SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
Commission file number 1-12222
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 68-0306514
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
270 Lafayette Circle, Lafayette, CA 94549
(Address of principal executive offices)
Registrant's telephone number, including area code (925) 283-8910
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $0.02 per share New York Stock Exchange
Pacific Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X] The aggregate market value
of the voting stock held by non-affiliates of Registrant as of March 13,
1998 was approximately $425,368,000. The number of shares of
Registrant's Common Stock, par value $0.02 per share, outstanding as of
March 13, 1998 was 22,583,867.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement to be mailed to stockholders
in connection with the Registrant's annual meeting of stockholders,
scheduled to be held on May 13, 1998, are incorporated by reference in
Part III of this report. Except as expressly incorporated by reference,
the Registrant's Proxy Statement shall not be deemed to be part of this
report.
<PAGE>
PART I
When used in this annual report, the words "believes," "anticipates" and
similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those projected,
including, but not limited to, those set forth in the section entitled
"Potential Factors Affecting Future Operating Results" below. Readers
are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements which may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ITEM 1. BUSINESS
The Company
Bedford Property Investors, Inc. is a self-administered and self-managed
equity REIT engaged in the business of owning, managing, acquiring and
developing industrial and suburban office properties proximate to
metropolitan areas primarily in the Western United States. As of
December 31, 1997, the Company owned and operated, either directly or
through one of its wholly-owned subsidiaries, 75 properties aggregating
approximately 6.2 million rentable square feet and comprised of 55
industrial properties (the "Industrial Properties") and 20 suburban
office properties (the "Suburban Office Properties" and, together with
the Industrial Properties, the "Properties"). This portfolio of
properties includes 4 industrial properties which were developed by the
Company in 1997 and 71 existing properties. In addition, the portfolio
includes 7 parcels of land held for future development. As of December
31, 1997, the existing Properties were approximately 99% leased by over
440 tenants and the development properties were approximately 44% leased
by 14 tenants. The Properties are located in Northern and Southern
California, Oregon, Washington, Arizona, Nevada, Utah, Colorado, Texas
and Kansas.
The Company seeks to grow its asset base through the acquisition of
industrial and suburban office properties and portfolios of such
properties, as well as through the development of new industrial and
suburban office properties. The Company's strategy is to operate in
suburban markets that are experiencing, or are expected by the Company
to experience, superior economic growth that are subject to limitations
on the development of similar properties. The Company believes that
employment growth is a reliable indicator of future demand for both
industrial and suburban office space. In addition, the Company believes
that certain supply-side constraints, such as limited availability of
undeveloped land in a market, increase a market's potential for higher
average rents over time. The Company is currently targeting selected
markets in which the Properties are located as well as selected markets
in which the Company has expertise. The Company believes that due to
recent economic improvements in these markets, and related improvements
in the commercial property markets, an investment in industrial or
suburban office properties in these markets provides the potential for
attractive returns through increased occupancy levels, rents and real
estate values.
Business Objectives and Growth Plan
Business Objectives
The Company's business objective is to increase stockholders' long-term
total return through the appreciation in value of the common stock. To
achieve this objective, the Company seeks to (i) increase cash flow from
our existing Properties, (ii) acquire quality industrial and suburban
office properties and/or portfolios of such properties, and (iii) develop
new industrial and suburban office properties.
Internal Growth
The Company seeks to increase cash flow from existing Properties through
(i) the lease-up of vacant space, (ii) the reduction of costs associated
with tenant turnover through the retention of existing tenants, (iii) the
negotiation of increases in rental rates and of contractual periodic rent
increases when market conditions permit, and (iv) the strict containment
of operating expenses and capital expenditures.
During 1997, leases for 946,920 square feet expired with a weighted
average base rental rate of $8.25 per square foot. Approximately 76% of
this space has been re-leased, and the weighted average base rental rate
of the new leases is $9.10 per square foot, an increase of 10.3%.
Changes in average rental rate do not reflect changes in expense recovery
rates, if any. In addition, past performance is not necessarily
indicative of results that will be obtained in the future, and no
assurance can be given in that regard.
Acquisitions
The Company seeks to acquire quality industrial and suburban office
properties and/or portfolios of such properties. The Company believes
that (i) the experience of its management team, (ii) its conservative
capital structure and its existing $175 million credit facility, (iii)
its relationships with private and institutional real estate owners, (iv)
its strong relationships with real estate brokers, and (v) its integrated
asset management program enable it to effectively identify and capitalize
on acquisition opportunities. Each acquisition opportunity is reviewed
to evaluate whether it meets the following criteria: (i) potential for
higher occupancy levels and/or rents as well as for lower turnover and/or
operating expenses, (ii) ability to generate returns in excess of the
Company's weighted average cost of capital, taking into account the
estimated costs associated with tenant turnover (i.e., tenant
improvements, leasing commissions and the loss of income due to vacancy),
and (iii) availability for purchase at a price at or below estimated
replacement cost. The Company has, however, acquired and may in the
future acquire properties which do not meet one or more of these
criteria. This may be particularly true with the acquisition of a
portfolio of properties, which may include individual properties that do
not meet one or more of the foregoing criteria.
Following completion of an initial review, the Company may make a
purchase offer, subject to satisfactory completion of its due diligence
process. The due diligence process enables the Company to refine its
original estimate of a property's potential performance and typically
includes a complete review and analysis of the property's physical
structure, systems, environmental status and projected financial
performance, as well as an evaluation of the local market and competitive
properties and of relevant economic and demographic information. Mr.
Bedford (the Chief Executive Officer) and at least one other member of
the Board of Directors typically visit each proposed acquisition property
before the purchase is closed.
The Company's activities relating to the acquisition of new properties,
including the due diligence process, are conducted on an exclusive basis
by Bedford Acquisitions, Inc. (BAI), a California corporation wholly-
owned by Mr. Bedford. BAI receives a fee in an amount equal to the
lesser of (i) 1 1/2% of the gross amount raised in financings or the
aggregate purchase price of property acquisitions, or (ii) an amount
equal to (a) the aggregate amount of approved expenses funded by BAI
through the time of such acquisition or financing minus (b) the aggregate
amount of fees previously paid to BAI pursuant to such arrangement. In
no event will the aggregate amount of fees paid to BAI exceed the
aggregate amount of costs funded by BAI. The agreement with BAI has a
term of one year and is renewable at the option of the Company for
additional one year terms. The current agreement will expire January 1,
1999.
Development
The Company seeks to develop properties in markets where (i) strong
demand for space has caused or is expected to cause occupancy rates to
remain high, and (ii) there is a limited supply of land available for new
development. The Company's management team has experience in all phases
of the development process, including market analysis, site selection,
zoning, design, pre-development leasing, construction and permanent
financing and construction management. The Company believes that a
general decrease in competition in development activity as well as higher
occupancy rates in most of the Company's markets will lead to additional
attractive development opportunities. The Company is currently in the
process of developing properties in Northern California, Arizona, and
Kansas and is considering developing additional properties in Northern
California, Southern California, Arizona, Colorado and Washington. The
Company's management team has significant development experience in each
of these markets. In 1997 the shell construction of 4 properties was
completed, representing 365,000 square feet of industrial space. These
properties are now in the lease up phase and were 44% leased by year end.
Corporate Strategies
In pursuing its business objectives and growth plans, the Company intends
to:
1. Pursue a Market Driven Strategy.
The Company's strategy is to operate in suburban markets which are
experiencing, or are expected by the Company to experience, economic
growth, and which are, ideally, subject to supply-side constraints. The
Company believes that the metropolitan areas in which it operates have
multiple suburban "cores" and that the potential for growth in these
metropolitan areas is generally greatest in and around these suburban
cores. The Company believes that such suburban cores emerge as jobs move
to the suburbs and typically offer a well-trained and well-educated work
force, high quality of life and, in many cases, a diversified economic
base. The Company focuses on owning, managing, acquiring and developing
properties in these suburban cores. Additionally, the Company seeks out
real estate markets that are subject to supply-side constraints such as
limited availability of undeveloped land and/or geographic, topographic,
regulatory and/or infrastructure restrictions. The Company believes that
such restrictions limit the supply of new commercial space, which, when
combined with a growing employment and population base, enhances the
long-term return potential for an investment in real estate assets.
2. Focus its Efforts in the Western United States.
The Company is currently targeting selected suburban markets in the
Western United States, including markets in which the Company's
Properties are located as well as selected new markets. The Company
believes that due to continued economic improvements in these markets,
and related improvements in the commercial property markets, an
investment in industrial or suburban office properties in these markets
provides the potential for attractive returns through increased occupancy
levels, rents and real estate values. The Company believes that this
geographic focus, combined with management's market experience,
contributes to a more thorough understanding of these industrial and
suburban office property markets and allows the Company to anticipate
trends and therefore to better identify investment opportunities.
3. Acquire and Develop "Service Center/Flex" Industrial
Properties.
One of the Company's targeted property types is "service center/flex"
industrial properties. These properties are generally smaller than other
industrial buildings and are divisible into units ranging from
approximately 1,500 square feet to approximately 20,000 square feet in
order to accommodate multiple tenants of various sizes and needs. The
buildings generally range in size from 8,000 to 80,000 square feet, have
a clear height of 12 to 18 feet and are built using concrete tilt
construction with store fronts incorporated in the front elevation and
grade level service doors in the back elevation. The Company believes
that these properties require more management expertise than other types
of industrial properties and that it has developed such expertise. The
Company also believes that many potential buyers do not wish or are not
well-positioned to undertake such active management. As a result, the
Company believes that it often faces fewer competitors for this product
and is generally able to acquire these properties at above average
yields.
4. Plan for Future Anticipated Expenses Associated with Tenant
Turnover.
The cash flow of a real estate asset can vary significantly from year to
year depending on tenant turnover. When a lease expires and a tenant
renews or vacates its space, costs associated with tenant improvements,
lease commissions and lost income due to vacancy or construction down-
time can significantly reduce property cash flow. Due to the capital
intensive nature of suburban office properties, and to a lesser degree,
industrial properties, the Company believes that planning and budgeting
for future costs associated with tenant turnover is a prudent component
of managing the cash flow of the Properties. For its existing portfolio,
the Company estimates the future costs for tenant improvements, lease
commissions and lost income due to vacancy and construction down-time on
a property by property basis. Although these future costs are not
accrued for financial reporting purposes, the Company incorporates these
estimates in its annual budgets and longer-term forecasts and seeks to
maintain cash and/or availability under the Credit Facility adequate to
cover these budgeted expenditures. The Company believes that its ability
to commit capital to fund tenant improvements and pay lease commissions
helps to retain and attract tenants. To the extent that a vacancy in one
of the Properties does occur, the Company believes that its policy of
budgeting ahead for anticipated tenant improvement costs and leasing
commissions enables it to compete effectively for new tenants.
5. Utilize In-House Asset and Property Management.
The Company believes that the long-term value of its Properties is
enhanced through in-house asset management and currently manages 68 of
its 75 properties from its seven regional property management offices and
its corporate headquarters. The Company conducts its Northern California
property management activities out of its headquarters office in
Lafayette, California; its Southern California property management
activities out of its regional office in Tustin, California; its Kansas
City property management activities out of its regional office in Lenexa,
Kansas; its Arizona property management activities out of its regional
office in Phoenix, Arizona; its Washington property management activities
out of its regional office in Seattle, Washington; its Colorado property
management activities out of its regional office in Denver, Colorado; and
its Texas property management activities out of its regional office in
Dallas, Texas. The Company's three Properties in Utah and Oregon are
currently managed for the Company by third parties. The Company intends
to open additional property management offices in those regions as its
portfolios grow to a point where it becomes economically justified.
The Company's asset management team develops and monitors a comprehensive
asset management plan for each Property in an effort to ensure its
efficient operation. The Company's Senior Vice President of
Property/Asset Management works directly with the Company's internal
finance and accounting staff to develop and monitor detailed budgets and
financial reports for each Property. He also works with each property
manager to identify and implement opportunities to improve cash flow from
each Property and to maximize each Property's long-term investment value.
The Company's property management staff is generally responsible for
leasing activities, ordinary maintenance and repairs, financial record
keeping on income and expenses, rent collection, payment of operating
expenses and property operations. The Company's property management
philosophy is based on the belief that the long-term value of the
Properties is enhanced by attention to detail and hands-on service
provided by professional in-house property managers. The Company
believes that a successful leasing program starts by servicing existing
tenants first. Costs associated with tenant turnover (i.e., tenant
improvements, leasing commissions and the loss of income due to vacancy)
can be significant and, by addressing and attending to existing tenants'
needs, the Company believes that it can increase its retention of
existing tenants and simultaneously make its properties more attractive
to tenants.
6. Cooperate with Local Real Estate Brokers.
The Company seeks to develop strong relationships with local real estate
brokers, who can provide access to tenants as well as general market
intelligence and research. The Company believes that these relationships
have enhanced the Company's ability to attract and retain tenants.
7. Maximize its Capital Structure.
As of December 31, 1997 the Company's total market capitalization was
$565 million. With a debt to total market capitalization ratio of 12%,
the Company is well positioned for future growth. Funding of new
acquisitions and development is expected to be provided by a combination
of debt and equity. The Company currently intends to take advantage of
the low interest rates available today by locking in long term debt
financing on a portion of its portfolio. At the same time, the Company
intends to preserve its financing flexibility through the use of short
term debt facilities such as its existing $175 million bank line of
credit as well as other means of managing interest rate risk. The
Company plans to access the equity markets from time to time to balance
its overall capital structure.
Transactions and Significant Events During 1997
Acquisitions and Development
During the year, the Company acquired 26 Properties, including 13
Industrial Properties and 13 Suburban Office Properties aggregating
approximately 2.3 million rentable square feet, for a total investment
of approximately $206 million. At acquisition, the Company estimated
that these Properties would provide an initial weighted average
unleveraged return on cost (computed as annualized property NOI at the
date of acquisition divided by total acquisition cost) of 9.4%. The
Company estimates that the purchase price of acquisitions completed in
1997 is approximately 84% of the replacement cost.
In addition, the Company completed shell construction of four industrial
properties aggregating approximately 365,000 square feet, for a total
investment to date of approximately $18 million.
The Company also acquired 6 parcels of land aggregating approximately 21
acres for a total investment of approximately $5 million, 5 of which are
adjacent to existing Properties. The Company plans to develop industrial
or office properties on each of these parcels.
Property Dispositions
In 1997, the Company sold three properties aggregating approximately
297,000 square feet. On July 31, 1997, two of its Southern California
office properties were sold for a sale price of approximately $25.8
million, which resulted in a gain of approximately $10.8 million. The
properties were 1000 Town Center Drive in Oxnard, California and Mariner
Court in Torrance, California. On October 22, 1997, Academy Place
Shopping Center in Colorado Springs, Colorado was sold for a sale price
of approximately $7.5 million, which resulted in a gain of approximately
$748,000.
Common Stock Offerings and Credit Facility
The Company completed the sale of 4,600,000 shares of common stock at $17
3/8 per share in February 1997 and 7,245,000 shares of common stock at
$19 5/8 per share in November 1997. Net cash proceeds from these
offerings were used to pay off the outstanding borrowings under the
Company's credit facility. The facility was amended and expanded to $150
million in June 1997, and was further expanded to $175 million in
September 1997. Under this facility, the Company can borrow up to $25
million on an unsecured basis. The secured loans bear interest at a rate
of LIBOR plus 1.50% and the unsecured loans bear interest at LIBOR plus
1.75%. The amended facility matures on June 1, 2000 and had an
outstanding balance of $8 million at December 31, 1997. The Company was
in compliance with the covenants and requirements of its revolving credit
facility at December 31, 1997.
Dividends
The Company has made regular quarterly distributions to the holders of
the Common Stock in each quarter since the second quarter of 1993, having
increased the dividend eight times since that time from $0.10 per share
in the second quarter of 1993 to $0.30 per share in each of the third and
fourth quarters of 1997. In March 1998, the Company declared a dividend
distribution for the first quarter 1998 to its stockholders in the amount
of $0.30 per share of Common Stock, payable 15 days after the quarter-
end.
The Company paid dividends to the holders of the 8,333,334 shares of its
Series A Convertible Preferred Stock par value $0.01 per share (the
"Convertible Preferred Stock") in the amount of $.135 per share for each
of the first two quarters of 1997 and $.15 per share for the third
quarter of 1997. In October 1997, the Convertible Preferred stock was
converted to 4,166,667 shares of common stock.
Tenants
Based on rentable square feet, as of December 31, 1997, the Suburban
Office Properties and Industrial Properties were approximately 99%
occupied by a total of 444 tenants, of which 94 were Suburban Office
Property tenants and 350 were Industrial Property tenants. The Company's
tenants include local, regional, national and international companies
engaged in a wide variety of businesses.
Financing
The Company expects cash flow from operations to be sufficient to pay
operating expenses, real estate taxes, general and administrative
expenses, and interest on indebtedness and to make distributions to
stockholders required to maintain the Company's REIT qualification.
The Company expects to fund the cost of acquisitions, capital
expenditures, costs associated with lease renewals and reletting of
space, repayment of indebtedness, and development of properties from (i)
cash flow from operations, (ii) borrowings under the credit facility and,
if available, other indebtedness (which may include indebtedness assumed
in acquisitions), (iii) the sale of real estate investments, and (iv) the
sale of equity securities and, possibly, the issuance of equity
securities in connection with acquisitions.
The Company does not anticipate that cash flow from operations will be
sufficient to enable it to repay amounts then outstanding under the
credit facility when it becomes due in 2000. The Company expects to
make such payment by refinancing or extending the credit facility or by
raising funds through the sale of equity securities or properties.
Insurance
The Company carries commercial general liability coverage with primary
limits of $1 million per occurrence and $2 million in the aggregate, as
well as a $20 million umbrella liability policy. This coverage protects
the Company against liability claims as well as the cost of defense. The
Company carries property insurance on a replacement value basis covering
both the cost of direct physical damage and the loss of rental income.
Separate flood and earthquake insurance is provided with an annual
aggregate limit of $12.5 million subject to a deductible of 5-10% of
total insurable value per building with respect to the earthquake
coverage. The Company also carries director and officer liability
insurance with an aggregate limit of $10 million. This coverage protects
the Company's directors and officers against liability claims as well as
the cost of defense.
Competition, Regulation, and Other Factors
The success of the Company depends upon, among other factors, general
economic conditions and trends, including real estate trends, interest
rates, government regulations and legislation, income tax laws and
zoning laws.
The Company's real estate investments are located in markets in which
they face significant competition for the rental revenues they generate.
Many of the Company's investments, particularly the office buildings, are
located in markets in which there is a significant supply of available
space, resulting in intense competition for tenants and low rents.
Government Regulations
The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes its properties are currently in
substantial compliance with all applicable regulatory requirements,
although expenditures at its properties may be required to comply with
changes in these laws. No material expenditures are contemplated at this
time in order to comply with any such laws or regulations.
Under various federal, state and local laws, ordinances and regulations,
an owner or operator of real estate is liable for the costs of removal
or remediation of certain hazardous or toxic substances released on,
above, under, or in such property. Such laws often impose such liability
without regard to whether the owner knew of, or was responsible for, the
presence of such hazardous or toxic substances. The costs of such
removal or remediation could be substantial.
Additionally, the presence of such substances or the failure to properly
remediate such substances may adversely affect the owner's ability to
borrow using such real estate as collateral.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any of
its present or former properties. The Company does not anticipate that
compliance with federal, state and local environmental protection
regulations will have any material adverse impact on the financial
position, results of operations or liquidity of the Company.
Other Information
The Company currently employs 46 full time employees. The Company is not
dependent upon a single tenant or a limited number of tenants.
The Company has conducted a comprehensive review of its computer systems
to identify "Year 2000" issues. The Year 2000 problem is a result of
computer programs being written using two digits rather than four to
define the applicable year. The Company purchased and implemented a new
computer information system in January 1997 in order to increase
efficiencies related to asset management and reporting. The new computer
information system is Year 2000 compliant. The Company presently
believes that the Year 2000 issue will not pose significant operational
problems for the Company and the Company does not anticipate material
expenditures related to this issue.
<PAGE>
ITEM 2. PROPERTIES
Real Estate Summary
As of December 31, 1997, the Company's real estate investments (net of
accumulated depreciation) were diversified by property type as follows:
Number of Investment
Properties Amount % of Total
Industrial Buildings 51 $230,890,000 55
Office Buildings 20 168,326,000 40
Properties Under Development 4 18,158,000 4
Land Held for Development 7 5,712,000 1
Total 82 $423,086,000 100
<PAGE>
As of December 31, 1997, the Company's real estate investments (net of
accumulated depreciation) were diversified by geographic region as
follows:
Number of Investment
Properties Amount % of Total
Industrial
Northern California 28 132,735,000 31
Southern California 8 43,276,000 10
Denver, Colorado 2 5,014,000 1
Arizona 4 20,486,000 5
Greater Portland Area 2 10,596,000 3
Greater Kansas City Area 6 16,039,000 4
Dallas, Texas 1 2,744,000 1
Total Industrial 51 230,890,000 55
Suburban Office
Northern California 4 17,394,000 4
Southern California 3 25,028,000 6
Salt Lake City 1 6,093,000 1
Greater Kansas City Area 1 6,361,000 2
Greater Seattle Area 2 44,871,000 11
Reno, Nevada 1 12,387,000 3
Austin, Texas 1 9,750,000 2
Arizona 6 31,382,000 7
Denver, Colorado 1 15,060,000 4
Total Suburban Office 20 168,326,000 40
Industrial Properties
Under Development
Northern California 2 10,484,000 2
Arizona 1 4,407,000 1
Greater Kansas City Area 1 3,267,000 1
Total Industrial Properties
Under Development 4 18,158,000 4
Land Held for Development
Northern California 2 1,752,000 *
Southern California 2 981,000 *
Arizona 2 1,334,000 *
Denver, Colorado 1 1,645,000 *
Total Land held for Development 7 5,712,000 1
Total 82 423,086,000 100
* Less than 1%.
<PAGE>
Percentage Leased and 10% Tenants
The following table sets forth the occupancy rates for each of the last five
years, the number of tenants occupying 10% or more of the developed square feet
at the Property as of the end of the year and the principal business of the
tenants in the Company's properties at December 31, 1997.
<TABLE>
Percentage Occupied/Number of Tenants Occupying 10% or more
<S> <C> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997
Property % # % # % # % # % # Principal Business at December 31, 1997
INDUSTRIAL PROPERTIES
Northern California
Building #3 at Contra Costa
Diablo Ind. Park, Concord 100% 1 100% 1 100% 1 100% 1 100% 1 Production and assembly of robotic parts
and machines.
Building #8 at Contra Costa
Diablo Ind. Park, Concord 100% 1 100% 1 100% 1 100% 1 100% 1 Warehouse and storage of medical supplies.
Building #18 at
Mason Ind. Park, Concord 100% 2 90% 2 83% 2 83% 2 100% 2 Warehouse of scaffolding materials and
construction supplies.
115 Mason Circle, Concord N/A N/A N/A 100% 5 100% 5 Mechanical systems insulation and acoustical
contractor, pipeline servicing co.,
wholesale distributor of computer peripherals
and software, distributor of fluid celing
products, manufacturer and welder of pipes.
Auburn Court, Fremont N/A N/A 100% 4 100% 4 100% 4 Manufacturing of computer equipment,
assembly of cable items, lab engineering, and
marketing design.
47650 Westinghouse Drive,
Fremont N/A N/A 100% 1 100% 1 100% 1 Electronic personal computer board
assembly.
47600 Westinghouse Drive,
Fremont N/A N/A N/A 100% 1 100% 1 Research and development assembly and
testing related to the semi-conductor/
electronics industry.
47633 Westinghouse Drive,
Fremont N/A N/A N/A 100% 1 100% 1 Design and manufacture chemical vapor
equipment for semi-conductors.
6500 Kaiser Drive, Fremont N/A N/A N/A N/A 100% 1 Office, research and development,
manufacturing of computers.
Bedford Fremont Business Center,
Fremont N/A N/A N/A N/A 100% 1 Administration and testing of samples for
kidney dialysis facilities.
Spinnaker Court, Fremont N/A N/A N/A N/A 100% 2 Warehouse and assembly of computer
products and general industrial, warehouse
research and development.
Fourier Avenue, Fremont N/A N/A N/A 100% 1 100% 1 Manufacturer of testers and equipment for
semi-conductors.
Milpitas Town Center, Milpitas N/A 100% 4 100% 4 100% 4 100% 4 Manufacturing of blood glucose meters,
assembly and repair of accelerator systems,
light manufacturing of OEM's and assembly
and manufacturing of vacuum components.
598 Gibraltar Drive, Milpitas N/A N/A N/A 100% 1 100% 1 Manufacturing of personal computers.
Doherty Avenue, Modesto N/A N/A N/A 100% 1 100% 1 Storing canned goods.
860-870 Napa Valley Corporate
Way, Napa N/A N/A N/A 96% 3 86% 3 Winery, engineering company and software
developer.
The Mondavi Building, Napa N/A N/A N/A N/A 100% 1 Wine storage and administration.
350 East Plumeria Drive,
San Jose N/A N/A 100% 1 100% 1 100% 1 Developer of data transmission
technology.
Lundy Avenue, San Jose N/A N/A N/A 100% 2 100% 2 Distributor of electronic components,
manufacturer and distributor of high
quality personal computers.
INDUSTRIAL PROPERTIES (continued)
O'Toole Business Center, San Jose N/A N/A N/A 94% 0 90% 0 N/A
301 East Grand, South
San Francisco N/A N/A 71% 2 100% 3 100% 3 Freight forwarding, furniture wholesale,
and distributor of MRI Equipment.
342 Allerton, South
San Francisco N/A N/A 100% 4 100% 4 100% 4 Freight forwarding.
400 Grandview, South
San Francisco N/A N/A 100% 5 100% 5 100% 4 Radiology research and developer, freight
forwarding, manufacturing and distribution
of point-of-sale marketing products.
410 Allerton, South
San Francisco N/A N/A 100% 1 100% 1 100% 1 Candy manufacturer and distributor.
417 Eccles, South
San Francisco N/A N/A 100% 2 100% 2 53% 1 Storage/distribution of food products.
2277 Pine View Way, Petaluma N/A N/A N/A N/A 100% 1 Manufacturer and distributor of plastic and
glass eyeglass lenses for world-wide
distribution.
Monterey Commerce Center 2,
Monterey N/A N/A N/A N/A 100% 1 Language interpretation - over seas
calls.
Monterey Commerce Center 3,
Monterey N/A N/A N/A N/A 100% 3 Sales.
INDUSTRIAL PROPERTIES (continued)
Southern California
Dupont Industrial Center,
Ontario N/A 91% 1 100% 1 59% 0 100% 1 Distribution of swimming pool supplies.
3002 Dow Business Center, N/A N/A 83% 0 99% 0 100% 0 N/A
Tustin
Carroll Tech I, San Diego N/A N/A N/A 100% 1 100% 1 Bio-technology company. Vacated 12/31/97.
Carroll Tech II, San Diego N/A N/A N/A 100% 1 100% 1 Bio-technology company.
Signal Systems Building,
San Diego N/A N/A N/A 100% 1 100% 1 Developer and manufacturer of avionic
diagnostic equipment.
Filed Chapter 11.
Vista 1, Vista N/A N/A N/A 100% 1 100% 1 Manufacturer of heat sensitive film
paper. Vacated 12/31/97. Company
liquidated under statute per the general
assignment for the benefit of creditors.
Vista 2, Vista N/A N/A N/A 100% 1 100% 1 Manufacturer of graphite golf club shaft.
2230 Oak Ridge Way N/A N/A N/A N/A 100% 1 Manufacturer of equipment for circuit
board assembly.
Denver, Colorado
Bryant Street Annex, Denver N/A N/A 100% 2 100% 2 100% 2 Office supplies distributor and automotive
paint distributor.
Bryant Street Quad, Denver N/A N/A 97% 3 100% 3 100% 3 Health care provider, photo processing lab,
and radiator coating plant/distributor.
INDUSTRIAL PROPERTIES (continued)
Arizona
Westech Business Center, Phoenix N/A N/A N/A 93% 0 96% 0 N/A
2601 W. Broadway, Tempe N/A N/A N/A N/A 100% 1 Wireless phone service provider.
Phoenix Airport Center #3,
Phoenix N/A N/A N/A N/A 100% 1 Cosmetic manufacturing and distribution.
Butterfield Business Center,
Tucson N/A N/A N/A N/A 100% 3 Sears call center, polish/wax research
and development.
Greater Portland Area, Oregon
Twin Oaks Technology Center,
Beaverton N/A N/A 81% 2 91% 3 96% 2 Software developer and telecommunications.
Twin Oaks Business Park,
Beaverton N/A N/A 94% 3 80% 4 81% 4 Electronic engineering, electronic
equipment assembly, computer equipment
distributor and postal service.
Kansas City, Kansas
Ninety-Ninth Street #1, Lenexa N/A N/A 100% 2 100% 2 100% 2 Tool distribution and surgical instrument
manufacturing.
Ninety-Ninth Street #2, Lenexa N/A N/A 100% 1 100% 1 100% 1 Drug testing clinic.
Ninety-Ninth Street #3, Lenexa 100% 2 100% 2 100% 2 89% 2 100% 2 Warehouse for computer cables/wiring and
storage of corporate records/supplies.
Lackman Business Center,
Lenexa N/A N/A 98% 2 91% 2 100% 2 Data document services and environmental
testing and survey.
85th Street, Lenexa N/A N/A N/A N/A 100% 1 Manufacturing of plastic containers.
INDUSTRIAL PROPERTIES (continued)
Kansas City, Kansas (continued)
Panorama Business Center,
Kansas City N/A N/A N/A 100% 2 100% 2 Graphics and refrigeration companies.
Dallas, Texas
Ferrell N/A N/A N/A N/A 100% 5 Glass manufacturing (sub-tenant is
telecommunications), medical products
distribution, hardware distribution, and
direct sales of nutritional products.
SUBURBAN OFFICE PROPERTIES
Northern California
Village Green, Lafayette N/A 82% 3 100% 2 100% 1 99% 1 Software developer.
100 View Street, Mountain View N/A N/A N/A 100% 4 100% 3 Architectural servicing (two tenants),
designing and marketing of integrated
circuits for semi-conductors, research and
development of governmental devices.
Monterey Commerce Center 1
Monterey N/A N/A N/A N/A 87% 4 Financial services, software development,
telecommunications sales, electronic
equipment sales.
Canyon Park, San Ramon N/A N/A N/A N/A 100% 2 Medical administrative offices and
geotechnical lab; soils testing, engineering
services.
Southern California
Laguna Hills Square, Laguna N/A N/A N/A 86% 2 96% 4 Medical facility and securities brokerage firm.
Carroll Tech III, San Diego N/A N/A N/A N/A 100% 1 Biomedical firm.
Scripps Wateridge, San Diego N/A N/A N/A N/A 100% 2 Wireless communications.
Denver, Colorado
Oracle Building N/A N/A N/A N/A 100% 2 Software company.
Salt Lake City
Woodlands Tower II,
Salt Lake City 96% 2 98% 2 95% 2 100% 2 100% 2 Insurance services and health care
staffing.
Greater Kansas City Area
6600 College Blvd., Overland Park N/A N/A 100% 1 98% 1 100% 1 Telecommunication.
Greater Seattle Area
Kenyon Center, Bellevue N/A N/A N/A 100% 1 100% 1 Manufacturer of aircraft.
Orillia Office Park, Renton N/A N/A N/A N/A 100% 1 Manufacturer of aircraft.
Reno
U. S. Bank Centre, Reno N/A N/A N/A N/A 94% 1 Insurance services.
Austin
9737 Great Hills Trail, Austin N/A N/A N/A N/A 100% 1 Home mortgage business.
Arizona
Executive Center at Southbank,
Phoenix N/A N/A N/A N/A 98% 3 Appliance sales, travel agency, and
customer credit call center.
Troika Building, Tucson N/A N/A N/A N/A 100% 1 Architectural Services
Phoenix Airport Center #1,
Phoenix N/A N/A N/A N/A 100% 5 Electronics, customer service, and sales
office.
Phoenix Airport Center #2,
Phoenix N/A N/A N/A N/A 100% 1 Electronics and customer service.
Phoenix Airport Center #4,
Phoenix N/A N/A N/A N/A 100% 1 Package delivery/service call center.
Phoenix Airport Center #5, Parking,
Phoenix N/A N/A N/A N/A N/A
</TABLE>
Lease Expirations - Real Estate Portfolio
The following table presents lease expirations for each of the ten
years beginning January 1, 1998. The table presents: (i) the number
of leases that expire each year, (ii) the square feet covered by such
expiring leases, (iii) the annualized base rent (the "Annualized Base
Rent") represented by such expiring leases and (iv) the percentage of
total Annualized Base Rent for expiring leases.
Number of Percentage
Leases Rentable Annualized of Annualized
Year Expiring Square Feet Base Rent Base Rent
1998 118 905,135 7,146,108 14.5%
1999 86 664,328 5,819,472 11.8%
2000 102 839,316 8,766,924 17.8%
2001 51 953,514 8,022,576 16.3%
2002 53 507,664 5,138,448 10.4%
2003 8 235,997 3,325,836 6.8%
2004 5 585,359 5,267,640 10.7%
2005 3 127,203 1,400,148 2.9%
2006 4 413,327 1,862,940 3.8%
2007 and thereafter 5 478,168 2,447,544 5.0%
Total 435 5,710,011 49,197,636 100.0%
<PAGE>
Principal Provisions of Leases
The following table sets forth the principal provisions of leases which
represent more than 10% of the gross leasable area ("GLA") of each of the
Company's Properties and the realty tax rate for each Property for 1997.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Annual # of Tenants Square Feet Contract Rent
Realty with 10% or Project of Each ($/Sq/Yr) Lease Renewal
Property Taxes/Rate More of GLA Square Feet Tenant At End of Year Expiration Options
INDUSTRIAL PROPERTIES
Northern California
Building #3 at Contra Costa $14,829 1 21,840 21,840 $6.84 Aug. 98 None
Diablo Ind. Park, Concord $1.03/100
Building #8 at Contra Costa $24,023 1 31,800 31,800 $6.00 Dec. 00 2-5 yr.
Diablo Ind. Park, Concord $1.03/100
Building #18 at Mason $18,944 2 28,836 7,225 $6.75 Oct. 98 None
Industrial Park, Concord $1.03/100 4,825 $7.70 Mar. 98 None
115 Mason Circle, Concord $18,293 5 35,000 5,833 $5.16 Jan. 00 None
$1.03/100 5,832 $6.18 Dec. 98 1-3 yr.
8,154 $6.96 Aug. 02 None
7,296 $6.24 Nov. 98 1-3 yr.
7,885 $6.24 Apr. 99 None
Auburn Court, Fremont $49,487 4 68,030 15,755 $10.20 Apr. 99 1-5 yr.
$1.07/100 16,095 $6.00 Sep. 98 1-5 yr.
12,060 $9.00 Apr. 98 None
12,060 $7.20 Jul. 00 None
47650 Westinghouse Drive, $15,308 1 24,030 24,030 $9.00 Sep. 04 1-3 yr.
Fremont $1.07/100
47600 Westinghouse Drive, $17,132 1 24,030 24,030 $10.20 Oct. 03 1-3 yr.
Fremont $1.07/100
47633 Westinghouse Drive, $52,810 1 50,088 50,088 $11.60 Oct. 03 1-3 yr.
Fremont $1.07/100
6500 Kaiser Drive, Fremont $134,912 1 78,611 78,611 $9.00 Sep. 04 2-5 yr.
$1.07/100
Bedford Fremont Business Center,
Fremont $132,082 1 146,509 27,750 $11.65 Jul. 98 1-3 yr.
$1.07/100
Spinnaker Court, Fremont $73,380 2 98,500 69,230 $8.10 Feb. 98 None
$1.07/100 29,270 $7.78 Mar. 00 None
Fourier Avenue, Fremont $105,583 1 104,400 104,400 $8.99 Apr. 04 None
$1.07/100
Milpitas Town Center, $65,950 4 102,620 23,924 $9.63 Sep. 99 1-2 yr.
Milpitas $1.07/100 24,426 $11.04 Apr. 02 1-2 yr.
30,840 $7.68 Jul. 03 1-5 yr.
23,430 $7.52 Jan. 00 1-5 yr.
598 Gibraltar Drive, $58,448 1 45,090 45,090 $9.48 Apr. 01 1-5 yr.
Milpitas $1.07/100
Doherty Avenue, Modesto $56,189 1 251,308 251,308 $1.88 Dec. 06 None
$1.10/100
860-870 Napa Valley Corporate $82,094 3 67,775 13,111 $9.61 Dec. 00 1-5 yr.
Way, Napa $1.03/100 7,558 $9.89 Sep. 01 None
8,474 $9.60 Dec. 99 None
The Mondavi Building, Napa $124,256 1 120,157 120,157 $4.92 Sep. 12 1-5 yr.
$1.03/100
350 East Plumeria Drive, $134,490 1 142,700 142,700 $8.40 Dec. 01 1-3 yr.
San Jose $1.08/100
Lundy Avenue, San Jose $60,310 3 60,428 11,086 $7.14 Jul. 98 None
$1.10/100 32,877 $7.80 Apr. 99 1-5 yr.
16,465 $5.64 Apr. 99 1-3 yr.
O'Toole Business Center, $111,276 0 122,320 N/A N/A N/A N/A
San Jose $1.10/100
301 East Grand, $32,333 3 57,846 26,240 $6.24 Jun. 98 None
South San Francisco $1.03/100 14,400 $5.46 Oct. 99 None
17,206 $4.68 Aug. 98 None
342 Allerton, $51,485 4 69,312 19,751 $6.96 Mar. 00 None
South San Francisco $1.03/100 9,720 $8.40 Mar. 02 None
30,953 $7.28 Feb. 99 None
8,888 $9.00 Aug. 02 None
400 Grandview, $75,734 4 107,004 21,841 $7.20 Dec. 98 None
South San Francisco $1.03/100 43,642 $7.41 Jul. 02 1-5 yr.
18,789 $6.45 May 99 1-5 yr.
18,864 $6.00 Jan. 03 None
410 Allerton, $25,858 1 46,050 46,050 $5.16 Apr. 01 None
South San Francisco $1.03/100
417 Eccles, $12,532 1 24,624 12,960 $6.36 Dec. 97 1-5 yr.
South San Francisco $1.03/100
2277 Pine View Way, $24,607 1 120,480 120,480 $6.91 Mar. 07 2-5 yr.
Petaluma $1.08/100
Monterey Commerce $22,627 1 28,020 28,020 $14.16 Dec. 00 None
Center 2, Monterey $1.00/100
Monterey Commerce $22,347 3 24,240 3,817 $13.08 Jul. 01 None
Center 3, Monterey $1.00/100 3,050 $12.96 Nov. 00 None
17,373 $15.36 Oct. 00 None
Southern California
Dupont Industrial Center, $205,346 1 451,192 183,244 $2.88 Jan. 07 2-5 yr.
Ontario $1.01/100
3002 Dow Business Center, $195,932 0 192,125 N/A N/A N/A N/A
Tustin $1.02/100
Carroll Tech I, $21,207 1 21,936 21,936 $11.93 Dec. 97 None
San Diego $1.12/100
Carroll Tech II, $34,605 1 37,586 37,586 $11.52 Dec. 98 1-3 yr.
San Diego $1.12/100
Signal Systems Building, $96,473 1 109,780 109,780 $8.11 Aug. 06 2-5 yr.
San Diego $1.02/100
Vista 1, Vista $33,289 1 42,508 42,508 $0.00 Chapter 11, 12/31/97
$1.04/100
Vista 2, Vista $36,584 1 47,550 47,550 $6.61 Sep. 01 1-5 yr.
$1.04/100
Denver, Colorado
Bryant Street Annex, Denver $27,293 2 55,000 42,148 $4.25 Nov. 00 1-3 yr.
$7.54/100 12,852 $3.55 Mar. 00 None
Bryant Street Quad, Denver $77,203 3 155,536 17,440 $4.25 Apr. 02 None
$7.54/100 20,726 $3.30 Feb. 01 1-5 yr.
16,055 $3.60 Feb. 99 1-3 yr.
Arizona
Westech Business Center, Phoenix $78,241 0 143,940 N/A N/A N/A N/A
$12.69/100
2601 W. Broadway, Tempe $49,095 1 44,244 44,244 $7.14 Jan. 07 None
$12.27/100
Phoenix Airport Center #3, $42,460 1 55,122 55,122 $6.36 Jul. 01 None
Phoenix $12.69/100
Butterfield Business Center, $73,510 3 95,746 50,000 $7.92 Aug. 99 None
Tucson $15.95/100 14,982 $2.60 Aug. 99 None
22,002 $8.37 Jun. 01 None
Greater Portland Area
Twin Oaks Technology Center, $54,684 2 95,173 11,460 $5.20 Nov. 98 None
Beaverton $1.41/100 14,690 $7.56 Aug. 98 None
Twin Oaks Business Park, $39,439 4 66,339 7,633 $9.60 Nov. 02 None
Beaverton $1.41/100 6,702 $9.00 Feb. 00 None
14,522 $10.67 Jul. 99 1-3 yr.
11,686 $7.48 May 99 1-2 yr.
Greater Kansas City Area
Ninety-Ninth Street #1, $48,647 2 35,516 19,019 $8.09 Sep. 00 1-3 yr.
Lenexa $1.13/100 13,305 $7.25 Oct. 02 None
Ninety-Ninth Street #2, $26,397 1 12,974 12,974 $8.62 Oct. 99 None
Lenexa $1.13/100
Ninety Ninth Street #3, $61,354 2 50,000 13,000 $7.10 Dec. 03 1 yr.
Lenexa $1.13/100 31,250 $5.38 May 98 1-5 yr.
Lackman Business Center, $61,235 3 45,956 5,510 $10.45 Jan. 98 None
Lenexa $1.13/100 5,132 $9.68 May 98 None
5,320 $7.95 Jun. 99 None
85th Street, Lenexa $81,453 1 171,642 171,642 $3.11 Nov. 01 1-5 yr.
$1.13/100
Panorama Business Center, $111,362 2 103,457 12,491 $5.95 Sep. 01 1-5 yr.
Kansas City $9.23/100 12,951 $5.15 Feb. 01 None
Dallas, Texas
Ferrell $37,349 5 68,580 11,430 $4.50 Jan. 00 None
$4.76/100 11,430 $4.50 Feb. 99 None
11,430 $4.20 Feb. 00 None
11,430 $4.50 Jul. 01 1 yr.
11,430 $4.50 Apr. 99 1-3 yr.
SUBURBAN OFFICE PROPERTIES
Northern California
Village Green, Lafayette $25,176 4 16,895 2,119 $21.66 Aug. 99 None
$1.14/100 3,675 $26.84 Mar. 05 None
1,798 $22.05 Mar. 05 None
2,516 $22.03 Mar. 05 None
100 View Street, $56,297 3 42,141 5,490 $20.28 Jul. 01 1-5 yr.
Mountain View $1.06/100 12,112 $18.60 Mar. 99 1-3 yr.
9,875 $22.20 Oct. 00 None
Monterey Commerce Center 1, $57,957 4 50,031 5,809 $20.04 Aug. 99 None
Monterey $1.00/100 7,000 $18.96 Mar. 03 None
16,088 $20.92 Jul. 98 None
5,046 $19.62 Mar. 98 None
Canyon Park, $67,261 2 57,667 43,415 $16.48 Feb. 00 None
San Ramon $1.08/100 7,736 $18.60 Jan. 98 None
Southern California
Laguna Hills Square, Laguna $67,008 4 51,734 8,474 $33.60 Jun. 02 1-5 yr.
$1.05/100 7,368 $25.24 Apr. 00 1-3 yr.
6,391 $24.24 Sep. 00 1-5 yr.
9,229 $17.64 Jun. 02 2-3 yr.
Carroll Tech III, San Diego $22,829 1 29,307 29,307 $8.52 Dec. 98 1-5 yr.
$1.12/100
Scripps Wateridge, San Diego $175,873 2 123,853 49,295 $9.62 Jul. 06 1-5 yr.
$1.12/100 74,558 $12.60 Aug. 05 2-3 yr.
Denver
Oracle Building, $250,217 2 90,712 10,043 $18.00 Aug. 11 1-4 yr.
Denver $12.76/100 74,265 $24.00 Sep. 03 1-2 yr.
Salt Lake City
Woodlands Tower II, $119,869 2 114,352 42,590 $15.74 Feb. 02 1-5 yr.
Salt Lake City $1.27/100 22,599 $15.00 Jan. 01 None
Greater Kansas City Area
6600 College Blvd., $167,955 1 79,316 62,441 $11.80 Dec. 99 None
Overland Park $11.95/100
Greater Seattle Area
Kenyon Center, Bellevue $171,902 1 94,840 94,840 $11.61 Feb. 00 1-5 yr.
$1.16/100
Orillia Office Park, Renton $262,365 2 334,255 274,405 $9.35 Feb. 04 None
$1.32/100 59,850 $9.35 Feb. 04 None
Reno
U.S. Bank Centre, Reno $109,333 1 104,324 35,361 $17.40 Apr. 00 2-5 yr.
$3.35/100
Austin
9737 Great Hills Trail, Austin $168,973 1 82,680 82,680 $18.00 Dec. 01 1-5 yr.
$2.48/100
Arizona
Executive Center at Southbank, $151,381 4 140,157 38,106 $9.18 Apr. 02 1-5 yr.
Phoenix $16.50/100 17,910 $7.96 Sep. 03 2-5 yr.
30,518 $10.00 Jun. 01 2-5 yr.
21,626 $10.00 Jul. 02 2-5 yr.
Troika Building, Tucson $109,698 1 52,000 52,000 $9.00 Oct. 01 None
$16.94/100
Phoenix Airport Center #1, $31,022 5 32,460 11,990 $10.95 Aug. 00 None
Phoenix $12.69/100 4,527 $15.00 Mar. 01 None
4,449 $17.55 Dec. 02 None
4,041 $16.39 Jul. 01 None
4,502 $12.00 M-T-M None
Phoenix Airport Center #2, $48,035 1 35,768 35,768 $7.20 Aug. 01 None
Phoenix $12.69/100
Phoenix Airport Center #4, $25,100 1 30,504 30,504 $7.20 Jun. 00 None
Phoenix $12.69/100
Phoenix Airport Center #5, $17,358 N/A N/A N/A N/A N/A N/A
Parking, Phoenix $12.69/100
</TABLE>
Average Effective Rent
The following table sets forth for each of the Properties the average
rent at the end of each year for the last five years.
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
INDUSTRIAL PROPERTIES:
Northern California
Building #3 at Contra Costa Diablo 47650 Westinghouse Drive
1993 $8.35 1993 N/A
1994 $8.35 1994 N/A
1995 $4.95 1995 $5.52
1996 $6.64 1996 $5.52
1997 $6.84 1997 $9.00
Building #8 at Contra Costa Diablo 47600 Westinghouse Drive
1993 $7.43 1993 N/A
1994 $7.81 1994 N/A
1995 $6.00 1995 N/A
1996 $6.00 1996 $5.94
1997 $6.00 1997 $10.20
Building #18 at Mason Industrial Park 47633 Westinghouse Drive
1993 $7.03 1993 N/A
1994 $6.95 1994 N/A
1995 $6.63 1995 N/A
1996 $6.78 1996 $11.37
1997 $6.88 1997 $11.60
115 Mason Circle 6500 Kaiser Drive
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 $6.05 1996 N/A
1997 $6.22 1997 $9.00
Auburn Court Bedford Fremont Business Center
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $6.54 1995 N/A
1996 $6.78 1996 N/A
1997 $7.80 1997 $11.93
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
INDUSTRIAL PROPERTIES(continued):
Spinnaker Court The Mondavi Building
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $8.01 1997 $4.92
Fourier Avenue 350 East Plumeria Drive
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 $7.80
1996 $8.99 1996 $7.80
1997 $8.99 1997 $8.40
Milpitas Town Center Lundy Avenue
1993 N/A 1993 N/A
1994 $7.11 1994 N/A
1995 $7.35 1995 N/A
1996 $8.03 1996 $7.09
1997 $8.90 1997 $7.09
598 Gibraltar Drive O'Toole Business Center
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 $9.48 1996 $8.75
1997 $9.48 1997 $10.31
Doherty Avenue 301 East Grand
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 $5.92
1996 $1.87 1996 $5.57
1997 $1.88 1997 $5.58
860-870 Napa Valley Corporate 342 Allerton
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 $6.88
1996 $9.44 1996 $7.18
1997 $8.86 1997 $7.57
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
INDUSTRIAL PROPERTIES(continued):
400 Grandview 410 Allerton
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $7.49 1995 $5.16
1996 $7.53 1996 $5.16
1997 $7.03 1997 $5.16
417 Eccles 2277 Pine View Way
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $5.71 1995 $5.16
1996 $6.01 1996 $5.16
1997 $6.36 1997 $5.16
Monterey Commerce Center 2 Monterey Commerce Center 3
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $14.16 1997 $14.70
Southern California
Dupont Industrial Center Carroll Tech II
1993 N/A 1993 N/A
1994 $3.07 1994 N/A
1995 $3.17 1995 N/A
1996 $3.53 1996 N/A
1997 $3.40 1997 $11.52
3002 Dow Business Center Signal Systems Building
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $8.88 1995 N/A
1996 $8.55 1996 $7.80
1997 $8.32 1997 $8.11
Carroll Tech I Vista 1
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 $10.35 1996 $5.16
1997 $11.93 1997 $0.00**
**Bankruptcy
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
INDUSTRIAL PROPERTIES (continued):
Vista 2
1993 N/A
1994 N/A
1995 N/A
1996 $6.36
1997 $6.61
Denver
Bryant Street Annex Bryant Street Quad
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $4.02 1995 $3.09
1996 $3.93 1996 $3.39
1997 $4.09 1997 $3.82
Arizona
Westech Business Center Phoenix Airport Center #3
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 $8.85 1996 N/A
1997 $9.44 1997 $6.36
2601 W. Broadway Butterfield Business Center
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $7.14 1997 $7.08
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
INDUSTRIAL PROPERTIES (continued):
Greater Portland Area, Oregon
Twin Oaks Technology Center Twin Oaks Business Park
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $7.27 1995 $7.75
1996 $7.32 1996 $8.35
1997 $7.67 1997 $8.86
Greater Kansas City Area
Ninety-Ninth Street #1 Ninety-Ninth Street #2
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 $7.96 1995 $7.56
1996 $8.32 1996 $8.62
1997 $7.72 1997 $8.62
Lackman Business Center Ninety-Ninth Street #3
1993 N/A 1993 $5.86
1994 N/A 1994 $5.86
1995 $8.36 1995 $5.86
1996 $8.59 1996 $5.30
1997 $8.77 1997 $6.08
85th Street, Lenexa Panorama Business Center
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 $6.54
1997 $3.11 1997 $6.70
Dallas, Texas
Ferrell
1993 N/A
1994 N/A
1995 N/A
1996 N/A
1997 $4.55
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
SUBURBAN OFFICE PROPERTIES:
Northern California
Village Green 100 View Street
1993 N/A 1993 N/A
1994 $20.85 1994 N/A
1995 $18.23 1995 N/A
1996 $19.99 1996 $18.82
1997 $23.24 1997 $20.10
Monterey Commerce Center 1 Canyon Park
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $20.12 1997 $15.92
Southern California
Laguna Hills Square Scripps Wateridge
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 $25.38 1996 N/A
1997 $23.90 1997 $11.41
Carroll Tech III
1993 N/A
1994 N/A
1995 N/A
1996 N/A
1997 $8.52
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
SUBURBAN OFFICE PROPERTIES(continued):
Denver, Colorado Reno
Oracle Building U.S. Bank Centre
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $23.37 1997 $18.59
Salt Lake City Austin
Woodlands Tower II 9737 Great Hills Trail
1993 $13.02 1993 N/A
1994 $14.47 1994 N/A
1995 $14.25 1995 N/A
1996 $14.58 1996 N/A
1997 $15.86 1997 $18.00
Greater Kansas City Area
6600 College Boulevard
1993 N/A
1994 N/A
1995 $12.01
1996 $11.99
1997 $12.28
Greater Seattle Area
Kenyon Center
1993 N/A
1994 N/A
1995 N/A
1996 $11.61
1997 $11.61
Orillia Office Park
1993 N/A
1994 N/A
1995 N/A
1996 N/A
1997 $9.35
<PAGE>
Net Effective Rent Net Effective Rent
($/Sq/Yr) ($/Sq/Yr)
Properties At End of Year Properties At End of Year
SUBURBAN OFFICE PROPERTIES(continued):
Arizona
Executive Center at Southbank Phoenix Airport Center #2
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $9.23 1997 $7.20
Troika Building Phoenix Airport Center #4
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $9.00 1997 $7.20
Phoenix Airport Center #1 Phoenix Airport Center #5
1993 N/A 1993 N/A
1994 N/A 1994 N/A
1995 N/A 1995 N/A
1996 N/A 1996 N/A
1997 $13.81 1997 $7.21
<PAGE>
<PAGE>
Tax Information
The following table sets forth tax information of the Company's real
estate investments at December 31, 1997, as follows: (i) Federal tax
basis, (ii) annual rate of depreciation, (iii) method of depreciation,
and (iv) life claimed, with respect to each property or component
thereof for purposes of depreciation (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
Federal Annual Rate of Depreciation Life
Depreciable assets Tax Basis Depreciation Method In Years
INDUSTRIAL PROPERTIES
Northern California 3,789 3.18% Straight Line 31.5
91,871 2.56% Straight Line 39.0
95,660
Southern California 31,067 2.56% Straight Line 39.0
Denver, Colorado 3,256 2.56% Straight Line 39.0
Greater Phoenix Area, Arizona 13,688 2.56% Straight Line 39.0
Tucson, Arizona 4,231 2.56% Straight Line 39.0
Greater Portland Area 8,404 2.56% Straight Line 39.0
Greater Kansas City Area 2,132 3.18% Straight Line 31.5
13,888 2.56% Straight Line 39.0
16,020
Dallas, Texas 1,639 2.56% Straight Line 39.0
Total depreciable assets for industrial properties 173,965
SUBURBAN OFFICE PROPERTIES
Northern California 13,138 2.56% Straight Line 39.0
Southern California 18,075 2.56% Straight Line 39.0
Salt Lake City 6,472 2.56% Straight Line 39.0
Greater Kansas City Area 4,046 2.56% Straight Line 39.0
Greater Seattle Area 30,225 2.56% Straight Line 39.0
Reno, Nevada 10,438 2.56% Straight Line 39.0
Austin, Texas 7,075 2.56% Straight Line 39.0
Phoenix, Arizona 17,645 2.56% Straight Line 39.0
Tucson, Arizona 2,666 2.56% Straight Line 39.0
Denver, Colorado 13,248 2.56% Straight Line 39.0
Total depreciable assets for suburban office properties 123,028
296,993
</TABLE>
For additional information on the Company's real estate portfolio, see
Note 2 to the Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock of the Company trades on the New York Exchange and
the Pacific Exchange under the symbol "BED." As of December 31, 1997
the Company had 518 stockholders of record. A significant number of
these stockholders are also nominees holding stock in street name for
individuals. The following table shows the high and low sale prices
per share reported on the New York Stock Exchange and the dividends
declared per share by the Company on the Common Stock for each
quarterly period during 1996 and 1997. All of the following
quotations have been adjusted to reflect the one-for-two reverse stock
split of the Common Stock effected on March 29, 1996.
Dividend
High Low Per Share
1996
First Quarter $15 1/4 $14 $.24
Second Quarter $16 $12 3/8 $.24
Third Quarter $14 5/8 $12 3/4 $.26
Fourth Quarter $17 1/2 $14 1/8 $.26
1997
First Quarter $21 1/4 $16 5/8 $.26
Second Quarter $20 1/8 $17 $.27
Third Quarter $22 $19 $.30
Fourth Quarter $22 7/8 $19 3/16 $.30
Credit Facility
Effective January 13, 1997, the Company's existing credit facility
(the "Credit Facility") was amended to lower the interest rate from
LIBOR plus 2.00% to LIBOR plus 1.75%. On June 13, 1997, the Company
further reduced this interest rate to LIBOR plus 1.50% and increased
the size of the Credit Facility to $150 million. On September 24,
1997 the Company again increased the size of the Credit Facility from
$150 million to $175 million. The credit facility contains various
restrictive covenants including, among other things, a covenant
limiting quarterly dividends to 95% of average Funds From Operations
for the immediately preceding two fiscal quarters. The Company is
currently under negotiations to restructure its Credit Facility as an
unsecured line and to further lower the interest rate thereunder. No
assurance can be given that the Credit Facility will be restructured
or that the interest rate will be further reduced.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Following is a table of selected financial data of the Company for the
last five years (which should be read in conjunction with the
discussion under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto contained herein):
(in thousands of dollars, except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Operating Data:
Rental income $ 46,377 $ 27,541 $ 11,695 $ 9,154 $ 7,207
Net income 31,291 11,021 2,895 3,609 3,147
Net income applicable
to common stockholders 27,791 6,516 1,607 3,609 3,147
Net income
per common share -
assuming dilution $ 1.94 $ 1.14 $ 0.52 $ 1.17 $ 1.04
Balance Sheet Data:
Real estate investments $ 423,086 $ 224,501 $ 128,964 $ 55,053 $ 35,962
Bank loan payable 8,216 46,097 43,250 22,400 3,621
Mortgage loans payable 60,323 51,850 - - -
Redeemable preferred shares - 50,000 50,000 - -
Common and other
stockholders' equity 346,426 73,756 32,435 36,932 35,441
Other Data:
Net cash provided by
operating activities $ 25,041 $ 14,378 $ 4,898 $ 2,716 $ 1,220
Net cash (used) provided
by investing activities (180,358) (96,964) (73,259) (19,720) 10,085
Net cash provided (used)
by financing activities 155,350 82,887 64,655 16,807 (6,550)
Funds From Operations (1) 25,582 13,645 5,021 3,622 1,964
Dividends declared per share $ 1.13 $ 1.00 $ 0.82 $ 0.71 $ 0.36
</TABLE>
(1) Management considers Funds From Operations to be one measure of
the performance of an equity REIT. Funds From Operations is used by
financial analysts in evaluating REITs and can be one measure of a
REIT's ability to make cash distributions. Presentation of this
information provides the reader with an additional measure to compare
the performance of REITs. Funds From Operations generally is defined
by NAREIT as net income (loss) (computed in accordance with generally
accepted accounting principles), excluding gains (losses) from debt
restructurings and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships
and joint ventures. Funds From Operations was computed by the Company
in accordance with this definition. Funds From Operations does not
represent cash generated by operating activities in accordance with
generally accepted accounting principles; it is not necessarily
indicative of cash available to fund cash needs and should not be
considered as an alternative to net income (loss) as an indicator of
the Company's operating performance or as an alternative to cash flow
as a measure of liquidity. Further, Funds from Operations as
disclosed by other Reit's may not be comparable to the Company's
calculation of Funds from Operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The following should be read in conjunction with the Selected Financial
Data and the Consolidated Financial Statements and Notes thereto, all of
which are included herein.
When used in this annual report, the words "believes," "anticipates" and
similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those projected,
including, but not limited to, those set forth in the section entitled
"Potential Factors Affecting Future Operating Results" below. Readers
are cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company
undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements which may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Results of Operations
The Company's operations consist of owning and operating industrial and
suburban office properties located primarily in the Western United
States.
Increases in revenues, expenses, net income and cash flows in the years
compared below were due primarily to the acquisition, development and
sale of operating property as follows:
1997 1996 1995
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Square Number of Square Number of Square
Properties Feet Properties Feet Properties Feet
Acquisitions
Industrial 13 1,091,000 13 1,251,000 18 1,384,000
Office 13 1,199,000 3 189,000 1 79,000
Retail - - - - 1 84,000
26 2,290,000 16 1,440,000 20 1,547,000
Development
Industrial 4 365,000 1 45,000 - -
Sales
Industrial - - 2 186,000 1 38,000
Office 2 213,000 - - 1 88,000
Retail 1 84,000 - - - -
3 297,000 2 186,000 2 126,000
</TABLE>
Comparison of 1997 to 1996
Income from Property Operations
Income from property operations (defined as rental income less rental
expenses) increased $13,268,000 or 80% in 1997 compared with 1996. This
is due to an increase in rental income of $18,836,000 offset by an
increase in rental expenses (which include operating expenses, real
estate taxes and depreciation and amortization) of $5,568,000.
The increase in rental income and expenses is primarily attributable to
the acquisition of real estate investments during 1997 and 1996. This
acquisition activity increased rental income and rental expenses by
$21,545,000 and $7,055,000,
respectively. This was partially offset by the sales of two office
properties and one retail property in 1997 and two industrial properties
in 1996, which generated a reduction in rental income and rental expenses
of $3,256,000 and $1,779,000, respectively.
Expenses
Interest expense, which includes amortization of loan fees, increased
$3,571,000 or 82.1% in 1997 compared with 1996. The increase is
attributable to the Company's higher level of borrowings to finance the
acquisition of properties in 1997, and higher financing costs incurred
in connection with its credit facility and mortgage loans. The
amortization of loan fees was $816,000 and $650,000 for 1997 and 1996,
respectively. General and administrative expenses increased $585,000 or
33.4% in 1997 compared with 1996, a result of managing a larger real
estate portfolio.
Gain on Sale
In July 1997, the Company sold two of its Southern California office
properties for a sale price of approximately $25,800,000, which resulted
in a gain of $10,785,000. In October 1997, the Company sold Academy
Place Shopping Center in Colorado Springs, Colorado for a sale price of
approximately $7,500,000, which resulted in a gain of approximately
$748,000. Net operating loss carryforward was utilized to offset
substantially all of the 1997 taxable income remaining after the
deduction of dividends paid in 1997. Retention and reinvestment of gains
on property sales generated alternative minimum tax expense of
approximately $250,000 which is included in 1997 general and
administrative expense.
In April 1996, the Company sold 3.6 acres of land adjacent to its
suburban office property in Utah for $1,000,000, receiving $950,000 in
cash and a $50,000 note. The 10% interest bearing note was paid in April
1997. The sale resulted in a gain of $359,000. In December 1996, the
Company sold two industrial properties in St. Paul, Minnesota for a cash
price of $6,705,000. The sale resulted in a gain of $47,000.
Dividends
1997 quarterly dividend declared for each share of common stock was $0.26
for the first quarter, $0.27 for the second quarter, and $0.30 for the
third and fourth quarters. Consistent with the Company's policy,
dividends are paid in the quarter after declared. In addition, the
Company declared a quarterly dividend of $1,125,000 in each of the first
two quarters of 1997 and $1,250,000 for the third quarter of 1997 on the
Series A Convertible Preferred Stock. The preferred shares were
converted into 4,166,667 shares of common stock on October 15, 1997.
Comparison of 1996 to 1995
Income from Property Operations
Income from property operations increased $10,202,000 or 160% in 1996
compared with 1995. This is due to an increase in rental income of
$15,846,000 offset by an increase in rental expenses of $5,644,000.
The increase in rental income and expenses is primarily attributable to
the acquisition and development of real estate investments. This
acquisition and development activity increased rental income and rental
expenses by $16,684,000 and $5,445,000, respectively. This was partially
offset by the sale of an office property and an industrial property in
1995 which generated a reduction in rental income and rental expenses of
$1,078,000 and $687,000, respectively.
Expenses
Interest expense, which includes amortization of loan fees, increased
$2,753,000 or 173% in 1996 compared with 1995. The increase is
attributable to the Company's higher level of borrowings to finance the
acquisition of properties in 1996, and higher financing costs incurred
in connection with its credit facility and mortgage loans. The
amortization of loan fees was $650,000 and $277,000 for 1996 and 1995,
respectively. General and administrative expenses increased $295,000 or
20% in 1996 compared with 1995, a result of managing a larger real estate
portfolio.
Gain on Sale
In April 1996, the Company sold 3.6 acres of land adjacent to its
suburban office property in Salt Lake City, Utah for $1,000,000,
receiving $950,000 in cash and a $50,000 note due in April 1997, with 10%
interest payable monthly. The sale resulted in a gain of $359,000. In
December 1996, the Company sold two industrial properties in St. Paul,
Minnesota for a cash sale price of $6,705,000. The sale resulted in a
gain of $47,000.
In 1995, the Company sold an office property located in Mississippi and
an industrial property located in Kansas for $8,000,000 cash. The sales
resulted in a loss of $642,000.
Dividends
Quarterly dividends declared for the first and second quarters of 1996
were $0.24 per share of common stock, and $0.26 per share of common stock
for the third and fourth quarters of 1996. Consistent with the Company's
policy, dividends are paid in the quarter after declared. In addition,
the Company declared a quarterly dividend of $1,125,000 on the Series A
Convertible Preferred Stock in each of the four quarters of 1996. The
preferred stock dividends are due and payable 45 days after the quarter
end.
Financial Condition
Total assets of the Company at December 31, 1997 increased by
$202,079,000 compared with December 31, 1996, primarily as a result of
an increase in real estate investments (net of depreciation) of
$198,585,000. Total liabilities at December 31, 1997 decreased by
$20,379,000 compared with December 31, 1996, primarily as a result of the
paydown of the Company's credit facility.
Liquidity and Capital Resources
During the year ended December 31, 1997, the Company's operating
activities provided net cash flow of $25,041,000. Investing activities
provided cash flow of $31,909,000 from the sale of properties and
utilized $212,267,000 to acquire and improve real estate investments.
Financing activities provided net cash flow of $155,350,000 consisting
of the proceeds from bank borrowings of $167,559,000 and net proceeds
from the sale of common stock of $210,953,000, offset by repayment of
bank borrowings and mortgage loans of $207,245,000, payment of dividends
of $15,660,000, and redemption of partnership units of $257,000.
The Company's mortgage loans, obtained in 1997 and 1996, totaled
$60,323,000 at December 31, 1997. They are secured by 17 properties
(which Properties collectively accounted for approximately 26% of the
Company's Annualized Base Rent and 20% of the Company's total assets as
of December 31, 1997). The loans bear interest at rates ranging from
7.02% to 8.9% per annum and have terms ranging from two to nine years.
Interest is due and payable monthly. In February 1998, the Company
secured a mortgage loan of $20,900,000 which bears interest at 6.9% and
has an eight year term. The proceeds of the mortgage loans were used to
pay down a portion of the outstanding borrowings under the credit
facility.
The Company completed the sale of 3,350,000 shares of common stock at $13
per share in April 1996. In February 1997, the Company completed the
sale of 4,600,000 shares of the common stock at $17 3/8 per share and in
November 1997 sold an additional 7,245,000 shares of common stock at $19
5/8 per share. Net cash proceeds from each of these offerings was used
to pay off the outstanding borrowings under the Company's credit
facility. The facility was amended and expanded to $150 million in June
1997, and was further expanded to $175 million in September 1997. Under
this facility, the Company can borrow up to $25 million on an unsecured
basis. The secured loans bear interest at a rate of LIBOR plus 1.50% and
the unsecured loans bear interest at LIBOR plus 1.75%. The credit
facility contains various restrictive covenants including, among other
things, a covenant limiting quarterly dividends to 95% of average Funds
From Operations for the immediately preceding two fiscal quarters. At
December 31, 1997 the Company was in compliance with the covenants and
requirements of the credit facility.
The Company anticipates that the cash flow generated by its real estate
investments will be sufficient to meet its short-term liquidity
requirements. The Company expects to fund the cost of acquisitions,
capital expenditures, costs associated with lease renewals and reletting
of space, repayment of indebtedness, and development of properties from
(i) cash flow from operations, (ii) borrowings under the credit facility
and, if available, other indebtedness (which may include indebtedness
assumed in acquisitions), (iii) the sale of real estate investments, and
(iv) the sale of equity securities and, possibly, the issuance of equity
securities in connection with acquisitions.
The ability to obtain mortgage loans on income-producing properties is
dependent upon the ability to attract and retain tenants and the
economics of the various markets in which the properties are located, as
well as the willingness of mortgage-lending institutions to make loans
secured by real property. The ability to sell real estate investments
is partially dependent upon the ability of purchasers to obtain financing
at commercially reasonable rates.
Potential Factors Affecting Future Operating Results
At the present time, borrowings under the Company's credit facility bear
interest at a floating rate. Results from operations in 1998 may be
negatively impacted if interest rates increase in the future.
While the Company has historically been successful in renewing and
reletting space, the Company will be subject to the risk that certain
leases expiring in 1998 may not be renewed or the terms of renewal may
be less favorable than current lease terms. However, the Company expects
to release the vacant spaces without any material adverse impact on 1998
operations. In addition, the Company expects to incur costs in making
improvements or repairs to its portfolio of properties required by new
or renewing tenants and expenses associated with brokerage commissions
payable in connection with the reletting of space.
Many other factors affect the Company's actual financial performance and
may cause the Company's future results to be markedly outside of the
Company's current expectations.
Government Regulations
The Properties are subject to various federal, state and local regulatory
requirements such as local building codes and other similar regulations.
The Company believes that the Properties are currently in substantial
compliance with all applicable regulatory requirements, although
expenditures at Properties may be required to comply with changes in
these laws. No material expenditures are contemplated at this time in
order to comply with any such laws or regulations.
Under various federal, state and local laws, ordinances and regulations,
an owner or operator of real estate is liable for the costs of removal
or remediation of certain hazardous or toxic substances released on,
above, under, or in such property. Such laws often impose such liability
without regard to whether the owner knew of, or was responsible for, the
presence of such hazardous or toxic substances. The costs of such
removal or remediation could be substantial.
Additionally, the presence of such substances or the failure to properly
remediate such substances may adversely affect the owner's ability to
borrow using such real estate as collateral.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any of
its present or former properties. The Company does not anticipate that
compliance with federal, state and local environmental protection
regulations will have any material adverse impact on the financial
position, results of operations or liquidity of the Company.
Accounting Developments
In June 1997, the FASB issued Financial Accounting Standard No. 130 (SFAS
130), Reporting Comprehensive Income. SFAS 130 is effective with the
year-end 1998 financial statements; however, the total comprehensive
income is required in the financial statements for interim periods
beginning in 1998. In June 1997, the FASB issued Financial Accounting
Standard No. 131, Disclosure About Segments of An Enterprise and Related
Information. SFAS 131 is effective with the year-end 1998 financial
statements. Management believes that the adoption of these statements
will not have a material impact on the Company's financial statements.
General Litigation
The Company is involved in various legal matters in the ordinary course
of business. In the opinion of management, none of these matters could
have a material impact on the Company's financial statements.
Inflation
Most of the Company's leases require the tenants to pay their share of
operating expenses, including common area maintenance, real estate taxes
and insurance, thereby reducing the Company's exposure to increases in
costs and operating expenses resulting from inflation. Inflation,
however, could result in increases in the Company's borrowing costs.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Schedule Covered by Reports of
Independent Public Accountants
Report of Independent Public Accountants 48
Consolidated Balance Sheets as of December 31, 1997 and 1996 49
For the Years Ended December 31, 1997, 1996 and 1995:
- - Consolidated Statements of Income 50
- - Consolidated Statements of Stockholders' Equity 51
- - Consolidated Statements of Cash Flows 52
Notes to Consolidated Financial Statements 53
Financial Statement Schedule:
- - Schedule III - Real Estate and Accumulated Depreciation 64
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information required by Items 10 through 13 of Part III is
incorporated by reference from the Registrant's Proxy Statement which
will be mailed to stockholders in connection with the Registrant's annual
meeting of stockholders scheduled to be held on May 13, 1998.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) 1. Financial Statements
Report of independent public accountants.
The following consolidated financial statements of the
Company and its subsidiaries are included in Item 8 of this
report:
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
Schedule III - Real Estate and Accumulated Depreciation
All other schedules have been omitted as they are not
applicable, or not required or because the information is
given in the Consolidated Financial Statements or related
Notes to Consolidated Financial Statements.
3. Exhibits
Exhibit No. List of Exhibits
3.1 Charter of the Company, as amended, is incorporated
herein by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-2, Registration No. 333-
921.
3.2 Amended and Restated Bylaws of the Company are
incorporated herein by reference to Exhibit 3.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
10.1 The Company's Automatic Dividend Reinvestment and Share
Purchase Plan, as adopted by the Company, is incorporated
herein by reference to Exhibit 4.1 to Amendment No. 2 to
Registration Statement No. 2-94354 of ICM Property
Investors Incorporated.
10.4 Second Amended and Restated Credit Agreement dated as of
June 26, 1996, by and between the Company, as Borrower,
Bank of America National Trust and Savings Association
and the several financial institutions (the "Banks") is
incorporated herein by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.
10.5 Sale and Option Agreement dated as of August 26, 1995, by
and between Kemper Investors Life Insurance Company, on
behalf of itself and Participants (as defined therein),
as Lender, the Company, as Purchaser, and Tustin
Properties, as Owner, for 3002 Dow Business Center is
incorporated herein by reference to Exhibit 10.19 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
10.6 BPIA Agreement dated as of January 1, 1995, by and
between Westminster Holdings, Inc., a California
corporation and the Company is incorporated herein by
reference to Exhibit 10.14 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1995.
10.7 Employment Agreement made as of February 17, 1993, by and
between ICM Property Investors Incorporated and Peter B.
Bedford is incorporated by reference to Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, as amended by Form 10-K/A
filed on May 1, 1995, and Form 10-K/A-2 filed on August
8, 1995.
10.8 Amendment No. 1 to Employment Agreement dated as of
September 18, 1995, by and between Peter B. Bedford and
the Company is incorporated herein by reference to
Exhibit 10.10 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995.
10.12 Purchase and Sale Agreement dated as of October 19, 1995,
between Landsing Pacific Fund, Inc., a Maryland
corporation as Seller, and the Company, the Buyer, as
amended, is incorporated herein by reference to Exhibit
2.1 to the Company's Current Report on Form 8-K filed on
December 27, 1995.
10.13 Amended and Restated Promissory Note date May 24, 1996
executed by the Company and payable to the order of
Prudential Insurance Company of America is incorporated
herein by reference to Exhibit 10.13 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996.
10.14 Loan Agreement dated as of December 24, 1996 between
Bedford Property Investors, Inc. as Borrower and Union
Bank of California, N.A. as Lender is incorporated herein
by reference to Exhibit 10.14 to the Company's Form 10-K
for the year ended December 31, 1996.
10.15* Loan Agreement dated as of January 30, 1998 between
Bedford Property Investors, Inc. as Borrower and
Prudential Insurance Company of America as Lender.
10.16* The Company's Amended and Restated Employee Stock Plan.
10.17* Form of Employee Stock Plan Option Agreement between the
Company and the Named Executive Officers under the
Company's Amended and Restated Employee Stock Plan.
10.18* The Company's Amended and Restated 1992 Directors' Stock
Option Plan.
10.19* Form of Retention Agreement.
10.20* Employment Agreement made as of August 4, 1997, by and
between Bedford Property Investors Incorporated and Scott
R. Whitney.
10.21* Employment Agreement made as of November 18, 1997, by and
between Bedford Property Investors Incorporated and
Dennis Klimmek.
12* Ratio of Earnings to Fixed Charges.
21.1* Subsidiaries of the Company.
23.1* Consent of KPMG Peat Marwick LLP, independent auditors.
27* Financial Data Schedule
* Filed herewith
<PAGE>
B. Reports on Form 8-K
During the quarter ended December 31, 1997 the Company
filed on October 31, 1997, a report on Form 8-K dated
September 16, 1997, reporting items 5 and 7 and
announcing the acquisitions of the Mondavi Building, 2230
Oak Ridge Way and Oracle Center.
The following financial statements were filed: (i)
Historical Summary of Gross Income and Direct Operating
Expenses for Oracle Center for the four months ended
December 31, 1996 and (ii) pro forma financial statements
showing the effect resulting from all the Company's
acquisitions through October 16, 1997.
