Deed of Trust shall
be determined by a court of competent
jurisdiction to be invalid, illegal or
unenforceable, that provision shall be
deemed severed from the Deed of Trust and
the validity, legality and enforceability
of the remaining provisions or obligations
shall remain in full force as though the
invalid, illegal or unenforceable
provision had never been a part of the
Deed of Trust.
7.13 TIME. Time is of the essence of each and
every term of this Deed of Trust.
24
<PAGE>
7.14 RELATIONSHIP. The relationship of Grantor
and Beneficiary under this Deed of Trust
and the other Loan Documents is, and shall
at all times remain, solely that of
borrower and lender; and Beneficiary
neither undertakes nor assumes any
responsibility or duty to Grantor or to
any third party with respect to the
Subject Property. Notwithstanding any
other provisions of this Deed of Trust and
the other Loan Documents: (i) Beneficiary
is not, and shall not be construed to be,
a partner, joint venturer, member, alter
ego, manager, controlling person or other
business associate or participant of any
kind of Grantor, and Beneficiary does not
intend to ever assume such status; (ii)
Beneficiary does not intend to ever assume
any responsibility to any person for the
quality, suitability, safety or condition
of the Subject Property; and (iii)
Beneficiary shall not be deemed
responsible for or a participant in any
acts, omissions or decisions of Grantor.
7.15 COMMERCIAL LOANS. Grantor warrants and
represents that the liabilities secured by
this Deed of Trust are "commercial loans"
within the meaning of the Commercial Law
Article of the Annotated Code of Maryland.
7.16 EXECUTION IN COUNTERPARTS. This Deed of
Trust may be executed in any number of
counterparts, each of which when executed
and delivered shall be deemed to be an
original and all such counterparts
together, shall constitute one and the
same instrument.
25
<PAGE>
IN WITNESS WHEREOF, Grantor, Trustee and Beneficiary
has executed this Deed of Trust as of the day and year
set forth above.
"Grantor"
MONTROSE OFFICE PARK JOINT VENTURE, a Maryland joint venture
By: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, its joint venturer
By: Prudential-Bache Properties, Inc., a Delaware
corporation, its general partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
-------------------------
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general partner
By: Montrose Office Park Limited Partnership, a
Maryland limited partnership, its joint venturer
By: Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership,
its general partner
By: Prudential-Bache Properties, Inc., a
Delaware corporation, its general partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a California
corporation, its general partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general partner
<PAGE>
"TRUSTEE"
CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation
By:__________________________
Its:_________________________
"BENEFICIARY"
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ David J. Weber
--------------------------
Its: SVP
--------------------------
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
On _______________, 1996, before me,
____________________________, a Notary Public in and
for the County and State aforesaid, personally appeared
_________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to
be the same person whose name is subscribed to the
within and acknowledged to me that _____ executed the
same in _____ authorized capacity, and that by _____
signature on the instrument the person or the entity
upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
EXHIBIT A
Rockville Property
Montrose Office Park
3200-3206 Tower Oaks Boulevard
Rockville, Montgomery County, Maryland
Recording Requirements
Parcel Identifier #: 4-201-1995656
County Tax Account #: ____________
Street Address: _________________________
_________________________
Grantor's Name and Address: Montrose Office Park Joint Venture
c/o Glenborough Corporation
400 South El Camino Real
11th Floor
San Mateo, California 94402
Trustee: Chicago Title Insurance Company
Title Insurer: Chicago Title Insurance Company
<PAGE>
Certification
I hereby certify that I am a member of the Bar of
the Court of Appeals of Maryland and that the foregoing
Amended and Restated Deed of Trust, with Absolute
Assignment of Leases and Rents, Security Agreement,
Assignment of Equipment Leases and Rents, Security
Agreement, Assignment of Equipment Leases, Assignment
of Permits and Fixture Filing was prepared under my
supervision.
/s/ Rita Watson Morales
A:\MDDOT.WPD January 8, 1997 (6:10p)
<PAGE>
THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING SHOULD BE
RETURNED TO:
Lee M. Smolen
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
City of Memphis, Tennessee
DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST, WITH ABSOLUTE
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT,
ASSIGNMENT OF EQUIPMENT LEASES, ASSIGNMENT OF PERMITS
AND FIXTURE FILING ("Deed of Trust"), made as of
December 13, 1996, are PRUDENTIAL-BACHE/EQUITEC REAL
ESTATE PARTNERSHIP, a California limited partnership
("Trustor"), having its chief executive office at c/o
Glenborough Corporation, 400 South El Camino Real, 11th
Floor, San Mateo, California 94402, J. Richard Rossie,
a resident of Shelby County, Tennessee ("Trustee"),
having an office at 675 Oakleaf Office Lane, Suite 200,
Memphis, Tennessee 38117, and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Beneficiary"), having an office
at 333 South Grand, Suite 900, Los Angeles, California
90071, (as may be modified, amended, supplemented or
restated from time to time the "Deed of Trust").
This instrument covers property which is or may become
so affixed to real property as to become fixtures and
also constitutes a fixture filing under Section 47-9-402 of
Tennessee Code Annotated.
MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING
TAX PURPOSES IS $3,193,039.10. THIS DEED OF TRUST IS
FOR COMMERCIAL PURPOSES.
<PAGE>
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms
and conditions in this Deed of Trust, Trustor
irrevocably grants, conveys and assigns to
Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of
entry and possession, all of Trustor's right,
title and interest in all of the real property
located in the City of Memphis, Tennessee and
described on Exhibit A attached hereto and made
a part hereof, together with all of Trustor's
right, title and interest in all development
rights or credits, air rights, water, water
rights and water stock related to the real
property, and all minerals, oil and gas, and
other hydrocarbon substances in, on or under
the real property, and all appurtenances,
easements, rights and rights of way appurtenant
or related thereto; all streets, roads and
alleys (whether open, proposed or vacated); all
buildings, other improvements and fixtures now
or hereafter located on the real property,
including, but not limited to, all apparatus,
equipment, and appliances used in the operation
or occupancy of the real property, it being
intended by the parties that all such items
shall be conclusively considered to be a part
of the real property, whether or not attached
or affixed to the real property (collectively,
the "Improvements"); all interest or estate
which Trustor may hereafter acquire in the
property described above, and all additions and
accretions thereto, and the proceeds of any of
the foregoing (all of the foregoing being
collectively referred to as the "Subject
Property"). The listing of specific rights or
property shall not be interpreted as a limit of
general terms.
1.2 NON-AGRICULTURAL USE. Trustor represents and
warrants to Beneficiary and Trustee that the
Subject Property is not used principally for
agricultural or farming purposes.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant
and assignment for the purpose of securing the
following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any
time owing under that certain Amended,
Restated and Consolidated Promissory Note,
of even date herewith, in the aggregate
principal amount of Twenty-Six Million Six
Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), executed by
2
<PAGE>
Trustor and Montrose Office Park Joint Venture,
a Maryland joint venture ("Co-Borrower";
Trustor and Co-Borrower collectively,
"Borrowers") and payable to the order of
Beneficiary (as may be modified, amended,
supplemented, replaced or restated from
time to time, the "Note"); and
(b) Payment and performance of all covenants
and obligations of Trustor under this Deed
of Trust; and
(c) Payment and performance of all covenants
and obligations on the part of Trustor
under that certain Loan Agreement, of even
date herewith, by and between Trustor and
Co-Borrower and Beneficiary (as may be
modified, amended, supplemented or
restated from time to time, the "Loan
Agreement") (capitalized terms used herein
but not defined herein shall have the
meaning provided for such terms in the
Loan Agreement); and
(d) Payment and performance of all covenants
and obligations on the part of each of the
Borrowers under all of the Loan Documents;
and
(e) Payment and performance of all future
advances and other obligations that the
then record owner of all or part of the
Subject Property may agree to pay and/or
perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary,
when such future advance or obligation is
evidenced by a writing which recites that
it is secured by this Deed of Trust; and
(f) All modifications, extensions and renewals
of any of the obligations secured hereby,
however evidenced, including, without
limitation: (i) modifications of the
required principal payment dates or
interest payment dates or both, as the
case may be, deferring or accelerating
payment dates wholly or partly; and (ii)
modifications, extensions or renewals at a
different rate of interest whether or not
in the case of the Note, the modification,
extension or renewal is evidenced by a new
or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used
herein in its broadest and most comprehensive
sense and shall be deemed to include, without
limitation, all protective advances and all
sums advanced to protect the Subject Property
or the lien of this Deed of Trust or otherwise
3
<PAGE>
disbursed or incurred under the terms of the
Loan Documents, all interest and charges,
prepayment charges (if any), late charges and
loan fees at any time accruing or assessed on
any of the Secured Obligations; provided,
however, that the terms "obligations" and
"Secured Obligations" as used herein shall in
no event include any obligations arising under
the Guaranty or the Hazardous Materials
Indemnity.