<PAGE>
Report of Independent Public Accountants
To the Stockholders and the Board of Directors of
Bedford Property Investors, Inc.:
We have audited the consolidated financial statements of Bedford Property
Investors, Inc. and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements,
we also have audited the financial statement schedule as listed in the
accompanying index. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Bedford Property Investors, Inc. and subsidiaries as of December 31, 1997
and 1996, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG Peat Marwick LLP
San Francisco, California
February 2, 1998
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
(in thousands, except share and per share amounts)
<TABLE>
<S> <C> <C>
1997 1996
Assets:
Real estate investments:
Industrial buildings $237,184 $164,674
Office buildings 170,948 53,071
Retail buildings - 6,281
Properties under development 18,227 5,388
Land held for development 5,712 -
432,071 229,414
Less accumulated depreciation 8,985 4,913
423,086 224,501
Cash 1,361 1,328
Other assets 9,456 5,995
$433,903 $231,824
Liabilities and Stockholders' Equity:
Bank loan payable 8,216 46,097
Mortgage loans payable 60,323 51,850
Accounts payable and accrued expenses 6,026 2,214
Dividend and distribution payable 6,804 2,827
Other liabilities 4,611 3,371
Total liabilities 85,980 106,359
Redeemable preferred stock:
Series A convertible preferred stock, par value
$0.01 per share; authorized 10,000,000 shares,
issued and outstanding none in 1997 and 8,333,334
shares in 1996; aggregate redemption amount
$50,000; aggregate liquidation preference $52,500 - 50,000
Minority interest in consolidated partnership 1,497 1,709
Stockholders' equity:
Common stock, par value $0.02 per share;
authorized 50,000,000 shares in 1997 and 15,000,000
shares in 1996; issued and outstanding 22,583,867
shares in 1997 and 6,526,325 shares in 1996 452 131
Additional paid-in capital 408,209 147,622
Accumulated losses and distributions in
excess of net income (62,235) (73,997)
Total stockholders' equity 346,426 73,756
$433,903 $231,824
</TABLE>
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 and 1995
(in thousands, except share and per share amounts)
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
Property operations:
Rental income $46,377 $27,541 $11,695
Rental expenses:
Operating expenses 6,852 5,352 2,744
Real estate taxes 3,977 2,595 1,105
Depreciation and amortization 5,716 3,030 1,484
Income from property operations 29,832 16,564 6,362
General and administrative expenses (2,337) (1,752) (1,457)
Interest income 289 150 226
Interest expense (7,918) (4,347) (1,594)
Income before gain (loss) on sales of real
estate investments and minority interest 19,866 10,615 3,537
Gain (loss) on sales of real estate investments 11,533 406 (642)
Minority interest (108) - -
Net income $31,291 $11,021 $ 2,895
Net income applicable to common
stockholders $27,791 $ 6,516 $ 1,607
Basic earnings per share $ 2.21 $ 1.21 $ 0.53
Weighted average number of shares 12,566,065 5,405,727 3,005,950
Earnings per share - assuming dilution $ 1.94 $ 1.14 $ 0.52
Weighted average number of shares -
assuming dilution 16,166,454 9,702,552 3,089,549
</TABLE>
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(in thousands, except share and per share amounts)
<TABLE>
<C> <C> <C> <C> <C>
Total
Accumulated common
losses and stock and
Additional distributions other stock-
Common paid-in in excess of holders'
stock capital net income equity
Balance, December 31, 1994 $ 60 $107,151 $(70,279) $ 36,932
Issuance of common stock 1 63 - 64
Costs of issuance of preferred stock - - (3,631) (3,631)
Redemption of rights - - (60) (60)
Net income - - 2,895 2,895
Dividends to common stockholders
($0.82 per share) - - (2,477) (2,477)
Dividends to preferred stockholders - - (1,288) (1,288)
Balance, December 31, 1995 $ 61 $107,214 $(74,840) $ 32,435
Issuance of common stock 70 43,778 - 43,848
Costs of issuance of preferred stock - - (2) (2)
Costs of issuance of common stock - (3,370) - (3,370)
Net income - - 11,021 11,021
Dividends to common stockholders
($1.00 per share) - - (5,671) (5,671)
Distributions to limited partnership unit holders - - (5) (5)
Dividends to preferred stockholders - - (4,500) (4,500)
Balance, December 31, 1996 $ 131 $147,622 $(73,997) $73,756
Issuance of common stock 321 265,622 - 265,943
Costs of issuance of common stock - (4,990) - (4,990)
Redemption of partnership units - (45) - (45)
Net income - - 31,291 31,291
Dividends to common stockholders
($1.13 per share) - - (16,029) (16,029)
Dividends to preferred stockholders - - (3,500) (3,500)
Balance, December 31, 1997 $ 452 $408,209 $(62,235) $346,426
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(in thousands)
<TABLE>
<C> <C> <C> <C>
1997 1996 1995
Operating Activities:
Net income $31,291 $11,021 $2,895
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest 108 - -
Depreciation and amortization 6,697 3,757 1,806
Loss (gain) on sale of real estate investments (11,533) (406) 642
Increase in other assets (4,655) (2,118) (1,679)
Increase in accounts payable and accrued expenses 1,282 763 601
Increase in other liabilities 1,851 1,361 633
Net cash provided by operating activities 25,041 14,378 4,898
Investing Activities:
Investments in real estate (212,267) (104,483) (81,173)
Proceeds from sales of real estate investments 31,909 7,519 7,914
Net cash used by investing activities (180,358) (96,964) (73,259)
Financing Activities:
Proceeds from bank loan payable 167,559 101,189 47,100
Repayment of bank loan payable (206,804) (99,048) (26,250)
Proceeds from mortgage loans payable - 49,384 -
Repayment of mortgage loans payable (441) - -
Issuance of common stock 210,953 40,476 64
Net proceeds from sale of preferred stock - - 46,369
Redemption of rights - - (60)
Redemption of partnership units (257) - -
Payment of dividends (15,660) (9,114) (2,568)
Net cash provided by financing activities 155,350 82,887 64,655
Net increase (decrease) in cash 33 301 (3,706)
Cash at beginning of year 1,328 1,027 4,733
Cash at end of year $ 1,361 $ 1,328 $1,027
Supplemental disclosure of cash flow information
a) Non-cash investing and financing activities:
Debt incurred with real estate acquired $ 8,914 $ 2,283 $3,000
Issuance of limited partnership units for real estate
acquired - 1,709 -
Note receivable from sale of real estate investment - 50 -
b) Cash paid during the year for interest, net of amounts
capitalized $ 7,291 $ 3,380 $1,283
c) Conversion of Preferred Stock (see footnote 9) $ 50,000 - -
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Summary of Significant Accounting Policies
and Practices
The Company
Bedford Property Investors Inc. (the Company) is a Maryland real
estate investment trust with investments primarily in industrial and
suburban office properties concentrated in the Western United States.
The Company's Common Stock trades under the symbol "BED" on both the
New York Exchange and Pacific Exchange.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and its general partnership
interest in Bedford Realty Partners, L.P. All significant
inter-entity balances have been eliminated in consolidation.
Use of Estimates
The preparation of these financial statements in conformity with
generally accepted accounting principles requires management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
Federal Income Taxes
The Company has elected to be taxed as a real estate investment trust
under Sections 856 to 860 of the Internal Revenue Code of 1986, as
amended ("the Code"). A real estate investment trust is generally not
subject to Federal income tax on that portion of its real estate
investment trust taxable income ("Taxable Income") which is
distributed to its stockholders, provided that at least 95% of Taxable
Income is distributed and other requirements are met. The Company
believes it is in compliance with the Code.
Taxable income differs from net income for financial reporting
purposes primarily because of the different methods of accounting for
depreciation. As of December 31, 1997, for Federal income tax
purposes, the Company had an ordinary loss carry forward of
approximately $32 million. As the Company does not expect to incur
income tax liabilities, the asset value of these losses has been
effectively fully reserved. Dividend distributions made for 1997 were
classified 88% as ordinary income and 12% as capital gain for Federal
income tax purposes.
Real Estate Investments
Buildings and improvements are carried at cost less accumulated
depreciation. Buildings are depreciated on a straight-line basis over
45 years. Upon the acquisition of an investment by the Company,
acquisition related costs are added to the carrying cost of that
investment. These costs are being depreciated over the useful lives
of the buildings. Leasing commissions and improvements to tenants'
space incurred subsequent to the acquisition are amortized over the
terms of the respective leases. Expenditures for repairs and
maintenance, which do not add to the value or prolong the useful life
of a property, are expensed as incurred. When the Company concludes
that the recovery of the carrying amount of a real estate investment
is impaired, it reduces such carrying amount to the estimated fair
value of the investment. Investments which have been classified as
held for sale are carried at the lower of the carrying amount or fair
value less costs to sell.
Income Recognition
Rental income from operating leases is recognized in income on a
straight-line basis over the period of the related lease agreement.
The aggregate rental income exceeded contractual rentals by
$1,644,000, $573,000 and $377,000 for 1997, 1996 and 1995,
respectively.
<PAGE>
Per Share Data
Per share data are based on the weighted average number of common and
common equivalent shares outstanding during the year. Per share data
reflects the retroactive application of the one-for-two reverse stock
split which took place on March 29, 1996. Stock options issued under
the Company's stock option plans are included in the calculation of
per share data if, upon exercise, they would have a dilutive effect.
The diluted earnings per share calculation assumes conversion of the
Series A Convertible Preferred Stock of the Company and the limited
partnership units of Bedford Realty Partners, L.P., if such
conversions would have dilutive effects, as of the beginning of the
year. Dividends accrued on the Series A Convertible Preferred Stock
and distributions accrued on the limited partnership units are
deducted from net income for purposes of determining net income
applicable to common stockholders.
Effective December 15, 1997, the Company adopted Statement of
Financial Accounting Standard No. 128, Earnings per share (FAS 128).
Earnings per share data for previous periods have been restated to
conform to FAS 128.
<PAGE>
Note 2 - Real Estate Investments
The following table sets forth the Company's real estate investments
as of December 31, 1997 (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
Less
Accumulated
Land Building Depreciation Total
INDUSTRIAL PROPERTIES
Northern California $ 42,941 $ 93,152 $ 3,358 $132,735
Southern California 13,551 31,130 1,405 43,276
Denver, Colorado 1,911 3,256 153 5,014
Arizona 6,248 14,502 264 20,486
Greater Portland Area 2,652 8,404 460 10,596
Greater Kansas City Area 3,398 13,295 654 16,039
Dallas, Texas 1,105 1,639 - 2,744
Total Industrial 71,806 165,378 6,294 230,890
SUBURBAN OFFICE PROPERTIES
Northern California 4,313 13,357 276 17,394
Southern California 7,312 18,074 358 25,028
Salt Lake City 359 6,491 757 6,093
Greater Kansas City Area 2,518 4,046 203 6,361
Greater Seattle Area 15,116 30,225 470 44,871
Reno, Nevada 2,102 10,439 154 12,387
Austin, Texas 2,766 7,075 91 9,750
Arizona 11,416 20,230 264 31,382
Denver, Colorado 1,860 13,249 49 15,060
Total Suburban Office 47,762 123,186 2,622 168,326
PROPERTIES UNDER DEVELOPMENT
Northern California 2,775 7,732 23 10,484
Arizona 1,033 3,407 33 4,407
Greater Kansas City Area 518 2,762 13 3,267
Total Properties Under Development 4,326 13,901 69 18,158
LAND HELD FOR DEVELOPMENT
Northern California 1,752 - - 1,752
Southern California 981 - - 981
Arizona 1,334 - - 1,334
Denver, Colorado 1,645 - - 1,645
Total Land Held for Development 5,712 - - 5,712
Total $129,606 $302,465 $ 8,985 $423,086
</TABLE>
The Company internally manages all but 7 of its properties from its
regional offices in Lafayette, CA; Tustin, CA; Phoenix, AZ; Lenexa,
KS; Denver, CO; Dallas, TX; and Seattle, WA. For the 7 properties
located in markets not served by a regional office, the Company has
subcontracted on-site management to local firms. All financial
record-keeping is centralized at the Company's corporate office in
Lafayette, CA.
During 1997 and 1996, the Company capitalized interest costs relating
to properties under development totaling $627,000 and $223,000,
respectively.
Note 3 - Consolidated Partnership
In December, 1996 the Company formed Bedford Realty Partners, L.P.
(the "Operating Partnership"), with the Company as the sole general
partner, for the purpose of acquiring real estate. In exchange for
contributing a property into the Operating Partnership, the owners of
the property receive limited partnership units ("OP Units"). A
limited partner can seek redemption of the OP Units at any time after
90 days. The Company, at its option, may redeem the OP Units by
either (i) issuing common stock at the rate of one share of common
stock for each OP Unit, or (ii) paying cash to a limited partner based
on the average trading price of its common stock. Each OP Unit is
allocated partnership income and cash flow at a rate equal to the
dividend being paid by the Company on a share of common stock.
Additional partnership income and cash flow is allocated 99% to the
Company and 1% to the limited partners.
This acquisition strategy is referred to as a "Down REIT" transaction;
as long as certain tax attributes are maintained, the income tax
consequences to a limited partner are generally deferred until such
time as the limited partner redeems their OP Units.
On December 17, 1996, the Company acquired a $3.6 million industrial
property located in Modesto, California utilizing the Operating
Partnership. The sellers of the property received 108,495 OP Units.
A director of the Company was a 9% owner of the property, but did not
participate in the approval of the acquisition. In March 1997, 13,446
OP Units were redeemed for cash.
Note 4 - Leases
Minimum future lease payments to be received as of December 31, 1997
are as follows (in thousands):
1998 $ 7,146
1999 5,819
2000 8,767
2001 8,023
2002 5,138
Thereafter 14,304
$49,197
The total minimum future lease payments shown above do not include
tenants' obligations for reimbursement of operating expenses or taxes
as provided by the terms of certain leases.
Note 5 - Related Party Transactions
Due to the Company's limited financial resources existing in prior
years, its activities relating to the acquisition of new properties
and debt and equity financings have been performed by Bedford
Acquisitions, Inc. (BAI) pursuant to a written contract dated January
1, 1995. The contract provides that BAI is obligated to provide
services to the Company with respect to the Company's acquisition and
financing activities, and that BAI is responsible for the payment of
its expenses incurred in connection therewith. The contract provides
that BAI is to be paid a fee in an amount equal to the lesser of (i)
1 1/2% of the gross amount raised in financings or the aggregated
purchase price of the property for acquisitions, or (ii) an amount
equal to (a) the aggregate amount of expenses funded by BAI through
the time of such acquisition or financing minus (b) the aggregate
amount of fees previously paid to BAI pursuant to such arrangement.
In no event will the aggregate amount of fees paid to BAI exceed the
aggregate amount of costs funded by BAI. The agreement with BAI has a
term of one year and is renewable at the option of the Company for
additional one-year terms. The current agreement will expire on
January 1, 1999.
For 1997, 1996 and 1995, the Company paid BAI $3,156,000, $1,808,000
and $2,143,000, respectively for acquisition and financing activities
performed pursuant to the foregoing arrangements. The Company
believes that since the fees charged under the foregoing arrangements
(i) have been and continue to be comparable to those charged by other
sponsors of real estate investment entities or other third party
service providers and (ii) have been and continue to be charged only
for services on acquired properties or completed financings, such fees
were and continue to be properly includable in direct acquisition
costs and capitalized as part of the asset or financing activities.
Note 6 - Stock Option Plans
A total of 900,000 shares of the Company's Common Stock have been
reserved for issuance under the Employee Stock Option Plan (the
"Employee Plan"). The Employee Plan expires in 2003. The Employee
Plan provides for non-qualified stock options and incentive stock
options.
The Employee Plan is administered by the Compensation Committee of the
Board of Directors, which determines the terms of options granted,
including the exercise price, the number of shares subject to the
option, and the exercisability of the options. Options granted to
employees are exercisable upon vesting, and typically vest over a
four-year period.
The Employee Plan requires that the exercise price of incentive stock
options be at least equal to the fair market value of such shares on
the date of grant and that the exercise price of non-qualified stock
options be equal to at least 85% of the fair market value of such
shares on the date of the grant. The maximum term of options granted
is ten years.
Initially 250,000 shares of the Company's Common Stock were reserved
for issuance under the Directors' Stock Option Plan (the "Directors'
Plan"). On May 16, 1996 the shareholders approved an additional
250,000 shares. The Directors' Plan expires in 2002. The Directors'
Plan provides for the grant of non-qualified stock options to
directors of the Company. The Directors' Plan contains an automatic
grant feature whereby a director receives a one-time "initial option"
to purchase 25,000 shares upon a director's appointment to the Board
of Directors and thereafter receives automatic annual grants of
options to purchase 10,000 shares upon re-election to the Board of
Directors. Options granted are generally exercisable six months from
the date of grant.
The Directors' Plan requires that the exercise price of options be
equal to the fair market value of the underlying shares on the date of
grant. The maximum term of options granted is ten years.
In September 1995, the Company established a Management Stock
Acquisition program. Under the program, options exercised by key
members of management shortly after the grant date may be exercised
either in cash or with a note payable to the Company. Such note bears
interest at 7.5% or the Applicable Federal Rate as defined by the
Internal Revenue Service, whichever is higher. The note is due in
five years or within ninety days from termination of employment, with
interest payable quarterly. During 1996 and 1995, options for 155,000
shares of Common Stock were exercised in exchange for notes payable to
the Company. The notes bear interest at 7.5%. The unpaid balance of
the notes is $1,466,000 and is included in the accompanying
consolidated balance sheet as a reduction of additional paid-in
capital.
In addition, the Company may grant restricted stock to key employees.
These shares generally vest over five years and are subject to
forfeiture under certain conditions. In 1997, 42,500 shares were
granted.<PAGE>
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its plans. Accordingly, compensation costs have not
been recognized for either the Employee or Directors' Plan. Had
compensation costs for the plans been determined consistent with FASB
Statement No. 123, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
1997 1996 1995
Net income:
As reported $31,291 $11,021 $2,895
Pro forma 31,045 10,831 2,821
Basic earnings per share:
As reported $ 2.21 $ 1.21 $ 0.53
Pro forma 2.19 1.17 0.51
Earnings per share - assuming dilution:
As reported $ 1.94 $ 1.14 $ 0.52
Pro forma 1.92 1.12 0.50
<PAGE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants in 1997, 1996 and 1995,
respectively: dividend yield of 5.8%, 6.9% and 6.7%; expected
volatility of 16.8%, 18.1% and 19.4%; risk-free interest rates of
5.7%, 6.3% and 5.3%; and expected lives of five years for each period.
A summary of the status of the Company's plans as of December 31,
1997, 1996 and 1995 and changes during the years ended on those dates
is presented below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1995
Weighted Avg. Weighted Avg. Weighted Avg.
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Employee Plan
Outstanding at beginning
of year 242,250 $12.94 93,750 $ 12.78 107,500 $ 13.04
Granted 483,000 18.25 267,000 13.00 86,000 11.50
Exercised (7,125) 13.37 (106,000) 12.96 (56,875) 11.14
Forfeited (29,375) 13.30 ( 12,500) 12.92 (42,875) 12.91
Outstanding at end of year 688,750 $16.64 242,250 $ 12.94 93,750 $ 12.78
Options exercisable 118,750 45,063 25,875
Weighted average fair value
of options granted during
the year $ 1.94 $ 1.37 $ 1.19
Directors' Plan
Outstanding at beginning
of year 295,000 $ 9.94 250,000 $ 8.28 175,000 $ 6.76
Granted 70,000 18.82 70,000 14.22 75,000 11.84
Exercised - - (25,000) 5.33 - -
Outstanding at end of year 365,000 $11.65 295,000 $ 9.94 250,000 $ 8.28
Options exercisable 365,000 295,000 175,000
Weighted average fair value
of options granted during
the year $ 1.59 $ 1.06 $ 1.16
</TABLE>
The following table summarizes information about stock options
outstanding on December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C>
Options Outstanding Options Exercisable
Weighted Avg.
Range of Number Remaining Weighted Avg. Number Weighted Avg.
Exercise Price Outstanding Contractual Life Exercise Price Exercisable Exercise Price
Employee Plan
$ 8.50 2,750 0.4 $ 8.50 2,750 $ 8.50
13.75 to 14.00 49,750 2.5 13.93 47,750 13.95
11.50 34,500 7.7 11.50 17,250 11.50
13.00 120,750 8.3 13.00 51,000 13.00
$ 17.63 to 20.75 481,000 9.3 18.25 - -
$ 8.50 to 20.75 688,750 8.5 $16.64 118,750 $ 13.06
Directors' Plan
$ 5.33 100,000 0.9 $ 5.33 100,000 $ 5.33
7.71 25,000 0.9 7.71 25,000 7.71
12.97 25,000 1.8 12.97 25,000 12.97
11.82 to 11.85 75,000 3.2 11.84 75,000 11.84
14.22 70,000 8.8 14.22 70,000 14.22
$ 18.82 70,000 9.8 $18.82 70,000 $ 18.82
$ 5.33 to 18.82 365,000 4.7 $11.65 365,000 $ 11.65
</TABLE>
Note 7 - Bank Loan Payable
In June 1997, the Company expanded its secured revolving credit
facility with Bank of America from $100 million to $150 million,
maturing on June 1, 2000. In September 1997, the credit facility was
further expanded to $175 million. Under this facility, the Company
can borrow up to $25 million on an unsecured basis. The secured loans
bear interest at a floating rate equal to either the lender's
published "reference rate" or LIBOR plus 1.50%. The interest rate of
the unsecured loans is 25 basis points higher than that of the secured
loans. The credit facility is secured by mortgages on 35 properties
(which properties collectively accounted for approximately 49% of the
Company's Annualized Base Rent and approximately 47% of the Company's
total assets as of December 31, 1997), together with the rental
proceeds from such properties. The credit facility contains various
restrictive covenants including, among other things, a covenant
limiting quarterly dividends to 95% of average Funds From Operations
for the immediately preceding two fiscal quarters.
The daily weighted average amount owed to the bank was $45,642,000 and
$10,997,000 in 1997 and 1996, respectively. The weighted average
interest rates in these periods were 7.42% and 8.03%, respectively.
The effective interest rate at December 31, 1997 was 7.50%.
<PAGE>
Note 8 - Mortgage Loans Payable
Mortgage loans payable at December 31, 1997 consist of the following
(in thousands):
Floating rate note due December 15, 1999,
current rate of 8.75% $ 1,823
7.5% note due January 1, 2002 24,677
7.02% note due March 15, 2003 25,000
8.9% note due July 31, 2006 8,823
$ 60,323
The mortgage loans are collaterized by 17 properties (which Properties
collectively accounted for approximately 26% of the Company's
Annualized Base Rent and approximately 20% of the Company's total
assets as of December 31, 1997).
The following table presents scheduled principal payments on mortgage
loans as of December 31, 1997 (in thousands):
1998 $ 838
1999 2,768
2000 1,048
2001 1,130
2002 23,681
Thereafter 30,858
$ 60,323
Note 9 - Redeemable Preferred Stock
On September 18, 1995, the Company issued and sold 8,333,334 shares of
Series A Convertible Preferred Stock (the "Convertible Preferred
Stock") for $6.00 per share. Holders of the Convertible Preferred
Stock were entitled to cumulative quarterly dividends in cash in an
amount equal to the greater of (i) $0.135 per share or (ii) the
dividends payable in such quarter on the Common Stock into which the
Convertible Preferred Stock is convertible plus, in both cases, the
accumulated but unpaid dividends on the Convertible Preferred Stock.
Dividends may be declared and paid on shares of Common Stock only if
full cumulative dividends have been paid or authorized and set apart
on all shares of Convertible Preferred Stock. Each share of
Convertible Preferred Stock was convertible at any time after
September 18, 1997 into one-half share of Common Stock. On October
14, 1997, the 8,333,334 shares of the Series A Convertible Preferred
Stock were converted to 4,166,667 shares of common stock.
Note 10 - Sales of Common Stock
The Company completed the sale of 3,350,000 shares of common stock at
$13 per share in April 1996. In February 1997, the Company
completed the sale of 4,600,000 shares of the common stock at $17 3/8
per share and in November 1997 sold an additional 7,245,000 shares of
common stock at $19 5/8 per share. Net cash proceeds from each of
these offerings was used to pay off the outstanding borrowings under
the Company's credit facility.
<PAGE>
Note 11 - Earnings per Share
Following is a reconciliation of earnings per share:
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1997 1996 1995
Basic:
Net income $ 31,291 $ 11,021 $ 2,895
Less:Dividends on the Series A Convertible
Preferred Stock (3,500) (4,500) (1,288)
Distributions to Operating
Partnership Unit Holders - (5) -
Net income applicable to common stockholders 27,791 6,516 1,607
Weighted average number of shares 12,566,065 5,405,727 3,005,950
Basic earnings per share $ 2.21 $ 1.21 $ 0.53
Diluted:
Weighted average number of shares (from above) 12,566,065 5,405,727 3,005,950
Weighted average shares issuable upon
conversion of the Series A Convertible
Preferred Stock1 3,264,840 4,166,667 -
Weighted average shares of dilutive stock
options using average period stock price
under the treasury stock method 237,185 125,711 83,599
Weighted average shares issuable upon the
conversion of operating partnership units2 98,364 4,447 -
Weighted average number of common shares -
assuming dilution 16,166,454 9,702,552 3,089,549
Earnings per share - assuming dilution $ 1.94 $ 1.14 $ 0.52
</TABLE>
Per share amounts and number of shares have been adjusted to
reflect the one-for-two reverse stock split effective
March 29, 1996.
1Not applicable before 1995. The Series A Convertible Preferred Stock
was issued in September 1995.
2Not applicable before 1996. The Operating Partnership Units were
issued in December 1996.
<PAGE>
Note 12 - Quarterly Financial Data-Unaudited
The following is a summary of quarterly results of operations for 1997
and 1996 (in thousands of dollars, except per share data):
<TABLE>
<S> <C> <C> <C> <C>
1997 Quarters Ended 3/31 6/30 9/30 12/31
Rental income $9,056 $10,627 $12,789 $13,905
Income from property operations 5,642 6,929 8,295 8,966
Income before gain on sales of real estate
investments and minority interest 3,680 4,886 5,022 6,278
Net income $3,655 $ 4,860 $15,781 $ 6,995
Net income applicable to common
stockholders1 $2,530 $ 3,735 $14,531 $ 6,995
Basic earnings per share3 $ 0.28 $ 0.34 $ 1.30 $ 0.37
Earnings per share -
assuming dilution3 $ 0.27 $ 0.31 $ 1.01 $ 0.35
1996 Quarters Ended 3/31 6/30 9/30 12/31
Rental income $5,709 $ 6,369 $ 7,090 $ 8,373
Income from property operations 3,347 3,857 4,230 5,130
Income before gain on sales of real
estate investments 1,953 2,621 2,932 3,109
Net income $1,953 $ 2,980 $ 2,932 $ 3,156
Net income applicable to common
stockholders2 $ 828 $ 1,855 $ 1,807 $ 2,026
Basic earnings per share3 $ 0.27 $ 0.33 $ 0.28 $ 0.31
Earnings per share -
assuming dilution3 $ 0.26 $ 0.30 $ 0.27 $ 0.29
</TABLE>
1Reflects reduction for dividends and distributions of $1,125 each for
the first and second quarter of 1997 and $1,250 for the third quarter
of 1997.
2Reflects reduction for dividends and distributions of $1,130 for the
fourth quarter of 1996 and $1,125 each for the first, second and third
quarter of 1996.
3Reflects the one-for-two reverse stock split effective March 29,
1996.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1997
(in thousands of dollars)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Cost Cost Gross Amount
to Company Capital- Carried at Close Accumu-
Build- ized Sub- of Period Accumu- Deprec-
ings & sequent to lated De- Date iable
Improve- Acquisi- precia- Con- Date Life
Land ment tion Land Building Total tion structed Acquired (Years)
INDUSTRIAL PROPERTIES:
Northern California
Building #3 at Contra Costa
Diablo Industrial Park, Concord $ 495 $ 1,159 $ 89 $ 495 $ 1,248 $ 1,743 $ 235 1983 12/90 45
Building #8 at Contra Costa
Diablo Industrial Park, Concord 877 1,548 143 877 1,691 2,568 300 1981 12/90 45
Building #18 at Mason Industrial
Park, Concord 610 1,265 60 610 1,325 1,935 237 1984 12/90 45
115 Mason Circle, Concord 697 854 36 697 890 1,587 27 1971 9/96 45
Auburn Court, Fremont 1,391 2,473 232 1,416 2,680 4,096 119 1983 12/95 45
47650 Westinghouse Drive, Fremont 267 893 60 271 949 1,220 42 1982 12/95 45
47600 Westinghouse Drive, Fremont 356 1,067 43 356 1,110 1,466 32 1982 9/96 45
47633 Westinghouse Drive, Fremont 1,051 3,239 142 1,051 3,381 4,432 92 1983 10/96 45
Fourier Avenue, Fremont 2,120 7,018 - 2,120 7,018 9,138 247 1982 5/96 45
Milpitas Town Center, Milpitas 1,400 4,421 86 1,400 4,507 5,907 339 1983 8/94 45
598 Gibraltar Drive, Milpitas 535 2,522 - 535 2,522 3,057 145 1996 5/96 45
Doherty Avenue, Modesto 464 3,178 266 470 3,438 3,908 76 1963-71 12/96 45
860-870 Napa Valley Corporate
Way, Napa 933 3,515 219 933 3,734 4,667 107 1984 9/96 45
350 E. Plumeria Drive, San Jose 3,621 4,704 166 3,683 4,808 8,491 240 1983 9/95 45
Lundy Avenue, San Jose 2,055 2,184 190 2,055 2,374 4,429 78 1982 7/96 45
O'Toole Business Center, San Jose 3,934 5,748 204 3,934 5,952 9,886 131 1984 12/96 45
301 East Grand, South
San Francisco 2,036 959 160 2,070 1,085 3,155 60 1974 12/95 45
342 Allerton, South
San Francisco 2,516 1,542 324 2,558 1,824 4,382 81 1969 12/95 45
400 Grandview, South
San Francisco 3,246 3,517 227 3,300 3,690 6,990 169 1976 12/95 45
410 Allerton, South
San Francisco 1,333 889 40 1,356 906 2,262 41 1970 12/95 45
417 Eccles, South San Francisco 649 510 28 661 526 1,187 24 1964 12/95 45
6500 Kaiser Drive, Fremont 1,556 6,411 29 1,556 6,440 7,996 143 1990 1/97 45
Bedford Fremont Business Center,
Fremont 3,598 9,004 97 3,598 9,101 12,699 176 1990 3/97 45
Spinnaker Court, Fremont 2,548 5,989 32 2,548 6,021 8,569 89 1986 5/97 45
2277 Pine View Way, Petaluma 1,861 7,074 2 1,861 7,076 8,937 92 1989 6/97 45
Mondavi Building, Napa 1,315 5,214 - 1,315 5,214 6,529 29 1985 9/97 45
Building #2 at Monterey Commerce
Center, Monterey 611 1,833 - 611 1,833 2,444 3 1990 12/97 45
Building #3 at Monterey Commerce
Center, Monterey 604 1,812 - 604 1,812 2,416 3 1990 12/97 45
Southern California
Dupont Industrial Center, Ontario 3,588 6,162 185 3,588 6,347 9,935 579 1989 5/94 45
3002 Dow Business Center, Tustin 4,209 7,291 665 4,305 7,860 12,165 452 1987-89 12/95 45
Building #1 at Carroll Tech
Center, San Diego 511 1,372 - 511 1,372 1,883 38 1984 10/96 45
Building #2 at Carroll Tech
Center, San Diego 1,022 2,129 - 1,022 2,129 3,151 59 1984 10/96 45
Signal Systems Building,
San Diego 2,228 7,264 - 2,228 7,264 9,492 161 1990 12/96 45
Building #1 at Oak Ridge Business
Center, Vista 646 2,135 - 646 2,135 2,781 55 1990 10/96 45
Building #2 at Oak Ridge Business
Center, Vista 566 1,832 - 566 1,832 2,398 47 1990 10/96 45
2230 Oak Ridge Way, Vista 684 2,191 - 684 2,191 2,875 13 1997 10/97 45
Denver Metropolitan Area
Bryant Street Annex, Denver 487 866 105 495 963 1,458 40 1968 12/95 45
Bryant Street Quad, Denver 1,394 2,181 135 1,416 2,294 3,710 113 1971-73 12/95 45
Greater Phoenix Area, Arizona
Westech Business Center, Phoenix 3,531 4,422 257 3,531 4,679 8,210 197 1985 4/96 45
2601 W. Broadway, Tempe 1,127 2,348 80 1,127 2,428 3,555 22 1977 7/97 45
Building #3 at Phoenix Airport
Center, Phoenix 682 3,163 - 682 3,163 3,845 29 1990 7/97 45
Greater Portland Area, Oregon
Twin Oaks Technology Center,
Beaverton 1,444 4,836 438 1,469 5,249 6,718 305 1984 12/95 45
Twin Oaks Business Center,
Beaverton 1,163 2,847 328 1,183 3,155 4,338 155 1984 12/95 45
Greater Kansas City Area
Panorama Business Center, Kansas
City 675 3,098 177 675 3,275 3,950 81 1984 12/96 45
Ninety-Ninth Street #3, Lenexa 360 2,167 179 360 2,346 2,706 361 1990 12/90 45
Ninety-Ninth Street #1, Lenexa 404 1,547 40 408 1,583 1,991 79 1988 9/95 45
Ninety-Ninth Street #2, Lenexa 180 555 14 183 566 749 28 1988 9/95 45
Lackman Business Center, Lenexa 619 1,631 182 628 1,804 2,432 106 1985 9/95 45
Continental Can, Lenexa 1,144 3,722 - 1,144 3,722 4,866 - 1972 12/97 45
Tucson, Arizona
Butterfield Business Center,
Tucson 909 4,230 1 909 4,231 5,140 16 1986 11/97 45
Dallas, Texas
Ferrell Drive, Dallas 1,105 1,639 - 1,105 1,639 2,744 - 1984 12/97 45
SUBURBAN OFFICE PROPERTIES:
Southern California
Laguna Hills Square, Laguna 2,436 3,655 546 2,436 4,201 6,637 180 1983 3/96 45
Building #3 at Carroll Tech
Center, San Diego 716 1,400 - 716 1,400 2,116 39 1984 10/96 45
Scripps Wateridge, San Diego 4,160 12,472 - 4,160 12,472 16,632 139 1990 6/97 45
Salt Lake City, Utah
Woodlands II, Salt Lake City 359 5,805 686 359 6,491 6,850 757 1990 8/93 45
Kansas City, Kansas
6600 College Blvd., Overland
Park 2,480 3,880 204 2,518 4,046 6,564 203 1982-83 10/95 45
Northern California
Village Green, Lafayette 547 1,245 508 743 1,557 2,300 140 1983 7/94 45
100 View Street, Mountain View 1,020 3,144 254 1,020 3,398 4,418 121 1985 5/96 45
Canyon Park, San Ramon 1,933 3,098 - 1,933 3,098 5,031 6 1971-72 12/97 45
Building #1 at Monterey Commerce
Center, Monterey 616 5,302 - 616 5,302 5,918 10 1990 12/97 45
Greater Seattle Area, Washington
Kenyon Center, Bellevue 5,095 7,250 - 5,095 7,250 12,345 215 1987 9/96 45
Orillia Office Park, Renton 10,021 22,975 - 10,021 22,975 32,996 255 1986 7/97 45
Phoenix, Arizona
Executive Center at Southbank,
Phoenix 4,943 7,134 - 4,943 7,134 12,077 133 1989 3/97 45
Building #1 at Phoenix Airport
Center, Phoenix 944 1,541 16 944 1,557 2,501 14 1990 7/97 45
Building #2 at Phoenix Airport
Center, Phoenix 723 3,278 - 723 3,278 4,001 30 1990 7/97 45
Building #4 at Phoenix Airport
Center, Phoenix 517 1,732 - 517 1,732 2,249 16 1990 7/97 45
Building #5 at Phoenix Airport
Center, Phoenix 1,507 3,860 3 1,507 3,863 5,370 36 1990 7/97 45
Phoenix Airport Center Parking,
Phoenix 1,450 - - 1,450 - 1,450 1 1990 7/97 45
Tucson, Arizona
Troika Building, Tucson 1,332 2,631 35 1,332 2,666 3,998 34 1985 6/97 45
Reno, Nevada
U.S. Bank Centre, Reno 2,102 10,264 175 2,102 10,439 12,541 154 1989 5/97 45
Austin, Texas
9737 Great Hills Trail, Austin 2,766 7,028 47 2,766 7,075 9,841 91 1984 5/97 45
Denver Metropolitan Area, Colorado
Oracle Building, Denver 1,860 13,249 - 1,860 13,249 15,109 49 1996 10/97 45
INDUSTRIAL PROPERTIES UNDER DEVELOPMENT
99th Street Building #4, Lenexa,
KS 519 - 2,762 519 2,762 3,281 13 N/A 6/96 45
Westech Business Center II,
Phoenix, AZ 1,033 - 3,407 1,033 3,407 4,440 33 N/A 7/96 45
Westinghouse Land, Fremont, CA 1,624 - 2,629 1,624 2,629 4,253 - N/A 10/96 45
Bordeaux Centre, Napa, CA 1,151 - 5,102 1,151 5,102 6,253 23 N/A 12/96 45
LAND HELD FOR DEVELOPMENT
Napa Lot 10A, Napa, CA 961 - 13 974 - 974 - N/A 12/96
Scripps Land, San Diego, CA 622 - - 622 - 622 - N/A 6/97
Oak Ridge Way Lot, Vista, CA 359 - - 359 - 359 - N/A 10/97
Oracle Land, Denver, CO 1,645 - - 1,645 - 1,645 - N/A 10/97
Butterfield Land, Tucson, AZ 102 - - 102 - 102 - N/A 11/97
Canyon Park Land, San Ramon, CA 778 - - 778 - 778 - N/A 12/97
Eaton Freeway Land, Tempe, AZ 1,232 - - 1,232 - 1,232 - N/A 12/97
$128,910 $281,113 $22,048 $129,606 $302,465 $432,071 $8,985
(A) (B)
</TABLE>
<PAGE>
NOTES TO SCHEDULE III
(in thousands of dollars)
(A) An analysis of the activity in real estate investments for the
years ended December 31, 1997, 1996 and 1995 is presented below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Accumulated Depreciation
1997 1996 1995 1997 1996 1995
BALANCE AT BEGINNING OF PERIOD $229,414 $131,183 $ 58,203 $4,913 $2,219 $3,150
Add (deduct):
Acquisition of Lackman Business Center - - 2,250 - - -
Acquisition of 350 E. Plumeria Drive - - 8,325 - - -
Sale of Cody Street Park, Building 6 (C) - - (1,639) - - (203)
Acquisition of Ninety-Ninth Street, Building 1 - - 1,951 - - -
Acquisition of Ninety-Ninth Street, Building 2 - - 735 - - -
Sale of IBM Building (D) - - (8,325) - - (2,024)
Acquisition of 6600 College Boulevard - - 6,360 - - -
Acquisition of 3002 Dow Business Center - - 11,500 - - -
Acquisition of Landsing Pacific Portfolio - - 49,708 - - -
Acquisition of Laguna Hills Square - 6,091 - - - -
Acquisition of Westech Business Center - 7,953 - - - -
Acquisition of 100 View Street - 4,164 - - - -
Acquisition of Fourier Avenue - 9,138 - - - -
Acquisition of 598 Gibraltar - 1,743 - - - -
Acquisition of Lundy Avenue - 4,239 - - - -
Acquisition of Kenyon Center - 12,345 - - - -
Acquisition of 47600 Westinghouse Drive - 1,423 - - - -
Acquisition of 860-870 Napa Valley Corp. Way - 4,448 - - - -
Acquisition of 115 Mason Circle - 1,551 - - - -
Acquisition of Oak Ridge Business Center - 5,179 - - - -
Acquisition of Carroll Tech Center - 7,151 - - - -
Acquisition of 47633 Westinghouse Drive - 4,290 - - - -
Acquisition of Panorama Business Center - 3,774 - - - -
Acquisition of Signal Systems Building - 9,492 - - - -
Acquisition of O'Toole Business Center - 9,681 - - - -
Acquisition of Doherty Avenue - 3,642 - - - -
Acquisition of Westinghouse Land - 1,625 - - - -
Acquisition of Napa Lot 10A - 961 - - - -
Acquisition of Napa Lots 12J & K - 1,151 - - - -
Acquisition of Lenexa Land - 518 - - - -
Acquisition of Phoenix Land - 1,033 - - - -
Sale of Woodland Land (E) - (614) - - - -
Sale of St. Paul East (F) - (2,792) - - (45) -
Sale of St. Paul West (F) - (3,839) - - (36) -
Acquisition of 6500 Kaiser Drive 7,967 - - - - -
Acquisition of Bedford Fremont
Business Center 12,602 - - - - -
Acquisition of Spinnaker Court 8,537 - - - - -
Acquisition of 2277 Pine View Way 8,935 - - - - -
Acquisition of Mondavi Building 6,529 - - - - -
Acquisition of Building #2 at Monterey
Commerce Center 2,444 - - - - -
Acquisition of Building #3 at Monterey
Commerce Center 2,416 - - - - -
Acquisition of 2230 Oak Ridge Way 2,875 - - - - -
Acquisition of 2601 W. Broadway 3,475 - - - - -
Acquisition of Building #3 at Phoenix
Airport Center 3,845 - - - - -
Acquisition of Continental Can 4,866 - - - - -
Acquisition of Butterfield Business Center 5,139 - - - - -
Acquisition of Ferrell Drive 2,744 - - - - -
Acquisition of Scripps Wateridge 16,632 - - - - -
Acquisition of Canyon Park 5,031 - - - - -
Acquisition of Building #1 at Monterey
Commerce Center 5,918 - - - - -
Acquisition of Orillia Office Park 32,996 - - - - -
Acquisition of Executive Center
At Southbank 12,077 - - - - -
Acquisition of Building #1 at Phoenix
Airport Center 2,485 - - - - -
Acquisition of Building #2 at Phoenix
Airport Center 4,001 - - - - -
Acquisition of Building #4 at Phoenix
Airport Center 2,249 - - - - -
Acquisition of Building #5 at Phoenix
Airport Center 5,367 - - - - -
Acquisition of Phoenix Airport Center
Parking 1,450 - - - - -
Acquisition of Troika Building 3,963 - - - - -
Acquisition of U.S. Bank Centre 12,366 - - - - -
Acquisition of 9737 Great Hills Trail 9,794 - - - - -
Acquisition of Oracle Building 15,109 - - - - -
Acquisition of Scripps Land 622 - - - - -
Acquisition of Oak Ridge Way Lot 359 - - - - -
Acquisition of Oracle Land 1,645 - - - - -
Acquisition of Butterfield Land 102 - - - - -
Acquisition of Canyon Park Land 778 - - - - -
Acquisition of Eaton Freeway Land 1,232 - - - - -
Sale of 1000 Town Center Drive (G) (6,622) - - (780) - -
Sale of Mariner Court (G) (7,864) - - (419) - -
Sale of Academy Place Shopping Center (H) (6,281) - - (110) - -
Capitalized costs 16,874 3,884 2,115 - - -
Depreciation - - - 5,381 2,775 1,296
BALANCE AT END OF PERIOD $432,071 $229,414 $131,183 $8,985 $4,913 $2,219
</TABLE>
(B) The aggregate cost for Federal income tax purposes is $296,993.
(C) In the third quarter 1995, the Company decided to sell the Cody Street
Park, Building 6. The property was sold on September 20, 1995.
(D) During 1995, the Company continued to offer for sale the IBM Building
located in Jackson, Mississippi. This property was first offered for
sale in 1991, at which time the Company's investment in the property was
written down by $2,113,000. The property sold on October 2, 1995.
(E) The property was sold in April 1996.
(F) The properties were sold in December 1996.
(G) The properties were sold in July 1997.
(H) The property was sold in October 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BEDFORD PROPERTY INVESTORS, INC.
By: /s/ Peter B. Bedford
Peter B. Bedford
Chairman of the Board and
Chief Executive Officer
Dated: March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of
the Registrant and in the capacity and on the date indicated.
/s/ Peter B. Bedford March 27, 1998
Peter B. Bedford, Chairman of the Board
and Chief Executive Officer
/s/ Claude M. Ballard March 27, 1998
Claude M. Ballard, Director
/s/ Anthony Downs March 27, 1998
Anthony Downs, Director
/s/ Anthony M. Frank March 27, 1998
Anthony M. Frank, Director
/s/ Martin I. Zankel March 27, 1998
Martin I. Zankel, Director
/s/ Thomas H. Nolan, Jr. March 27, 1998
Thomas H. Nolan, Jr., Director
/s/ Thomas G. Eastman March 27, 1998
Thomas G. Eastman, Director
/s/ Scott R. Whitney March 27, 1998
Scott R. Whitney
Senior Vice President and
Chief Financial Officer
/s/ Hanh Kihara March 27, 1998
Hanh Kihara, Vice President Controller
<PAGE>
Exhibit 12
Bedford Property Investors, Inc.
Computation of Ratio of Earnings to Fixed Charges and Preferred
Dividends and Limited Partner Distributions
(in thousands, except for ratio)
<TABLE>
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1997 1996 1995 1994 1993
Net income $31,291 $ 11,021 $ 2,895 $3,609 $3,147
Fixed charges - interest and
amortization of loan fees 7,918 4,347 1,594 955 716
Fixed charges - interest capitalized 627 - - - -
Net income including fixed charges 39,836 15,368 4,489 4,564 3,863
Preferred dividends and limited partner
distributions 3,608 4,505 1,288 - -
Net income including fixed charges,
preferred dividends and limited
partner distributions $43,444 $19,873 $ 5,777 $4,564 $3,863
Ratio of earnings to fixed charges,
including preferred dividends and
limited partner distributions 3.57 2.25 2.00 4.78 5.40
Ratio of earnings to fixed charges,
excluding preferred dividends and
limited partner distributions 4.66 3.54 2.82 4.78 5.40
</TABLE>
<PAGE>
Exhibit 21.1
Subsidiaries of Bedford Property Investors, Inc.
<TABLE>
<S> <C> <C>
Name Under
Subsidiary Which Subsidiary is
Name State ofIncorporation doing Business
1. ICMPI (Concord Diablo 3), Inc. Delaware ICMPI (Concord Diablo 3), Inc.
2. ICMPI (Concord Diablo 8), Inc. Delaware ICMPI (Concord Diablo 8), Inc.
3. ICMPI (Concord Mason 18), Inc. Delaware ICMPI (Concord Mason 18), Inc.
4. ICMPI (Overland Park), Inc. Delaware ICMPI (Overland Park), Inc.
5. ICMPI (Lenexa), Inc. Delaware ICMPI (Lenexa), Inc.
6. ICMPI (Jackson), Inc. Delaware ICMPI (Jackson), Inc.<PAGE>
Exhibit 23.1
</TABLE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Bedford Property Investors, Inc.:
We consent to incorporation by reference in the registration
statements on Form S-3 (No.'s 33-15233 and 333-23687) and the
registration statement on Form S-8 (No. 333-18215) of Bedford Property
Investors, Inc. of our report dated February 2, 1998, relating to the
consolidated balance sheets of Bedford Property Investors, Inc. as of
December 31, 1997 and 1996, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the years in
the three-year period ended December 31, 1997, and the related
financial statement schedule as of December 31, 1997, which report
appears in the December 31, 1997 annual report on Form 10-K of Bedford
Property Investors, Inc.
KPMG Peat Marwick LLP
San Francisco, California
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
EXHIBIT 27
FINANCIAL DATA SCHEDULE
(in thousands except per share amounts)
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> $1,361
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,416
<PP&E> 432,071
<DEPRECIATION> 8,985
<TOTAL-ASSETS> 433,903
<CURRENT-LIABILITIES> 15,839
<BONDS> 68,539
0
0
<COMMON> 452
<OTHER-SE> 345,974
<TOTAL-LIABILITY-AND-EQUITY> 433,903
<SALES> 0
<TOTAL-REVENUES> 46,666
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,882
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,918
<INCOME-PRETAX> 31,291
<INCOME-TAX> 0
<INCOME-CONTINUING> 31,291
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,291
<EPS-PRIMARY> 2.21
<EPS-DILUTED> 1.94
</TABLE>
EXHIBIT 10.15
PROMISSORY NOTE
$20,900,000
Loan Nos.: 6-102-104 January 30, 1998
6-102-291
6-102-324
FOR VALUE RECEIVED, the undersigned, BEDFORD PROPERTY INVESTORS,
INC., a Maryland corporation ("Maker"), having an address at 270
Lafayette Circle, Lafayette, California 94549, PROMISES TO PAY TO THE
ORDER OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), a
New Jersey corporation authorized to do business in the State of
California (Prudential and its successors and assigns who become
holders of this Amended and Restated Promissory Note (the "Note") are
hereinafter collectively referred to as "Holder"), by electronic funds
transfer to Prudential at Bank of New York, located in New York, New
York, ABA Routing Number 021-000-018, Account No. 890-0304-766,
referencing Loan Nos. 6-102-104, 6-102-291 and 6-102-234, or at such
other place as Holder, may from time to time designate, the principal
sum of Twenty Million Nine Hundred Thousand Dollars ($20,900,000),
together with interest on the amount advanced from the date funds are
first disbursed hereunder until paid at a rate per annum equal to the
Interest Rate (as hereinafter defined). For the first payment due
under the Loan or any additional advance hereunder, interest shall be
calculated on the basis of a 365-day year and the actual number of
days in each month. Thereafter, interest shall be calculated on the
basis of a 360-day year and 30-day month; except with respect to
partial months in which case interest shall be calculated on the basis
of the actual number of days in the year and the actual number of days
elapsed in the period during which it accrues, in accordance with the
terms and conditions set forth below.
1. Definitions. For the purpose of this Note, the following terms
shall have the meanings set forth below; certain other terms are
defined where they appear in this Note:
(a) "Deeds of Trust" means, collectively, that certain
(i) Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Leases, Rents and Agreements (Dupont Industrial Center,
Ontario), dated as of March 20, 1996, executed by Maker as "Trustor"
to the benefit of Prudential as "Beneficiary" and recorded in the
Official Records of San Bernardino County, California, (ii) Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements (Tustin Business Park), dated as of
March 20, 1996, executed by Maker as "Trustor" to the benefit of
Prudential as "Beneficiary" and recorded in the Official Records of
Orange County, California, (iii) Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements
(Woodlands II), dated as of March 20, 1996, executed by Maker as
"Trustor" to the benefit of Prudential as "Beneficiary" and recorded
in the Official Records of Salt Lake County, Utah, (iv) Deed of Trust,
Security Agreement and Fixture Filing with Assignment of Leases, Rents
and Agreements (Milpitas Town Center), dated as of May 24, 1996,
executed by Maker as "Trustor" to the benefit of Prudential as
"Beneficiary" and recorded in the Official Records of Santa Clara
County, California, (v) Deed of Trust, Security Agreement and Fixture
Filing with Assignment of Leases, Rents and Agreements (Nevada), dated
as of May 9, 1997, executed by Maker as "Trustor" to the benefit of
Prudential as "Beneficiary" and recorded in the Official Records of
Washoe County, Nevada, (vi) Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of even date herewith, executed by Maker as "Trustor" to the
benefit of Prudential as "Beneficiary" and recorded in the Official
Records of Maricopa County, Arizona (the "Arizona Deed of Trust"),
(vii) Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Leases, Rents and Agreements dated as of even date
herewith, executed by Maker as "Trustor" to the benefit of Prudential
as "Beneficiary" and recorded in the Official Records of Alameda
County, California (the "Fremont Deed of Trust"), and (viii) Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements dated as of even date herewith, executed
by Maker as "Trustor" to the benefit of Prudential as "Beneficiary"
and recorded in the Official Records of San Mateo County, California
(the "South San Francisco Deed of Trust"), in each case as the same
have been modified, if at all, by those certain First Modifications of
Deed of Trust and Other Loan Documents dated as of May 24, 1996, those
certain First Modification of Deed of Trust and Other Loan Documents
or Second Modifications of Deed of Trust and Other Loan Documents
dated as of May 9, 1997 and those certain First Modification of Deed
of Trust and Other Loan Documents, Second Modifications of Deed of
Trust and other Loan Documents or Third Modifications of Deed of Trust
and Other Loan Documents dated as of even date herewith.
B. "Discount Rate" means the interest rate, which when
compounded monthly, is equivalent to the Treasury Rate, when
compounded semi-annually.
C. "Interest Rate" means a rate of interest per annum of
six and ninety-one hundredths percent (6.91%).
D. "Loan Documents" means this Note, the Deeds of Trust,
and all other documents, with the exception of each of the eight (8)
documents entitled "Hazardous Substances Remediation and
Indemnification Agreement" each executed by Maker in favor of Holder
with respect to the land secured by the Deeds of Trust (collectively,
the "Remediation and Indemnification Agreements") now or hereafter
governing, securing or executed in connection with the indebtedness
evidenced by this Note or any portion of such indebtedness.
E. "Loan" means the loan evidenced by this Note.
F. "Maturity Date" means July 31, 2006.
G. "Prepayment Amount" means the amount of the Principal
Balance prepaid on a Prepayment Date.
H. "Prepayment Date" means any date, prior to the
Maturity Date, upon which all or any portion of the Principal Balance
is prepaid.
I. "Prepayment Premium" shall have the meaning set forth
in Paragraph 6(a) hereof.
J. "Present Value of the Loan" means the present value,
discounting from the Prepayment Date at the Discount Rate, of all
payments of principal and interest which would have been payable on
the Prepayment Amount from the Prepayment Date through and including
the Maturity Date.
K. "Principal Balance" means the outstanding principal
balance of this Note from time to time outstanding.
L. "Secondary Interest Rate" means a rate of interest
equal to the greater of (i) eighteen percent (18%) per annum, or
(ii) a per annum rate equal to five percent (5%) over the prime rate
(for corporate loans at large United States money center commercial
banks) published in the Wall Street Journal on the first business day
of each month in which such default occurs or continues.
M. "Treasury Rate" means the interest rate, conclusively
determined by Holder on the Prepayment Date equal to the semi-annual
yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life of the Loan for the week prior to
the Prepayment Date, as reported in Federal Reserve Statistical
Release H.15 - Selected Interest Rates ("Release H.15"). The rate
will be determined by linear interpolation between the yields reported
in Release H.15, if necessary. In the event Release H.15 is no longer
published, Holder shall select a comparable publication to determine
the Treasury Rate.
2 Payments.
A. Commencing on the fifteenth (15th) day of March, 1998
and continuing on the fifteenth (15th) day of each calendar month
thereafter through and including the fifteenth (15th) day of July,
2006, monthly installments of principal and interest in the amount of
$146,519.08 shall be due and payable, with the entire unpaid Principal
Balance plus accrued interest and other amounts payable under the Loan
Documents being due and payable on the Maturity Date.
B. In addition, on February 15, 1998 Maker shall pay to
Holder an amount equal to all accrued interest, at the Interest Rate,
on the Principal Balance for the period from the date of first
disbursement of funds under the Loan through and including February
14, 1998.
3 Treatment of Payments. All payments due under this Note or
the Loan Documents shall be paid by Maker in lawful money of the
United States of America on the date such payment is due. All such
payments shall be made without deduction for any present or future
taxes, levies, imposts, deductions, charges or withholdings (including
U.S., state or local income taxes), which amounts shall be paid by
Maker. Payments from Maker to Holder under this Note shall be applied
first to the payment of any expense reimbursements under the Loan
Documents, any Per Diem Late Charges or Late Charges (each as
hereinafter defined) and any Prepayment Premium due thereon, in such
order as Holder shall determine, then to accrued and unpaid interest,
with the remainder to be applied to the Principal Balance.
4 Per Diem Late Charges, Late Charges and Secondary Interest.
A. If Maker fails timely to pay any sum due and payable
under this Note on or before the date due, a late charge equal to
Three Hundred Dollars ($300) per day (the "Per Diem Late Charge")
shall be assessed for each day that such payment is not paid from and
including the first day following the date such payment was due to and
including the date upon which such payment is made; provided, however,
that notwithstanding the foregoing, if such payment, together with all
accrued Per Diem Late Charges, is not made on or before the fifteenth
(15th) day following the date due, a late charge equal to four
cents ($.04) for each dollar ($1.00) of each such late payment (the
"Late Charge") shall be immediately due and payable. The Late Charge
shall be in lieu of the Per Diem Late Charges that shall have accrued
during the immediately preceding fifteen (15) day period. Maker
acknowledges and agrees that its failure to make timely payments will
result in Holder incurring additional expense in servicing the Loan,
and that it is extremely difficult and impractical to ascertain the
extent of such damages and that the Per Diem Late Charges and the Late
Charge represent fair and reasonable estimates, considering all of the
circumstances existing on the date of the execution of this Note, of
the costs that Holder will incur by reason of such late payment.
Holder agrees to comply with Section 2954.5 of the California Civil
Code with respect to the giving of notice prior to imposing a Per Diem
Late Charge or Late Charge, as such Section or any successor Section
may now or hereafter be in effect. Acceptance of any Per Diem Late
Charge or Late Charge shall not constitute a waiver of the default
with respect to the late payment, and shall not prevent Holder from
exercising any of the other rights or remedies available hereunder or
at law or in equity.
B. Maker further acknowledges and agrees that during the
time that any payment of principal, interest or other amount due under
this Note shall be delinquent, Holder will incur additional costs and
expenses attributable to its loss of use of money due to and to the
adverse impact on Holder's ability to meet its other obligations and
avail itself of other opportunities. Maker agrees that it is
extremely difficult and impractical to ascertain the extent of such
expenses, and Maker therefore agrees that interest at the Secondary
Interest Rate shall accrue on any delinquent payments of principal,
interest or other amounts due under this Note or any Loan Document
from the date such payments were due and for so long as non-payment
continues, regardless of whether or not there has been an acceleration
of the maturity of the indebtedness evidenced by this Note.
5 Event of Default and Secondary Interest.
A. The occurrence of an "Event of Default" under any Loan
Document shall constitute an Event of Default under this Note. Upon
the occurrence of an Event of Default (including without limitation
the failure of the Maker to observe the provisions of Paragraph 4.2 of
each of the Deeds of Trust), Holder, at its option may cause the
Principal Balance together with all unpaid accrued interest, any
Prepayment Premium (as hereinafter defined) and any other sums
evidenced or secured by this Note or any Loan Document, to be
immediately due and payable, without further presentment, demand,
protest or notice of any kind, by so notifying Maker in writing
("Acceleration Notice").
B. Maker agrees that from and after the delivery of an
Acceleration Notice pursuant to Paragraph 5(a) hereof, interest at the
Secondary Interest Rate shall accrue on the Principal Balance and all
unpaid accrued interest and other sums evidenced or secured by this
Note or any Loan Documents.
6 Prepayment.
A. If for any reason the Principal Balance or any portion
thereof is prepaid (whether by operation of law, acceleration or
otherwise) on a date prior to the Maturity Date, Maker shall pay to
Holder as liquidated damages, immediately upon demand, together with
the related principal prepayment and any unpaid accrued interest, a
prepayment charge (the "Prepayment Premium") equal to the greater of:
(1) the product of (x) one percent (1%) of the
Prepayment Amount multiplied by (y) a fraction,
the numerator of which is the number of full
months remaining until the Maturity Date as of
the Prepayment Date and the denominator of which
is the number of full months comprising the term
of the Loan; or
(2) the Present Value of the Loan less the sum of
(x) the Prepayment Amount, and (y) unpaid accrued
interest, if any.
B. Maker shall have the right voluntarily to prepay all
or any portion of the Principal Balance, together with accrued
interest thereon, provided that Maker gives Holder not less than
thirty (30) days prior written notice of its intention to prepay, and
delivers to Holder, on or before the Prepayment Date, the Prepayment
Premium as calculated above, together with the Prepayment Amount and
all accrued interest and other sums due under the Loan Documents.
C. Maker agrees that such Prepayment Premium represents
the reasonable estimate of Holder and Maker of a fair average
compensation for the loss that may be sustained by Holder due to the
payment of any of the Principal Balance prior to the Maturity Date;
and by initialing this provision in the space provided below, Maker
hereby declares that Holder's agreement to enter into this transaction
on the terms set forth in this Note and in the other Loan Documents
constitutes adequate and valuable consideration, given individual
weight by Maker for this agreement. Such Prepayment Premium shall be
paid without prejudice to the right of Holder to collect any other
amount provided to be paid hereunder. Holder shall not be obligated
to actually reinvest the Prepayment Amount in any Treasury obligations
as a condition to receiving the Prepayment Premium.
INITIALS OF MAKER: /s/ S. W.
D. Notwithstanding anything to the contrary contained in
this Paragraph 6, Maker shall have a right to prepay in full the
entire outstanding balance due under this Note on or after June 30,
2006 without payment of the Prepayment Premium.
7 Security. This Note is secured, among other security, by
the Deeds of Trust and the other Loan Documents, which contain
provisions for the acceleration of the maturity of this Note upon the
occurrence of certain described events.
8 Holder's Rights; No Waiver by Holder. The rights, powers
and remedies of Holder under this Note shall be in addition to all
rights, powers and remedies given to Holder under the Loan Documents
and any other agreement or document securing or evidencing the
indebtedness evidenced hereby or by virtue of any statute or rule of
law, including, but not limited to, the Arizona Uniform Commercial
Code, the California Uniform Commercial Code, the Nevada Uniform
Commercial Code and the Utah Uniform Commercial Code. All such
rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently in Holder's sole discretion without
impairing Holder's security interest, rights or available remedies.
Any forbearance, failure or delay by Holder in exercising any right,
power or remedy shall not preclude further exercise thereof, and every
right, power or remedy of Holder shall continue in full force and
effect until such right, power or remedy is specifically waived in a
writing executed by Holder. Maker waives any right to require the
Beneficiary (as defined in each of the Deeds of Trust) to proceed
against any person or to pursue any remedy in Holder's power.
9 Maker's Waivers.
A. Maker and any endorsers of this Note, and each of
them, hereby waive diligence, demand, presentment for payment, notice
of non-payment, protest and notice of protest, and specifically
consent to and waive notice of any renewals or extensions of this
Note, whether made to or in favor of Maker or any person or persons.
Maker and any endorsers of this Note expressly waive all right to the
benefit of any statute of limitations and any moratorium,
reinstatement, marshalling, forbearance, extension, redemption, or
appraisement now or hereafter provided by the Constitution or the laws
of the United States or of any state thereof, as a defense to any
demand against Maker or any such endorsers, to the fullest extent
permitted by law.
B. Maker hereby waives any right to trial by jury with
respect to any action or proceeding brought by Maker, Holder or any
other person relating to (i) the indebtedness evidenced by this Note,
or (ii) the Loan Documents. Maker hereby agrees that this Note
constitutes a written consent to waiver of trial by jury pursuant to
the provisions of California Code of Civil Procedure Section 631 and
Maker does hereby constitute and appoint Holder its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and
Maker does hereby authorize and empower Holder, in the name, place and
stead of Maker, to file this Note with the clerk or judge of any court
of competent jurisdiction as statutory written consent to waiver of
trial by jury.
C. Maker hereby expressly waives any right it may have
under California Civil Code Section 2954.10 to prepay this Note, in
whole or in part, without prepayment charge, upon acceleration of the
Maturity Date of this Note, and agrees that if for any reason, a
prepayment of any or all of this Note is made, whether voluntarily or
upon or following any acceleration of the Maturity Date of this Note
by the Holder, then Maker shall pay, concurrently therewith, a
Prepayment Premium calculated pursuant to Paragraph 6 hereof. By
initialling this provision in the space provided below, Maker hereby
declares that Holder's agreement to make the Loan at the Interest Rate
and for the term set forth in this Note constitutes adequate
consideration, given individual weight by Maker, for this waiver and
agreement.
INITIALS OF MAKER: /s/ S. W.
10 Transfers by Holder. This Note or any interest in this Note
and the Loan Documents may be hypothecated, transferred or assigned by
Holder without the prior consent of Maker.
11 Amendment. This Note may be amended or modified only by an
instrument in writing which by its express terms refers to this Note
and which is duly executed by the party sought to be bound thereby.
12 Successors and Assigns. This Note shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and
permitted assigns.
13 Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of California.
14 Authority. Each individual executing this Note on behalf of
a partnership, corporation or other entity states that he or she is
duly authorized to execute and deliver this Note on behalf of said
entity, in accordance with duly and regularly adopted existing
authority and, if necessary, resolution of the governing body of such
organization, and that this Note is binding upon said entity in
accordance with its terms.
15 Time. Time is of the essence with respect to each and every
term and provision of this Note.
16 Usury. Notwithstanding any provision herein, the total
liability for payments in the nature of interest shall not exceed the
applicable limits imposed by any applicable state or federal interest
rate laws. If any payments in the nature of interest, additional
interest, and other charges made hereunder are held to be in excess of
the applicable limits imposed by any applicable state or federal laws,
it is agreed that any such amount held to be in excess shall be
considered payment of principal and the indebtedness evidenced thereby
shall be reduced by such amount in the inverse order of maturity so
that the total liability for payments in the nature of interest,
additional interest and other charges shall not exceed the applicable
limits imposed by any applicable state or federal interest rate laws
in compliance with the desires of Holder and Maker.
17 Notices. All notices, consents and other communications
required or permitted by this Note shall be in writing and shall be
given in the manner set forth in the Deeds of Trust.
18 Attorneys' Fees. The undersigned agrees to pay all costs,
including reasonable attorneys' fees and expenses, incurred by Holder
in enforcing payment or collection of this Note or the terms of any
Loan Document, whether or not suit is filed.
19 Limitation on Personal Liabilities.
A. Except as expressly set forth in Paragraphs 19(b), (c)
and/or (d) below, the recourse of Holder with respect to the
obligations evidenced by this Note shall be solely to the Property
(which for the purposes of this Note shall mean, collectively, the
properties defined as the "Property" in each of the Deeds of Trust).
B. Notwithstanding anything to the contrary contained in
this Note or in any Loan Document, nothing shall be deemed in any way
to impair, limit or prejudice the rights of Holder:
(i) in foreclosure proceedings or in any ancil-
lary proceedings brought to facilitate Hol-
der's foreclosure on the Property or any
portion thereof;
(ii) to recover from Maker damages or costs
(including without limitation reasonable
attorneys' fees) incurred by Holder as a
result of waste to the Property by Maker;
(iii) to recover from Maker any condemnation or
insurance proceeds attributable to the
Property which were not paid to Holder or
used to restore the Property in accordance
with the terms of the Deeds of Trust;
(iv) to recover from Maker any rents, profits,
security deposits, advances, rebates,
prepaid rents or other similar sums
attributable to the Property collected by
or for Maker following an Event of Default
and not properly applied to the reasonable
fixed and operating expenses of the
Property, including payments of the Loan;
(v) to pursue the personal liability of Maker
under the provisions of paragraph 9.26 of
each of the Deeds of Trust, including any
indemnification provisions under said
paragraph;
(vi) to exercise any other specific rights or
remedies afforded Holder under any
provisions of the Loan Documents or at law
or in equity (or to recover under any
guarantee given in connection with the
Loan);
(vii) to recover from Maker the amount of any
unpaid taxes, assessments, and/or utility
charges affecting the Property and to
collect from Maker any sums expended by
Holder in fulfilling the obligations of
Maker, as lessor, under any leases
affecting the Property, which obligations
accrued prior to Holder's (or Holder's
nominee's) acquisition of title to the
Property; provided, however, that the cost
of any obligations of Maker as lessor under
any such leases which have been expressly
approved by Holder shall not be a recourse
liability of Maker;
(viii) to pursue any personal liability of Maker
under the Remediation and Indemnification
Agreements (as defined in the Deeds of
Trust);
(ix) to recover from Maker damages or costs
incurred by Holder as a result of any non-
willful misrepresentation by Maker in
connection with the Property, the Loan
Documents or the Loan Applications, or any
other aspect of the Loan; and/or
(x) to recover from Maker damages or costs
incurred by Holder as a result of Maker's
failure to obtain and maintain in effect
all the insurance required in the Loan
Documents.
C. The agreement contained in this Paragraph 19 to limit
the personal liability of Maker shall become null and void and of no
further force or effect in the event:
(i) that the Property or any part thereof or
any interest therein shall be further
encumbered by a voluntary lien securing any
obligation upon which Maker shall be
personally liable for repayment;
(ii) of any breach or violation of paragraph 4.2
of any of the Deeds of Trust;
(iii) of any intentional fraud or willful and
material misrepresentation by Maker in
connection with the Property, the Loan
Documents or the Loan Applications;
(iv) that the Property or any part thereof shall
become an asset a voluntary bankruptcy or
insolvency proceeding or (ii) an
involuntary bankruptcy or insolvency
proceeding which is not dismissed within
ninety (90) days of filing; provided
however, that this clause shall not apply
if an involuntary bankruptcy is filed by
Holder or if notwithstanding any such
proceeding Maker maintains a senior long
term unsecured debt rating of "BBB-" from
Standard & Poor's Rating Group ("S&P") and
another rating at least equivalent to S&P's
rating of "BBB-" from one other nationally
recognized agency; or
(v) any property encumbered by the Deeds of
Trust is determined to be "environmentally
impaired" as such term is defined in
Section 40.503 of the Nevada Revised
Statutes, Section 726.5 of the California
Code of Civil Procedure, Section 78-37-1.5
of the Utah Code Annotated or any other
similar statute, law or provision
applicable to any Property; provided,
however, that Holder's recovery hereunder
due to such environmental impairment shall
be limited to the Allocable Loan Amount(s)
(as defined in the Deeds of Trust)
attributable to such Property(ies) which is
so environmentally impaired.
D. The agreement contained in this Paragraph 19 to limit
the personal liability of Maker shall become null and void and of no
further force or effect in the event of the execution, modification,
amendment and/or termination of any leases for the occupancy of space
in any portion of the Property which remains encumbered by any of the
Deeds of Trust, without Holder's prior written approval if such
approval is required under the terms of the Loan Documents (such
leases being hereinafter referred to as "Unapproved Leases"), such
that the net rentable area covered by Unapproved Leases exceeds twenty
percent (20%), in the aggregate, of the total net rentable area of all
of the Property which remains encumbered by the Deeds of Trust.<PAGE>
IN WITNESS WHEREOF, Maker and Holder have caused this Promissory
Note to be executed and delivered effective as of the date first
written above.
"MAKER":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney
Senior Vice President
[11128.AGRE]H61142
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS
(Arizona)
THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS (this "Deed of
Trust") dated as of January 30, 1998 is made by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation, having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Trustor"), First
American Title Insurance Company, having offices at 1850 Mount Diablo
Boulevard, Suite 300, Walnut Creek, California 94596 ("Trustee"), and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation,
having offices at Four Embarcadero Center, Suite 2700, San Francisco,
California 94111 ("Beneficiary").
WITNESSETH:
Trustor HEREBY IRREVOCABLY GRANTS, TRANSFERS AND
ASSIGNS TO Trustee, IN TRUST, WITH POWER OF SALE, all of Trustor's
right, title and interest now owned or hereafter acquired in and to
the following property, together with the Personalty (as hereinafter
defined), all of which is hereinafter collectively defined as the
"Property": (i) that certain real property (the "Land") located in
the County of Maricopa, State of Arizona, and more particularly
described in Exhibit A attached hereto and incorporated herein by this
reference; (ii) all Improvements (as hereinafter defined) and all
appurtenances, easements, rights and privileges thereof, including all
minerals, oil, gas and other hydrocarbon substances thereon or
therein, air rights, water rights and development rights, and any land
lying in the streets, roads or avenues adjoining the Land or any part
thereof; (iii) all Fixtures (as hereinafter defined), whether now or
hereafter installed, being hereby declared to be for all purposes of
this Deed of Trust a part of the Land; and (iv) the rents, issues and
profits of or from the Land, Improvements and Fixtures.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary
may determine: (i) payment of the Indebtedness (as hereinafter
defined), and (ii) payment (with interest as provided) and performance
by Trustor of the Obligations (as hereinafter defined).
Notwithstanding the foregoing, or any other term contained herein or
in the Loan Documents, none of Trustor's obligations under or pursuant
to the Remediation and Indemnification Agreements (as hereinafter
defined) shall be secured by the lien of this Deed of Trust.
ARTICLE 20
Definitions
As used in this Deed of Trust the following terms
shall have the following meanings; other terms are defined where they
appear in this Deed of Trust:
Allocable Loan Amount: (i) For the property encumbered by the Ontario
Deed of Trust, $8,000,000 less the product of (x) all payments of
principal made under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined Deeds of Trust)
multiplied by (y) a fraction, the numerator of which is 8,000,000, and
the denominator of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000 less the product of
(x) all payments of principal made under the Multistate Note (other
than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is $7,000,000, and the denominator of which is 25,000,000;
(iii) for the property encumbered by the Woodlands Deed of Trust,
$5,200,000 less the product of (x) all payments of principal made
under the Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 5,200,000, and the
denominator of which is 25,000,000; (iv) for the property encumbered
by the Milpitas Deed of Trust, $4,800,000 less the product of (x) all
payments of principal made under the Multistate Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the numerator of which
is 4,800,000, and the denominator of which is 25,000,000; (v) for the
property encumbered by the Nevada Deed of Trust, $8,913,730.85 less
all payments of principal made under the Nevada Note; (vi) for the
property encumbered by this Deed of Trust, $7,200,000 less the product
of (x) all payments of principal made under the Arizona/California
Note (other than payments made pursuant to Paragraph 9.36(3) of any of
the Combined Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator of which is
20,900,000; (vii) for the properties encumbered by the South San
Francisco Deed of Trust, $6,500,000 less the product of (x) all
payments of principal made under the Arizona/California Note (other
than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is 6,500,000, and the denominator of which is 20,900,000; and
(viii) for the property encumbered by the Fremont Deed of Trust,
$7,200,000 less the product of (x) all payments of principal made
under the Arizona/California Note (other than payments made pursuant
to Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied
by (y) a fraction, the numerator of which is 7,200,000, and the
denominator of which is 20,900,000.
Application: Collectively, the Application dated December 5, 1995,
executed by Trustor (referred to as "Borrower" therein), which
Application includes the exhibits attached thereto, the Application
dated January 5, 1996, executed by Trustor (referred to as "Borrower"
therein), which Application includes the exhibits attached thereto,
the Application executed by Trustor (referred to as "Borrower"
therein) on April 13, 1996, which Application includes the exhibits
attached thereto, and the Application executed by Trustor (referred to
as "Borrower" therein) on October 31, 1997, which Application includes
the exhibits attached thereto.
Closing Date: The date this Deed of Trust is recorded in the Official
Records of Maricopa County, Arizona.
Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the preceding twelve-
month period for the Remaining Properties, to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the preceding twelve-month period on the portion of the Loan
consisting of the aggregate of the Allocable Loan Amounts for the
Remaining Properties, and (ii) the annual debt service payments
(including principal and interest) on all other indebtedness secured
or which will be secured by a lien on all or part of the Remaining
Properties for the preceding twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory notes or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Combined Deeds of Trust: Collectively, this Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the Milpitas Deed of
Trust, the Woodlands Deed of Trust, the Nevada Deed of Trust, the
Fremont Deed of Trust, and the South San Francisco Deed of Trust.
Combined Loan to Value Ratio: The ratio, as determined by
Beneficiary, of (i) the aggregate principal balance, together with all
accrued but unpaid interest, of all encumbrances against the Remaining
Properties, to (ii) the fair market value of the Remaining Properties,
as determined by Beneficiary.
Combined Properties: Collectively, the Property, the property
encumbered by the Ontario Deed of Trust, the property encumbered by
the Tustin Deed of Trust, the property encumbered by the Milpitas Deed
of Trust, the property encumbered by the Woodlands Deed of Trust, the
property encumbered by the Nevada Deed of Trust, the property
encumbered by the Fremont Deed of Trust, and the properties encumbered
by the South San Francisco Deed of Trust.
Event of Default: As defined in Paragraph 6.1 hereof.
Fixtures: All fixtures located upon or within the Improvements or now
or hereafter installed in, or used in connection with any of the
Improvements, including boilers, furnaces, pipes, plumbing, elevators,
cleaning and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, whether or not permanently affixed to the Land or
the Improvements.
Fremont Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of even date herewith, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Alameda County,
California, as amended from time to time.
Future Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the immediately upcoming
twelve-month period for the Remaining Properties (based on reasonable
assumptions determined by Beneficiary), to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the same twelve-month period on the portion of the Loan consisting of
the aggregate of the Allocable Loan Amounts for the Remaining
Properties, and (ii) the annual debt service payments (including
principal and interest) on all other indebtedness secured or which
will be secured by a lien on all or part of the Remaining Properties
for the same twelve-month period. For purposes of calculating annual
debt service, amortization of the aggregate principal indebtedness
over a thirty (30) year period (or such lesser period if the
applicable promissory notes or other loan documents in the case of
loans other than the Loan provide otherwise) is assumed to apply
during the entire term of the Loan.
Future Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the next upcoming
twelve-month period (based on reasonable assumptions determined by
Beneficiary), to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the same twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the same twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Impositions: All real estate and personal property and other taxes
and assessments, water and sewer rates and charges levied or assessed
upon or with respect to the Property, and all other governmental
charges and any interest or costs or penalties with respect thereto,
ground rent and charges for any easement or agreement maintained for
the benefit of the Property, general and special, ordinary and
extraordinary, foreseen or unforeseen, of any kind and nature
whatsoever that at any time prior to or after the execution of the
Loan Documents may be assessed, levied, imposed, or become a lien upon
the Property or the rent or income received therefrom, or any use or
occupancy thereof; and any and all other charges, expenses, payments,
claims, mechanics' or material suppliers' liens or assessments of any
nature, if any, which are or may become a lien upon the Property or
the rent or income received therefrom.
Impound Account: The account that Trustor may be required to maintain
pursuant to Paragraph 3.4 hereof for the deposit of amounts required
to pay Impositions and insurance premiums.
Improvements: All buildings and other improvements and appurtenances
located on the Land, including surface improvements, such as parking
areas and landscaping structures and all improvements, additions and
replacements thereof, and other buildings and improvements, at any
time hereafter constructed or placed upon the Land.
Indebtedness: The principal of and all other amounts, payments and
premiums due under the Note (and each and every of them) and any
extensions or renewals thereof (including extensions or renewals at a
different rate of interest, whether or not evidenced by a new or
additional promissory note or notes), and all other indebtedness of
Trustor to Beneficiary and additional advances under, evidenced by
and/or secured by the Loan Documents, plus interest on all such
amounts.
Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the preceding twelve-
month period, to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the preceding twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the preceding twelve-month period. For purposes
of calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Individual Loan to Value Ratio: For each individual Combined
Property, the ratio, as determined by Beneficiary, of (i) the
aggregate principal balance, together with all accrued but unpaid
interest, of the Allocable Loan Amount for such Combined Property and
all other encumbrances (other than the Loan) against such Combined
Property, to (ii) the fair market value of such Combined Property, as
determined by Beneficiary.
Inventory: The personal property Inventory attached hereto as Exhibit
C.
Laws and Restrictions: All federal, state, regional, county, local
and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, Leases and other rental
agreements, relating to the development, occupancy, ownership,
management, use, and/or operation of the Property or otherwise
affecting all or any part of the Property or Trustor.
Leases: Any and all leasehold interests, including subleases and
tenancies following attornment, now or hereafter affecting or covering
any part of the Property.
Loan: The loans from Beneficiary to Trustor evidenced by the Note.
Loan Documents: The Note, the Application, the Owner's Affidavit,
this Deed of Trust, the Ontario Deed of Trust, the Tustin Deed of
Trust, the Milpitas Deed of Trust, the Woodlands Deed of Trust, that
certain Note Assignment and Assumption Agreement dated as of May 9,
1997 relating to the Nevada Note, the Nevada Deed of Trust, the
Fremont Deed of Trust, the South San Francisco Deed of Trust, each of
the Assignments of Agreements, each of the Assignments of Lessor's
Interest in Leases, the Post-Closing Agreement, and all other
documents, with the exception of the Remediation and Indemnification
Agreements, evidencing, securing or relating to the Loan, the payment
of the Indebtedness or the performance of the Obligations.
Loan Parties: Trustor.
Material Adverse Change: Any material and adverse change in (i) the
financial condition of any of the Loan Parties, or (ii) the condition
or operation of the Property.
Milpitas Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Santa
Clara County, California, as amended by that certain First
Modification of Deed of Trust and Other Loan Documents dated as of May
9, 1997, as further amended by that certain Second Modification of
Deed of Trust and Other Loan Documents dated as of even date herewith,
as further amended from time to time.
Net Operating Income: For any period, gross income from operations of
the Remaining Properties, for the purposes of determining Combined
Debt Service Coverage or Future Combined Debt Service Coverage, or
from operations of an individual Combined Property, for the purposes
of determining the Individual Debt Service Coverage or Future
Individual Debt Service Coverage for such Combined Property, in either
case, derived from arm's length, market rate rents from leases with
unaffiliated third parties in possession of the leased premises and
paying rent on a current basis, service fees or charges, and addi-
tional rent resulting from operating expense, common area maintenance,
utilities and tax escalation pass through provisions (excluding
capital gains income derived from the sale of assets and other items
of income which Beneficiary reasonably determines are unlikely to
occur in any subsequent period), less operating expenses (such as
cleaning, utilities, administrative, landscaping, security and common
area maintenance expenses, common area association fees, repairs and
maintenance and less fixed expenses (such as insurance, real estate
and other taxes), which expenses shall be related to the property
producing such gross income, shall be for services from arm's length
third party transactions or equivalent to the same, and shall exclude
all expenses for capital improvements and replacements, debt service
and depreciation or amortization of capital expenditures and other
similar noncash items. Operating expenses shall include not less than
4.0% of gross income for the property encumbered by the Woodlands Deed
of Trust and not less than 3.5% of gross income for each of the other
Combined Properties and shall include reserves for replacements of not
less than $31,000 for the Property encumbered by the Tustin Deed of
Trust and not less than $23,000 for each of the other Combined
Properties. Real estate taxes shall be calculated based upon the
greater of (i) the current tax bill plus the next subsequent year's
escalations as permitted under applicable law, or (ii) the estimated
market value of such Combined Properties (as determined by
Beneficiary) at the time of any reconveyance described in
Paragraph 9.36 of this Deed of Trust multiplied by the then current
tax rate. Gross income shall not be anticipated for any greater
period than that approved by generally accepted accounting principles,
nor shall operating expenses be prepaid.