2.3 INCORPORATION. All terms of the Secured
Obligations and the documents evidencing such
obligations are incorporated herein by this
reference. All persons who may have or acquire
an interest in the Subject Property shall be
deemed to have notice of the terms of the
Secured Obligations and to have notice that the
rate of interest on one or more Secured
Obligations may vary from time to time.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Trustor hereby irrevocably assigns
to Beneficiary all of Trustor's right, title
and interest in, to and under: (a) all leases
of the Subject Property or any portion thereof,
and all other agreements of any kind relating
to the use or occupancy of the Subject Property
or any portion thereof, whether now existing or
entered into after the date hereof ("Leases");
and (b) the rents, issues, deposits, profits
and revenues of the Subject Property and the
operations conducted thereon, including,
without limitation, all amounts payable and all
rights and benefits accruing to Trustor under
the Leases ("Payments"). The term "Leases"
shall also include all guarantees of and
security for the lessees' performance
thereunder, and all amendments, extensions,
renewals or modifications thereto which are
permitted hereunder. This is a present and
absolute assignment, not an assignment for
security purposes only, and Beneficiary's right
to the Leases and Payments is not contingent
upon, and may be exercised without possession
of, the Subject Property, and without the
commencement of a foreclosure action or the
appointment of a receiver. Furthermore, upon
any Default, Beneficiary shall be entitled to
receive pursuant to the foregoing assignment,
and Trustor shall be obligated to deliver to
Beneficiary or its designee (including any
receiver), any and all Payments collected by
Trustor which remain in the possession or
control of Trustor, whether or not commingled
with other funds or Trustor, and whether
collected by Trustor before or after the
occurrence of the Default.
4
<PAGE>
3.2 GRANT OF LICENSE. Beneficiary confers upon
Trustor a license ("License") to collect and
retain the Payments as they become due and
payable, until the occurrence of a Default.
Upon a Default, the License shall be
automatically revoked and Beneficiary may
collect and apply the Payments pursuant to
Section 6.4 without notice and without taking
possession of the Subject Property. Trustor
hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and
comply with any notice or demand by Beneficiary
for the payment to Beneficiary of any rental or
other sums which may at any time become due
under the Leases, or for the performance of any
of the lessees' undertakings under the Leases,
and the lessees shall have no right or duty to
inquire as to whether any Default has actually
occurred or is then existing hereunder.
Trustor hereby relieves the lessees from any
liability to Trustor by reason of relying upon
and complying with any such notice or demand by
Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing
irrevocable assignment shall (in and of itself)
not cause Beneficiary to be: (a) a mortgagee
in possession; (b) responsible or liable for
the control, care, management or repair of the
Subject Property or for performing any of the
terms, agreements, undertakings, obligations,
representations, warranties, covenants and
conditions of the Leases; (c) responsible or
liable for any waste committed on the Subject
Property by the lessees under any of the Leases
or any other parties; (d) responsible or liable
for any dangerous or defective condition of the
Subject Property; or (e) responsible or liable
for any negligence in the management, upkeep,
repair or control of the Subject Property
resulting in loss or injury or death to any
lessee, licensee, employee, invitee or other
person. Beneficiary shall not directly or
indirectly be liable to Trustor or any other
person as a consequence of: (i) the exercise
or failure to exercise any of the rights,
remedies or powers granted to Beneficiary
hereunder; or (ii) the failure or refusal of
Beneficiary to perform or discharge any
obligation, duty or liability of Trustor
arising under the Leases.
3.4 COVENANTS. Trustor covenants and agrees at
Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in
the Leases and enforce by all available
remedies performance by the lessees of the
obligations of the lessees contained in the
Leases; (b) deliver to Beneficiary fully
executed, counterpart original(s) of each and
every Lease if requested to do so; and (c)
execute and record (or cause to be executed and
recorded) such additional assignments of any Lease
5
<PAGE>
or specific subordinations of any Lease to
this Deed of Trust, in form and substance
acceptable to Beneficiary, as Beneficiary may
reasonably request. Trustor shall not, without
Beneficiary's prior written consent or as
otherwise permitted by any provision of the
Loan Agreement or as otherwise permitted above:
(i) execute any other assignment relating to
any of the Leases; (ii) discount any rent or
other sums due under the Leases or collect the
same in advance, other than to collect rent one
(1) month in advance of the time when it
becomes due; (iii) modify, amend (if such
modification or amendment would result in the
Lease being less favorable to Trustor or
Beneficiary than presently existing) or
terminate any of the Leases or in any manner
release or discharge the lessees from any
obligations thereunder; (iv) consent to any
assignment or subletting by any lessee; or (v)
subordinate or agree to subordinate any of the
Leases to any other deed of trust or encumbrance.
Any such attempted action in violation
of the provisions of this Section 3.4 shall be
null and void.
3.5 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request by Beneficiary, Trustor shall use
its reasonable efforts to deliver to
Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by
Trustor and by the lessees, certifying: (i)
that the foregoing assignment and the Leases
are in full force and effect; (ii) the date of
each lessee's most recent payment of rent;
(iii) that there are no defenses or offsets
outstanding, or stating those claimed by
Trustor or the lessees under said Leases; (iv)
that no default exists under any of the Leases
and no condition exists that after the giving
of notice, the passage of time or both would
constitute a default under any of the Leases;
and (v) any other information reasonably
requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and
assigns to Beneficiary, as of the Effective
Date, a security interest, to secure payment
and performance of all of the Secured
Obligations, in all of the following described
personal property in which Trustor now or at
any time hereafter has any interest
(collectively, the "Collateral"):
All goods, building and other
materials, supplies, work in process,
equipment, machinery, fixtures,
furniture, furnishings,
6
<PAGE>
signs and other personal property, wherever
situated, which are or are to be
incorporated into, used in connection
with, or appropriated for use on the
real property described on Exhibit A
attached hereto and incorporated by
reference herein (to the extent the
same are not effectively made a part
of the real property pursuant to
Section 1.1 above); together with all
rents, issues, deposits and profits of
the Subject Property; all inventory,
accounts, cash receipts, deposit
accounts, accounts receivable,
contract rights, general intangibles,
judgments, chattel paper, instruments,
documents, notes, drafts, letters of
credit, insurance policies, insurance
and condemnation awards and proceeds,
any other rights to the payment of
money, trade names, trademarks and
service marks arising from or related
to the Subject Property or any
business now or hereafter conducted
thereon by Trustor; subject to Section
4.8, all permits, consents, approvals,
licenses, authorizations and other
rights granted by, given by or
obtained from, any governmental entity
with respect to the Subject Property;
all deposits or other security now or
hereafter made with or given to
utility companies by Trustor with
respect to the Subject Property; all
advance payments of insurance premiums
made by Trustor with respect to the
Subject Property; all plans, drawings
and specifications relating to the
Subject Property; all loan funds held
by Beneficiary, whether or not
disbursed; all funds deposited with
Beneficiary pursuant to any loan
agreement or any other document or
right of Beneficiary; all reserves,
deferred payments, deposits, accounts,
refunds, cost savings and payments of
any kind related to the Subject
Property or any portion thereof; all
other items of personal property (of
whatever kind or nature) used in the
operation of the Subject Property; all
of the rights and interest of Trustor
in and under all management
agreements, franchise agreements and
leasing agreements affecting all or
any portion of the Subject Property;
all of the rights and interest of
Trustor in and to those accounts that
have been (or may hereafter be)
established with Beneficiary; all of
the rights and interest of Trustor in
and to any interest rate protection agreement
7
<PAGE>
that may have been (or may
hereafter be) entered into by Trustor
in connection with the Loan; all
rents, revenues, issues, profits and
income generated from the operation of
the Subject Property; subject to
Section 4.7, all rights of Trustor as
lessee under all chattel leases
relating to furniture, fixtures,
equipment or any other item used in
connection with the operation of the
Subject Property; together with all
replacements and proceeds of, and
additions and accessions to, any of
the foregoing; together with all
books, records and files relating to
any of the foregoing.
As to all of the above described personal
property which is or which hereafter becomes a
"fixture" under applicable law, this Deed of
Trust constitutes a "fixture filing" within the
meaning of the Tennessee Uniform Commercial
Code (as amended or recodified from time to
time, "UCC") Sections TCA 47-9-313 and TCA 47-9-402.
4.2 REPRESENTATIONS AND WARRANTIES. Trustor
represents and warrants that (subject to the
Permitted Encumbrances): (a) Trustor has good
title to the Collateral; and (b) Trustor has
not previously assigned or encumbered the
Collateral, and no financing statement covering
any of the Collateral has been delivered by
Trustor to any other person or entity.
4.3 RIGHTS OF BENEFICIARY. In addition to
Beneficiary's rights as a "Secured Party" under
the UCC, Beneficiary may, but shall not be
obligated to, at any time without notice
(except as provided below) and at the expense
of Trustor: (a) give notice to any person of
Beneficiary's rights hereunder and enforce such
rights at law or in equity; (b) insure,
protect, defend and preserve the Collateral or
any rights or interests of Beneficiary therein;
and (c) inspect the Collateral at reasonable
times and upon reasonable prior notice.
Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any
obligation of Trustor to Beneficiary unless
Beneficiary shall make an express written
election of said remedy under the UCC, or other
applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the
occurrence of a Default, in addition to all of
Beneficiary's rights as a "Secured Party" under
the UCC or otherwise at law:
8
<PAGE>
(g) Beneficiary may (i) upon written notice,
require Trustor to assemble any or all of
the Collateral and make it available to
Beneficiary at a place designated by
Beneficiary; (ii) without prior notice,
enter upon the Subject Property or other
place where any of the Collateral may be
located and take possession of, collect,
sell, and dispose of any or all of the
Collateral, and store the same at
locations acceptable to Beneficiary at
Trustor's expense; and (iii) sell, assign
and deliver at any place or in any lawful
manner all or any part of the Collateral
and bid and become purchaser at any such
sales; and
(h) Beneficiary may, for the account of
Trustor and at Trustor's expense: (i)
operate, use, consume, sell or dispose of
the Collateral as Beneficiary deems
appropriate for the purpose of performing
any or all of the Secured Obligations;
(ii) enter into any agreement, compromise,
or settlement, including insurance claims,
which Beneficiary may deem desirable or
proper with respect to any of the
Collateral; (iii) endorse, collect and
receive any right to payment of money
owing to Trustor under or from the
Collateral; and (iv) endorse and deliver
evidences of title for, and receive,
enforce and collect by legal action or
otherwise, all indebtedness and
obligations now or hereafter owing to
Trustor in connection with or on account
of any or all of the Collateral.
Trustor acknowledges and agrees that a
disposition of the Collateral in accordance
with Beneficiary's rights and remedies as
heretofore provided is a disposition thereof in
a commercially reasonable manner and that five
(5) days prior notice of such disposition is
commercially reasonable notice.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably
appoints Beneficiary as Trustor's
attorney-in-fact (such agency being coupled
with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do
so, in Beneficiary's name, or in the name of
Trustor, prepare, execute and file or record
financing statements, continuation statements,
applications for registration and like papers
necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in
or to any of the Collateral, and, upon a
Default hereunder, take any other action
required of Trustor; provided, however, that
Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually
received by Beneficiary.
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4.6 POSSESSION AND USE OF COLLATERAL. Except as
otherwise provided in this Article or in the
other Loan Documents, so long as no Default
exists under this Deed of Trust or any of the
Loan Documents, Trustor may possess, use, move,
transfer or dispose of any of the Collateral in
the ordinary course of Trustor's business and
in accordance with the Loan Agreement.
4.7 ASSIGNMENT OF EQUIPMENT LEASES. To secure the
payment and performance of the Secured
Obligations, Trustor (to the extent assignable)
hereby sells, assigns, grants, transfers and
sets over to Beneficiary all of Trustor's
right, title and interest in and to the
Equipment Leases relating to the Subject
Property and in and to the furniture, fixtures,
equipment and other items (herein called the
"Leased Equipment") and any rights to acquire
the Leased Equipment as set forth in the
Equipment Leases relating thereto, or
otherwise, and any and all extensions and
renewals thereof and any and all substitutions
therefor. Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due and promptly perform all covenants and
obligations required of the lessee under each
Equipment Lease, including, to the extent
required by the lessor under any Equipment
Lease, keeping the Leased Equipment in good
condition and repair, and making all necessary
replacements or renewals thereof. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Equipment Lease,
including, but not limited to, the payment of
rent, until such time as Beneficiary takes
actual possession of the Leased Equipment and
the Subject Property. So long as there shall
exist no Default, Beneficiary shall not demand
from the lessor under any Equipment Lease any
rights of Trustor thereunder, nor shall
Beneficiary be entitled to the use and
possession of the Leased Equipment. Upon or at
any time after a Default, Trustor agrees to
turn over and give up possession of the Leased
Equipment to Beneficiary at the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, manage and operate the Leased
Equipment, and in connection therewith: (x)
Beneficiary may make, cancel, enforce or modify
any Equipment Lease, repair, maintain and
improve the Leased Equipment, employ agents,
attorneys and accountants in connection with
the enforcement of
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Beneficiary's rights hereunder and pay the reasonable fees
and expenses thereof, and otherwise do and perform
any and all acts and things which Beneficiary
may deem necessary or appropriate in the
protection of the Leased Equipment or the
enforcement of Beneficiary's rights hereunder
or under the Loan Agreement or any other Loan
Document; and any and all amounts expended by
Beneficiary in connection with the exercise of
any rights granted under this Section 4.7 shall
constitute additional Secured Obligations
secured by this Deed of Trust; (y) the entering
upon the Subject Property and taking possession
of the Leased Equipment and the exercise of any
of the rights hereinabove specified shall not
cure, waive, modify or affect any Default
hereunder or under the Loan Agreement or any
other Loan Document; and (z) Beneficiary may
acquire the Leased Equipment in accordance with
the provisions of any Equipment Lease. Except
as otherwise permitted hereunder and except for
amendments that do not result in an Equipment
Lease being less favorable to Trustor or
Beneficiary, Trustor shall keep each Equipment
Lease in full force and effect and will not
modify, change, alter, supplement or amend any
Equipment Lease. Trustor hereby warrants and
represents that, with respect to each of the
Equipment Leases, the execution and delivery of
this Deed of Trust (and the performance of
Trustor's obligations hereunder) do not cause
or create a default under any Equipment Lease,
a right to terminate any Equipment Lease or any
other event that after the giving of notice,
the passage of time or both could constitute a
default (or provide the lessor under an
Equipment Lease with a right to terminate). At
the request of Beneficiary, Trustor shall cause
this Deed of Trust to be served upon the lessor
under any Equipment Lease and shall use
reasonable efforts to cause such lessor to
acknowledge receipt of such notice. Without
limiting anything herein contained, this Deed
of Trust shall vest in Beneficiary a security
interest in each Equipment Lease and Trustor's
interest in the Leased Equipment (subject to
the ownership and security interest in the
Leased Equipment of lessor, as provided for in
the Equipment Lease). The Equipment Leases and
Leased Equipment shall constitute "Collateral"
hereunder.
4.8 ASSIGNMENT OF PERMITS. To secure the payment
and performance of the Secured Obligations,
Trustor hereby sells, assigns, grants,
transfers and sets over to Beneficiary all of
Trustor's right, title and interest in and to
all Required Permits now or hereafter in
effect, but only to the extent that the
Required Permits may be lawfully assigned; and
any and all substitutions therefor (and said
Required Permits shall
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constitute "Collateral" hereunder). Trustor will, from
time to time, execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due under each Required Permit relating to the
Subject Property and promptly perform all
covenants and obligations required of the
licensee or permittee, as the case may be,
under each such Required Permit. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Required Permit,
including, but not limited to, the payment of
fees, until such time as Beneficiary takes
actual possession of the Subject Property and
the Required Permits relating thereto. Upon or
at any time after a Default, Trustor agrees (to
the extent not prohibited by law) to turn over
and give up possession of the assignable
Required Permits relating to the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, and manage and operate the
Subject Property; and in connection therewith:
(x) Beneficiary may make, cancel, enforce or
modify any Required Permit relating to the
Subject Property or cause the same to be issued
or reissued in its own name or the name of its
designee or operator of the Subject Property or
receiver, and otherwise do and perform any and
all acts and things which Beneficiary may deem
necessary or appropriate in the protection of
such Required Permits or the enforcement of
Beneficiary's rights hereunder or under the
Loan Agreement or any other Loan Document; and
any and all amounts expended by Beneficiary in
connection with the foregoing shall constitute
additional Secured Obligations secured by this
Deed of Trust; and (y) the entering upon the
Subject Property and taking possession of the
same and the operation thereof under the
assignable Required Permits relating thereto,
and the exercise of any of the rights
hereinabove specified shall not cure, waive,
modify or affect any Default hereunder or under
the Loan Agreement or any other Loan Document.