Nevada Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of May 9, 1997, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Washoe County Nevada,
as amended by that certain First Modification of Deed of Trust and
Other Loan Documents dated as of even date herewith, as further
amended from time to time.
Note: Collectively (i) that certain Amended and Restated Promissory
Note dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Trustor in the original principal amount
of Twenty-Five Million and No/100 Dollars ($25,000,000.00), payable to
Beneficiary or its order, and all modifications, renewals or
extensions thereof (the "Multistate Note"), (ii) that certain Amended
and Restated Promissory Note dated as of May 9, 1997 executed by
Trustor in the original principal amount of Eight Million Nine Hundred
Thirteen Thousand Seven Hundred Thirty and 85/100 Dollars
($8,913,730.85), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Nevada Note"), and
(iii) that certain Promissory Note dated as of even date herewith
executed by Trustor in the original principal amount of Twenty Million
Nine Hundred Thousand Dollars ($20,900,000), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Arizona/California Note").
Obligations: Any and all of the covenants, promises and other
obligations (including, without limitation, the Indebtedness) made or
owing by Trustor to or due to Beneficiary under and/or as set forth in
the Loan Documents and all of the material covenants, promises and
other obligations made or owing by Trustor to each and every other
Person relating to the Property.
Ontario Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Bernardino
County, California, as amended by that certain First Modification of
Deed of Trust and Other Loan Documents dated as of May 24, 1996, as
further amended by that certain Second Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as further amended
by that certain Third Modification of Deed of Trust and Other Loan
Documents dated as of even date herewith, as further amended from time
to time.
Owner's Affidavit: That certain Owner's Affidavit dated as of even
date herewith, executed by Trustor in favor of Beneficiary.
Permitted Exceptions: All of those matters described on Exhibit B
attached hereto.
Person: Any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
Personalty: Trustor's right, title and interest in all personal
property (other than Fixtures) now or hereafter located in, upon or
about or collected or used in connection with the Property, together
with all present and future attachments, accessions, replacements,
substitutions and additions thereto or therefor, and the cash and
noncash proceeds thereof, including all property listed in the
Inventory, the Impound Account, all goods, documents, instruments and
chattel paper, all drawings, plans and specifications, all causes of
action and recoveries now or hereafter existing for any loss or
diminution in value of the Property, all licenses, governmental
authorizations or permits pertaining to the Property or the
development, ownership, management or operation thereof, all
trademarks, service marks, designs, logos, trade names, names or
similar identifications pertaining to the Property, and all accounts,
contract rights and general intangibles (including, without
limitation, any insurance proceeds and condemnation awards or
compensation) arising out of or incident to the ownership, development
or operation of the Property owned by or in which Trustor has an
interest including, without limitation, all personal property
described in the UCC-1 Financing Statement executed by Trustor of even
date herewith, which is incorporated herein by this reference, and all
furniture, furnishings, equipment, machinery, construction materials
and supplies, leasehold interests in personal property and the Leases.
Notwithstanding the foregoing, Personalty shall not include any
proprietary computer software developed by Trustor for the
interpretation, manipulation or presentation of the information
comprising the books and records of Trustor.
Post-Closing Agreement: That certain Post-Closing Actions Agreement
dated as of even date herewith, executed by Trustor in favor of
Beneficiary.
Property: As defined in the above granting paragraph of this Deed of
Trust.
Receiver: Any trustee, receiver, custodian, fiscal agent, liquidator
or similar officer.
Remaining Properties: Collectively, each of the Combined Properties
which remain encumbered by any of the Combined Deeds of Trust
following the requested reconveyance of this Deed of Trust pursuant to
Paragraph 9.36 of this Deed of Trust and following the prior or
concurrent reconveyance of any of the other Combined Deeds of Trust
pursuant to Paragraph 9.36 of any of the other Combined Deeds of
Trust.
Remediation and Indemnification Agreements: Collectively, (i) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of May 24, 1996 executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Milpitas Deed of Trust,
(ii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the Ontario
Deed of Trust, (iii) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary in connection with the property
encumbered by the Tustin Deed of Trust, (iv) the Hazardous Substances
Remediation and Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in connection with the
property encumbered by the Woodlands Deed of Trust, (v) the Hazardous
Substances Remediation and Indemnification Agreement dated as of May
9, 1997 executed by Trustor in favor of Beneficiary in connection with
the property encumbered by the Nevada Deed of Trust, (vi) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of even date herewith executed by Trustor in favor of Beneficiary
in connection with the property encumbered by the Fremont Deed of
Trust, (vii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of even date herewith executed by Trustor in favor
of Beneficiary in connection with the property encumbered by the South
San Francisco Deed of Trust, and (viii) the Hazardous Substances
Remediation and Indemnification Agreement dated as of even date
herewith executed by Trustor in favor of Beneficiary in connection
with the Property.
Rents: All rents, royalties, revenues, issues, profits, proceeds and
other income from the Property.
Secondary Interest Rate: As defined in the Note.
South San Francisco Deed of Trust: That certain Deed of Trust dated
as of this date herewith, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Mateo County,
California as amended from time to time.
Tustin Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Orange County,
California, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
Woodlands Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of March 20, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Salt Lake
County, Utah, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
ARTICLE 21
Representations and Warranties
Trustor hereby represents and warrants to Beneficiary
and Trustee that as of the date of this Deed of Trust and as of the
date of any subsequent disbursement pursuant to the Loan Documents:
21.1 Title, Authorization and Organization. Trustor
(i) is the lawful owner of the Property and holds good and marketable
title to the Property free and clear of all defects, liens,
encumbrances, easements, exceptions and assessments, except the
Permitted Exceptions; (ii) has good, right and lawful authority to
grant the Property as provided in and by this Deed of Trust; (iii) has
the requisite power and authority to own, develop and operate the
Property; (iv) is duly organized, validly existing and in good
standing under the laws of the State of its organization and is duly
qualified to do business in the State in which the Land is located;
and (v) is in compliance with all Laws and Restrictions applicable to
it.
21.2 Validity of Loan Documents. The execution,
delivery and performance by Trustor of the Loan Documents and the
borrowings evidenced by the Note are within the power of Trustor, have
been authorized by all requisite corporate or partnership authority
and will not violate any Laws and Restrictions or any agreement or
other instrument. Each of the Loan Documents when executed and
delivered to Beneficiary, will constitute a legal, valid and binding
obligation of Trustor enforceable in accordance with its terms.
21.3 Financial Statements. All financial statements
and data that have been given to Beneficiary with respect to the
Property or any Loan Party are true, accurate, complete and correct
and except as expressly noted to the contrary therein, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby. There
has been no Material Adverse Change since the date of the most recent
financial statement given to Beneficiary.
21.4 Other Information. All reports, papers, data
and information given to Beneficiary with respect to Loan Parties and
the Property are accurate, correct and complete.
21.5 Litigation. There is not now pending against or
affecting any Loan Party or the Property, nor to the best of Trustor's
knowledge is there threatened any action, suit or proceeding at law or
in equity or by or before any administrative agency that, if adversely
determined, would materially impair or affect (i) the financial
condition or operations of such Loan Party, or (ii) the condition, use
or operation of the Property.
21.6 Additional Representations and Warranties.
(i) The Property is not used principally or primarily for agricultural
or grazing purposes; (ii) each Loan Party has filed all federal,
state, county and municipal income tax returns required to have been
filed by it and has paid all taxes that have become due pursuant to
such returns or pursuant to any assessments received by it (and no
Loan Party knows of any basis for any additional assessment against it
in respect of such taxes); (iii) all costs for labor and materials for
the construction of the Improvements have been paid in full other than
ongoing work for leasehold improvements under Leases approved in
writing by Beneficiary; (iv) Trustor is not aware of any assessment
for public improvements which is pending and which could become a lien
upon the Property; (v) no event has occurred which with the giving of
notice or the passage of time, or both, would constitute an Event of
Default under any of the Loan Documents; (vi) Trustor is not a party
to any agreement or instrument materially and adversely affecting its
present or proposed business conducted on the Property or the Property
itself, financial or otherwise; (vii) Trustor is not in default in the
performance, observance or fulfillment of any of the material
obligations, covenants or conditions set forth in any such agreement
or instrument to which it is a party to the extent that the same would
have a material and adverse effect on the Property or Trustor's
ability to timely perform its Obligations under the Loan Documents;
(viii) all Fixtures are permanently affixed to the Improvements and
Trustor has not executed any financing statement or security
agreements covering the Fixtures, or any of them, and the costs of all
Fixtures due as of the date hereof have been paid; (ix) neither the
Property, nor any part thereof, has sustained, incurred or suffered
any material damage or destruction; and (x) subject to the Permitted
Exceptions, the Personalty is owned by Trustor, free and clear of any
liens, encumbrances, mortgages, security interests, claims and rights
of others.
21.7 Compliance with Laws. The Property and the
proposed and actual use thereof comply with all Laws and Restrictions
and the Laws and Restrictions contain no unsatisfied conditions
necessary for the actual use of the Property as it is currently used.
Trustor has received no notices of violations of any Laws and
Restrictions.
21.8 Bankruptcy. No petition in bankruptcy, petition
or answer seeking assignment for the benefit of creditors or
appointment of a Receiver with respect to Trustor has occurred or is
contemplated, and no reorganization, arrangement, liquidation or
dissolution or similar relief under the Federal Bankruptcy laws or any
state laws have been instituted by or against Trustor, and none is
contemplated.
ARTICLE 22
Affirmative Covenants
Trustor hereby covenants and agrees as follows:
22.1 Obligations of Trustor. Trustor will (i) timely
perform, or cause to be timely performed, all the Obligations;
(ii) maintain and preserve the lien of this Deed of Trust; and
(iii) forever warrant and defend its grant made herein against any and
all claims and demands whatsoever.
22.2 Insurance.
A. Trustor, at its sole cost and expense,
will keep and maintain for the mutual benefit of Trustor and
Beneficiary, the following policies of insurance:
(1) Insurance against loss or damage to the
Property by fire and other risks covered by insurance commonly known
as the broad form of extended coverage, including losses sustained by
reason of riot and civil commotion, vandalism, malicious mischief,
burglary, theft and mysterious disappearance, flood (if the Property
is located in a HUD designated special flood hazard area) and against
such other risks or hazards as Beneficiary from time to time
reasonably may designate, in an amount equal to one hundred
percent (100%) of the then "full replacement cost" of the
Improvements, the Fixtures and the Personalty, without deduction for
physical depreciation.
(2) Rental income insurance against loss of
income in an amount not less than twelve (12) months rental and taxes
and other operating expense reimbursements or payments at then-current
income levels.
(3) Commercial General Liability insurance
including broad form property damage, contractual liability and
personal injury or death coverage, with a combined single limit of at
least $5,000,000.
(4) "Builders Risk" insurance, during any
material construction, repair, replacement, renovation or alteration
of the Improvements, in such amounts as are reasonably approved by
Beneficiary.
(5) If applicable, boiler and machinery
insurance covering boilers and other pressure vessels, the air
conditioning system, high pressure piping and other machinery and
equipment required for the operation of the Property.
(6) Such other insurance, and in such amounts,
as may from time to time be reasonably required by Beneficiary (but
excluding earthquake insurance, unless earthquake insurance is
required pursuant to the terms of any of the Leases).
B. Trustor shall provide Beneficiary with
satisfactory evidence of compliance with applicable requirements for
Worker's Compensation insurance and of employee automobile coverage.
C. All policies of insurance required by this
Deed of Trust (i) shall be satisfactory in form and substance to
Beneficiary and written with companies satisfactory to Beneficiary,
(ii) shall name Beneficiary as an additional insured as its interests
may appear, (iii) shall contain a Standard Lender's Loss Payable
endorsement and other non-contributory standard mortgagee protection
clauses acceptable to Beneficiary, and at Beneficiary's option, a
waiver of subrogation rights by the insurer, (iv) shall contain an
agreement by the insurer that such policy shall not be amended or
canceled without at least thirty (30) days' prior written notice to
Beneficiary, (v) shall be in the full replacement cost of the Improve-
ments, without deduction for physical depreciation and (vi) shall
contain such other provisions as Beneficiary deems reasonably
necessary or desirable to protect its interests. Any policies
containing a coinsurance clause shall include a replacement cost
endorsement adequate to ensure that the coinsurance clause is rendered
inoperative.
D. In the event a blanket policy is submitted
to satisfy Trustor's responsibilities under this Paragraph 3.2, in
addition to such other requirements set forth herein, Trustor shall
deliver to Beneficiary a certificate from such insurer indicating that
Beneficiary is an insured under such policy and designating the amount
of such insurance applicable to the Property.
E. Trustor shall furnish evidence,
satisfactory to Beneficiary, that (i) all insurance requirements
(including, without limitation, provisions for waivers of subrogation)
set forth in the Leases or any other agreements affecting the Property
shall have been satisfied by each party thereto, and (ii) Trustor's
insurance coverage is sufficient (assuming the total destruction of
the Property) to permit Trustor to rebuild the Improvements (including
basic tenant improvements) and to replace the Fixtures and Personalty
in such manner as to enable the Property to be operable and rentable
as it is currently rented and operated, and no tenant shall have the
right to terminate its lease of any portion of the Property as a
result of the failure of Trustor to rebuild above-standard tenant
improvements.
F. Self-insurance (other than the applicable
deductibles approved by Beneficiary) shall not be employed to satisfy
the requirements of this Paragraph 3.2.
G. All of Trustor's right, title and interest
in and to all policies of property insurance and any unearned premiums
paid thereon are hereby assigned (to the fullest extent assignable) to
Beneficiary who shall have the right, but not the obligation, to
assign the same to any purchaser of the Property at any foreclosure
sale.
H. Not less than thirty (30) days prior to
the expiration dates of any policy previously furnished pursuant to
this Paragraph 3.2, Trustor shall provide Beneficiary with duplicate
originals or certified copies of the renewal policies together with
evidence satisfactory to Beneficiary of Trustor's payment of the
applicable premiums.
22.3 Maintenance, Waste and Repair. Trustor will
(i) maintain the Property in good order and condition, (ii) promptly
make all necessary structural and non-structural repairs to the
Property, (iii) not diminish or materially alter the Improvements, nor
erect any new buildings, structures or building additions on the
Property, without the prior written consent of Beneficiary, and
(iv) not permit any waste of the Property or make any change in the
use thereof, nor do or permit to be done thereon anything, that may in
any way impair the security of this Deed of Trust.
22.4 Impositions; Impounds. Trustor will pay when
due all Impositions. Upon an Event of Default, Trustor will pay
monthly to Beneficiary an amount equal to one-twelfth (1/12th) of the
annual cost of Impositions together with an amount equal to the
estimated next hazard and other required insurance premiums. These
funds will be held by Beneficiary (and may be commingled with other
funds of Beneficiary) without interest and will be released to Trustor
for payment of Impositions and insurance premiums, or directly applied
to such costs by Beneficiary, as Beneficiary may elect.
22.5 Compliance with Law. Trustor will promptly and
faithfully comply with all present and future Laws and Restrictions.
22.6 Books and Records. Trustor, without expense to
Beneficiary, will maintain full and complete books of account and
other records reflecting the results of the operations of the Property
in accordance with generally accepted accounting principles
consistently applied, and will furnish or cause to be furnished to
Beneficiary such financial information concerning the condition of the
Loan Parties and the Property as Beneficiary shall reasonably request.
The following information will be furnished without request:
A. As soon as available, and in any event
within thirty (30) days after the close of each fiscal quarter of each
fiscal year of Trustor, a statement of revenues and expenses relating
to the rentals and operations of the Property for the applicable
fiscal quarter just ended, certified by Trustor;
B. As soon as available, and in any event
within ninety (90) days after the end of each fiscal year of Trustor,
an annual operating statement for the Property certified by an
independent certified public accountant acceptable to Beneficiary and
a rent roll in the form delivered to Beneficiary in connection with
the closing of the Loan certified by Trustor reflecting all the
existing Leases; and
C. As soon as available, and in any event
within ninety (90) days after the end of Trustor's fiscal year, a
balance sheet of Trustor, certified in a manner acceptable to
Beneficiary.
After the occurrence of an Event of Default, or in the
event Trustor fails to deliver an annual operating statement for the
Property certified by an independent certified public accountant
acceptable to Beneficiary within the time frame set forth in
Paragraph 3.6.B, above, Beneficiary shall have the right, at all
reasonable times and upon reasonable notice, to audit the books of
account and records of any Loan Party, all of which shall be made
available at Trustor's office during reasonable business hours to
Beneficiary and Beneficiary's representatives for such purpose, from
time to time. If such audit discloses a variance of three per-
cent (3%) or more in income or expenses, the cost of such audit shall
be paid by Trustor.
22.7 Further Assurances. Trustor, at any time upon
the reasonable request of Beneficiary, will at Trustor's expense
execute, acknowledge and deliver all such additional papers and
instruments (including, without limitation, a declaration of no
setoff) and all such further acts and things as may be reasonably
necessary to carry out the purposes of the Loan Documents and to
subject to the liens thereof any property intended by the terms
thereof to be covered thereby and any renewals, additions,
substitutions or replacements thereto.
22.8 Indemnity and Attorneys' Fees. Trustor will
indemnify, defend, protect and hold Beneficiary harmless from any and
all liability, loss, claims, damage, cost or expense (including,
without limitation, reasonable attorneys' fees) that Beneficiary may
or might incur hereunder, or in connection with the making or
administering of the Loan, the enforcement of any of Beneficiary's
rights or remedies hereunder or under the other Loan Documents, any
action taken by Beneficiary hereunder or thereunder, whether or not
suit is filed, or by reason or in defense of any and all claims and
demands whatsoever that may be asserted against Beneficiary arising
out of the Property, or any part thereof or interest therein, or as to
which it becomes necessary to defend or uphold the lien of this Deed
of Trust or other Loan Documents. Should Beneficiary incur any such
liability, loss, claim, damage, cost or expense, the amount thereof
with interest thereon at the Secondary Interest Rate shall be payable
by Trustor immediately without demand, shall be secured by this Deed
of Trust, and shall be part of the Indebtedness.
22.9 Litigation. Trustor will promptly give notice
in writing to Beneficiary of any litigation which may reasonably be
expected to result in a Material Adverse Change.
22.10 Inspection of Property. Trustor hereby grants
to Beneficiary, its agents, employees, consultants and contractors,
the right to enter upon the Property for the purpose of making any and
all inspections, reports, tests (including, without limitation, soils
borings, ground water testing, wells and/or soils analysis), inquiries
and reviews as Beneficiary (in its sole and absolute discretion) may
deem necessary to assess the then current condition of the Property;
provided, however, that Beneficiary shall not conduct any such tests
(including, without limitation, soil borings, ground water testing,
wells and/or soils analysis) (i) unless Beneficiary becomes aware of,
or reasonably suspects, an environmental event on or near the Property
which could have a material adverse effect on any portion of the
Property and Trustor refuses or fails to conduct such tests in a
manner reasonably requested by Beneficiary, or (ii) until after the
occurrence of an Event of Default under any of the Loan documents or
the Remediation and Indemnification Agreements. Beneficiary shall
provide Trustor with one (1) business day's notice of such entry;
provided, however, that, subject to the preceding sentence, Trustor's
consent shall not be required for such entry or for the performance of
such tests. All costs, fees and expenses (including those of Benefi-
ciary's legal counsel and consultants) incurred by Beneficiary with
respect to such inspections, reports, tests, inquiries and reviews
shall be paid by Trustor to Beneficiary upon demand, shall accrue
interest at the Secondary Interest Rate until paid, and shall be
secured by this Deed of Trust. Beneficiary shall make reasonable
efforts in the exercise of its entry, inspection, and other rights
under this Paragraph to avoid interference with the business
operations of any tenant or licensee occupying space at the Property
pursuant to Leases permitted by the Loan Documents, and, so long as no
Event of Default has occurred, shall cooperate with Trustor in setting
the time for such entry, inspections and tests.
22.11 Contest. Notwithstanding the provisions of
Paragraphs 3.4 and 3.5 hereof, Trustor may, at its expense, contest
the validity or application of any Impositions or Laws and
Restrictions by appropriate legal proceedings promptly initiated and
conducted in good faith and with due diligence, provided that
(i) Beneficiary is reasonably satisfied that neither the Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, or lost as a result of such contest, and (ii) Trustor shall
have posted a bond or furnished such other security as may be
reasonably required from time to time by Beneficiary.
22.12 Tax Receipts. Trustor will deliver to
Beneficiary, within seven (7) days after the demand made therefor,
bills showing the payment to the extent then due of all taxes,
assessments (including, without limitation, those payable in periodic
installments), and any Imposition that may have become a lien upon the
Property or any part thereof.
22.13 Additional Information. Trustor will furnish
to Beneficiary, within seven (7) days after written request therefor,
any and all information that Beneficiary may reasonably request
concerning the Property or the performance by Trustor of the
Obligations.
22.14 Prepayment. Trustor may prepay the Loan only
on the terms and conditions set forth in the Note and Trustor shall
pay Beneficiary prepayment charges in respect of any prepayment,
whether voluntary or involuntary, as required by and on the terms and
conditions set forth in the Note.
22.15 FIRPTA Affidavit. In the event of any transfer
by Trustor of its rights hereunder or of any interest in the Property
otherwise permitted under this Deed of Trust, such transferee shall,
as an additional condition to such transfer, under penalty of perjury,
execute and deliver to Beneficiary an affidavit concerning the non-
foreign status of such transferee substantially in the form required
to be delivered by Trustor in connection with the funding of the Loan.
Nothing in this Paragraph 3.15 shall be deemed a modification or
waiver of any other provision of any of the Loan Documents limiting,
prohibiting or otherwise relating to any transfer of any interest in
the Property or Trustor.
22.16 Tax Service Contract. Throughout the term of
the Loan, at Trustor's sole expense, Beneficiary shall be furnished
tax service contracts issued by a tax reporting agency satisfactory to
Beneficiary.
22.17 Reimbursement. Any amount paid by Beneficiary
for any tax, stamp tax, assessment, water rate, sewer rate, insurance
premium, repair, rent charge, debt, claim, inspection or lien having
priority over this Deed of Trust or to in any way protect the security
for the Loan, shall (i) bear interest at the Secondary Interest Rate
from the date of payment by Beneficiary, (ii) constitute additional
indebtedness secured by this Deed of Trust, prior to any right, title
or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, (iii) be secured by this
Deed of Trust, and (iv) be payable by Trustor to Beneficiary upon
demand.
22.18 Plans and Specifications. Trustor agrees to
keep at its offices at the Property, and to make available to
Beneficiary during normal business hours, "As-Built Plans and
Specifications", or, if unavailable, the final set of plans and
specifications from which the Improvements were constructed
("As-Builts"), certified by a licensed architect or licensed
contractor as true, correct and complete As-Builts for the
Improvements.
ARTICLE 23
Negative Covenants
Trustor hereby covenants and agrees as follows:
23.1 Restrictive Uses. Trustor will not initiate,
join in, or consent to any change in the current use of the Property
or in any zoning ordinance, private restrictive covenant, assessment
proceedings or other public or private restrictions limiting or
restricting the uses that may be made of the Property or any part
thereof without the prior written consent of Beneficiary.
23.2 Due on Sale or Encumbrance.
A. Except as expressly otherwise provided in
this Paragraph 4.2, in the event that Trustor, without the prior
written consent of Beneficiary (which consent may be withheld for any
reason or for no reason or given upon such terms and conditions as
Beneficiary deems necessary or appropriate, all within Beneficiary's
absolute discretion), shall sell, convey, assign, transfer, alienate
or otherwise dispose of or be divested of its title to, or, shall
mortgage, convey security title to, or otherwise encumber or cause to
be encumbered, the Property or any part thereof or any interest
therein in any manner or way, whether voluntary or involuntary, or in
the event of (a) any merger, consolidation or dissolution involving,
or the sale or transfer of all or substantially all of the assets of,
Trustor or any general partner of Trustor, (b) the transfer (at one
time or over any period of time) of ten percent (10%) or more of the
voting stock of (i) a corporate Trustor or (ii) any corporate general
partner of Trustor, (c) the transfer of any general partnership
interest in Trustor or in any partnership which is a direct or
indirect general partner of Trustor, or (d) the conversion of any such
general partnership interest to a limited partnership interest, then
the entire balance of the Indebtedness, plus the Prepayment Premium
(as defined in the Note), shall become immediately due and payable at
the option of Beneficiary. Trustor hereby covenants not to
participate in, cause or permit any of the foregoing actions or events
described in this Paragraph 4.2 without Beneficiary's prior written
consent. Consent to one such transfer by Beneficiary shall not be
deemed a waiver of the right to require such consent to further or
future transfers. Any such transferee shall, as a condition of the
effectiveness of any consent or waiver by Beneficiary hereunder, as a
covenant of Trustor and such transferee, and in form and substance
required by Beneficiary, assume all obligations under the Loan
Documents and the assumption shall not, however, release Trustor, or
any maker or guarantor of the Note, from any liability thereunder.
This provision shall not apply to transfers of title or interest under
any will or testament or applicable law of descent.
B. Notwithstanding the foregoing, the
provisions of this Paragraph 4.2 shall not apply to (i) the sale of
stock on any recognized public stock exchange in the ordinary course
of business, (ii) any merger or consolidation of Trustor where the
surviving company has a Debt Ratio (as defined below) which does not
exceed the Debt Ratio of Trustor as of the Closing Date, as shown by
evidence reasonably satisfactory to Beneficiary, and (iii) a public
tender offer by a Person unaffiliated with Trustor to purchase the
stock of Trustor. Notwithstanding anything to the contrary contained
herein, unless a change in the ownership of Trustor is the result of
one or more of the acts described in the immediately preceding
sentence (in which case the prior consent of Beneficiary is not
required), Beneficiary's prior written consent shall be required in
the event of a change in the ownership of Trustor (in a single
transaction or cumulative transactions) such that in excess of 50% of
Trustor's stock is owned or controlled by a sole shareholder or an
affiliated group of shareholders ("Sale"). Notwithstanding the
foregoing, a Sale shall specifically exclude: (a) the conversion
("Conversion") to common stock shares of some or all of the Series A
convertible preferred stock of Trustor outstanding as of the Closing
Date (the "Preferred Stock"), (b) any initial sale ("Initial Sale") of
any of the Preferred Stock to a Person unaffiliated with Trustor which
occurs either prior to and/or subsequent to any Conversion, and
(c) any sale of any of the Preferred Stock subsequent to an Initial
Sale of such Preferred Stock to a Person unaffiliated with Trustor
which previously acquired some or all of the Preferred Stock in an
Initial Sale. As used herein, "Debt Ratio" means the ratio of all
indebtedness of Trustor and its subsidiaries to the sum of all assets
of Trustor and it subsidiaries, before depreciation and less the sum
of any intangible assets.
23.3 Replacement of Fixtures and Personalty. Trustor
will not permit any of the Fixtures or Personalty to be removed at any
time from the Property without the prior written consent of
Beneficiary unless actually replaced by articles of equal suitability
and value owned by Trustor free and clear of any lien or security
interest.
23.4 No Cooperative or Condominium. Trustor shall
not operate the Property or permit the Property to be operated, as a
cooperative or condominium building or buildings in which the tenants
or occupants participate in the ownership, control, or management of
the Property or any part thereof, as tenant stockholders or otherwise.
23.5 Partnership Agreement. Trustor, if a
partnership, will not terminate, alter, modify or amend or permit the
termination, alteration, modification or amendment of its Partnership
Agreement without Beneficiary's prior written consent.
23.6 Community Facilities District. Without
obtaining the prior written consent of Beneficiary, Trustor shall not
consent to, or vote in favor of, the inclusion of all or any part of
the Property in any Community Facilities District formed pursuant to
the Community Facilities District Act, A.R.S. Section 48-701, et seq.,
as amended from time to time. Trustor shall immediately give notice
to Beneficiary of any notification or advice that Trustor may receive
from any municipality or other third party of any intent or proposal
to include all or any part of the Property in a Community Facilities
District. Beneficiary shall have the right to file a written
objection to the inclusion of all or any part of the Property in a
Community Facilities District, either in its own name or in the name
of Trustor, and to appear at, and participate in, any hearing with
respect to the formation of any such district.
<PAGE>
ARTICLE 24
Casualties and Condemnation
24.1 Insurance and Condemnation Proceeds.
A. Trustor will notify Beneficiary in writing
promptly after loss or damage caused by fire or other casualty to all
or any part of the Property resulting in damage in excess of $25,000
per occurrence, and prior to the making of any repairs thereto.
Trustor will furnish to Beneficiary within sixty (60) days after such
loss or damage (a) preliminary plans and specifications for the repair
and reconstruction of the Property (the "Preliminary Plans and
Specifications"); and (b) evidence satisfactory to Beneficiary (i) of
the cost of repair or reconstruction in accordance with the
Preliminary Plans and Specifications, (ii) that sufficient funds are
available and/or committed for the benefit of Beneficiary, including
insurance proceeds, funds provided by the Trustor, payment and
performance bond, or otherwise, to complete such repair or
reconstruction, and (iii) that such repair or reconstruction may be
completed in accordance with all applicable Laws and Restrictions
within the time frame described in Paragraph 5.1.C.(v) hereof and that
all necessary permits and approvals have been or will be obtained.
Trustor hereby unconditionally and irrevocably waives all rights of a
property owner under applicable law providing for the allocation of
condemnation proceeds between a property owner and a lien holder.
B. In the event of any insured loss in excess
of Two Hundred Fifty Thousand Dollars ($250,000) or in the event an
Event of Default, or an event which with the giving of notice or the
passing of time or both constitutes an Event of Default, shall have
occurred and be continuing, all insurance proceeds on account of any
damage to the Property shall be payable to, and deposited with,
Beneficiary. Beneficiary, at its sole option, may (i) apply such
insurance proceeds in payment of the Indebtedness or in satisfaction
of any other Obligation in such order as Beneficiary may determine,
(ii) use such insurance proceeds to repair or reconstruct the
Improvements, (iii) release such insurance proceeds to Trustor for
repair or reconstruction of the Improvements in accordance with the
procedures described in Paragraph 5.1.E hereof, or (iv) divide such
proceeds in any manner among any such application, use or release. No
such application, use or release shall, however, extend or postpone
the due date of any installments under the Note or change the amount
of such installments or cure or waive any Event of Default or notice
of Event of Default under the Loan Documents or invalidate any act
done pursuant to such notice.
C. Notwithstanding the provisions of Para-
graph 5.1.B hereof, if all or any part of the Property is damaged or
destroyed or less than all of the Property is taken by any public or
quasi-public authority through condemnation, eminent domain, deed in
lieu thereof, or otherwise, Beneficiary shall make the net amount of
all insurance proceeds and condemnation awards received by Beneficiary
after deduction of Beneficiary's reasonable costs and expenses, if
any, in collection of the same and costs associated with Beneficiary's
review of the Preliminary Plans and Specifications and other costs
associated with disbursement of such proceeds (the "Net Proceeds")
available for the repair and reconstruction of the Property (or so
much thereof as was not condemned) pursuant to the procedures
described in Paragraph 5.1.E hereof, provided that (i) no Event of
Default or event which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default, shall have
occurred and shall be continuing, (ii) Trustor has complied with the
provisions of Paragraph 5.1.A hereof and Beneficiary has approved the
Preliminary Plans and Specifications, (iii) Trustor shall proceed with
the reconstruction of the Property as nearly as possible to the
condition it was in immediately prior to the occurrence of such
casualty or taking (the "Occurrence") and in accordance with the Plans
and Specifications as promptly as is practicable after the Occurrence,
but in no event later than four (4) months after the Occurrence,
(iv) Beneficiary shall be satisfied that such reconstruction can be
completed no later than twelve (12) months after the Occurrence and at
least twelve (12) months before the maturity of the Loan,
(v) Beneficiary shall be satisfied that the reconstruction can be
completed at a cost which does not exceed the Net Proceeds, or, in the
event the cost of such restoration exceeds the Net Proceeds, Trustor
shall have satisfied the requirements set forth in Para-
graph 5.1.F(i) hereof or Paragraph 5.1.F(ii) hereof, (vi) Beneficiary
shall be satisfied that Trustor (whether with rental loss insurance
proceeds or otherwise) will continue to be able to timely pay all
payments as they become due on the Indebtedness during such period of
repair and reconstruction, (vii) Trustor shall cause such
reconstruction to be completed with due diligence as promptly as
possible after commencement, but in no event later than twelve
(12) months after the Occurrence and at least twelve (12) months
before the maturity of the Loan, (viii) Beneficiary determines that
repair or reconstruction is economically feasible and that the
Property can physically and legally be restored to at least its value
as of the Closing Date, (ix) Trustor shall have entered into a guaran-
teed maximum price general construction contract acceptable in all
respects to Beneficiary for completion of the repair or
reconstruction, which contract must include provision for a retainage
of not less than ten percent (10%) until full completion of the repair
or reconstruction, and (x) the insurer does not deny liability to any
named insured.
D. Beneficiary shall be entitled to settle
and adjust all insurance claims, and Beneficiary may deduct and retain
from the proceeds of any insurance the amount of all expenses incurred
by Beneficiary in connection with any settlement or adjustment.
Notwithstanding the foregoing, so long as no Event of Default or event
which, with the giving of notice or the passage of time or both, would
constitute an Event of Default shall have occurred and be continuing,
Trustor may settle directly with the insurer any insurance claims
involving an amount less than Two Hundred Fifty Thousand Dollars
($250,000) so long as (i) Trustor applies all insurance proceeds to
reconstruction of the Property, (ii) Trustor promptly and diligently
pursues the repairs to completion, and (iii) Trustor follows the
provisions of Paragraph 5.1.A hereof.
E. The Net Proceeds and any additional funds
deposited by Trustor with Beneficiary shall constitute additional
security for the Loan. Trustor shall execute, deliver, file and/or
record, at its own expense, such documents and instruments as
Beneficiary deems necessary or advisable to grant to Beneficiary a
perfected, first priority security interest in the Net Proceeds and
such additional funds. Provided that Trustor is otherwise entitled to
receive the Net Proceeds pursuant to the terms and provisions of this
Deed of Trust, Beneficiary or, at Beneficiary's option, a disbursing
agent (the "Disbursing Agent") selected by Beneficiary (whose fees and
expenses shall be paid by Trustor), shall pay the Net Proceeds to
Trustor from time to time during the course of the restoration,
subject to the following terms and conditions:
(1) The work shall be administered and
overseen by an architect or engineer approved by Beneficiary (the
"Architect"). Complete copies of the plans and specifications for the
work (the "Plans and Specifications"), approved by all governmental
authorities whose approval is required, and bearing the signed
approval thereof by the Architect and accompanied by the Architect's
signed estimate, bearing the Architect's seal, of the entire cost of
completing the work, shall be delivered to Beneficiary;
(2) Each request for payment shall be made
upon seven (7) day's prior written notice to Beneficiary or the
Disbursing Agent and shall be accompanied by a certificate to be made
by the Architect stating that (i) all of the work completed has been
done in compliance with the Plans and Specifications, as approved by
Beneficiary, (ii) the sum requested is justly required to reimburse
Trustor for payments by Trustor to, or is justly due to, the
contractor, subcontractors, materialmen, laborers, engineers,
architects or other persons rendering services and materials for the
work (giving a brief description of such services and materials) and,
when added to all sums previously paid out by Beneficiary or the
Disbursing Agent, does not exceed the value of the work done to the
date of such certificate, and (iii) the amount of such proceeds
remaining with Beneficiary are sufficient on completion of the work to
pay for the same in full (giving in such reasonable detail as
Beneficiary may require an estimate of the cost of such completion);
(3) Each request shall be accompanied by
waivers of lien satisfactory to Beneficiary and the Disbursing Agent
covering that part of the work for which payment or reimbursement is
being requested and, if required by Beneficiary or the Disbursing
Agent, by a search prepared by a title company satisfactory to
Beneficiary or the Disbursing Agent, that there has not been filed
with respect to the Property any mechanics', materialmen's or other
liens;
(4) The request for any payment after the work
has been completed shall be accompanied by a copy of any certificate
or certificates required by any Laws and Restrictions for legal
occupancy of the Improvements;
(5) Trustor shall deliver to Beneficiary or
the Disbursing Agent certified or photostatic copies of all permits
and approvals required by any Laws and Restrictions in connection with
the commencement and conduct of the work; and
(6) Trustor shall deliver to Beneficiary or
the Disbursing Agent a surety bond for and/or guaranty of the payment
for and completion of the work, which bond or guaranty shall be in
form and substance satisfactory to Beneficiary and in an amount no
less than the Architect's estimate of the entire cost of completing
the work.
F. Notwithstanding anything to the contrary
contained herein or in any of the insurance policies, all proceeds
paid to Trustor under such policies shall immediately be delivered to
Beneficiary. If the Net Proceeds exceed the costs of completion of
the restoration of the Property, such excess proceeds shall belong and
be retained by and/or paid over to Beneficiary to be applied against
the Indebtedness. If at any time the Net Proceeds shall not, in
Beneficiary's opinion, be sufficient to pay in full the balance of the
costs which will be incurred in connection with the repair and
reconstruction of the Property and all payments as they come due on
the Indebtedness and all other obligations which are or may be secured
by a lien on the Property during the reconstruction period, Trustor
shall, prior to receiving any further disbursement, either
(i) complete, using its own funds and not borrowed funds, such portion
of the reconstruction as shall be sufficient to render the Net
Proceeds sufficient to complete the reconstruction, or (ii) deposit
the deficiency with Beneficiary before any further disbursement of the
Net Proceeds shall be made, which deficiency deposit shall be held by
Beneficiary in an interest bearing special account and shall be
disbursed on the same conditions applicable to the Net Proceeds.
Beneficiary shall remit to Trustor the balance, if any, of any such
deficiency deposit remaining after completion of the reconstruction.
24.2 Additional Provisions Relating to Condemnation.
Trustor, immediately upon obtaining knowledge of the commencement of
any proceedings for the condemnation of the entire Property or any
material part thereof, will notify Trustee and the Beneficiary of the
pendency of such proceedings. Trustee and Beneficiary may participate
in any such proceedings and Trustor from time to time will deliver to
Beneficiary all instruments requested by Beneficiary to permit such
participation. In the event of such condemnation proceedings, the
award or compensation payable is hereby assigned to and shall be paid
to Beneficiary. Beneficiary shall be under no obligation to question
the amount of any such award or compensation and may accept the same
in the amount in which the same shall be paid. In any such
condemnation proceedings Beneficiary may be represented by counsel
selected by Beneficiary, the cost of such counsel to be borne by
Trustor. The proceeds of any award or compensation so received shall,
subject to Paragraph 5.1.C hereof as it relates to condemnation, and
at the option of Beneficiary, either be applied to the prepayment of
the Indebtedness or be paid over to the Trustor for restoration of the
Improvements in accordance with the provisions of Paragraph 5.1.E
hereof. Trustor hereby unconditionally and irrevocably waives all
rights of a property owner under applicable Arizona law providing for
the allocation of condemnation proceeds between a property owner and a
lien holder.
ARTICLE 25
Events of Default and Remedies of Beneficiary
25.1 Events of Default.
A. If one or more of the following events
shall have occurred and be continuing:
(1) Trustor shall fail to pay when due any
part of the Indebtedness;
(2) Trustor shall fail to timely observe,
perform or discharge any Obligation contained in any of the Loan
Documents, any agreement relating to the Property or any other loan
documents with respect to the Property on its part to be performed or
observed, other than as described in Paragraphs 6.1.A(1), (3), (4),
(5), (6), (7) and (8), and any such failure shall remain unremedied
for thirty (30) days or such lesser period as may be otherwise
specified in the applicable Loan Document (the "Grace Period") after
notice to Trustor of the occurrence of such failure; provided,
however, that the Grace Period may be extended to ninety (90) days if:
(a) Beneficiary determines in good faith that (i) such default cannot
be cured within the Grace Period but can be cured within ninety
(90) days, (ii) no lien or security interest created by the Loan
Documents shall be impaired prior to the completion of such cure, and
(iii) Beneficiary's immediate exercise of any remedies provided
hereunder or by law is not necessary for the protection or
preservation of the Property or Beneficiary's security interest
therein, and (b) Trustor shall immediately commence and diligently
pursue the cure of such default;
(3) Trustor, as lessor or sublessor, as the
case may be, shall assign the rents or income of the Property or any
part thereof (other than to Beneficiary) without first obtaining the
written consent of Beneficiary;
(4) Any representation or warranty made by
Trustor in, under or pursuant to the Loan Documents was false or
misleading in any material respect as of the date on which such
representation or warranty was made or deemed remade, and Trustor does
not cause to be taken and completed within thirty (30) days following
notice of such breach any and all action required to cause such
representation or warranty to be true and correct in all respects as
originally made;
(5) (i) Any claim or lien shall be filed
against the Property or any part thereof, whether or not such lien
shall be prior to this Deed of Trust, which shall be maintained for a
period of thirty (30) days without discharge, satisfaction or adequate
bonding in accordance with the terms of this Deed of Trust; (ii) the
existence of any interest in the Property other than the Permitted
Exceptions, those of Trustor, Trustee, Beneficiary and any tenants in
the Property; or (iii) the sale, hypothecation, conveyance or other
disposition of the Property without the prior written consent of
Beneficiary except as the result of the condemnation of a non-material
part of the Property as set forth in Paragraph 5.1 above or as
otherwise expressly permitted under the Loan Documents;
(6) Any of the Loan Documents, at any time
after their respective execution and delivery and for any reason,
other than an act or omission of Beneficiary, shall cease to be in
full force and effect or be declared null and void, or shall cease to
constitute valid and subsisting liens and/or valid and perfected
security interests in and to the Property, or Trustor shall contest or
deny in writing that it has any further liability or obligation under
any of the Loan Documents;
(7) The failure of Trustor to observe the
provisions of Paragraph 4.2 hereof; and/or
(8) An "Event of Default" occurs under any one
or more of the Woodlands Deed of Trust, the Milpitas Deed of Trust,
the Ontario Deed of Trust, the Tustin Deed of Trust, the Fremont Deed
of Trust, the Nevada Deed of Trust and/or the South San Francisco Deed
of Trust.
THEN and in any such event Beneficiary may, by written
notice delivered to Trustor, which notice specifically states the
occurrence of an Event of Default, declare Trustor to be in default.
Upon the occurrence of such event and the giving of such notice, the
same shall constitute an event of default (an "Event of Default").
B. It shall constitute an Event of Default
hereunder without the requirement of any notice if one or more of the
following events shall have occurred and be continuing:
(1) (i) The entry of an order for relief under
Title 11 of the United States Code as to Trustor, any general partner
of Trustor, any parent company of such partner, or any owner of the
Property or any interest therein or the adjudication of Trustor, any
general partner of Trustor, or any owner of the Property as insolvent
or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act; (ii) the commencement by Trustor, any general partner
of Trustor, or any parent company of such partner of any case,
proceeding or other action seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors; (iii) consent to, acquiescence in or attempt to secure the
appointment of any Receiver of all or any substantial part of its
properties or of the Property by Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the
Property or any interest therein; (iv) Trustor, any general partner of
Trustor, or any parent company of such partner shall generally not pay
its debts as they become due or shall admit in writing its inability
to pay its debts or shall make a general assignment for the benefit of
creditors; or (v) Trustor, any general partner of Trustor, or any
parent company of such partner shall take any action to authorize any
of the acts set forth above; or
(2) Any case, proceeding or other action
against Trustor, any general partner of Trustor, any parent company of
such partner, or any owner of Property or any interest therein shall
be commenced seeking to have an order for relief entered against such
party as a debtor or seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors, or seeking the appointment of any Receiver for Trustor, any
general partner thereof, or any parent company of such partner or for
all or any substantial part of its property or the Property, and such
case, proceeding or other action remains undismissed for an aggregate
of sixty (60) days (whether or not consecutive) or Trustor or general
partner or parent company during the period of its ownership fails to
proceed diligently during such sixty (60) day period to have such
proceeding or other action dismissed.
C. Upon the occurrence of any Event of
Default, Beneficiary may at any time declare all of the Indebtedness
to be due and payable and the same shall thereupon become immediately
due and payable, together with any prepayment fee due in accordance
with the terms of the Note, without any further presentment, demand,
protest or notice of any kind. Beneficiary may in its sole
discretion, also do any of the following:
(1) in person, by agent, or by a Receiver, and
without regard to the adequacy of security, the solvency of Trustor or
the condition of the Property, enter upon and take possession of the
Property, or any part thereof, in its own name or in the name of
Trustee and do any acts which Beneficiary deems necessary to preserve
the value, marketability or rentability of the Property; sue for or
otherwise collect the rents, issues and profits therefrom, including
those past due and unpaid, and apply the same, less cost and expenses
of operation and collection, including, without limitation, reasonable
attorneys' fees, against the Indebtedness, all in such order as
Beneficiary may determine. The entering upon and taking possession of
said property, the collection of such rents, issues and profits and
the application thereof as aforesaid shall not cure or waive any
default or notice of default hereunder or invalidate any act done
pursuant to such notice;
(2) commence an action to foreclose this Deed
of Trust in the manner provided under this Deed of Trust or by law;
(3) with respect to any Personalty, proceed as
to both the real and personal property in accordance with
Beneficiary's rights and remedies in respect of the Land, or proceed
to sell said Personalty separately and without regard to the Land in
accordance with Beneficiary's rights and remedies as to personal
property; and/or
(4) deliver to Trustee a written declaration
of default and demand for sale, and a written notice of default and
election to cause the Property to be sold, which notice Trustee or
Beneficiary shall cause to be duly filed for record.
25.2 Power of Sale.
A. Should Beneficiary elect to foreclose by
exercise of the power of sale herein contained, Beneficiary shall also
deposit with Trustee this Deed of Trust and the Note and such receipts
and evidence of expenditures made and secured hereby as Trustee may
require, and notice of default having been given as then required by
law, and after lapse of such time as may then be required by law,
after recordation of such notice of default, Trustee, without demand
on Trustor, shall, after notice of sale having been given as required
by law, sell the Property at the time and place of sale fixed by it in
said notice of sale, either as a whole or in separate parcels as
Beneficiary shall determine, and in such order as Beneficiary may
determine, at public auction to the highest bidder. Beneficiary may,
in its sole discretion, designate the order in which the Property
shall be offered for sale or sold through a single sale or through two
or more successive sales, or in any other manner Beneficiary deems to
be in its best interest. If Beneficiary elects more than one sale or
other disposition of the Property, Beneficiary may at its option cause
the same to be conducted simultaneously or successively, on the same
day or at such different days or times and in such order as
Beneficiary may deem to be in its best interest, and no such sale
shall terminate or otherwise affect the lien of this Deed of Trust on
any part of the Property not then sold until all Indebtedness secured
hereby has been fully paid. If Beneficiary elects to dispose of the
Property though more than one sale, Trustor shall pay the costs and
expenses of each such sale of its interest in the Property and of any
proceedings where the same may be made. Trustee may postpone sale of
all or any part of the Property by public announcement at such time
and place of sale, and from time to time thereafter may postpone such
sale by public announcement at the time fixed by the preceding
postponement, and without further notice make such sale at the time
fixed by the last postponement; or Trustee may, in its discretion,
give a new notice of sale. Beneficiary may rescind any such notice of
default at any time before Trustee's sale by executing a notice of
rescission and recording the same. The recordation of such notice
shall constitute a cancellation of any prior declaration of default
and demand for sale and of any acceleration of maturity of Indebted-
ness affected by any prior declaration or notice of default. The
exercise by Beneficiary of the right of rescission shall not
constitute a waiver of any default then existing or subsequently
occurring, or impair the right of Beneficiary to execute other
declarations of default and demand for sale, or notices of default and
of election to cause the Property to be sold, nor otherwise affect the
Note or this Deed of Trust, or any of the rights, obligations or
remedies of Beneficiary or Trustee hereunder or thereunder. After
sale Trustee shall deliver to such purchaser its deed conveying the
property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any Person, including,
without limitation, Trustor, Trustee or Beneficiary, may purchase at
such sale. If allowed by law, Beneficiary, if it is the purchaser,
may turn in the Note at the amount owing therein toward payment of the
purchase price (or for endorsement of the purchase price as a payment
on the Note if the amount owing thereon exceeds the purchase price).
Trustor hereby expressly waives any right of redemption after sale
that Trustor may have at the time of sale or that may apply to the
sale. Trustor hereby expressly waives all rights of marshalling with
respect to each of the Combined Properties that Trustor may have in
the event of foreclosure hereunder or under any of the other Combined
Deeds of Trust.
B. Trustee, upon such sale, shall make
(without any covenant or warranty, express or implied), execute and
after due payment made, deliver to the purchaser, its heirs or
assigns, a deed or other record of interest, as the case may be, in
and to the property so sold that shall convey to the purchaser all the
title and interest of Trustor in the Property (or part thereof sold),
and shall apply the proceeds of such sale in payment, first, of the
expenses of such sale together with the reasonable expenses of the
trust, including, without limitation, attorneys' fees, that shall
become due upon any default made by Trustor, and also such sums, if
any, as Trustee or Beneficiary shall have paid for procuring a search
of the title to the Property, or any part thereof, subsequent to the
execution of this Deed of Trust; and in payment, second, of the
Indebtedness then remaining unpaid, and the amount of all other monies
with interest thereon agreed or provided to be paid by Trustor; and
the balance or surplus of such proceeds of sale Trustee shall pay to
Trustor, its successors or assigns as their interest may appear.
C. The purchaser at the Trustee sale shall be
entitled to immediate possession of the Property as against Trustee or
any other persons in possession and shall have the right to summary
proceedings to obtain possession provided in Title 12, Chapter 8,
Article 4, Arizona Revised Statutes, or otherwise, together with costs
and reasonable attorneys fees. Each provision of applicable law
relating to this Deed of Trust is and shall remain applicable to the
respective rights and obligations of Trustor, Beneficiary and Trustee
and no term or provision hereof shall limit or restrict such rights or
obligations. The omission of any express provision restating the
applicable law herein shall not constitute or render the same
inapplicable or waive the same. All provisions of law relating to
this Deed of Trust are incorporated by reference herein. To the
extent permitted by law, an action may be maintained by Beneficiary to
recover a deficiency judgment for any balance due hereunder. In lieu
of sale pursuant to the power of sale conferred hereby, this Deed of
Trust may be foreclosed in the same manner provided by law for the
foreclosure of mortgages on real property and Beneficiary shall have
all rights and remedies available to it pursuant to such laws.
D. Acknowledgement of Due Process. TRUSTOR
UPON EXECUTION AND DELIVERY OF THIS DEED OF TRUST WAS INFORMED THAT
CERTAIN PARAGRAPHS HEREOF GRANT A POWER OF SALE AND PROVIDE FOR
SUMMARY FORECLOSURE PROCEEDING AT THE ELECTION OF BENEFICIARY UPON AN
EVENT OF DEFAULT. AS A CONDITION PRECEDENT TO OBTAINING THE LOAN AND
IN CONSIDERATION THEREOF, TRUSTOR SPECIFICALLY ACKNOWLEDGES THAT SUCH
PROCEEDING MAY NOT GRANT THE RIGHT TO NOTICE AND OPPORTUNITY TO BE
HEARD IN ANY JUDICIAL PROCEEDING IN A COURT HAVING JURISDICTION OF THE
PARTIES AND THE SUBJECT MATTERS PRIOR TO THE COMMENCEMENT OF SUCH
PROCEEDINGS AND OF THE POWER OF SALE HEREIN GRANTED. TRUSTOR
REPRESENTS AND WARRANTS THAT IT IS AN ENTITY SOPHISTICATED IN THE
FINANCING OF COMMERCIAL PROPERTIES OF THE NATURE CONSTITUTING THE
PROPERTY AND HAS BEEN FULLY REPRESENTED BY COUNSEL IN THIS MATTER AND
HAS BEEN ADVISED OF THE TERMS AND CONDITIONS OF THIS DEED OF TRUST AND
THE SPECIFIC PROVISIONS OF THIS DEED OF TRUST AS DESCRIBED ABOVE.
E. In any case in which, under the provisions
of this Deed of Trust, Beneficiary has a right to institute a
trustee's sale or foreclosure proceedings, whether before or after the
whole Indebtedness is declared to be immediately due as aforesaid, or
whether before or after the institution of legal proceedings to
foreclose the lien hereof or before or after sale thereunder,
forthwith upon demand of Beneficiary, Trustor shall surrender to
Beneficiary and Beneficiary shall be entitled to take actual
possession of the Property or any part thereof personally, or by its
agents or attorneys, as for condition broken, and Beneficiary in its
discretion may, with or without force and with or without process of
law, enter upon and take and maintain possession of all or any part of
the Property, together with all documents, books, records, papers and
accounts of Trustor or then owners of the Property relating thereto,
and may exclude Trustor, its agents or servants, wholly therefrom and
may, as attorney-in-fact or agent of Trustor, or in its own name as
Beneficiary and under the powers herein granted, hold, operate, manage
and control the Property and conduct the business, if any, thereof,
either personally or by its agents, and with full power to use such
measures, legal or equitable, as in its discretion or in the
discretion of its successors or assigns may be deemed proper or
necessary to enforce the payment of security of the avails, rents,
issues and profits of the Property, including actions for the recovery
of rent, actions in forcible detainer and actions in distress for
rent, if an available remedy, hereby granting full power and authority
to exercise each and every of the rights, privileges and powers herein
granted at any and all times hereafter, without notice to Trustor, and
with full power to cancel or terminate any lease or sublease for any
cause or on any ground which would entitle Trustor to cancel the same,
to elect to disaffirm any lease or sublease made subsequent to this
Deed of Trust or subordinated to the lien hereof, to make all
necessary or proper repairs, betterments and improvements to the
Property as to it may seem judicious, insure and reinsure the same and
all risks incidental to Beneficiary's possession, operation and
management thereof and to receive all of such avails, rents, issues
and profits. Beneficiary shall not be obligated to perform or
discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under any leases and Trustor shall and
does hereby agree to indemnify and hold Beneficiary harmless of and
from any and all liability, loss or damage which it may or might incur
under said leases or under or by reason of the assignment thereof and
of and from any and all claims and demands whatsoever which may be
asserted against it by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms,
covenants or agreements contained in said leases. Should Beneficiary
incur any such liability, loss or damage under said leases or under or
by reason of the assignment thereof, or in the defense of any claims
or demands, the amount thereof, including costs, expenses and
reasonable attorneys' fees shall be secured hereby, and Trustor shall
reimburse Beneficiary therefor immediately upon demand. Trustor shall
have no obligation to indemnify Beneficiary as to any claim or demand
arising from the gross negligence or willful misconduct of Beneficiary
or any employee, agent, representative or contractor of Beneficiary.
F. Beneficiary, in the exercise of the rights
and powers hereinabove conferred upon it by Paragraphs 6.2.E and 8.1
hereof, shall have full power to use and apply the avails, rents,
issues and profits of the Property to the payment of or on account of
the following, in such order as Beneficiary may determine:
(1) to the payment of the reasonable operating
expenses of said Property, including cost of
management and leasing thereof (which shall include
reasonable compensation to Beneficiary's agent or
agents, if management be delegated to an agent or
agents, and shall also include lease commissions and
other compensation and expenses of seeking and
procuring tenants and entering into leases),
established claims for damages, if any, and premiums
on insurance hereinabove authorized;
(2) to the payment of taxes and special
assessments now due or which may hereafter become
due on said Property;
(3) to the payment of all repairs, decorating,
renewals, replacements, alterations, additions,
betterments and improvements reasonably necessary
for the continued operation of said Property,
including the cost from time to time of installing
or replacing refrigeration and gas or electric
heating therein, and of placing said property in
such condition as will, in the judgment of
Beneficiary, make it readily rentable;
(4) to the payment of any Indebtedness or any
deficiency which may result from any foreclosure
sale; and
(5) the remainder to be paid to Trustor or as
may be required by law.
25.3 Proof of Default. In the event of a sale of the
Property, or any part thereof, and the execution of a deed therefor,
the recital therein of default, and of recording notice of default and
election of sale, and of the elapsing of the required time (if any)
between the foregoing recording and the following notice, and of the
giving of notice of sale, and of a demand by Beneficiary, or its
successors or assigns, that such sale should be made, shall be
conclusive proof of such default, recording, election, elapsing of
time, and of the due giving of such notice, and that the sale was
regularly and validly made on due and proper demand by Beneficiary,
its successors or assigns. Any such deed or deeds with such recitals
therein shall be effective and conclusive against Trustor, its
successors and assigns, and all other Persons. The receipt for the
purchase money recited or contained in any deed executed to the
purchaser as aforesaid shall be sufficient to discharge such purchaser
from all obligations to see to the proper application of the purchase
money.
25.4 Protection of Security. If an Event of Default
shall have occurred and be continuing, then Beneficiary or Trustee,
but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligations or defaults
hereunder, may: (i) perform any act in such manner and to such extent
as either may deem necessary to protect the security hereof,
Beneficiary and Trustee being authorized to enter upon the Property
for such purpose; (ii) appear in and defend any action or proceeding
purporting to affect, in any manner whatsoever, the obligations or the
Indebtedness, the security hereof or the rights or powers of
Beneficiary or Trustee; (iii) pay, purchase or compromise any
encumbrance, charge or lien that in the judgment of Beneficiary or
Trustee is prior or superior hereto; and (iv) in exercising any such
powers, pay necessary expenses, employ counsel and pay reasonable
attorneys' fees. Trustor agrees that all sums expended by Trustee or
Beneficiary pursuant to this paragraph, together with interest at the
Secondary Interest Rate from the date of expenditure by Beneficiary,
shall be added to the principal amount of the Indebtedness secured by
the Loan Documents and this Deed of Trust and shall be payable by
Trustor to Beneficiary upon demand.
25.5 Receiver. If an Event of Default shall have
occurred and be continuing, Beneficiary, as a matter of strict right
and without notice to Trustor or anyone claiming under Trustor, and
without regard to the then value of the Property, shall have the right
to apply ex parte to any court having jurisdiction to appoint a
Receiver to enter upon and take possession of the Property, and
Trustor hereby waives notice of any application therefor, provided a
hearing to confirm such appointment with notice to Trustor is set
within the time required by law. Any such Receiver shall have all the
powers and duties of Receivers in like or similar cases and all the
powers and duties of Beneficiary in case of entry as provided in this
Deed of Trust, and shall continue as such and exercise all such powers
until the date of confirmation of sale, unless such receivership is
sooner terminated. Beneficiary's right to a Receiver as set forth in
this Paragraph 6.5, shall be absolute and unconditional once an Event
of Default occurs and said Receiver may be obtained in any judicial
foreclosure, suit for specific performance or in any other law suit to
enforce this Deed of Trust in any manner or in any other independent
and/or separate action brought by Beneficiary regardless of whether
Beneficiary seeks any relief in such action other than the appointment
of a receiver and in that respect, Trustor waivers any express or
implied requirement under common law or A.R.S. Section 12.1241 that a
receiver may be appointed only ancillary to other judicial or non-
judicial relief. This right is created by this Deed of Trust and is a
contractual right between the parties and is cumulative of and shall
not affect in any way the right of Beneficiary given by law for the
appointment of a Receiver. It is agreed that time is of the essence
in the performance of this Deed of Trust.
25.6 Remedies Cumulative. All remedies of
Beneficiary provided for herein are cumulative and shall be in
addition to any and all other rights and remedies provided in the
other Loan Documents or by law, including, without limitation, any
right of offset. The exercise of any right or remedy by Beneficiary
hereunder shall not in any way constitute a cure or waiver of default
hereunder or under the Loan Documents, or invalidate any act done
pursuant to any notice of default, or prejudice Beneficiary in the
exercise of any of its rights hereunder or under the Loan Documents.
The entering upon or taking possession of the Property, collections of
the Rents and Proceeds and the application thereof as permitted in
this Deed of trust shall not cure or waive any Event of Default or
notice of Trustee's sale or invalidate any act done pursuant to such
notice. Beneficiary shall have all of the rights provided for in
Arizona Revised Statutes Sections 33-702B and 33-807, or otherwise.
25.7 Curing of Defaults. If Trustor shall at any
time fail to perform or comply with any of the terms, covenants and
conditions required on Trustor's part to be performed and complied
with under this Deed of Trust, any of the other Loan Documents or any
other agreement that, under the terms of this Deed of Trust, Trustor
is required to perform, then Beneficiary, and without waiving or
releasing Trustor from any of the Obligations, may, in its sole
discretion:
(i)
make any payments thereunder payable by Trustor and
take out, pay for and maintain any of the insurance policies provided
for therein; and/or
(ii)
after the expiration of any applicable grace period
and subject to Trustor's rights to contest certain obligations
specifically granted hereby, perform any such other acts thereunder on
the part of Trustor to be performed and enter upon the Property for
such purpose.
All sums so paid out of Beneficiary's own funds and all reasonable
costs and expenses incurred and paid by Beneficiary in connection with
the performance of any such act, together with interest on unpaid
balances thereof at the Secondary Interest Rate from the respective
dates of Beneficiary's making of each such payment, shall be added to
the principal of the Indebtedness, shall be secured by the Loan
Documents and by the lien of this Deed of Trust, prior to any right,
title or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, and shall be payable by
Trustor to Beneficiary on demand.
ARTICLE 26
Security Agreement and Fixture Filing
26.1 Grant of Security Interest. Trustor hereby
grants to Beneficiary a security interest in and to all Trustor's
right, title and interest now owned or hereafter acquired in and to
the Personalty and the Fixtures (collectively, the "Collateral"), to
secure the payment and performance of the Obligations.
26.2 Remedies. This Deed of Trust constitutes a
security agreement with respect to the Collateral in which Beneficiary
is hereby granted a security interest. In addition to the rights and
remedies provided under this Deed of Trust, Beneficiary shall have all
of the rights and remedies of a secured party under the Arizona
Uniform Commercial Code (the "Commercial Code") as well as all other
rights and remedies available at law or in equity. Trustor hereby
agrees to execute and deliver on demand and irrevocably constitutes
and appoints Beneficiary the attorney-in-fact of Trustor to, at
Trustor's expense, execute, deliver and, if appropriate, to file with
the appropriate filing officer or office such security agreements,
financing statements, continuation statements or other instruments as
Beneficiary may request or require in order to impose, perfect or
continue the perfection of the lien or security interest created
hereby. Upon the occurrence of any Event of Default, Beneficiary
shall have (i) the right to cause any of the Collateral which is
personal property to be sold at any one or more public or private
sales as permitted by applicable law and to apply the proceeds thereof
to the Indebtedness or any other monetary obligation of Trustor to
Beneficiary, and (ii) the right to apply to the Indebtedness or any
other monetary obligation of Trustor to Beneficiary, any Collateral
which is cash, negotiable documents or chattel paper. Any such
disposition may be conducted by an employee or agent of Beneficiary or
Trustee. Any Person, including, without limitation, both Trustor and
Beneficiary, shall be eligible to purchase any part or all of such
Personalty at any such disposition.
26.3 Expenses. Expenses of retaking, holding,
preparing for sale, selling or the like pertaining to the Collateral
shall be borne by Trustor and shall include Beneficiary's and
Trustee's reasonable attorneys' fees and legal expenses. Trustor,
upon demand of Beneficiary shall assemble the Collateral and make it
available to Beneficiary at the Property, a place which is hereby
deemed to be reasonably convenient to Beneficiary and Trustor.
Beneficiary shall give Trustor at least ten (10) days' prior written
notice of the time and place of any public sale or other disposition
of the Collateral or of the time after which any private sale or any
other intended disposition is to be made. Any such notice sent to
Trustor in the manner provided for the mailing of notices herein is
hereby deemed to be reasonable notice to Trustor.
26.4 Fixture Filing. This Deed of Trust covers
certain goods which are or are to become fixtures related to the Land
and constitutes a financing statement, filed as a fixture filing in
the official records of the county recorder of the county in which the
Property is located, executed by Trustor as debtor in favor of
Beneficiary as secured party. For purposes of the Commercial Code the
following information is supplied:
(a) Name and Address of Debtor:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, California 94549
Attention: Mr. Scott Whitney
(b) Name and Address of Record Owner of Real
Estate:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, California 94549
Attention: Mr. Scott Whitney
(c) Description of Real Estate:
See Exhibit A attached hereto.
(d) Name and Address of Secured Party:
The Prudential Insurance Company of
America
Four Embarcadero Center, Suite 2700
San Francisco, California 94111
Attention: Regional Counsel
This Deed of Trust covers certain goods which are or are to become
fixtures related to the Land and constitutes a fixture filing with
respect to such goods executed by Trustor as debtor in favor of
Beneficiary as secured party.
26.5 Waivers. Trustor waives (a) any right to
require Beneficiary to (i) proceed against any Person, (ii) proceed
against or exhaust any Collateral or (iii) pursue any other remedy in
its power; and (b) any defense arising by reason of any disability or
other defense of Trustor or any other Person, or by reason of the
cessation from any cause whatsoever of the liability of Trustor or any
other Person. Until the Indebtedness shall have been paid in full,
Trustor shall not have any right to subrogation, and Trustor waives
any right to enforce any remedy which Beneficiary now has or may
hereafter have against Trustor or against any other Person and waives
any benefit of and any right to participate in any Collateral or
security whatsoever now or hereafter held by Beneficiary.
ARTICLE 27
Assignment of Rents
27.1 Assignment of Rents. Trustor absolutely and
unconditionally assigns and transfers the Rents to Beneficiary,
whether now due, past due or to become due, and gives to and confers
upon Beneficiary the right, power and authority to collect such Rents,
and apply the same to the Indebtedness. Trustor irrevocably appoints
Beneficiary its agent to, at any time, demand, receive and enforce
payment, to give receipts, releases and satisfactions, and to sue,
either in the name of Trustor or in the name of Beneficiary, for all
such Rents. Neither the foregoing assignment of Rents to Beneficiary
nor the exercise by Beneficiary of any of its rights or remedies under
this Deed of Trust shall be deemed to make Beneficiary a "mortgagee-
in-possession" or otherwise responsible or liable in any manner with
respect to the Property or the use, occupancy, enjoyment or operation
of all or any part thereof, unless and until Beneficiary, in person or
by its own agent, assumes actual possession thereof, nor shall
appointment of a Receiver for the Property by any court at the request
of Beneficiary or by agreement with Trustor or the entering into
possession of the Property or any part thereof by such Receiver be
deemed to make Beneficiary a "mortgagee-in-possession" or otherwise
responsible or liable in any manner with respect to the Property or
the use, occupancy, enjoyment or operation of all or any part thereof.
27.2 Collection of Rents. Notwithstanding anything
to the contrary contained herein or in the Note, so long as no Event
of Default shall occur, Trustor shall have a license, revocable upon
the occurrence of an Event of Default or, if an Event of Default shall
have occurred, so long as such Event of Default shall not have been
waived by Beneficiary, to collect all Rents, and to first apply same
to the Indebtedness as and when due and thereafter to retain, use and
enjoy the same and to otherwise exercise all rights with respect
thereto, subject to the terms hereof. Upon the occurrence of an Event
of Default, Beneficiary shall have the right, on written notice to
Trustor, to terminate and revoke the license heretofore granted to
Trustor and shall have the complete right and authority then or
thereafter to exercise and enforce any and all of its rights and
remedies provided herein or by law or at equity.
ARTICLE 28
Miscellaneous
28.1 Successor Trustee. Beneficiary may remove
Trustee or any successor trustee at any time or times and appoint a
successor trustee by recording a written substitution in the county
where the Property is located, or in any other manner permitted by
law.
28.2 Change of Law. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the
value of the Property, for the purposes of taxation, any lien thereon,
or changing in any way the laws now in force for the taxation of
mortgages, deeds of trust, or debts secured by mortgage or deed of
trust (other than laws imposing taxes on income), or the manner of the
collection of any such taxes so as to materially affect the
anticipated yield of Beneficiary as holder of the Note and/or Benefi-
ciary under this Deed of Trust, the Indebtedness plus any applicable
prepayment charges shall become due and payable at the option of
Beneficiary exercised by thirty (30) days' notice to Trustor unless
Trustor, within such thirty (30) day period shall, if permitted by
law, assume the payment of any tax or other charge so imposed upon
Beneficiary for the period remaining until full payment by Trustor of
the Indebtedness.
28.3 No Waiver. No waiver by Beneficiary of any
default or breach by Trustor hereunder shall be implied from any
omission by Beneficiary to take action on account of such default if
such default persists or is repeated, and no express waiver shall
affect any default other than the default expressly referenced in the
waiver and such waiver shall be operative only for the time and to the
extent therein stated. Waivers of any covenant, term or condition
contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or
approval by Beneficiary to or of any act by Trustor requiring further
consent or approval shall not be deemed to waive or render unnecessary
the consent or approval to or of any subsequent similar act.
28.4 Abandonment. Subject to such chattel mortgages,
security agreements or other liens on title as may exist thereon with
the consent of Beneficiary, or any provided for herein, any and all
Personalty that upon foreclosure of the Property is owned by Trustor
and is used in connection with the operation of the Property shall be
deemed at the option of Beneficiary to have become on such date a part
of the Property and abandoned to Beneficiary in its then condition.
28.5 Notices. All notices, demands, requests,
consents, statements, satisfactions, waivers, designations, refusals,
confirmation or denials that may be required or otherwise provided for
or contemplated under the terms of this Deed of Trust shall be in
writing, and shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with
receipt acknowledged, (ii) one business day after having been
deposited for overnight delivery with Federal Express or another
comparable overnight courier service, or (iii) three business days
after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered
or certified mail, postage prepaid, addressed as follows:
If to Trustor:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, California 94549
Attention: Mr. Scott Whitney
If to Trustee:
First American Title Insurance Company
1850 Mount Diablo Boulevard, Suite 300
Walnut Creek, California 94596
If to Beneficiary:
The Prudential Insurance Company of America
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Regional Counsel
Loan No. 6 102 104
with a copy to:
The Prudential Insurance Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Vice President, Loan Servicing
Loan No. 6 102 104
or addressed to each respective party at such other address as such
party may from time to time designate by written notice to the other
parties given in the manner aforesaid.
28.6 Severability. If any term, provision, covenant
or condition hereof or any application thereof should be held by a
court of competent jurisdiction to be invalid, void or unenforceable,
in whole or in part, all terms, provisions, covenants and conditions
hereof and all applications thereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
28.7 Joinder of Foreclosure. Should Beneficiary hold
any other or additional security for the payment of the Indebtedness
or performance of the Obligations, its sale or foreclosure, upon any
default in such payment or performance, in the sole discretion of
Beneficiary, may be prior to, subsequent to, or joined or otherwise
contemporaneous with any sale or foreclosure hereunder. In addition
to the rights herein specifically conferred, Beneficiary, at any time
and from time to time, may exercise any right or remedy now or
hereafter given by law to beneficiaries under deeds of trust
generally, or to the holders of any obligations of the kind hereby
secured.
28.8 Governing Law. The parties expressly agree that
this Deed of Trust (including, without limitation, all questions
regarding permissible rates of interest) shall be governed by and
construed in accordance with the laws of the state in which the Land
is located.
28.9 Subordination. At the option of Beneficiary,
this Deed of Trust shall become subject and subordinate in whole or in
part (but not with respect to priority of entitlement to any insurance
proceeds, damages, awards, or compensation resulting from damage to
the Property or condemnation or exercise of power of eminent domain),
to any and all contracts of sale and/or any and all Leases upon the
execution by Beneficiary and recording thereof in the Official Records
of the County in which the Land is located of a unilateral declaration
to that effect. Beneficiary may require the issuance of such title
insurance endorsements to the Title Policy in connection with any such
subordination as Beneficiary, in its reasonable judgment, shall
determine are appropriate, and Trustor shall be obligated to pay any
cost or expense incurred in connection with the issuance thereof.
28.10 Future Advances. Upon the request of Trustor
or its permitted successors in ownership of the Property, Beneficiary
may hereafter, at its option, at any time before full payment of the
Indebtedness, make future advances to Trustor or said successors, and
the same, with interest and late charges, shall be secured by this
Deed of Trust; provided, however, that the amount of principal secured
by this Deed of Trust and remaining unpaid, shall not at the time of
and including any such advance exceed the original principal sum
secured hereby; and provided further that if Beneficiary, at its
option, shall make a future advance or advances as aforesaid, Trustor
or said successors in ownership agree to execute and deliver to
Beneficiary (i) a note to evidence the same, payable on or before the
maturity of the Indebtedness secured hereby and bearing such other
terms as Beneficiary shall require, and (ii) satisfactory evidence
that after such advance this Deed of Trust will secure such advance
and continue to constitute a valid first mortgage lien on the Property
subject only to the Permitted Exceptions.
28.11 Waiver of Statute of Limitations and Rights to
Trial by Jury. The pleading of any statute of limitations as a
defense to any and all obligations secured by this Deed of Trust and
the right to a jury trial in any action under or relating to the Loan
Documents is hereby waived, to the fullest extent allowed by law.
28.12 Entire Agreement. The Loan Documents and the
Remediation and Indemnification Agreements set forth the entire
understanding between Trustor and Beneficiary relative to the Loan and
the same shall not be amended except by a written instrument duly
executed by each of Trustor and Beneficiary. Any and all previous
representations, warranties, agreements and understandings between or
among the parties regarding the subject matter of the Loan or the Loan
Documents, whether written or oral, are superseded by this Deed of
Trust and the other Loan Documents. The foregoing notwithstanding,
the terms and the conditions of the Application shall survive the
funding of the Loan but in the event of any conflict between the
provisions of the Application and any of the other Loan Documents or
the Remediation and Indemnification Agreements, except as otherwise
specifically provided herein, the terms of such other Loan Documents
and the Remediation and Indemnification Agreements shall control.
28.13 References to Foreclosure. References in this
Deed of Trust to "foreclosure" and related phrases shall be deemed
references to the appropriate procedure in connection with Trustee's
private power of sale as well as any judicial foreclosure proceeding
or a conveyance in lieu of foreclosure.
28.14 Rights of Beneficiary and Trustee. At any time
or from time to time, without liability therefor and without notice,
and without releasing or otherwise affecting the liability of any
person for payment of any Indebtedness (i) Beneficiary at its sole
discretion and only in writing may extend the time for, or release any
Person now or hereafter liable for, payment of any or all such
Indebtedness, or accept or release additional security therefor, or
subordinate the lien or charge hereof, or (ii) Trustee upon written
request of Beneficiary and presentation of the Note, any additional
notes secured by this Deed of Trust and this Deed of Trust for
endorsement may reconvey any part of the Property, consent to the
making of any map or plat thereof, join in granting any easement
thereon, or join in any such agreement of extension or subordination.
Upon written request of Beneficiary and surrender of the Note, any
additional notes secured by this Deed of Trust and this Deed of Trust
to the Trustee for cancellation, and upon payment to Trustee of its
fees and expenses, Trustee shall reconvey without warranty the
remaining Property. The recitals in any reconveyance shall be
conclusive proof of the truthfulness thereof and the grantee in any
reconveyance may be described as "the person or persons legally
entitled thereto."
28.15 Copies. Trustor will promptly give to
Beneficiary copies of all (i) notices of violation relating to the
Property that Trustor receives from any governmental agency or author-
ity, and (ii) notices of default that Trustor shall give or receive
under any agreement that Trustor covenants to perform hereunder,
including, without limitation, notices of default relating to the
Property that Trustor receives under any agreement relating to the
borrowing of money by Trustor or from any Person.
28.16 No Merger. So long as any of the Indebtedness
shall remain unpaid or Trustor shall have any further obligation under
the Loan Documents, unless Beneficiary shall otherwise consent in
writing, the fee estate of Trustor in the Property or any part thereof
shall not merge, by operation of law or otherwise, with any leasehold
or other estate in the Property or any part thereof, but shall always
be kept separate and distinct therefrom, notwithstanding the union of
said fee estate and such leasehold or other estate in Trustor or any
other Person.
28.17 Right of Entry. In addition to the rights
granted to Beneficiary under Paragraph 3.10 hereof, Beneficiary may
enter at any reasonable time upon any part of the Property for the
purpose of performing any of the acts Beneficiary is authorized to
perform under the terms of this Deed of Trust or of any of the other
Loan Documents. Trustor agrees to cooperate with Beneficiary to
facilitate such entry.
28.18 Performance by Trustor. Trustor will
faithfully perform each and every Obligation to be performed by
Trustor under any lien or encumbrance, including, without limitation,
mortgages, deeds of trust, leases, declarations or covenants,
conditions and/or restrictions and other agreements which affect the
Property. If Trustor fails to do so, Beneficiary, without demand or
notice, may do any or all things necessary to perform the Obligations
of Trustor under the pertinent instrument.
28.19 Personalty Security Instruments. Trustor
covenants and agrees that if Beneficiary at any time holds additional
security for any obligations secured hereby, it may enforce the terms
thereof or otherwise realize upon the same, at its option, either
before or concurrently herewith or after a sale is made hereunder, and
may apply the proceeds upon the Indebtedness secured hereby without
affecting the status of or waiving any right to exhaust all or any
other security, including the security hereunder, and without waiving
any breach or default or any right or power whether exercised
hereunder, and without waiving any breach or default or any right or
power whether exercised hereunder or contained herein or in any such
other security.
28.20 Suits to Protect Property. Trustor covenants
and agrees to appear in and defend any action or proceeding purporting
to affect the security of the Deed of Trust, or of any additional or
other security for the Obligations, the interest of Beneficiary or the
rights, powers and duties of Trustee hereunder; and to pay all costs
and expenses, including, without limitation, costs of evidence of
title and reasonable attorneys' fees, in any action or proceeding in
which Beneficiary and/or Trustee may appear or be made a party,
including, without limitation, foreclosure or other proceedings
commenced by those claiming a right to any part of the Property in any
action to partition or condemn all or part of the Property, whether or
not pursued to final judgment, and in any exercise of the power of
sale contained herein, whether or not the sale is actually
consummated. Trustee agrees that in any such action or proceeding in
which Beneficiary is made a party, Beneficiary may at its option
defend such action, and all costs of such defense, including all court
costs and reasonable attorneys' fees, shall be borne and paid by
Trustor.
28.21 Junior Liens. Trustor represents and warrants
that as of the date hereof there are no encumbrances to secure debt
junior to this Deed of Trust and covenants that there are to be none
as of the date when this Deed of Trust becomes of record.
28.22 Charges for Statements. Trustor agrees to pay
Beneficiary's charge, up to the maximum amount permitted by law, for
any statement regarding the obligations secured by this Deed of Trust
requested by Trustor or on its behalf.