Trustor shall keep each Required Permit
relating to the Subject Property in full force
and effect and will renew the same prior to
expiration and pay all fees in connection
therewith. Trustor hereby warrants and
represents that with respect to each Required
Permit relating to the Subject Property, the
execution and delivery of this Deed of Trust
(and the performance of Trustor's obligations
hereunder) do not cause or create (1) a default
with respect to any such Required Permit, (2) a
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right to terminate or revoke any such Required
Permit or (3) any other event that after the
giving of notice, the passage of time or both
could constitute a default (or give rise to a
right to terminate). At the request of
Beneficiary, Trustor shall cause this Deed of
Trust to be served upon the issuer of each
assignable Required Permit relating to the
Subject Property and shall use its best efforts
to cause such issuer to acknowledge receipt of
such notice. Without limiting anything
contained herein, this Deed of Trust shall vest
in Beneficiary a security interest in each such
assignable Required Permit.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Trustor represents and warrants that,
except as disclosed to Beneficiary in a writing
which refers to this warranty and except for
the Permitted Encumbrances, Trustor lawfully
holds and possesses fee simple title to the
Subject Property without limitation on the
right to encumber, and that this Deed of Trust
is a first and prior lien on the Subject
Property.
5.2 TAXES AND ASSESSMENTS. Subject to Section 7.3
of the Loan Agreement, Trustor shall pay prior
to delinquency, all taxes, assessments, levies
and charges imposed by any public or
quasi-public authority or utility company which
are or which may become a lien upon or cause a
loss in value of the Subject Property or any
interest therein. Trustor shall also pay prior
to delinquency all taxes, assessments, levies
and charges imposed by any public authority
upon Beneficiary by reason of its interest in
any Secured Obligation or in the Subject
Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation;
provided, however, Trustor shall have no
obligation to pay taxes which may be imposed
from time to time upon Beneficiary and which
are measured by and imposed upon Beneficiary's
capital or net income.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's
election and demand, Trustor shall, until all
Secured Obligations have been paid in full, pay
to Beneficiary monthly, annually or as
otherwise directed by Beneficiary an amount
estimated by Beneficiary to be equal to: (i)
all taxes, assessments and levies imposed by
any public or quasi-public authority or utility
company which are or may become a lien upon the
Subject Property and will become due for the
tax year during which such payment is so
directed; and (ii) premiums for fire and other
hazard insurance next due. If Beneficiary
determines that any amounts paid by
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Trustor are insufficient for the payment in full of
such taxes, assessments, levies and/or insurance
premiums, Beneficiary shall notify Trustor of
the increased amounts required to pay all
amounts due, whereupon Trustor shall pay to
Beneficiary within thirty (30) days thereafter
the additional amount as stated in
Beneficiary's notice. All sums so paid shall
earn interest at the rate then paid on current
market rate accounts maintained with
Beneficiary. The funds deposited with
Beneficiary may be commingled by Beneficiary
with its general funds. Beneficiary shall,
unless Trustor is otherwise in Default
hereunder or under any Secured Obligation,
apply said funds to the payment of, or at the
sole option of Beneficiary release said funds
to Trustor for the application to and payment
of, such sums, taxes, assessments, levies,
charges, and insurance premiums. Upon Default
by Trustor hereunder or under any Secured
Obligation, Beneficiary may apply all or any
part of said sums to any Secured Obligation
and/or to cure such Default, in which event
Trustor shall be required to restore all
amounts so applied, as well as to cure any
other events or conditions of Default not cured
by such application. Upon assignment of this
Deed of Trust, Beneficiary shall have the right
to assign all amounts collected and in its
possession to its assignee whereupon
Beneficiary shall be released from all
liability with respect thereto. Within ninety-five
(95) days following full repayment of the
Secured Obligations (other than full repayment
of the Secured Obligations as a consequence of
a foreclosure or conveyance in lieu of
foreclosure of the liens and security interests
securing the Secured Obligations) or at such
earlier time as Beneficiary may elect, the
balance of all amounts collected and in
Beneficiary's possession shall be paid to
Trustor and no other party shall have any right
or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor
shall promptly pay and perform each Secured
Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Subject to
Section 7.3 of the Loan Agreement, Trustor
shall immediately discharge any lien not
approved by Beneficiary in writing that has or
may attain priority over this Deed of Trust.
Subject to Section 7.3 of the Loan Agreement,
Trustor shall pay when due all obligations
secured by or reducible to liens and
encumbrances which shall now or hereafter
encumber or appear to encumber all or any part
of the Subject Property or any interest
therein, whether senior or subordinate hereto.
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5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
All insurance and condemnation proceeds shall
be paid and applied in accordance with the
terms contained in the Loan Agreement.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the
Loan Agreement, Trustor covenants:
(a) to maintain the insurance provided for in
the Loan Agreement, and to comply with the
requirements of any insurance companies
insuring the Subject Property; provided,
however, neither Beneficiary nor Trustee,
by reason of accepting, rejecting,
approving or obtaining insurance shall
incur any liability for (x) the existence,
nonexistence, form or legal sufficiency of
any insurance, (y) the solvency of any
insurer, or (z) the payment of claims;
(b) to keep the Subject Property in good
condition and repair, reasonable wear and
tear excepted;
(c) except as otherwise permitted under the
Loan Documents, not to remove or demolish
the Subject Property or any part thereof,
not to alter, restore or add to the
Subject Property and not to initiate or
acquiesce in any change in any zoning or
other land classification which affects
the Subject Property without Beneficiary's
prior written consent (which consent shall
not be unreasonably withheld or delayed);
(d) to complete or restore promptly and in
good and workmanlike manner the Subject
Property, or any part thereof which may be
damaged or destroyed, without regard to
whether Beneficiary elects to require that
insurance proceeds be used to reduce the
Secured Obligations as provided in the
Loan Agreement;
(e) to comply with all laws, ordinances,
regulations and standards, and all
covenants, conditions, restrictions and
equitable servitudes, whether public or
private, of every kind and character which
affect the Subject Property and pertain to
acts committed or conditions existing
thereon, including, without limitation,
any work, alteration, improvement or
demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the
Subject Property; and
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(g) to do all other acts which from the
character or use of the Subject Property
may be necessary to maintain and preserve
its value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND
ACTIONS. At Trustor's sole expense, Trustor
shall protect, preserve and defend the Subject
Property and title to and right of possession
of the Subject Property, the security hereof
and the rights and powers of Beneficiary and
Trustee hereunder against all adverse claims.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF
TRUSTEE. Trustee accepts this trust when this
Deed of Trust is recorded. From time to time
upon written request of Beneficiary and presentation
of this Deed of Trust or a certified
copy thereof for endorsement, and without
affecting the personal liability of any person
for payment of any indebtedness or performance
of any obligations secured hereby, Trustee may,
without liability therefor and without notice:
(i) release all or any part of the Subject
Property from the lien of this Deed of Trust;
(ii) consent to the making of any map or plat
thereof; and (iii) join in any grant of
easement thereon, any declaration of covenants
and restrictions, or any extension agreement or
any agreement subordinating the lien or charge
of this Deed of Trust. Except as may be
required by applicable law, Trustee or
Beneficiary may from time to time apply to any
court of competent jurisdiction for aid and
direction in the execution of the trust
hereunder and the enforcement of the rights and
remedies available hereunder, and may obtain
orders or decrees directing or confirming or
approving acts in the execution of said trust
and the enforcement of said remedies. Trustee
has no obligation to notify any party of any
pending sale or any action or proceeding,
including, without limitation, actions in which
Trustor, Beneficiary or Trustee shall be a
party unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee
shall not be obligated to perform any act
required of it hereunder unless the performance
of the act is requested in writing and Trustee
is reasonably indemnified and held harmless
against loss, cost, liability or expense.
5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Trustor shall pay Trustee's fees and
reimburse Trustee and Beneficiary for
expenses in the administration of this
trust, including attorneys' fees.
Beneficiary shall not directly or
indirectly be liable to Trustor or any
other person as a consequence of (i) the
exercise of the
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rights, remedies or powers
granted to Beneficiary in this Deed of
Trust (unless the loss is caused by the
gross negligence or willful misconduct of
Beneficiary); (ii) the failure or refusal
of Beneficiary to perform or discharge any
obligation or liability of Trustor under
any agreement related to the Subject
Property or under this Deed of Trust; or
(iii) any loss sustained by Trustor or any
third party resulting from Beneficiary's
failure to lease the Subject Property
after a Default or from any other act or
omission of Beneficiary in managing the
Subject Property after a Default (unless
the loss is caused by the gross negligence
or willful misconduct of Beneficiary) and
no such liability shall be asserted
against or imposed upon Beneficiary, and
all such liability is hereby expressly
waived and released by Trustor.
(b) Trustor indemnifies Trustee and
Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses,
damages, liabilities, claims, causes of
action, judgments, court costs, reasonable
attorneys' fees and other legal expenses,
cost of evidence of title, cost of
evidence of value, and other expenses
which either may suffer or incur: (i) by
reason of this Deed of Trust; (ii) by
reason of the execution of this trust or
in performance of any act required or
permitted hereunder or by law; (iii) as a
result of any failure of Trustor to
perform Trustor's obligations hereunder or
under any other Loan Documents; or (iv) by
reason of any alleged obligation or
undertaking on Beneficiary's part to
perform or discharge any of the
representations, warranties, conditions,
covenants or other obligations contained
in any other document related to the
Subject Property. The above obligation of
Trustor to indemnify and hold harmless
Trustee and Beneficiary shall survive the
release and cancellation of the Secured
Obligations and the release and
reconveyance or partial release and
reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts and
indebtedness arising under this Section
5.10 immediately upon demand by Trustee or
Beneficiary together with interest thereon
from the date the indebtedness arises at
the rate of interest then applicable to
the principal balance of the Note as
specified therein.
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5.11 PROHIBITION OF TRANSFER OF SUBJECT
PROPERTY OR INTERESTS IN TRUSTOR. Trustor
acknowledges that Beneficiary has relied
upon the principals of Trustor and Co-Borrower
and their experience in owning
and operating properties similar to the
Subject Property in connection with the
closing of the Loan. Accordingly, except
with the prior written consent of
Beneficiary or as otherwise expressly
permitted in the Note, Trustor shall not
cause or permit any sale, exchange,
mortgage, pledge, hypothecation,
assignment, encumbrance or other transfer,
conveyance or disposition, whether
voluntarily, involuntarily, conditionally,
unconditionally or by operation of law
("Transfer") of all or any part of, or all
or any direct or indirect interest in, the
Subject Property or the Collateral (except
for equipment and inventory in the
ordinary course of its business), or cause
or permit a Transfer of any direct or
indirect interest (whether general or
limited partnership interest, stock,
limited liability company interest, trust,
or otherwise) in Trustor or Co-Borrower.
In the event of any Transfer that is not
expressly permitted in the Note and is
without the prior written consent of
Beneficiary, Beneficiary shall have the
absolute right at its option, without
prior demand or notice, to declare all of
the Secured Obligations immediately due
and payable, except to the extent
prohibited by law, and pursue its rights
and remedies under Section 6.2 herein.
Trustor agrees to pay any prepayment fee
as set forth in the Note in the event the
Secured Obligations are accelerated
pursuant to the terms of this Section.
Consent to one such Transfer shall not be
deemed to be a waiver of the right to
require the consent to future or
successive Transfers.
5.12 RELEASES, EXTENSIONS, MODIFICATIONS AND
ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any
persons or entities having any interest at
any time in the Subject Property or in any
manner obligated under the Secured
Obligations ("Interested Parties"),
Beneficiary may, from time to time,
release any person or entity from
liability for the payment or performance
of any Secured Obligation, take any action
or make any agreement extending the
maturity or otherwise altering the terms
or increasing the amount of any Secured
Obligation, or accept additional security
or release all or a portion of the Subject
Property and other security for the
Secured Obligations. None of the
foregoing actions shall release or reduce
the personal liability of any of said
Interested Parties, or release or impair
the priority
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of the lien of this Deed of Trust upon the Subject
Property.
5.13 RECONVEYANCE. Subject to the terms of the
Loan Agreement, and upon surrender to
Benneficiary for cancellation of this Deed
of Trust or a certified copy thereof,
Beneficiary shall reconvey or release,
without warranty, the Subject Property or
that portion thereof then held hereunder.
To the extent permitted by law, the
reconveyance or release may describe the
grantee as "the person or persons legally
entitled thereto" and the recitals of any
matters or facts in any reconveyance or
release executed hereunder shall be
conclusive proof of the truthfulness
thereof. Neither Beneficiary nor Trustee
shall have any duty to determine the
rights of persons claiming to be rightful
grantees of any reconveyance or release.
When the Subject Property has been fully
reconveyed or released, the last such
reconveyance or release shall operate as a
reassignment of all future rents, issues
and profits of the Subject Property to the
person or persons legally entitled
thereto.
5.14 SUBROGATION. Beneficiary shall be
subrogated to the lien of all
encumbrances, whether released of record
or not, paid in whole or in part by
Beneficiary pursuant to this Deed of Trust
or by the proceeds of any loan secured by
this Deed of Trust.
5.15 RIGHT OF INSPECTION. Beneficiary, its
agents and employees, may enter the
Subject Property at any reasonable time,
upon reasonable advance notice, for the
purpose of inspecting the Subject Property
and ascertaining Trustor's compliance with
the terms hereof.
5.16 SUBSTITUTION OF TRUSTEES. From time to
time, by a writing, signed and
acknowledged by Beneficiary and recorded
in the Register's Office of the County in
which the Subject Property is situated,
Beneficiary may appoint another trustee to
act in the place and stead of Trustee or
any successor. Such writing shall set
forth any information required by law.
The recordation of such instrument of
substitution shall discharge Trustee
herein named and shall appoint the new
trustee as the trustee hereunder with the
same effect as if originally named Trustee
herein. A writing recorded pursuant to
the provisions of this Section 5.16 shall
be conclusive proof of the proper substitution
of such new Trustee.
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5.17 HAZARDOUS MATERIALS. Without limiting any
other provision of this Deed of Trust,
Trustor agrees as follows:
(a) Prohibited Activities. Trustor shall not
cause or permit the Subject Property to be
used as a site for the use, generation,
manufacture, storage, treatment, release,
discharge, disposal, transportation or
presence of any Hazardous Materials. The
foregoing to the contrary notwithstanding:
(i) Trustor may store, maintain and use on
the Subject Property janitorial and
maintenance supplies, paint and other
Hazardous Materials of a type and in a
quantity readily available for purchase by
the general public and normally stored,
maintained and used by owners and managers
of properties of a type similar to the
Subject Property; and (ii) tenants of the
Subject Property may store, maintain and
use on the Subject Property (and, if any
tenant is a retail business, hold in
inventory and sell in the ordinary course
of such tenant's business) Hazardous
Materials of a type and quantity readily
available for purchase by the general
public and normally stored, maintained and
used (and, if tenant is a retail business,
sold) by tenants in similar lines of
business on properties similar to the
Subject Property.
(b) Hazardous Materials Laws. Trustor shall
comply and cause the Subject Property to
comply with all Hazardous Materials Laws.
(c) Notices. Trustor shall immediately notify
Beneficiary in writing of: (i) the
discovery of any Hazardous Materials on,
under or about the Subject Property (other
than Hazardous Materials permitted under
Section 6.2 (a)); (ii) any knowledge by
Trustor that the Subject Property does not
comply with any Hazardous Materials Laws;
and (iii) any Hazardous Materials Claims
pending or threatened against Trustor or
the Subject Property by any governmental
entity or agency or any other person or
entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) Remedial Action. In response to the
presence of any Hazardous Materials on,
under or about the Subject Property,
Trustor shall immediately take, at
Trustor's sole expense, all remedial
action required by any Hazardous Materials
Laws or any
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judgment, consent decree, settlement or compromise
in respect to any Hazardous Materials Claims.