28.23 Usury. In the event that Beneficiary
determines that any charge, fee or interest paid or agreed to be paid
in connection with the Loan may, under the applicable usury laws,
cause the interest rate on the Loan to exceed the maximum permitted by
law, then such charges, fees or interest shall be reduced and any
amounts actually paid in excess of the maximum interest permitted by
such laws shall be applied by Beneficiary to reduce the outstanding
principal balance of the Loan. The parties intend that Trustor shall
not be required to pay, and Beneficiary shall not be entitled to
collect, interest in excess of the maximum legal rate permitted under
the applicable usury laws.
28.24 Publicity. Trustor hereby agrees that
Beneficiary, at its expense, may publicize the financing of the
Property. Beneficiary shall endeavor to notify Trustor of its intent
to publicize the financing; provided, however, that Beneficiary's
failure to so notify Trustor shall not constitute a breach by
Beneficiary under the Loan Documents.
28.25 Information Reporting Under IRC
Section 6045(e). Any information returns or certifications that must
be filed with the Internal Revenue Service and/or provided to other
parties, pursuant to Internal Revenue Code Section 6045(e) shall be
prepared, filed by and sent to the appropriate parties by Trustor. To
the extent permitted by law, Beneficiary shall have no responsibility
to perform such services; provided however, upon demand Trustor shall
reimburse Beneficiary for any costs incurred by Beneficiary in doing
so and shall also pay such fee as Beneficiary may reasonably and
lawfully request. Beneficiary shall, where requested by Trustor,
promptly supply Trustor with all information pertaining to Beneficiary
reasonably required by Trustor to prepare and file any such return or
certification. Trustor shall indemnify Beneficiary and defend,
protect and hold Beneficiary harmless from and against all loss, cost,
damage and expense (including, without limitation, attorneys' fees and
costs incurred in the investigation, defense and settlement of claims)
that Beneficiary may incur, directly or indirectly, as a result of or
in connection with the assertion against Beneficiary of any claim
relating to the failure of Trustor to comply with its obligations
under this Paragraph.
28.26 ERISA.
A. Trustor understands and acknowledges that on
the Closing Date, the source of funds from which Beneficiary extends
the Loan is its general account, which is subject to the claims of its
general creditors under state law. Beneficiary (i) represents and
warrants that either (a) it is not funding the Loan with Plan Assets
(as described below) or (b) if Beneficiary is funding the Loan with
Plan Assets, such funding satisfies the provisions of Prohibited
Transaction Class Exemption 95-60 and (ii) covenants that either
clause (a) or (b) immediately above will be true throughout the term
of the Loan.
B. Trustor represents and warrants to Beneficiary
that, as of the date of this Deed of Trust and throughout the term of
the Loan, (i) Trustor is not an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which is subject to Title I of ERISA, and (ii)
the assets of Trustor do not constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101 ("Plan
Assets").
C. Trustor represents and warrants to Beneficiary
that, as of the date of this Deed of Trust and throughout the term of
the Loan, (i) Trustor is not a "governmental plan" within the meaning
of Section 3(32) of ERISA, and (ii) transactions by or with Trustor
are not subject to state statutes regulating investments of and
fiduciary obligations with respect to governmental plans.
D. Trustor covenants and agrees to deliver to
Beneficiary such certifications or other evidence on the Closing Date
and from time to time throughout the term of the Loan, as requested by
Beneficiary in its sole discretion, that (i) Trustor is not an
"employee benefit plan" or a "governmental plan"; and (ii) Trustor is
not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more
of the following circumstances is true:
(1) Equity interests in Trustor are
publicly offered securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(2) Less than twenty-five percent (25%)
of all equity interests in Trustor are held by "benefit plan
investors" within the meaning of 29 C.F.R Section 2510.3-101(f)(2); or
(3) Trustor qualifies as an "operating
company" or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e).
E. Any of the following shall constitute an Event
of Default entitling Beneficiary to exercise any and all remedies to
which it may be entitled under the Loan Documents: (i) the failure of
any representation or warranty made by Trustor under this Paragraph
9.26 to be true and correct in all material respects, (ii) the failure
of Trustor to comply in all material respects with the obligation to
provide Beneficiary with the written certifications and evidence
referred to above, or (iii) assuming compliance by Beneficiary with
the representations, warranties and covenants in Paragraph 9.26.A
above, the consummation by Trustor of a transaction which would cause
the Loan or any exercise of Beneficiary's rights under the Loan
Documents to constitute a non-exempt prohibited transaction under
ERISA or a material violation of a state statute regulating
governmental plans, subjecting Beneficiary to liability for violation
of ERISA or such state statute, provided, that Trustor shall have
thirty (30) days after its receipt of notice of default from
Beneficiary within which to commence the cure of such default and,
with respect to defaults under clause (i) immediately above, Trustor
shall have an additional ninety (90) days thereafter within which to
effect such cure provided it shall have commenced its efforts to cure
within such thirty (30) day period and shall thereafter diligently and
in good faith continuously prosecute such cure to completion. Failure
by Trustor to cure any such default within the applicable time period
set forth above shall constitute an Event of Default.
F. Trustor hereby indemnifies, defends and holds
Beneficiary harmless from and against all loss, cost, damage and
expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims and
losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required) that
Beneficiary may incur as a direct result of an Event of Default under
clause (E) above, assuming compliance by Beneficiary with the
representations, warranties and covenants set forth in Paragraph
9.26.A above. This indemnity shall survive any termination,
satisfaction or foreclosure of this Deed of Trust and shall not be
subject to the limitation on personal liability described in Paragraph
19 of the Note.
G. Anything in the Application, Paragraph 4.2 or
elsewhere in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no sale, assignment or transfer of any direct or
indirect interest in Trustor shall be permitted which would negate
Trustor's representations in this Paragraph 9.26 or cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of any provision of ERISA or of
any applicable state statute regulating a governmental plan, assuming
compliance by Beneficiary with the representations, warranties and
covenants set forth in Paragraph 9.26.A above.
H. Anything in the Application, Paragraph 4.2
elsewhere in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no direct or indirect transfer of the Property or any
interest therein including, without limitation, a junior lien or
leasehold interest, shall be permitted which would cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of ERISA or any applicable state
statute regulating a governmental plan, assuming compliance by
Beneficiary with the representations, warranties and covenants set
forth in Paragraph 9.26.A above.
I. Anything in the Application, this Deed of
Trust or the Loan Documents to the contrary notwithstanding, no less
than fifteen (15) before consummation of any permitted transfer of
title to the Property or of an interest in Trustor, or of any direct
or indirect right, title or interest in either of them, or of the
placing of any lien or encumbrance on the Property, Borrower shall
obtain from the proposed transferee or lienholder a representation to
Beneficiary in form and substance satisfactory to Beneficiary that the
provisions of Paragraph 9.26.D above will be true after the transfer,
or in the case of a lien or encumbrance, would remain true following
any foreclosure or conveyance in lieu thereof, and further provided
that any proposed lienholder agrees that any direct or indirect
transfer of its lien or any interest therein will be governed by this
section.
28.27 Defense and Indemnity Rights. Whenever, under
any Loan Document, Trustor is obligated to indemnify and/or defend
Beneficiary, or Trustor is obligated to defend or prosecute any action
or proceeding, then Beneficiary shall have the right of counsel of
Beneficiary's choice reasonably exercised, and all costs and expenses
incurred by Beneficiary in connection with such participation
(including, without limitation, reasonable attorneys' fees) shall be
reimbursed by Trustor to Beneficiary immediately upon demand. In
addition, Beneficiary shall have the right to approve any counsel
retained by Trustor in connection with the prosecution or defense of
any such action or proceeding by Trustor. Trustor shall give notice
to Beneficiary of the initiation of all proceedings prosecuted or
required to be defended by Trustor, or which are subject to Trustor's
indemnity obligations, under this Deed of Trust, promptly after the
receipt by Trustor of notice of the existence of any such proceeding,
but in no event later than five (5) days thereafter. All costs or
expenses required to be reimbursed by Trustor to Beneficiary hereunder
shall, if not paid when due as herein specified, bear interest at the
Secondary Interest Rate. As used herein, "proceeding" shall include
litigation (whether by way of complaint, answer, cross-complaint,
counter claim or third party claim), arbitration and administrative
hearings or proceedings.
28.28 Destruction of Note. Trustor shall, if the
Note is mutilated or destroyed by any cause whatsoever, or otherwise
lost or stolen and regardless of whether due to the act or neglect of
Beneficiary or Trustee, execute and deliver to Beneficiary in
substitution therefor a duplicate promissory note containing the same
terms and conditions as the Note, within ten (10) days after
Beneficiary notifies Trustor of any such mutilation, destruction, loss
or theft of the Note. Any new promissory note executed and delivered
hereunder shall be in full substitution for the Note, shall not
constitute any new or additional indebtedness of Trustor to
Beneficiary, shall constitute solely a substitute evidence of the
indebtedness evidenced by the original Note, and shall not affect in
any manner the priority of this Deed of Trust, or any other document
or instrument executed in connection with or evidencing or securing
the Indebtedness under the Note. Failure or delay by Beneficiary to
notify Trustor hereunder shall not affect in any manner Trustor's lia-
bility for the Indebtedness under the Note or Trustor's obligation to
execute a new promissory note hereunder; and Trustor's failure to
execute a new promissory note on Beneficiary's request hereunder shall
likewise not affect Trustor's liability for the indebtedness under the
Note.
28.29 Trustor, Beneficiary and Trustee Defined. As
used in this Deed of Trust, "Trustor" includes the original signators
of this Deed of Trust as Trustor, and its successors and assigns; the
term "Beneficiary" means the Beneficiary named herein or any future
owner or holder, including pledgee and participants, of any note,
notes or instrument secured hereby, or any participation therein; and
"Trustee" includes the original Trustee under this Deed of Trust and
its successors and assigns.
28.30 Rules of Construction. When the identity of
the parties or other circumstances make appropriate, the masculine
gender shall include the feminine and/or neuter, and the singular
number shall include the plural. Specific enumeration of rights,
powers and remedies of Trustee and Beneficiary and of acts which they
may do and of acts Trustor must do or not do shall not exclude or
limit the general. The headings of each Article and Paragraph are for
information and convenience and do not limit or construe the contents
of any provision hereof. The provisions of this Deed of Trust, all
other Loan Documents and the Remediation and Indemnification
Agreements shall be construed as a whole according to their common
meaning, not strictly for or against any party and consistent with the
provisions herein contained, in order to achieve the objectives and
purposes of such documents. Each party and its counsel has reviewed
and revised the Loan Documents and the Remediation and Indemnification
Agreements and agree that the normal rule of construction to the
effect that any ambiguities to be resolved against the drafting party
shall not be employed in the interpretation of such document. The use
in this Deed of Trust, all other Loan Documents and the Remediation
and Indemnification Agreements of the words "including," "such as," or
words of similar import, when following any general term, statement or
matter shall not be construed to limit such statement, term or matter
to the specific items or matters, whether or not language of non-
limitation such as "without limitation" or "but not limited to," or
words of similar import, are used with reference thereto, but rather
shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such statement,
term or matter.
28.31 Information to Third Persons. If, at any time,
Beneficiary desires to sell or transfer, or grant a participation
interest in, all or any portion of, or any interest in, the Note, this
Deed of Trust or any other Loan Document to any Person, Trustor and
each Loan Party shall furnish in a timely manner any and all financial
information concerning the Property and Leases, and concerning
Trustor's or such Loan Party's financial condition, requested by
Beneficiary or such person in connection with any such sale or
transfer.
28.32 Commingling of Funds. Any and all sums
collected or retained by Beneficiary hereunder (including insurance
and condemnation proceeds and any amounts paid by Trustor to
Beneficiary under Paragraph 3.4 hereof), shall not be deemed to be
held in trust, and Beneficiary may commingle any and all such funds or
proceeds with its general assets and shall not be liable for the
payment of any interest or other return thereon, except to the extent
expressly provided herein or otherwise required by law.
28.33 Standards of Discretion. Nothing contained in
this Deed of Trust, the Note, or any other Loan Documents, shall limit
the right of Beneficiary to exercise its good faith business judgment,
or act, in a subjective manner with respect to any matter as to which
it has specifically been granted such right or the right to act in its
sole discretion or sole judgment hereunder or thereunder, whether
"objectively" reasonable under the circumstances. Any such exercise
shall not be deemed inconsistent with any covenant of good faith and
fair dealing otherwise implied by law to be a part of this Deed of
Trust; and the parties intend by the foregoing to set forth and affirm
their entire understanding with respect to the terms, covenants and
conditions and standards pursuant to which their rights, duties and
obligations are to be judged, their performance measured, and the
parameters within which Beneficiary's discretion may be exercised
hereunder and under the other Loan Documents; provided, however, that
the foregoing shall not limit Beneficiary's obligation to act
reasonably under the circumstances where any provision of the Loan
Documents provides for the reasonable consent or approval of
Beneficiary.
28.34 Certain Standards on Efforts of Trustor.
Whenever in this Deed of Trust, or any other Loan Document, the phrase
"cause to be" is used in conjunction with any of Trustor's
Obligations, such phrase shall be deemed to include the use by Trustor
of best efforts and all due diligence to cause the applicable act,
event or circumstance to occur or be performed or taken, and such
efforts and due diligence shall encompass the initiation of litigation
or other proceedings in order to enforce or bring about the happening
of the applicable act or matter.
28.35 Certain Obligations Unsecured. Notwithstanding
anything to the contrary set forth herein or any of the Loan
Documents, this Deed of Trust shall not secure the following
obligations (the "Unsecured Obligations"): (i) any obligations
evidenced by or arising under the Remediation and Indemnification
Agreements, and (ii) any other obligations in this Deed of Trust or in
any of the other Loan Documents to the extent that such other
obligations relate specifically to the presence on the Property of
Hazardous Materials (as defined in the Remediation and Indemnification
Agreements) and are the same or have the same effect as any of the
obligations evidenced by or arising under the Remediation and
Indemnification Agreements. Any breach or default with respect to the
Unsecured Obligations shall constitute an Event of Default hereunder,
notwithstanding the fact that such Unsecured Obligations are not
secured by this Deed of Trust. Nothing in this section shall, in
itself, impair or limit Beneficiary's right to obtain a judgment in
accordance with applicable law after foreclosure for any deficiency in
recovery of all obligations that are secured by this Deed of Trust
following foreclosure.
28.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property from the lien of
this Deed of Trust upon the satisfaction of the following conditions
at the time of reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or the
giving on notice, or both, would constitute an Event
of Default shall have occurred either at the time of
Beneficiary's receipt of the Trustor's written request
for a reconveyance or as of the date of such
reconveyance;
(2) Not more than a total of three (3) of the
Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed hereby or
concurrently herewith (and in no event shall Trustor
be entitled to more than three (3) total releases of
any or all of the Combined Properties hereunder and/or
under the Combined Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior to
or concurrently with the reconveyance of this Deed of
Trust, the Allocable Loan Amount for the Property
along with the prepayment premium allocable to such
Allocable Loan Amount as determined pursuant to the
applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of this
Deed of Trust does not violate the provisions of any
declaration of covenants, conditions and restrictions,
reciprocal easement agreement, Lease or other
agreement affecting the Property or any portion
thereof;
(5) The Remaining Properties shall have: (i)
after the first reconveyance, both a Combined Debt
Service Coverage and a Future Combined Debt Service
Coverage of not less than 1.80 and a Combined Loan to
Value Ratio of not more than 65%, (ii) after the
second reconveyance, both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 1.90 and a Combined Loan to Value
Ratio of not more than 60%, and (iii) after the third
and final reconveyance both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 2.00 and a Combined Loan to Value
Ratio of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt Service
Coverage and a Future Individual Debt Service Coverage
of not less than 1.00 and an Individual Loan to Value
Ratio of not more than 75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the liens
of the Milpitas Deed of Trust, the Ontario Deed of
Trust, the Tustin Deed of Trust, the Woodlands Deed of
Trust, the Nevada Deed of Trust, the Fremont Deed of
Trust, and the South San Francisco Deed of Trust will
issue such title endorsements as Beneficiary deems
necessary or desirable for attachment to the
applicable title policies, including without
limitation, CLTA Endorsement Nos. 110.5, 111, and
111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums then
due and payable under the Loan Documents and a non-
refundable $25,000 processing fee, which fee shall be
paid at the time of notice of the requested
reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of the
requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event that the
Debt Service Coverage and the Loan to Value Ratio tests set forth in
Paragraphs 9.36(5) and 9.36(6), above, cannot be satisfied because of
the value of, or the net cash flow from, the applicable Combined
Properties, Trustor may, at its option, satisfy such tests by making a
principal prepayment (the "Excess Principal Payment") on the Loan in
an amount sufficient to satisfy such tests so long as Trustor also
pays to Beneficiary any prepayment premium relating to such principal
prepayment, as determined by the applicable Note. Upon receipt of the
Excess Principal Payment, Beneficiary shall apply such amount to
reduce the outstanding Loan and may apply such amount to any one or
more of the Multistate Note, the Nevada Note and/or the
Arizona/California Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall allocate the Excess
Principal Payment to the applicable Allocable Loan Amount in
proportion to each such Allocable Loan Amount's share of the
outstanding principal balance of the Note to which such amount is
applied, and, the monthly payments due under such applicable Note
shall be adjusted, as of the date of the release of this Deed of Trust
pursuant to this Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such adjustment to be based
on the applicable interest rate under such Note and an amortization
schedule equal to 300 months minus the number of months that have
elapsed since May 31, 1998.
28.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
28.38 Waiver of Appraisement, Homestead,
Marshaling. Trustor waives to the full extent lawfully allowed the
benefit of any homestead, evaluation, stay and extension or exemption
laws or any so called "moratorium laws" now or hereinafter in force
and waives any rights available with respect to marshaling of assets
so as to require the separate sales of any portion of the Property, or
as to require Beneficiary to exhaust its remedies against a specific
portion of Property before proceeding against the other and does
hereby expressly consent to and authorize the sale of the Property or
any part thereof as a single unit or parcel or as separate parcels.
Trustor further waives to the full extent lawfully allowed the benefit
of all laws now existing or that hereafter may be enacted providing
for (i) any appraisement before sale of any portion of the Property,
commonly known as "Appraisement Laws," including, without limitation,
a hearing to determine fair market value pursuant to A.R.S. Sections
12-1566, 33-814, 33-725 and/or 33-727, and (ii) the benefit of all
laws that may be hereafter enacted in any way extending the time of
the enforcement of the collection of the Indebtedness or commonly
known as "Stay Laws".
28.39 Business Loan Representation. Trustor
represents and warrants to Beneficiary that the Loan evidenced by the
Note is a business loan transacted solely for the purpose of carrying
on the business of Trustor and the Property does not constitute the
homestead of Trustor.<PAGE>
IN WITNESS WHEREOF, Trustor has caused this Deed of
Trust to be executed as of the day and year first above written.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
[11128.AGRE]H61606
<PAGE>
State of California)
) ss.
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington, a
notary public, personally appeared
Scott R. Whitney
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
(seal)
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS
(Fremont)
THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS (this "Deed of
Trust") dated as of January 30, 1998 is made by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation, having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Trustor"), First
American Title Insurance Company, having offices at 1850 Mount Diablo
Boulevard, Suite 300, Walnut Creek, California 94596 ("Trustee"), and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation,
having offices at Four Embarcadero Center, Suite 2700, San Francisco,
California 94111 ("Beneficiary").
WITNESSETH:
Trustor HEREBY IRREVOCABLY GRANTS, TRANSFERS AND
ASSIGNS TO Trustee, IN TRUST, WITH POWER OF SALE, all of Trustor's
right, title and interest now owned or hereafter acquired in and to
the following property, together with the Personalty (as hereinafter
defined), all of which is hereinafter collectively defined as the
"Property": (i) that certain real property (the "Land") located in
the County of Alameda, State of California, and more particularly
described in Exhibit A attached hereto and incorporated herein by this
reference; (ii) all Improvements (as hereinafter defined) and all
appurtenances, easements, rights and privileges thereof, including all
minerals, oil, gas and other hydrocarbon substances thereon or
therein, air rights, water rights and development rights, and any land
lying in the streets, roads or avenues adjoining the Land or any part
thereof; (iii) all Fixtures (as hereinafter defined), whether now or
hereafter installed, being hereby declared to be for all purposes of
this Deed of Trust a part of the Land; and (iv) the rents, issues and
profits of or from the Land, Improvements and Fixtures.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary
may determine: (i) payment of the Indebtedness (as hereinafter
defined), and (ii) payment (with interest as provided) and performance
by Trustor of the Obligations (as hereinafter defined).
Notwithstanding the foregoing, or any other term contained herein or
in the Loan Documents, none of Trustor's obligations under or pursuant
to the Remediation and Indemnification Agreements (as hereinafter
defined) shall be secured by the lien of this Deed of Trust.
ARTICLE
29
Definitions
As used in this Deed of Trust the following terms
shall have the following meanings; other terms are defined where they
appear in this Deed of Trust:
Allocable Loan Amount: (i) For the property encumbered by the Ontario
Deed of Trust, $8,000,000 less the product of (x) all payments of
principal made under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined Deeds of Trust)
multiplied by (y) a fraction, the numerator of which is 8,000,000, and
the denominator of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000 less the product of
(x) all payments of principal made under the Multistate Note (other
than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is $7,000,000, and the denominator of which is 25,000,000;
(iii) for the property encumbered by the Woodlands Deed of Trust,
$5,200,000 less the product of (x) all payments of principal made
under the Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 5,200,000, and the
denominator of which is 25,000,000; (iv) for the property encumbered
by the Milpitas Deed of Trust, $4,800,000 less the product of (x) all
payments of principal made under the Multistate Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the numerator of which
is 4,800,000, and the denominator of which is 25,000,000; (v) for the
property encumbered by the Nevada Deed of Trust, $8,913,730.85 less
all payments of principal made under the Nevada Note; (vi) for the
property encumbered by the Arizona Deed of Trust, $7,200,000 less the
product of (x) all payments of principal made under the
Arizona/California Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 7,200,000, and the
denominator of which is 20,900,000; (vii) for the properties
encumbered by the South San Francisco Deed of Trust, $6,500,000 less
the product of (x) all payments of principal made under the
Arizona/California Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 6,500,000, and the
denominator of which is 20,900,000; and (viii) for the property
encumbered by this Deed of Trust, $7,200,000 less the product of (x)
all payments of principal made under the Arizona/California Note
(other than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is 7,200,000, and the denominator of which is 20,900,000.
Application: Collectively, the Application dated December 5, 1995,
executed by Trustor (referred to as "Borrower" therein), which
Application includes the exhibits attached thereto, the Application
dated January 5, 1996, executed by Trustor (referred to as "Borrower"
therein), which Application includes the exhibits attached thereto,
the Application executed by Trustor (referred to as "Borrower"
therein) on April 13, 1996, which Application includes the exhibits
attached thereto, and the Application executed by Trustor (referred to
as "Borrower" therein) on October 31, 1997, which Application includes
the exhibits attached thereto.
Arizona Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of even date herewith, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Maricopa County,
Arizona, as amended from time to time.
Closing Date: The date this Deed of Trust is recorded in the Official
Records of Alameda County, California.
Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the preceding twelve-
month period for the Remaining Properties, to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the preceding twelve-month period on the portion of the Loan
consisting of the aggregate of the Allocable Loan Amounts for the
Remaining Properties, and (ii) the annual debt service payments
(including principal and interest) on all other indebtedness secured
or which will be secured by a lien on all or part of the Remaining
Properties for the preceding twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory notes or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Combined Deeds of Trust: Collectively, this Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the Milpitas Deed of
Trust, the Woodlands Deed of Trust, the Nevada Deed of Trust, the
Arizona Deed of Trust, and the South San Francisco Deed of Trust.
Combined Loan to Value Ratio: The ratio, as determined by
Beneficiary, of (i) the aggregate principal balance, together with all
accrued but unpaid interest, of all encumbrances against the Remaining
Properties, to (ii) the fair market value of the Remaining Properties,
as determined by Beneficiary.
Combined Properties: Collectively, the Property, the property
encumbered by the Ontario Deed of Trust, the property encumbered by
the Tustin Deed of Trust, the property encumbered by the Milpitas Deed
of Trust, the property encumbered by the Woodlands Deed of Trust, the
property encumbered by the Nevada Deed of Trust, the property
encumbered by the Arizona Deed of Trust, and the properties encumbered
by the South San Francisco Deed of Trust.
Event of Default: As defined in Paragraph 6.1 hereof.
Fixtures: All fixtures located upon or within the Improvements or now
or hereafter installed in, or used in connection with any of the
Improvements, including boilers, furnaces, pipes, plumbing, elevators,
cleaning and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, whether or not permanently affixed to the Land or
the Improvements.
Future Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the immediately upcoming
twelve-month period for the Remaining Properties (based on reasonable
assumptions determined by Beneficiary), to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the same twelve-month period on the portion of the Loan consisting of
the aggregate of the Allocable Loan Amounts for the Remaining
Properties, and (ii) the annual debt service payments (including
principal and interest) on all other indebtedness secured or which
will be secured by a lien on all or part of the Remaining Properties
for the same twelve-month period. For purposes of calculating annual
debt service, amortization of the aggregate principal indebtedness
over a thirty (30) year period (or such lesser period if the
applicable promissory notes or other loan documents in the case of
loans other than the Loan provide otherwise) is assumed to apply
during the entire term of the Loan.
Future Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the next upcoming
twelve-month period (based on reasonable assumptions determined by
Beneficiary), to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the same twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the same twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Impositions: All real estate and personal property and other taxes
and assessments, water and sewer rates and charges levied or assessed
upon or with respect to the Property, and all other governmental
charges and any interest or costs or penalties with respect thereto,
ground rent and charges for any easement or agreement maintained for
the benefit of the Property, general and special, ordinary and
extraordinary, foreseen or unforeseen, of any kind and nature
whatsoever that at any time prior to or after the execution of the
Loan Documents may be assessed, levied, imposed, or become a lien upon
the Property or the rent or income received therefrom, or any use or
occupancy thereof; and any and all other charges, expenses, payments,
claims, mechanics' or material suppliers' liens or assessments of any
nature, if any, which are or may become a lien upon the Property or
the rent or income received therefrom.
Impound Account: The account that Trustor may be required to maintain
pursuant to Paragraph 3.4 hereof for the deposit of amounts required
to pay Impositions and insurance premiums.
Improvements: All buildings and other improvements and appurtenances
located on the Land, including surface improvements, such as parking
areas and landscaping structures and all improvements, additions and
replacements thereof, and other buildings and improvements, at any
time hereafter constructed or placed upon the Land.
Indebtedness: The principal of and all other amounts, payments and
premiums due under the Note (and each and every of them) and any
extensions or renewals thereof (including extensions or renewals at a
different rate of interest, whether or not evidenced by a new or
additional promissory note or notes), and all other indebtedness of
Trustor to Beneficiary and additional advances under, evidenced by
and/or secured by the Loan Documents, plus interest on all such
amounts.
Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the preceding twelve-
month period, to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the preceding twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the preceding twelve-month period. For purposes
of calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Individual Loan to Value Ratio: For each individual Combined
Property, the ratio, as determined by Beneficiary, of (i) the
aggregate principal balance, together with all accrued but unpaid
interest, of the Allocable Loan Amount for such Combined Property and
all other encumbrances (other than the Loan) against such Combined
Property, to (ii) the fair market value of such Combined Property, as
determined by Beneficiary.
Inventory: The personal property Inventory attached hereto as Exhibit
C.
Laws and Restrictions: All federal, state, regional, county, local
and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, Leases and other rental
agreements, relating to the development, occupancy, ownership,
management, use, and/or operation of the Property or otherwise
affecting all or any part of the Property or Trustor.
Leases: Any and all leasehold interests, including subleases and
tenancies following attornment, now or hereafter affecting or covering
any part of the Property.
Loan: The loans from Beneficiary to Trustor evidenced by the Note.
Loan Documents: The Note, the Application, the Owner's Affidavit,
this Deed of Trust, the Ontario Deed of Trust, the Tustin Deed of
Trust, the Milpitas Deed of Trust, the Woodlands Deed of Trust, that
certain Note Assignment and Assumption Agreement dated as of May 9,
1997 relating to the Nevada Note, the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of Trust, each of
the Assignments of Agreements, each of the Assignments of Lessor's
Interest in Leases, the Post-Closing Agreement, and all other
documents, with the exception of the Remediation and Indemnification
Agreements, evidencing, securing or relating to the Loan, the payment
of the Indebtedness or the performance of the Obligations.
Loan Parties: Trustor.
Material Adverse Change: Any material and adverse change in (i) the
financial condition of any of the Loan Parties, or (ii) the condition
or operation of the Property.
Milpitas Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Santa
Clara County, California, as amended by that certain First
Modification of Deed of Trust and Other Loan Documents dated as of May
9, 1997, as further amended by that certain Second Modification of
Deed of Trust and Other Loan Documents dated as of even date herewith,
as further amended from time to time.
Net Operating Income: For any period, gross income from operations of
the Remaining Properties, for the purposes of determining Combined
Debt Service Coverage or Future Combined Debt Service Coverage, or
from operations of an individual Combined Property, for the purposes
of determining the Individual Debt Service Coverage or Future
Individual Debt Service Coverage for such Combined Property, in either
case, derived from arm's length, market rate rents from leases with
unaffiliated third parties in possession of the leased premises and
paying rent on a current basis, service fees or charges, and addi-
tional rent resulting from operating expense, common area maintenance,
utilities and tax escalation pass through provisions (excluding
capital gains income derived from the sale of assets and other items
of income which Beneficiary reasonably determines are unlikely to
occur in any subsequent period), less operating expenses (such as
cleaning, utilities, administrative, landscaping, security and common
area maintenance expenses, common area association fees, repairs and
maintenance and less fixed expenses (such as insurance, real estate
and other taxes), which expenses shall be related to the property
producing such gross income, shall be for services from arm's length
third party transactions or equivalent to the same, and shall exclude
all expenses for capital improvements and replacements, debt service
and depreciation or amortization of capital expenditures and other
similar noncash items. Operating expenses shall include not less than
4.0% of gross income for the property encumbered by the Woodlands Deed
of Trust and not less than 3.5% of gross income for each of the other
Combined Properties and shall include reserves for replacements of not
less than $31,000 for the Property encumbered by the Tustin Deed of
Trust and not less than $23,000 for each of the other Combined
Properties. Real estate taxes shall be calculated based upon the
greater of (i) the current tax bill plus the next subsequent year's
escalations as permitted under applicable law, or (ii) the estimated
market value of such Combined Properties (as determined by
Beneficiary) at the time of any reconveyance described in
Paragraph 9.36 of this Deed of Trust multiplied by the then current
tax rate. Gross income shall not be anticipated for any greater
period than that approved by generally accepted accounting principles,
nor shall operating expenses be prepaid.
Nevada Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of May 9, 1997, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Washoe County Nevada,
as amended by that certain First Modification of Deed of Trust and
Other Loan Documents dated as of even date herewith, as further
amended from time to time.
Note: Collectively (i) that certain Amended and Restated Promissory
Note dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Trustor in the original principal amount
of Twenty-Five Million and No/100 Dollars ($25,000,000.00), payable to
Beneficiary or its order, and all modifications, renewals or
extensions thereof (the "Multistate Note"), (ii) that certain Amended
and Restated Promissory Note dated as of May 9, 1997 executed by
Trustor in the original principal amount of Eight Million Nine Hundred
Thirteen Thousand Seven Hundred Thirty and 85/100 Dollars
($8,913,730.85), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Nevada Note"), and
(iii) that certain Promissory Note dated as of even date herewith
executed by Trustor in the original principal amount of Twenty Million
Nine Hundred Thousand Dollars ($20,900,000), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Arizona/California Note").
Obligations: Any and all of the covenants, promises and other
obligations (including, without limitation, the Indebtedness) made or
owing by Trustor to or due to Beneficiary under and/or as set forth in
the Loan Documents and all of the material covenants, promises and
other obligations made or owing by Trustor to each and every other
Person relating to the Property.
Ontario Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Bernardino
County, California, as amended by that certain First Modification of
Deed of Trust and Other Loan Documents dated as of May 24, 1996, as
further amended by that certain Second Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as further amended
by that certain Third Modification of Deed of Trust and Other Loan
Documents dated as of even date herewith, as further amended from time
to time.
Owner's Affidavit: That certain Owner's Affidavit dated as of even
date herewith, executed by Trustor in favor of Beneficiary.
Permitted Exceptions: All of those matters described on Exhibit B
attached hereto.
Person: Any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
Personalty: Trustor's right, title and interest in all personal
property (other than Fixtures) now or hereafter located in, upon or
about or collected or used in connection with the Property, together
with all present and future attachments, accessions, replacements,
substitutions and additions thereto or therefor, and the cash and
noncash proceeds thereof, including all property listed in the
Inventory, the Impound Account, all goods, documents, instruments and
chattel paper, all drawings, plans and specifications, all causes of
action and recoveries now or hereafter existing for any loss or
diminution in value of the Property, all licenses, governmental
authorizations or permits pertaining to the Property or the
development, ownership, management or operation thereof, all
trademarks, service marks, designs, logos, trade names, names or
similar identifications pertaining to the Property, and all accounts,
contract rights and general intangibles (including, without
limitation, any insurance proceeds and condemnation awards or
compensation) arising out of or incident to the ownership, development
or operation of the Property owned by or in which Trustor has an
interest including, without limitation, all personal property
described in the UCC-1 Financing Statement executed by Trustor of even
date herewith, which is incorporated herein by this reference, and all
furniture, furnishings, equipment, machinery, construction materials
and supplies, leasehold interests in personal property and the Leases.
Notwithstanding the foregoing, Personalty shall not include any
proprietary computer software developed by Trustor for the
interpretation, manipulation or presentation of the information
comprising the books and records of Trustor.
Post-Closing Agreement: That certain Post-Closing Actions Agreement
dated as of even date herewith, executed by Trustor in favor of
Beneficiary.
Property: As defined in the above granting paragraph of this Deed of
Trust.
Receiver: Any trustee, receiver, custodian, fiscal agent, liquidator
or similar officer.
Remaining Properties: Collectively, each of the Combined Properties
which remain encumbered by any of the Combined Deeds of Trust
following the requested reconveyance of this Deed of Trust pursuant to
Paragraph 9.36 of this Deed of Trust and following the prior or
concurrent reconveyance of any of the other Combined Deeds of Trust
pursuant to Paragraph 9.36 of any of the other Combined Deeds of
Trust.
Remediation and Indemnification Agreements: Collectively, (i) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of May 24, 1996 executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Milpitas Deed of Trust,
(ii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the Ontario
Deed of Trust, (iii) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary in connection with the property
encumbered by the Tustin Deed of Trust, (iv) the Hazardous Substances
Remediation and Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in connection with the
property encumbered by the Woodlands Deed of Trust, (v) the Hazardous
Substances Remediation and Indemnification Agreement dated as of May
9, 1997 executed by Trustor in favor of Beneficiary in connection with
the property encumbered by the Nevada Deed of Trust, (vi) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of even date herewith executed by Trustor in favor of Beneficiary
in connection with the property encumbered by the Arizona Deed of
Trust, (vii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of even date herewith executed by Trustor in favor
of Beneficiary in connection with the property encumbered by the South
San Francisco Deed of Trust, and (viii) the Hazardous Substances
Remediation and Indemnification Agreement dated as of even date
herewith executed by Trustor in favor of Beneficiary in connection
with the Property.
Rents: All rents, royalties, revenues, issues, profits, proceeds and
other income from the Property.
Secondary Interest Rate: As defined in the Note.
South San Francisco Deed of Trust: That certain Deed of Trust dated
as of this date herewith, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Mateo County,
California as amended from time to time.
Tustin Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Orange County,
California, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
Woodlands Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of March 20, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Salt Lake
County, Utah, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
ARTICLE 30
Representations and Warranties
Trustor hereby represents and warrants to Beneficiary
and Trustee that as of the date of this Deed of Trust and as of the
date of any subsequent disbursement pursuant to the Loan Documents:
30.1 Title, Authorization and Organization. Trustor
(i) is the lawful owner of the Property and holds good and marketable
title to the Property free and clear of all defects, liens,
encumbrances, easements, exceptions and assessments, except the
Permitted Exceptions; (ii) has good, right and lawful authority to
grant the Property as provided in and by this Deed of Trust; (iii) has
the requisite power and authority to own, develop and operate the
Property; (iv) is duly organized, validly existing and in good
standing under the laws of the State of its organization and is duly
qualified to do business in the State in which the Land is located;
and (v) is in compliance with all Laws and Restrictions applicable to
it.
30.2 Validity of Loan Documents. The execution,
delivery and performance by Trustor of the Loan Documents and the
borrowings evidenced by the Note are within the power of Trustor, have
been authorized by all requisite corporate or partnership authority
and will not violate any Laws and Restrictions or any agreement or
other instrument. Each of the Loan Documents when executed and
delivered to Beneficiary, will constitute a legal, valid and binding
obligation of Trustor enforceable in accordance with its terms.
30.3 Financial Statements. All financial statements
and data that have been given to Beneficiary with respect to the
Property or any Loan Party are true, accurate, complete and correct
and except as expressly noted to the contrary therein, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby. There
has been no Material Adverse Change since the date of the most recent
financial statement given to Beneficiary.
30.4 Other Information. All reports, papers, data
and information given to Beneficiary with respect to Loan Parties and
the Property are accurate, correct and complete.
30.5 Litigation. There is not now pending against or
affecting any Loan Party or the Property, nor to the best of Trustor's
knowledge is there threatened any action, suit or proceeding at law or
in equity or by or before any administrative agency that, if adversely
determined, would materially impair or affect (i) the financial
condition or operations of such Loan Party, or (ii) the condition, use
or operation of the Property.
30.6 Additional Representations and Warranties.
(i) The Property is not used principally or primarily for agricultural
or grazing purposes; (ii) each Loan Party has filed all federal,
state, county and municipal income tax returns required to have been
filed by it and has paid all taxes that have become due pursuant to
such returns or pursuant to any assessments received by it (and no
Loan Party knows of any basis for any additional assessment against it
in respect of such taxes); (iii) all costs for labor and materials for
the construction of the Improvements have been paid in full other than
ongoing work for leasehold improvements under Leases approved in
writing by Beneficiary; (iv) Trustor is not aware of any assessment
for public improvements which is pending and which could become a lien
upon the Property; (v) no event has occurred which with the giving of
notice or the passage of time, or both, would constitute an Event of
Default under any of the Loan Documents; (vi) Trustor is not a party
to any agreement or instrument materially and adversely affecting its
present or proposed business conducted on the Property or the Property
itself, financial or otherwise; (vii) Trustor is not in default in the
performance, observance or fulfillment of any of the material
obligations, covenants or conditions set forth in any such agreement
or instrument to which it is a party to the extent that the same would
have a material and adverse effect on the Property or Trustor's
ability to timely perform its Obligations under the Loan Documents;
(viii) all Fixtures are permanently affixed to the Improvements and
Trustor has not executed any financing statement or security
agreements covering the Fixtures, or any of them, and the costs of all
Fixtures due as of the date hereof have been paid; (ix) neither the
Property, nor any part thereof, has sustained, incurred or suffered
any material damage or destruction; and (x) subject to the Permitted
Exceptions, the Personalty is owned by Trustor, free and clear of any
liens, encumbrances, mortgages, security interests, claims and rights
of others.
30.7 Compliance with Laws. The Property and the
proposed and actual use thereof comply with all Laws and Restrictions
and the Laws and Restrictions contain no unsatisfied conditions
necessary for the actual use of the Property as it is currently used.
Trustor has received no notices of violations of any Laws and
Restrictions.
30.8 Bankruptcy. No petition in bankruptcy, petition
or answer seeking assignment for the benefit of creditors or
appointment of a Receiver with respect to Trustor has occurred or is
contemplated, and no reorganization, arrangement, liquidation or
dissolution or similar relief under the Federal Bankruptcy laws or any
state laws have been instituted by or against Trustor, and none is
contemplated.
ARTICLE 31
Affirmative Covenants
Trustor hereby covenants and agrees as follows:
31.1 Obligations of Trustor. Trustor will (i) timely
perform, or cause to be timely performed, all the Obligations;
(ii) maintain and preserve the lien of this Deed of Trust; and
(iii) forever warrant and defend its grant made herein against any and
all claims and demands whatsoever.
31.2 Insurance.
A. Trustor, at its sole cost and expense,
will keep and maintain for the mutual benefit of Trustor and
Beneficiary, the following policies of insurance:
(1) Insurance against loss or damage to the
Property by fire and other risks covered by insurance commonly known
as the broad form of extended coverage, including losses sustained by
reason of riot and civil commotion, vandalism, malicious mischief,
burglary, theft and mysterious disappearance, flood (if the Property
is located in a HUD designated special flood hazard area) and against
such other risks or hazards as Beneficiary from time to time
reasonably may designate, in an amount equal to one hundred
percent (100%) of the then "full replacement cost" of the
Improvements, the Fixtures and the Personalty, without deduction for
physical depreciation.
(2) Rental income insurance against loss of
income in an amount not less than twelve (12) months rental and taxes
and other operating expense reimbursements or payments at then-current
income levels.
(3) Commercial General Liability insurance
including broad form property damage, contractual liability and
personal injury or death coverage, with a combined single limit of at
least $5,000,000.
(4) "Builders Risk" insurance, during any
material construction, repair, replacement, renovation or alteration
of the Improvements, in such amounts as are reasonably approved by
Beneficiary.
(5) If applicable, boiler and machinery
insurance covering boilers and other pressure vessels, the air
conditioning system, high pressure piping and other machinery and
equipment required for the operation of the Property.
(6) Such other insurance, and in such amounts,
as may from time to time be reasonably required by Beneficiary (but
excluding earthquake insurance, unless earthquake insurance is
required pursuant to the terms of any of the Leases).
B. Trustor shall provide Beneficiary with
satisfactory evidence of compliance with applicable requirements for
Worker's Compensation insurance and of employee automobile coverage.
C. All policies of insurance required by this
Deed of Trust (i) shall be satisfactory in form and substance to
Beneficiary and written with companies satisfactory to Beneficiary,
(ii) shall name Beneficiary as an additional insured as its interests
may appear, (iii) shall contain a Standard Lender's Loss Payable
endorsement and other non-contributory standard mortgagee protection
clauses acceptable to Beneficiary, and at Beneficiary's option, a
waiver of subrogation rights by the insurer, (iv) shall contain an
agreement by the insurer that such policy shall not be amended or
canceled without at least thirty (30) days' prior written notice to
Beneficiary, (v) shall be in the full replacement cost of the Improve-
ments, without deduction for physical depreciation and (vi) shall
contain such other provisions as Beneficiary deems reasonably
necessary or desirable to protect its interests. Any policies
containing a coinsurance clause shall include a replacement cost
endorsement adequate to ensure that the coinsurance clause is rendered
inoperative.
D. In the event a blanket policy is submitted
to satisfy Trustor's responsibilities under this Paragraph 3.2, in
addition to such other requirements set forth herein, Trustor shall
deliver to Beneficiary a certificate from such insurer indicating that
Beneficiary is an insured under such policy and designating the amount
of such insurance applicable to the Property.
E. Trustor shall furnish evidence,
satisfactory to Beneficiary, that (i) all insurance requirements
(including, without limitation, provisions for waivers of subrogation)
set forth in the Leases or any other agreements affecting the Property
shall have been satisfied by each party thereto, and (ii) Trustor's
insurance coverage is sufficient (assuming the total destruction of
the Property) to permit Trustor to rebuild the Improvements (including
basic tenant improvements) and to replace the Fixtures and Personalty
in such manner as to enable the Property to be operable and rentable
as it is currently rented and operated, and no tenant shall have the
right to terminate its lease of any portion of the Property as a
result of the failure of Trustor to rebuild above-standard tenant
improvements.
F. Self-insurance (other than the applicable
deductibles approved by Beneficiary) shall not be employed to satisfy
the requirements of this Paragraph 3.2.
G. All of Trustor's right, title and interest
in and to all policies of property insurance and any unearned premiums
paid thereon are hereby assigned (to the fullest extent assignable) to
Beneficiary who shall have the right, but not the obligation, to
assign the same to any purchaser of the Property at any foreclosure
sale.
H. Not less than thirty (30) days prior to
the expiration dates of any policy previously furnished pursuant to
this Paragraph 3.2, Trustor shall provide Beneficiary with duplicate
originals or certified copies of the renewal policies together with
evidence satisfactory to Beneficiary of Trustor's payment of the
applicable premiums.
31.3 Maintenance, Waste and Repair. Trustor will
(i) maintain the Property in good order and condition, (ii) promptly
make all necessary structural and non-structural repairs to the
Property, (iii) not diminish or materially alter the Improvements, nor
erect any new buildings, structures or building additions on the
Property, without the prior written consent of Beneficiary, and
(iv) not permit any waste of the Property or make any change in the
use thereof, nor do or permit to be done thereon anything, that may in
any way impair the security of this Deed of Trust.
31.4 Impositions; Impounds. Trustor will pay when
due all Impositions. Upon an Event of Default, Trustor will pay
monthly to Beneficiary an amount equal to one-twelfth (1/12th) of the
annual cost of Impositions together with an amount equal to the
estimated next hazard and other required insurance premiums. These
funds will be held by Beneficiary (and may be commingled with other
funds of Beneficiary) without interest and will be released to Trustor
for payment of Impositions and insurance premiums, or directly applied
to such costs by Beneficiary, as Beneficiary may elect.
31.5 Compliance with Law. Trustor will promptly and
faithfully comply with all present and future Laws and Restrictions.
31.6 Books and Records. Trustor, without expense to
Beneficiary, will maintain full and complete books of account and
other records reflecting the results of the operations of the Property
in accordance with generally accepted accounting principles
consistently applied, and will furnish or cause to be furnished to
Beneficiary such financial information concerning the condition of the
Loan Parties and the Property as Beneficiary shall reasonably request.
The following information will be furnished without request:
A. As soon as available, and in any event
within thirty (30) days after the close of each fiscal quarter of each
fiscal year of Trustor, a statement of revenues and expenses relating
to the rentals and operations of the Property for the applicable
fiscal quarter just ended, certified by Trustor;
B. As soon as available, and in any event
within ninety (90) days after the end of each fiscal year of Trustor,
an annual operating statement for the Property certified by an
independent certified public accountant acceptable to Beneficiary and
a rent roll in the form delivered to Beneficiary in connection with
the closing of the Loan certified by Trustor reflecting all the
existing Leases; and
C. As soon as available, and in any event
within ninety (90) days after the end of Trustor's fiscal year, a
balance sheet of Trustor, certified in a manner acceptable to
Beneficiary.
After the occurrence of an Event of Default, or in the
event Trustor fails to deliver an annual operating statement for the
Property certified by an independent certified public accountant
acceptable to Beneficiary within the time frame set forth in
Paragraph 3.6.B, above, Beneficiary shall have the right, at all
reasonable times and upon reasonable notice, to audit the books of
account and records of any Loan Party, all of which shall be made
available at Trustor's office during reasonable business hours to
Beneficiary and Beneficiary's representatives for such purpose, from
time to time. If such audit discloses a variance of three per-
cent (3%) or more in income or expenses, the cost of such audit shall
be paid by Trustor.
31.7 Further Assurances. Trustor, at any time upon
the reasonable request of Beneficiary, will at Trustor's expense
execute, acknowledge and deliver all such additional papers and
instruments (including, without limitation, a declaration of no
setoff) and all such further acts and things as may be reasonably
necessary to carry out the purposes of the Loan Documents and to
subject to the liens thereof any property intended by the terms
thereof to be covered thereby and any renewals, additions,
substitutions or replacements thereto.
31.8 Indemnity and Attorneys' Fees. Trustor will
indemnify, defend, protect and hold Beneficiary harmless from any and
all liability, loss, claims, damage, cost or expense (including,
without limitation, reasonable attorneys' fees) that Beneficiary may
or might incur hereunder, or in connection with the making or
administering of the Loan, the enforcement of any of Beneficiary's
rights or remedies hereunder or under the other Loan Documents, any
action taken by Beneficiary hereunder or thereunder, whether or not
suit is filed, or by reason or in defense of any and all claims and
demands whatsoever that may be asserted against Beneficiary arising
out of the Property, or any part thereof or interest therein, or as to
which it becomes necessary to defend or uphold the lien of this Deed
of Trust or other Loan Documents. Should Beneficiary incur any such
liability, loss, claim, damage, cost or expense, the amount thereof
with interest thereon at the Secondary Interest Rate shall be payable
by Trustor immediately without demand, shall be secured by this Deed
of Trust, and shall be part of the Indebtedness.
31.9 Litigation. Trustor will promptly give notice
in writing to Beneficiary of any litigation which may reasonably be
expected to result in a Material Adverse Change.
31.10 Inspection of Property. Trustor hereby grants
to Beneficiary, its agents, employees, consultants and contractors,
the right to enter upon the Property for the purpose of making any and
all inspections, reports, tests (including, without limitation, soils
borings, ground water testing, wells and/or soils analysis), inquiries
and reviews as Beneficiary (in its sole and absolute discretion) may
deem necessary to assess the then current condition of the Property;
provided, however, that Beneficiary shall not conduct any such tests
(including, without limitation, soil borings, ground water testing,
wells and/or soils analysis) (i) unless Beneficiary becomes aware of,
or reasonably suspects, an environmental event on or near the Property
which could have a material adverse effect on any portion of the
Property and Trustor refuses or fails to conduct such tests in a
manner reasonably requested by Beneficiary, or (ii) until after the
occurrence of an Event of Default under any of the Loan documents or
the Remediation and Indemnification Agreements. Beneficiary shall
provide Trustor with one (1) business day's notice of such entry;
provided, however, that, subject to the preceding sentence, Trustor's
consent shall not be required for such entry or for the performance of
such tests. All costs, fees and expenses (including those of Benefi-
ciary's legal counsel and consultants) incurred by Beneficiary with
respect to such inspections, reports, tests, inquiries and reviews
shall be paid by Trustor to Beneficiary upon demand, shall accrue
interest at the Secondary Interest Rate until paid, and shall be
secured by this Deed of Trust. Beneficiary shall make reasonable
efforts in the exercise of its entry, inspection, and other rights
under this Paragraph to avoid interference with the business
operations of any tenant or licensee occupying space at the Property
pursuant to Leases permitted by the Loan Documents, and, so long as no
Event of Default has occurred, shall cooperate with Trustor in setting
the time for such entry, inspections and tests.
31.11 Contest. Notwithstanding the provisions of
Paragraphs 3.4 and 3.5 hereof, Trustor may, at its expense, contest
the validity or application of any Impositions or Laws and
Restrictions by appropriate legal proceedings promptly initiated and
conducted in good faith and with due diligence, provided that
(i) Beneficiary is reasonably satisfied that neither the Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, or lost as a result of such contest, and (ii) Trustor shall
have posted a bond or furnished such other security as may be
reasonably required from time to time by Beneficiary.
31.12 Tax Receipts. Trustor will deliver to
Beneficiary, within seven (7) days after the demand made therefor,
bills showing the payment to the extent then due of all taxes,
assessments (including, without limitation, those payable in periodic
installments), and any Imposition that may have become a lien upon the
Property or any part thereof.
31.13 Additional Information. Trustor will furnish
to Beneficiary, within seven (7) days after written request therefor,
any and all information that Beneficiary may reasonably request
concerning the Property or the performance by Trustor of the
Obligations.
31.14 Prepayment. Trustor may prepay the Loan only
on the terms and conditions set forth in the Note and Trustor shall
pay Beneficiary prepayment charges in respect of any prepayment,
whether voluntary or involuntary, as required by and on the terms and
conditions set forth in the Note.
31.15 FIRPTA Affidavit. In the event of any transfer
by Trustor of its rights hereunder or of any interest in the Property
otherwise permitted under this Deed of Trust, such transferee shall,
as an additional condition to such transfer, under penalty of perjury,
execute and deliver to Beneficiary an affidavit concerning the non-
foreign status of such transferee substantially in the form required
to be delivered by Trustor in connection with the funding of the Loan.
Nothing in this Paragraph 3.15 shall be deemed a modification or
waiver of any other provision of any of the Loan Documents limiting,
prohibiting or otherwise relating to any transfer of any interest in
the Property or Trustor.
31.16 Tax Service Contract. Throughout the term of
the Loan, at Trustor's sole expense, Beneficiary shall be furnished
tax service contracts issued by a tax reporting agency satisfactory to
Beneficiary.
31.17 Reimbursement. Any amount paid by Beneficiary
for any tax, stamp tax, assessment, water rate, sewer rate, insurance
premium, repair, rent charge, debt, claim, inspection or lien having
priority over this Deed of Trust or to in any way protect the security
for the Loan, shall (i) bear interest at the Secondary Interest Rate
from the date of payment by Beneficiary, (ii) constitute additional
indebtedness secured by this Deed of Trust, prior to any right, title
or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, (iii) be secured by this
Deed of Trust, and (iv) be payable by Trustor to Beneficiary upon
demand.
31.18 Plans and Specifications. Trustor agrees to
keep at its offices at the Property, and to make available to
Beneficiary during normal business hours, "As-Built Plans and
Specifications", or, if unavailable, the final set of plans and
specifications from which the Improvements were constructed
("As-Builts"), certified by a licensed architect or licensed
contractor as true, correct and complete As-Builts for the
Improvements.
ARTICLE 32
Negative Covenants
Trustor hereby covenants and agrees as follows:
32.1 Restrictive Uses. Trustor will not initiate,
join in, or consent to any change in the current use of the Property
or in any zoning ordinance, private restrictive covenant, assessment
proceedings or other public or private restrictions limiting or
restricting the uses that may be made of the Property or any part
thereof without the prior written consent of Beneficiary.
32.2 Due on Sale or Encumbrance.
A. Except as expressly otherwise provided in
this Paragraph 4.2, in the event that Trustor, without the prior
written consent of Beneficiary (which consent may be withheld for any
reason or for no reason or given upon such terms and conditions as
Beneficiary deems necessary or appropriate, all within Beneficiary's
absolute discretion), shall sell, convey, assign, transfer, alienate
or otherwise dispose of or be divested of its title to, or, shall
mortgage, convey security title to, or otherwise encumber or cause to
be encumbered, the Property or any part thereof or any interest
therein in any manner or way, whether voluntary or involuntary, or in
the event of (a) any merger, consolidation or dissolution involving,
or the sale or transfer of all or substantially all of the assets of,
Trustor or any general partner of Trustor, (b) the transfer (at one
time or over any period of time) of ten percent (10%) or more of the
voting stock of (i) a corporate Trustor or (ii) any corporate general
partner of Trustor, (c) the transfer of any general partnership
interest in Trustor or in any partnership which is a direct or
indirect general partner of Trustor, or (d) the conversion of any such
general partnership interest to a limited partnership interest, then
the entire balance of the Indebtedness, plus the Prepayment Premium
(as defined in the Note), shall become immediately due and payable at
the option of Beneficiary. Trustor hereby covenants not to
participate in, cause or permit any of the foregoing actions or events
described in this Paragraph 4.2 without Beneficiary's prior written
consent. Consent to one such transfer by Beneficiary shall not be
deemed a waiver of the right to require such consent to further or
future transfers. Any such transferee shall, as a condition of the
effectiveness of any consent or waiver by Beneficiary hereunder, as a
covenant of Trustor and such transferee, and in form and substance
required by Beneficiary, assume all obligations under the Loan
Documents and the assumption shall not, however, release Trustor, or
any maker or guarantor of the Note, from any liability thereunder.
This provision shall not apply to transfers of title or interest under
any will or testament or applicable law of descent.
B. Notwithstanding the foregoing, the
provisions of this Paragraph 4.2 shall not apply to (i) the sale of
stock on any recognized public stock exchange in the ordinary course
of business, (ii) any merger or consolidation of Trustor where the
surviving company has a Debt Ratio (as defined below) which does not
exceed the Debt Ratio of Trustor as of the Closing Date, as shown by
evidence reasonably satisfactory to Beneficiary, and (iii) a public
tender offer by a Person unaffiliated with Trustor to purchase the
stock of Trustor. Notwithstanding anything to the contrary contained
herein, unless a change in the ownership of Trustor is the result of
one or more of the acts described in the immediately preceding
sentence (in which case the prior consent of Beneficiary is not
required), Beneficiary's prior written consent shall be required in
the event of a change in the ownership of Trustor (in a single
transaction or cumulative transactions) such that in excess of 50% of
Trustor's stock is owned or controlled by a sole shareholder or an
affiliated group of shareholders ("Sale"). Notwithstanding the
foregoing, a Sale shall specifically exclude: (a) the conversion
("Conversion") to common stock shares of some or all of the Series A
convertible preferred stock of Trustor outstanding as of the Closing
Date (the "Preferred Stock"), (b) any initial sale ("Initial Sale") of
any of the Preferred Stock to a Person unaffiliated with Trustor which
occurs either prior to and/or subsequent to any Conversion, and
(c) any sale of any of the Preferred Stock subsequent to an Initial
Sale of such Preferred Stock to a Person unaffiliated with Trustor
which previously acquired some or all of the Preferred Stock in an
Initial Sale. As used herein, "Debt Ratio" means the ratio of all
indebtedness of Trustor and its subsidiaries to the sum of all assets
of Trustor and it subsidiaries, before depreciation and less the sum
of any intangible assets.
32.3 Replacement of Fixtures and Personalty. Trustor
will not permit any of the Fixtures or Personalty to be removed at any
time from the Property without the prior written consent of
Beneficiary unless actually replaced by articles of equal suitability
and value owned by Trustor free and clear of any lien or security
interest.
32.4 No Cooperative or Condominium. Trustor shall
not operate the Property or permit the Property to be operated, as a
cooperative or condominium building or buildings in which the tenants
or occupants participate in the ownership, control, or management of
the Property or any part thereof, as tenant stockholders or otherwise.
32.5 Partnership Agreement. Trustor, if a
partnership, will not terminate, alter, modify or amend or permit the
termination, alteration, modification or amendment of its Partnership
Agreement without Beneficiary's prior written consent.
ARTICLE 33
Casualties and Condemnation
33.1 Insurance and Condemnation Proceeds.
A. Trustor will notify Beneficiary in writing
promptly after loss or damage caused by fire or other casualty to all
or any part of the Property resulting in damage in excess of $25,000
per occurrence, and prior to the making of any repairs thereto.
Trustor will furnish to Beneficiary within sixty (60) days after such
loss or damage (a) preliminary plans and specifications for the repair
and reconstruction of the Property (the "Preliminary Plans and
Specifications"); and (b) evidence satisfactory to Beneficiary (i) of
the cost of repair or reconstruction in accordance with the
Preliminary Plans and Specifications, (ii) that sufficient funds are
available and/or committed for the benefit of Beneficiary, including
insurance proceeds, funds provided by the Trustor, payment and
performance bond, or otherwise, to complete such repair or
reconstruction, and (iii) that such repair or reconstruction may be
completed in accordance with all applicable Laws and Restrictions
within the time frame described in Paragraph 5.1.C.(v) hereof and that
all necessary permits and approvals have been or will be obtained.
Trustor hereby unconditionally and irrevocably waives all rights of a
property owner under applicable law providing for the allocation of
condemnation proceeds between a property owner and a lien holder.
B. In the event of any insured loss in excess
of Two Hundred Fifty Thousand Dollars ($250,000) or in the event an
Event of Default, or an event which with the giving of notice or the
passing of time or both constitutes an Event of Default, shall have
occurred and be continuing, all insurance proceeds on account of any
damage to the Property shall be payable to, and deposited with,
Beneficiary. Beneficiary, at its sole option, may (i) apply such
insurance proceeds in payment of the Indebtedness or in satisfaction
of any other Obligation in such order as Beneficiary may determine,
(ii) use such insurance proceeds to repair or reconstruct the
Improvements, (iii) release such insurance proceeds to Trustor for
repair or reconstruction of the Improvements in accordance with the
procedures described in Paragraph 5.1.E hereof, or (iv) divide such
proceeds in any manner among any such application, use or release. No
such application, use or release shall, however, extend or postpone
the due date of any installments under the Note or change the amount
of such installments or cure or waive any Event of Default or notice
of Event of Default under the Loan Documents or invalidate any act
done pursuant to such notice.
C. Notwithstanding the provisions of Para-
graph 5.1.B hereof, if all or any part of the Property is damaged or
destroyed or less than all of the Property is taken by any public or
quasi-public authority through condemnation, eminent domain, deed in
lieu thereof, or otherwise, Beneficiary shall make the net amount of
all insurance proceeds and condemnation awards received by Beneficiary
after deduction of Beneficiary's reasonable costs and expenses, if
any, in collection of the same and costs associated with Beneficiary's
review of the Preliminary Plans and Specifications and other costs
associated with disbursement of such proceeds (the "Net Proceeds")
available for the repair and reconstruction of the Property (or so
much thereof as was not condemned) pursuant to the procedures
described in Paragraph 5.1.E hereof, provided that (i) no Event of
Default or event which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default, shall have
occurred and shall be continuing, (ii) Trustor has complied with the
provisions of Paragraph 5.1.A hereof and Beneficiary has approved the
Preliminary Plans and Specifications, (iii) Trustor shall proceed with
the reconstruction of the Property as nearly as possible to the
condition it was in immediately prior to the occurrence of such
casualty or taking (the "Occurrence") and in accordance with the Plans
and Specifications as promptly as is practicable after the Occurrence,
but in no event later than four (4) months after the Occurrence,
(iv) Beneficiary shall be satisfied that such reconstruction can be
completed no later than twelve (12) months after the Occurrence and at
least twelve (12) months before the maturity of the Loan,
(v) Beneficiary shall be satisfied that the reconstruction can be
completed at a cost which does not exceed the Net Proceeds, or, in the
event the cost of such restoration exceeds the Net Proceeds, Trustor
shall have satisfied the requirements set forth in Para-
graph 5.1.F(i) hereof or Paragraph 5.1.F(ii) hereof, (vi) Beneficiary
shall be satisfied that Trustor (whether with rental loss insurance
proceeds or otherwise) will continue to be able to timely pay all
payments as they become due on the Indebtedness during such period of
repair and reconstruction, (vii) Trustor shall cause such
reconstruction to be completed with due diligence as promptly as
possible after commencement, but in no event later than twelve
(12) months after the Occurrence and at least twelve (12) months
before the maturity of the Loan, (viii) Beneficiary determines that
repair or reconstruction is economically feasible and that the
Property can physically and legally be restored to at least its value
as of the Closing Date, (ix) Trustor shall have entered into a guaran-
teed maximum price general construction contract acceptable in all
respects to Beneficiary for completion of the repair or
reconstruction, which contract must include provision for a retainage
of not less than ten percent (10%) until full completion of the repair
or reconstruction, and (x) the insurer does not deny liability to any
named insured.
D. Beneficiary shall be entitled to settle
and adjust all insurance claims, and Beneficiary may deduct and retain
from the proceeds of any insurance the amount of all expenses incurred
by Beneficiary in connection with any settlement or adjustment.
Notwithstanding the foregoing, so long as no Event of Default or event
which, with the giving of notice or the passage of time or both, would
constitute an Event of Default shall have occurred and be continuing,
Trustor may settle directly with the insurer any insurance claims
involving an amount less than Two Hundred Fifty Thousand Dollars
($250,000) so long as (i) Trustor applies all insurance proceeds to
reconstruction of the Property, (ii) Trustor promptly and diligently
pursues the repairs to completion, and (iii) Trustor follows the
provisions of Paragraph 5.1.A hereof.
E. The Net Proceeds and any additional funds
deposited by Trustor with Beneficiary shall constitute additional
security for the Loan. Trustor shall execute, deliver, file and/or
record, at its own expense, such documents and instruments as
Beneficiary deems necessary or advisable to grant to Beneficiary a
perfected, first priority security interest in the Net Proceeds and
such additional funds. Provided that Trustor is otherwise entitled to
receive the Net Proceeds pursuant to the terms and provisions of this
Deed of Trust, Beneficiary or, at Beneficiary's option, a disbursing
agent (the "Disbursing Agent") selected by Beneficiary (whose fees and
expenses shall be paid by Trustor), shall pay the Net Proceeds to
Trustor from time to time during the course of the restoration,
subject to the following terms and conditions:
(1) The work shall be administered and
overseen by an architect or engineer approved by Beneficiary (the
"Architect"). Complete copies of the plans and specifications for the
work (the "Plans and Specifications"), approved by all governmental
authorities whose approval is required, and bearing the signed
approval thereof by the Architect and accompanied by the Architect's
signed estimate, bearing the Architect's seal, of the entire cost of
completing the work, shall be delivered to Beneficiary;
(2) Each request for payment shall be made
upon seven (7) day's prior written notice to Beneficiary or the
Disbursing Agent and shall be accompanied by a certificate to be made
by the Architect stating that (i) all of the work completed has been
done in compliance with the Plans and Specifications, as approved by
Beneficiary, (ii) the sum requested is justly required to reimburse
Trustor for payments by Trustor to, or is justly due to, the
contractor, subcontractors, materialmen, laborers, engineers,
architects or other persons rendering services and materials for the
work (giving a brief description of such services and materials) and,
when added to all sums previously paid out by Beneficiary or the
Disbursing Agent, does not exceed the value of the work done to the
date of such certificate, and (iii) the amount of such proceeds
remaining with Beneficiary are sufficient on completion of the work to
pay for the same in full (giving in such reasonable detail as
Beneficiary may require an estimate of the cost of such completion);
(3) Each request shall be accompanied by
waivers of lien satisfactory to Beneficiary and the Disbursing Agent
covering that part of the work for which payment or reimbursement is
being requested and, if required by Beneficiary or the Disbursing
Agent, by a search prepared by a title company satisfactory to
Beneficiary or the Disbursing Agent, that there has not been filed
with respect to the Property any mechanics', materialmen's or other
liens;
(4) The request for any payment after the work
has been completed shall be accompanied by a copy of any certificate
or certificates required by any Laws and Restrictions for legal
occupancy of the Improvements;
(5) Trustor shall deliver to Beneficiary or
the Disbursing Agent certified or photostatic copies of all permits
and approvals required by any Laws and Restrictions in connection with
the commencement and conduct of the work; and
(6) Trustor shall deliver to Beneficiary or
the Disbursing Agent a surety bond for and/or guaranty of the payment
for and completion of the work, which bond or guaranty shall be in
form and substance satisfactory to Beneficiary and in an amount no
less than the Architect's estimate of the entire cost of completing
the work.
F. Notwithstanding anything to the contrary
contained herein or in any of the insurance policies, all proceeds
paid to Trustor under such policies shall immediately be delivered to
Beneficiary. If the Net Proceeds exceed the costs of completion of
the restoration of the Property, such excess proceeds shall belong and
be retained by and/or paid over to Beneficiary to be applied against
the Indebtedness. If at any time the Net Proceeds shall not, in
Beneficiary's opinion, be sufficient to pay in full the balance of the
costs which will be incurred in connection with the repair and
reconstruction of the Property and all payments as they come due on
the Indebtedness and all other obligations which are or may be secured
by a lien on the Property during the reconstruction period, Trustor
shall, prior to receiving any further disbursement, either
(i) complete, using its own funds and not borrowed funds, such portion
of the reconstruction as shall be sufficient to render the Net
Proceeds sufficient to complete the reconstruction, or (ii) deposit
the deficiency with Beneficiary before any further disbursement of the
Net Proceeds shall be made, which deficiency deposit shall be held by
Beneficiary in an interest bearing special account and shall be
disbursed on the same conditions applicable to the Net Proceeds.
Beneficiary shall remit to Trustor the balance, if any, of any such
deficiency deposit remaining after completion of the reconstruction.
33.2 Additional Provisions Relating to Condemnation.
Trustor, immediately upon obtaining knowledge of the commencement of
any proceedings for the condemnation of the entire Property or any
material part thereof, will notify Trustee and the Beneficiary of the
pendency of such proceedings. Trustee and Beneficiary may participate
in any such proceedings and Trustor from time to time will deliver to
Beneficiary all instruments requested by Beneficiary to permit such
participation. In the event of such condemnation proceedings, the
award or compensation payable is hereby assigned to and shall be paid
to Beneficiary. Beneficiary shall be under no obligation to question
the amount of any such award or compensation and may accept the same
in the amount in which the same shall be paid. In any such
condemnation proceedings Beneficiary may be represented by counsel
selected by Beneficiary, the cost of such counsel to be borne by
Trustor. The proceeds of any award or compensation so received shall,
subject to Paragraph 5.1.C hereof as it relates to condemnation, and
at the option of Beneficiary, either be applied to the prepayment of
the Indebtedness or be paid over to the Trustor for restoration of the
Improvements in accordance with the provisions of Paragraph 5.1.E
hereof. Trustor hereby unconditionally and irrevocably waives all
rights of a property owner under Section 1265.225(a) of the California
Code of Civil Procedure or any successor statute.
ARTICLE 34
Events of Default and Remedies of Beneficiary
34.1 Events of Default.
A. If one or more of the following events
shall have occurred and be continuing:
(1) Trustor shall fail to pay when due any
part of the Indebtedness;
(2) Trustor shall fail to timely observe,
perform or discharge any Obligation contained in any of the Loan
Documents, any agreement relating to the Property or any other loan
documents with respect to the Property on its part to be performed or
observed, other than as described in Paragraphs 6.1.A(1), (3), (4),
(5), (6), (7) and (8), and any such failure shall remain unremedied
for thirty (30) days or such lesser period as may be otherwise
specified in the applicable Loan Document (the "Grace Period") after
notice to Trustor of the occurrence of such failure; provided,
however, that the Grace Period may be extended to ninety (90) days if:
(a) Beneficiary determines in good faith that (i) such default cannot
be cured within the Grace Period but can be cured within ninety
(90) days, (ii) no lien or security interest created by the Loan
Documents shall be impaired prior to the completion of such cure, and
(iii) Beneficiary's immediate exercise of any remedies provided
hereunder or by law is not necessary for the protection or
preservation of the Property or Beneficiary's security interest
therein, and (b) Trustor shall immediately commence and diligently
pursue the cure of such default;
(3) Trustor, as lessor or sublessor, as the
case may be, shall assign the rents or income of the Property or any
part thereof (other than to Beneficiary) without first obtaining the
written consent of Beneficiary;
(4) Any representation or warranty made by
Trustor in, under or pursuant to the Loan Documents was false or
misleading in any material respect as of the date on which such
representation or warranty was made or deemed remade, and Trustor does
not cause to be taken and completed within thirty (30) days following
notice of such breach any and all action required to cause such
representation or warranty to be true and correct in all respects as
originally made;
(5) (i) Any claim or lien shall be filed
against the Property or any part thereof, whether or not such lien
shall be prior to this Deed of Trust, which shall be maintained for a
period of thirty (30) days without discharge, satisfaction or adequate
bonding in accordance with the terms of this Deed of Trust; (ii) the
existence of any interest in the Property other than the Permitted
Exceptions, those of Trustor, Trustee, Beneficiary and any tenants in
the Property; or (iii) the sale, hypothecation, conveyance or other
disposition of the Property without the prior written consent of
Beneficiary except as the result of the condemnation of a non-material
part of the Property as set forth in Paragraph 5.1 above or as
otherwise expressly permitted under the Loan Documents;
(6) Any of the Loan Documents, at any time
after their respective execution and delivery and for any reason,
other than an act or omission of Beneficiary, shall cease to be in
full force and effect or be declared null and void, or shall cease to
constitute valid and subsisting liens and/or valid and perfected
security interests in and to the Property, or Trustor shall contest or
deny in writing that it has any further liability or obligation under
any of the Loan Documents;
(7) The failure of Trustor to observe the
provisions of Paragraph 4.2 hereof; and/or
(8) An "Event of Default" occurs under any one
or more of the Woodlands Deed of Trust, the Milpitas Deed of Trust,
the Ontario Deed of Trust, the Tustin Deed of Trust, the Nevada Deed
of Trust, the Arizona Deed of Trust and/or the South San Francisco
Deed of Trust.
THEN and in any such event Beneficiary may, by written
notice delivered to Trustor, which notice specifically states the
occurrence of an Event of Default, declare Trustor to be in default.
Upon the occurrence of such event and the giving of such notice, the
same shall constitute an event of default (an "Event of Default").
B. It shall constitute an Event of Default
hereunder without the requirement of any notice if one or more of the
following events shall have occurred and be continuing:
(1) (i) The entry of an order for relief under
Title 11 of the United States Code as to Trustor, any general partner
of Trustor, any parent company of such partner, or any owner of the
Property or any interest therein or the adjudication of Trustor, any
general partner of Trustor, or any owner of the Property as insolvent
or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act; (ii) the commencement by Trustor, any general partner
of Trustor, or any parent company of such partner of any case,
proceeding or other action seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors; (iii) consent to, acquiescence in or attempt to secure the
appointment of any Receiver of all or any substantial part of its
properties or of the Property by Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the
Property or any interest therein; (iv) Trustor, any general partner of
Trustor, or any parent company of such partner shall generally not pay
its debts as they become due or shall admit in writing its inability
to pay its debts or shall make a general assignment for the benefit of
creditors; or (v) Trustor, any general partner of Trustor, or any
parent company of such partner shall take any action to authorize any
of the acts set forth above; or
(2) Any case, proceeding or other action
against Trustor, any general partner of Trustor, any parent company of
such partner, or any owner of Property or any interest therein shall
be commenced seeking to have an order for relief entered against such
party as a debtor or seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors, or seeking the appointment of any Receiver for Trustor, any
general partner thereof, or any parent company of such partner or for
all or any substantial part of its property or the Property, and such
case, proceeding or other action remains undismissed for an aggregate
of sixty (60) days (whether or not consecutive) or Trustor or general
partner or parent company during the period of its ownership fails to
proceed diligently during such sixty (60) day period to have such
proceeding or other action dismissed.
C. Upon the occurrence of any Event of
Default, Beneficiary may at any time declare all of the Indebtedness
to be due and payable and the same shall thereupon become immediately
due and payable, together with any prepayment fee due in accordance
with the terms of the Note, without any further presentment, demand,
protest or notice of any kind. Beneficiary may in its sole
discretion, also do any of the following:
(1) in person, by agent, or by a Receiver, and
without regard to the adequacy of security, the solvency of Trustor or
the condition of the Property, enter upon and take possession of the
Property, or any part thereof, in its own name or in the name of
Trustee and do any acts which Beneficiary deems necessary to preserve
the value, marketability or rentability of the Property; sue for or
otherwise collect the rents, issues and profits therefrom, including
those past due and unpaid, and apply the same, less cost and expenses
of operation and collection, including, without limitation, reasonable
attorneys' fees, against the Indebtedness, all in such order as
Beneficiary may determine. The entering upon and taking possession of
said property, the collection of such rents, issues and profits and
the application thereof as aforesaid shall not cure or waive any
default or notice of default hereunder or invalidate any act done
pursuant to such notice;
(2) commence an action to foreclose this Deed
of Trust in the manner provided under this Deed of Trust or by law;
(3) with respect to any Personalty, proceed as
to both the real and personal property in accordance with
Beneficiary's rights and remedies in respect of the Land, or proceed
to sell said Personalty separately and without regard to the Land in
accordance with Beneficiary's rights and remedies as to personal
property; and/or
(4) deliver to Trustee a written declaration
of default and demand for sale, and a written notice of default and
election to cause the Property to be sold, which notice Trustee or
Beneficiary shall cause to be duly filed for record.
34.2 Power of Sale.
A. Should Beneficiary elect to foreclose by
exercise of the power of sale herein contained, Beneficiary shall also
deposit with Trustee this Deed of Trust and the Note and such receipts
and evidence of expenditures made and secured hereby as Trustee may
require, and notice of default having been given as then required by
law, and after lapse of such time as may then be required by law,
after recordation of such notice of default, Trustee, without demand
on Trustor, shall, after notice of sale having been given as required
by law, sell the Property at the time and place of sale fixed by it in
said notice of sale, either as a whole or in separate parcels as
Beneficiary shall determine, and in such order as Beneficiary may
determine, at public auction to the highest bidder. Beneficiary may,
in its sole discretion, designate the order in which the Property
shall be offered for sale or sold through a single sale or through two
or more successive sales, or in any other manner Beneficiary deems to
be in its best interest. If Beneficiary elects more than one sale or
other disposition of the Property, Beneficiary may at its option cause
the same to be conducted simultaneously or successively, on the same
day or at such different days or times and in such order as
Beneficiary may deem to be in its best interest, and no such sale
shall terminate or otherwise affect the lien of this Deed of Trust on
any part of the Property not then sold until all Indebtedness secured
hereby has been fully paid. If Beneficiary elects to dispose of the
Property though more than one sale, Trustor shall pay the costs and
expenses of each such sale of its interest in the Property and of any
proceedings where the same may be made. Trustee may postpone sale of
all or any part of the Property by public announcement at such time
and place of sale, and from time to time thereafter may postpone such
sale by public announcement at the time fixed by the preceding
postponement, and without further notice make such sale at the time
fixed by the last postponement; or Trustee may, in its discretion,
give a new notice of sale. Beneficiary may rescind any such notice of
default at any time before Trustee's sale by executing a notice of
rescission and recording the same. The recordation of such notice
shall constitute a cancellation of any prior declaration of default
and demand for sale and of any acceleration of maturity of Indebted-
ness affected by any prior declaration or notice of default. The
exercise by Beneficiary of the right of rescission shall not
constitute a waiver of any default then existing or subsequently
occurring, or impair the right of Beneficiary to execute other
declarations of default and demand for sale, or notices of default and
of election to cause the Property to be sold, nor otherwise affect the
Note or this Deed of Trust, or any of the rights, obligations or
remedies of Beneficiary or Trustee hereunder or thereunder. After
sale Trustee shall deliver to such purchaser its deed conveying the
property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any Person, including,
without limitation, Trustor, Trustee or Beneficiary, may purchase at
such sale. If allowed by law, Beneficiary, if it is the purchaser,
may turn in the Note at the amount owing therein toward payment of the
purchase price (or for endorsement of the purchase price as a payment
on the Note if the amount owing thereon exceeds the purchase price).
Trustor hereby expressly waives any right of redemption after sale
that Trustor may have at the time of sale or that may apply to the
sale. Trustor hereby expressly waives all rights of marshalling with
respect to each of the Combined Properties that Trustor may have in
the event of foreclosure hereunder or under any of the other Combined
Deeds of Trust.
B. Trustee, upon such sale, shall make
(without any covenant or warranty, express or implied), execute and
after due payment made, deliver to the purchaser, its heirs or
assigns, a deed or other record of interest, as the case may be, in
and to the property so sold that shall convey to the purchaser all the
title and interest of Trustor in the Property (or part thereof sold),
and shall apply the proceeds of such sale in payment, first, of the
expenses of such sale together with the reasonable expenses of the
trust, including, without limitation, attorneys' fees, that shall
become due upon any default made by Trustor, and also such sums, if
any, as Trustee or Beneficiary shall have paid for procuring a search
of the title to the Property, or any part thereof, subsequent to the
execution of this Deed of Trust; and in payment, second, of the
Indebtedness then remaining unpaid, and the amount of all other monies
with interest thereon agreed or provided to be paid by Trustor; and
the balance or surplus of such proceeds of sale Trustee shall pay to
Trustor, its successors or assigns as their interest may appear.
34.3 Proof of Default. In the event of a sale of the
Property, or any part thereof, and the execution of a deed therefor,
the recital therein of default, and of recording notice of default and
election of sale, and of the elapsing of the required time (if any)
between the foregoing recording and the following notice, and of the
giving of notice of sale, and of a demand by Beneficiary, or its
successors or assigns, that such sale should be made, shall be
conclusive proof of such default, recording, election, elapsing of
time, and of the due giving of such notice, and that the sale was
regularly and validly made on due and proper demand by Beneficiary,
its successors or assigns. Any such deed or deeds with such recitals
therein shall be effective and conclusive against Trustor, its
successors and assigns, and all other Persons. The receipt for the
purchase money recited or contained in any deed executed to the
purchaser as aforesaid shall be sufficient to discharge such purchaser
from all obligations to see to the proper application of the purchase
money.
34.4 Protection of Security. If an Event of Default
shall have occurred and be continuing, then Beneficiary or Trustee,
but without obligation so to do and without notice to or demand upon
Trustor and without releasing Trustor from any obligations or defaults
hereunder, may: (i) perform any act in such manner and to such extent
as either may deem necessary to protect the security hereof,
Beneficiary and Trustee being authorized to enter upon the Property
for such purpose; (ii) appear in and defend any action or proceeding
purporting to affect, in any manner whatsoever, the obligations or the
Indebtedness, the security hereof or the rights or powers of
Beneficiary or Trustee; (iii) pay, purchase or compromise any
encumbrance, charge or lien that in the judgment of Beneficiary or
Trustee is prior or superior hereto; and (iv) in exercising any such
powers, pay necessary expenses, employ counsel and pay reasonable
attorneys' fees. Trustor agrees that all sums expended by Trustee or
Beneficiary pursuant to this paragraph, together with interest at the
Secondary Interest Rate from the date of expenditure by Beneficiary,
shall be added to the principal amount of the Indebtedness secured by
the Loan Documents and this Deed of Trust and shall be payable by
Trustor to Beneficiary upon demand.
34.5 Receiver. If an Event of Default shall have
occurred and be continuing, Beneficiary, as a matter of strict right
and without notice to Trustor or anyone claiming under Trustor, and
without regard to the then value of the Property, shall have the right
to apply ex parte to any court having jurisdiction to appoint a
Receiver to enter upon and take possession of the Property, and
Trustor hereby waives notice of any application therefor, provided a
hearing to confirm such appointment with notice to Trustor is set
within the time required by law. Any such Receiver shall have all the
powers and duties of Receivers in like or similar cases and all the
powers and duties of Beneficiary in case of entry as provided in this
Deed of Trust, and shall continue as such and exercise all such powers
until the date of confirmation of sale, unless such receivership is
sooner terminated.
34.6 Remedies Cumulative. All remedies of
Beneficiary provided for herein are cumulative and shall be in
addition to any and all other rights and remedies provided in the
other Loan Documents or by law, including, without limitation, any
right of offset. The exercise of any right or remedy by Beneficiary
hereunder shall not in any way constitute a cure or waiver of default
hereunder or under the Loan Documents, or invalidate any act done
pursuant to any notice of default, or prejudice Beneficiary in the
exercise of any of its rights hereunder or under the Loan Documents.
34.7 Curing of Defaults. If Trustor shall at any
time fail to perform or comply with any of the terms, covenants and
conditions required on Trustor's part to be performed and complied
with under this Deed of Trust, any of the other Loan Documents or any
other agreement that, under the terms of this Deed of Trust, Trustor
is required to perform, then Beneficiary, and without waiving or
releasing Trustor from any of the Obligations, may, in its sole
discretion:
(i)
make any payments thereunder payable by Trustor and
take out, pay for and maintain any of the insurance policies provided
for therein; and/or
(ii)
after the expiration of any applicable grace period
and subject to Trustor's rights to contest certain obligations
specifically granted hereby, perform any such other acts thereunder on
the part of Trustor to be performed and enter upon the Property for
such purpose.
All sums so paid out of Beneficiary's own funds and all reasonable
costs and expenses incurred and paid by Beneficiary in connection with
the performance of any such act, together with interest on unpaid
balances thereof at the Secondary Interest Rate from the respective
dates of Beneficiary's making of each such payment, shall be added to
the principal of the Indebtedness, shall be secured by the Loan
Documents and by the lien of this Deed of Trust, prior to any right,
title or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, and shall be payable by
Trustor to Beneficiary on demand.
ARTICLE 35
Security Agreement and Fixture Filing
35.1 Grant of Security Interest. Trustor hereby
grants to Beneficiary a security interest in and to all Trustor's
right, title and interest now owned or hereafter acquired in and to
the Personalty and the Fixtures (collectively, the "Collateral"), to
secure the payment and performance of the Obligations.
35.2 Remedies. This Deed of Trust constitutes a
security agreement with respect to the Collateral in which Beneficiary
is hereby granted a security interest. In addition to the rights and
remedies provided under this Deed of Trust, Beneficiary shall have all
of the rights and remedies of a secured party under the California
Uniform Commercial Code as well as all other rights and remedies
available at law or in equity. Trustor hereby agrees to execute and
deliver on demand and irrevocably constitutes and appoints Beneficiary
the attorney-in-fact of Trustor to, at Trustor's expense, execute,
deliver and, if appropriate, to file with the appropriate filing
officer or office such security agreements, financing statements, con-
tinuation statements or other instruments as Beneficiary may request
or require in order to impose, perfect or continue the perfection of
the lien or security interest created hereby. Upon the occurrence of
any Event of Default, Beneficiary shall have (i) the right to cause
any of the Collateral which is personal property to be sold at any one
or more public or private sales as permitted by applicable law and to
apply the proceeds thereof to the Indebtedness or any other monetary
obligation of Trustor to Beneficiary, and (ii) the right to apply to
the Indebtedness or any other monetary obligation of Trustor to
Beneficiary, any Collateral which is cash, negotiable documents or
chattel paper. Any such disposition may be conducted by an employee
or agent of Beneficiary or Trustee. Any Person, including, without
limitation, both Trustor and Beneficiary, shall be eligible to
purchase any part or all of such Personalty at any such disposition.
35.3 Expenses. Expenses of retaking, holding,
preparing for sale, selling or the like pertaining to the Collateral
shall be borne by Trustor and shall include Beneficiary's and
Trustee's reasonable attorneys' fees and legal expenses. Trustor,
upon demand of Beneficiary shall assemble the Collateral and make it
available to Beneficiary at the Property, a place which is hereby
deemed to be reasonably convenient to Beneficiary and Trustor.
Beneficiary shall give Trustor at least ten (10) days' prior written
notice of the time and place of any public sale or other disposition
of the Collateral or of the time after which any private sale or any
other intended disposition is to be made. Any such notice sent to
Trustor in the manner provided for the mailing of notices herein is
hereby deemed to be reasonable notice to Trustor.
35.4 Fixture Filing. This Deed of Trust covers
certain goods which are or are to become fixtures related to the Land
and constitutes a fixture filing with respect to such goods executed
by Trustor as debtor in favor of Beneficiary as secured party.
35.5 Waivers. Trustor waives (a) any right to
require Beneficiary to (i) proceed against any Person, (ii) proceed
against or exhaust any Collateral or (iii) pursue any other remedy in
its power; and (b) any defense arising by reason of any disability or
other defense of Trustor or any other Person, or by reason of the
cessation from any cause whatsoever of the liability of Trustor or any
other Person. Until the Indebtedness shall have been paid in full,
Trustor shall not have any right to subrogation, and Trustor waives
any right to enforce any remedy which Beneficiary now has or may
hereafter have against Trustor or against any other Person and waives
any benefit of and any right to participate in any Collateral or
security whatsoever now or hereafter held by Beneficiary.
ARTICLE 36
Assignment of Rents
36.1 Assignment of Rents. Trustor absolutely and
unconditionally assigns and transfers the Rents to Beneficiary,
whether now due, past due or to become due, and gives to and confers
upon Beneficiary the right, power and authority to collect such Rents,
and apply the same to the Indebtedness. Trustor irrevocably appoints
Beneficiary its agent to, at any time, demand, receive and enforce
payment, to give receipts, releases and satisfactions, and to sue,
either in the name of Trustor or in the name of Beneficiary, for all
such Rents. Neither the foregoing assignment of Rents to Beneficiary
nor the exercise by Beneficiary of any of its rights or remedies under
this Deed of Trust shall be deemed to make Beneficiary a "mortgagee-
in-possession" or otherwise responsible or liable in any manner with
respect to the Property or the use, occupancy, enjoyment or operation
of all or any part thereof, unless and until Beneficiary, in person or
by its own agent, assumes actual possession thereof, nor shall
appointment of a Receiver for the Property by any court at the request
of Beneficiary or by agreement with Trustor or the entering into
possession of the Property or any part thereof by such Receiver be
deemed to make Beneficiary a "mortgagee-in-possession" or otherwise
responsible or liable in any manner with respect to the Property or
the use, occupancy, enjoyment or operation of all or any part thereof.
36.2 Collection of Rents. Notwithstanding anything
to the contrary contained herein or in the Note, so long as no Event
of Default shall occur, Trustor shall have a license, revocable upon
the occurrence of an Event of Default or, if an Event of Default shall
have occurred, so long as such Event of Default shall not have been
waived by Beneficiary, to collect all Rents, and to first apply same
to the Indebtedness as and when due and thereafter to retain, use and
enjoy the same and to otherwise exercise all rights with respect
thereto, subject to the terms hereof. Upon the occurrence of an Event
of Default, Beneficiary shall have the right, on written notice to
Trustor, to terminate and revoke the license heretofore granted to
Trustor and shall have the complete right and authority then or
thereafter to exercise and enforce any and all of its rights and
remedies provided herein or by law or at equity.
ARTICLE 37
Miscellaneous
37.1 Successor Trustee. Beneficiary may remove
Trustee or any successor trustee at any time or times and appoint a
successor trustee by recording a written substitution in the county
where the Property is located, or in any other manner permitted by
law.
37.2 Change of Law. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the
value of the Property, for the purposes of taxation, any lien thereon,
or changing in any way the laws now in force for the taxation of
mortgages, deeds of trust, or debts secured by mortgage or deed of
trust (other than laws imposing taxes on income), or the manner of the
collection of any such taxes so as to materially affect the
anticipated yield of Beneficiary as holder of the Note and/or Benefi-
ciary under this Deed of Trust, the Indebtedness plus any applicable
prepayment charges shall become due and payable at the option of
Beneficiary exercised by thirty (30) days' notice to Trustor unless
Trustor, within such thirty (30) day period shall, if permitted by
law, assume the payment of any tax or other charge so imposed upon
Beneficiary for the period remaining until full payment by Trustor of
the Indebtedness.
37.3 No Waiver. No waiver by Beneficiary of any
default or breach by Trustor hereunder shall be implied from any
omission by Beneficiary to take action on account of such default if
such default persists or is repeated, and no express waiver shall
affect any default other than the default expressly referenced in the
waiver and such waiver shall be operative only for the time and to the
extent therein stated. Waivers of any covenant, term or condition
contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or
approval by Beneficiary to or of any act by Trustor requiring further
consent or approval shall not be deemed to waive or render unnecessary
the consent or approval to or of any subsequent similar act.
37.4 Abandonment. Subject to such chattel mortgages,
security agreements or other liens on title as may exist thereon with
the consent of Beneficiary, or any provided for herein, any and all
Personalty that upon foreclosure of the Property is owned by Trustor
and is used in connection with the operation of the Property shall be
deemed at the option of Beneficiary to have become on such date a part
of the Property and abandoned to Beneficiary in its then condition.
37.5 Notices. All notices, demands, requests,
consents, statements, satisfactions, waivers, designations, refusals,
confirmation or denials that may be required or otherwise provided for
or contemplated under the terms of this Deed of Trust shall be in
writing, and shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with
receipt acknowledged, (ii) one business day after having been
deposited for overnight delivery with Federal Express or another
comparable overnight courier service, or (iii) three business days
after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered
or certified mail, postage prepaid, addressed as follows:
If to Trustor:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, California 94549
Attention: Mr. Scott Whitney
If to Trustee:
First American Title Insurance Company
1850 Mount Diablo Boulevard, Suite 300
Walnut Creek, California 94596
If to Beneficiary:
The Prudential Insurance Company of America
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Regional Counsel
Loan No. 6 101 085
with a copy to:
The Prudential Insurance Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Vice President, Loan Servicing
Loan No. 6 101 085
or addressed to each respective party at such other address as such
party may from time to time designate by written notice to the other
parties given in the manner aforesaid.
37.6 Severability. If any term, provision, covenant
or condition hereof or any application thereof should be held by a
court of competent jurisdiction to be invalid, void or unenforceable,
in whole or in part, all terms, provisions, covenants and conditions
hereof and all applications thereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
37.7 Joinder of Foreclosure. Should Beneficiary hold
any other or additional security for the payment of the Indebtedness
or performance of the Obligations, its sale or foreclosure, upon any
default in such payment or performance, in the sole discretion of
Beneficiary, may be prior to, subsequent to, or joined or otherwise
contemporaneous with any sale or foreclosure hereunder. In addition
to the rights herein specifically conferred, Beneficiary, at any time
and from time to time, may exercise any right or remedy now or
hereafter given by law to beneficiaries under deeds of trust
generally, or to the holders of any obligations of the kind hereby
secured.
37.8 Governing Law. The parties expressly agree that
this Deed of Trust (including, without limitation, all questions
regarding permissible rates of interest) shall be governed by and
construed in accordance with the laws of the state in which the Land
is located.
37.9 Subordination. At the option of Beneficiary,
this Deed of Trust shall become subject and subordinate in whole or in
part (but not with respect to priority of entitlement to any insurance
proceeds, damages, awards, or compensation resulting from damage to
the Property or condemnation or exercise of power of eminent domain),
to any and all contracts of sale and/or any and all Leases upon the
execution by Beneficiary and recording thereof in the Official Records
of the County in which the Land is located of a unilateral declaration
to that effect. Beneficiary may require the issuance of such title
insurance endorsements to the Title Policy in connection with any such
subordination as Beneficiary, in its reasonable judgment, shall
determine are appropriate, and Trustor shall be obligated to pay any
cost or expense incurred in connection with the issuance thereof.
37.10 Future Advances. Upon the request of Trustor
or its permitted successors in ownership of the Property, Beneficiary
may hereafter, at its option, at any time before full payment of the
Indebtedness, make future advances to Trustor or said successors, and
the same, with interest and late charges, shall be secured by this
Deed of Trust; provided, however, that the amount of principal secured
by this Deed of Trust and remaining unpaid, shall not at the time of
and including any such advance exceed the original principal sum
secured hereby; and provided further that if Beneficiary, at its
option, shall make a future advance or advances as aforesaid, Trustor
or said successors in ownership agree to execute and deliver to
Beneficiary (i) a note to evidence the same, payable on or before the
maturity of the Indebtedness secured hereby and bearing such other
terms as Beneficiary shall require, and (ii) satisfactory evidence
that after such advance this Deed of Trust will secure such advance
and continue to constitute a valid first mortgage lien on the Property
subject only to the Permitted Exceptions.
37.11 Waiver of Statute of Limitations and Rights to
Trial by Jury. The pleading of any statute of limitations as a
defense to any and all obligations secured by this Deed of Trust and
the right to a jury trial in any action under or relating to the Loan
Documents is hereby waived, to the fullest extent allowed by law.
37.12 Entire Agreement. The Loan Documents and the
Remediation and Indemnification Agreements set forth the entire
understanding between Trustor and Beneficiary relative to the Loan and
the same shall not be amended except by a written instrument duly
executed by each of Trustor and Beneficiary. Any and all previous
representations, warranties, agreements and understandings between or
among the parties regarding the subject matter of the Loan or the Loan
Documents, whether written or oral, are superseded by this Deed of
Trust and the other Loan Documents. The foregoing notwithstanding,
the terms and the conditions of the Application shall survive the
funding of the Loan but in the event of any conflict between the
provisions of the Application and any of the other Loan Documents or
the Remediation and Indemnification Agreements, except as otherwise
specifically provided herein, the terms of such other Loan Documents
and the Remediation and Indemnification Agreements shall control.
37.13 References to Foreclosure. References in this
Deed of Trust to "foreclosure" and related phrases shall be deemed
references to the appropriate procedure in connection with Trustee's
private power of sale as well as any judicial foreclosure proceeding
or a conveyance in lieu of foreclosure.
37.14 Rights of Beneficiary and Trustee. At any time
or from time to time, without liability therefor and without notice,
and without releasing or otherwise affecting the liability of any
person for payment of any Indebtedness (i) Beneficiary at its sole
discretion and only in writing may extend the time for, or release any
Person now or hereafter liable for, payment of any or all such
Indebtedness, or accept or release additional security therefor, or
subordinate the lien or charge hereof, or (ii) Trustee upon written
request of Beneficiary and presentation of the Note, any additional
notes secured by this Deed of Trust and this Deed of Trust for
endorsement may reconvey any part of the Property, consent to the
making of any map or plat thereof, join in granting any easement
thereon, or join in any such agreement of extension or subordination.
Upon written request of Beneficiary and surrender of the Note, any
additional notes secured by this Deed of Trust and this Deed of Trust
to the Trustee for cancellation, and upon payment to Trustee of its
fees and expenses, Trustee shall reconvey without warranty the
remaining Property. The recitals in any reconveyance shall be
conclusive proof of the truthfulness thereof and the grantee in any
reconveyance may be described as "the person or persons legally
entitled thereto."
37.15 Copies. Trustor will promptly give to
Beneficiary copies of all (i) notices of violation relating to the
Property that Trustor receives from any governmental agency or author-
ity, and (ii) notices of default that Trustor shall give or receive
under any agreement that Trustor covenants to perform hereunder,
including, without limitation, notices of default relating to the
Property that Trustor receives under any agreement relating to the
borrowing of money by Trustor or from any Person.
37.16 No Merger. So long as any of the Indebtedness
shall remain unpaid or Trustor shall have any further obligation under
the Loan Documents, unless Beneficiary shall otherwise consent in
writing, the fee estate of Trustor in the Property or any part thereof
shall not merge, by operation of law or otherwise, with any leasehold
or other estate in the Property or any part thereof, but shall always
be kept separate and distinct therefrom, notwithstanding the union of
said fee estate and such leasehold or other estate in Trustor or any
other Person.
37.17 Right of Entry. In addition to the rights
granted to Beneficiary under Paragraph 3.10 hereof, Beneficiary may
enter at any reasonable time upon any part of the Property for the
purpose of performing any of the acts Beneficiary is authorized to
perform under the terms of this Deed of Trust or of any of the other
Loan Documents. Trustor agrees to cooperate with Beneficiary to
facilitate such entry.
37.18 Performance by Trustor. Trustor will
faithfully perform each and every Obligation to be performed by
Trustor under any lien or encumbrance, including, without limitation,
mortgages, deeds of trust, leases, declarations or covenants,
conditions and/or restrictions and other agreements which affect the
Property. If Trustor fails to do so, Beneficiary, without demand or
notice, may do any or all things necessary to perform the Obligations
of Trustor under the pertinent instrument.
37.19 Personalty Security Instruments. Trustor
covenants and agrees that if Beneficiary at any time holds additional
security for any obligations secured hereby, it may enforce the terms
thereof or otherwise realize upon the same, at its option, either
before or concurrently herewith or after a sale is made hereunder, and
may apply the proceeds upon the Indebtedness secured hereby without
affecting the status of or waiving any right to exhaust all or any
other security, including the security hereunder, and without waiving
any breach or default or any right or power whether exercised
hereunder, and without waiving any breach or default or any right or
power whether exercised hereunder or contained herein or in any such
other security.
37.20 Suits to Protect Property. Trustor covenants
and agrees to appear in and defend any action or proceeding purporting
to affect the security of the Deed of Trust, or of any additional or
other security for the Obligations, the interest of Beneficiary or the
rights, powers and duties of Trustee hereunder; and to pay all costs
and expenses, including, without limitation, costs of evidence of
title and reasonable attorneys' fees, in any action or proceeding in
which Beneficiary and/or Trustee may appear or be made a party,
including, without limitation, foreclosure or other proceedings
commenced by those claiming a right to any part of the Property in any
action to partition or condemn all or part of the Property, whether or
not pursued to final judgment, and in any exercise of the power of
sale contained herein, whether or not the sale is actually
consummated. Trustee agrees that in any such action or proceeding in
which Beneficiary is made a party, Beneficiary may at its option
defend such action, and all costs of such defense, including all court
costs and reasonable attorneys' fees, shall be borne and paid by
Trustor.
37.21 Junior Liens. Trustor represents and warrants
that as of the date hereof there are no encumbrances to secure debt
junior to this Deed of Trust and covenants that there are to be none
as of the date when this Deed of Trust becomes of record.
37.22 Charges for Statements. Trustor agrees to pay
Beneficiary's charge, up to the maximum amount permitted by law, for
any statement regarding the obligations secured by this Deed of Trust
requested by Trustor or on its behalf.
37.23 Usury. In the event that Beneficiary
determines that any charge, fee or interest paid or agreed to be paid
in connection with the Loan may, under the applicable usury laws,
cause the interest rate on the Loan to exceed the maximum permitted by
law, then such charges, fees or interest shall be reduced and any
amounts actually paid in excess of the maximum interest permitted by
such laws shall be applied by Beneficiary to reduce the outstanding
principal balance of the Loan. The parties intend that Trustor shall
not be required to pay, and Beneficiary shall not be entitled to
collect, interest in excess of the maximum legal rate permitted under
the applicable usury laws.
37.24 Publicity. Trustor hereby agrees that
Beneficiary, at its expense, may publicize the financing of the
Property. Beneficiary shall endeavor to notify Trustor of its intent
to publicize the financing; provided, however, that Beneficiary's
failure to so notify Trustor shall not constitute a breach by
Beneficiary under the Loan Documents.
37.25 Information Reporting Under IRC
Section 6045(e). Any information returns or certifications that must
be filed with the Internal Revenue Service and/or provided to other
parties, pursuant to Internal Revenue Code Section 6045(e) shall be
prepared, filed by and sent to the appropriate parties by Trustor. To
the extent permitted by law, Beneficiary shall have no responsibility
to perform such services; provided however, upon demand Trustor shall
reimburse Beneficiary for any costs incurred by Beneficiary in doing
so and shall also pay such fee as Beneficiary may reasonably and
lawfully request. Beneficiary shall, where requested by Trustor,
promptly supply Trustor with all information pertaining to Beneficiary
reasonably required by Trustor to prepare and file any such return or
certification. Trustor shall indemnify Beneficiary and defend,
protect and hold Beneficiary harmless from and against all loss, cost,
damage and expense (including, without limitation, attorneys' fees and
costs incurred in the investigation, defense and settlement of claims)
that Beneficiary may incur, directly or indirectly, as a result of or
in connection with the assertion against Beneficiary of any claim
relating to the failure of Trustor to comply with its obligations
under this Paragraph.
37.26 ERISA.
A. Trustor understands and acknowledges that on
the Closing Date, the source of funds from which Beneficiary extends
the Loan is its general account, which is subject to the claims of its
general creditors under state law. Beneficiary (i) represents and
warrants that either (a) it is not funding the Loan with Plan Assets
(as described below) or (b) if Beneficiary is funding the Loan with
Plan Assets, such funding satisfies the provisions of Prohibited
Transaction Class Exemption 95-60 and (ii) covenants that either
clause (a) or (b) immediately above will be true throughout the term
of the Loan.
B. Trustor represents and warrants to Beneficiary
that, as of the date of this Deed of Trust and throughout the term of
the Loan, (i) Trustor is not an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which is subject to Title I of ERISA, and (ii)
the assets of Trustor do not constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101 ("Plan
Assets").
C. Trustor represents and warrants to Beneficiary
that, as of the date of this Deed of Trust and throughout the term of
the Loan, (i) Trustor is not a "governmental plan" within the meaning
of Section 3(32) of ERISA, and (ii) transactions by or with Trustor
are not subject to state statutes regulating investments of and
fiduciary obligations with respect to governmental plans.
D. Trustor covenants and agrees to deliver to
Beneficiary such certifications or other evidence on the Closing Date
and from time to time throughout the term of the Loan, as requested by
Beneficiary in its sole discretion, that (i) Trustor is not an
"employee benefit plan" or a "governmental plan"; and (ii) Trustor is
not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more
of the following circumstances is true:
(1) Equity interests in Trustor are
publicly offered securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(2) Less than twenty-five percent (25%)
of all equity interests in Trustor are held by "benefit plan
investors" within the meaning of 29 C.F.R Section 2510.3-101(f)(2); or
(3) Trustor qualifies as an "operating
company" or a "real estate operating company" within the meaning of 29
C.F.R. Section 2510.3-101(c) or (e).
E. Any of the following shall constitute an Event
of Default entitling Beneficiary to exercise any and all remedies to
which it may be entitled under the Loan Documents: (i) the failure of
any representation or warranty made by Trustor under this Paragraph
9.26 to be true and correct in all material respects, (ii) the failure
of Trustor to comply in all material respects with the obligation to
provide Beneficiary with the written certifications and evidence
referred to above, or (iii) assuming compliance by Beneficiary with
the representations, warranties and covenants in Paragraph 9.26.Aabove,
the consummation by Trustor of a transaction which would cause
the Loan or any exercise of Beneficiary's rights under the Loan
Documents to constitute a non-exempt prohibited transaction under
ERISA or a material violation of a state statute regulating
governmental plans, subjecting Beneficiary to liability for violation
of ERISA or such state statute, provided, that Trustor shall have
thirty (30) days after its receipt of notice of default from
Beneficiary within which to commence the cure of such default and,
with respect to defaults under clause (i) immediately above, Trustor
shall have an additional ninety (90) days thereafter within which to
effect such cure provided it shall have commenced its efforts to cure
within such thirty (30) day period and shall thereafter diligently and
in good faith continuously prosecute such cure to completion. Failure
by Trustor to cure any such default within the applicable time period
set forth above shall constitute an Event of Default.
F. Trustor hereby indemnifies, defends and holds
Beneficiary harmless from and against all loss, cost, damage and
expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims and
losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required) that
Beneficiary may incur as a direct result of an Event of Default under
clause (E) above, assuming compliance by Beneficiary with the
representations, warranties and covenants set forth in Paragraph
9.26.A above. This indemnity shall survive any termination,
satisfaction or foreclosure of this Deed of Trust and shall not be
subject to the limitation on personal liability described in Paragraph
19 of the Note.
G. Anything in the Application, Paragraph 4.2 or
elsewhere in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no sale, assignment or transfer of any direct or
indirect interest in Trustor shall be permitted which would negate
Trustor's representations in this Paragraph 9.26 or cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of any provision of ERISA or of
any applicable state statute regulating a governmental plan, assuming
compliance by Beneficiary with the representations, warranties and
covenants set forth in Paragraph 9.26.A above.
H. Anything in the Application, Paragraph 4.2
elsewhere in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no direct or indirect transfer of the Property or any
interest therein including, without limitation, a junior lien or
leasehold interest, shall be permitted which would cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of ERISA or any applicable state
statute regulating a governmental plan, assuming compliance by
Beneficiary with the representations, warranties and covenants set
forth in Paragraph 9.26.A above.
I. Anything in the Application, this Deed of
Trust or the Loan Documents to the contrary notwithstanding, no less
than fifteen (15) before consummation of any permitted transfer of
title to the Property or of an interest in Trustor, or of any direct
or indirect right, title or interest in either of them, or of the
placing of any lien or encumbrance on the Property, Borrower shall
obtain from the proposed transferee or lienholder a representation to
Beneficiary in form and substance satisfactory to Beneficiary that the
provisions of Paragraph 9.26.D above will be true after the transfer,
or in the case of a lien or encumbrance, would remain true following
any foreclosure or conveyance in lieu thereof, and further provided
that any proposed lienholder agrees that any direct or indirect
transfer of its lien or any interest therein will be governed by this
section.
37.27 Defense and Indemnity Rights. Whenever, under
any Loan Document, Trustor is obligated to indemnify and/or defend
Beneficiary, or Trustor is obligated to defend or prosecute any action
or proceeding, then Beneficiary shall have the right of counsel of
Beneficiary's choice reasonably exercised, and all costs and expenses
incurred by Beneficiary in connection with such participation
(including, without limitation, reasonable attorneys' fees) shall be
reimbursed by Trustor to Beneficiary immediately upon demand. In
addition, Beneficiary shall have the right to approve any counsel
retained by Trustor in connection with the prosecution or defense of
any such action or proceeding by Trustor. Trustor shall give notice
to Beneficiary of the initiation of all proceedings prosecuted or
required to be defended by Trustor, or which are subject to Trustor's
indemnity obligations, under this Deed of Trust, promptly after the
receipt by Trustor of notice of the existence of any such proceeding,
but in no event later than five (5) days thereafter. All costs or
expenses required to be reimbursed by Trustor to Beneficiary hereunder
shall, if not paid when due as herein specified, bear interest at the
Secondary Interest Rate. As used herein, "proceeding" shall include
litigation (whether by way of complaint, answer, cross-complaint,
counter claim or third party claim), arbitration and administrative
hearings or proceedings.
37.28 Destruction of Note. Trustor shall, if the
Note is mutilated or destroyed by any cause whatsoever, or otherwise
lost or stolen and regardless of whether due to the act or neglect of
Beneficiary or Trustee, execute and deliver to Beneficiary in
substitution therefor a duplicate promissory note containing the same
terms and conditions as the Note, within ten (10) days after
Beneficiary notifies Trustor of any such mutilation, destruction, loss
or theft of the Note. Any new promissory note executed and delivered
hereunder shall be in full substitution for the Note, shall not
constitute any new or additional indebtedness of Trustor to
Beneficiary, shall constitute solely a substitute evidence of the
indebtedness evidenced by the original Note, and shall not affect in
any manner the priority of this Deed of Trust, or any other document
or instrument executed in connection with or evidencing or securing
the Indebtedness under the Note. Failure or delay by Beneficiary to
notify Trustor hereunder shall not affect in any manner Trustor's lia-
bility for the Indebtedness under the Note or Trustor's obligation to
execute a new promissory note hereunder; and Trustor's failure to
execute a new promissory note on Beneficiary's request hereunder shall
likewise not affect Trustor's liability for the indebtedness under the
Note.
37.29 Trustor, Beneficiary and Trustee Defined. As
used in this Deed of Trust, "Trustor" includes the original signators
of this Deed of Trust as Trustor, and its successors and assigns; the
term "Beneficiary" means the Beneficiary named herein or any future
owner or holder, including pledgee and participants, of any note,
notes or instrument secured hereby, or any participation therein; and
"Trustee" includes the original Trustee under this Deed of Trust and
its successors and assigns.
37.30 Rules of Construction. When the identity of
the parties or other circumstances make appropriate, the masculine
gender shall include the feminine and/or neuter, and the singular
number shall include the plural. Specific enumeration of rights,
powers and remedies of Trustee and Beneficiary and of acts which they
may do and of acts Trustor must do or not do shall not exclude or
limit the general. The headings of each Article and Paragraph are for
information and convenience and do not limit or construe the contents
of any provision hereof. The provisions of this Deed of Trust, all
other Loan Documents and the Remediation and Indemnification
Agreements shall be construed as a whole according to their common
meaning, not strictly for or against any party and consistent with the
provisions herein contained, in order to achieve the objectives and
purposes of such documents. Each party and its counsel has reviewed
and revised the Loan Documents and the Remediation and Indemnification
Agreements and agree that the normal rule of construction to the
effect that any ambiguities to be resolved against the drafting party
shall not be employed in the interpretation of such document. The use
in this Deed of Trust, all other Loan Documents and the Remediation
and Indemnification Agreements of the words "including," "such as," or
words of similar import, when following any general term, statement or
matter shall not be construed to limit such statement, term or matter
to the specific items or matters, whether or not language of non-
limitation such as "without limitation" or "but not limited to," or
words of similar import, are used with reference thereto, but rather
shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such statement,
term or matter.
37.31 Information to Third Persons. If, at any time,
Beneficiary desires to sell or transfer, or grant a participation
interest in, all or any portion of, or any interest in, the Note, this
Deed of Trust or any other Loan Document to any Person, Trustor and
each Loan Party shall furnish in a timely manner any and all financial
information concerning the Property and Leases, and concerning
Trustor's or such Loan Party's financial condition, requested by
Beneficiary or such person in connection with any such sale or
transfer.
37.32 Commingling of Funds. Any and all sums
collected or retained by Beneficiary hereunder (including insurance
and condemnation proceeds and any amounts paid by Trustor to
Beneficiary under Paragraph 3.4 hereof), shall not be deemed to be
held in trust, and Beneficiary may commingle any and all such funds or
proceeds with its general assets and shall not be liable for the
payment of any interest or other return thereon, except to the extent
expressly provided herein or otherwise required by law.
37.33 Standards of Discretion. Nothing contained in
this Deed of Trust, the Note, or any other Loan Documents, shall limit
the right of Beneficiary to exercise its good faith business judgment,
or act, in a subjective manner with respect to any matter as to which
it has specifically been granted such right or the right to act in its
sole discretion or sole judgment hereunder or thereunder, whether
"objectively" reasonable under the circumstances. Any such exercise
shall not be deemed inconsistent with any covenant of good faith and
fair dealing otherwise implied by law to be a part of this Deed of
Trust; and the parties intend by the foregoing to set forth and affirm
their entire understanding with respect to the terms, covenants and
conditions and standards pursuant to which their rights, duties and
obligations are to be judged, their performance measured, and the
parameters within which Beneficiary's discretion may be exercised
hereunder and under the other Loan Documents; provided, however, that
the foregoing shall not limit Beneficiary's obligation to act
reasonably under the circumstances where any provision of the Loan
Documents provides for the reasonable consent or approval of
Beneficiary.
37.34 Certain Standards on Efforts of Trustor.
Whenever in this Deed of Trust, or any other Loan Document, the phrase
"cause to be" is used in conjunction with any of Trustor's
Obligations, such phrase shall be deemed to include the use by Trustor
of best efforts and all due diligence to cause the applicable act,
event or circumstance to occur or be performed or taken, and such
efforts and due diligence shall encompass the initiation of litigation
or other proceedings in order to enforce or bring about the happening
of the applicable act or matter.
37.35 Certain Obligations Unsecured. Notwithstanding
anything to the contrary set forth herein or any of the Loan
Documents, this Deed of Trust shall not secure the following
obligations (the "Unsecured Obligations"): (i) any obligations
evidenced by or arising under the Remediation and Indemnification
Agreements, and (ii) any other obligations in this Deed of Trust or in
any of the other Loan Documents to the extent that such other
obligations relate specifically to the presence on the Property of
Hazardous Materials (as defined in the Remediation and Indemnification
Agreements) and are the same or have the same effect as any of the
obligations evidenced by or arising under the Remediation and
Indemnification Agreements. Any breach or default with respect to the
Unsecured Obligations shall constitute an Event of Default hereunder,
notwithstanding the fact that such Unsecured Obligations are not
secured by this Deed of Trust. Nothing in this section shall, in
itself, impair or limit Beneficiary's right to obtain a judgment in
accordance with applicable law after foreclosure for any deficiency in
recovery of all obligations that are secured by this Deed of Trust
following foreclosure.
37.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property from the lien of
this Deed of Trust upon the satisfaction of the following conditions
at the time of reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or the
giving on notice, or both, would constitute an Event
of Default shall have occurred either at the time of
Beneficiary's receipt of the Trustor's written request
for a reconveyance or as of the date of such
reconveyance;
(2) Not more than a total of three (3) of the
Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed hereby or
concurrently herewith (and in no event shall Trustor
be entitled to more than three (3) total releases of
any or all of the Combined Properties hereunder and/or
under the Combined Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior to
or concurrently with the reconveyance of this Deed of
Trust, the Allocable Loan Amount for the Property
along with the prepayment premium allocable to such
Allocable Loan Amount as determined pursuant to the
applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of this
Deed of Trust does not violate the provisions of any
declaration of covenants, conditions and restrictions,
reciprocal easement agreement, Lease or other
agreement affecting the Property or any portion
thereof;
(5) The Remaining Properties shall have: (i)
after the first reconveyance, both a Combined Debt
Service Coverage and a Future Combined Debt Service
Coverage of not less than 1.80 and a Combined Loan to
Value Ratio of not more than 65%, (ii) after the
second reconveyance, both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 1.90 and a Combined Loan to Value
Ratio of not more than 60%, and (iii) after the third
and final reconveyance both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 2.00 and a Combined Loan to Value
Ratio of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt Service
Coverage and a Future Individual Debt Service Coverage
of not less than 1.00 and an Individual Loan to Value
Ratio of not more than 75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the liens
of the Milpitas Deed of Trust, the Ontario Deed of
Trust, the Tustin Deed of Trust, the Woodlands Deed of
Trust, the Nevada Deed of Trust, the Arizona Deed of
Trust, and the South San Francisco Deed of Trust will
issue such title endorsements as Beneficiary deems
necessary or desirable for attachment to the
applicable title policies, including without
limitation, CLTA Endorsement Nos. 110.5, 111, and
111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums then
due and payable under the Loan Documents and a non-
refundable $25,000 processing fee, which fee shall be
paid at the time of notice of the requested
reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of the
requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event that the
Debt Service Coverage and the Loan to Value Ratio tests set forth in
Paragraphs 9.36(5) and 9.36(6), above, cannot be satisfied because of
the value of, or the net cash flow from, the applicable Combined
Properties, Trustor may, at its option, satisfy such tests by making a
principal prepayment (the "Excess Principal Payment") on the Loan in
an amount sufficient to satisfy such tests so long as Trustor also
pays to Beneficiary any prepayment premium relating to such principal
prepayment, as determined by the applicable Note. Upon receipt of the
Excess Principal Payment, Beneficiary shall apply such amount to
reduce the outstanding Loan and may apply such amount to any one or
more of the Multistate Note, the Nevada Note and/or the
Arizona/California Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall allocate the Excess
Principal Payment to the applicable Allocable Loan Amount in
proportion to each such Allocable Loan Amount's share of the
outstanding principal balance of the Note to which such amount is
applied, and, the monthly payments due under such applicable Note
shall be adjusted, as of the date of the release of this Deed of Trust
pursuant to this Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such adjustment to be based
on the applicable interest rate under such Note and an amortization
schedule equal to 300 months minus the number of months that have
elapsed since May 31, 1998.
37.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
<PAGE>
IN WITNESS WHEREOF, Trustor has caused this Deed of
Trust to be executed as of the day and year first above written.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
[11128.AGRE]H61141<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington , a notary
public, personally appeared
Scott R. Whitney
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
(seal)
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS
(South San Francisco)
THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS (this "Deed of
Trust") dated as of January 30, 1998 is made by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation, having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Trustor"), First
American Title Insurance Company, having offices at 1850 Mount Diablo
Boulevard, Suite 300, Walnut Creek, California 94596 ("Trustee"), and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation,
having offices at Four Embarcadero Center, Suite 2700, San Francisco,
California 94111 ("Beneficiary").
WITNESSETH:
Trustor HEREBY IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO
Trustee, IN TRUST, WITH POWER OF SALE, all of Trustor's right, title
and interest now owned or hereafter acquired in and to the following
property, together with the Personalty (as hereinafter defined), all
of which is hereinafter collectively defined as the "Property":
(i) those certain real properties (collectively, the "Land") located
in the County of San Mateo, State of California, and more particularly
described in Exhibit A-1 and Exhibit A-2 attached hereto and
incorporated herein by this reference; (ii) all Improvements (as
hereinafter defined) and all appurtenances, easements, rights and
privileges thereof, including all minerals, oil, gas and other
hydrocarbon substances thereon or therein, air rights, water rights
and development rights, and any land lying in the streets, roads or
avenues adjoining the Land or any part thereof; (iii) all Fixtures (as
hereinafter defined), whether now or hereafter installed, being hereby
declared to be for all purposes of this Deed of Trust a part of the
Land; and (iv) the rents, issues and profits of or from the Land,
Improvements and Fixtures.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary
may determine: (i) payment of the Indebtedness (as hereinafter
defined), and (ii) payment (with interest as provided) and performance
by Trustor of the Obligations (as hereinafter defined).
Notwithstanding the foregoing, or any other term contained herein or
in the Loan Documents, none of Trustor's obligations under or pursuant
to the Remediation and Indemnification Agreements (as hereinafter
defined) shall be secured by the lien of this Deed of Trust.
ARTICLE 38
Definitions
As used in this Deed of Trust the following terms shall have
the following meanings; other terms are defined where they appear in
this Deed of Trust:
Allocable Loan Amount: (i) For the property encumbered by the Ontario
Deed of Trust, $8,000,000 less the product of (x) all payments of
principal made under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined Deeds of Trust)
multiplied by (y) a fraction, the numerator of which is 8,000,000, and
the denominator of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000 less the product of
(x) all payments of principal made under the Multistate Note (other
than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is $7,000,000, and the denominator of which is 25,000,000;
(iii) for the property encumbered by the Woodlands Deed of Trust,
$5,200,000 less the product of (x) all payments of principal made
under the Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 5,200,000, and the
denominator of which is 25,000,000; (iv) for the property encumbered
by the Milpitas Deed of Trust, $4,800,000 less the product of (x) all
payments of principal made under the Multistate Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the numerator of which
is 4,800,000, and the denominator of which is 25,000,000; (v) for the
property encumbered by the Nevada Deed of Trust, $8,913,730.85 less
all payments of principal made under the Nevada Note; (vi) for the
property encumbered by the Arizona Deed of Trust, $7,200,000 less the
product of (x) all payments of principal made under the
Arizona/California Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 7,200,000, and the
denominator of which is 20,900,000; (vii) for the property encumbered
by the Fremont Deed of Trust, $7,200,000 less the product of (x) all
payments of principal made under the Arizona/California Note (other
than payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the numerator
of which is 7,200,000, and the denominator of which is 20,900,000; and
(viii) for the properties encumbered by this Deed of Trust, $6,500,000
less the product of (x) all payments of principal made under the
Arizona/California Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust) multiplied by
(y) a fraction, the numerator of which is 6,500,000, and the
denominator of which is 20,900,000.
Application: Collectively, the Application dated December 5, 1995,
executed by Trustor (referred to as "Borrower" therein), which
Application includes the exhibits attached thereto, the Application
dated January 5, 1996, executed by Trustor (referred to as "Borrower"
therein), which Application includes the exhibits attached thereto,
the Application executed by Trustor (referred to as "Borrower"
therein) on April 13, 1996, which Application includes the exhibits
attached thereto, and the Application executed by Trustor (referred to
as "Borrower" therein) on October 31, 1997, which Application includes
the exhibits attached thereto.
Arizona Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of even date herewith, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Maricopa County,
Arizona, as amended from time to time.
Closing Date: The date this Deed of Trust is recorded in the Official
Records of Alameda County, California.
Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the preceding twelve-
month period for the Remaining Properties, to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the preceding twelve-month period on the portion of the Loan
consisting of the aggregate of the Allocable Loan Amounts for the
Remaining Properties, and (ii) the annual debt service payments
(including principal and interest) on all other indebtedness secured
or which will be secured by a lien on all or part of the Remaining
Properties for the preceding twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory notes or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Combined Deeds of Trust: Collectively, this Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the Milpitas Deed of
Trust, the Woodlands Deed of Trust, the Nevada Deed of Trust, the
Arizona Deed of Trust, and the Fremont Deed of Trust.
Combined Loan to Value Ratio: The ratio, as determined by
Beneficiary, of (i) the aggregate principal balance, together with all
accrued but unpaid interest, of all encumbrances against the Remaining
Properties, to (ii) the fair market value of the Remaining Properties,
as determined by Beneficiary.
Combined Properties: Collectively, the Property, the property
encumbered by the Ontario Deed of Trust, the property encumbered by
the Tustin Deed of Trust, the property encumbered by the Milpitas Deed
of Trust, the property encumbered by the Woodlands Deed of Trust, the
property encumbered by the Nevada Deed of Trust, the property
encumbered by the Arizona Deed of Trust, and the property encumbered
by the Fremont Deed of Trust.
Event of Default: As defined in Paragraph 6.1 hereof.
Fixtures: All fixtures located upon or within the Improvements or now
or hereafter installed in, or used in connection with any of the
Improvements, including boilers, furnaces, pipes, plumbing, elevators,
cleaning and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, heating, ventilating, air conditioning and air
cooling equipment, whether or not permanently affixed to the Land or
the Improvements.
Fremont Deed of Trust: That certain Deed of Trust dated as of this
date herewith, executed by Trustor for the benefit of Beneficiary,
recorded in the Official Records of Alameda County, California as
amended from time to time.
Future Combined Debt Service Coverage: The ratio, as determined by
Beneficiary, of (a) Net Operating Income for the immediately upcoming
twelve-month period for the Remaining Properties (based on reasonable
assumptions determined by Beneficiary), to (b) the sum of (i) the
annual debt service payments (including principal and interest) for
the same twelve-month period on the portion of the Loan consisting of
the aggregate of the Allocable Loan Amounts for the Remaining
Properties, and (ii) the annual debt service payments (including
principal and interest) on all other indebtedness secured or which
will be secured by a lien on all or part of the Remaining Properties
for the same twelve-month period. For purposes of calculating annual
debt service, amortization of the aggregate principal indebtedness
over a thirty (30) year period (or such lesser period if the
applicable promissory notes or other loan documents in the case of
loans other than the Loan provide otherwise) is assumed to apply
during the entire term of the Loan.
Future Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the next upcoming
twelve-month period (based on reasonable assumptions determined by
Beneficiary), to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the same twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the same twelve-month period. For purposes of
calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Impositions: All real estate and personal property and other taxes
and assessments, water and sewer rates and charges levied or assessed
upon or with respect to the Property, and all other governmental
charges and any interest or costs or penalties with respect thereto,
ground rent and charges for any easement or agreement maintained for
the benefit of the Property, general and special, ordinary and
extraordinary, foreseen or unforeseen, of any kind and nature
whatsoever that at any time prior to or after the execution of the
Loan Documents may be assessed, levied, imposed, or become a lien upon
the Property or the rent or income received therefrom, or any use or
occupancy thereof; and any and all other charges, expenses, payments,
claims, mechanics' or material suppliers' liens or assessments of any
nature, if any, which are or may become a lien upon the Property or
the rent or income received therefrom.
Impound Account: The account that Trustor may be required to maintain
pursuant to Paragraph 3.4 hereof for the deposit of amounts required
to pay Impositions and insurance premiums.
Improvements: All buildings and other improvements and appurtenances
located on the Land, including surface improvements, such as parking
areas and landscaping structures and all improvements, additions and
replacements thereof, and other buildings and improvements, at any
time hereafter constructed or placed upon the Land.
Indebtedness: The principal of and all other amounts, payments and
premiums due under the Note (and each and every of them) and any
extensions or renewals thereof (including extensions or renewals at a
different rate of interest, whether or not evidenced by a new or
additional promissory note or notes), and all other indebtedness of
Trustor to Beneficiary and additional advances under, evidenced by
and/or secured by the Loan Documents, plus interest on all such
amounts.
Individual Debt Service Coverage: For each of the Combined
Properties, the ratio, as determined by Beneficiary, of (a) Net
Operating Income for such Combined Property for the preceding twelve-
month period, to (b) the sum of (i) the annual debt service payments
(including principal and interest) on the portion of the Loan
consisting of the Allocable Loan Amount for such Combined Property for
the preceding twelve-month period, and (ii) the annual debt service
payments (including principal and interest) on all other indebtedness
secured or which will be secured by a lien on all or part of such
Combined Property for the preceding twelve-month period. For purposes
of calculating annual debt service, amortization of the aggregate
principal indebtedness over a thirty (30) year period (or such lesser
period if the applicable promissory note or other loan documents in
the case of loans other than the Loan provide otherwise) is assumed to
apply during the entire term of the Loan.
Individual Loan to Value Ratio: For each individual Combined
Property, the ratio, as determined by Beneficiary, of (i) the
aggregate principal balance, together with all accrued but unpaid
interest, of the Allocable Loan Amount for such Combined Property and
all other encumbrances (other than the Loan) against such Combined
Property, to (ii) the fair market value of such Combined Property, as
determined by Beneficiary.
Inventory: The personal property Inventory attached hereto as
Exhibits C-1 and C-2.
Laws and Restrictions: All federal, state, regional, county, local
and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, Leases and other rental
agreements, relating to the development, occupancy, ownership,
management, use, and/or operation of the Property or otherwise
affecting all or any part of the Property or Trustor.
Leases: Any and all leasehold interests, including subleases and
tenancies following attornment, now or hereafter affecting or covering
any part of the Property.
Loan: The loans from Beneficiary to Trustor evidenced by the Note.
Loan Documents: The Note, the Application, the Owner's Affidavit,
this Deed of Trust, the Ontario Deed of Trust, the Tustin Deed of
Trust, the Milpitas Deed of Trust, the Woodlands Deed of Trust, that
certain Note Assignment and Assumption Agreement dated as of May 9,
1997 relating to the Nevada Note, the Nevada Deed of Trust, the
Arizona Deed of Trust, the Fremont Deed of Trust, each of the
Assignments of Agreements, each of the Assignments of Lessor's
Interest in Leases, the Post-Closing Agreement, and all other
documents, with the exception of the Remediation and Indemnification
Agreements, evidencing, securing or relating to the Loan, the payment
of the Indebtedness or the performance of the Obligations.
Loan Parties: Trustor.
Material Adverse Change: Any material and adverse change in (i) the
financial condition of any of the Loan Parties, or (ii) the condition
or operation of the Property.
Milpitas Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Santa
Clara County, California, as amended by that certain First
Modification of Deed of Trust and Other Loan Documents dated as of May
9, 1997, as further amended by that certain Second Modification of
Deed of Trust and Other Loan Documents dated as of even date herewith,
as further amended from time to time.
Net Operating Income: For any period, gross income from operations of
the Remaining Properties, for the purposes of determining Combined
Debt Service Coverage or Future Combined Debt Service Coverage, or
from operations of an individual Combined Property, for the purposes
of determining the Individual Debt Service Coverage or Future
Individual Debt Service Coverage for such Combined Property, in either
case, derived from arm's length, market rate rents from leases with
unaffiliated third parties in possession of the leased premises and
paying rent on a current basis, service fees or charges, and addi-
tional rent resulting from operating expense, common area maintenance,
utilities and tax escalation pass through provisions (excluding
capital gains income derived from the sale of assets and other items
of income which Beneficiary reasonably determines are unlikely to
occur in any subsequent period), less operating expenses (such as
cleaning, utilities, administrative, landscaping, security and common
area maintenance expenses, common area association fees, repairs and
maintenance and less fixed expenses (such as insurance, real estate
and other taxes), which expenses shall be related to the property
producing such gross income, shall be for services from arm's length
third party transactions or equivalent to the same, and shall exclude
all expenses for capital improvements and replacements, debt service
and depreciation or amortization of capital expenditures and other
similar noncash items. Operating expenses shall include not less than
4.0% of gross income for the property encumbered by the Woodlands Deed
of Trust and not less than 3.5% of gross income for each of the other
Combined Properties and shall include reserves for replacements of not
less than $31,000 for the Property encumbered by the Tustin Deed of
Trust and not less than $23,000 for each of the other Combined
Properties. Real estate taxes shall be calculated based upon the
greater of (i) the current tax bill plus the next subsequent year's
escalations as permitted under applicable law, or (ii) the estimated
market value of such Combined Properties (as determined by
Beneficiary) at the time of any reconveyance described in
Paragraph 9.36 of this Deed of Trust multiplied by the then current
tax rate. Gross income shall not be anticipated for any greater
period than that approved by generally accepted accounting principles,
nor shall operating expenses be prepaid.
Nevada Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of May 9, 1997, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Washoe County Nevada,
as amended by that certain First Modification of Deed of Trust and
Other Loan Documents dated as of even date herewith, as further
amended from time to time.
Note: Collectively (i) that certain Amended and Restated Promissory
Note dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Trustor in the original principal amount
of Twenty-Five Million and No/100 Dollars ($25,000,000.00), payable to
Beneficiary or its order, and all modifications, renewals or
extensions thereof (the "Multistate Note"), (ii) that certain Amended
and Restated Promissory Note dated as of May 9, 1997 executed by
Trustor in the original principal amount of Eight Million Nine Hundred
Thirteen Thousand Seven Hundred Thirty and 85/100 Dollars
($8,913,730.85), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Nevada Note"), and
(iii) that certain Promissory Note dated as of even date herewith
executed by Trustor in the original principal amount of Twenty Million
Nine Hundred Thousand Dollars ($20,900,000), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Arizona/California Note").
Obligations: Any and all of the covenants, promises and other
obligations (including, without limitation, the Indebtedness) made or
owing by Trustor to or due to Beneficiary under and/or as set forth in
the Loan Documents and all of the material covenants, promises and
other obligations made or owing by Trustor to each and every other
Person relating to the Property.
Ontario Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Bernardino
County, California, as amended by that certain First Modification of
Deed of Trust and Other Loan Documents dated as of May 24, 1996, as
further amended by that certain Second Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as further amended
by that certain Third Modification of Deed of Trust and Other Loan
Documents dated as of even date herewith, as further amended from time
to time.
Owner's Affidavit: That certain Owner's Affidavit dated as of even
date herewith, executed by Trustor in favor of Beneficiary.
Permitted Exceptions: All of those matters described on Exhibit B
attached hereto.
Person: Any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
Personalty: Trustor's right, title and interest in all personal
property (other than Fixtures) now or hereafter located in, upon or
about or collected or used in connection with the Property, together
with all present and future attachments, accessions, replacements,
substitutions and additions thereto or therefor, and the cash and
noncash proceeds thereof, including all property listed in the
Inventory, the Impound Account, all goods, documents, instruments and
chattel paper, all drawings, plans and specifications, all causes of
action and recoveries now or hereafter existing for any loss or
diminution in value of the Property, all licenses, governmental
authorizations or permits pertaining to the Property or the
development, ownership, management or operation thereof, all
trademarks, service marks, designs, logos, trade names, names or
similar identifications pertaining to the Property, and all accounts,
contract rights and general intangibles (including, without
limitation, any insurance proceeds and condemnation awards or
compensation) arising out of or incident to the ownership, development
or operation of the Property owned by or in which Trustor has an
interest including, without limitation, all personal property
described in the UCC-1 Financing Statement executed by Trustor of even
date herewith, which is incorporated herein by this reference, and all
furniture, furnishings, equipment, machinery, construction materials
and supplies, leasehold interests in personal property and the Leases.
Notwithstanding the foregoing, Personalty shall not include any
proprietary computer software developed by Trustor for the
interpretation, manipulation or presentation of the information
comprising the books and records of Trustor.
Post-Closing Agreement: That certain Post-Closing Actions Agreement
dated as of even date herewith, executed by Trustor in favor of
Beneficiary.
Property: As defined in the above granting paragraph of this Deed of
Trust.
Receiver: Any trustee, receiver, custodian, fiscal agent, liquidator
or similar officer.
Remaining Properties: Collectively, each of the Combined Properties
which remain encumbered by any of the Combined Deeds of Trust
following the requested reconveyance of this Deed of Trust pursuant to
Paragraph 9.36 of this Deed of Trust and following the prior or
concurrent reconveyance of any of the other Combined Deeds of Trust
pursuant to Paragraph 9.36 of any of the other Combined Deeds of
Trust.
Remediation and Indemnification Agreements: Collectively, (i) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of May 24, 1996 executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Milpitas Deed of Trust,
(ii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the Ontario
Deed of Trust, (iii) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary in connection with the property
encumbered by the Tustin Deed of Trust, (iv) the Hazardous Substances
Remediation and Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in connection with the
property encumbered by the Woodlands Deed of Trust, (v) the Hazardous
Substances Remediation and Indemnification Agreement dated as of May
9, 1997 executed by Trustor in favor of Beneficiary in connection with
the property encumbered by the Nevada Deed of Trust, (vi) the
Hazardous Substances Remediation and Indemnification Agreement dated
as of even date herewith executed by Trustor in favor of Beneficiary
in connection with the property encumbered by the Arizona Deed of
Trust, (vii) the Hazardous Substances Remediation and Indemnification
Agreement dated as of even date herewith executed by Trustor in favor
of Beneficiary in connection with the property encumbered by the
Fremont Deed of Trust, and (viii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of even date herewith executed
by Trustor in favor of Beneficiary in connection with the Property.
Rents: All rents, royalties, revenues, issues, profits, proceeds and
other income from the Property.
Secondary Interest Rate: As defined in the Note.
Tustin Deed of Trust: That certain Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
dated as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Orange County,
California, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
Woodlands Deed of Trust: That certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and
Agreements dated as of March 20, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official Records of Salt Lake
County, Utah, as amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24, 1996, as further by
that certain Second Modification of Deed of Trust and Other Loan
Documents dated as of May 9, 1997, as further amended by that certain
Third Modification of Deed of Trust and Other Loan Documents dated as
of even date herewith, as further amended from time to time.
ARTICLE 39
Representations and Warranties
Trustor hereby represents and warrants to Beneficiary and Trustee
that as of the date of this Deed of Trust and as of the date of any
subsequent disbursement pursuant to the Loan Documents:
39.1 Title, Authorization and Organization. Trustor (i) is the
lawful owner of the Property and holds good and marketable title to
the Property free and clear of all defects, liens, encumbrances, ease-
ments, exceptions and assessments, except the Permitted Exceptions;
(ii) has good, right and lawful authority to grant the Property as
provided in and by this Deed of Trust; (iii) has the requisite power
and authority to own, develop and operate the Property; (iv) is duly
organized, validly existing and in good standing under the laws of the
State of its organization and is duly qualified to do business in the
State in which the Land is located; and (v) is in compliance with all
Laws and Restrictions applicable to it.
39.2 Validity of Loan Documents. The execution, delivery and
performance by Trustor of the Loan Documents and the borrowings
evidenced by the Note are within the power of Trustor, have been
authorized by all requisite corporate or partnership authority and
will not violate any Laws and Restrictions or any agreement or other
instrument. Each of the Loan Documents when executed and delivered to
Beneficiary, will constitute a legal, valid and binding obligation of
Trustor enforceable in accordance with its terms.
39.3 Financial Statements. All financial statements and data that
have been given to Beneficiary with respect to the Property or any
Loan Party are true, accurate, complete and correct and except as
expressly noted to the contrary therein, have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby. There has been no
Material Adverse Change since the date of the most recent financial
statement given to Beneficiary.
39.4 Other Information. All reports, papers, data and information
given to Beneficiary with respect to Loan Parties and the Property are
accurate, correct and complete.
39.5 Litigation. There is not now pending against or affecting
any Loan Party or the Property, nor to the best of Trustor's knowledge
is there threatened any action, suit or proceeding at law or in equity
or by or before any administrative agency that, if adversely
determined, would materially impair or affect (i) the financial
condition or operations of such Loan Party, or (ii) the condition, use
or operation of the Property.
39.6 Additional Representations and Warranties. (i) The Property
is not used principally or primarily for agricultural or grazing
purposes; (ii) each Loan Party has filed all federal, state, county
and municipal income tax returns required to have been filed by it and
has paid all taxes that have become due pursuant to such returns or
pursuant to any assessments received by it (and no Loan Party knows of
any basis for any additional assessment against it in respect of such
taxes); (iii) all costs for labor and materials for the construction
of the Improvements have been paid in full other than ongoing work for
leasehold improvements under Leases approved in writing by
Beneficiary; (iv) Trustor is not aware of any assessment for public
improvements which is pending and which could become a lien upon the
Property; (v) no event has occurred which with the giving of notice or
the passage of time, or both, would constitute an Event of Default
under any of the Loan Documents; (vi) Trustor is not a party to any
agreement or instrument materially and adversely affecting its present
or proposed business conducted on the Property or the Property itself,
financial or otherwise; (vii) Trustor is not in default in the
performance, observance or fulfillment of any of the material
obligations, covenants or conditions set forth in any such agreement
or instrument to which it is a party to the extent that the same would
have a material and adverse effect on the Property or Trustor's
ability to timely perform its Obligations under the Loan Documents;
(viii) all Fixtures are permanently affixed to the Improvements and
Trustor has not executed any financing statement or security
agreements covering the Fixtures, or any of them, and the costs of all
Fixtures due as of the date hereof have been paid; (ix) neither the
Property, nor any part thereof, has sustained, incurred or suffered
any material damage or destruction; and (x) subject to the Permitted
Exceptions, the Personalty is owned by Trustor, free and clear of any
liens, encumbrances, mortgages, security interests, claims and rights
of others.
39.7 Compliance with Laws. The Property and the proposed and
actual use thereof comply with all Laws and Restrictions and the Laws
and Restrictions contain no unsatisfied conditions necessary for the
actual use of the Property as it is currently used. Trustor has
received no notices of violations of any Laws and Restrictions.
39.8 Bankruptcy. No petition in bankruptcy, petition or answer
seeking assignment for the benefit of creditors or appointment of a
Receiver with respect to Trustor has occurred or is contemplated, and
no reorganization, arrangement, liquidation or dissolution or similar
relief under the Federal Bankruptcy laws or any state laws have been
instituted by or against Trustor, and none is contemplated.
ARTICLE 40
Affirmative Covenants
Trustor hereby covenants and agrees as follows:
40.1 Obligations of Trustor. Trustor will (i) timely perform, or
cause to be timely performed, all the Obligations; (ii) maintain and
preserve the lien of this Deed of Trust; and (iii) forever warrant and
defend its grant made herein against any and all claims and demands
whatsoever.
40.2 Insurance.
A. Trustor, at its sole cost and expense, will keep and
maintain for the mutual benefit of Trustor and Beneficiary, the
following policies of insurance:
(1) Insurance against loss or damage to the Property by
fire and other risks covered by insurance commonly known as the broad
form of extended coverage, including losses sustained by reason of
riot and civil commotion, vandalism, malicious mischief, burglary,
theft and mysterious disappearance, flood (if the Property is located
in a HUD designated special flood hazard area) and against such other
risks or hazards as Beneficiary from time to time reasonably may
designate, in an amount equal to one hundred percent (100%) of the
then "full replacement cost" of the Improvements, the Fixtures and the
Personalty, without deduction for physical depreciation.
(2) Rental income insurance against loss of income in an
amount not less than twelve (12) months rental and taxes and other
operating expense reimbursements or payments at then-current income
levels.
(3) Commercial General Liability insurance including
broad form property damage, contractual liability and personal injury
or death coverage, with a combined single limit of at least
$5,000,000.
(4) "Builders Risk" insurance, during any material
construction, repair, replacement, renovation or alteration of the
Improvements, in such amounts as are reasonably approved by
Beneficiary.
(5) If applicable, boiler and machinery insurance
covering boilers and other pressure vessels, the air conditioning
system, high pressure piping and other machinery and equipment
required for the operation of the Property.
(6) Such other insurance, and in such amounts, as may
from time to time be reasonably required by Beneficiary (but excluding
earthquake insurance, unless earthquake insurance is required pursuant
to the terms of any of the Leases).
B. Trustor shall provide Beneficiary with satisfactory
evidence of compliance with applicable requirements for Worker's
Compensation insurance and of employee automobile coverage.
C. All policies of insurance required by this Deed of Trust
(i) shall be satisfactory in form and substance to Beneficiary and
written with companies satisfactory to Beneficiary, (ii) shall name
Beneficiary as an additional insured as its interests may appear,
(iii) shall contain a Standard Lender's Loss Payable endorsement and
other non-contributory standard mortgagee protection clauses
acceptable to Beneficiary, and at Beneficiary's option, a waiver of
subrogation rights by the insurer, (iv) shall contain an agreement by
the insurer that such policy shall not be amended or canceled without
at least thirty (30) days' prior written notice to Beneficiary,
(v) shall be in the full replacement cost of the Improvements, without
deduction for physical depreciation and (vi) shall contain such other
provisions as Beneficiary deems reasonably necessary or desirable to
protect its interests. Any policies containing a coinsurance clause
shall include a replacement cost endorsement adequate to ensure that
the coinsurance clause is rendered inoperative.
D. In the event a blanket policy is submitted to satisfy
Trustor's responsibilities under this Paragraph 3.2, in addition to
such other requirements set forth herein, Trustor shall deliver to
Beneficiary a certificate from such insurer indicating that
Beneficiary is an insured under such policy and designating the amount
of such insurance applicable to the Property.
E. Trustor shall furnish evidence, satisfactory to
Beneficiary, that (i) all insurance requirements (including, without
limitation, provisions for waivers of subrogation) set forth in the
Leases or any other agreements affecting the Property shall have been
satisfied by each party thereto, and (ii) Trustor's insurance coverage
is sufficient (assuming the total destruction of the Property) to
permit Trustor to rebuild the Improvements (including basic tenant
improvements) and to replace the Fixtures and Personalty in such
manner as to enable the Property to be operable and rentable as it is
currently rented and operated, and no tenant shall have the right to
terminate its lease of any portion of the Property as a result of the
failure of Trustor to rebuild above-standard tenant improvements.
F. Self-insurance (other than the applicable deductibles
approved by Beneficiary) shall not be employed to satisfy the
requirements of this Paragraph 3.2.
G. All of Trustor's right, title and interest in and to all
policies of property insurance and any unearned premiums paid thereon
are hereby assigned (to the fullest extent assignable) to Beneficiary
who shall have the right, but not the obligation, to assign the same
to any purchaser of the Property at any foreclosure sale.
H. Not less than thirty (30) days prior to the expiration
dates of any policy previously furnished pursuant to this
Paragraph 3.2, Trustor shall provide Beneficiary with duplicate
originals or certified copies of the renewal policies together with
evidence satisfactory to Beneficiary of Trustor's payment of the
applicable premiums.
40.3 Maintenance, Waste and Repair. Trustor will (i) maintain the
Property in good order and condition, (ii) promptly make all necessary
structural and non-structural repairs to the Property, (iii) not
diminish or materially alter the Improvements, nor erect any new
buildings, structures or building additions on the Property, without
the prior written consent of Beneficiary, and (iv) not permit any
waste of the Property or make any change in the use thereof, nor do or
permit to be done thereon anything, that may in any way impair the
security of this Deed of Trust.
40.4 Impositions; Impounds. Trustor will pay when due all
Impositions. Upon an Event of Default, Trustor will pay monthly to
Beneficiary an amount equal to one-twelfth (1/12th) of the annual cost
of Impositions together with an amount equal to the estimated next
hazard and other required insurance premiums. These funds will be
held by Beneficiary (and may be commingled with other funds of
Beneficiary) without interest and will be released to Trustor for
payment of Impositions and insurance premiums, or directly applied to
such costs by Beneficiary, as Beneficiary may elect.
40.5 Compliance with Law. Trustor will promptly and faithfully
comply with all present and future Laws and Restrictions.
40.6 Books and Records. Trustor, without expense to Beneficiary,
will maintain full and complete books of account and other records
reflecting the results of the operations of the Property in accordance
with generally accepted accounting principles consistently applied,
and will furnish or cause to be furnished to Beneficiary such
financial information concerning the condition of the Loan Parties and
the Property as Beneficiary shall reasonably request. The following
information will be furnished without request:
A. As soon as available, and in any event within thirty
(30) days after the close of each fiscal quarter of each fiscal year
of Trustor, a statement of revenues and expenses relating to the
rentals and operations of the Property for the applicable fiscal
quarter just ended, certified by Trustor;
B. As soon as available, and in any event within ninety
(90) days after the end of each fiscal year of Trustor, an annual
operating statement for the Property certified by an independent
certified public accountant acceptable to Beneficiary and a rent roll
in the form delivered to Beneficiary in connection with the closing of
the Loan certified by Trustor reflecting all the existing Leases; and
C. As soon as available, and in any event within ninety
(90) days after the end of Trustor's fiscal year, a balance sheet of
Trustor, certified in a manner acceptable to Beneficiary.
After the occurrence of an Event of Default, or in the event
Trustor fails to deliver an annual operating statement for the
Property certified by an independent certified public accountant
acceptable to Beneficiary within the time frame set forth in
Paragraph 3.6.B, above, Beneficiary shall have the right, at all
reasonable times and upon reasonable notice, to audit the books of
account and records of any Loan Party, all of which shall be made
available at Trustor's office during reasonable business hours to
Beneficiary and Beneficiary's representatives for such purpose, from
time to time. If such audit discloses a variance of three per-
cent (3%) or more in income or expenses, the cost of such audit shall
be paid by Trustor.
40.7 Further Assurances. Trustor, at any time upon the reasonable
request of Beneficiary, will at Trustor's expense execute, acknowledge
and deliver all such additional papers and instruments (including,
without limitation, a declaration of no setoff) and all such further
acts and things as may be reasonably necessary to carry out the
purposes of the Loan Documents and to subject to the liens thereof any
property intended by the terms thereof to be covered thereby and any
renewals, additions, substitutions or replacements thereto.
40.8 Indemnity and Attorneys' Fees. Trustor will indemnify,
defend, protect and hold Beneficiary harmless from any and all
liability, loss, claims, damage, cost or expense (including, without
limitation, reasonable attorneys' fees) that Beneficiary may or might
incur hereunder, or in connection with the making or administering of
the Loan, the enforcement of any of Beneficiary's rights or remedies
hereunder or under the other Loan Documents, any action taken by
Beneficiary hereunder or thereunder, whether or not suit is filed, or
by reason or in defense of any and all claims and demands whatsoever
that may be asserted against Beneficiary arising out of the Property,
or any part thereof or interest therein, or as to which it becomes
necessary to defend or uphold the lien of this Deed of Trust or other
Loan Documents. Should Beneficiary incur any such liability, loss,
claim, damage, cost or expense, the amount thereof with interest
thereon at the Secondary Interest Rate shall be payable by Trustor
immediately without demand, shall be secured by this Deed of Trust,
and shall be part of the Indebtedness.
40.9 Litigation. Trustor will promptly give notice in writing to
Beneficiary of any litigation which may reasonably be expected to
result in a Material Adverse Change.
40.10 Inspection of Property. Trustor hereby grants to
Beneficiary, its agents, employees, consultants and contractors, the
right to enter upon the Property for the purpose of making any and all
inspections, reports, tests (including, without limitation, soils
borings, ground water testing, wells and/or soils analysis), inquiries
and reviews as Beneficiary (in its sole and absolute discretion) may
deem necessary to assess the then current condition of the Property;
provided, however, that Beneficiary shall not conduct any such tests
(including, without limitation, soil borings, ground water testing,
wells and/or soils analysis) (i) unless Beneficiary becomes aware of,
or reasonably suspects, an environmental event on or near the Property
which could have a material adverse effect on any portion of the
Property and Trustor refuses or fails to conduct such tests in a
manner reasonably requested by Beneficiary, or (ii) until after the
occurrence of an Event of Default under any of the Loan documents or
the Remediation and Indemnification Agreements. Beneficiary shall
provide Trustor with one (1) business day's notice of such entry;
provided, however, that, subject to the preceding sentence, Trustor's
consent shall not be required for such entry or for the performance of
such tests. All costs, fees and expenses (including those of Benefi-
ciary's legal counsel and consultants) incurred by Beneficiary with
respect to such inspections, reports, tests, inquiries and reviews
shall be paid by Trustor to Beneficiary upon demand, shall accrue
interest at the Secondary Interest Rate until paid, and shall be
secured by this Deed of Trust. Beneficiary shall make reasonable
efforts in the exercise of its entry, inspection, and other rights
under this Paragraph to avoid interference with the business
operations of any tenant or licensee occupying space at the Property
pursuant to Leases permitted by the Loan Documents, and, so long as no
Event of Default has occurred, shall cooperate with Trustor in setting
the time for such entry, inspections and tests.
40.11 Contest. Notwithstanding the provisions of Paragraphs 3.4
and 3.5 hereof, Trustor may, at its expense, contest the validity or
application of any Impositions or Laws and Restrictions by appropriate
legal proceedings promptly initiated and conducted in good faith and
with due diligence, provided that (i) Beneficiary is reasonably
satisfied that neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, or lost as a
result of such contest, and (ii) Trustor shall have posted a bond or
furnished such other security as may be reasonably required from time
to time by Beneficiary.
40.12 Tax Receipts. Trustor will deliver to Beneficiary, within
seven (7) days after the demand made therefor, bills showing the
payment to the extent then due of all taxes, assessments (including,
without limitation, those payable in periodic installments), and any
Imposition that may have become a lien upon the Property or any part
thereof.
40.13 Additional Information. Trustor will furnish to
Beneficiary, within seven (7) days after written request therefor, any
and all information that Beneficiary may reasonably request concerning
the Property or the performance by Trustor of the Obligations.
40.14 Prepayment. Trustor may prepay the Loan only on the terms
and conditions set forth in the Note and Trustor shall pay Beneficiary
prepayment charges in respect of any prepayment, whether voluntary or
involuntary, as required by and on the terms and conditions set forth
in the Note.
40.15 FIRPTA Affidavit. In the event of any transfer by Trustor
of its rights hereunder or of any interest in the Property otherwise
permitted under this Deed of Trust, such transferee shall, as an addi-
tional condition to such transfer, under penalty of perjury, execute
and deliver to Beneficiary an affidavit concerning the non-foreign
status of such transferee substantially in the form required to be
delivered by Trustor in connection with the funding of the Loan.
Nothing in this Paragraph 3.15 shall be deemed a modification or
waiver of any other provision of any of the Loan Documents limiting,
prohibiting or otherwise relating to any transfer of any interest in
the Property or Trustor.
40.16 Tax Service Contract. Throughout the term of the Loan, at
Trustor's sole expense, Beneficiary shall be furnished tax service
contracts issued by a tax reporting agency satisfactory to
Beneficiary.
40.17 Reimbursement. Any amount paid by Beneficiary for any tax,
stamp tax, assessment, water rate, sewer rate, insurance premium,
repair, rent charge, debt, claim, inspection or lien having priority
over this Deed of Trust or to in any way protect the security for the
Loan, shall (i) bear interest at the Secondary Interest Rate from the
date of payment by Beneficiary, (ii) constitute additional
indebtedness secured by this Deed of Trust, prior to any right, title
or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, (iii) be secured by this
Deed of Trust, and (iv) be payable by Trustor to Beneficiary upon
demand.
40.18 Plans and Specifications. Trustor agrees to keep at its
offices at the Property, and to make available to Beneficiary during
normal business hours, "As-Built Plans and Specifications", or, if
unavailable, the final set of plans and specifications from which the
Improvements were constructed ("As-Builts"), certified by a licensed
architect or licensed contractor as true, correct and complete
As-Builts for the Improvements.
ARTICLE 41
Negative Covenants
Trustor hereby covenants and agrees as follows:
41.1 Restrictive Uses. Trustor will not initiate, join in, or
consent to any change in the current use of the Property or in any
zoning ordinance, private restrictive covenant, assessment proceedings
or other public or private restrictions limiting or restricting the
uses that may be made of the Property or any part thereof without the
prior written consent of Beneficiary.
41.2 Due on Sale or Encumbrance.
A. Except as expressly otherwise provided in this
Paragraph 4.2, in the event that Trustor, without the prior written
consent of Beneficiary (which consent may be withheld for any reason
or for no reason or given upon such terms and conditions as Bene-
ficiary deems necessary or appropriate, all within Beneficiary's
absolute discretion), shall sell, convey, assign, transfer, alienate
or otherwise dispose of or be divested of its title to, or, shall
mortgage, convey security title to, or otherwise encumber or cause to
be encumbered, the Property or any part thereof or any interest
therein in any manner or way, whether voluntary or involuntary, or in
the event of (a) any merger, consolidation or dissolution involving,
or the sale or transfer of all or substantially all of the assets of,
Trustor or any general partner of Trustor, (b) the transfer (at one
time or over any period of time) of ten percent (10%) or more of the
voting stock of (i) a corporate Trustor or (ii) any corporate general
partner of Trustor, (c) the transfer of any general partnership
interest in Trustor or in any partnership which is a direct or
indirect general partner of Trustor, or (d) the conversion of any such
general partnership interest to a limited partnership interest, then
the entire balance of the Indebtedness, plus the Prepayment Premium
(as defined in the Note), shall become immediately due and payable at
the option of Beneficiary. Trustor hereby covenants not to
participate in, cause or permit any of the foregoing actions or events
described in this Paragraph 4.2 without Beneficiary's prior written
consent. Consent to one such transfer by Beneficiary shall not be
deemed a waiver of the right to require such consent to further or
future transfers. Any such transferee shall, as a condition of the
effectiveness of any consent or waiver by Beneficiary hereunder, as a
covenant of Trustor and such transferee, and in form and substance
required by Beneficiary, assume all obligations under the Loan
Documents and the assumption shall not, however, release Trustor, or
any maker or guarantor of the Note, from any liability thereunder.
This provision shall not apply to transfers of title or interest under
any will or testament or applicable law of descent.
B. Notwithstanding the foregoing, the provisions of this
Paragraph 4.2 shall not apply to (i) the sale of stock on any
recognized public stock exchange in the ordinary course of business,
(ii) any merger or consolidation of Trustor where the surviving
company has a Debt Ratio (as defined below) which does not exceed the
Debt Ratio of Trustor as of the Closing Date, as shown by evidence
reasonably satisfactory to Beneficiary, and (iii) a public tender
offer by a Person unaffiliated with Trustor to purchase the stock of
Trustor. Notwithstanding anything to the contrary contained herein,
unless a change in the ownership of Trustor is the result of one or
more of the acts described in the immediately preceding sentence (in
which case the prior consent of Beneficiary is not required),
Beneficiary's prior written consent shall be required in the event of
a change in the ownership of Trustor (in a single transaction or
cumulative transactions) such that in excess of 50% of Trustor's stock
is owned or controlled by a sole shareholder or an affiliated group of
shareholders ("Sale"). Notwithstanding the foregoing, a Sale shall
specifically exclude: (a) the conversion ("Conversion") to common
stock shares of some or all of the Series A convertible preferred
stock of Trustor outstanding as of the Closing Date (the "Preferred
Stock"), (b) any initial sale ("Initial Sale") of any of the Preferred
Stock to a Person unaffiliated with Trustor which occurs either prior
to and/or subsequent to any Conversion, and (c) any sale of any of the
Preferred Stock subsequent to an Initial Sale of such Preferred Stock
to a Person unaffiliated with Trustor which previously acquired some
or all of the Preferred Stock in an Initial Sale. As used herein,
"Debt Ratio" means the ratio of all indebtedness of Trustor and its
subsidiaries to the sum of all assets of Trustor and it subsidiaries,
before depreciation and less the sum of any intangible assets.
41.3 Replacement of Fixtures and Personalty. Trustor will not
permit any of the Fixtures or Personalty to be removed at any time
from the Property without the prior written consent of Beneficiary
unless actually replaced by articles of equal suitability and value
owned by Trustor free and clear of any lien or security interest.
41.4 No Cooperative or Condominium. Trustor shall not operate the
Property or permit the Property to be operated, as a cooperative or
condominium building or buildings in which the tenants or occupants
participate in the ownership, control, or management of the Property
or any part thereof, as tenant stockholders or otherwise.