(e) Inspection By Beneficiary. Upon
reasonable prior notice to Trustor,
Beneficiary, its employees and agents, may
from time to time (whether before or after
the commencement of a nonjudicial or
judicial foreclosure proceeding), enter
and inspect the Subject Property for the
purpose of determining the existence,
location, nature and magnitude of any past
or present release or threatened release
of any Hazardous Materials into, onto,
beneath or from the Subject Property.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term
"Default" shall mean the existence of any
Default as defined in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after
Default, Beneficiary and Trustee shall each
have all the following rights and remedies (in
addition to (and without limiting) any rights
and remedies that are available under
applicable law):
(a) With or without prior notice, to declare
all Secured Obligations immediately due
and payable;
(b) With or without notice, and without
releasing Trustor from any Secured
Obligation, and without becoming a
mortgagee in possession, to enter upon the
Subject Property from time to time and to
do such acts and things as Beneficiary or
Trustee deem necessary or desirable in
order to inspect, investigate, assess and
protect the security hereof or to cure any
Default, including, without limitation:
(i) to appear in and defend any action or
proceeding purporting to affect the
security of this Deed of Trust or the
rights or powers of Beneficiary or Trustee
under this Deed of Trust; (ii) to pay,
purchase, contest or compromise any encumbrance,
charge, lien or claim of lien
which, in the sole judgment of either
Beneficiary or Trustee, is or may be
senior in priority to this Deed of Trust,
the judgment of Beneficiary or Trustee
being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to
pay any premiums or charges with respect
to insurance required to be carried under
the Loan Documents; and (v) to employ
legal counsel,
21
<PAGE>
accountants, engineers, consultants, contractors
and other appropriate persons to assist them;
(c) To commence and maintain an action or
actions in any court of competent
jurisdiction to foreclose this instrument
as a mortgage or to obtain specific
enforcement of the covenants of Trustor
hereunder, and Trustor agrees that such
covenants shall be specifically
enforceable by injunction or any other
appropriate equitable remedy and that for
the purposes of any suit brought under
this subparagraph, Trustor waives the
defense of laches and any applicable
statute of limitations;
(d) To apply to a court of competent
jurisdiction for and obtain appointment of
a receiver of the Subject Property as a
matter of strict right, ex parte and
without notice to Trustor (Trustor hereby
waiving any notice), and without regard to
the adequacy of the security for the
Secured Obligations, the existence of a
declaration that the Secured Obligations
are immediately due and payable, the
filing of a notice of default, or the
commencement of any foreclosure, and
Trustor hereby consents to such
appointment. Such receiver shall have the
right to take possession of and protect
the Subject Property and operate the same
and collect the rents, issues, profits,
revenues and Payments therefrom, which
receiver shall have the right to remain in
possession of the Subject Property
thereafter, during the pendency of any
foreclosure proceeding and all redemption
periods until the issuance of a Trustee's
deed. All expenses and costs incurred by
the receiver or its agents shall
constitute a part of the Secured
Obligations;
(e) To enter upon, possess, manage and operate
the Subject Property or any part thereof,
to take and possess all documents, books,
records, papers and accounts of Trustor or
the then owner of the Subject Property, to
make, terminate, enforce or modify Leases
of the Subject Property upon such terms
and conditions as Beneficiary deems
proper, to make repairs, alterations and
improvements to the Subject Property as
necessary, in Trustee's or Beneficiary's
sole judgment, all to protect or enhance
the security hereof;
(f) To execute a written notice of such
Default and of its election to cause the
Subject Property to be sold to satisfy the
Secured Obligations. As a condition
precedent to any such sale, Trustee
22
<PAGE>
and/or Beneficiary shall give and record such
notices as the law then requires. When
the minimum period of time required after
such notices has elapsed, Trustee, without
notice to or demand upon Trustor, except
as required by law, shall sell the Subject
Property at the time and place of sale
fixed by it in the notice of sale, at one
or several sales, either as a whole or in
separate parcels and in such manner and
order, all as Beneficiary in its sole
discretion may determine, at public
auction to the highest bidder for cash, in
lawful money of the United States, payable
at time of sale. Neither Trustor nor any
other person or entity other than
Beneficiary shall have the right to direct
the order in which the Subject Property is
sold. Subject to requirements and limits
imposed by law, Trustee may from time to
time postpone sale of all or any portion
of the Subject Property by public
announcement at such time and place of
sale. Trustee shall deliver to the purchaser
at such sale a deed conveying the
Subject Property or portion thereof so
sold, but without any covenant or
warranty, express or implied. The
recitals in the deed of any matters or
facts shall be conclusive proof of the
truthfulness thereof. Any person (other
than Trustee), including Trustor or
Beneficiary may purchase at the sale;
(g) To resort to and realize upon the security
hereunder and any other security now or
later held by Beneficiary concurrently or
successively and in one or several
consolidated or independent judicial
actions or lawfully taken non-judicial
proceedings, or both, and to apply the
proceeds received upon the Secured Obligations
all in such order and manner as
Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any
judicial or non-judicial foreclosure,
Beneficiary or any Affiliate or designee
of Beneficiary may credit bid (as
determined by Beneficiary in its sole and
absolute discretion) all or any portion of
the Secured Obligations. In determining
such credit bid, Beneficiary may, but is
not obligated to, take into account all or
any of the following: (i) appraisals of
the Subject Property as such appraisals
may be discounted or adjusted by
Beneficiary in its sole and absolute
underwriting discretion; (ii) expenses and
costs incurred by Beneficiary with respect
to the Subject Property
23
<PAGE>
prior to foreclosure; (iii) expenses and costs
which Beneficiary anticipates will be
incurred with respect to the Subject
Property after foreclosure, but prior to
resale, including, without limitation,
costs of structural reports and other due
diligence, costs to carry the Subject
Property prior to resale, costs of resale
(e.g. commissions, attorneys' fees, and
taxes), costs of any hazardous materials
clean-up and monitoring, costs of deferred
maintenance, repair, refurbishment and
retrofit, costs of defending or settling
litigation affecting the Subject Property,
and lost opportunity costs (if any),
including the time value of money during
any anticipated holding period by
Beneficiary; (iv) declining trends in real
property values generally and with respect
to properties similar to the Subject
Property; (v) anticipated discounts upon
resale of the Subject Property as a
distressed or foreclosed property; (vi)
the fact of additional collateral (if
any), for the Secured Obligations; and
(vii) such other factors or matters that
Beneficiary (in its sole and absolute
discretion) deems appropriate. In regard
to the above, Trustor acknowledges and
agrees that: (w) Beneficiary is not
required to use any or all of the
foregoing factors to determine the amount
of its credit bid; (x) this Section does
not impose upon Beneficiary any additional
obligations that are not imposed by law at
the time the credit bid is made; (y) the
amount of Beneficiary's credit bid need
not have any relation to any loan-to-value
ratios specified in the Loan Documents or
previously discussed between Trustor and
Beneficiary; and (z) Beneficiary's credit
bid may be (at Beneficiary's sole and
absolute discretion) higher or lower than
any appraised value of the Subject
Property;
(i) Trustee is hereby authorized and empowered
to enter and take possession of the
Subject Property, and before or after such
entry to advertise the sale of the Subject
Property for twenty-one (21) days by three
weekly notices in some newspaper published
in Shelby County, Tennessee, and to sell
the Subject Property or any interest
therein, at the discretion of the
Beneficiary, in one or more parcels or in
several interests or portions and in any
order or manner, to the highest bidder for
cash, free from equity or redemption,
statutory right of redemption, homestead,
dower, and all other exemptions, all of
which are hereby expressly waived, in fee
simple and deliver
24
<PAGE>
possession of the Subject Property to the purchaser,
which Trustor binds itself shall be given
without obstruction, hindrance or delay.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS.
After deducting all costs, fees and expenses of
Trustee, and of this trust (including, without
limitation, the payment of the Trustee's fees
and attorneys' fees, the cost of evidence of
title in connection with sale and costs and
expenses of sale and of any judicial proceeding
wherein such sale may be made), Trustee shall
apply all proceeds of any foreclosure sale:
(i) to discharge all taxes, levies and
assessments, with costs and interest if they
have priority over the lien of this Deed of
Trust, including the pro rata portion thereof
due for the current year; (ii) to payment of
all sums expended by Beneficiary under the
terms hereof and not then repaid, with accrued
interest at the rate of interest specified in
the Note to be applicable on or after maturity
or acceleration of the Note; (iii) to payment
of all other Secured Obligations; and (iv) the
remainder, if any, to Trustor or Trustor's
assigns.
6.4 ORDER OF APPLICATION OF PROCEEDS. All sums
received by Beneficiary under Section 6.2
(subject to Section 6.3) or Section 3.2, less
all costs and expenses incurred by Beneficiary
or any receiver under Section 6.2 or
Section 3.2, including, without limitation,
attorneys' fees, shall be applied in payment of
the Secured Obligations in such order as
Beneficiary shall determine in its sole
discretion; provided, however, Beneficiary
shall have no liability for funds not actually
received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor
Trustee's nor any receiver's entry upon and
taking possession of all or any part of the
Subject Property, nor any collection of rents,
issues, profits, insurance proceeds,
condemnation proceeds or damages, other
security or proceeds of other security, or
other sums, nor the application of any
collected sum to any Secured Obligation, nor
the exercise or failure to exercise of any
other right or remedy by Beneficiary or Trustee
or any receiver shall cure or waive any breach,
Default or notice of default under this Deed of
Trust, or nullify the effect of any notice of
default or sale (unless all Secured Obligations
then due have been paid and performed and
Trustor has cured all other defaults), or
impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any
right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy,
lease or option or a subordination of the lien
of this Deed of Trust.
25
<PAGE>
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S FEES.
Trustor agrees to pay to Beneficiary
immediately and without demand all reasonable
costs and expenses incurred by Trustee and
Beneficiary in connection with the exercise of
the rights and remedies provided for herein
and/or in any of the other Loan Documents
(including, without limitation, court costs,
appraisal fees and reasonable attorneys' fees,
whether incurred in litigation or not) with
interest from the date of expenditure until
said sums have been paid at the rate of
interest then applicable to the principal
balance of the Note as specified therein. In
addition, Trustor shall pay to Trustee and/or
Beneficiary all Trustee's fees hereunder and
shall reimburse Trustee for all reasonable
expenses incurred in the administration of this
trust, including, without limitation, any
attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS.
Trustor hereby irrevocably appoints Beneficiary
and its successors and assigns, as its
attorney-in-fact, which agency is coupled with
an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or
any other notices that Beneficiary deems
appropriate to protect Beneficiary's interest,
(b) upon the issuance of a deed pursuant to the
foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment or
further assurance with respect to the Leases
and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for
such purpose, (c) to prepare, execute and file
or record financing statements, continuation
statements, applications for registration and
like papers necessary to create, perfect or
preserve Beneficiary's security interests and
rights in or to any of the Collateral and any
other property or interests securing the
payment and the performance of the Secured
Obligations, and (d) upon the occurrence of a
Default, Beneficiary may perform any obligation
of Trustor hereunder; provided, however, that:
(i) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are
actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or
any other person or entity for any failure to
act under this Section.
6.8 REMEDIES CUMULATIVE. All rights and remedies
of Beneficiary and Trustee provided hereunder
are cumulative and are in addition to all
rights and remedies provided by applicable law
(including specifically that of foreclosure of
this instrument as though it were a mortgage)
or in any other agreements between Trustor and
Beneficiary. Beneficiary may
26
<PAGE>
enforce any one or more remedies or rights hereunder
successively or concurrently.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents
contain or incorporate by reference the entire
agreement of the parties with respect to
matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant
further rights to Beneficiary and contain
further agreements and affirmative and negative
covenants by Trustor which apply to this Deed
of Trust and to the Subject Property and such
further rights and agreements are incorporated
herein by this reference.
7.2 MERGER. No merger shall occur as a result of
Beneficiary's acquiring any other estate in, or
any other lien on, the Subject Property unless
Beneficiary consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for
itself and for all parties claiming through or
under Trustor, and for all parties who may
acquire a lien on or interest in the Subject
Property, hereby waives all rights to have the
Subject Property and/or any other property,
including, without limitation, the Collateral,
which is now or later may be security for any
Secured Obligation ("Other Property")
marshalled upon any foreclosure of this Deed of
Trust or on a foreclosure of any Other
Property. Beneficiary shall have the right to
sell, and any court in which foreclosure proceedings
may be brought shall have the right to
order a sale of, the Subject Property and any
or all of the Collateral or Other Property as a
whole or in separate parcels, in any order that
Beneficiary may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND
REINSTATEMENT. To the fullest extent permitted
by applicable law, Trustor, for itself and for
all parties claiming through or under Trustor,
and for all parties who may acquire a lien on
or interest in the Subject Property, hereby
waives any and all rights of redemption and
reinstatement under law and under any order or
decree of foreclosure of this Deed of Trust,
and all such rights of redemption and
reinstatement of Trustor and of all other
persons, are and shall be deemed to be hereby
waived to the full extent permitted by the
provisions of the applicable law.
7.5 EXERCISE OF REMEDIES. Notwithstanding any of
the terms or provisions contained in this Deed
of Trust (or in
27
<PAGE>
any of the other Loan Documents), if at any
time after the occurrence of a Default under
any of the Loan Documents (but prior to the
time (if any) that said Default has been
cured to the satisfaction of
Beneficiary), Beneficiary has commenced to
exercise one or more of its remedies provided
for herein (or provided in any of the other
Loan Documents or available at law or in
equity), Beneficiary will not be precluded from
continuing to exercise all of its rights and
remedies upon said Default (notwithstanding the
fact that Trustor may have cured, attempted to
cure or be in the process of curing said
Default). It is the intention of the parties
hereto that (to the extent permitted by law)
once Beneficiary has commenced to exercise one
or more of its rights or remedies (upon a
Default), said Default cannot be cured, unless
Beneficiary expressly agrees in writing to
accept said cure and to cease the exercise of
said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term "Subject
Property" means all and any part of the Subject
Property and any interest in the Subject
Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants,
and conditions herein contained shall be
binding upon and inure to the benefit of the
successors and assigns of the parties hereto;
provided, however, that this section does not
waive or modify any restrictions on transfer
contained herein or in any of the other Loan
Documents.
7.8 GOVERNING LAW. The agreements of the parties
with respect to the Secured Obligations are
governed by and are to be construed in
accordance with the laws of the State of
California, but all other rights and
obligations under this Deed of Trust
(including, without limitation, the rights and
remedies of Trustee and Beneficiary in and with
respect to the Subject Property and the
enforcement of Trustee's and Beneficiary's
rights in the Subject Property) are to be
governed by and construed in accordance with
the laws of the State of Tennessee.
7.9 INCORPORATION. Exhibit A as attached, is
incorporated into this Deed of Trust by this
reference.
7.10 NOTICES. All notices, reports, demands,
requests and other communications
authorized or required under this Deed of
Trust to be given to Trustor or
Beneficiary, shall be given in the manner
and to the addresses specified in the Loan
Agreement for the giving of notices.
Trustor shall forward to Beneficiary, without
28
<PAGE>
delay, any notices, letters or
other communications delivered to the
Subject Property or to Trustor naming
Beneficiary, "Lender" or any similar
designation as addressee, or which could
reasonably be deemed to affect the ability
of Trustor to perform its obligations to
Beneficiary under the Note, the Loan
Agreement or any other Loan Documents.
7.11 LIMITATION OF LIABILITY. The limitations
on liability set forth in Section 2.8 of
the Loan Agreement shall apply with equal
force to this Deed of Trust, and said
limitations are incorporated herein by
reference as fully and with the same
effect as if recited herein at length.
7.12 SEVERABILITY. If any provision or
obligation under this Deed of Trust shall
be determined by a court of competent
jurisdiction to be invalid, illegal or
unenforceable, that provision shall be
deemed severed from the Deed of Trust and
the validity, legality and enforceability
of the remaining provisions or obligations
shall remain in full force as though the
invalid, illegal or unenforceable
provision had never been a part of the
Deed of Trust.
7.13 TIME. Time is of the essence of each and
every term of this Deed of Trust.