41.5 Partnership Agreement. Trustor, if a partnership, will not
terminate, alter, modify or amend or permit the termination,
alteration, modification or amendment of its Partnership Agreement
without Beneficiary's prior written consent.
ARTICLE 42
Casualties and Condemnation
42.1 Insurance and Condemnation Proceeds.
A. Trustor will notify Beneficiary in writing promptly
after loss or damage caused by fire or other casualty to all or any
part of the Property resulting in damage in excess of $25,000 per
occurrence, and prior to the making of any repairs thereto. Trustor
will furnish to Beneficiary within sixty (60) days after such loss or
damage (a) preliminary plans and specifications for the repair and
reconstruction of the Property (the "Preliminary Plans and Specifi-
cations"); and (b) evidence satisfactory to Beneficiary (i) of the
cost of repair or reconstruction in accordance with the Preliminary
Plans and Specifications, (ii) that sufficient funds are available
and/or committed for the benefit of Beneficiary, including insurance
proceeds, funds provided by the Trustor, payment and performance bond,
or otherwise, to complete such repair or reconstruction, and
(iii) that such repair or reconstruction may be completed in
accordance with all applicable Laws and Restrictions within the time
frame described in Paragraph 5.1.C.(v) hereof and that all necessary
permits and approvals have been or will be obtained. Trustor hereby
unconditionally and irrevocably waives all rights of a property owner
under applicable law providing for the allocation of condemnation
proceeds between a property owner and a lien holder.
B. In the event of any insured loss in excess of Two
Hundred Fifty Thousand Dollars ($250,000) or in the event an Event of
Default, or an event which with the giving of notice or the passing of
time or both constitutes an Event of Default, shall have occurred and
be continuing, all insurance proceeds on account of any damage to the
Property shall be payable to, and deposited with, Beneficiary.
Beneficiary, at its sole option, may (i) apply such insurance proceeds
in payment of the Indebtedness or in satisfaction of any other
Obligation in such order as Beneficiary may determine, (ii) use such
insurance proceeds to repair or reconstruct the Improvements,
(iii) release such insurance proceeds to Trustor for repair or
reconstruction of the Improvements in accordance with the procedures
described in Paragraph 5.1.E hereof, or (iv) divide such proceeds in
any manner among any such application, use or release. No such
application, use or release shall, however, extend or postpone the due
date of any installments under the Note or change the amount of such
installments or cure or waive any Event of Default or notice of Event
of Default under the Loan Documents or invalidate any act done
pursuant to such notice.
C. Notwithstanding the provisions of Paragraph 5.1.B
hereof, if all or any part of the Property is damaged or destroyed or
less than all of the Property is taken by any public or quasi-public
authority through condemnation, eminent domain, deed in lieu thereof,
or otherwise, Beneficiary shall make the net amount of all insurance
proceeds and condemnation awards received by Beneficiary after
deduction of Beneficiary's reasonable costs and expenses, if any, in
collection of the same and costs associated with Beneficiary's review
of the Preliminary Plans and Specifications and other costs associated
with disbursement of such proceeds (the "Net Proceeds") available for
the repair and reconstruction of the Property (or so much thereof as
was not condemned) pursuant to the procedures described in
Paragraph 5.1.E hereof, provided that (i) no Event of Default or event
which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default, shall have occurred and shall be
continuing, (ii) Trustor has complied with the provisions of Para-
graph 5.1.A hereof and Beneficiary has approved the Preliminary Plans
and Specifications, (iii) Trustor shall proceed with the
reconstruction of the Property as nearly as possible to the condition
it was in immediately prior to the occurrence of such casualty or
taking (the "Occurrence") and in accordance with the Plans and
Specifications as promptly as is practicable after the Occurrence, but
in no event later than four (4) months after the Occurrence,
(iv) Beneficiary shall be satisfied that such reconstruction can be
completed no later than twelve (12) months after the Occurrence and at
least twelve (12) months before the maturity of the Loan,
(v) Beneficiary shall be satisfied that the reconstruction can be
completed at a cost which does not exceed the Net Proceeds, or, in the
event the cost of such restoration exceeds the Net Proceeds, Trustor
shall have satisfied the requirements set forth in Para-
graph 5.1.F(i) hereof or Paragraph 5.1.F(ii) hereof, (vi) Beneficiary
shall be satisfied that Trustor (whether with rental loss insurance
proceeds or otherwise) will continue to be able to timely pay all
payments as they become due on the Indebtedness during such period of
repair and reconstruction, (vii) Trustor shall cause such
reconstruction to be completed with due diligence as promptly as
possible after commencement, but in no event later than twelve
(12) months after the Occurrence and at least twelve (12) months
before the maturity of the Loan, (viii) Beneficiary determines that
repair or reconstruction is economically feasible and that the
Property can physically and legally be restored to at least its value
as of the Closing Date, (ix) Trustor shall have entered into a guaran-
teed maximum price general construction contract acceptable in all
respects to Beneficiary for completion of the repair or
reconstruction, which contract must include provision for a retainage
of not less than ten percent (10%) until full completion of the repair
or reconstruction, and (x) the insurer does not deny liability to any
named insured.
D. Beneficiary shall be entitled to settle and adjust all
insurance claims, and Beneficiary may deduct and retain from the
proceeds of any insurance the amount of all expenses incurred by
Beneficiary in connection with any settlement or adjustment.
Notwithstanding the foregoing, so long as no Event of Default or event
which, with the giving of notice or the passage of time or both, would
constitute an Event of Default shall have occurred and be continuing,
Trustor may settle directly with the insurer any insurance claims
involving an amount less than Two Hundred Fifty Thousand Dollars
($250,000) so long as (i) Trustor applies all insurance proceeds to
reconstruction of the Property, (ii) Trustor promptly and diligently
pursues the repairs to completion, and (iii) Trustor follows the
provisions of Paragraph 5.1.A hereof.
E. The Net Proceeds and any additional funds deposited by
Trustor with Beneficiary shall constitute additional security for the
Loan. Trustor shall execute, deliver, file and/or record, at its own
expense, such documents and instruments as Beneficiary deems necessary
or advisable to grant to Beneficiary a perfected, first priority
security interest in the Net Proceeds and such additional funds.
Provided that Trustor is otherwise entitled to receive the Net
Proceeds pursuant to the terms and provisions of this Deed of Trust,
Beneficiary or, at Beneficiary's option, a disbursing agent (the
"Disbursing Agent") selected by Beneficiary (whose fees and expenses
shall be paid by Trustor), shall pay the Net Proceeds to Trustor from
time to time during the course of the restoration, subject to the
following terms and conditions:
(1) The work shall be administered and overseen by an
architect or engineer approved by Beneficiary (the "Architect").
Complete copies of the plans and specifications for the work (the
"Plans and Specifications"), approved by all governmental authorities
whose approval is required, and bearing the signed approval thereof by
the Architect and accompanied by the Architect's signed estimate,
bearing the Architect's seal, of the entire cost of completing the
work, shall be delivered to Beneficiary;
(2) Each request for payment shall be made upon seven
(7) day's prior written notice to Beneficiary or the Disbursing Agent
and shall be accompanied by a certificate to be made by the Architect
stating that (i) all of the work completed has been done in compliance
with the Plans and Specifications, as approved by Beneficiary,
(ii) the sum requested is justly required to reimburse Trustor for
payments by Trustor to, or is justly due to, the contractor,
subcontractors, materialmen, laborers, engineers, architects or other
persons rendering services and materials for the work (giving a brief
description of such services and materials) and, when added to all
sums previously paid out by Beneficiary or the Disbursing Agent, does
not exceed the value of the work done to the date of such certificate,
and (iii) the amount of such proceeds remaining with Beneficiary are
sufficient on completion of the work to pay for the same in full
(giving in such reasonable detail as Beneficiary may require an
estimate of the cost of such completion);
(3) Each request shall be accompanied by waivers of lien
satisfactory to Beneficiary and the Disbursing Agent covering that
part of the work for which payment or reimbursement is being requested
and, if required by Beneficiary or the Disbursing Agent, by a search
prepared by a title company satisfactory to Beneficiary or the
Disbursing Agent, that there has not been filed with respect to the
Property any mechanics', materialmen's or other liens;
(4) The request for any payment after the work has been
completed shall be accompanied by a copy of any certificate or
certificates required by any Laws and Restrictions for legal occupancy
of the Improvements;
(5) Trustor shall deliver to Beneficiary or the
Disbursing Agent certified or photostatic copies of all permits and
approvals required by any Laws and Restrictions in connection with the
commencement and conduct of the work; and
(6) Trustor shall deliver to Beneficiary or the
Disbursing Agent a surety bond for and/or guaranty of the payment for
and completion of the work, which bond or guaranty shall be in form
and substance satisfactory to Beneficiary and in an amount no less
than the Architect's estimate of the entire cost of completing the
work.
F. Notwithstanding anything to the contrary contained
herein or in any of the insurance policies, all proceeds paid to
Trustor under such policies shall immediately be delivered to
Beneficiary. If the Net Proceeds exceed the costs of completion of
the restoration of the Property, such excess proceeds shall belong and
be retained by and/or paid over to Beneficiary to be applied against
the Indebtedness. If at any time the Net Proceeds shall not, in
Beneficiary's opinion, be sufficient to pay in full the balance of the
costs which will be incurred in connection with the repair and
reconstruction of the Property and all payments as they come due on
the Indebtedness and all other obligations which are or may be secured
by a lien on the Property during the reconstruction period, Trustor
shall, prior to receiving any further disbursement, either
(i) complete, using its own funds and not borrowed funds, such portion
of the reconstruction as shall be sufficient to render the Net
Proceeds sufficient to complete the reconstruction, or (ii) deposit
the deficiency with Beneficiary before any further disbursement of the
Net Proceeds shall be made, which deficiency deposit shall be held by
Beneficiary in an interest bearing special account and shall be
disbursed on the same conditions applicable to the Net Proceeds.
Beneficiary shall remit to Trustor the balance, if any, of any such
deficiency deposit remaining after completion of the reconstruction.
42.2 Additional Provisions Relating to Condemnation. Trustor,
immediately upon obtaining knowledge of the commencement of any
proceedings for the condemnation of the entire Property or any
material part thereof, will notify Trustee and the Beneficiary of the
pendency of such proceedings. Trustee and Beneficiary may participate
in any such proceedings and Trustor from time to time will deliver to
Beneficiary all instruments requested by Beneficiary to permit such
participation. In the event of such condemnation proceedings, the
award or compensation payable is hereby assigned to and shall be paid
to Beneficiary. Beneficiary shall be under no obligation to question
the amount of any such award or compensation and may accept the same
in the amount in which the same shall be paid. In any such
condemnation proceedings Beneficiary may be represented by counsel
selected by Beneficiary, the cost of such counsel to be borne by
Trustor. The proceeds of any award or compensation so received shall,
subject to Paragraph 5.1.C hereof as it relates to condemnation, and
at the option of Beneficiary, either be applied to the prepayment of
the Indebtedness or be paid over to the Trustor for restoration of the
Improvements in accordance with the provisions of Paragraph 5.1.E
hereof. Trustor hereby unconditionally and irrevocably waives all
rights of a property owner under Section 1265.225(a) of the California
Code of Civil Procedure or any successor statute.
ARTICLE 43
Events of Default and Remedies of Beneficiary
43.1 Events of Default.
A. If one or more of the following events shall have
occurred and be continuing:
(1) Trustor shall fail to pay when due any part of the
Indebtedness;
(2) Trustor shall fail to timely observe, perform or
discharge any Obligation contained in any of the Loan Documents, any
agreement relating to the Property or any other loan documents with
respect to the Property on its part to be performed or observed, other
than as described in Paragraphs 6.1.A(1), (3), (4), (5), (6), (7) and
(8), and any such failure shall remain unremedied for thirty (30) days
or such lesser period as may be otherwise specified in the applicable
Loan Document (the "Grace Period") after notice to Trustor of the
occurrence of such failure; provided, however, that the Grace Period
may be extended to ninety (90) days if: (a) Beneficiary determines in
good faith that (i) such default cannot be cured within the Grace
Period but can be cured within ninety (90) days, (ii) no lien or
security interest created by the Loan Documents shall be impaired
prior to the completion of such cure, and (iii) Beneficiary's
immediate exercise of any remedies provided hereunder or by law is not
necessary for the protection or preservation of the Property or
Beneficiary's security interest therein, and (b) Trustor shall
immediately commence and diligently pursue the cure of such default;
(3) Trustor, as lessor or sublessor, as the case may be,
shall assign the rents or income of the Property or any part thereof
(other than to Beneficiary) without first obtaining the written
consent of Beneficiary;
(4) Any representation or warranty made by Trustor in,
under or pursuant to the Loan Documents was false or misleading in any
material respect as of the date on which such representation or
warranty was made or deemed remade, and Trustor does not cause to be
taken and completed within thirty (30) days following notice of such
breach any and all action required to cause such representation or
warranty to be true and correct in all respects as originally made;
(5) (i) Any claim or lien shall be filed against the
Property or any part thereof, whether or not such lien shall be prior
to this Deed of Trust, which shall be maintained for a period of
thirty (30) days without discharge, satisfaction or adequate bonding
in accordance with the terms of this Deed of Trust; (ii) the existence
of any interest in the Property other than the Permitted Exceptions,
those of Trustor, Trustee, Beneficiary and any tenants in the
Property; or (iii) the sale, hypothecation, conveyance or other
disposition of the Property without the prior written consent of
Beneficiary except as the result of the condemnation of a non-material
part of the Property as set forth in Paragraph 5.1 above or as
otherwise expressly permitted under the Loan Documents;
(6) Any of the Loan Documents, at any time after their
respective execution and delivery and for any reason, other than an
act or omission of Beneficiary, shall cease to be in full force and
effect or be declared null and void, or shall cease to constitute
valid and subsisting liens and/or valid and perfected security
interests in and to the Property, or Trustor shall contest or deny in
writing that it has any further liability or obligation under any of
the Loan Documents;
(7) The failure of Trustor to observe the provisions of
Paragraph 4.2 hereof; and/or
(8) An "Event of Default" occurs under any one or more
of the Woodlands Deed of Trust, the Milpitas Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the Nevada Deed of
Trust, the Arizona Deed of Trust and/or the Fremont Deed of Trust.
THEN and in any such event Beneficiary may, by written notice
delivered to Trustor, which notice specifically states the occurrence
of an Event of Default, declare Trustor to be in default. Upon the
occurrence of such event and the giving of such notice, the same shall
constitute an event of default (an "Event of Default").
B. It shall constitute an Event of Default hereunder
without the requirement of any notice if one or more of the following
events shall have occurred and be continuing:
(1) (i) The entry of an order for relief under Title 11
of the United States Code as to Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the
Property or any interest therein or the adjudication of Trustor, any
general partner of Trustor, or any owner of the Property as insolvent
or bankrupt pursuant to the provisions of any state insolvency or
bankruptcy act; (ii) the commencement by Trustor, any general partner
of Trustor, or any parent company of such partner of any case,
proceeding or other action seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors; (iii) consent to, acquiescence in or attempt to secure the
appointment of any Receiver of all or any substantial part of its
properties or of the Property by Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the
Property or any interest therein; (iv) Trustor, any general partner of
Trustor, or any parent company of such partner shall generally not pay
its debts as they become due or shall admit in writing its inability
to pay its debts or shall make a general assignment for the benefit of
creditors; or (v) Trustor, any general partner of Trustor, or any
parent company of such partner shall take any action to authorize any
of the acts set forth above; or
(2) Any case, proceeding or other action against
Trustor, any general partner of Trustor, any parent company of such
partner, or any owner of Property or any interest therein shall be
commenced seeking to have an order for relief entered against such
party as a debtor or seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief
for itself under any present or future statute, law or regulation
relating to bankruptcy, insolvency, reorganization or other relief for
debtors, or seeking the appointment of any Receiver for Trustor, any
general partner thereof, or any parent company of such partner or for
all or any substantial part of its property or the Property, and such
case, proceeding or other action remains undismissed for an aggregate
of sixty (60) days (whether or not consecutive) or Trustor or general
partner or parent company during the period of its ownership fails to
proceed diligently during such sixty (60) day period to have such
proceeding or other action dismissed.
C. Upon the occurrence of any Event of Default, Beneficiary
may at any time declare all of the Indebtedness to be due and payable
and the same shall thereupon become immediately due and payable,
together with any prepayment fee due in accordance with the terms of
the Note, without any further presentment, demand, protest or notice
of any kind. Beneficiary may in its sole discretion, also do any of
the following:
(1) in person, by agent, or by a Receiver, and without
regard to the adequacy of security, the solvency of Trustor or the
condition of the Property, enter upon and take possession of the
Property, or any part thereof, in its own name or in the name of
Trustee and do any acts which Beneficiary deems necessary to preserve
the value, marketability or rentability of the Property; sue for or
otherwise collect the rents, issues and profits therefrom, including
those past due and unpaid, and apply the same, less cost and expenses
of operation and collection, including, without limitation, reasonable
attorneys' fees, against the Indebtedness, all in such order as
Beneficiary may determine. The entering upon and taking possession of
said property, the collection of such rents, issues and profits and
the application thereof as aforesaid shall not cure or waive any
default or notice of default hereunder or invalidate any act done
pursuant to such notice;
(2) commence an action to foreclose this Deed of Trust
in the manner provided under this Deed of Trust or by law;
(3) with respect to any Personalty, proceed as to both
the real and personal property in accordance with Beneficiary's rights
and remedies in respect of the Land, or proceed to sell said
Personalty separately and without regard to the Land in accordance
with Beneficiary's rights and remedies as to personal property; and/or
(4) deliver to Trustee a written declaration of default
and demand for sale, and a written notice of default and election to
cause the Property to be sold, which notice Trustee or Beneficiary
shall cause to be duly filed for record.
43.2 Power of Sale.
A. Should Beneficiary elect to foreclose by exercise of the
power of sale herein contained, Beneficiary shall also deposit with
Trustee this Deed of Trust and the Note and such receipts and evidence
of expenditures made and secured hereby as Trustee may require, and
notice of default having been given as then required by law, and after
lapse of such time as may then be required by law, after recordation
of such notice of default, Trustee, without demand on Trustor, shall,
after notice of sale having been given as required by law, sell the
Property at the time and place of sale fixed by it in said notice of
sale, either as a whole or in separate parcels as Beneficiary shall
determine, and in such order as Beneficiary may determine, at public
auction to the highest bidder. Beneficiary may, in its sole
discretion, designate the order in which the Property shall be offered
for sale or sold through a single sale or through two or more
successive sales, or in any other manner Beneficiary deems to be in
its best interest. If Beneficiary elects more than one sale or other
disposition of the Property, Beneficiary may at its option cause the
same to be conducted simultaneously or successively, on the same day
or at such different days or times and in such order as Beneficiary
may deem to be in its best interest, and no such sale shall terminate
or otherwise affect the lien of this Deed of Trust on any part of the
Property not then sold until all Indebtedness secured hereby has been
fully paid. If Beneficiary elects to dispose of the Property though
more than one sale, Trustor shall pay the costs and expenses of each
such sale of its interest in the Property and of any proceedings where
the same may be made. Trustee may postpone sale of all or any part of
the Property by public announcement at such time and place of sale,
and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement, and
without further notice make such sale at the time fixed by the last
postponement; or Trustee may, in its discretion, give a new notice of
sale. Beneficiary may rescind any such notice of default at any time
before Trustee's sale by executing a notice of rescission and
recording the same. The recordation of such notice shall constitute a
cancellation of any prior declaration of default and demand for sale
and of any acceleration of maturity of Indebtedness affected by any
prior declaration or notice of default. The exercise by Beneficiary
of the right of rescission shall not constitute a waiver of any
default then existing or subsequently occurring, or impair the right
of Beneficiary to execute other declarations of default and demand for
sale, or notices of default and of election to cause the Property to
be sold, nor otherwise affect the Note or this Deed of Trust, or any
of the rights, obligations or remedies of Beneficiary or Trustee
hereunder or thereunder. After sale Trustee shall deliver to such
purchaser its deed conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed
of any matters or facts shall be conclusive proof of the truthfulness
thereof. Any Person, including, without limitation, Trustor, Trustee
or Beneficiary, may purchase at such sale. If allowed by law,
Beneficiary, if it is the purchaser, may turn in the Note at the
amount owing therein toward payment of the purchase price (or for
endorsement of the purchase price as a payment on the Note if the
amount owing thereon exceeds the purchase price). Trustor hereby
expressly waives any right of redemption after sale that Trustor may
have at the time of sale or that may apply to the sale. Trustor
hereby expressly waives all rights of marshalling with respect to each
of the Combined Properties that Trustor may have in the event of
foreclosure hereunder or under any of the other Combined Deeds of
Trust.
B. Trustee, upon such sale, shall make (without any
covenant or warranty, express or implied), execute and after due
payment made, deliver to the purchaser, its heirs or assigns, a deed
or other record of interest, as the case may be, in and to the
property so sold that shall convey to the purchaser all the title and
interest of Trustor in the Property (or part thereof sold), and shall
apply the proceeds of such sale in payment, first, of the expenses of
such sale together with the reasonable expenses of the trust,
including, without limitation, attorneys' fees, that shall become due
upon any default made by Trustor, and also such sums, if any, as
Trustee or Beneficiary shall have paid for procuring a search of the
title to the Property, or any part thereof, subsequent to the
execution of this Deed of Trust; and in payment, second, of the
Indebtedness then remaining unpaid, and the amount of all other monies
with interest thereon agreed or provided to be paid by Trustor; and
the balance or surplus of such proceeds of sale Trustee shall pay to
Trustor, its successors or assigns as their interest may appear.
43.3 Proof of Default. In the event of a sale of the Property, or
any part thereof, and the execution of a deed therefor, the recital
therein of default, and of recording notice of default and election of
sale, and of the elapsing of the required time (if any) between the
foregoing recording and the following notice, and of the giving of
notice of sale, and of a demand by Beneficiary, or its successors or
assigns, that such sale should be made, shall be conclusive proof of
such default, recording, election, elapsing of time, and of the due
giving of such notice, and that the sale was regularly and validly
made on due and proper demand by Beneficiary, its successors or
assigns. Any such deed or deeds with such recitals therein shall be
effective and conclusive against Trustor, its successors and assigns,
and all other Persons. The receipt for the purchase money recited or
contained in any deed executed to the purchaser as aforesaid shall be
sufficient to discharge such purchaser from all obligations to see to
the proper application of the purchase money.
43.4 Protection of Security. If an Event of Default shall have
occurred and be continuing, then Beneficiary or Trustee, but without
obligation so to do and without notice to or demand upon Trustor and
without releasing Trustor from any obligations or defaults hereunder,
may: (i) perform any act in such manner and to such extent as either
may deem necessary to protect the security hereof, Beneficiary and
Trustee being authorized to enter upon the Property for such purpose;
(ii) appear in and defend any action or proceeding purporting to
affect, in any manner whatsoever, the obligations or the Indebtedness,
the security hereof or the rights or powers of Beneficiary or Trustee;
(iii) pay, purchase or compromise any encumbrance, charge or lien that
in the judgment of Beneficiary or Trustee is prior or superior hereto;
and (iv) in exercising any such powers, pay necessary expenses, employ
counsel and pay reasonable attorneys' fees. Trustor agrees that all
sums expended by Trustee or Beneficiary pursuant to this paragraph,
together with interest at the Secondary Interest Rate from the date of
expenditure by Beneficiary, shall be added to the principal amount of
the Indebtedness secured by the Loan Documents and this Deed of Trust
and shall be payable by Trustor to Beneficiary upon demand.
43.5 Receiver. If an Event of Default shall have occurred and be
continuing, Beneficiary, as a matter of strict right and without
notice to Trustor or anyone claiming under Trustor, and without regard
to the then value of the Property, shall have the right to apply ex
parte to any court having jurisdiction to appoint a Receiver to enter
upon and take possession of the Property, and Trustor hereby waives
notice of any application therefor, provided a hearing to confirm such
appointment with notice to Trustor is set within the time required by
law. Any such Receiver shall have all the powers and duties of
Receivers in like or similar cases and all the powers and duties of
Beneficiary in case of entry as provided in this Deed of Trust, and
shall continue as such and exercise all such powers until the date of
confirmation of sale, unless such receivership is sooner terminated.
43.6 Remedies Cumulative. All remedies of Beneficiary provided
for herein are cumulative and shall be in addition to any and all
other rights and remedies provided in the other Loan Documents or by
law, including, without limitation, any right of offset. The exercise
of any right or remedy by Beneficiary hereunder shall not in any way
constitute a cure or waiver of default hereunder or under the Loan
Documents, or invalidate any act done pursuant to any notice of
default, or prejudice Beneficiary in the exercise of any of its rights
hereunder or under the Loan Documents.
43.7 Curing of Defaults. If Trustor shall at any time fail to
perform or comply with any of the terms, covenants and conditions
required on Trustor's part to be performed and complied with under
this Deed of Trust, any of the other Loan Documents or any other
agreement that, under the terms of this Deed of Trust, Trustor is
required to perform, then Beneficiary, and without waiving or
releasing Trustor from any of the Obligations, may, in its sole
discretion:
(i) make any payments thereunder payable by
Trustor and take out, pay for and maintain any of the insurance policies
provided for therein; and/or
(ii) after the expiration of any applicable grace
period and subject to Trustor's rights to contest certain obligations
specifically granted hereby, perform any such other acts thereunder on
the part of Trustor to be performed and enter upon the Property for
such purpose.
All sums so paid out of Beneficiary's own funds and all reasonable
costs and expenses incurred and paid by Beneficiary in connection with
the performance of any such act, together with interest on unpaid
balances thereof at the Secondary Interest Rate from the respective
dates of Beneficiary's making of each such payment, shall be added to
the principal of the Indebtedness, shall be secured by the Loan
Documents and by the lien of this Deed of Trust, prior to any right,
title or interest in or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, and shall be payable by
Trustor to Beneficiary on demand.
ARTICLE 44
Security Agreement and Fixture Filing
44.1 Grant of Security Interest. Trustor hereby grants to
Beneficiary a security interest in and to all Trustor's right, title
and interest now owned or hereafter acquired in and to the Personalty
and the Fixtures (collectively, the "Collateral"), to secure the
payment and performance of the Obligations.
44.2 Remedies. This Deed of Trust constitutes a security
agreement with respect to the Collateral in which Beneficiary is
hereby granted a security interest. In addition to the rights and
remedies provided under this Deed of Trust, Beneficiary shall have all
of the rights and remedies of a secured party under the California
Uniform Commercial Code as well as all other rights and remedies
available at law or in equity. Trustor hereby agrees to execute and
deliver on demand and irrevocably constitutes and appoints Beneficiary
the attorney-in-fact of Trustor to, at Trustor's expense, execute,
deliver and, if appropriate, to file with the appropriate filing
officer or office such security agreements, financing statements, con-
tinuation statements or other instruments as Beneficiary may request
or require in order to impose, perfect or continue the perfection of
the lien or security interest created hereby. Upon the occurrence of
any Event of Default, Beneficiary shall have (i) the right to cause
any of the Collateral which is personal property to be sold at any one
or more public or private sales as permitted by applicable law and to
apply the proceeds thereof to the Indebtedness or any other monetary
obligation of Trustor to Beneficiary, and (ii) the right to apply to
the Indebtedness or any other monetary obligation of Trustor to
Beneficiary, any Collateral which is cash, negotiable documents or
chattel paper. Any such disposition may be conducted by an employee
or agent of Beneficiary or Trustee. Any Person, including, without
limitation, both Trustor and Beneficiary, shall be eligible to
purchase any part or all of such Personalty at any such disposition.
44.3 Expenses. Expenses of retaking, holding, preparing for sale,
selling or the like pertaining to the Collateral shall be borne by
Trustor and shall include Beneficiary's and Trustee's reasonable
attorneys' fees and legal expenses. Trustor, upon demand of
Beneficiary shall assemble the Collateral and make it available to
Beneficiary at the Property, a place which is hereby deemed to be
reasonably convenient to Beneficiary and Trustor. Beneficiary shall
give Trustor at least ten (10) days' prior written notice of the time
and place of any public sale or other disposition of the Collateral or
of the time after which any private sale or any other intended
disposition is to be made. Any such notice sent to Trustor in the
manner provided for the mailing of notices herein is hereby deemed to
be reasonable notice to Trustor.
44.4 Fixture Filing. This Deed of Trust covers certain goods
which are or are to become fixtures related to the Land and
constitutes a fixture filing with respect to such goods executed by
Trustor as debtor in favor of Beneficiary as secured party.
44.5 Waivers. Trustor waives (a) any right to require Beneficiary
to (i) proceed against any Person, (ii) proceed against or exhaust any
Collateral or (iii) pursue any other remedy in its power; and (b) any
defense arising by reason of any disability or other defense of
Trustor or any other Person, or by reason of the cessation from any
cause whatsoever of the liability of Trustor or any other Person.
Until the Indebtedness shall have been paid in full, Trustor shall not
have any right to subrogation, and Trustor waives any right to enforce
any remedy which Beneficiary now has or may hereafter have against
Trustor or against any other Person and waives any benefit of and any
right to participate in any Collateral or security whatsoever now or
hereafter held by Beneficiary.
ARTICLE 45
Assignment of Rents
45.1 Assignment of Rents. Trustor absolutely and unconditionally
assigns and transfers the Rents to Beneficiary, whether now due, past
due or to become due, and gives to and confers upon Beneficiary the
right, power and authority to collect such Rents, and apply the same
to the Indebtedness. Trustor irrevocably appoints Beneficiary its
agent to, at any time, demand, receive and enforce payment, to give
receipts, releases and satisfactions, and to sue, either in the name
of Trustor or in the name of Beneficiary, for all such Rents. Neither
the foregoing assignment of Rents to Beneficiary nor the exercise by
Beneficiary of any of its rights or remedies under this Deed of Trust
shall be deemed to make Beneficiary a "mortgagee-in-possession" or
otherwise responsible or liable in any manner with respect to the
Property or the use, occupancy, enjoyment or operation of all or any
part thereof, unless and until Beneficiary, in person or by its own
agent, assumes actual possession thereof, nor shall appointment of a
Receiver for the Property by any court at the request of Beneficiary
or by agreement with Trustor or the entering into possession of the
Property or any part thereof by such Receiver be deemed to make
Beneficiary a "mortgagee-in-possession" or otherwise responsible or
liable in any manner with respect to the Property or the use,
occupancy, enjoyment or operation of all or any part thereof.
45.2 Collection of Rents. Notwithstanding anything to the
contrary contained herein or in the Note, so long as no Event of
Default shall occur, Trustor shall have a license, revocable upon the
occurrence of an Event of Default or, if an Event of Default shall
have occurred, so long as such Event of Default shall not have been
waived by Beneficiary, to collect all Rents, and to first apply same
to the Indebtedness as and when due and thereafter to retain, use and
enjoy the same and to otherwise exercise all rights with respect
thereto, subject to the terms hereof. Upon the occurrence of an Event
of Default, Beneficiary shall have the right, on written notice to
Trustor, to terminate and revoke the license heretofore granted to
Trustor and shall have the complete right and authority then or
thereafter to exercise and enforce any and all of its rights and
remedies provided herein or by law or at equity.
ARTICLE 46
Miscellaneous
46.1 Successor Trustee. Beneficiary may remove Trustee or any
successor trustee at any time or times and appoint a successor trustee
by recording a written substitution in the county where the Property
is located, or in any other manner permitted by law.
46.2 Change of Law. In the event of the passage, after the date
of this Deed of Trust, of any law deducting from the value of the
Property, for the purposes of taxation, any lien thereon, or changing
in any way the laws now in force for the taxation of mortgages, deeds
of trust, or debts secured by mortgage or deed of trust (other than
laws imposing taxes on income), or the manner of the collection of any
such taxes so as to materially affect the anticipated yield of
Beneficiary as holder of the Note and/or Beneficiary under this Deed
of Trust, the Indebtedness plus any applicable prepayment charges
shall become due and payable at the option of Beneficiary exercised by
thirty (30) days' notice to Trustor unless Trustor, within such thirty
(30) day period shall, if permitted by law, assume the payment of any
tax or other charge so imposed upon Beneficiary for the period
remaining until full payment by Trustor of the Indebtedness.
46.3 No Waiver. No waiver by Beneficiary of any default or breach
by Trustor hereunder shall be implied from any omission by Beneficiary
to take action on account of such default if such default persists or
is repeated, and no express waiver shall affect any default other than
the default expressly referenced in the waiver and such waiver shall
be operative only for the time and to the extent therein stated.
Waivers of any covenant, term or condition contained herein shall not
be construed as a waiver of any subsequent breach of the same
covenant, term or condition. The consent or approval by Beneficiary
to or of any act by Trustor requiring further consent or approval
shall not be deemed to waive or render unnecessary the consent or
approval to or of any subsequent similar act.
46.4 Abandonment. Subject to such chattel mortgages, security
agreements or other liens on title as may exist thereon with the
consent of Beneficiary, or any provided for herein, any and all
Personalty that upon foreclosure of the Property is owned by Trustor
and is used in connection with the operation of the Property shall be
deemed at the option of Beneficiary to have become on such date a part
of the Property and abandoned to Beneficiary in its then condition.
46.5 Notices. All notices, demands, requests, consents,
statements, satisfactions, waivers, designations, refusals,
confirmation or denials that may be required or otherwise provided for
or contemplated under the terms of this Deed of Trust shall be in
writing, and shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with
receipt acknowledged, (ii) one business day after having been
deposited for overnight delivery with Federal Express or another
comparable overnight courier service, or (iii) three business days
after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered
or certified mail, postage prepaid, addressed as follows:
If to Trustor:
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, California 94549
Attention: Mr. Scott Whitney
If to Trustee:
First American Title Insurance Company
1850 Mount Diablo Boulevard, Suite 300
Walnut Creek, California 94596
If to Beneficiary:
The Prudential Insurance Company of America
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Regional Counsel
Loan No. 6 101 085
with a copy to:
The Prudential Insurance Company of America
One Ravinia Drive, Suite 1400
Atlanta, Georgia 30346
Attention: Vice President, Loan Servicing
Loan No. 6 101 085
or addressed to each respective party at such other address as such
party may from time to time designate by written notice to the other
parties given in the manner aforesaid.
46.6 Severability. If any term, provision, covenant or condition
hereof or any application thereof should be held by a court of
competent jurisdiction to be invalid, void or unenforceable, in whole
or in part, all terms, provisions, covenants and conditions hereof and
all applications thereof not held invalid, void or unenforceable shall
continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
46.7 Joinder of Foreclosure. Should Beneficiary hold any other or
additional security for the payment of the Indebtedness or performance
of the Obligations, its sale or foreclosure, upon any default in such
payment or performance, in the sole discretion of Beneficiary, may be
prior to, subsequent to, or joined or otherwise contemporaneous with
any sale or foreclosure hereunder. In addition to the rights herein
specifically conferred, Beneficiary, at any time and from time to
time, may exercise any right or remedy now or hereafter given by law
to beneficiaries under deeds of trust generally, or to the holders of
any obligations of the kind hereby secured.
46.8 Governing Law. The parties expressly agree that this Deed of
Trust (including, without limitation, all questions regarding
permissible rates of interest) shall be governed by and construed in
accordance with the laws of the state in which the Land is located.
46.9 Subordination. At the option of Beneficiary, this Deed of
Trust shall become subject and subordinate in whole or in part (but
not with respect to priority of entitlement to any insurance proceeds,
damages, awards, or compensation resulting from damage to the Property
or condemnation or exercise of power of eminent domain), to any and
all contracts of sale and/or any and all Leases upon the execution by
Beneficiary and recording thereof in the Official Records of the
County in which the Land is located of a unilateral declaration to
that effect. Beneficiary may require the issuance of such title
insurance endorsements to the Title Policy in connection with any such
subordination as Beneficiary, in its reasonable judgment, shall
determine are appropriate, and Trustor shall be obligated to pay any
cost or expense incurred in connection with the issuance thereof.
46.10 Future Advances. Upon the request of Trustor or its
permitted successors in ownership of the Property, Beneficiary may
hereafter, at its option, at any time before full payment of the
Indebtedness, make future advances to Trustor or said successors, and
the same, with interest and late charges, shall be secured by this
Deed of Trust; provided, however, that the amount of principal secured
by this Deed of Trust and remaining unpaid, shall not at the time of
and including any such advance exceed the original principal sum
secured hereby; and provided further that if Beneficiary, at its
option, shall make a future advance or advances as aforesaid, Trustor
or said successors in ownership agree to execute and deliver to
Beneficiary (i) a note to evidence the same, payable on or before the
maturity of the Indebtedness secured hereby and bearing such other
terms as Beneficiary shall require, and (ii) satisfactory evidence
that after such advance this Deed of Trust will secure such advance
and continue to constitute a valid first mortgage lien on the Property
subject only to the Permitted Exceptions.
46.11 Waiver of Statute of Limitations and Rights to Trial by
Jury. The pleading of any statute of limitations as a defense to any
and all obligations secured by this Deed of Trust and the right to a
jury trial in any action under or relating to the Loan Documents is
hereby waived, to the fullest extent allowed by law.
46.12 Entire Agreement. The Loan Documents and the Remediation
and Indemnification Agreements set forth the entire understanding
between Trustor and Beneficiary relative to the Loan and the same
shall not be amended except by a written instrument duly executed by
each of Trustor and Beneficiary. Any and all previous
representations, warranties, agreements and understandings between or
among the parties regarding the subject matter of the Loan or the Loan
Documents, whether written or oral, are superseded by this Deed of
Trust and the other Loan Documents. The foregoing notwithstanding,
the terms and the conditions of the Application shall survive the
funding of the Loan but in the event of any conflict between the
provisions of the Application and any of the other Loan Documents or
the Remediation and Indemnification Agreements, except as otherwise
specifically provided herein, the terms of such other Loan Documents
and the Remediation and Indemnification Agreements shall control.
46.13 References to Foreclosure. References in this Deed of Trust
to "foreclosure" and related phrases shall be deemed references to the
appropriate procedure in connection with Trustee's private power of
sale as well as any judicial foreclosure proceeding or a conveyance in
lieu of foreclosure.
46.14 Rights of Beneficiary and Trustee. At any time or from time
to time, without liability therefor and without notice, and without
releasing or otherwise affecting the liability of any person for
payment of any Indebtedness (i) Beneficiary at its sole discretion and
only in writing may extend the time for, or release any Person now or
hereafter liable for, payment of any or all such Indebtedness, or
accept or release additional security therefor, or subordinate the
lien or charge hereof, or (ii) Trustee upon written request of
Beneficiary and presentation of the Note, any additional notes secured
by this Deed of Trust and this Deed of Trust for endorsement may
reconvey any part of the Property, consent to the making of any map or
plat thereof, join in granting any easement thereon, or join in any
such agreement of extension or subordination. Upon written request of
Beneficiary and surrender of the Note, any additional notes secured by
this Deed of Trust and this Deed of Trust to the Trustee for cancella-
tion, and upon payment to Trustee of its fees and expenses, Trustee
shall reconvey without warranty the remaining Property. The recitals
in any reconveyance shall be conclusive proof of the truthfulness
thereof and the grantee in any reconveyance may be described as "the
person or persons legally entitled thereto."
46.15 Copies. Trustor will promptly give to Beneficiary copies of
all (i) notices of violation relating to the Property that Trustor
receives from any governmental agency or authority, and (ii) notices
of default that Trustor shall give or receive under any agreement that
Trustor covenants to perform hereunder, including, without limitation,
notices of default relating to the Property that Trustor receives
under any agreement relating to the borrowing of money by Trustor or
from any Person.
46.16 No Merger. So long as any of the Indebtedness shall remain
unpaid or Trustor shall have any further obligation under the Loan
Documents, unless Beneficiary shall otherwise consent in writing, the
fee estate of Trustor in the Property or any part thereof shall not
merge, by operation of law or otherwise, with any leasehold or other
estate in the Property or any part thereof, but shall always be kept
separate and distinct therefrom, notwithstanding the union of said fee
estate and such leasehold or other estate in Trustor or any other
Person.
46.17 Right of Entry. In addition to the rights granted to
Beneficiary under Paragraph 3.10 hereof, Beneficiary may enter at any
reasonable time upon any part of the Property for the purpose of
performing any of the acts Beneficiary is authorized to perform under
the terms of this Deed of Trust or of any of the other Loan Documents.
Trustor agrees to cooperate with Beneficiary to facilitate such entry.
46.18 Performance by Trustor. Trustor will faithfully perform
each and every Obligation to be performed by Trustor under any lien or
encumbrance, including, without limitation, mortgages, deeds of trust,
leases, declarations or covenants, conditions and/or restrictions and
other agreements which affect the Property. If Trustor fails to do
so, Beneficiary, without demand or notice, may do any or all things
necessary to perform the Obligations of Trustor under the pertinent
instrument.
46.19 Personalty Security Instruments. Trustor covenants and
agrees that if Beneficiary at any time holds additional security for
any obligations secured hereby, it may enforce the terms thereof or
otherwise realize upon the same, at its option, either before or
concurrently herewith or after a sale is made hereunder, and may apply
the proceeds upon the Indebtedness secured hereby without affecting
the status of or waiving any right to exhaust all or any other
security, including the security hereunder, and without waiving any
breach or default or any right or power whether exercised hereunder,
and without waiving any breach or default or any right or power
whether exercised hereunder or contained herein or in any such other
security.
46.20 Suits to Protect Property. Trustor covenants and agrees to
appear in and defend any action or proceeding purporting to affect the
security of the Deed of Trust, or of any additional or other security
for the Obligations, the interest of Beneficiary or the rights, powers
and duties of Trustee hereunder; and to pay all costs and expenses,
including, without limitation, costs of evidence of title and
reasonable attorneys' fees, in any action or proceeding in which
Beneficiary and/or Trustee may appear or be made a party, including,
without limitation, foreclosure or other proceedings commenced by
those claiming a right to any part of the Property in any action to
partition or condemn all or part of the Property, whether or not
pursued to final judgment, and in any exercise of the power of sale
contained herein, whether or not the sale is actually consummated.
Trustee agrees that in any such action or proceeding in which
Beneficiary is made a party, Beneficiary may at its option defend such
action, and all costs of such defense, including all court costs and
reasonable attorneys' fees, shall be borne and paid by Trustor.
46.21 Junior Liens. Trustor represents and warrants that as of
the date hereof there are no encumbrances to secure debt junior to
this Deed of Trust and covenants that there are to be none as of the
date when this Deed of Trust becomes of record.
46.22 Charges for Statements. Trustor agrees to pay Beneficiary's
charge, up to the maximum amount permitted by law, for any statement
regarding the obligations secured by this Deed of Trust requested by
Trustor or on its behalf.
46.23 Usury. In the event that Beneficiary determines that any
charge, fee or interest paid or agreed to be paid in connection with
the Loan may, under the applicable usury laws, cause the interest rate
on the Loan to exceed the maximum permitted by law, then such charges,
fees or interest shall be reduced and any amounts actually paid in
excess of the maximum interest permitted by such laws shall be applied
by Beneficiary to reduce the outstanding principal balance of the
Loan. The parties intend that Trustor shall not be required to pay,
and Beneficiary shall not be entitled to collect, interest in excess
of the maximum legal rate permitted under the applicable usury laws.
46.24 Publicity. Trustor hereby agrees that Beneficiary, at its
expense, may publicize the financing of the Property. Beneficiary
shall endeavor to notify Trustor of its intent to publicize the
financing; provided, however, that Beneficiary's failure to so notify
Trustor shall not constitute a breach by Beneficiary under the Loan
Documents.
46.25 Information Reporting Under IRC Section 6045(e). Any
information returns or certifications that must be filed with the
Internal Revenue Service and/or provided to other parties, pursuant to
Internal Revenue Code Section 6045(e) shall be prepared, filed by and
sent to the appropriate parties by Trustor. To the extent permitted
by law, Beneficiary shall have no responsibility to perform such
services; provided however, upon demand Trustor shall reimburse
Beneficiary for any costs incurred by Beneficiary in doing so and
shall also pay such fee as Beneficiary may reasonably and lawfully
request. Beneficiary shall, where requested by Trustor, promptly
supply Trustor with all information pertaining to Beneficiary
reasonably required by Trustor to prepare and file any such return or
certification. Trustor shall indemnify Beneficiary and defend,
protect and hold Beneficiary harmless from and against all loss, cost,
damage and expense (including, without limitation, attorneys' fees and
costs incurred in the investigation, defense and settlement of claims)
that Beneficiary may incur, directly or indirectly, as a result of or
in connection with the assertion against Beneficiary of any claim
relating to the failure of Trustor to comply with its obligations
under this Paragraph.
46.26 ERISA.
A. Trustor understands and acknowledges that on the
Closing Date, the source of funds from which Beneficiary extends the
Loan is its general account, which is subject to the claims of its
general creditors under state law. Beneficiary (i) represents and
warrants that either (a) it is not funding the Loan with Plan Assets
(as described below) or (b) if Beneficiary is funding the Loan with
Plan Assets, such funding satisfies the provisions of Prohibited
Transaction Class Exemption 95-60 and (ii) covenants that either
clause (a) or (b) immediately above will be true throughout the term
of the Loan.
B. Trustor represents and warrants to Beneficiary that,
as of the date of this Deed of Trust and throughout the term of the
Loan, (i) Trustor is not an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), which is subject to Title I of ERISA, and (ii)
the assets of Trustor do not constitute "plan assets" of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101 ("Plan
Assets").
C. Trustor represents and warrants to Beneficiary that,
as of the date of this Deed of Trust and throughout the term of the
Loan, (i) Trustor is not a "governmental plan" within the meaning of
Section 3(32) of ERISA, and (ii) transactions by or with Trustor are
not subject to state statutes regulating investments of and fiduciary
obligations with respect to governmental plans.
D. Trustor covenants and agrees to deliver to
Beneficiary such certifications or other evidence on the Closing Date
and from time to time throughout the term of the Loan, as requested by
Beneficiary in its sole discretion, that (i) Trustor is not an
"employee benefit plan" or a "governmental plan"; and (ii) Trustor is
not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more
of the following circumstances is true:
(1) Equity interests in Trustor are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of all equity
interests in Trustor are held by "benefit plan investors" within the
meaning of 29 C.F.R Section 2510.3-101(f)(2); or
(3) Trustor qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e).
E. Any of the following shall constitute an Event of
Default entitling Beneficiary to exercise any and all remedies to
which it may be entitled under the Loan Documents: (i) the failure of
any representation or warranty made by Trustor under this Paragraph
9.26 to be true and correct in all material respects, (ii) the failure
of Trustor to comply in all material respects with the obligation to
provide Beneficiary with the written certifications and evidence
referred to above, or (iii) assuming compliance by Beneficiary with
the representations, warranties and covenants in Paragraph 9.26.A
above, the consummation by Trustor of a transaction which would cause
the Loan or any exercise of Beneficiary's rights under the Loan
Documents to constitute a non-exempt prohibited transaction under
ERISA or a material violation of a state statute regulating
governmental plans, subjecting Beneficiary to liability for violation
of ERISA or such state statute, provided, that Trustor shall have
thirty (30) days after its receipt of notice of default from
Beneficiary within which to commence the cure of such default and,
with respect to defaults under clause (i) immediately above, Trustor
shall have an additional ninety (90) days thereafter within which to
effect such cure provided it shall have commenced its efforts to cure
within such thirty (30) day period and shall thereafter diligently and
in good faith continuously prosecute such cure to completion. Failure
by Trustor to cure any such default within the applicable time period
set forth above shall constitute an Event of Default.
F. Trustor hereby indemnifies, defends and holds
Beneficiary harmless from and against all loss, cost, damage and
expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims and
losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required) that
Beneficiary may incur as a direct result of an Event of Default under
clause (E) above, assuming compliance by Beneficiary with the
representations, warranties and covenants set forth in Paragraph
9.26.A above. This indemnity shall survive any termination,
satisfaction or foreclosure of this Deed of Trust and shall not be
subject to the limitation on personal liability described in Paragraph
19 of the Note.
G. Anything in the Application, Paragraph 4.2 or
elsewhere in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no sale, assignment or transfer of any direct or
indirect interest in Trustor shall be permitted which would negate
Trustor's representations in this Paragraph 9.26 or cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of any provision of ERISA or of
any applicable state statute regulating a governmental plan, assuming
compliance by Beneficiary with the representations, warranties and
covenants set forth in Paragraph 9.26.A above.
H. Anything in the Application, Paragraph 4.2 elsewhere
in this Deed of Trust or the Loan Documents to the contrary
notwithstanding, no direct or indirect transfer of the Property or any
interest therein including, without limitation, a junior lien or
leasehold interest, shall be permitted which would cause this Deed of
Trust (or any exercise of Beneficiary's rights under the Loan
Documents) to constitute a violation of ERISA or any applicable state
statute regulating a governmental plan, assuming compliance by
Beneficiary with the representations, warranties and covenants set
forth in Paragraph 9.26.A above.
I. Anything in the Application, this Deed of Trust or
the Loan Documents to the contrary notwithstanding, no less than
fifteen (15) before consummation of any permitted transfer of title to
the Property or of an interest in Trustor, or of any direct or
indirect right, title or interest in either of them, or of the placing
of any lien or encumbrance on the Property, Borrower shall obtain from
the proposed transferee or lienholder a representation to Beneficiary
in form and substance satisfactory to Beneficiary that the provisions
of Paragraph 9.26.D above will be true after the transfer, or in the
case of a lien or encumbrance, would remain true following any
foreclosure or conveyance in lieu thereof, and further provided that
any proposed lienholder agrees that any direct or indirect transfer of
its lien or any interest therein will be governed by this section.
46.27 Defense and Indemnity Rights. Whenever, under any Loan
Document, Trustor is obligated to indemnify and/or defend Beneficiary,
or Trustor is obligated to defend or prosecute any action or
proceeding, then Beneficiary shall have the right of counsel of
Beneficiary's choice reasonably exercised, and all costs and expenses
incurred by Beneficiary in connection with such participation
(including, without limitation, reasonable attorneys' fees) shall be
reimbursed by Trustor to Beneficiary immediately upon demand. In
addition, Beneficiary shall have the right to approve any counsel
retained by Trustor in connection with the prosecution or defense of
any such action or proceeding by Trustor. Trustor shall give notice
to Beneficiary of the initiation of all proceedings prosecuted or
required to be defended by Trustor, or which are subject to Trustor's
indemnity obligations, under this Deed of Trust, promptly after the
receipt by Trustor of notice of the existence of any such proceeding,
but in no event later than five (5) days thereafter. All costs or
expenses required to be reimbursed by Trustor to Beneficiary hereunder
shall, if not paid when due as herein specified, bear interest at the
Secondary Interest Rate. As used herein, "proceeding" shall include
litigation (whether by way of complaint, answer, cross-complaint,
counter claim or third party claim), arbitration and administrative
hearings or proceedings.
46.28 Destruction of Note. Trustor shall, if the Note is
mutilated or destroyed by any cause whatsoever, or otherwise lost or
stolen and regardless of whether due to the act or neglect of
Beneficiary or Trustee, execute and deliver to Beneficiary in
substitution therefor a duplicate promissory note containing the same
terms and conditions as the Note, within ten (10) days after
Beneficiary notifies Trustor of any such mutilation, destruction, loss
or theft of the Note. Any new promissory note executed and delivered
hereunder shall be in full substitution for the Note, shall not
constitute any new or additional indebtedness of Trustor to
Beneficiary, shall constitute solely a substitute evidence of the
indebtedness evidenced by the original Note, and shall not affect in
any manner the priority of this Deed of Trust, or any other document
or instrument executed in connection with or evidencing or securing
the Indebtedness under the Note. Failure or delay by Beneficiary to
notify Trustor hereunder shall not affect in any manner Trustor's lia-
bility for the Indebtedness under the Note or Trustor's obligation to
execute a new promissory note hereunder; and Trustor's failure to
execute a new promissory note on Beneficiary's request hereunder shall
likewise not affect Trustor's liability for the indebtedness under the
Note.
46.29 Trustor, Beneficiary and Trustee Defined. As used in this
Deed of Trust, "Trustor" includes the original signators of this Deed
of Trust as Trustor, and its successors and assigns; the term "Benefi-
ciary" means the Beneficiary named herein or any future owner or
holder, including pledgee and participants, of any note, notes or
instrument secured hereby, or any participation therein; and "Trustee"
includes the original Trustee under this Deed of Trust and its
successors and assigns.
46.30 Rules of Construction. When the identity of the parties or
other circumstances make appropriate, the masculine gender shall
include the feminine and/or neuter, and the singular number shall
include the plural. Specific enumeration of rights, powers and
remedies of Trustee and Beneficiary and of acts which they may do and
of acts Trustor must do or not do shall not exclude or limit the
general. The headings of each Article and Paragraph are for
information and convenience and do not limit or construe the contents
of any provision hereof. The provisions of this Deed of Trust, all
other Loan Documents and the Remediation and Indemnification
Agreements shall be construed as a whole according to their common
meaning, not strictly for or against any party and consistent with the
provisions herein contained, in order to achieve the objectives and
purposes of such documents. Each party and its counsel has reviewed
and revised the Loan Documents and the Remediation and Indemnification
Agreements and agree that the normal rule of construction to the
effect that any ambiguities to be resolved against the drafting party
shall not be employed in the interpretation of such document. The use
in this Deed of Trust, all other Loan Documents and the Remediation
and Indemnification Agreements of the words "including," "such as," or
words of similar import, when following any general term, statement or
matter shall not be construed to limit such statement, term or matter
to the specific items or matters, whether or not language of non-
limitation such as "without limitation" or "but not limited to," or
words of similar import, are used with reference thereto, but rather
shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such statement,
term or matter.
46.31 Information to Third Persons. If, at any time, Beneficiary
desires to sell or transfer, or grant a participation interest in, all
or any portion of, or any interest in, the Note, this Deed of Trust or
any other Loan Document to any Person, Trustor and each Loan Party
shall furnish in a timely manner any and all financial information
concerning the Property and Leases, and concerning Trustor's or such
Loan Party's financial condition, requested by Beneficiary or such
person in connection with any such sale or transfer.
46.32 Commingling of Funds. Any and all sums collected or
retained by Beneficiary hereunder (including insurance and
condemnation proceeds and any amounts paid by Trustor to Beneficiary
under Paragraph 3.4 hereof), shall not be deemed to be held in trust,
and Beneficiary may commingle any and all such funds or proceeds with
its general assets and shall not be liable for the payment of any
interest or other return thereon, except to the extent expressly
provided herein or otherwise required by law.
46.33 Standards of Discretion. Nothing contained in this Deed of
Trust, the Note, or any other Loan Documents, shall limit the right of
Beneficiary to exercise its good faith business judgment, or act, in a
subjective manner with respect to any matter as to which it has
specifically been granted such right or the right to act in its sole
discretion or sole judgment hereunder or thereunder, whether
"objectively" reasonable under the circumstances. Any such exercise
shall not be deemed inconsistent with any covenant of good faith and
fair dealing otherwise implied by law to be a part of this Deed of
Trust; and the parties intend by the foregoing to set forth and affirm
their entire understanding with respect to the terms, covenants and
conditions and standards pursuant to which their rights, duties and
obligations are to be judged, their performance measured, and the
parameters within which Beneficiary's discretion may be exercised
hereunder and under the other Loan Documents; provided, however, that
the foregoing shall not limit Beneficiary's obligation to act
reasonably under the circumstances where any provision of the Loan
Documents provides for the reasonable consent or approval of
Beneficiary.
46.34 Certain Standards on Efforts of Trustor. Whenever in this
Deed of Trust, or any other Loan Document, the phrase "cause to be" is
used in conjunction with any of Trustor's Obligations, such phrase
shall be deemed to include the use by Trustor of best efforts and all
due diligence to cause the applicable act, event or circumstance to
occur or be performed or taken, and such efforts and due diligence
shall encompass the initiation of litigation or other proceedings in
order to enforce or bring about the happening of the applicable act or
matter.
46.35 Certain Obligations Unsecured. Notwithstanding anything to
the contrary set forth herein or any of the Loan Documents, this Deed
of Trust shall not secure the following obligations (the "Unsecured
Obligations"): (i) any obligations evidenced by or arising under the
Remediation and Indemnification Agreements, and (ii) any other
obligations in this Deed of Trust or in any of the other Loan
Documents to the extent that such other obligations relate
specifically to the presence on the Property of Hazardous Materials
(as defined in the Remediation and Indemnification Agreements) and are
the same or have the same effect as any of the obligations evidenced
by or arising under the Remediation and Indemnification Agreements.
Any breach or default with respect to the Unsecured Obligations shall
constitute an Event of Default hereunder, notwithstanding the fact
that such Unsecured Obligations are not secured by this Deed of Trust.
Nothing in this section shall, in itself, impair or limit
Beneficiary's right to obtain a judgment in accordance with applicable
law after foreclosure for any deficiency in recovery of all
obligations that are secured by this Deed of Trust following
foreclosure.
46.36 Partial Release. Beneficiary agrees to release, at any time
after May 31, 1998, the Property from the lien of this Deed of Trust
upon the satisfaction of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred and no event
which, with the passage of time or the giving on notice, or both,
would constitute an Event of Default shall have occurred either at
the time of Beneficiary's receipt of the Trustor's written request
for a reconveyance or as of the date of such reconveyance;
(2) Not more than a total of three (3) of the Combined
Deeds of Trust (including, without limitation, this Deed of Trust)
shall have been previously reconveyed or shall be reconveyed hereby
or concurrently herewith (and in no event shall Trustor be entitled
to more than three (3) total releases of any or all of the Combined
Properties hereunder and/or under the Combined Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior to or
concurrently with the reconveyance of this Deed of Trust, the
Allocable Loan Amount for the Property along with the prepayment
premium allocable to such Allocable Loan Amount as determined
pursuant to the applicable Note;
(4) Beneficiary shall have been provided satisfactory
evidence that the reconveyance of this Deed of Trust does not
violate the provisions of any declaration of covenants, conditions
and restrictions, reciprocal easement agreement, Lease or other
agreement affecting the Property or any portion thereof;
(5) The Remaining Properties shall have: (i) after the
first reconveyance, both a Combined Debt Service Coverage and a
Future Combined Debt Service Coverage of not less than 1.80 and a
Combined Loan to Value Ratio of not more than 65%, (ii) after the
second reconveyance, both a Combined Debt Service Coverage and a
Future Combined Debt Service Coverage of not less than 1.90 and a
Combined Loan to Value Ratio of not more than 60%, and (iii) after
the third and final reconveyance both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage of not less
than 2.00 and a Combined Loan to Value Ratio of not more than 55%;
(6) Each of the individual Remaining Properties shall
have both an Individual Debt Service Coverage and a Future
Individual Debt Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than 75%;
(7) Beneficiary shall have received a commitment that
the title company insuring the liens of the Milpitas Deed of Trust,
the Ontario Deed of Trust, the Tustin Deed of Trust, the Woodlands
Deed of Trust, the Nevada Deed of Trust, the Arizona Deed of Trust,
and the Fremont Deed of Trust will issue such title endorsements as
Beneficiary deems necessary or desirable for attachment to the
applicable title policies, including without limitation, CLTA
Endorsement Nos. 110.5, 111, and 111.1;
(8) Trustor shall pay to Beneficiary all escrow, closing
and recording costs, the cost of preparing and delivering any
reconveyance documentation, including legal fees and costs, the
cost of any title insurance endorsements that Beneficiary may
require, recording fees, any sums then due and payable under the
Loan Documents and a non-refundable $25,000 processing fee, which
fee shall be paid at the time of notice of the requested
reconveyance;
(9) Trustor shall have provided Beneficiary with forty-
five (45) days prior written notice of the requested reconveyance;
and
(10) Such other terms and conditions as Beneficiary
shall reasonably require.
Notwithstanding the foregoing, in the event that the Debt Service
Coverage and the Loan to Value Ratio tests set forth in
Paragraphs 9.36(5) and 9.36(6), above, cannot be satisfied because of
the value of, or the net cash flow from, the applicable Combined
Properties, Trustor may, at its option, satisfy such tests by making a
principal prepayment (the "Excess Principal Payment") on the Loan in
an amount sufficient to satisfy such tests so long as Trustor also
pays to Beneficiary any prepayment premium relating to such principal
prepayment, as determined by the applicable Note. Upon receipt of the
Excess Principal Payment, Beneficiary shall apply such amount to
reduce the outstanding Loan and may apply such amount to any one or
more of the Multistate Note, the Nevada Note and/or the
Arizona/California Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall allocate the Excess
Principal Payment to the applicable Allocable Loan Amount in
proportion to each such Allocable Loan Amount's share of the
outstanding principal balance of the Note to which such amount is
applied, and, the monthly payments due under such applicable Note
shall be adjusted, as of the date of the release of this Deed of Trust
pursuant to this Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such adjustment to be based
on the applicable interest rate under such Note and an amortization
schedule equal to 300 months minus the number of months that have
elapsed since May 31, 1998.
46.37 Limitation on Personal Liabilities. Trustor's liability
(i) under the Multistate Note is subject to the terms and conditions
set forth in Paragraph 19 of the Multistate Note; (ii) under the
Nevada Note is subject to the terms and conditions set forth in
Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
<PAGE>
IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to be
executed as of the day and year first above written.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
[11128.AGRE]I12494<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca , a notary public,
personally appeared
Scott R. Whitney, Sr. V. P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_______________________________________________________________
ASSIGNMENT OF LESSOR'S INTEREST
IN LEASES
(Arizona)
THIS ASSIGNMENT OF LESSOR'S INTEREST IN LEASES (this
"Assignment") is made as of January 30, 1998, by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Assignor"), in favor
of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation having offices at Four Embarcadero Center, Suite 2700,
San Francisco, California 94111 ("Assignee"), for the benefit and
protection of Assignee as beneficiary under that certain Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements of even date herewith executed by
Assignor in favor of Assignee (the "Deed of Trust") encumbering that
certain real property, together with any improvements now or at any
time located thereon, located in the County of Maricopa, State of
Arizona (the "Property"), and more particularly described in Exhibit A
attached hereto and incorporated herein by this reference and for the
benefit and protection of Assignee as payee and holder of that certain
Amended and Restated Promissory Note dated May 24, 1996 (and deemed
made as of, and relating back to, March 20, 1996), executed by
Assignor, as maker, to and for the benefit of Assignee, as holder, in
the original principal amount of Twenty-Five Million and No/100
Dollars ($25,000,000.00), and all modifications, renewals or
extensions thereof (the "Multistate Note"), and that certain Amended
and Restated Promissory Note dated as of May 9, 1997 executed by
Assignor, as maker, to and for the benefit of Assignee, as holder, in
the original principal amount of Eight Million Nine Hundred Thirteen
Thousand Seven Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Assignee or its order, and all modifications, renewals or
extensions thereof (the "Nevada Note"), and that certain Promissory
Note dated as of even date herewith executed by Assignor, as maker, to
and for the benefit of Assignee, as holder, in the original principal
amount of Twenty Million Nine Hundred Thousand Dollars ($20,900,000),
payable to Assignee or its order, and all modifications, renewals or
extensions thereof (the "Arizona/California Note," and together with
the Multistate Note and the Nevada Note, collectively, the "Note").
W I T N E S S E T H:
FOR VALUE RECEIVED, Assignor does hereby irrevocably
and absolutely SELL, ASSIGN, TRANSFER, SET OVER AND DELIVER unto
Assignee any and all leasehold interests, including subleases and
tenancies following attornment, now or hereafter affecting or covering
any part of the Property, including, without limitation, those leases
described in Exhibit B attached hereto (collectively, the "Leases").
TOGETHER, with the immediate and continuing right to
collect and receive all of the rents, income, receipts, revenues,
issues and profits now due or which may become due or to which
Assignor may now or shall hereafter (including the period of
redemption, if any) become entitled or may demand or claim, arising or
issuing from or out of the Leases or from deficiency rents and
liquidated damages following default, including, without limitation,
all security and other deposits now or hereafter held by Assignor, and
all proceeds payable under any policy of insurance covering loss of
rents or other income from the Property, together with any and all
rights and claims of any kind that Assignor may have against lessees
under the Leases or any subtenants or occupants of the Property, or
any part thereof (all such moneys, rights and claims described in this
paragraph being hereinafter called the "Receipts").
SUBJECT, however, to a license hereby granted by
Assignee to Assignor, but limited as hereinafter provided, to collect
and receive the Receipts.
ASSIGNOR REPRESENTS, WARRANTS, COVENANTS AND AGREES AS
FOLLOWS:
47 Representations and Warranties. Assignor
represents and warrants that: (i) Assignor is the owner of the
Property, and has good title to the Leases and Receipts and full and
complete right to assign the same; (ii) no other Person (as herein-
after defined) has any right, title or interest in the Leases or
Receipts; (iii) Assignor has duly and punctually performed all and
singular the obligations, terms, covenants, conditions and warranties
of the Leases on Assignor's part to be kept, observed and performed;
(iv) Assignor has not previously sold, assigned, transferred,
mortgaged or pledged the Leases or the Receipts, whether now due or
hereafter to become due; (v) no Receipts for any period of more than
thirty (30) days subsequent to the date hereof have been collected,
nor has payment of any of same been otherwise discharged or
compromised; (vi) the lessees under the Leases ("Lessees") are not in
default of any of the terms thereof and do not have any defense, set-
off or counter claim against Assignor thereunder; (vii) the Leases are
in full force and effect, are valid and enforceable in accordance with
their terms, and have not been modified, amended or altered, whether
in writing or orally, except as otherwise disclosed to Assignee in
writing; (viii) except as disclosed on the rent roll delivered to
Assignee in connection with the funding of the Loan (the "Rent Roll"),
there are no unextinguished rent concessions, abatements or other
inducements relating to the Leases, and no Lessee has any option or
right to acquire any interest in the Property; and (ix) the Rent Roll
discloses all currently existing Leases and is complete, accurate and
true in all respects. As used herein, the term "Person" shall mean
and refer to any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
48 Affirmative Covenants. Assignor shall:
(i) observe, perform and discharge, duly and punctually, all and
singular the obligations, terms, covenants, conditions and warranties
of the Leases, on the part of Assignor to be kept, observed and per-
formed, and give prompt notice to Assignee of any failure on the part
of Assignor to observe, perform and discharge the same; (ii) direct
the Lessees to deliver all rents and other payments due under the
Leases to Assignee upon written request of Assignee and without
further action of Assignor; (iii) upon request of Assignee, notify
Lessees in writing of this Assignment and that any security deposit,
or other deposits heretofore delivered to Assignor have been retained
by Assignor or assigned and delivered to Assignee, as the case may be;
(iv) enforce or secure in the name of Assignee the performance of each
and every obligation, term, covenant, condition and agreement of the
Leases to be performed by Lessees; (v) appear in and defend any action
or proceeding arising under, occurring out of, or in any manner con-
nected with the Leases or the obligations, duties, or liabilities of
Assignor and Lessees thereunder; and (vi) upon request by Assignee, to
do so in the name and on behalf of Assignee but at the expense of
Assignor, and to pay all costs and expenses of Assignee, including,
without limitation, reasonable attorneys' fees. In the negotiation of
any future leases or the renewal of any of the Leases, Assignor shall
use commercially reasonable efforts not to agree to obtain the
agreement of Assignee to execute a subordination, non-disturbance and
attornment agreement ("SNDA") with the Lessee or proposed lessee. So
long as Assignor uses such commercially reasonable efforts, Assignee
shall enter into an SNDA on Assignee's then current standard SNDA form
with the tenant for any lease which is either expressly approved by
Assignee in writing or which meets the criteria set forth in
paragraphs (a) or (b) of Section 3, below. Pursuant to such SNDA,
Assignee shall agree that in the exercise of any foreclosure remedies
under the Deed of Trust, Assignee will not disturb such tenant in its
possession of the demised premises so long as such tenant is not in
default under its lease.
49 Negative Covenants. Assignor shall not, without
the prior written consent of Assignee: (i) lease any part of the
Property or renew or extend any of the Leases; (ii) terminate, amend,
modify or alter in any manner any of the Leases, or waive, excuse,
condone, discount, set off, compromise, or in any manner release or
discharge Lessees from any obligations, covenants, conditions or
agreements by such Lessees to be kept, or accept or consent to any
surrender of the Leases; (iii) receive or collect any Receipts for a
period of more than one month in advance (whether in cash or by
promissory note or otherwise); (iv) further assign the Leases or
pledge, transfer, mortgage or otherwise encumber or assign future
payments of Receipts; (v) commence an action of ejectment or summary
proceedings for dispossession of the Lessees under any of the Leases;
(vi) consent to any modification of the express purposes for which the
Property has been leased; or (vii) consent to any subletting of the
Property or any part thereof, or to any assignment of the Leases by
lessees thereunder or to any assignment or further subletting by any
sublessees. Notwithstanding the foregoing, Assignor may do the
following with respect to the Leases, including without limitation any
new leases affecting the Property, without obtaining Assignee's prior
written consent:
A. Enter into any amendment or modification
of any Lease, so long as the Lessee under such Lease
leases not more than 10,000 rentable square feet of
the Property, provided that Assignor delivers to
Assignee an executed copy of such amendment within a
reasonable time after execution thereof, but in no
case later than 5 business days after such execution,
and provided further that such amendment (i) is
consistent with the ordinary and reasonable business
practices and procedures customarily employed by
Assignor for properties similar to the Property,
(ii) does not substantially increase the obligations
of the landlord by providing non-market inducements to
the Lessee, (iii) does not decrease or accelerate the
rent under such Lease, (iv) does not decrease the term
of such Lease, unless such a reduced lease term is
granted in conjunction with both retaining an existing
Lessee and with enlarging the size of the same
Lessee's space in the Property, (v) does not cause
such Lease to vary substantially from Assignor's
standard form lease, and (vi) is not of a Lease for a
single tenant space which comprises all or
substantially all of the area for an individual
building on the Property; and
B. Enter into new bona fide arms-length
leases (or renew existing Leases) with third-party
tenants for premises of 10,000 rentable square feet or
less, provided such leases (i) are on Assignor's
standard form lease approved by Assignee, with no
modifications that substantially increase the
obligations of the landlord by providing non-market
inducements to the Lessee, and (ii) are not for a
single tenant space which comprises all or
substantially all of the area for an individual
building on the Property; and
C. Terminate any Lease (for premises of
10,000 rentable square feet or less) in the ordinary
course of Assignor's business (i) for non-payment of
rent or other material default by the Lessee
thereunder so long as such termination does not
include a payment by such Lessee to Assignor, or
(ii) if all of the space occupied pursuant to the
Lease to be terminated is to be leased to another
Lessee in conjunction with a transaction permitted
under Section 3(a)(iv), above.
In any case in which Assignee's consent is required pursuant to this
Section 3, Assignee shall respond to requests for such consent in an
expedient manner, and such consent shall not be unreasonably withheld
or delayed and shall be deemed given unless objections in reasonable
detail are given to Assignee within eight (8) business days following
Assignor's receipt of (i) written request for such consent, which
written request shall include the date Assignee's response is due, and
(ii) all pertinent information relating to the Lease or proposed lease
in question, including, without limitation, copies of the proposed
amendment or new lease, if applicable.
50 Default and Remedies. In the event any
representation or warranty herein of Assignor shall be found to be
untrue in any material respect when made, or thereafter becomes untrue
in any material respect, or in the event Assignor shall default in the
payment of any Indebtedness (as hereinafter defined) or in the
observance or performance of any other Obligation (as hereinafter
defined), after the expiration of all applicable grace or cure
periods, if any, set forth in the Deed of Trust, then, in each such
instance, the same shall constitute an "Event of Default" hereunder
and under the Loan Documents (as defined in the Deed of Trust),
thereby entitling Assignee to declare all Indebtedness immediately due
and payable and to exercise any and all of the rights and remedies
provided thereunder and hereunder as well as by law or in equity.
Specifically, but without limiting the generality of the foregoing,
upon or at any time after the occurrence of an Event of Default,
Assignee, at its option, shall have the complete right, power and
authority to exercise and enforce any or all of the following rights
and remedies:
(i) to terminate and revoke the license granted to
Assignor hereunder and collect the Receipts, and
without taking possession of the Property, in
Assignee's own name, to demand, collect, receive,
sue for, attach and levy the Receipts, to give
proper receipts, releases and acquittances
therefor, and after deducting all necessary and
proper costs and expenses of operation and
collection, as determined in Assignee's sole
judgment, and including reasonable attorneys'
fees, to apply the net proceeds thereof, together
with any funds of Assignor deposited with
Assignee, upon the Indebtedness and in such order
as Assignee may determine in its sole discretion;
and
(ii) without regard to the adequacy of the security,
with or without any action or proceeding, through
any person or by agent, by the Trustee under the
Deed of Trust, or by a receiver appointed by a
court of competent jurisdiction, and irrespective
of Assignor's possession, to enter upon, take
possession of, manage and operate the Property, or
any part thereof or interest therein, make,
modify, enforce, cancel or accept surrender of,
any of the Leases, remove and evict any Lessee,
increase or decrease rents under any of the
Leases, decorate, clean and repair any premises
under any of the Leases, and otherwise do any act
or incur any costs or expenses as Assignee deems
necessary or proper to protect the rights of
Assignee therein, as fully and to the same extent
as Assignor could do if in possession, and in such
event to apply the Receipts so collected to the
operation and management of the Property, in such
order as the Assignee shall deem proper in its
sole discretion, including payment of reasonable
management, brokerage and attorneys' fees, payment
of the Indebtedness and maintenance, without
interest, of reserves for replacements.
Collection of Receipts hereunder, and application thereof as specified
above, and/or the entry upon and taking possession of the Property, or
any part thereof or interest therein, shall not cure or waive any
default or waive, modify or affect any notice of default under any
Loan Documents, or invalidate any act done pursuant to such notice,
and the enforcement of such right or remedy by Assignee, once
exercised, shall continue for so long as Assignee shall elect. If
Assignee shall thereafter elect to discontinue the exercise of any
such right or remedy, the same or any other right or remedy hereunder
may be reasserted at any time and from time to time following any
subsequent Event of Default. A demand upon any Lessee made by
Assignee for payment of Receipts by reason of any default claimed by
Assignee hereunder or under any other Loan Documents shall be
sufficient to warrant to said Lessee to make future payments of all
Receipts to Assignee without the necessity for further consent by
Assignor.
As used herein, the term "Indebtedness" shall mean and
refer to the principal of and all other amounts, payments and premiums
due under the Note and any extensions or renewals thereof (including
extensions or renewals at a different rate of interest, whether or not
evidenced by a new or additional promissory note or notes), and all
other indebtedness of Assignor to Assignee and additional advances
under, evidenced by and/or secured by the Loan Documents, plus
interest on all such amounts. As used herein, the term "Obligations"
shall mean and refer to any and all of the covenants, promises and
other obligations (including the Indebtedness) made or owing by
Assignor to or due Assignee under and/or as set forth in the Loan
Documents and all of the material covenants, promises and other
obligations made or owing by Assignor to each and every other Person
relating to the Property.
51 Grant of License to Assignor. So long as there
shall exist no Event of Default, Assignor shall have the right under a
license granted hereby (but limited as provided in this paragraph) to
collect, but not prior to accrual, all Receipts. Assignor shall
receive such Receipts, and shall hold the same, as well as the right
and license to receive the same, as a trust fund to be applied, and
Assignor shall so apply the same, first to the payment of taxes and
assessments upon the Property before penalty or interest are due
thereon, second to the cost of such insurance and of such maintenance
and repairs as is required by the terms of the Deed of Trust, third to
the satisfaction of all obligations under the Leases, and fourth to
the payment of the Indebtedness before using any part of the Receipts
for any other purpose.
52 Power of Attorney. Effective automatically upon
the occurrence of an Event of Default and continuously thereafter, and
without the necessity of the execution of any further documents or
instruments, Assignor hereby constitutes and appoints Assignee as
Assignor's true and lawful attorney, coupled with an interest, in the
name, place and stead of Assignor (i) to collect, demand, sue for,
attach, levy, recover and receive all Receipts due and payable by
Lessees pursuant to the Leases and to give proper notices, receipts,
releases and acquittances therefor and after deducting expenses of
collection, to apply the net proceeds as a credit upon any portion, as
selected by Assignee, of the Indebtedness, notwithstanding that the
amount owing thereunder may not then be due and payable or that the
Indebtedness is adequately secured, and Assignor does hereby authorize
and direct such Lessees to deliver such payment to Assignee in
accordance with the foregoing; and (ii) to subject and subordinate at
any time and from time to time, the Leases, to the lien of the Deed of
Trust or any other Loan Documents or any other mortgage or deed of
trust on or to any ground lease of the Property or to request or
require such subordination, where such reservation, option or
authority was reserved under the Leases to the Assignor, or in any
case, where the Assignor otherwise would have the right, power or
privilege so to do. Assignor hereby ratifies and confirms all acts
that Assignee shall do or cause to be done by virtue of the powers
granted hereby and warrants that the Assignor has not, on or at any
time prior to the date hereof, exercised any such right of
subordination under clause (ii) above and covenants not to exercise
any such right except as may be required by Assignee. The power of
attorney hereunder granted is irrevocable and continuing, shall
survive the insolvency or dissolution of Assignor, and such rights,
powers and privileges shall be exclusive in Assignee, its successors
and assigns so long as any part of the Indebtedness shall remain
unpaid.
53 Indemnity. Assignor shall indemnify, defend,
protect and hold Assignee harmless from and against any and all lia-
bility, loss, cost, damage or expense (including, without limitation,
reasonable attorneys' fees) that Assignee may or might incur under or
by reason of this Assignment, for any action taken by Assignee
hereunder, or the enforcement of this Assignment, or by reason or in
defense of any and all claims and demands whatsoever that may be
asserted against Assignee arising out of the Leases, including any
claim by any Lessees of credit from rental paid to and received by
Assignor. If Assignee incurs any such liability, loss, cost, damage
or expense, the amount thereof with interest thereon at the Secondary
Interest Rate (as defined in the Note), shall be payable by Assignor
immediately upon demand, shall be secured by the Deed of Trust, and
shall be part of the Indebtedness.
54 No Waiver. The failure of Assignee to avail
itself of any of the terms, covenants and conditions of this
Assignment for any period of time, or at any time or times, shall not
be construed or deemed to be a waiver of any such right, and nothing
herein contained, nor anything done or omitted to be done by Assignee
pursuant hereto, shall be deemed a waiver by Assignee of any of its
rights and remedies under the Loan Documents, or under any applicable
laws. The rights of Assignee to collect the Indebtedness and to
enforce any security therefor may be exercised by Assignee, either
prior to, simultaneously with, or subsequent to, any action taken
hereunder.
55 No Merger. So long as any of the Indebtedness
shall remain unpaid, unless Assignee shall otherwise consent in
writing, the leasehold estates and the subleasehold estates on the
Property, if any, shall not merge, but shall always be kept separate
and distinct, notwithstanding the union of said estates either in
Assignor or in any Lessees or in a third party, by purchase or
otherwise.