7.14 RELATIONSHIP. The relationship of Trustor
and Beneficiary under this Deed of Trust
and the other Loan Documents is, and shall
at all times remain, solely that of
borrower and lender; and Beneficiary
neither undertakes nor assumes any
responsibility or duty to Trustor or to
any third party with respect to the
Subject Property. Notwithstanding any
other provisions of this Deed of Trust and
the other Loan Documents: (i) Beneficiary
is not, and shall not be construed to be,
a partner, joint venturer, member, alter
ego, manager, controlling person or other
business associate or participant of any
kind of Trustor, and Beneficiary does not
intend to ever assume such status; (ii)
Beneficiary does not intend to ever assume
any responsibility to any person for the
quality, suitability, safety or condition
of the Subject Property; and (iii)
Beneficiary shall not be deemed
responsible for or a participant in any
acts, omissions or decisions of Trustor.
7.15 ADDITIONAL PROVISIONS. The following
provisions shall also constitute an
integral part of this Deed of Trust.
Furthermore, in the event that any prior
provisions of this Deed of Trust conflict
with the following provisions of this
Section, the provisions of this
29
<PAGE>
Section shall control and shall be deemed a
modification of or amendment to the
section or provision at issue.
(a) Trustor agrees to pay all transfer taxes,
recording fees, and any other fees
required by or imposed by the State of
Tennessee or the county in which the
Subject Property is located in order to
record this Deed of Trust in the
Register's Office of said County.
(b) In the event of a foreclosure of the
Subject Property, Trustee and Beneficiary
shall not assume any liability of Trustor
for Trustor's violation of any
environmental laws, statutes, codes,
regulations, or practices and Trustor's
indemnification as contained in the Loan
Agreement shall survive said foreclosure.
(c) Trustor agrees to bear and pay all
expenses (including reasonable attorney
fees and appellate attorney fees), of or
incidental to the enforcement of any
provision hereof, or the enforcement,
compromise, or settlement of this Deed of
Trust or the Secured Obligations, and for
the curing thereof, or for defending or
asserting the rights and claims of
Beneficiary in respect thereof, by
litigation or otherwise. All rights and
remedies of Beneficiary shall be
cumulative and may be exercised singly or
concurrently. Notwithstanding anything
herein contained to the contrary, Trustor:
(i) after consultation with its counsel,
hereby waives trial by jury; (ii) will not
(a) at any time insist upon, or plead, or
in any manner whatever claim or take any
benefit or advantage of any stay or
execution or moratorium law, any exemption
for execution of sale of the Subject
Property or any part thereof, wherever
enacted, now or at any time hereafter
enforced, which may affect the covenants
and terms of performance of this Deed of
Trust, nor (b) claim, take or insist upon
any benefit or advantage of any law now or
hereafter enforced providing for the
evaluation or appraisal of the Subject
Property, or any part thereof, prior to
any sale or sales thereof which may be
made pursuant to any provision herein, or
pursuant to the decree, judgment or order
of any court of competent jurisdiction,
nor (c) after any such sale or sales,
claim or exercise any right under any
statute heretofore or hereafter enacted to
redeem the property so sold or any part
thereof; (iii) hereby expressly waives all
benefit or
30
<PAGE>
advantage of any such law or
laws including but not limited to a waiver
of the equity of redemption, statutory
right of redemption, and any other
statutory or common law right of
redemption, homestead, dower, marital
share and all other exemptions; and
(iv) covenants not to hinder, delay or
impede the execution of any power herein
granted or delegated to Beneficiary, but
to suffer and permit the execution of
every power as though no such laws or laws
had been made or enacted. Trustor, for
itself and all who may claim under it,
waives, to the extent that it lawfully
may, all right to have the Subject
Property marshalled upon any foreclosure
hereof.
(d) The Trustee named herein or any successor
trustee shall be clothed with the full
power to act when action herein shall be
required and to execute any conveyance of
the Subject Property except as otherwise
expressly required. In the event that the
substitution of the Trustee shall become
necessary for any reason, the substitution
of one trustee in the place of the Trustee
herein named shall be sufficient. The
necessity of the Trustee herein named, or
any successor in trust, making oath or
giving bond is expressly waived. The
Trustee or any one acting in his stead,
shall have, in his discretion, authority
to employ all proper agents and attorneys
in the execution of this Deed of Trust
and/or in the conducting of any sale made
pursuant to the terms hereof, and to pay
for such services rendered out of the
proceeds of the sale of the Subject
Property, should any be realized; and if
no sale be made then Trustor hereby
undertakes and agrees to pay the cost of
such services rendered to said Trustee.
7.16 EXECUTION IN COUNTERPARTS. This Deed of
Trust may be executed in any number of
counterparts, each of which when executed
and delivered shall be deemed to be an
original and all such counterparts
together, shall constitute one and the
same instrument.
31
<PAGE>
IN WITNESS WHEREOF, Trustor has executed this Deed of
Trust as of the day and year set forth above.
"TRUSTOR"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE
PARTNERSHIP, a California limited
partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation, its general
partner
By: /s/ C. A. Piskorowski
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a
California corporation, its general
partner
By: /s/ Andrew Batinovich
-------------------------
Its: Chairman/CEO
By: /s/ Robert Batinovich
-----------------------------
Robert Batinovich, its general
partner
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
Personally appeared before me,
______________________, a Notary Public in and for said
State and County, _____________
__________________________, with whom I am personally
acquainted, and who acknowledged that _____ executed
the within instrument for the purposes therein
contained, and who further acknowledged that ____ is
the ________________ of Prudential-Bache Properties,
Inc., a Delaware corporation, a general partner of
maker, Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership, and is
authorized by said general partner, the general partner
being authorized by the maker, to execute this
instrument on behalf of the maker.
WITNESS my hand, at office, this _____ day of
December, 1996.
_________________________________
Notary Public
My Commission Expires:
_____________________________
STATE OF_________________)
) SS
COUNTY OF________________)
Personally appeared before me,
______________________, a Notary Public in and for said
State and County, _____________
__________________________, with whom I am personally
acquainted, and who acknowledged that _____ executed
the within instrument for the purposes therein
contained, and who further acknowledged that ____ is
the ________________ of Glenborough Corporation, a
California corporation, a general partner of maker,
Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, and is authorized by
said general partner, the general partner being
authorized by the maker, to execute this instrument on
behalf of the maker.
WITNESS my hand, at office, this _____ day of
December, 1996.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
STATE OF_________________)
) SS
COUNTY OF________________)
Personally appeared before me,
____________________, a Notary Public in and for the
County and State aforesaid, Robert Batinovich, with
whom I am personally acquainted, and who under oath
acknowledged that he executed the within instrument for
the purposes therein contained, and who further
acknowledged that he is a general partner of the maker,
Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership, and is authorized by
the maker to execute this instrument on behalf of the
maker.
WITNESS my hand at office, this _____ day of
December, 1996.
_________________________________
Notary Public
My Commission Expires:
_____________________________
<PAGE>
EXHIBIT A
Memphis Property
Poplar Towers
6263 Poplar Avenue
Memphis, Tennessee
<PAGE>
AFFIDAVIT FOR PURPOSES OF
TENNESSEE CODE ANNOTATED S67-4-409
The undersigned, after first being duly sworn
according to law, for the purpose of indicating the
amount of the indebtedness secured by the instrument to
which this Affidavit is attached and for the purpose of
calculating the mortgage tax due to the State of
Tennessee in accordance with applicable law, states as
follows:
1. That the amount of the indebtedness
secured by the instrument to which this Affidavit is
attached is $26,650,000.00.
2. That the property standing as security for
the payment of the indebtedness secured by the
instrument to which this Affidavit is attached is
located part within and part without the State of
Tennessee.
3. The REQUIRED LANGUAGE (required by the
rules of the taxing authorities) applicable to this
situation is set forth as follows:
$4,750,000.00 (value of the collateral in Tennessee) divided by
$39,620,000.00 (value of collateral everywhere)
and multiplied by the total indebtedness of
$26,650,000.00, results in an apportioned indebtedness
of $3,195,039.10, which after subtracting $2,000.00
results in the Maximum Principal Indebtedness for
Tennessee Recording Tax Purposes being $3,193,039.10.
4. The Tennessee recording tax due hereunder
is computed as follows:
$3,193,039.10 x $.115 per $100 thereof equals $3,671.99.
____________________________
Officer
STATE OF ____________)
)
COUNTY OF ___________)
Sworn to and subscribed before me, a Notary
Public this the ____ day of _________________, 1996.
___________________________
Notary Public
My Commission Expires:
_____________________
<PAGE>
283591.01 COGHLAN, DENNIS M. CH January 8, 1997 (5:36p)