56 No Mortgagee in Possession; No Other Liability.
The acceptance by Assignee of this Assignment, with all of the rights,
power, privileges and authority so created, shall not, prior to entry
upon and taking of possession of the Property by Assignee, be deemed
or construed to (i) constitute Assignee a mortgagee in possession nor
thereafter or at any time or in any event obligate Assignee to appear
in or defend any action or proceeding relating to the Leases or to the
Property, (ii) require Assignee to take any action hereunder, or to
expend any money or incur any expenses or perform or discharge any
obligation, duty or liability under the Leases, or (iii) require
Assignee to assume any obligation or responsibility for any security
deposits or other deposits delivered to Assignor by Lessees and not
assigned and delivered to Assignee. Assignee shall not be liable in
any way for any injury or damage to person or property sustained by
any Person in or about the Property.
57 Payment of Indebtedness. Upon payment in full of
all of the Indebtedness, this Assignment shall become and be void and
of no effect, but the affidavit, certificate, letter or statement of
any officer of Assignee showing any part of said Indebtedness to
remain unpaid shall be and constitute conclusive evidence of the
validity, effectiveness and continuing force of this Assignment, and
any Person may and is hereby authorized to rely thereon.
58 Notices. All notices, demands or documents of any
kind that Assignee or Assignor may be required or may desire to serve
shall be served in the manner provided in the Deed of Trust.
59 Successors and Assigns; Gender. The terms,
covenants, conditions and warranties contained herein and the powers
granted hereby shall run with the land, shall inure to the benefit of
and bind all parties hereto and their respective heirs, executors,
administrators, successors and assigns, and all subsequent owners of
the Property, and all subsequent holders of the Note and the Deed of
Trust, subject in all events to the provisions of the Deed of Trust
regarding transfers of the Property by Assignor. In this Assignment,
whenever the context so requires, the masculine gender shall include
the feminine and/or neuter and the singular number shall include the
plural and conversely in each case. If there is more than one party
constituting Assignor, all obligations of each Assignor hereunder
shall be joint and several.
60 Severability. If any term, provision, covenant or
condition hereof or any application thereof should be held unen-
forceable, in whole or in part, all terms, provisions, covenants and
conditions hereof and all applications thereof not held invalid, void
or unenforceable shall continue in full force and effect and shall in
no way be affected, impaired or invalidated thereby.
61 Governing Law. This Assignment shall be governed
by and construed in accordance with the laws of the State of Arizona.
62 Expenses. Assignor shall pay on demand all costs
and expenses incurred by Assignee in connection with the review of
Leases, including the fees and disbursements of Assignee's outside
counsel.
63 Absolute Assignment. Notwithstanding anything
contained herein to the contrary, this Assignment is intended by
Assignor and Assignee to create and shall be construed to create an
absolute assignment by Assignor to Assignee of all of Assignor's
right, title and interest in the Leases and Receipts and shall not be
deemed to create a security interest therein. Assignor and Assignee
further agree that, during the term of this Assignment, the Leases and
Receipts shall not constitute property of Assignor (or of any estate
of Assignor) within the meaning of 11 U.S.C. Section 541, as amended
from time to time.
64 Priority Of Leases. NOTICE OF THE FOLLOWING IS
HEREBY GIVEN TO ALL TENANTS EXECUTING A LEASE AFFECTING THE PROPERTY,
EACH OF WHICH SHALL BE ON NOTICE OF, BOUND BY AND SUBJECT TO THE TERMS
OF THIS PARAGRAPH 18:
18.1 Anything to the contrary in any Lease
notwithstanding, Assignee shall have the right, but not the
obligation, to change the priority of that Lease and the lien of the
Deed of Trust from time to time by one or more unilateral notices to
the tenant that (a) the lien of the Deed of Trust shall be subordinate
to such Lease, or (b) the Lease shall be subordinate to the Deed of
Trust.
18.2 Upon written request of Assignee, every
tenant under a Lease receiving such request shall execute and deliver
to Assignee within the time period specified in that written request a
written agreement which provides the following: (a) upon the
foreclosure of the Deed of Trust such tenant shall attorn to the
purchaser of the Property at the foreclosure sale, and (b) the
foreclosure of the Deed of Trust shall not disturb or result in the
cancellation or termination of that tenant's Lease. Assignee has no
obligation to deliver such a request to any tenant.
18.3 Assignor covenants that, unless Assignee
otherwise agrees, each Lease shall provide, among other things, that
Assignee shall have the right to (a) change the relative priority of
that Lease and the Deed of Trust by notice to the tenant that (i) the
Lease shall be subordinate to the Deed of Trust, or (ii) the Deed of
Trust shall be subordinate to the Lease, and (b) elect whether or not
(i) such Lease shall survive foreclosure of the Deed of Trust, and
(ii) such tenant shall attorn to Assignee or the purchaser upon a
foreclosure sale.
18.4 Assignee shall have the right to elect to
be a third party beneficiary of any attornment provisions contained in
any Lease. Anything to the contrary in any Lease notwithstanding, no
election by Assignor under any Lease or otherwise to alter the
relative priority of that Lease and the Deed of Trust shall be
effective unless Assignee shall have consented thereto in writing.
65 Limitation on Personal Liabilities. Assignor's
liability (i) under the Multistate Note is subject to the terms and
conditions set forth in Paragraph 19 of the Multistate Note; (ii)
under the Nevada Note is subject to the terms and conditions set forth
in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
66 Counterparts. This Assignment may be executed in
any number of counterparts, each of which counterparts shall be deemed
to be an original and all of which together shall constitute but one
and the same Assignment.<PAGE>
IN WITNESS WHEREOF, this Assignment of Lessor's
Interest in Leases has been duly executed by Assignor the day and year
first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
Witness (other than Notary Public):
/s/ Cindy Lynds
Name: Cindy Lynds
The Prudential Insurance Company
of America hereby executes this
Assignment to evidence its agreement
with the last two sentences of
Section 2, hereof.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
[Printed Name and Title]
Witness (other than Notary Public):
Name:
[11128.AGRE]I13400<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca , a notary public,
personally appeared
Scott R. Whitney, Sr. V.P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca , a notary
public, personally appeared
Scott R. Whitney, Sr. V. P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_______________________________________________________________
ASSIGNMENT OF LESSOR'S INTEREST
IN LEASES
(Fremont)
THIS ASSIGNMENT OF LESSOR'S INTEREST IN LEASES (this
"Assignment") is made as of January 30, 1998, by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Assignor"), in favor
of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation having offices at Four Embarcadero Center, Suite 2700,
San Francisco, California 94111 ("Assignee"), for the benefit and
protection of Assignee as beneficiary under that certain Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements of even date herewith executed by
Assignor in favor of Assignee (the "Deed of Trust") encumbering that
certain real property, together with any improvements now or at any
time located thereon, located in the County of Alameda, State of
California (the "Property"), and more particularly described in
Exhibit A attached hereto and incorporated herein by this reference
and for the benefit and protection of Assignee as payee and holder of
that certain Amended and Restated Promissory Note dated May 24, 1996
(and deemed made as of, and relating back to, March 20, 1996),
executed by Assignor, as maker, to and for the benefit of Assignee, as
holder, in the original principal amount of Twenty-Five Million and
No/100 Dollars ($25,000,000.00), and all modifications, renewals or
extensions thereof (the "Multistate Note"), and that certain Amended
and Restated Promissory Note dated as of May 9, 1997 executed by
Assignor, as maker, to and for the benefit of Assignee, as holder, in
the original principal amount of Eight Million Nine Hundred Thirteen
Thousand Seven Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Assignee or its order, and all modifications, renewals or
extensions thereof (the "Nevada Note"), and that certain Promissory
Note dated as of even date herewith executed by Assignor, as maker, to
and for the benefit of Assignee, as holder, in the original principal
amount of Twenty Million Nine Hundred Thousand Dollars ($20,900,000),
payable to Assignee or its order, and all modifications, renewals or
extensions thereof (the "Arizona/California Note," and together with
the Multistate Note and the Nevada Note, collectively, the "Note").
W I T N E S S E T H:
FOR VALUE RECEIVED, Assignor does hereby irrevocably
and absolutely SELL, ASSIGN, TRANSFER, SET OVER AND DELIVER unto
Assignee any and all leasehold interests, including subleases and
tenancies following attornment, now or hereafter affecting or covering
any part of the Property, including, without limitation, those leases
described in Exhibit B attached hereto (collectively, the "Leases").
TOGETHER, with the immediate and continuing right to
collect and receive all of the rents, income, receipts, revenues,
issues and profits now due or which may become due or to which
Assignor may now or shall hereafter (including the period of
redemption, if any) become entitled or may demand or claim, arising or
issuing from or out of the Leases or from deficiency rents and
liquidated damages following default, including, without limitation,
all security and other deposits now or hereafter held by Assignor, and
all proceeds payable under any policy of insurance covering loss of
rents or other income from the Property, together with any and all
rights and claims of any kind that Assignor may have against lessees
under the Leases or any subtenants or occupants of the Property, or
any part thereof (all such moneys, rights and claims described in this
paragraph being hereinafter called the "Receipts").
SUBJECT, however, to a license hereby granted by
Assignee to Assignor, but limited as hereinafter provided, to collect
and receive the Receipts.
ASSIGNOR REPRESENTS, WARRANTS, COVENANTS AND AGREES AS
FOLLOWS:
67 Representations and Warranties. Assignor
represents and warrants that: (i) Assignor is the owner of the
Property, and has good title to the Leases and Receipts and full and
complete right to assign the same; (ii) no other Person (as herein-
after defined) has any right, title or interest in the Leases or
Receipts; (iii) Assignor has duly and punctually performed all and
singular the obligations, terms, covenants, conditions and warranties
of the Leases on Assignor's part to be kept, observed and performed;
(iv) Assignor has not previously sold, assigned, transferred,
mortgaged or pledged the Leases or the Receipts, whether now due or
hereafter to become due; (v) no Receipts for any period of more than
thirty (30) days subsequent to the date hereof have been collected,
nor has payment of any of same been otherwise discharged or
compromised; (vi) the lessees under the Leases ("Lessees") are not in
default of any of the terms thereof and do not have any defense, set-
off or counter claim against Assignor thereunder; (vii) the Leases are
in full force and effect, are valid and enforceable in accordance with
their terms, and have not been modified, amended or altered, whether
in writing or orally, except as otherwise disclosed to Assignee in
writing; (viii) except as disclosed on the rent roll delivered to
Assignee in connection with the funding of the Loan (the "Rent Roll"),
there are no unextinguished rent concessions, abatements or other
inducements relating to the Leases, and no Lessee has any option or
right to acquire any interest in the Property; and (ix) the Rent Roll
discloses all currently existing Leases and is complete, accurate and
true in all respects. As used herein, the term "Person" shall mean
and refer to any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in
an individual, fiduciary or other capacity.
68 Affirmative Covenants. Assignor shall:
(i) observe, perform and discharge, duly and punctually, all and
singular the obligations, terms, covenants, conditions and warranties
of the Leases, on the part of Assignor to be kept, observed and per-
formed, and give prompt notice to Assignee of any failure on the part
of Assignor to observe, perform and discharge the same; (ii) direct
the Lessees to deliver all rents and other payments due under the
Leases to Assignee upon written request of Assignee and without
further action of Assignor; (iii) upon request of Assignee, notify
Lessees in writing of this Assignment and that any security deposit,
or other deposits heretofore delivered to Assignor have been retained
by Assignor or assigned and delivered to Assignee, as the case may be;
(iv) enforce or secure in the name of Assignee the performance of each
and every obligation, term, covenant, condition and agreement of the
Leases to be performed by Lessees; (v) appear in and defend any action
or proceeding arising under, occurring out of, or in any manner con-
nected with the Leases or the obligations, duties, or liabilities of
Assignor and Lessees thereunder; and (vi) upon request by Assignee, to
do so in the name and on behalf of Assignee but at the expense of
Assignor, and to pay all costs and expenses of Assignee, including,
without limitation, reasonable attorneys' fees. In the negotiation of
any future leases or the renewal of any of the Leases, Assignor shall
use commercially reasonable efforts not to agree to obtain the
agreement of Assignee to execute a subordination, non-disturbance and
attornment agreement ("SNDA") with the Lessee or proposed lessee. So
long as Assignor uses such commercially reasonable efforts, Assignee
shall enter into an SNDA on Assignee's then current standard SNDA form
with the tenant for any lease which is either expressly approved by
Assignee in writing or which meets the criteria set forth in
paragraphs (a) or (b) of Section 3, below. Pursuant to such SNDA,
Assignee shall agree that in the exercise of any foreclosure remedies
under the Deed of Trust, Assignee will not disturb such tenant in its
possession of the demised premises so long as such tenant is not in
default under its lease.
69 Negative Covenants. Assignor shall not, without
the prior written consent of Assignee: (i) lease any part of the
Property or renew or extend any of the Leases; (ii) terminate, amend,
modify or alter in any manner any of the Leases, or waive, excuse,
condone, discount, set off, compromise, or in any manner release or
discharge Lessees from any obligations, covenants, conditions or
agreements by such Lessees to be kept, or accept or consent to any
surrender of the Leases; (iii) receive or collect any Receipts for a
period of more than one month in advance (whether in cash or by
promissory note or otherwise); (iv) further assign the Leases or
pledge, transfer, mortgage or otherwise encumber or assign future
payments of Receipts; (v) commence an action of ejectment or summary
proceedings for dispossession of the Lessees under any of the Leases;
(vi) consent to any modification of the express purposes for which the
Property has been leased; or (vii) consent to any subletting of the
Property or any part thereof, or to any assignment of the Leases by
lessees thereunder or to any assignment or further subletting by any
sublessees. Notwithstanding the foregoing, Assignor may do the
following with respect to the Leases, including without limitation any
new leases affecting the Property, without obtaining Assignee's prior
written consent:
A. Enter into any amendment or modification
of any Lease, so long as the Lessee under such Lease
leases not more than 10,000 rentable square feet of
the Property, provided that Assignor delivers to
Assignee an executed copy of such amendment within a
reasonable time after execution thereof, but in no
case later than 5 business days after such execution,
and provided further that such amendment (i) is
consistent with the ordinary and reasonable business
practices and procedures customarily employed by
Assignor for properties similar to the Property,
(ii) does not substantially increase the obligations
of the landlord by providing non-market inducements to
the Lessee, (iii) does not decrease or accelerate the
rent under such Lease, (iv) does not decrease the term
of such Lease, unless such a reduced lease term is
granted in conjunction with both retaining an existing
Lessee and with enlarging the size of the same
Lessee's space in the Property, (v) does not cause
such Lease to vary substantially from Assignor's
standard form lease, and (vi) is not of a Lease for a
single tenant space which comprises all or
substantially all of the area for an individual
building on the Property; and
B. Enter into new bona fide arms-length
leases (or renew existing Leases) with third-party
tenants for premises of 10,000 rentable square feet or
less, provided such leases (i) are on Assignor's
standard form lease approved by Assignee, with no
modifications that substantially increase the
obligations of the landlord by providing non-market
inducements to the Lessee, and (ii) are not for a
single tenant space which comprises all or
substantially all of the area for an individual
building on the Property; and
C. Terminate any Lease (for premises of
10,000 rentable square feet or less) in the ordinary
course of Assignor's business (i) for non-payment of
rent or other material default by the Lessee
thereunder so long as such termination does not
include a payment by such Lessee to Assignor, or
(ii) if all of the space occupied pursuant to the
Lease to be terminated is to be leased to another
Lessee in conjunction with a transaction permitted
under Section 3(a)(iv), above.
In any case in which Assignee's consent is required pursuant to this
Section 3, Assignee shall respond to requests for such consent in an
expedient manner, and such consent shall not be unreasonably withheld
or delayed and shall be deemed given unless objections in reasonable
detail are given to Assignee within eight (8) business days following
Assignor's receipt of (i) written request for such consent, which
written request shall include the date Assignee's response is due, and
(ii) all pertinent information relating to the Lease or proposed lease
in question, including, without limitation, copies of the proposed
amendment or new lease, if applicable.
70 Default and Remedies. In the event any
representation or warranty herein of Assignor shall be found to be
untrue in any material respect when made, or thereafter becomes untrue
in any material respect, or in the event Assignor shall default in the
payment of any Indebtedness (as hereinafter defined) or in the
observance or performance of any other Obligation (as hereinafter
defined), after the expiration of all applicable grace or cure
periods, if any, set forth in the Deed of Trust, then, in each such
instance, the same shall constitute an "Event of Default" hereunder
and under the Loan Documents (as defined in the Deed of Trust),
thereby entitling Assignee to declare all Indebtedness immediately due
and payable and to exercise any and all of the rights and remedies
provided thereunder and hereunder as well as by law or in equity.
Specifically, but without limiting the generality of the foregoing,
upon or at any time after the occurrence of an Event of Default,
Assignee, at its option, shall have the complete right, power and
authority to exercise and enforce any or all of the following rights
and remedies:
(i) to terminate and revoke the license granted to
Assignor hereunder and collect the Receipts, and
without taking possession of the Property, in
Assignee's own name, to demand, collect, receive,
sue for, attach and levy the Receipts, to give
proper receipts, releases and acquittances
therefor, and after deducting all necessary and
proper costs and expenses of operation and
collection, as determined in Assignee's sole
judgment, and including reasonable attorneys'
fees, to apply the net proceeds thereof, together
with any funds of Assignor deposited with
Assignee, upon the Indebtedness and in such order
as Assignee may determine in its sole discretion;
and
(ii) without regard to the adequacy of the security,
with or without any action or proceeding, through
any person or by agent, by the Trustee under the
Deed of Trust, or by a receiver appointed by a
court of competent jurisdiction, and irrespective
of Assignor's possession, to enter upon, take
possession of, manage and operate the Property, or
any part thereof or interest therein, make,
modify, enforce, cancel or accept surrender of,
any of the Leases, remove and evict any Lessee,
increase or decrease rents under any of the
Leases, decorate, clean and repair any premises
under any of the Leases, and otherwise do any act
or incur any costs or expenses as Assignee deems
necessary or proper to protect the rights of
Assignee therein, as fully and to the same extent
as Assignor could do if in possession, and in such
event to apply the Receipts so collected to the
operation and management of the Property, in such
order as the Assignee shall deem proper in its
sole discretion, including payment of reasonable
management, brokerage and attorneys' fees, payment
of the Indebtedness and maintenance, without
interest, of reserves for replacements.
Collection of Receipts hereunder, and application thereof as specified
above, and/or the entry upon and taking possession of the Property, or
any part thereof or interest therein, shall not cure or waive any
default or waive, modify or affect any notice of default under any
Loan Documents, or invalidate any act done pursuant to such notice,
and the enforcement of such right or remedy by Assignee, once
exercised, shall continue for so long as Assignee shall elect. If
Assignee shall thereafter elect to discontinue the exercise of any
such right or remedy, the same or any other right or remedy hereunder
may be reasserted at any time and from time to time following any
subsequent Event of Default. A demand upon any Lessee made by
Assignee for payment of Receipts by reason of any default claimed by
Assignee hereunder or under any other Loan Documents shall be
sufficient to warrant to said Lessee to make future payments of all
Receipts to Assignee without the necessity for further consent by
Assignor.
As used herein, the term "Indebtedness" shall mean and
refer to the principal of and all other amounts, payments and premiums
due under the Note and any extensions or renewals thereof (including
extensions or renewals at a different rate of interest, whether or not
evidenced by a new or additional promissory note or notes), and all
other indebtedness of Assignor to Assignee and additional advances
under, evidenced by and/or secured by the Loan Documents, plus
interest on all such amounts. As used herein, the term "Obligations"
shall mean and refer to any and all of the covenants, promises and
other obligations (including the Indebtedness) made or owing by
Assignor to or due Assignee under and/or as set forth in the Loan
Documents and all of the material covenants, promises and other
obligations made or owing by Assignor to each and every other Person
relating to the Property.
71 Grant of License to Assignor. So long as there
shall exist no Event of Default, Assignor shall have the right under a
license granted hereby (but limited as provided in this paragraph) to
collect, but not prior to accrual, all Receipts. Assignor shall
receive such Receipts, and shall hold the same, as well as the right
and license to receive the same, as a trust fund to be applied, and
Assignor shall so apply the same, first to the payment of taxes and
assessments upon the Property before penalty or interest are due
thereon, second to the cost of such insurance and of such maintenance
and repairs as is required by the terms of the Deed of Trust, third to
the satisfaction of all obligations under the Leases, and fourth to
the payment of the Indebtedness before using any part of the Receipts
for any other purpose.
72 Power of Attorney. Effective automatically upon
the occurrence of an Event of Default and continuously thereafter, and
without the necessity of the execution of any further documents or
instruments, Assignor hereby constitutes and appoints Assignee as
Assignor's true and lawful attorney, coupled with an interest, in the
name, place and stead of Assignor (i) to collect, demand, sue for,
attach, levy, recover and receive all Receipts due and payable by
Lessees pursuant to the Leases and to give proper notices, receipts,
releases and acquittances therefor and after deducting expenses of
collection, to apply the net proceeds as a credit upon any portion, as
selected by Assignee, of the Indebtedness, notwithstanding that the
amount owing thereunder may not then be due and payable or that the
Indebtedness is adequately secured, and Assignor does hereby authorize
and direct such Lessees to deliver such payment to Assignee in
accordance with the foregoing; and (ii) to subject and subordinate at
any time and from time to time, the Leases, to the lien of the Deed of
Trust or any other Loan Documents or any other mortgage or deed of
trust on or to any ground lease of the Property or to request or
require such subordination, where such reservation, option or
authority was reserved under the Leases to the Assignor, or in any
case, where the Assignor otherwise would have the right, power or
privilege so to do. Assignor hereby ratifies and confirms all acts
that Assignee shall do or cause to be done by virtue of the powers
granted hereby and warrants that the Assignor has not, on or at any
time prior to the date hereof, exercised any such right of
subordination under clause (ii) above and covenants not to exercise
any such right except as may be required by Assignee. The power of
attorney hereunder granted is irrevocable and continuing, shall
survive the insolvency or dissolution of Assignor, and such rights,
powers and privileges shall be exclusive in Assignee, its successors
and assigns so long as any part of the Indebtedness shall remain
unpaid.
73 Indemnity. Assignor shall indemnify, defend,
protect and hold Assignee harmless from and against any and all lia-
bility, loss, cost, damage or expense (including, without limitation,
reasonable attorneys' fees) that Assignee may or might incur under or
by reason of this Assignment, for any action taken by Assignee
hereunder, or the enforcement of this Assignment, or by reason or in
defense of any and all claims and demands whatsoever that may be
asserted against Assignee arising out of the Leases, including any
claim by any Lessees of credit from rental paid to and received by
Assignor. If Assignee incurs any such liability, loss, cost, damage
or expense, the amount thereof with interest thereon at the Secondary
Interest Rate (as defined in the Note), shall be payable by Assignor
immediately upon demand, shall be secured by the Deed of Trust, and
shall be part of the Indebtedness.
74 No Waiver. The failure of Assignee to avail
itself of any of the terms, covenants and conditions of this
Assignment for any period of time, or at any time or times, shall not
be construed or deemed to be a waiver of any such right, and nothing
herein contained, nor anything done or omitted to be done by Assignee
pursuant hereto, shall be deemed a waiver by Assignee of any of its
rights and remedies under the Loan Documents, or under any applicable
laws. The rights of Assignee to collect the Indebtedness and to
enforce any security therefor may be exercised by Assignee, either
prior to, simultaneously with, or subsequent to, any action taken
hereunder.
75 No Merger. So long as any of the Indebtedness
shall remain unpaid, unless Assignee shall otherwise consent in
writing, the leasehold estates and the subleasehold estates on the
Property, if any, shall not merge, but shall always be kept separate
and distinct, notwithstanding the union of said estates either in
Assignor or in any Lessees or in a third party, by purchase or
otherwise.
76 No Mortgagee in Possession; No Other Liability.
The acceptance by Assignee of this Assignment, with all of the rights,
power, privileges and authority so created, shall not, prior to entry
upon and taking of possession of the Property by Assignee, be deemed
or construed to (i) constitute Assignee a mortgagee in possession nor
thereafter or at any time or in any event obligate Assignee to appear
in or defend any action or proceeding relating to the Leases or to the
Property, (ii) require Assignee to take any action hereunder, or to
expend any money or incur any expenses or perform or discharge any
obligation, duty or liability under the Leases, or (iii) require
Assignee to assume any obligation or responsibility for any security
deposits or other deposits delivered to Assignor by Lessees and not
assigned and delivered to Assignee. Assignee shall not be liable in
any way for any injury or damage to person or property sustained by
any Person in or about the Property.
77 Payment of Indebtedness. Upon payment in full of
all of the Indebtedness, this Assignment shall become and be void and
of no effect, but the affidavit, certificate, letter or statement of
any officer of Assignee showing any part of said Indebtedness to
remain unpaid shall be and constitute conclusive evidence of the
validity, effectiveness and continuing force of this Assignment, and
any Person may and is hereby authorized to rely thereon.
78 Notices. All notices, demands or documents of any
kind that Assignee or Assignor may be required or may desire to serve
shall be served in the manner provided in the Deed of Trust.
79 Successors and Assigns; Gender. The terms,
covenants, conditions and warranties contained herein and the powers
granted hereby shall run with the land, shall inure to the benefit of
and bind all parties hereto and their respective heirs, executors,
administrators, successors and assigns, and all subsequent owners of
the Property, and all subsequent holders of the Note and the Deed of
Trust, subject in all events to the provisions of the Deed of Trust
regarding transfers of the Property by Assignor. In this Assignment,
whenever the context so requires, the masculine gender shall include
the feminine and/or neuter and the singular number shall include the
plural and conversely in each case. If there is more than one party
constituting Assignor, all obligations of each Assignor hereunder
shall be joint and several.
80 Severability. If any term, provision, covenant or
condition hereof or any application thereof should be held unen-
forceable, in whole or in part, all terms, provisions, covenants and
conditions hereof and all applications thereof not held invalid, void
or unenforceable shall continue in full force and effect and shall in
no way be affected, impaired or invalidated thereby.
81 Governing Law. This Assignment shall be governed
by and construed in accordance with the laws of the State of
California.
82 Expenses. Assignor shall pay on demand all costs
and expenses incurred by Assignee in connection with the review of
Leases, including the fees and disbursements of Assignee's outside
counsel.
83 Absolute Assignment. Notwithstanding anything
contained herein to the contrary, this Assignment is intended by
Assignor and Assignee to create and shall be construed to create an
absolute assignment by Assignor to Assignee of all of Assignor's
right, title and interest in the Leases and Receipts and shall not be
deemed to create a security interest therein. Assignor and Assignee
further agree that, during the term of this Assignment, the Leases and
Receipts shall not constitute property of Assignor (or of any estate
of Assignor) within the meaning of 11 U.S.C. Section 541, as amended
from time to time.
84 Priority Of Leases. NOTICE OF THE FOLLOWING IS
HEREBY GIVEN TO ALL TENANTS EXECUTING A LEASE AFFECTING THE PROPERTY,
EACH OF WHICH SHALL BE ON NOTICE OF, BOUND BY AND SUBJECT TO THE TERMS
OF THIS PARAGRAPH 18:
18.1 Anything to the contrary in any Lease
notwithstanding, Assignee shall have the right, but not the
obligation, to change the priority of that Lease and the lien of the
Deed of Trust from time to time by one or more unilateral notices to
the tenant that (a) the lien of the Deed of Trust shall be subordinate
to such Lease, or (b) the Lease shall be subordinate to the Deed of
Trust.
18.2 Upon written request of Assignee, every
tenant under a Lease receiving such request shall execute and deliver
to Assignee within the time period specified in that written request a
written agreement which provides the following: (a) upon the
foreclosure of the Deed of Trust such tenant shall attorn to the
purchaser of the Property at the foreclosure sale, and (b) the
foreclosure of the Deed of Trust shall not disturb or result in the
cancellation or termination of that tenant's Lease. Assignee has no
obligation to deliver such a request to any tenant.
18.3 Assignor covenants that, unless Assignee
otherwise agrees, each Lease shall provide, among other things, that
Assignee shall have the right to (a) change the relative priority of
that Lease and the Deed of Trust by notice to the tenant that (i) the
Lease shall be subordinate to the Deed of Trust, or (ii) the Deed of
Trust shall be subordinate to the Lease, and (b) elect whether or not
(i) such Lease shall survive foreclosure of the Deed of Trust, and
(ii) such tenant shall attorn to Assignee or the purchaser upon a
foreclosure sale.
18.4 Assignee shall have the right to elect to
be a third party beneficiary of any attornment provisions contained in
any Lease. Anything to the contrary in any Lease notwithstanding, no
election by Assignor under any Lease or otherwise to alter the
relative priority of that Lease and the Deed of Trust shall be
effective unless Assignee shall have consented thereto in writing.
85 Limitation on Personal Liabilities. Assignor's
liability (i) under the Multistate Note is subject to the terms and
conditions set forth in Paragraph 19 of the Multistate Note; (ii)
under the Nevada Note is subject to the terms and conditions set forth
in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
86 This Assignment may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the
same Assignment.<PAGE>
IN WITNESS WHEREOF, this Assignment of Lessor's
Interest in Leases has been duly executed by Assignor the day and year
first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
The Prudential Insurance Company
of America hereby executes this
Assignment to evidence its agreement
with the last two sentences of
Section 2, hereof.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
[Printed Name and Title]
[11128.AGRE]H61452
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca , a notary
public, personally appeared
Scott R. Whitney, Sr. V. P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
State of )
) ss.
County of )
On _______________________, 1998, before me,
, a notary public, personally appeared
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
(seal)
<PAGE>
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_____________________________________________________________________
FIRST MODIFICATION OF DEED OF TRUST
AND OTHER DOCUMENTS
(Nevada)
This First Modification of Deed of Trust and Other
Documents, dated as of January 30, 1998 (this "Modification"), is made
by and between BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Trustor"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("Beneficiary"), as a first
modification to that certain Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of May 9, 1997, executed by Trustor for the benefit of Beneficiary
and recorded on May 9, 1997 as Instrument No. 2026926 in the Official
Records of Washoe County, Nevada (the "Deed of Trust") and the other
documents described herein. The Deed of Trust secures certain
obligations of Trustor more particularly described therein and
encumbers the real property described in Exhibit A attached hereto.
Reference is also made to that certain Assignment of
Lessor's Interest in Leases dated as of May 9, 1997, executed by
Trustor in favor of Beneficiary and recorded on May 9, 19976 as
Instrument No. 2096927 in the Official Records of Washoe County,
Nevada (the "Assignment").
This Modification is entered into in conjunction
with that certain Third Modification of Deed of Trust and Other
Documents (The Woodlands Business Park) of even date herewith, to be
recorded in the Official Records of Salt Lake County, Utah, that
certain Third Modification of Deed of Trust and Other Documents
(Tustin Business Park) of even date herewith, to be recorded in the
Official Records of Orange County, California, that certain Third
Modification of Deed of Trust and Other Documents (Dupont Industrial
Center, Ontario) of even date herewith, to be recorded in the Official
Records of San Bernardino County, California, and that certain Second
Modification of Deed of Trust and Other Documents (Milpitas Business
Park) of even date herewith, to be recorded in the Official Records of
Santa Clara County, California (collectively, together with this
Modification, the "Modification Documents").
The Modification Documents are entered into with
reference to (i) Trustor's assumption of, and amendment and
restatement of, that certain Amended and Restated Promissory Note
dated as of May 9, 1997 executed by Trustor in the original principal
amount of Eight Million Nine Hundred Thirteen Thousand Seven Hundred
Thirty and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), (ii) the indebtedness of Trustor evidenced by that
certain Amended and Restated Promissory Note dated as of May 24, 1996,
made by Trustor to the order of Beneficiary in the face principal
amount of $25,000,000 (the "Multistate Note"), and (iii) the
indebtedness of Trustor evidenced by that certain Promissory Note
dated as of even date herewith executed by Trustor in the original
principal amount of Twenty Million Nine Hundred Thousand Dollars
($20,900,000), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Arizona/California
Note," and together with the Multistate Note and the Nevada Note,
collectively, the "Note"). Capitalized terms used and not otherwise
defined herein have the meanings set forth for them in the Deed of
Trust.
In consideration of the foregoing, and for other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Trustor and Beneficiary hereby agree as follows:
I. Modification of Deed of Trust. The Deed of Trust is hereby
modified as follows:
A. The definitions of Allocable Loan Amount,
Combined Deeds of Trust, Combined Properties, Loan Documents, Milpitas
Deed of Trust, Note, Ontario Deed of Trust, Remediation and
Indemnification Agreements, Tustin Deed of Trust, and Woodlands Deed
of Trust, as set forth in Article 1 of the Deed of Trust are hereby
deleted in their entirety, and the following new definitions are
inserted in their place, in the appropriate alphabetical order:
Allocable Loan Amount: (i) For the property
encumbered by the Ontario Deed of Trust, $8,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 8,000,000, and the denominator
of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is $7,000,000, and the denominator
of which is 25,000,000; (iii) for the property
encumbered by the Woodlands Deed of Trust, $5,200,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 5,200,000, and the denominator
of which is 25,000,000; (iv) for the property
encumbered by the Milpitas Deed of Trust, $4,800,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 4,800,000, and the denominator
of which is 25,000,000; (v) for the property
encumbered by this Deed of Trust, $8,913,730.85 less
all payments of principal made under the Nevada Note;
(vi) for the property encumbered by the Arizona Deed
of Trust, $7,200,000 less the product of (x) all
payments of principal made under the
Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator
of which is 20,900,000; (vii) for the properties
encumbered by the South San Francisco Deed of Trust,
$6,500,000 less the product of (x) all payments of
principal made under the Arizona/California Note
(other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 6,500,000, and the denominator of which is
20,900,000; and (viii) for the property encumbered by
the Fremont Deed of Trust, $7,200,000 less the product
of (x) all payments of principal made under the
Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator
of which is 20,900,000.
Combined Deeds of Trust: Collectively, this Deed of
Trust, the Woodlands Deed of Trust, the Ontario Deed
of Trust, the Milpitas Deed of Trust, the Tustin Deed
of Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust, and the Fremont Deed of
Trust.
Combined Properties: Collectively, the Property, the
property encumbered by the Woodlands Deed of Trust,
the property encumbered by the Ontario Deed of Trust,
the property encumbered by the Milpitas Deed of Trust,
the property encumbered by the Tustin Deed of Trust,
the property encumbered by the Arizona Deed of Trust,
the properties encumbered by the South San Francisco
Deed of Trust and the property encumbered by the
Fremont Deed of Trust.
Loan Documents: The Note, the Application, that
certain Note Assignment and Assumption Agreement dated
as of May 9, 1997 relating to the Nevada Note, this
Deed of Trust, the Woodlands Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the
Milpitas Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust, the Fremont Deed of
Trust, each of the Assignments of Agreements, each of
the Assignments of Lessor's Interest in Leases and all
other documents, with the exception of the Remediation
and Indemnification Agreements, evidencing, securing
or relating to the Loan, the payment of the
Indebtedness or the performance of the Obligations.
Milpitas Deed of Trust: That certain Deed of Trust
dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Santa Clara County, California, as amended
by that certain First Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
Note: Collectively (i) that certain Amended and
Restated Promissory Note dated May 24, 1996 (and
deemed made as of, and relating back to, March 20,
1996), executed by Trustor in the original principal
amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00), payable to Beneficiary or its order,
and all modifications, renewals or extensions thereof
(the "Multistate Note"), (ii) that certain Amended and
Restated Promissory Note dated as of May 9, 1997
executed by Trustor in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven
Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note
dated as of January 30, 1998 executed by Trustor in
the original principal amount of Twenty Million Nine
Hundred Thousand Dollars ($20,900,000) payable to
Beneficiary or its order, and all modifications,
renewals or extensions thereof (the
"Arizona/California Note").
Ontario Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of San Bernardino County, California, as
amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24,
1996, as amended by that certain Second Modification
of Deed of Trust and Other Loan Documents dated as of
May 9, 1997, as amended by that certain Third
Modification of Deed of Trust and Other Loan Documents
dated as of January , 1998, as further amended from
time to time.
Remediation and Indemnification Agreements:
Collectively, (i) the Hazardous Substances Remediation
and Indemnification Agreement dated as of May 9, 1997,
executed by Trustor in favor of Beneficiary in
connection with the Property, (ii) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Woodlands Deed of Trust, (iii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the Ontario Deed of Trust,
(iv) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Tustin
Deed of Trust, (v) the Hazardous Substances
Remediation and Indemnification Agreement dated as of
May 24, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered
by the Milpitas Deed of Trust, (vi) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of January 30, 1998, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Arizona Deed of Trust, (vii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of January 30, 1998, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the South San Francisco Deed of
Trust, and (viii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of January 30,
1998, executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Fremont
Deed of Trust.
Tustin Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Orange County, California, as amended by
that certain First Modification of Deed of Trust and
Other Loan Documents dated as of May 24, 1996, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of May 9,
1997, as amended by that certain Third Modification of
Deed of Trust and Other Loan Documents dated as of
January 30, 1998, as further amended from time to
time.
Woodlands Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Salt Lake County, Utah, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of May 24, 1996, as amended by
that certain Second Modification of Deed of Trust and
Other Loan Documents dated as of May 9, 1997, as
amended by that certain Third Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
B. The following new definitions of Arizona
Deed of Trust, Fremont Deed of Trust and South San Francisco Deed of
Trust are hereby added to Article 1 of the Deed of Trust, in
alphabetical order:
Arizona Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Maricopa County, Arizona, as amended from
time to time.
Fremont Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Alameda County, California, as amended from
time to time.
South San Francisco Deed of Trust: That certain Deed
of Trust dated as of January 30, 1998, executed by
Trustor for the benefit of Beneficiary, recorded in
the Official Records of San Mateo County, California
as amended from time to time.
C. Paragraph 6.1.A(8) of the Deed of Trust is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place:
(8) An "Event of Default" occurs
under any one or more of the Tustin Deed of Trust, the
Woodlands Deed of Trust, the Milpitas Deed of Trust,
the Ontario Deed of Trust, the Arizona Deed of Trust,
the South San Francisco Deed of Trust and/or the
Fremont Deed of Trust.
D. Paragraph 9.36 of the Deed of Trust is
hereby deleted in its entirety and the following new Paragraph 9.36 is
hereby inserted in its place:
9.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property
from the lien of this Deed of Trust upon the satisfac-
tion of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or
the giving on notice, or both, would constitute an
Event of Default shall have occurred either at the
time of Beneficiary's receipt of the Trustor's
written request for a reconveyance or as of the
date of such reconveyance;
(2) Not more than a total of three (3) of
the Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed
hereby or concurrently herewith (and in no event
shall Trustor be entitled to more than three (3)
total releases of any or all of the Combined
Properties hereunder and/or under the Combined
Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior
to or concurrently with the reconveyance of this
Deed of Trust, the Allocable Loan Amount for the
Property along with the prepayment premium
allocable to such Allocable Loan Amount as
determined pursuant to the applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of
this Deed of Trust does not violate the provisions
of any declaration of covenants, conditions and
restrictions, reciprocal easement agreement, Lease
or other agreement affecting the Property or any
portion thereof;
(5) The Remaining Properties shall have:
(i) after the first reconveyance, both a Combined
Debt Service Coverage and a Future Combined Debt
Service Coverage of not less than 1.80 and a
Combined Loan to Value Ratio of not more than 65%,
(ii) after the second reconveyance, both a
Combined Debt Service Coverage and a Future
Combined Debt Service Coverage of not less than
1.90 and a Combined Loan to Value Ratio of not
more than 60%, and (iii) after the third and final
reconveyance both a Combined Debt Service Coverage
and a Future Combined Debt Service Coverage of not
less than 2.00 and a Combined Loan to Value Ratio
of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt
Service Coverage and a Future Individual Debt
Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than
75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the
liens of the Woodlands Deed of Trust, the Tustin
Deed of Trust, the Milpitas Deed of Trust, the
Ontario Deed of Trust, the Arizona Deed of Trust,
the South San Francisco Deed of Trust, and the
Fremont Deed of Trust will issue such title
endorsements as Beneficiary deems necessary or
desirable for attachment to the applicable title
policies, including without limitation, CLTA
Endorsement Nos. 110.5, 111, and 111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums
then due and payable under the Loan Documents and
a non-refundable $25,000 processing fee, which fee
shall be paid at the time of notice of the
requested reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of
the requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event
that the Debt Service Coverage and the Loan to Value
Ratio tests set forth in Paragraphs 9.36(5) and
9.36(6), above, cannot be satisfied because of the
value of, or the net cash flow from, the applicable
Combined Properties, Trustor may, at its option,
satisfy such tests by making a principal prepayment
(the "Excess Principal Payment") on the Loan in an
amount sufficient to satisfy such tests so long as
Trustor also pays to Beneficiary any prepayment
premium relating to such principal prepayment, as
determined by the applicable Note. Upon receipt of
the Excess Principal Payment, Beneficiary shall apply
such amount to reduce the outstanding Loan and may
apply such amount to any one or more of the Multistate
Note, the Nevada Note and/or the Arizona/California
Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall
allocate the Excess Principal Payment to the
applicable Allocable Loan Amount in proportion to each
such Allocable Loan Amount's share of the outstanding
principal balance of the Note to which such amount is
applied, and, the monthly payments due under such
applicable Note shall be adjusted, as of the date of
the release of this Deed of Trust pursuant to this
Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such
adjustment to be based on the applicable interest rate
under such Note and an amortization schedule equal to
300 months minus the number of months that have
elapsed since May 31, 1998.
E. Paragraph 9.37 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.37 is hereby
inserted in its place:
9.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
F. The Deed of Trust is hereby modified to provide
that it secures, in addition to all other obligations now or hereafter
secured thereby, a. Trustor's obligations to Beneficiary under the
Multistate Note, the Nevada Note, the Arizona/California Note and all
other Loan Documents, as supplemented and/or otherwise modified by
this Modification, and b. Trustor's obligations to Beneficiary under
the (i) the Arizona Deed of Trust, (ii) the South San Francisco Deed
of Trust, (iii) the Fremont Deed of Trust, and (iv) the Modification
Documents.
II. Modification of Multistate Note. The Multistate
Note is hereby amended so that (i) the term "Deeds of Trust" as used
therein includes the Arizona Deed of Trust, the South San Francisco
Deed of Trust and the Fremont Deed of Trust (as defined in Paragraph
1.2 of this Modification) as well as the balance of the Deeds of Trust
provided therein, as modified by the Modification Documents, (ii) the
term "Remediation and Indemnification Agreements" as used therein
shall have the meaning ascribed thereto in the Deeds of Trust (as
modified by the Modification Documents).
III. Modification of Assignment. The Assignment is
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, and (ii) the term "Deed of Trust" as used
therein shall mean the Deed of Trust as modified by this Modification.
IV. Modification of Other Documents. The other Loan
Documents and the Remediation and Indemnification Agreement executed
by Trustor in favor of Beneficiary in connection with the Property are
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, the term "Deed of Trust" as used therein
shall mean the Deed of Trust as modified by this Modification.
V. No Other Modification. Except as expressly
modified hereby, the Note, the Deed of Trust, and other Loan Documents
remain unmodified and in full force and effect.
VI. Miscellaneous. This Modification shall bind, and
shall inure to the benefit of, the successors and assigns of the
parties. This document may be executed in counterparts with the same
force and effect as if the parties had executed one instrument, and
each such counterpart shall constitute an original hereof. This
Modification shall be governed by the laws of the State of Nevada
(without regard to any choice of law provisions thereof).
<PAGE>
IN WITNESS WHEREOF, Trustor and Beneficiary have
caused this Modification to be duly executed as of the date first
written above.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
"BENEFICIARY":
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
Vice President
[11128.AGRE]I3394
<PAGE>
State of California )
)
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, Notary Public,
personally appeared Scott R. Whitney, Sr. V. P.,
X personally known to me or ____ proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
<PAGE>
State of California )
)
County of )
On _________, 1998, before me, ________________, Notary Public,
personally appeared ___________________________________,
____ personally known to me or ____ proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
<PAGE>
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_____________________________________________________________________
SECOND MODIFICATION OF DEED OF TRUST
AND OTHER DOCUMENTS
(Milpitas Town Center)
This Second Modification of Deed of Trust and Other
Documents, dated as of January 30, 1998 (this "Modification"), is made
by and between BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Trustor"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("Beneficiary"), as a second
modification to that certain Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of May 24, 1996, executed by Trustor for the benefit of Beneficiary
and recorded on May 31, 1996 as Instrument No. 13312305 in the
Official Records of Santa Clara County, California, as modified by
that certain First Modification of Deed of Trust and Other Documents
(the "First Modification") dated as of May 9, 1997 and recorded on May
9, 1997 as Instrument No. 13702775 in the Official Records of Santa
Clara County, California (collectively, the "Deed of Trust") and the
other documents described herein. The Deed of Trust secures certain
obligations of Trustor more particularly described therein and
encumbers the real property described in Exhibit A attached hereto.
Reference is also made to that certain Assignment of
Lessor's Interest in Leases dated as of May 24, 1996, executed by
Trustor in favor of Beneficiary and recorded on May 31, 1996 as
Instrument No. 13312306 in the Official Records of Santa Clara County,
California, as modified by the First Modification (collectively, the
"Assignment").
This Modification is entered into in conjunction
with that certain Third Modification of Deed of Trust and Other
Documents (The Woodlands Business Park) of even date herewith, to be
recorded in the Official Records of Salt Lake County, Utah, that
certain Third Modification of Deed of Trust and Other Documents
(Tustin Business Park) of even date herewith, to be recorded in the
Official Records of Orange County, California, that certain Third
Modification of Deed of Trust and Other Documents (Dupont Industrial
Center, Ontario) of even date herewith, to be recorded in the Official
Records of San Bernardino County, California, and that certain First
Modification of Deed of Trust and Other Documents (Nevada) of even
date herewith, to be recorded in the Official Records of Washoe
County, Nevada (collectively, together with this Modification, the
"Modification Documents").
The Modification Documents are entered into with
reference to (i) Trustor's assumption of, and amendment and
restatement of, that certain Amended and Restated Promissory Note
dated as of May 9, 1997 executed by Trustor in the original principal
amount of Eight Million Nine Hundred Thirteen Thousand Seven Hundred
Thirty and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), (ii) the indebtedness of Trustor evidenced by that
certain Amended and Restated Promissory Note dated as of May 24, 1996,
made by Trustor to the order of Beneficiary in the face principal
amount of $25,000,000 (the "Multistate Note"), and (iii) the
indebtedness of Trustor evidenced by that certain Promissory Note
dated as of even date herewith executed by Trustor in the original
principal amount of Twenty Million Nine Hundred Thousand Dollars
($20,900,000), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Arizona/California
Note," and together with the Multistate Note and the Nevada Note,
collectively, the "Note"). Capitalized terms used and not otherwise
defined herein have the meanings set forth for them in the Deed of
Trust.
In consideration of the foregoing, and for other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Trustor and Beneficiary hereby agree as follows:
I. Modification of Deed of Trust. The Deed of Trust is hereby
modified as follows:
A. The definitions of Allocable Loan Amount,
Combined Deeds of Trust, Combined Properties, Loan Documents, Nevada
Deed of Trust, Note, Ontario Deed of Trust, Remediation and
Indemnification Agreements, Tustin Deed of Trust, and Woodlands Deed
of Trust, as set forth in Article 1 of the Deed of Trust are hereby
deleted in their entirety, and the following new definitions are
inserted in their place, in the appropriate alphabetical order:
Allocable Loan Amount: (i) For the property
encumbered by the Ontario Deed of Trust, $8,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 8,000,000, and the denominator
of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is $7,000,000, and the denominator
of which is 25,000,000; (iii) for the property
encumbered by the Woodlands Deed of Trust, $5,200,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 5,200,000, and the denominator
of which is 25,000,000; (iv) for the property
encumbered by the this Deed of Trust, $4,800,000 less
the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 4,800,000, and the denominator
of which is 25,000,000; (v) for the property
encumbered by the Nevada Deed of Trust, $8,913,730.85
less all payments of principal made under the Nevada
Note; (vi) for the property encumbered by the Arizona
Deed of Trust, $7,200,000 less the product of (x) all
payments of principal made under the
Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator
of which is 20,900,000; (vii) for the properties
encumbered by the South San Francisco Deed of Trust,
$6,500,000 less the product of (x) all payments of
principal made under the Arizona/California Note
(other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 6,500,000, and the denominator of which is
20,900,000; and (viii) for the property encumbered by
the Fremont Deed of Trust, $7,200,000 less the product
of (x) all payments of principal made under the
Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator
of which is 20,900,000.
Combined Deeds of Trust: Collectively, this Deed of
Trust, the Woodlands Deed of Trust, the Ontario Deed
of Trust, the Nevada Deed of Trust, the Tustin Deed of
Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust, and the Fremont Deed of
Trust.
Combined Properties: Collectively, the Property, the
property encumbered by the Woodlands Deed of Trust,
the property encumbered by the Ontario Deed of Trust,
the property encumbered by the Nevada Deed of Trust,
the property encumbered by the Tustin Deed of Trust,
the property encumbered by the Arizona Deed of Trust,
the properties encumbered by the South San Francisco
Deed of Trust and the property encumbered by the
Fremont Deed of Trust.
Loan Documents: The Note, the Application, that
certain Note Assignment and Assumption Agreement dated
as of May 9, 1997 relating to the Nevada Note, this
Deed of Trust, the Woodlands Deed of Trust, the
Ontario Deed of Trust, the Tustin Deed of Trust, the
Nevada Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust, the Fremont Deed of
Trust, each of the Assignments of Agreements, each of
the Assignments of Lessor's Interest in Leases and all
other documents, with the exception of the Remediation
and Indemnification Agreements, evidencing, securing
or relating to the Loan, the payment of the
Indebtedness or the performance of the Obligations.
Nevada Deed of Trust: That certain Deed of Trust
dated as of May 9, 1997, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Washoe County, Nevada, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of January 30, 1998, as
further amended from time to time.
Note: Collectively (i) that certain Amended and
Restated Promissory Note dated May 24, 1996 (and
deemed made as of, and relating back to, March 20,
1996), executed by Trustor in the original principal
amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00), payable to Beneficiary or its order,
and all modifications, renewals or extensions thereof
(the "Multistate Note"), (ii) that certain Amended and
Restated Promissory Note dated as of May 9, 1997
executed by Trustor in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven
Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note
dated as of January 30, 1998 executed by Trustor in
the original principal amount of Twenty Million Nine
Hundred Thousand Dollars ($20,900,000) payable to
Beneficiary or its order, and all modifications,
renewals or extensions thereof (the
"Arizona/California Note").
Ontario Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of San Bernardino County, California, as
amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24,
1996, as amended by that certain Second Modification
of Deed of Trust and Other Loan Documents dated as of
May 9, 1997, as amended by that certain Third
Modification of Deed of Trust and Other Loan Documents
dated as of January 30, 1998, as further amended from
time to time.
Remediation and Indemnification Agreements:
Collectively, (i) the Hazardous Substances Remediation
and Indemnification Agreement dated as of May 24,
1996, executed by Trustor in favor of Beneficiary in
connection with the Property, (ii) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Woodlands Deed of Trust, (iii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the Ontario Deed of Trust,
(iv) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Tustin
Deed of Trust, (v) the Hazardous Substances
Remediation and Indemnification Agreement dated as of
May 9, 1997, executed by Trustor in favor of
Beneficiary in connection with the property encumbered
by the Nevada Deed of Trust, (vi) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of January 30, 1998, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Arizona Deed of Trust, (vii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of January 30, 1998, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the South San Francisco Deed of
Trust, and (viii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of January 30,
1998, executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Fremont
Deed of Trust.
Tustin Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Orange County, California, as amended by
that certain First Modification of Deed of Trust and
Other Loan Documents dated as of May 24, 1996, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of May 9,
1997, as amended by that certain Third Modification of
Deed of Trust and Other Loan Documents dated as of
January 30, 1998, as further amended from time to
time.
Woodlands Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Salt Lake County, Utah, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of May 24, 1996, as amended by
that certain Second Modification of Deed of Trust and
Other Loan Documents dated as of May 9, 1997, as
amended by that certain Third Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
B. The following new definitions of Arizona
Deed of Trust, Fremont Deed of Trust and South San Francisco Deed of
Trust are hereby added to Article 1 of the Deed of Trust, in
alphabetical order:
Arizona Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Maricopa County, Arizona, as amended from
time to time.
Fremont Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Alameda County, California, as amended from
time to time.
South San Francisco Deed of Trust: That certain Deed
of Trust dated as of January 30, 1998, executed by
Trustor for the benefit of Beneficiary, recorded in
the Official Records of San Mateo County, California
as amended from time to time.
C. Paragraph 6.1.A(8) of the Deed of Trust is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place:
(8) An "Event of Default" occurs
under any one or more of the Tustin Deed of Trust, the
Woodlands Deed of Trust, the Nevada Deed of Trust, the
Ontario Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust and/or the Fremont
Deed of Trust.
D. Paragraph 9.36 of the Deed of Trust is
hereby deleted in its entirety and the following new Paragraph 9.36 is
hereby inserted in its place:
9.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property
from the lien of this Deed of Trust upon the satisfac-
tion of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or
the giving on notice, or both, would constitute an
Event of Default shall have occurred either at the
time of Beneficiary's receipt of the Trustor's
written request for a reconveyance or as of the
date of such reconveyance;
(2) Not more than a total of three (3) of
the Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed
hereby or concurrently herewith (and in no event
shall Trustor be entitled to more than three (3)
total releases of any or all of the Combined
Properties hereunder and/or under the Combined
Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior
to or concurrently with the reconveyance of this
Deed of Trust, the Allocable Loan Amount for the
Property along with the prepayment premium
allocable to such Allocable Loan Amount as
determined pursuant to the applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of
this Deed of Trust does not violate the provisions
of any declaration of covenants, conditions and
restrictions, reciprocal easement agreement, Lease
or other agreement affecting the Property or any
portion thereof;
(5) The Remaining Properties shall have:
(i) after the first reconveyance, both a Combined
Debt Service Coverage and a Future Combined Debt
Service Coverage of not less than 1.80 and a
Combined Loan to Value Ratio of not more than 65%,
(ii) after the second reconveyance, both a
Combined Debt Service Coverage and a Future
Combined Debt Service Coverage of not less than
1.90 and a Combined Loan to Value Ratio of not
more than 60%, and (iii) after the third and final
reconveyance both a Combined Debt Service Coverage
and a Future Combined Debt Service Coverage of not
less than 2.00 and a Combined Loan to Value Ratio
of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt
Service Coverage and a Future Individual Debt
Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than
75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the
liens of the Woodlands Deed of Trust, the Tustin
Deed of Trust, the Nevada Deed of Trust, the
Ontario Deed of Trust, the Arizona Deed of Trust,
the South San Francisco Deed of Trust, and the
Fremont Deed of Trust will issue such title
endorsements as Beneficiary deems necessary or
desirable for attachment to the applicable title
policies, including without limitation, CLTA
Endorsement Nos. 110.5, 111, and 111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums
then due and payable under the Loan Documents and
a non-refundable $25,000 processing fee, which fee
shall be paid at the time of notice of the
requested reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of
the requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event
that the Debt Service Coverage and the Loan to Value
Ratio tests set forth in Paragraphs 9.36(5) and
9.36(6), above, cannot be satisfied because of the
value of, or the net cash flow from, the applicable
Combined Properties, Trustor may, at its option,
satisfy such tests by making a principal prepayment
(the "Excess Principal Payment") on the Loan in an
amount sufficient to satisfy such tests so long as
Trustor also pays to Beneficiary any prepayment
premium relating to such principal prepayment, as
determined by the applicable Note. Upon receipt of
the Excess Principal Payment, Beneficiary shall apply
such amount to reduce the outstanding Loan and may
apply such amount to any one or more of the Multistate
Note, the Nevada Note and/or the Arizona/California
Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall
allocate the Excess Principal Payment to the
applicable Allocable Loan Amount in proportion to each
such Allocable Loan Amount's share of the outstanding
principal balance of the Note to which such amount is
applied, and, the monthly payments due under such
applicable Note shall be adjusted, as of the date of
the release of this Deed of Trust pursuant to this
Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such
adjustment to be based on the applicable interest rate
under such Note and an amortization schedule equal to
300 months minus the number of months that have
elapsed since May 31, 1998.
E. Paragraph 9.37 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.37 is hereby
inserted in its place:
9.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
F. Paragraph 9.38 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.38 is hereby
inserted in its place:
9.38 Reconveyance on Full Payment of Multistate
Note. In the event that the Indebtedness evidenced by
the Multistate Note is repaid in full on the Maturity
Date thereof (as defined in the Multistate Note), and
provided (i) no Event of Default shall have occurred
and be continuing under the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust, (ii) the Remaining
Properties (after the proposed release of the Ontario
Deed of Trust, this Deed of Trust, the Woodlands Deed
of Trust and the Tustin Deed of Trust) would have both
a Combined Debt Service Coverage and a Future Combined
Debt Service Coverage of not less than 2.00 and a
Combined Loan to Value Ratio of not more than 55%, and
(iii) each of the individual Remaining Properties
(after such release) shall have both an Individual
Debt Service Coverage and a Future Individual Debt
Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than 75%;
provided, however, that if there is only one Remaining
Property then such Remaining Property would have both
an Individual Debt Service Coverage and a Future
Individual Debt Service Coverage of not less than 2.00
and an Individual Loan to Value Ratio of not more than
55%, then Beneficiary agrees to release and reconvey
the Ontario Deed of Trust, this Deed of Trust, the
Woodlands Deed of Trust and the Tustin Deed of Trust,
and the Combined Properties (other than the properties
encumbered by the Nevada Deed of Trust, the Arizona
Deed of Trust, the South San Francisco Deed of Trust
or the Fremont Deed of Trust) encumbered thereby shall
then and thereafter no longer serve as collateral for
the Nevada Note or the Arizona/California Note.
G. The Deed of Trust is hereby modified to provide
that it secures, in addition to all other obligations now or hereafter
secured thereby, a. Trustor's obligations to Beneficiary under the
Multistate Note, the Nevada Note, the Arizona/California Note and all
other Loan Documents, as supplemented and/or otherwise modified by the
First Modification and this Modification, and b. Trustor's obligations
to Beneficiary under the (i) Nevada Deed of Trust, (ii) the Arizona
Deed of Trust, (iii) the South San Francisco Deed of Trust, (iv) the
Fremont Deed of Trust, and (v) the Modification Documents.
II. Modification of Multistate Note. The Multistate
Note is hereby amended so that (i) the term "Deeds of Trust" as used
therein includes the Arizona Deed of Trust, the South San Francisco
Deed of Trust and the Fremont Deed of Trust (as defined in Paragraph
1.2 of this Modification) as well as the balance of the Deeds of Trust
provided therein, as modified by the Modification Documents, (ii) the
term "Remediation and Indemnification Agreements" as used therein
shall have the meaning ascribed thereto in the Deeds of Trust (as
modified by the Modification Documents).
III. Modification of Assignment. The Assignment is
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, and (ii) the term "Deed of Trust" as used
therein shall mean the Deed of Trust as modified by the First
Modification and this Modification.
IV. Modification of Other Documents. The other Loan
Documents and the Remediation and Indemnification Agreement executed
by Trustor in favor of Beneficiary in connection with the Property are
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, the term "Deed of Trust" as used therein
shall mean the Deed of Trust as modified by the First Modification and
this Modification.
V. No Other Modification. Except as expressly
modified hereby, the Note, the Deed of Trust, and other Loan Documents
remain unmodified and in full force and effect.
VI. Miscellaneous. This Modification shall bind, and
shall inure to the benefit of, the successors and assigns of the
parties. This document may be executed in counterparts with the same
force and effect as if the parties had executed one instrument, and
each such counterpart shall constitute an original hereof. This
Modification shall be governed by the laws of the State of California
(without regard to any choice of law provisions thereof).
<PAGE>
IN WITNESS WHEREOF, Trustor and Beneficiary have
caused this Modification to be duly executed as of the date first
written above.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
"BENEFICIARY":
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
Vice President
[11128.AGRE]I3393
<PAGE>
State of California )
)
County of California)
On February 2, 1998, before me, Colette M. Pennington, Notary Public,
personally appeared Scott R. Whitney,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/Colette M. Pennington
<PAGE>
State of California California )
)
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington, Notary Public,
personally appeared Scott R. Whitney,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Colette M. Pennington
<PAGE>
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_____________________________________________________________________
THIRD MODIFICATION OF DEED OF TRUST
AND OTHER DOCUMENTS
(The Woodlands Business Park)
This Third Modification of Deed of Trust and Other
Documents, dated as of January 30, 1998 (this "Modification"), is made
by and between BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Trustor"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("Beneficiary"), as a third
modification to that certain Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary and recorded on March 27, 1996 as Instrument No. 6313696
in the Official Records of Salt Lake County, Utah, as modified by that
certain First Modification of Deed of Trust and Other Documents (the
"First Modification"), dated as of May 24, 1996 and recorded on
May 31, 1996 as Instrument No. 6371832 in the Official Records of Salt
Lake County, Utah, as modified by that certain Second Modification of
Deed of Trust and Other Documents (the "Second Modification "), dated
as of May 9, 1997 and recorded on May 9, 1997 as Instrument No.
6641142 in the Official Records of Salt Lake County, Utah
(collectively, the "Deed of Trust") and the other documents described
herein. The Deed of Trust secures certain obligations of Trustor more
particularly described therein and encumbers the real property
described in Exhibit A attached hereto.
Reference is also made to that certain Assignment of
Lessor's Interest in Leases dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary and recorded on March 27, 1996 as
Instrument No. 6313697 in the Official Records of Salt Lake County,
Utah, as modified by the First Modification and the Second
Modification (collectively, the "Assignment").
This Modification is entered into in conjunction
with that certain Third Modification of Deed of Trust and Other
Documents (Dupont Industrial Center, Ontario) of even date herewith,
to be recorded in the Official Records of San Bernardino County,
California, that certain Third Modification of Deed of Trust and Other
Documents (Tustin Business Park) of even date herewith, to be recorded
in the Official Records of Orange County, California, that certain
Second Modification of Deed of Trust and Other Documents (Milpitas
Business Park) of even date herewith, to be recorded in the Official
Records of Santa Clara County, California, and that certain First
Modification of Deed of Trust and Other Documents (Nevada) of even
date herewith, to be recorded in the Official Records of Washoe
County, Nevada (collectively, together with this Modification, the
"Modification Documents").
The Modification Documents are entered into with
reference to (i) Trustor's assumption of, and amendment and
restatement of, that certain Amended and Restated Promissory Note
dated as of May 9, 1997 executed by Trustor in the original principal
amount of Eight Million Nine Hundred Thirteen Thousand Seven Hundred
Thirty and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), (ii) the indebtedness of Trustor evidenced by that
certain Amended and Restated Promissory Note dated as of May 24, 1996,
made by Trustor to the order of Beneficiary in the face principal
amount of $25,000,000 (the "Multistate Note"), and (iii) the
indebtedness of Trustor evidenced by that certain Promissory Note
dated as of even date herewith executed by Trustor in the original
principal amount of Twenty Million Nine Hundred Thousand Dollars
($20,900,000), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Arizona/California
Note," and together with the Multistate Note and the Nevada Note,
collectively, the "Note"). Capitalized terms used and not otherwise
defined herein have the meanings set forth for them in the Deed of
Trust.
In consideration of the foregoing, and for other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Trustor and Beneficiary hereby agree as follows:
I. Modification of Deed of Trust. The Deed of Trust is hereby
modified as follows:
A. The definitions of Allocable Loan Amount,
Combined Deeds of Trust, Combined Properties, Loan Documents, Milpitas
Deed of Trust, Nevada Deed of Trust, Note, Ontario Deed of Trust,
Remediation and Indemnification Agreements, and Tustin Deed of Trust,
as set forth in Article 1 of the Deed of Trust are hereby deleted in
their entirety, and the following new definitions are inserted in
their place, in the appropriate alphabetical order:
Allocable Loan Amount: (i) For the property
encumbered by the Ontario Deed of Trust, $8,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 8,000,000, and the denominator
of which is 25,000,000; (ii) for the property
encumbered by the Tustin Deed of Trust, $7,000,000
less the product of (x) all payments of principal made
under the Multistate Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is $7,000,000, and the denominator
of which is 25,000,000; (iii) for the property
encumbered by this Deed of Trust, $5,200,000 less the
product of (x) all payments of principal made under
the Multistate Note (other than payments made pursuant
to Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 5,200,000, and the denominator of which is
25,000,000; (iv) for the property encumbered by the
Milpitas Deed of Trust, $4,800,000 less the product of
(x) all payments of principal made under the
Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 4,800,000, and the denominator of which is
25,000,000; (v) for the property encumbered by the
Nevada Deed of Trust, $8,913,730.85 less all payments
of principal made under the Nevada Note; (vi) for the
property encumbered by the Arizona Deed of Trust,
$7,200,000 less the product of (x) all payments of
principal made under the Arizona/California Note
(other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 7,200,000, and the denominator of which is
20,900,000; (vii) for the properties encumbered by the
South San Francisco Deed of Trust, $6,500,000 less the
product of (x) all payments of principal made under
the Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 6,500,000, and the denominator
of which is 20,900,000; and (viii) for the property
encumbered by the Fremont Deed of Trust, $7,200,000
less the product of (x) all payments of principal made
under the Arizona/California Note (other than payments
made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction,
the numerator of which is 7,200,000, and the
denominator of which is 20,900,000.
Combined Deeds of Trust: Collectively, this Deed of
Trust, the Ontario Deed of Trust, the Milpitas Deed of
Trust, the Nevada Deed of Trust, the Tustin Deed of
Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust and the Fremont Deed of Trust.
Combined Properties: Collectively, the Property, the
property encumbered by the Ontario Deed of Trust, the
property encumbered by the Milpitas Deed of Trust, the
property encumbered by the Nevada Deed of Trust, the
property encumbered by the Tustin Deed of Trust, the
property encumbered by the Arizona Deed of Trust, the
properties encumbered by the South San Francisco Deed
of Trust and the property encumbered by the Fremont
Deed of Trust.
Loan Documents: The Note, the Application, that
certain Note Assignment and Assumption Agreement dated
as of May 9, 1997 relating to the Nevada Note, this
Deed of Trust, the Ontario Deed of Trust, the Milpitas
Deed of Trust, the Tustin Deed of Trust, the Nevada
Deed of Trust, the Arizona Deed of Trust, the South
San Francisco Deed of Trust, the Fremont Deed of
Trust, each of the Assignments of Agreements, each of
the Assignments of Lessor's Interest in Leases and all
other documents, with the exception of the Remediation
and Indemnification Agreements, evidencing, securing
or relating to the Loan, the payment of the
Indebtedness or the performance of the Obligations.
Milpitas Deed of Trust: That certain Deed of Trust
dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Santa Clara County, California, as amended
by that certain First Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
Nevada Deed of Trust: That certain Deed of Trust
dated as of May 9, 1997, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Washoe County, Nevada, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of January 30, 1998, as
further amended from time to time.
Note: Collectively (i) that certain Amended and
Restated Promissory Note dated May 24, 1996 (and
deemed made as of, and relating back to, March 20,
1996), executed by Trustor in the original principal
amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00), payable to Beneficiary or its order,
and all modifications, renewals or extensions thereof
(the "Multistate Note"), (ii) that certain Amended and
Restated Promissory Note dated as of May 9, 1997
executed by Trustor in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven
Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note
dated as of January 30, 1998 executed by Trustor in
the original principal amount of Twenty Million Nine
Hundred Thousand Dollars ($20,900,000) payable to
Beneficiary or its order, and all modifications,
renewals or extensions thereof (the
"Arizona/California Note").
Ontario Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of San Bernardino County, California, as
amended by that certain First Modification of Deed of
Trust and Other Loan Documents dated as of May 24,
1996, as amended by that certain Second Modification
of Deed of Trust and Other Loan Documents dated as of
May 9, 1997, as amended by that certain Third
Modification of Deed of Trust and Other Loan Documents
dated as of January 30, 1998, as further amended from
time to time.
Remediation and Indemnification Agreements:
Collectively, (i) the Hazardous Substances Remediation
and Indemnification Agreement dated as of March 20,
1996, executed by Trustor in favor of Beneficiary in
connection with the Property, (ii) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Ontario Deed of Trust, (iii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of May 24, 1996, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the Milpitas Deed of Trust,
(iv) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Tustin
Deed of Trust, (v) the Hazardous Substances
Remediation and Indemnification Agreement dated as of
May 9, 1997, executed by Trustor in favor of
Beneficiary in connection with the property encumbered
by the Nevada Deed of Trust, (vi) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of January 30, 1998, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Arizona Deed of Trust, (vii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of January 30, 1998, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the South San Francisco Deed of
Trust, and (viii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of January 30,
1998, executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Fremont
Deed of Trust.
Tustin Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Orange County, California, as amended by
that certain First Modification of Deed of Trust and
Other Loan Documents dated as of May 24, 1996, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of May 9,
1997, as amended by that certain Third Modification of
Deed of Trust and Other Loan Documents dated as of
January 30, 1998, as further amended from time to
time.
B. The following new definitions of Arizona
Deed of Trust, Fremont Deed of Trust and South San Francisco Deed of
Trust are hereby added to Article 1 of the Deed of Trust, in
alphabetical order:
Arizona Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Maricopa County, Arizona, as amended from
time to time.
Fremont Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Alameda County, California, as amended from
time to time.
South San Francisco Deed of Trust: That certain Deed
of Trust dated as of January 30, 1998, executed by
Trustor for the benefit of Beneficiary, recorded in
the Official Records of San Mateo County, California
as amended from time to time.
C. Paragraph 6.1.A(8) of the Deed of Trust is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place:
(8) An "Event of Default" occurs
under any one or more of the Tustin Deed of Trust, the
Ontario Deed of Trust, the Nevada Deed of Trust, the
Milpitas Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust and/or the Fremont
Deed of Trust.
D. Paragraph 9.36 of the Deed of Trust is
hereby deleted in its entirety and the following new Paragraph 9.36 is
hereby inserted in its place:
9.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property
from the lien of this Deed of Trust upon the satisfac-
tion of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or
the giving on notice, or both, would constitute an
Event of Default shall have occurred either at the
time of Beneficiary's receipt of the Trustor's
written request for a reconveyance or as of the
date of such reconveyance;
(2) Not more than a total of three (3) of
the Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed
hereby or concurrently herewith (and in no event
shall Trustor be entitled to more than three (3)
total releases of any or all of the Combined
Properties hereunder and/or under the Combined
Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior
to or concurrently with the reconveyance of this
Deed of Trust, the Allocable Loan Amount for the
Property along with the prepayment premium
allocable to such Allocable Loan Amount as
determined pursuant to the applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of
this Deed of Trust does not violate the provisions
of any declaration of covenants, conditions and
restrictions, reciprocal easement agreement, Lease
or other agreement affecting the Property or any
portion thereof;
(5) The Remaining Properties shall have:
(i) after the first reconveyance, both a Combined
Debt Service Coverage and a Future Combined Debt
Service Coverage of not less than 1.80 and a
Combined Loan to Value Ratio of not more than 65%,
(ii) after the second reconveyance, both a
Combined Debt Service Coverage and a Future
Combined Debt Service Coverage of not less than
1.90 and a Combined Loan to Value Ratio of not
more than 60%, and (iii) after the third and final
reconveyance both a Combined Debt Service Coverage
and a Future Combined Debt Service Coverage of not
less than 2.00 and a Combined Loan to Value Ratio
of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt
Service Coverage and a Future Individual Debt
Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than
75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the
liens of the Ontario Deed of Trust, the Tustin
Deed of Trust, the Nevada Deed of Trust, the
Milpitas Deed of Trust, the Arizona Deed of Trust,
the South San Francisco Deed of Trust, and the
Fremont Deed of Trust will issue such title
endorsements as Beneficiary deems necessary or
desirable for attachment to the applicable title
policies, including without limitation, CLTA
Endorsement Nos. 110.5, 111, and 111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums
then due and payable under the Loan Documents and
a non-refundable $25,000 processing fee, which fee
shall be paid at the time of notice of the
requested reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of
the requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event
that the Debt Service Coverage and the Loan to Value
Ratio tests set forth in Paragraphs 9.36(5) and
9.36(6), above, cannot be satisfied because of the
value of, or the net cash flow from, the applicable
Combined Properties, Trustor may, at its option,
satisfy such tests by making a principal prepayment
(the "Excess Principal Payment") on the Loan in an
amount sufficient to satisfy such tests so long as
Trustor also pays to Beneficiary any prepayment
premium relating to such principal prepayment, as
determined by the applicable Note. Upon receipt of
the Excess Principal Payment, Beneficiary shall apply
such amount to reduce the outstanding Loan and may
apply such amount to any one or more of the Multistate
Note, the Nevada Note and/or the Arizona/California
Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall
allocate the Excess Principal Payment to the
applicable Allocable Loan Amount in proportion to each
such Allocable Loan Amount's share of the outstanding
principal balance of the Note to which such amount is
applied, and, the monthly payments due under such
applicable Note shall be adjusted, as of the date of
the release of this Deed of Trust pursuant to this
Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such
adjustment to be based on the applicable interest rate
under such Note and an amortization schedule equal to
300 months minus the number of months that have
elapsed since May 31, 1998.
E. Paragraph 9.37 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.37 is hereby
inserted in its place:
9.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
F. Paragraph 9.38 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.38 is hereby
inserted in its place:
9.38 Reconveyance on Full Payment of Multistate
Note. In the event that the Indebtedness evidenced by
the Multistate Note is repaid in full on the Maturity
Date thereof (as defined in the Multistate Note), and
provided (i) no Event of Default shall have occurred
and be continuing under the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust, (ii) the Remaining
Properties (after the proposed release of the Ontario
Deed of Trust, the Milpitas Deed of Trust, the Tustin
Deed of Trust and this Deed of Trust) would have both
a Combined Debt Service Coverage and a Future Combined
Debt Service Coverage of not less than 2.00 and a
Combined Loan to Value Ratio of not more than 55%, and
(iii) each of the individual Remaining Properties
(after such release) shall have both an Individual
Debt Service Coverage and a Future Individual Debt
Service Coverage of not less than 1.00 and an
Individual Loan to Value Ratio of not more than 75%;
provided, however, that if there is only one Remaining
Property then such Remaining Property would have both
an Individual Debt Service Coverage and a Future
Individual Debt Service Coverage of not less than 2.00
and an Individual Loan to Value Ratio of not more than
55%, then Beneficiary agrees to release and reconvey
the Ontario Deed of Trust, the Milpitas Deed of Trust,
the Woodlands Deed of Trust and this Deed of Trust,
and the Combined Properties (other than the properties
encumbered by the Nevada Deed of Trust, the Arizona
Deed of Trust, the South San Francisco Deed of Trust
or the Fremont Deed of Trust) encumbered thereby shall
then and thereafter no longer serve as collateral for
the Nevada Note or the Arizona/California Note.
G. The Deed of Trust is hereby modified to
provide that it secures, in addition to all other obligations now or
hereafter secured thereby, a. Trustor's obligations to Beneficiary
under the Multistate Note, the Nevada Note, the Arizona/California
Note and all other Loan Documents, as supplemented and/or otherwise
modified by the First Modification, the Second Modification and this
Modification, and b. Trustor's obligations to Beneficiary under the
(i) Nevada Deed of Trust, (ii) the Arizona Deed of Trust, (iii) the
South San Francisco Deed of Trust, (iv) the Fremont Deed of Trust, and
(v) the Modification Documents.
II. Modification of Multistate Note. The Multistate
Note is hereby amended so that (i) the term "Deeds of Trust" as used
therein includes the Arizona Deed of Trust, the South San Francisco
Deed of Trust and the Fremont Deed of Trust (as defined in Paragraph
1.2 of this Modification) as well as the balance of the Deeds of Trust
provided therein, as modified by the Modification Documents, (ii) the
term "Remediation and Indemnification Agreements" as used therein
shall have the meaning ascribed thereto in the Deeds of Trust (as
modified by the Modification Documents).
III. Modification of Assignment. The Assignment is
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, and (ii) the term "Deed of Trust" as used
therein shall mean the Deed of Trust as modified by the First
Modification, the Second Modification and this Modification.
IV. Modification of Other Documents. The other Loan
Documents and the Remediation and Indemnification Agreement executed
by Trustor in favor of Beneficiary in connection with the Property are
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, the term "Deed of Trust" as used therein
shall mean the Deed of Trust as modified by the First Modification,
the Second Modification and this Modification.
V. No Other Modification. Except as expressly
modified hereby, the Note, the Deed of Trust, and other Loan Documents
remain unmodified and in full force and effect.
VI. Miscellaneous. This Modification shall bind, and
shall inure to the benefit of, the successors and assigns of the
parties. This document may be executed in counterparts with the same
force and effect as if the parties had executed one instrument, and
each such counterpart shall constitute an original hereof. This
Modification shall be governed by the laws of the State of Utah
(without regard to any choice of law provisions thereof).
<PAGE>
IN WITNESS WHEREOF, Trustor and Beneficiary have
caused this Modification to be duly executed as of the date first
written above.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
"BENEFICIARY":
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Vice President
[11128.AGRE]I12581<PAGE>
State of California )
)
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington, Notary Public,
personally appeared Scott R. Whitney,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
<PAGE>
State of California )
)
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington, Notary Public,
personally appeared Scott R. Whitney,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/Colette M. Pennington
Notary Public
<PAGE>
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_____________________________________________________________________
THIRD MODIFICATION OF DEED OF TRUST
AND OTHER DOCUMENTS
(Dupont Industrial Center, Ontario)
This Third Modification of Deed of Trust and Other
Documents, dated as of January 30, 1998 (this "Modification"), is made
by and between BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Trustor"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("Beneficiary"), as a third
modification to that certain Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary and recorded on March 27, 1996 as Instrument
No. 19960104594 in the Official Records of San Bernardino County,
California, as modified by that certain First Modification of Deed of
Trust and Other Documents (the "First Modification"), dated as of
May 24, 1996 and recorded on May 31, 1996 as Instrument
No. 19960193054 in the Official Records of San Bernardino County,
California, as modified by that certain Second Modification of Deed of
Trust and Other Documents (the "Second Modification"), dated as of May
9, 1997 and recorded on May 9, 1997 as Instrument No. 19970167135 in
the Official Records of San Bernadino County, California
(collectively, the "Deed of Trust") and the other documents described
herein. The Deed of Trust secures certain obligations of Trustor more
particularly described therein and encumbers the real property
described in Exhibit A attached hereto.
Reference is also made to that certain Assignment of
Lessor's Interest in Leases dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary and recorded on March 27, 1996 as
Instrument No. 19960104597 in the Official Records of San Bernardino
County, California, as modified by the First Modification and the
Second Modification (collectively, the "Assignment").
This Modification is entered into in conjunction
with that certain Third Modification of Deed of Trust and Other
Documents (The Woodlands Business Park) of even date herewith, to be
recorded in the Official Records of Salt Lake County, Utah, that
certain Third Modification of Deed of Trust and Other Documents
(Tustin Business Park) of even date herewith, to be recorded in the
Official Records of Orange County, California, that certain Second
Modification of Deed of Trust and Other Documents (Milpitas Business
Park) of even date herewith, to be recorded in the Official Records of
Santa Clara County, California, and that certain First Modification of
Deed of Trust and Other Documents (Nevada) of even date herewith, to
be recorded in the Official Records of Washoe County, Nevada
(collectively, together with this Modification, the "Modification
Documents").
The Modification Documents are entered into with
reference to (i) Trustor's assumption of, and amendment and
restatement of, that certain Amended and Restated Promissory Note
dated as of May 9, 1997 executed by Trustor in the original principal
amount of Eight Million Nine Hundred Thirteen Thousand Seven Hundred
Thirty and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or
its order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), (ii) the indebtedness of Trustor evidenced by that
certain Amended and Restated Promissory Note dated as of May 24, 1996,
made by Trustor to the order of Beneficiary in the face principal
amount of $25,000,000 (the "Multistate Note"), and (iii) the
indebtedness of Trustor evidenced by that certain Promissory Note
dated as of even date herewith executed by Trustor in the original
principal amount of Twenty Million Nine Hundred Thousand Dollars
($20,900,000), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Arizona/California
Note," and together with the Multistate Note and the Nevada Note,
collectively, the "Note"). Capitalized terms used and not otherwise
defined herein have the meanings set forth for them in the Deed of
Trust.
In consideration of the foregoing, and for other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Trustor and Beneficiary hereby agree as follows:
I. Modification of Deed of Trust. The Deed of Trust is hereby
modified as follows:
A. The definitions of Allocable Loan Amount,
Combined Deeds of Trust, Combined Properties, Loan Documents, Milpitas
Deed of Trust, Nevada Deed of Trust, Note, Remediation and
Indemnification Agreements, Tustin Deed of Trust, and Woodlands Deed
of Trust, as set forth in Article 1 of the Deed of Trust are hereby
deleted in their entirety, and the following new definitions are
inserted in their place, in the appropriate alphabetical order:
Allocable Loan Amount: (i) For the property
encumbered by this Deed of Trust, $8,000,000 less the
product of (x) all payments of principal made under
the Multistate Note (other than payments made pursuant
to Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 8,000,000, and the denominator of which is
25,000,000; (ii) for the property encumbered by the
Tustin Deed of Trust, $7,000,000 less the product of
(x) all payments of principal made under the
Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is $7,000,000, and the denominator of which is
25,000,000; (iii) for the property encumbered by the
Woodlands Deed of Trust, $5,200,000 less the product
of (x) all payments of principal made under the
Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 5,200,000, and the denominator of which is
25,000,000; (iv) for the property encumbered by the
Milpitas Deed of Trust, $4,800,000 less the product of
(x) all payments of principal made under the
Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 4,800,000, and the denominator of which is
25,000,000; (v) for the property encumbered by the
Nevada Deed of Trust, $8,913,730.85 less all payments
of principal made under the Nevada Note; (vi) for the
property encumbered by the Arizona Deed of Trust,
$7,200,000 less the product of (x) all payments of
principal made under the Arizona/California Note
(other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of
Trust) multiplied by (y) a fraction, the numerator of
which is 7,200,000, and the denominator of which is
20,900,000; (vii) for the properties encumbered by the
South San Francisco Deed of Trust, $6,500,000 less the
product of (x) all payments of principal made under
the Arizona/California Note (other than payments made
pursuant to Paragraph 9.36(3) of any of the Combined
Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 6,500,000, and the denominator
of which is 20,900,000; and (viii) for the property
encumbered by the Fremont Deed of Trust, $7,200,000
less the product of (x) all payments of principal made
under the Arizona/California Note (other than payments
made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction,
the numerator of which is 7,200,000, and the
denominator of which is 20,900,000.
Combined Deeds of Trust: Collectively, this Deed of
Trust, the Woodlands Deed of Trust, the Milpitas Deed
of Trust, the Nevada Deed of Trust, the Tustin Deed of
Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust and the Fremont Deed of Trust.
Combined Properties: Collectively, the Property, the
property encumbered by the Woodlands Deed of Trust,
the property encumbered by the Milpitas Deed of Trust,
the property encumbered by the Nevada Deed of Trust,
the property encumbered by the Tustin Deed of Trust,
the property encumbered by the Arizona Deed of Trust,
the properties encumbered by the South San Francisco
Deed of Trust and the property encumbered by the
Fremont Deed of Trust.
Loan Documents: The Note, the Application, that
certain Note Assignment and Assumption Agreement dated
as of May 9, 1997 relating to the Nevada Note, this
Deed of Trust, the Woodlands Deed of Trust, the
Milpitas Deed of Trust, the Tustin Deed of Trust, the
Nevada Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust, the Fremont Deed of
Trust, each of the Assignments of Agreements, each of
the Assignments of Lessor's Interest in Leases and all
other documents, with the exception of the Remediation
and Indemnification Agreements, evidencing, securing
or relating to the Loan, the payment of the
Indebtedness or the performance of the Obligations.
Milpitas Deed of Trust: That certain Deed of Trust
dated as of May 24, 1996, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Santa Clara County, California, as amended
by that certain First Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
Nevada Deed of Trust: That certain Deed of Trust
dated as of May 9, 1997, executed by Trustor for the
benefit of Beneficiary, recorded in the Official
Records of Washoe County, Nevada, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of January 30, 1998, as
further amended from time to time.
Note: Collectively (i) that certain Amended and
Restated Promissory Note dated May 24, 1996 (and
deemed made as of, and relating back to, March 20,
1996), executed by Trustor in the original principal
amount of Twenty-Five Million and No/100 Dollars
($25,000,000.00), payable to Beneficiary or its order,
and all modifications, renewals or extensions thereof
(the "Multistate Note"), (ii) that certain Amended and
Restated Promissory Note dated as of May 9, 1997
executed by Trustor in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven
Hundred Thirty and 85/100 Dollars ($8,913,730.85),
payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note
dated as of January 30, 1998 executed by Trustor in
the original principal amount of Twenty Million Nine
Hundred Thousand Dollars ($20,900,000) payable to
Beneficiary or its order, and all modifications,
renewals or extensions thereof (the
"Arizona/California Note").
Remediation and Indemnification Agreements:
Collectively, (i) the Hazardous Substances Remediation
and Indemnification Agreement dated as of March 20,
1996, executed by Trustor in favor of Beneficiary in
connection with the Property, (ii) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Woodlands Deed of Trust, (iii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of May 24, 1996, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the Milpitas Deed of Trust,
(iv) the Hazardous Substances Remediation and
Indemnification Agreement dated as of March 20, 1996,
executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Tustin
Deed of Trust, (v) the Hazardous Substances
Remediation and Indemnification Agreement dated as of
May 9, 1997, executed by Trustor in favor of
Beneficiary in connection with the property encumbered
by the Nevada Deed of Trust, (vi) the Hazardous
Substances Remediation and Indemnification Agreement
dated as of January 30, 1998, executed by Trustor in
favor of Beneficiary in connection with the property
encumbered by the Arizona Deed of Trust, (vii) the
Hazardous Substances Remediation and Indemnification
Agreement dated as of January 30, 1998, executed by
Trustor in favor of Beneficiary in connection with the
property encumbered by the South San Francisco Deed of
Trust, and (viii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of January 30,
1998, executed by Trustor in favor of Beneficiary in
connection with the property encumbered by the Fremont
Deed of Trust.
Tustin Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Orange County, California, as amended by
that certain First Modification of Deed of Trust and
Other Loan Documents dated as of May 24, 1996, as
amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of May 9,
1997, as amended by that certain Third Modification of
Deed of Trust and Other Loan Documents dated as of
January 30, 1998, as further amended from time to
time.
Woodlands Deed of Trust: That certain Deed of Trust
dated as of March 20, 1996, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Salt Lake County, Utah, as amended by that
certain First Modification of Deed of Trust and Other
Loan Documents dated as of May 24, 1996, as amended by
that certain Second Modification of Deed of Trust and
Other Loan Documents dated as of May 9, 1997, as
amended by that certain Third Modification of Deed of
Trust and Other Loan Documents dated as of January 30,
1998, as further amended from time to time.
B. The following new definitions of Arizona
Deed of Trust, Fremont Deed of Trust and South San Francisco Deed of
Trust are hereby added to Article 1 of the Deed of Trust, in
alphabetical order:
Arizona Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Maricopa County, Arizona, as amended from
time to time.
Fremont Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for
the benefit of Beneficiary, recorded in the Official
Records of Alameda County, California, as amended from
time to time.
South San Francisco Deed of Trust: That certain Deed
of Trust dated as of January 30, 1998, executed by
Trustor for the benefit of Beneficiary, recorded in
the Official Records of San Mateo County, California
as amended from time to time.
C. Paragraph 6.1.A(8) of the Deed of Trust is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place:
(8) An "Event of Default" occurs under
any one or more of the Woodlands Deed of Trust, the
Tustin Deed of Trust, the Nevada Deed of Trust, the
Milpitas Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust and/or the Fremont
Deed of Trust.
D. Paragraph 9.36 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.36 is hereby
inserted in its place:
9.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property
from the lien of this Deed of Trust upon the satisfac-
tion of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or the
giving on notice, or both, would constitute an Event
of Default shall have occurred either at the time of
Beneficiary's receipt of the Trustor's written request
for a reconveyance or as of the date of such
reconveyance;
(2) Not more than a total of three (3) of
the Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed hereby or
concurrently herewith (and in no event shall Trustor
be entitled to more than three (3) total releases of
any or all of the Combined Properties hereunder and/or
under the Combined Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior
to or concurrently with the reconveyance of this Deed
of Trust, the Allocable Loan Amount for the Property
along with the prepayment premium allocable to such
Allocable Loan Amount as determined pursuant to the
applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of this
Deed of Trust does not violate the provisions of any
declaration of covenants, conditions and restrictions,
reciprocal easement agreement, Lease or other
agreement affecting the Property or any portion
thereof;
(5) The Remaining Properties shall have:
(i) after the first reconveyance, both a Combined Debt
Service Coverage and a Future Combined Debt Service
Coverage of not less than 1.80 and a Combined Loan to
Value Ratio of not more than 65%, (ii) after the
second reconveyance, both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 1.90 and a Combined Loan to Value
Ratio of not more than 60%, and (iii) after the third
and final reconveyance both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 2.00 and a Combined Loan to Value
Ratio of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt Service
Coverage and a Future Individual Debt Service Coverage
of not less than 1.00 and an Individual Loan to Value
Ratio of not more than 75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the liens
of the Milpitas Deed of Trust, the Tustin Deed of
Trust, the Woodlands Deed of Trust, the Nevada Deed of
Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust, and the Fremont Deed of Trust
will issue such title endorsements as Beneficiary
deems necessary or desirable for attachment to the
applicable title policies, including without
limitation, CLTA Endorsement Nos. 110.5, 111, and
111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums then
due and payable under the Loan Documents and a non-
refundable $25,000 processing fee, which fee shall be
paid at the time of notice of the requested
reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of the
requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event that the
Debt Service Coverage and the Loan to Value Ratio tests set forth in
Paragraphs 9.36(5) and 9.36(6), above, cannot be satisfied because of
the value of, or the net cash flow from, the applicable Combined
Properties, Trustor may, at its option, satisfy such tests by making a
principal prepayment (the "Excess Principal Payment") on the Loan in
an amount sufficient to satisfy such tests so long as Trustor also
pays to Beneficiary any prepayment premium relating to such principal
prepayment, as determined by the applicable Note. Upon receipt of the
Excess Principal Payment, Beneficiary shall apply such amount to
reduce the outstanding Loan and may apply such amount to any one or
more of the Multistate Note, the Nevada Note and/or the
Arizona/California Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall allocate the Excess
Principal Payment to the applicable Allocable Loan Amount in
proportion to each such Allocable Loan Amount's share of the
outstanding principal balance of the Note to which such amount is
applied, and, the monthly payments due under such applicable Note
shall be adjusted, as of the date of the release of this Deed of Trust
pursuant to this Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such adjustment to be based
on the applicable interest rate under such Note and an amortization
schedule equal to 300 months minus the number of months that have
elapsed since May 31, 1998.
1.5 Paragraph 9.37 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.37 is hereby
inserted in its place:
9.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
1.6 Paragraph 9.38 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.38 is hereby
inserted in its place:
9.38 Reconveyance on Full Payment of Multistate
Note. In the event that the Indebtedness evidenced by
the Multistate Note is repaid in full on the Maturity
Date thereof (as defined in the Multistate Note), and
provided (i) no Event of Default shall have occurred
and be continuing under the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust, (ii) the Remaining
Properties (after the proposed release of the Tustin
Deed of Trust, the Milpitas Deed of Trust, the
Woodlands Deed of Trust and this Deed of Trust) would
have both a Combined Debt Service Coverage and a
Future Combined Debt Service Coverage of not less than
2.00 and a Combined Loan to Value Ratio of not more
than 55%, and (iii) each of the individual Remaining
Properties (after such release) shall have both an
Individual Debt Service Coverage and a Future
Individual Debt Service Coverage of not less than 1.00
and an Individual Loan to Value Ratio of not more than
75%; provided, however, that if there is only one
Remaining Property then such Remaining Property would
have both an Individual Debt Service Coverage and a
Future Individual Debt Service Coverage of not less
than 2.00 and an Individual Loan to Value Ratio of not
more than 55%, then Beneficiary agrees to release and
reconvey the Tustin Deed of Trust, the Milpitas Deed
of Trust, the Woodlands Deed of Trust and this Deed of
Trust, and the Combined Properties (other than the
properties encumbered by the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust) encumbered thereby
shall then and thereafter no longer serve as
collateral for the Nevada Note or the
Arizona/California Note.
1.7 The Deed of Trust is hereby modified to provide
that it secures, in addition to all other obligations now or hereafter
secured thereby, (a) Trustor's obligations to Beneficiary under the
Multistate Note, the Nevada Note, the Arizona/California Note and all
other Loan Documents, as supplemented and/or otherwise modified by the
First Modification, the Second Modification and this Modification, and
(b) Trustor's obligations to Beneficiary under the (i) Nevada Deed of
Trust, (ii) the Arizona Deed of Trust, (iii) the South San Francisco
Deed of Trust, (iv) the Fremont Deed of Trust, and (v) the
Modification Documents.
2. Modification of Multistate Note. The Multistate
Note is hereby amended so that (i) the term "Deeds of Trust" as used
therein includes the Arizona Deed of Trust, the South San Francisco
Deed of Trust and the Fremont Deed of Trust (as defined in Paragraph
1.2 of this Modification) as well as the balance of the Deeds of Trust
provided therein, as modified by the Modification Documents, (ii) the
term "Remediation and Indemnification Agreements" as used therein
shall have the meaning ascribed thereto in the Deeds of Trust (as
modified by the Modification Documents).
3. Modification of Assignment. The Assignment is
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, and (ii) the term "Deed of Trust" as used
therein shall mean the Deed of Trust as modified by the First
Modification, the Second Modification and this Modification.
4. Modification of Other Documents. The other Loan
Documents and the Remediation and Indemnification Agreement executed
by Trustor in favor of Beneficiary in connection with the Property are
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, the term "Deed of Trust" as used therein
shall mean the Deed of Trust as modified by the First Modification,
the Second Modification and this Modification.
5. No Other Modification. Except as expressly
modified hereby, the Note, the Deed of Trust, and other Loan Documents
remain unmodified and in full force and effect.
6. Miscellaneous. This Modification shall bind, and
shall inure to the benefit of, the successors and assigns of the
parties. This document may be executed in counterparts with the same
force and effect as if the parties had executed one instrument, and
each such counterpart shall constitute an original hereof. This
Modification shall be governed by the laws of the State of California
(without regard to any choice of law provisions thereof).
<PAGE>
IN WITNESS WHEREOF, Trustor and Beneficiary have
caused this Modification to be duly executed as of the date first
written above.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
"BENEFICIARY":
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
Vice President
[11128.AGRE]I12549<PAGE>
State of California )
)
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, Notary Public,
personally appeared Scott R. Whitney, Sr. V. P.,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
<PAGE>
State of California )
)
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, Notary Public,
personally appeared Scott R. Whitney, Sr. V. P.,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
<PAGE>
RECORDING REQUESTED BY, AND
WHEN RECORDED RETURN TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_____________________________________________________________________
THIRD MODIFICATION OF DEED OF TRUST
AND OTHER DOCUMENTS
(Tustin Business Park)
This Third Modification of Deed of Trust and Other
Documents, dated as of January 30, 1998 (this "Modification"), is made
by and between BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Trustor"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("Beneficiary"), as a third
modification to that certain Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements dated
as of March 20, 1996, executed by Trustor for the benefit of
Beneficiary and recorded on March 27, 1996 as Instrument
No. 19960147696 in the Official Records of Orange County, California,
as modified by that certain First Modification of Deed of Trust and
Other Documents (the "First Modification"), dated as of May 24, 1996
and recorded on May 31, 1996 as Instrument No. 19960272607 in the
Official Records of Orange County, California, as modified by that
certain Second Modification of Deed of Trust and Other Documents (the
"Second Modification"), dated as of May 9, 1997 and recorded on May 9,
1997 as Instrument No. 19970217603 in the Official Records of Orange
County, California (collectively, the "Deed of Trust") and the other
documents described herein. The Deed of Trust secures certain
obligations of Trustor more particularly described therein and
encumbers the real property described in Exhibit A attached hereto.
Reference is also made to that certain Assignment of
Lessor's Interest in Leases dated as of March 20, 1996, executed by
Trustor in favor of Beneficiary and recorded on March 27, 1996 as
Instrument No. 19960147697 in the Official Records of Orange County,
California, as modified by the First Modification and the Second
Modification (collectively, the "Assignment").
This Modification is entered into in conjunction with that
certain Third Modification of Deed of Trust and Other Documents
(Dupont Industrial Center, Ontario) of even date herewith, to be
recorded in the Official Records of San Bernardino County, California,
that certain Third Modification of Deed of Trust and Other Documents
(The Woodlands Business Park) of even date herewith, to be recorded in
the Official Records of Salt Lake County, Utah, that certain Second
Modification of Deed of Trust and Other Documents (Milpitas Business
Park) of even date herewith, to be recorded in the Official Records of
Santa Clara County, California, and that certain First Modification of
Deed of Trust and Other Documents (Nevada) of even date herewith, to
be recorded in the Official Records of Washoe County, Nevada
(collectively, together with this Modification, the "Modification
Documents").
The Modification Documents are entered into with reference
to (i) Trustor's assumption of, and amendment and restatement of, that
certain Amended and Restated Promissory Note dated as of May 9, 1997
executed by Trustor in the original principal amount of Eight Million
Nine Hundred Thirteen Thousand Seven Hundred Thirty and 85/100 Dollars
($8,913,730.85), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Nevada Note"),
(ii) the indebtedness of Trustor evidenced by that certain Amended and
Restated Promissory Note dated as of May 24, 1996, made by Trustor to
the order of Beneficiary in the face principal amount of $25,000,000
(the "Multistate Note"), and (iii) the indebtedness of Trustor
evidenced by that certain Promissory Note dated as of even date
herewith executed by Trustor in the original principal amount of
Twenty Million Nine Hundred Thousand Dollars ($20,900,000), payable to
Beneficiary or its order, and all modifications, renewals or
extensions thereof (the "Arizona/California Note," and together with
the Multistate Note and the Nevada Note, collectively, the "Note").
Capitalized terms used and not otherwise defined herein have the
meanings set forth for them in the Deed of Trust.
In consideration of the foregoing, and for other valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Trustor and Beneficiary hereby agree as follows:
7 Modification of Deed of Trust. The Deed of Trust is hereby
modified as follows:
7.1 The definitions of Allocable Loan Amount, Combined
Deeds of Trust, Combined Properties, Loan Documents, Milpitas Deed of
Trust, Nevada Deed of Trust, Note, Ontario Deed of Trust, Remediation
and Indemnification Agreements, and Woodlands Deed of Trust, as set
forth in Article 1 of the Deed of Trust are hereby deleted in their
entirety, and the following new definitions are inserted in their
place, in the appropriate alphabetical order:
Allocable Loan Amount: (i) For the property encumbered by the
Ontario Deed of Trust, $8,000,000 less the product of (x) all
payments of principal made under the Multistate Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 8,000,000, and the denominator of which is
25,000,000; (ii) for the property encumbered by this Deed of
Trust, $7,000,000 less the product of (x) all payments of
principal made under the Multistate Note (other than payments
made pursuant to Paragraph 9.36(3) of any of the Combined Deeds
of Trust) multiplied by (y) a fraction, the numerator of which is
$7,000,000, and the denominator of which is 25,000,000; (iii) for
the property encumbered by the Woodlands Deed of Trust,
$5,200,000 less the product of (x) all payments of principal made
under the Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust)
multiplied by (y) a fraction, the numerator of which is
5,200,000, and the denominator of which is 25,000,000; (iv) for
the property encumbered by the Milpitas Deed of Trust, $4,800,000
less the product of (x) all payments of principal made under the
Multistate Note (other than payments made pursuant to
Paragraph 9.36(3) of any of the Combined Deeds of Trust)
multiplied by (y) a fraction, the numerator of which is
4,800,000, and the denominator of which is 25,000,000; (v) for
the property encumbered by the Nevada Deed of Trust,
$8,913,730.85 less all payments of principal made under the
Nevada Note; (vi) for the property encumbered by the Arizona Deed
of Trust, $7,200,000 less the product of (x) all payments of
principal made under the Arizona/California Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator of which is
20,900,000; (vii) for the properties encumbered by the South San
Francisco Deed of Trust, $6,500,000 less the product of (x) all
payments of principal made under the Arizona/California Note
(other than payments made pursuant to Paragraph 9.36(3) of any of
the Combined Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 6,500,000, and the denominator of which is
20,900,000; and (viii) for the property encumbered by the Fremont
Deed of Trust, $7,200,000 less the product of (x) all payments of
principal made under the Arizona/California Note (other than
payments made pursuant to Paragraph 9.36(3) of any of the
Combined Deeds of Trust) multiplied by (y) a fraction, the
numerator of which is 7,200,000, and the denominator of which is
20,900,000.
Combined Deeds of Trust: Collectively, this Deed of Trust, the
Ontario Deed of Trust, the Milpitas Deed of Trust, the Nevada
Deed of Trust, the Woodlands Deed of Trust, the Arizona Deed of
Trust, the South San Francisco Deed of Trust, and the Fremont
Deed of Trust.
Combined Properties: Collectively, the Property, the property
encumbered by the Ontario Deed of Trust, the property encumbered
by the Milpitas Deed of Trust, the property encumbered by the
Nevada Deed of Trust, the property encumbered by the Woodlands
Deed of Trust, the property encumbered by the Arizona Deed of
Trust, the properties encumbered by the South San Francisco Deed
of Trust and the property encumbered by the Fremont Deed of
Trust.
Loan Documents: The Note, the Application, that certain Note
Assignment and Assumption Agreement dated as of May 9, 1997
relating to the Nevada Note, this Deed of Trust, the Ontario Deed
of Trust, the Milpitas Deed of Trust, the Woodlands Deed of
Trust, the Nevada Deed of Trust, the Arizona Deed of Trust, the
South San Francisco Deed of Trust, the Fremont Deed of Trust,
each of the Assignments of Agreements, each of the Assignments of
Lessor's Interest in Leases and all other documents, with the
exception of the Remediation and Indemnification Agreements,
evidencing, securing or relating to the Loan, the payment of the
Indebtedness or the performance of the Obligations.
Milpitas Deed of Trust: That certain Deed of Trust dated as of
May 24, 1996, executed by Trustor for the benefit of Beneficiary,
recorded in the Official Records of Santa Clara County,
California, as amended by that certain First Modification of Deed
of Trust and Other Loan Documents dated as of May 9, 1997, as
amended by that certain Second Modification of Deed of Trust and
Other Loan Documents dated as of January 30, 1998, as further
amended from time to time.
Nevada Deed of Trust: That certain Deed of Trust dated as of
May 9, 1997, executed by Trustor for the benefit of Beneficiary,
recorded in the Official Records of Washoe County, Nevada, as
amended by that certain First Modification of Deed of Trust and
Other Loan Documents dated as of January 30, 1998, as further
amended from time to time.
Note: Collectively (i) that certain Amended and Restated
Promissory Note dated May 24, 1996 (and deemed made as of, and
relating back to, March 20, 1996), executed by Trustor in the
original principal amount of Twenty-Five Million and No/100
Dollars ($25,000,000.00), payable to Beneficiary or its order,
and all modifications, renewals or extensions thereof (the
"Multistate Note"), (ii) that certain Amended and Restated
Promissory Note dated as of May 9, 1997 executed by Trustor in
the original principal amount of Eight Million Nine Hundred
Thirteen Thousand Seven Hundred Thirty and 85/100 Dollars
($8,913,730.85), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the "Nevada
Note"), and (iii) that certain Promissory Note dated as of
January 30, 1998 executed by Trustor in the original principal
amount of Twenty Million Nine Hundred Thousand Dollars
($20,900,000) payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof (the
"Arizona/California Note").
Ontario Deed of Trust: That certain Deed of Trust dated as of
March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of San Bernardino
County, California, as amended by that certain First Modification
of Deed of Trust and Other Loan Documents dated as of May 24,
1996, as amended by that certain Second Modification of Deed of
Trust and Other Loan Documents dated as of May 9, 1997, as
amended by that certain Third Modification of Deed of Trust and
Other Loan Documents dated as of January 30, 1998, as further
amended from time to time.
Remediation and Indemnification Agreements: Collectively,
(i) the Hazardous Substances Remediation and Indemnification
Agreement dated as of March 20, 1996, executed by Trustor in
favor of Beneficiary in connection with the Property, (ii) the
Hazardous Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the
Ontario Deed of Trust, (iii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of May 24, 1996, executed
by Trustor in favor of Beneficiary in connection with the
property encumbered by the Milpitas Deed of Trust, (iv) the
Hazardous Substances Remediation and Indemnification Agreement
dated as of March 20, 1996, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the
Woodlands Deed of Trust, (v) the Hazardous Substances Remediation
and Indemnification Agreement dated as of May 9, 1997, executed
by Trustor in favor of Beneficiary in connection with the
property encumbered by the Nevada Deed of Trust, (vi) the
Hazardous Substances Remediation and Indemnification Agreement
dated as of January 30, 1998, executed by Trustor in favor of
Beneficiary in connection with the property encumbered by the
Arizona Deed of Trust, (vii) the Hazardous Substances Remediation
and Indemnification Agreement dated as of January 30, 1998,
executed by Trustor in favor of Beneficiary in connection with
the property encumbered by the South San Francisco Deed of Trust,
and (viii) the Hazardous Substances Remediation and
Indemnification Agreement dated as of January 30, 1998, executed
by Trustor in favor of Beneficiary in connection with the
property encumbered by the Fremont Deed of Trust.
Woodlands Deed of Trust: That certain Deed of Trust dated as of
March 20, 1996, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Salt Lake
County, Utah, as amended by that certain First Modification of
Deed of Trust and Other Loan Documents dated as of May 24, 1996,
as amended by that certain Second Modification of Deed of Trust
and Other Loan Documents dated as of May 9, 1997, as amended by
that certain Third Modification of Deed of Trust and Other Loan
Documents dated as of January 30, 1998, as further amended from
time to time.
7.2 The following new definitions of Arizona Deed of Trust,
Fremont Deed of Trust and South San Francisco Deed of Trust are hereby
added to Article 1 of the Deed of Trust, in alphabetical order:
Arizona Deed of Trust: That certain Deed of Trust dated as of
January 30, 1998, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Maricopa County,
Arizona, as amended from time to time.
Fremont Deed of Trust: That certain Deed of Trust dated as of
January 30, 1998, executed by Trustor for the benefit of
Beneficiary, recorded in the Official Records of Alameda County,
California, as amended from time to time.
South San Francisco Deed of Trust: That certain Deed of Trust
dated as of January 30, 1998, executed by Trustor for the benefit
of Beneficiary, recorded in the Official Records of San Mateo
County, California as amended from time to time.
7.3 Paragraph 6.1.A(8) of the Deed of Trust is hereby
deleted in its entirety and the following new paragraph is hereby
inserted in its place:
(8) An "Event of Default" occurs under any one
or more of the Woodlands Deed of Trust, the Ontario Deed of
Trust, the Nevada Deed of Trust, the Milpitas Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of Trust
and/or the Fremont Deed of Trust.
7.4 Paragraph 9.36 of the Deed of Trust is hereby deleted
in its entirety and the following new Paragraph 9.36 is hereby
inserted in its place:
9.36 Partial Release. Beneficiary agrees to
release, at any time after May 31, 1998, the Property
from the lien of this Deed of Trust upon the satisfac-
tion of the following conditions at the time of
reconveyance:
(1) No Event of Default shall have occurred
and no event which, with the passage of time or the
giving on notice, or both, would constitute an Event
of Default shall have occurred either at the time of
Beneficiary's receipt of the Trustor's written request
for a reconveyance or as of the date of such
reconveyance;
(2) Not more than a total of three (3) of
the Combined Deeds of Trust (including, without
limitation, this Deed of Trust) shall have been
previously reconveyed or shall be reconveyed hereby or
concurrently herewith (and in no event shall Trustor
be entitled to more than three (3) total releases of
any or all of the Combined Properties hereunder and/or
under the Combined Deeds of Trust);
(3) Trustor shall pay to Beneficiary, prior
to or concurrently with the reconveyance of this Deed
of Trust, the Allocable Loan Amount for the Property
along with the prepayment premium allocable to such
Allocable Loan Amount as determined pursuant to the
applicable Note;
(4) Beneficiary shall have been provided
satisfactory evidence that the reconveyance of this
Deed of Trust does not violate the provisions of any
declaration of covenants, conditions and restrictions,
reciprocal easement agreement, Lease or other
agreement affecting the Property or any portion
thereof;
(5) The Remaining Properties shall have:
(i) after the first reconveyance, both a Combined Debt
Service Coverage and a Future Combined Debt Service
Coverage of not less than 1.80 and a Combined Loan to
Value Ratio of not more than 65%, (ii) after the
second reconveyance, both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 1.90 and a Combined Loan to Value
Ratio of not more than 60%, and (iii) after the third
and final reconveyance both a Combined Debt Service
Coverage and a Future Combined Debt Service Coverage
of not less than 2.00 and a Combined Loan to Value
Ratio of not more than 55%;
(6) Each of the individual Remaining
Properties shall have both an Individual Debt Service
Coverage and a Future Individual Debt Service Coverage
of not less than 1.00 and an Individual Loan to Value
Ratio of not more than 75%;
(7) Beneficiary shall have received a
commitment that the title company insuring the liens
of the Milpitas Deed of Trust, the Ontario Deed of
Trust, the Woodlands Deed of Trust, the Nevada Deed of
Trust, the Arizona Deed of Trust, the South San
Francisco Deed of Trust, and the Fremont Deed of Trust
will issue such title endorsements as Beneficiary
deems necessary or desirable for attachment to the
applicable title policies, including without
limitation, CLTA Endorsement Nos. 110.5, 111, and
111.1;
(8) Trustor shall pay to Beneficiary all
escrow, closing and recording costs, the cost of
preparing and delivering any reconveyance
documentation, including legal fees and costs, the
cost of any title insurance endorsements that
Beneficiary may require, recording fees, any sums then
due and payable under the Loan Documents and a non-
refundable $25,000 processing fee, which fee shall be
paid at the time of notice of the requested
reconveyance;
(9) Trustor shall have provided Beneficiary
with forty-five (45) days prior written notice of the
requested reconveyance; and
(10) Such other terms and conditions as
Beneficiary shall reasonably require.
Notwithstanding the foregoing, in the event that the
Debt Service Coverage and the Loan to Value Ratio tests set forth in
Paragraphs 9.36(5) and 9.36(6), above, cannot be satisfied because of
the value of, or the net cash flow from, the applicable Combined
Properties, Trustor may, at its option, satisfy such tests by making a
principal prepayment (the "Excess Principal Payment") on the Loan in
an amount sufficient to satisfy such tests so long as Trustor also
pays to Beneficiary any prepayment premium relating to such principal
prepayment, as determined by the applicable Note. Upon receipt of the
Excess Principal Payment, Beneficiary shall apply such amount to
reduce the outstanding Loan and may apply such amount to any one or
more of the Multistate Note, the Nevada Note and/or the
Arizona/California Note (in such order or priority as to satisfy such
tests, as determined by Beneficiary), and shall allocate the Excess
Principal Payment to the applicable Allocable Loan Amount in
proportion to each such Allocable Loan Amount's share of the
outstanding principal balance of the Note to which such amount is
applied, and, the monthly payments due under such applicable Note
shall be adjusted, as of the date of the release of this Deed of Trust
pursuant to this Paragraph 9.36, to reflect the Excess Principal
Payment applied to such applicable Note, such adjustment to be based
on the applicable interest rate under such Note and an amortization
schedule equal to 300 months minus the number of months that have
elapsed since May 31, 1998.
A..5 Paragraph 9.37 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.37 is hereby
inserted in its place:
9.37 Limitation on Personal Liabilities.
Trustor's liability (i) under the Multistate Note is subject to the
terms and conditions set forth in Paragraph 19 of the Multistate Note;
(ii) under the Nevada Note is subject to the terms and conditions set
forth in Paragraph 19 of the Nevada Note; and (iii) under the
Arizona/California Note is subject to the terms and conditions set
forth in Paragraph 19 of the Arizona/California Note.
1.6 Paragraph 9.38 of the Deed of Trust is hereby
deleted in its entirety and the following new Paragraph 9.38 is hereby
inserted in its place:
9.38 Reconveyance on Full Payment of Multistate
Note. In the event that the Indebtedness evidenced by
the Multistate Note is repaid in full on the Maturity
Date thereof (as defined in the Multistate Note), and
provided (i) no Event of Default shall have occurred
and be continuing under the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust, (ii) the Remaining
Properties (after the proposed release of the Ontario
Deed of Trust, the Milpitas Deed of Trust, the
Woodlands Deed of Trust and this Deed of Trust) would
have both a Combined Debt Service Coverage and a
Future Combined Debt Service Coverage of not less than
2.00 and a Combined Loan to Value Ratio of not more
than 55%, and (iii) each of the individual Remaining
Properties (after such release) shall have both an
Individual Debt Service Coverage and a Future
Individual Debt Service Coverage of not less than 1.00
and an Individual Loan to Value Ratio of not more than
75%; provided, however, that if there is only one
Remaining Property then such Remaining Property would
have both an Individual Debt Service Coverage and a
Future Individual Debt Service Coverage of not less
than 2.00 and an Individual Loan to Value Ratio of not
more than 55%, then Beneficiary agrees to release and
reconvey the Ontario Deed of Trust, the Milpitas Deed
of Trust, the Woodlands Deed of Trust and this Deed of
Trust, and the Combined Properties (other than the
properties encumbered by the Nevada Deed of Trust, the
Arizona Deed of Trust, the South San Francisco Deed of
Trust or the Fremont Deed of Trust) encumbered thereby
shall then and thereafter no longer serve as
collateral for the Nevada Note or the
Arizona/California Note.
1.7 The Deed of Trust is hereby modified to provide
that it secures, in addition to all other obligations now or hereafter
secured thereby, a. Trustor's obligations to Beneficiary under the
Multistate Note, the Nevada Note, the Arizona/California Note and all
other Loan Documents, as supplemented and/or otherwise modified by the
First Modification, the Second Modification and this Modification, and
b. Trustor's obligations to Beneficiary under the (i) Nevada Deed of
Trust, (ii) the Arizona Deed of Trust, (iii) the South San Francisco
Deed of Trust, (iv) the Fremont Deed of Trust, and (v) the
Modification Documents.
II. Modification of Multistate Note. The Multistate
Note is hereby amended so that (i) the term "Deeds of Trust" as used
therein includes the Arizona Deed of Trust, the South San Francisco
Deed of Trust and the Fremont Deed of Trust (as defined in Paragraph
1.2 of this Modification) as well as the balance of the Deeds of Trust
provided therein, as modified by the Modification Documents, (ii) the
term "Remediation and Indemnification Agreements" as used therein
shall have the meaning ascribed thereto in the Deeds of Trust (as
modified by the Modification Documents).
III. Modification of Assignment. The Assignment is
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, and (ii) the term "Deed of Trust" as used
therein shall mean the Deed of Trust as modified by the First
Modification, the Second Modification and this Modification.
IV. Modification of Other Documents. The other Loan
Documents and the Remediation and Indemnification Agreement executed
by Trustor in favor of Beneficiary in connection with the Property are
hereby amended so that (i) the term "Note" as used therein shall mean
collectively, the Multistate Note, the Nevada Note and the
Arizona/California Note, the term "Deed of Trust" as used therein
shall mean the Deed of Trust as modified by the First Modification,
the Second Modification and this Modification.
V. No Other Modification. Except as expressly
modified hereby, the Note, the Deed of Trust, and other Loan Documents
remain unmodified and in full force and effect.
VI. Miscellaneous. This Modification shall bind, and
shall inure to the benefit of, the successors and assigns of the
parties. This document may be executed in counterparts with the same
force and effect as if the parties had executed one instrument, and
each such counterpart shall constitute an original hereof. This
Modification shall be governed by the laws of the State of California
(without regard to any choice of law provisions thereof).
<PAGE>
IN WITNESS WHEREOF, Trustor and Beneficiary have
caused this Modification to be duly executed as of the date first
written above.
"TRUSTOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Sr. Vice President
[Printed Name and Title]
"BENEFICIARY":
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson
Vice President
[11128.AGRE]H61738
<PAGE>
REAFFIRMATION OF SUBORDINATION AGREEMENT
THE IRVINE COMPANY, a Michigan corporation
("Irvine"), hereby acknowledges, agrees and consents to the foregoing
Third Modification of Deed of Trust and Other Documents (the
"Modification"), and agrees that the Subordination Agreement (the
"Subordination Agreement") dated as of March 20, 1996 by and among
Bedford Property Investors, Inc., a Maryland corporation, The
Prudential Insurance Company of American, a New Jersey corporation,
and Irvine, a short form of which was recorded on March 27, 1996 as
Instrument No. 19960147698 in the Official Records of Orange County,
California, as affirmed by the First Modification and the Second
Modification, shall remain in full force and effect. Capitalized
terms used herein and not otherwise defined shall have the meaning set
forth in the Subordination Agreement.
The Deed of Trust as amended by the Modification,
and all present and future indebtedness and obligations secured
thereby, and any further renewals, extensions or modifications
thereof, shall be and remain at all times a lien or charge upon the
Real Property prior and superior to the Declaration and to all liens
and enforcement rights and remedies of Irvine under the Declaration,
including without limitation the right to require payment of an
additional purchase price in the event of Owner's violation of certain
Restrictions and the right of first refusal with respect to the sale
of all or a portion of the Real Property.
IN WITNESS WHEREOF, Irvine has duly executed this
Reaffirmation of Subordination as of January 29, 1998.
"IRVINE"
THE IRVINE COMPANY,
a Michigan corporation
By: /s/ Clarence W. Barker
Clarence W. Barker
President, Irvine
Industrial Company
A division of The Irvine
Company
By: /s/ Jeffrey J. Wallace
Jeffrey J. Wallace
Assistant Secretary
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, a notary public,
personally appeared Scott R. Whitney, Sr. V. P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, a notary public,
personally appeared Scott R. Whitney, Sr. V. P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Rebecca L. Ingraca, a notary public,
personally appeared Scott R. Whitney, Sr. V.P.
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Rebecca L. Ingraca
Notary Public
(seal)
<PAGE>
State of )
) ss.
County of )
On _______________________, 1998, before me,
___________________________, a notary public, personally appeared
__________________________________
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
Notary Public
(seal)
<PAGE>
Loan No.: 6-102-291
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT OF AGREEMENTS (this "Assignment") is made as
of January 30,1998, by BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Assignor"), in favor of THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation ("Assignee").
RECITALS
Assignee has made certain loans (collectively, the "Loan") to
Assignor (or which have been assumed by Assignor), which are
evidenced by (i) that certain Amended and Restated Promissory Note
dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00), and all
modifications, renewals or extensions thereof (the "Multistate
Note"), (ii) that certain Amended and Restated Promissory Note dated
as of even date herewith executed by Assignor, as maker, to and for
the benefit of Assignee, as holder, in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven Hundred Thirty
and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or its
order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note dated as of
even date herewith executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty Million Nine Hundred Thousand Dollars ($20,900,000) (the
"Arizona/California Note," and together with the Multistate Note and
the Nevada Note, collectively, the "Note"), and which is to be
secured by, among other things, a Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
of even date herewith made by Assignor, as trustor, for the benefit
of Assignee, as beneficiary (the "Deed of Trust"), which Deed of
Trust encumbers property located in Alameda County, California (the
"Property"), as more particularly described in Exhibit A attached
hereto and incorporated herein by this reference.
Assignor has entered into and, from time to time, intends to
enter into certain agreements pertaining to the operation of the
Property and the construction of certain improvements (the
"Improvements") on the Property (as defined in the Deed of Trust).
As a condition to the making of the Loan, Assignee has
required that Assignor execute and deliver this Assignment.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION for the Loan and other good and
valuable consideration, the parties agree as follows:
Assignment. Assignor hereby sells, assigns, transfers, sets
over and delivers to Assignee all of Assignor's right, title and
interest in and to any and all agreements and contracts whatsoever
pertaining to the operation of the Property and any and all
agreements and contracts whatsoever pertaining to the construction
of the Improvements, including all preliminary and final development
plans and specifications, architectural drawings, environmental
impact reports, negative declarations, map approvals, conditional
use permits, management agreements, agreements with contractors and
agreements pertaining to the transfer of development rights or
permitted floor area under all federal, state, regional, county,
local and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, and agreements, relating to the
development, occupancy, ownership, management, use and/or operation
of the Property or otherwise affecting all or any part of the
Property or Assignor, including, without limitation, those
agreements described in Exhibit B attached hereto and incorporated
herein by this reference (collectively, the "Agreements"), as the
same may be amended or otherwise modified from time to time. The
foregoing assignment shall not include the "Leases" as defined in
that certain Assignment of Lessor's Interest in Leases of even date
herewith, executed by Assignor in favor of Assignee. The foregoing
assignment encompasses the right of Assignor to terminate any of the
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, together with the
immediate and continuing right to collect and receive all sums which
may become due to Assignor or which Assignor may now or shall
hereafter become entitled to demand or claim, arising from or out of
the Agreements, including claims of Assignor for damages arising out
of, or for breach of, of default under, any of the Agreements and
all rights of Assignor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to any of the
Agreements.
Further Assurances. Assignor shall execute, at its cost, upon
Assignee's request, any documents necessary to cause the specific
assignment of any particular Agreements which are necessary, proper
or desirable in Assignee's judgment to carry out the purposes of
this Assignment.
Obligations. Assignor shall observe, perform, and discharge
duly and punctually all the obligations, terms, covenants,
conditions and warranties to be performed by it pursuant to the
Agreements. Assignor shall not, without the prior written consent
of Assignee, which consent shall not be unreasonably withheld,
terminate, amend, modify or alter in any manner any Agreements, or
waive, execute, condone, discount, set off, compromise, or in any
manner release or discharge the other parties to any Agreements from
any obligations, covenants, conditions, or agreements by such
parties to be kept, or accept or consent to any surrender of the
Agreements.
Revocable License. So long as no event of default shall have
occurred hereunder or under any of the other Loan Documents,
Assignor shall have the right under a revocable license granted
hereby to collect and retain all sums which may become payable to
Assignor under the Agreements. Assignee, upon the occurrence of an
event of default hereunder or under any of the other Loan Documents,
at its option, on written notice to Assignor shall have the right to
terminate and revoke the license herein granted and shall have the
complete right and authority then or thereafter to exercise and
enforce any and all of its rights and remedies provided herein,
under any of the Loan Documents or by law or in equity.
Representations and Warranties. Assignor represents and
warrants that, to the best of its knowledge, it has the right to
assign the Agreements to Assignee as herein provided (except for
those Agreements which by their express terms are not assignable)
and that Assignor has not previously sold, assigned, mortgaged,
pledged or otherwise transferred or encumbered any of its rights,
title or interest therein.
Nonresponsibility. The acceptance by Assignee of this
Assignment with all the rights, powers, privileges and authority so
granted shall not obligate Assignee to assume any obligations under
the Agreements or to take any action thereunder or to expend any
money or incur any expense or perform or discharge any obligation or
responsibility for the nonperformance of the provisions thereof by
Assignor.
Attorney-in-Fact. Assignor does hereby constitute and appoint
Assignee its true and lawful attorney-in-fact, which appointment is
coupled with an interest to (i) exercise any and all rights under
the Agreements and (ii) demand, sue for, collect, attach, levy,
recover and receive any and all sums which may become due to
Assignor, to which Assignor now or shall hereafter become entitled
or which Assignor may demand or claim, arising or issuing from or
out of the Agreements and to give proper notices, receipts, releases
and acquittances therefor and after deducting expenses of
collection, to apply the net proceeds as a credit upon any portion
of the Indebtedness (as hereinafter defined), as selected by
Assignee, notwithstanding that the amount owing thereunder may not
then be due and payable or that the Note is adequately secured.
Assignor does hereby authorize and direct the delivery and payment
of such sums to Assignee and authorizes Assignee to sign and deliver
written instructions to this effect in Assignor's name and stead,
and hereby ratifies and confirms all whatsoever that its said
attorney shall do or cause to be done by virtue of the powers
granted hereby. The power of attorney hereunder is irrevocable and
continuing and such rights, powers and privileges shall be exclusive
in Assignee, it successors and assigns so long as any part of the
Indebtedness remains unpaid; provided, however, Assignee shall not
exercise any of its rights or authority as attorney-in-fact prior to
the occurrence of an event of default hereunder or under any of the
other Loan Documents. As used herein, the term "Indebtedness" shall
mean and refer to the principal of and all other amounts, payments
and premiums due under the Note and any extensions or renewals
thereof (including extensions or renewals at a different rate of
interest, whether or not evidenced by a new or additional promissory
note or notes), and all other indebtedness of Assignor to Assignee
and additional advances under, evidenced by and/or secured by the
Loan Documents, plus interest on all such amounts.
Indemnity. Assignor shall pay any and all costs and expenses
incurred by Assignee in enforcing any rights or remedies under this
Assignment, including, without limitation, reasonable attorneys'
fees. Assignor shall indemnify, defend, protect and hold Assignee
harmless from and against any and all claims, losses, liabilities,
costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or resulting from this Assignment,
including the exercise or enforcement of any of the rights of
Assignee hereunder, and Assignor shall reimburse Assignee on demand
for any and all such expenses.
Counterparts. This Assignment may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the
same Assignment.
Successors and Assigns. The covenants and agreements herein
contained shall bind and inure to the benefit of the parties hereto
and their successors and assigns, subject, however, to the
provisions of the Deed of Trust regarding transfer of the Property
by Assignor.
Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of California.
Limitation on Personal Liabilities. Assignor's liability (i)
under the Multistate Note is subject to the terms and conditions set
forth in Paragraph 19 of the Multistate Note; (ii) under the Nevada
Note is subject to the terms and conditions set forth in Paragraph
19 of the Nevada Note; and (iii) under the Arizona/California Note
is subject to the terms and conditions set forth in Paragraph 19 of
the Arizona/California Note.
IN WITNESS WHEREOF, Assignor has executed this Assignment of
Agreements on the day and year first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
[11128.AGRE]H61652
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Steefel, Levitt & Weiss
One Embarcadero Center, 30th Floor
San Francisco, California 94111
Attention: James F. Eastman, Esq.
_______________________________________________________________
ASSIGNMENT OF LESSOR'S INTEREST
IN LEASES
(South San Francisco)
THIS ASSIGNMENT OF LESSOR'S INTEREST IN LEASES (this
"Assignment") is made as of January 30, 1998, by BEDFORD PROPERTY
INVESTORS, INC., a Maryland corporation having offices at 270
Lafayette Circle, Lafayette, California 94549 ("Assignor"), in favor
of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation having offices at Four Embarcadero Center, Suite 2700, San
Francisco, California 94111 ("Assignee"), for the benefit and
protection of Assignee as beneficiary under that certain Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements of even date herewith executed by
Assignor in favor of Assignee (the "Deed of Trust") encumbering those
certain real properties, together with any improvements now or at any
time located thereon, located in the County of San Mateo, State of
California (collectively, the "Property"), and more particularly
described in Exhibits A-1 and A-2 attached hereto and incorporated
herein by this reference and for the benefit and protection of
Assignee as payee and holder of that certain Amended and Restated
Promissory Note dated May 24, 1996 (and deemed made as of, and
relating back to, March 20, 1996), executed by Assignor, as maker, to
and for the benefit of Assignee, as holder, in the original principal
amount of Twenty-Five Million and No/100 Dollars ($25,000,000.00), and
all modifications, renewals or extensions thereof (the "Multistate
Note"), and that certain Amended and Restated Promissory Note dated as
of May 9, 1997 executed by Assignor, as maker, to and for the benefit
of Assignee, as holder, in the original principal amount of Eight
Million Nine Hundred Thirteen Thousand Seven Hundred Thirty and 85/100
Dollars ($8,913,730.85), payable to Assignee or its order, and all
modifications, renewals or extensions thereof (the "Nevada Note"), and
that certain Promissory Note dated as of even date herewith executed
by Assignor, as maker, to and for the benefit of Assignee, as holder,
in the original principal amount of Twenty Million Nine Hundred
Thousand Dollars ($20,900,000), payable to Assignee or its order, and
all modifications, renewals or extensions thereof (the
"Arizona/California Note," and together with the Multistate Note and
the Nevada Note, collectively, the "Note").
W I T N E S S E T H:
FOR VALUE RECEIVED, Assignor does hereby irrevocably and
absolutely SELL, ASSIGN, TRANSFER, SET OVER AND DELIVER unto Assignee
any and all leasehold interests, including subleases and tenancies
following attornment, now or hereafter affecting or covering any part
of the Property, including, without limitation, those leases described
in Exhibits B-1 and B-2 attached hereto (collectively, the "Leases").
TOGETHER, with the immediate and continuing right to collect
and receive all of the rents, income, receipts, revenues, issues and
profits now due or which may become due or to which Assignor may now
or shall hereafter (including the period of redemption, if any) become
entitled or may demand or claim, arising or issuing from or out of the
Leases or from deficiency rents and liquidated damages following
default, including, without limitation, all security and other
deposits now or hereafter held by Assignor, and all proceeds payable
under any policy of insurance covering loss of rents or other income
from the Property, together with any and all rights and claims of any
kind that Assignor may have against lessees under the Leases or any
subtenants or occupants of the Property, or any part thereof (all such
moneys, rights and claims described in this paragraph being
hereinafter called the "Receipts").
SUBJECT, however, to a license hereby granted by Assignee to
Assignor, but limited as hereinafter provided, to collect and receive
the Receipts.
ASSIGNOR REPRESENTS, WARRANTS, COVENANTS AND AGREES AS
FOLLOWS:
Representations and Warranties. Assignor represents and warrants
that: (i)ASSIGNOR is the owner of the Property, and has good title to
the Leases and Receipts and full and complete right to assign the
same; (ii)no other Person (as hereinafter defined) has any right,
title or interest in the Leases or Receipts; (iii)ASSIGNOR has duly
and punctually performed all and singular the obligations, terms,
covenants, conditions and warranties of the Leases on Assignor's part
to be kept, observed and performed; (iv) Assignor has not previously
sold, assigned, transferred, mortgaged or pledged the Leases or the
Receipts, whether now due or hereafter to become due; (v)No Receipts
for any period of more than thirty (30) days subsequent to the date
hereof have been collected, nor has payment of any of same been
otherwise discharged or compromised; (vi)the lessees under the Leases
("Lessees") are not in default of any of the terms thereof and do not
have any defense, set-off or counter claim against Assignor
thereunder; (vii)The Leases are in full force and effect, are valid
and enforceable in accordance with their terms, and have not been
modified, amended or altered, whether in writing or orally, except as
otherwise disclosed to Assignee in writing; (viii)except as disclosed
on the rent rolls delivered to Assignee in connection with the funding
of the Loan (the "Rent Rolls"), there are no unextinguished rent
concessions, abatements or other inducements relating to the Leases,
and no Lessee has any option or right to acquire any interest in the
Property; and (ix)The Rent Rolls disclose all currently existing
Leases and is complete, accurate and true in all respects. As used
herein, the term "Person" shall mean and refer to any natural person,
corporation, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other
capacity.
Affirmative Covenants. Assignor shall: (i) observe, perform and
discharge, duly and punctually, all and singular the obligations,
terms, covenants, conditions and warranties of the Leases, on the part
of Assignor to be kept, observed and performed, and give prompt notice
to Assignee of any failure on the part of Assignor to observe, perform
and discharge the same; (ii) direct the Lessees to deliver all rents
and other payments due under the Leases to Assignee upon written
request of Assignee and without further action of Assignor; (iii) upon
request of Assignee, notify Lessees in writing of this Assignment and
that any security deposit, or other deposits heretofore delivered to
Assignor have been retained by Assignor or assigned and delivered to
Assignee, as the case may be; (iv) enforce or secure in the name of
Assignee the performance of each and every obligation, term, covenant,
condition and agreement of the Leases to be performed by Lessees; (v)
appear in and defend any action or proceeding arising under, occurring
out of, or in any manner connected with the Leases or the obligations,
duties, or liabilities of Assignor and Lessees thereunder; and (vi)
upon request by Assignee, to do so in the name and on behalf of
Assignee but at the expense of Assignor, and to pay all costs and
expenses of Assignee, including, without limitation, reasonable
attorneys' fees. In the negotiation of any future leases or the
renewal of any of the Leases, Assignor shall use commercially
reasonable efforts not to agree to obtain the agreement of Assignee to
execute a subordination, non-disturbance and attornment agreement
("SNDA") with the Lessee or proposed lessee. So long as Assignor uses
such commercially reasonable efforts, Assignee shall enter into an
SNDA on Assignee's then current standard SNDA form with the tenant for
any lease which is either expressly approved by Assignee in writing or
which meets the criteria set forth in paragraphs (a) or (b) of Section
3, below. Pursuant to such SNDA, Assignee shall agree that in the
exercise of any foreclosure remedies under the Deed of Trust, Assignee
will not disturb such tenant in its possession of the demised premises
so long as such tenant is not in default under its lease.
Negative Covenants. Assignor shall not, without the prior
written consent of Assignee: (i) lease any part of the Property or
renew or extend any of the Leases; (ii) terminate, amend, modify or
alter in any manner any of the Leases, or waive, excuse, condone,
discount, set off, compromise, or in any manner release or discharge
Lessees from any obligations, covenants, conditions or agreements by
such Lessees to be kept, or accept or consent to any surrender of the
Leases; (iii) receive or collect any Receipts for a period of more
than one month in advance (whether in cash or by promissory note or
otherwise); (iv) further assign the Leases or pledge, transfer,
mortgage or otherwise encumber or assign future payments of Receipts;
(v) commence an action of ejectment or summary proceedings for
dispossession of the Lessees under any of the Leases; (vi) consent to
any modification of the express purposes for which the Property has
been leased; or (vii) consent to any subletting of the Property or any
part thereof, or to any assignment of the Leases by lessees thereunder
or to any assignment or further subletting by any sublessees.
Notwithstanding the foregoing, Assignor may do the following with
respect to the Leases, including without limitation any new leases
affecting the Property, without obtaining Assignee's prior written
consent:
Enter into any amendment or modification of any Lease, so
long as the Lessee under such Lease leases not more than
10,000 rentable square feet of the Property, provided that
Assignor delivers to Assignee an executed copy of such
amendment within a reasonable time after execution thereof,
but in no case later than 5 business days after such
execution, and provided further that such amendment (i)is
consistent with the ordinary and reasonable business practices
and procedures customarily employed by Assignor for properties
similar to the Property, (ii) does not substantially increase
the obligations of the landlord by providing non-market
inducements to the Lessee, (iii) does not decrease or
accelerate the rent under such Lease, (iv) does not decrease
the term of such Lease, unless such a reduced lease term is
granted in conjunction with both retaining an existing Lessee
and with enlarging the size of the same Lessee's space in the
Property, (v) does not cause such Lease to vary substantially
from Assignor's standard form lease, and (vi) is not of a
Lease for a single tenant space which comprises all or
substantially all of the area for an individual building on
the Property; and
Enter into new bona fide arms-length leases (or renew
existing Leases) with third-party tenants for premises of
10,000 rentable square feet or less, provided such leases (i)
are on Assignor's standard form lease approved by Assignee,
with no modifications that substantially increase the
obligations of the landlord by providing non-market
inducements to the Lessee, and (ii) are not for a single
tenant space which comprises all or substantially all of the
area for an individual building on the Property; and
Terminate any Lease (for premises of 10,000 rentable
square feet or less) in the ordinary course of Assignor's
business (i) for non-payment of rent or other material default
by the Lessee thereunder so long as such termination does not
include a payment by such Lessee to Assignor, or (ii) if all
of the space occupied pursuant to the Lease to be terminated
is to be leased to another Lessee in conjunction with a
transaction permitted under Section 3(a)(iv), above.
In any case in which Assignee's consent is required pursuant to this
Section 3, Assignee shall respond to requests for such consent in an
expedient manner, and such consent shall not be unreasonably withheld
or delayed and shall be deemed given unless objections in reasonable
detail are given to Assignee within eight (8) business days following
Assignor's receipt of (i) written request for such consent, which
written request shall include the date Assignee's response is due, and
(ii) all pertinent information relating to the Lease or proposed lease
in question, including, without limitation, copies of the proposed
amendment or new lease, if applicable.
Default and Remedies. In the event any representation or
warranty herein of Assignor shall be found to be untrue in any
material respect when made, or thereafter becomes untrue in any
material respect, or in the event Assignor shall default in the
payment of any Indebtedness (as hereinafter defined) or in the
observance or performance of any other Obligation (as hereinafter
defined), after the expiration of all applicable grace or cure
periods, if any, set forth in the Deed of Trust, then, in each such
instance, the same shall constitute an "Event of Default" hereunder
and under the Loan Documents (as defined in the Deed of Trust),
thereby entitling Assignee to declare all Indebtedness immediately due
and payable and to exercise any and all of the rights and remedies
provided thereunder and hereunder as well as by law or in equity.
Specifically, but without limiting the generality of the foregoing,
upon or at any time after the occurrence of an Event of Default,
Assignee, at its option, shall have the complete right, power and
authority to exercise and enforce any or all of the following rights
and remedies:
to terminate and revoke the license granted to
Assignor hereunder and collect the Receipts, and without
taking possession of the Property, in Assignee's own name,
to demand, collect, receive, sue for, attach and levy the
Receipts, to give proper receipts, releases and
acquittances therefor, and after deducting all necessary
and proper costs and expenses of operation and collection,
as determined in Assignee's sole judgment, and including
reasonable attorneys' fees, to apply the net proceeds
thereof, together with any funds of Assignor deposited
with Assignee, upon the Indebtedness and in such order as
Assignee may determine in its sole discretion; and
without regard to the adequacy of the security,
with or without any action or proceeding, through any
person or by agent, by the Trustee under the Deed of
Trust, or by a receiver appointed by a court of competent
jurisdiction, and irrespective of Assignor's possession,
to enter upon, take possession of, manage and operate the
Property, or any part thereof or interest therein, make,
modify, enforce, cancel or accept surrender of, any of the
Leases, remove and evict any Lessee, increase or decrease
rents under any of the Leases, decorate, clean and repair
any premises under any of the Leases, and otherwise do any
act or incur any costs or expenses as Assignee deems
necessary or proper to protect the rights of Assignee
therein, as fully and to the same extent as Assignor could
do if in possession, and in such event to apply the
Receipts so collected to the operation and management of
the Property, in such order as the Assignee shall deem
proper in its sole discretion, including payment of
reasonable management, brokerage and attorneys' fees,
payment of the Indebtedness and maintenance, without
interest, of reserves for replacements.
Collection of Receipts hereunder, and application thereof as specified
above, and/or the entry upon and taking possession of the Property, or
any part thereof or interest therein, shall not cure or waive any
default or waive, modify or affect any notice of default under any
Loan Documents, or invalidate any act done pursuant to such notice,
and the enforcement of such right or remedy by Assignee, once
exercised, shall continue for so long as Assignee shall elect. If
Assignee shall thereafter elect to discontinue the exercise of any
such right or remedy, the same or any other right or remedy hereunder
may be reasserted at any time and from time to time following any
subsequent Event of Default. A demand upon any Lessee made by
Assignee for payment of Receipts by reason of any default claimed by
Assignee hereunder or under any other Loan Documents shall be
sufficient to warrant to said Lessee to make future payments of all
Receipts to Assignee without the necessity for further consent by
Assignor.
As used herein, the term "Indebtedness" shall mean and refer to the
principal of and all other amounts, payments and premiums due under
the Note and any extensions or renewals thereof (including extensions
or renewals at a different rate of interest, whether or not evidenced
by a new or additional promissory note or notes), and all other
indebtedness of Assignor to Assignee and additional advances under,
evidenced by and/or secured by the Loan Documents, plus interest on
all such amounts. As used herein, the term "Obligations" shall mean
and refer to any and all of the covenants, promises and other
obligations (including the Indebtedness) made or owing by Assignor to
or due Assignee under and/or as set forth in the Loan Documents and
all of the material covenants, promises and other obligations made or
owing by Assignor to each and every other Person relating to the
Property.
Grant of License to Assignor. So long as there shall exist no
Event of Default, Assignor shall have the right under a license
granted hereby (but limited as provided in this paragraph) to collect,
but not prior to accrual, all Receipts. Assignor shall receive such
Receipts, and shall hold the same, as well as the right and license to
receive the same, as a trust fund to be applied, and Assignor shall so
apply the same, first to the payment of taxes and assessments upon the
Property before penalty or interest are due thereon, second to the
cost of such insurance and of such maintenance and repairs as is
required by the terms of the Deed of Trust, third to the satisfaction
of all obligations under the Leases, and fourth to the payment of the
Indebtedness before using any part of the Receipts for any other
purpose.
Power of Attorney. Effective automatically upon the occurrence
of an Event of Default and continuously thereafter, and without the
necessity of the execution of any further documents or instruments,
Assignor hereby constitutes and appoints Assignee as Assignor's true
and lawful attorney, coupled with an interest, in the name, place and
stead of Assignor (i)to collect, demand, sue for, attach, levy,
recover and receive all Receipts due and payable by Lessees pursuant
to the Leases and to give proper notices, receipts, releases and
acquittances therefor and after deducting expenses of collection, to
apply the net proceeds as a credit upon any portion, as selected by
Assignee, of the Indebtedness, notwithstanding that the amount owing
thereunder may not then be due and payable or that the Indebtedness is
adequately secured, and Assignor does hereby authorize and direct such
Lessees to deliver such payment to Assignee in accordance with the
foregoing; and (ii)To subject and subordinate at any time and from
time to time, the Leases, to the lien of the Deed of Trust or any
other Loan Documents or any other mortgage or deed of trust on or to
any ground lease of the Property or to request or require such
subordination, where such reservation, option or authority was
reserved under the Leases to the Assignor, or in any case, where the
Assignor otherwise would have the right, power or privilege so to do.
Assignor hereby ratifies and confirms all acts that Assignee shall do
or cause to be done by virtue of the powers granted hereby and
warrants that the Assignor has not, on or at any time prior to the
date hereof, exercised any such right of subordination under
clause(ii) above and covenants not to exercise any such right except
as may be required by Assignee. The power of attorney hereunder
granted is irrevocable and continuing, shall survive the insolvency or
dissolution of Assignor, and such rights, powers and privileges shall
be exclusive in Assignee, its successors and assigns so long as any
part of the Indebtedness shall remain unpaid.
Indemnity. Assignor shall indemnify, defend, protect and hold
Assignee harmless from and against any and all liability, loss, cost,
damage or expense (including, without limitation, reasonable
attorneys' fees) that Assignee may or might incur under or by reason
of this Assignment, for any action taken by Assignee hereunder, or the
enforcement of this Assignment, or by reason or in defense of any and
all claims and demands whatsoever that may be asserted against
Assignee arising out of the Leases, including any claim by any Lessees
of credit from rental paid to and received by Assignor. If Assignee
incurs any such liability, loss, cost, damage or expense, the amount
thereof with interest thereon at the Secondary Interest Rate (as
defined in the Note), shall be payable by Assignor immediately upon
demand, shall be secured by the Deed of Trust, and shall be part of
the Indebtedness.
No Waiver. The failure of Assignee to avail itself of any of the
terms, covenants and conditions of this Assignment for any period of
time, or at any time or times, shall not be construed or deemed to be
a waiver of any such right, and nothing herein contained, nor anything
done or omitted to be done by Assignee pursuant hereto, shall be
deemed a waiver by Assignee of any of its rights and remedies under
the Loan Documents, or under any applicable laws. The rights of
Assignee to collect the Indebtedness and to enforce any security
therefor may be exercised by Assignee, either prior to, simultaneously
with, or subsequent to, any action taken hereunder.
No Merger. So long as any of the Indebtedness shall remain
unpaid, unless Assignee shall otherwise consent in writing, the
leasehold estates and the subleasehold estates on the Property, if
any, shall not merge, but shall always be kept separate and distinct,
notwithstanding the union of said estates either in Assignor or in any
Lessees or in a third party, by purchase or otherwise.
No Mortgagee in Possession; No Other Liability. The acceptance
by Assignee of this Assignment, with all of the rights, power,
privileges and authority so created, shall not, prior to entry upon
and taking of possession of the Property by Assignee, be deemed or
construed to (i)constitute Assignee a mortgagee in possession nor
thereafter or at any time or in any event obligate Assignee to appear
in or defend any action or proceeding relating to the Leases or to the
Property, (ii)require Assignee to take any action hereunder, or to
expend any money or incur any expenses or perform or discharge any
obligation, duty or liability under the Leases, or (iii)Require
Assignee to assume any obligation or responsibility for any security
deposits or other deposits delivered to Assignor by Lessees and not
assigned and delivered to Assignee. Assignee shall not be liable in
any way for any injury or damage to person or property sustained by
any Person in or about the Property.
Payment of Indebtedness. Upon payment in full of all of the
Indebtedness, this Assignment shall become and be void and of no
effect, but the affidavit, certificate, letter or statement of any
officer of Assignee showing any part of said Indebtedness to remain
unpaid shall be and constitute conclusive evidence of the validity,
effectiveness and continuing force of this Assignment, and any Person
may and is hereby authorized to rely thereon.
Notices. All notices, demands or documents of any kind that
Assignee or Assignor may be required or may desire to serve shall be
served in the manner provided in the Deed of Trust.
Successors and Assigns; Gender. The terms, covenants, conditions
and warranties contained herein and the powers granted hereby shall
run with the land, shall inure to the benefit of and bind all parties
hereto and their respective heirs, executors, administrators,
successors and assigns, and all subsequent owners of the Property, and
all subsequent holders of the Note and the Deed of Trust, subject in
all events to the provisions of the Deed of Trust regarding transfers
of the Property by Assignor. In this Assignment, whenever the context
so requires, the masculine gender shall include the feminine and/or
neuter and the singular number shall include the plural and conversely
in each case. If there is more than one party constituting Assignor,
all obligations of each Assignor hereunder shall be joint and several.
Severability. If any term, provision, covenant or condition
hereof or any application thereof should be held unenforceable, in
whole or in part, all terms, provisions, covenants and conditions
hereof and all applications thereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of California.
Expenses. Assignor shall pay on demand all costs and expenses
incurred by Assignee in connection with the review of Leases,
including the fees and disbursements of Assignee's outside counsel.
Absolute Assignment. Notwithstanding anything contained herein
to the contrary, this Assignment is intended by Assignor and Assignee
to create and shall be construed to create an absolute assignment by
Assignor to Assignee of all of Assignor's right, title and interest in
the Leases and Receipts and shall not be deemed to create a security
interest therein. Assignor and Assignee further agree that, during
the term of this Assignment, the Leases and Receipts shall not
constitute property of Assignor (or of any estate of Assignor) within
the meaning of 11 U.S.C. Section 541, as amended from time to time.
Priority Of Leases. NOTICE OF THE FOLLOWING IS HEREBY GIVEN TO
ALL TENANTS EXECUTING A LEASE AFFECTING THE PROPERTY, EACH OF WHICH
SHALL BE ON NOTICE OF, BOUND BY AND SUBJECT TO THE TERMS OF THIS
PARAGRAPH 18:
18.1 Anything to the contrary in any Lease
notwithstanding, Assignee shall have the right, but not the
obligation, to change the priority of that Lease and the lien of the
Deed of Trust from time to time by one or more unilateral notices to
the tenant that (a) the lien of the Deed of Trust shall be subordinate
to such Lease, or (b) the Lease shall be subordinate to the Deed of
Trust.
18.2 Upon written request of Assignee, every tenant
under a Lease receiving such request shall execute and deliver to
Assignee within the time period specified in that written request a
written agreement which provides the following: (a)upon the
foreclosure of the Deed of Trust such tenant shall attorn to the
purchaser of the Property at the foreclosure sale, and (b)The
foreclosure of the Deed of Trust shall not disturb or result in the
cancellation or termination of that tenant's Lease. Assignee has no
obligation to deliver such a request to any tenant.
18.3 Assignor covenants that, unless Assignee otherwise
agrees, each Lease shall provide, among other things, that Assignee
shall have the right to (a) change the relative priority of that Lease
and the Deed of Trust by notice to the tenant that (i) the Lease shall
be subordinate to the Deed of Trust, or (ii) the Deed of Trust shall
be subordinate to the Lease, and (b) elect whether or not (i) such
Lease shall survive foreclosure of the Deed of Trust, and (ii) such
tenant shall attorn to Assignee or the purchaser upon a foreclosure
sale.
18.4 Assignee shall have the right to elect to be a
third party beneficiary of any attornment provisions contained in any
Lease. Anything to the contrary in any Lease notwithstanding, no
election by Assignor under any Lease or otherwise to alter the
relative priority of that Lease and the Deed of Trust shall be
effective unless Assignee shall have consented thereto in writing.
Limitation on Personal Liabilities. Assignor's liability (i)
under the Multistate Note is subject to the terms and conditions set
forth in Paragraph 19 of the Multistate Note; (ii) under the Nevada
Note is subject to the terms and conditions set forth in Paragraph 19
of the Nevada Note; and (iii) under the Arizona/California Note is
subject to the terms and conditions set forth in Paragraph 19 of the
Arizona/California Note.
Counterparts. This Assignment may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the
same Assignment.
<PAGE>
IN WITNESS WHEREOF, this Assignment of Lessor's Interest in Leases has
been duly executed by Assignor the day and year first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice
President
[Printed Name and Title]
The Prudential Insurance Company
of America hereby executes this
Assignment to evidence its agreement
with the last two sentences of
Section 2, hereof.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
By: /s/ Michael B. Jameson
Michael B. Jameson, Vice President
[Printed Name and Title]
[11128.AGRE]I13399
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington , a
notary public, personally appeared
Scott R. Whitney
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
(seal)
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington , a
notary public, personally appeared
Scott R. Whitney
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
(seal)
<PAGE>
State of California )
) ss.
County of Contra Costa )
On February 2, 1998, before me, Colette M. Pennington , a
notary public, personally appeared
Scott R. Whitney
personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Colette M. Pennington
Notary Public
(seal)
<PAGE>
Loan No.: 6-102-324
ASSIGNMENT OF AGREEMENTS
(South San Francisco)
THIS ASSIGNMENT OF AGREEMENTS (this "Assignment") is made as
of January 30, 1998, by BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Assignor"), in favor of THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation ("Assignee").
RECITALS
Assignee has made certain loans (collectively, the "Loan") to
Assignor (or which have been assumed by Assignor), which are
evidenced by (i)that certain Amended and Restated Promissory Note
dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00), and all
modifications, renewals or extensions thereof (the "Multistate
Note"), (ii)That certain Amended and Restated Promissory Note dated
as of even date herewith executed by Assignor, as maker, to and for
the benefit of Assignee, as holder, in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven Hundred Thirty
and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or its
order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note dated as of
even date herewith executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty Million Nine Hundred Thousand Dollars ($20,900,000) (the
"Arizona/California Note," and together with the Multistate Note and
the Nevada Note, collectively, the "Note"), and which is to be
secured by, among other things, a Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
of even date herewith made by Assignor, as trustor, for the benefit
of Assignee, as beneficiary (the "Deed of Trust"), which Deed of
Trust encumbers property located in San Mateo County, California
(the "Property"), as more particularly described in Exhibits a-1 and
A-2 attached hereto and incorporated herein by this reference.
Assignor has entered into and, from time to time, intends to
enter into certain agreements pertaining to the operation of the
Property and the construction of certain improvements (the
"Improvements") on the Property (as defined in the Deed of Trust).
As a condition to the making of the Loan, Assignee has
required that Assignor execute and deliver this Assignment.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION for the Loan and other good and
valuable consideration, the parties agree as follows:
Assignment. Assignor hereby sells, assigns, transfers, sets
over and delivers to Assignee all of Assignor's right, title and
interest in and to any and all agreements and contracts whatsoever
pertaining to the operation of the Property and any and all
agreements and contracts whatsoever pertaining to the construction
of the Improvements, including all preliminary and final development
plans and specifications, architectural drawings, environmental
impact reports, negative declarations, map approvals, conditional
use permits, management agreements, agreements with contractors and
agreements pertaining to the transfer of development rights or
permitted floor area under all federal, state, regional, county,
local and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, and agreements, relating to the
development, occupancy, ownership, management, use and/or operation
of the Property or otherwise affecting all or any part of the
Property or Assignor, including, without limitation, those
agreements described in Exhibits B-1 and B-2 attached hereto and
incorporated herein by this reference (collectively, the
"Agreements"), as the same may be amended or otherwise modified from
time to time. The foregoing assignment shall not include the
"Leases" as defined in that certain Assignment of Lessor's Interest
in Leases of even date herewith, executed by Assignor in favor of
Assignee. The foregoing assignment encompasses the right of
Assignor to terminate any of the Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies
thereunder, together with the immediate and continuing right to
collect and receive all sums which may become due to Assignor or
which Assignor may now or shall hereafter become entitled to demand
or claim, arising from or out of the Agreements, including claims of
Assignor for damages arising out of, or for breach of, of default
under, any of the Agreements and all rights of Assignor to receive
proceeds of any insurance, indemnity, warranty or guaranty with
respect to any of the Agreements.
Further Assurances. Assignor shall execute, at its cost, upon
Assignee's request, any documents necessary to cause the specific
assignment of any particular Agreements which are necessary, proper
or desirable in Assignee's judgment to carry out the purposes of
this Assignment.
Obligations. Assignor shall observe, perform, and discharge
duly and punctually all the obligations, terms, covenants,
conditions and warranties to be performed by it pursuant to the
Agreements. Assignor shall not, without the prior written consent
of Assignee, which consent shall not be unreasonably withheld,
terminate, amend, modify or alter in any manner any Agreements, or
waive, execute, condone, discount, set off, compromise, or in any
manner release or discharge the other parties to any Agreements from
any obligations, covenants, conditions, or agreements by such
parties to be kept, or accept or consent to any surrender of the
Agreements.
Revocable License. So long as no event of default shall have
occurred hereunder or under any of the other Loan Documents,
Assignor shall have the right under a revocable license granted
hereby to collect and retain all sums which may become payable to
Assignor under the Agreements. Assignee, upon the occurrence of an
event of default hereunder or under any of the other Loan Documents,
at its option, on written notice to Assignor shall have the right to
terminate and revoke the license herein granted and shall have the
complete right and authority then or thereafter to exercise and
enforce any and all of its rights and remedies provided herein,
under any of the Loan Documents or by law or in equity.
Representations and Warranties. Assignor represents and
warrants that, to the best of its knowledge, it has the right to
assign the Agreements to Assignee as herein provided (except for
those Agreements which by their express terms are not assignable)
and that Assignor has not previously sold, assigned, mortgaged,
pledged or otherwise transferred or encumbered any of its rights,
title or interest therein.
Nonresponsibility. The acceptance by Assignee of this
Assignment with all the rights, powers, privileges and authority so
granted shall not obligate Assignee to assume any obligations under
the Agreements or to take any action thereunder or to expend any
money or incur any expense or perform or discharge any obligation or
responsibility for the nonperformance of the provisions thereof by
Assignor.
Attorney-in-Fact. Assignor does hereby constitute and appoint
Assignee its true and lawful attorney-in-fact, which appointment is
coupled with an interest to (i)exercise any and all rights under the
Agreements and (ii)demand, sue for, collect, attach, levy, recover
and receive any and all sums which may become due to Assignor, to
which Assignor now or shall hereafter become entitled or which
Assignor may demand or claim, arising or issuing from or out of the
Agreements and to give proper notices, receipts, releases and
acquittances therefor and after deducting expenses of collection, to
apply the net proceeds as a credit upon any portion of the
Indebtedness (as hereinafter defined), as selected by Assignee,
notwithstanding that the amount owing thereunder may not then be due
and payable or that the Note is adequately secured. Assignor does
hereby authorize and direct the delivery and payment of such sums to
Assignee and authorizes Assignee to sign and deliver written
instructions to this effect in Assignor's name and stead, and hereby
ratifies and confirms all whatsoever that its said attorney shall do
or cause to be done by virtue of the powers granted hereby. The
power of attorney hereunder is irrevocable and continuing and such
rights, powers and privileges shall be exclusive in Assignee, it
successors and assigns so long as any part of the Indebtedness
remains unpaid; provided, however, Assignee shall not exercise any
of its rights or authority as attorney-in-fact prior to the
occurrence of an event of default hereunder or under any of the
other Loan Documents. As used herein, the term "Indebtedness" shall
mean and refer to the principal of and all other amounts, payments
and premiums due under the Note and any extensions or renewals
thereof (including extensions or renewals at a different rate of
interest, whether or not evidenced by a new or additional promissory
note or notes), and all other indebtedness of Assignor to Assignee
and additional advances under, evidenced by and/or secured by the
Loan Documents, plus interest on all such amounts.
Indemnity. Assignor shall pay any and all costs and expenses
incurred by Assignee in enforcing any rights or remedies under this
Assignment, including, without limitation, reasonable attorneys'
fees. Assignor shall indemnify, defend, protect and hold Assignee
harmless from and against any and all claims, losses, liabilities,
costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or resulting from this Assignment,
including the exercise or enforcement of any of the rights of
Assignee hereunder, and Assignor shall reimburse Assignee on demand
for any and all such expenses.
Counterparts. This Assignment may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the
same Assignment.
Successors and Assigns. The covenants and agreements herein
contained shall bind and inure to the benefit of the parties hereto
and their successors and assigns, subject, however, to the
provisions of the Deed of Trust regarding transfer of the Property
by Assignor.
Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of California.
Limitation on Personal Liabilities. Assignor's liability (i)
under the Multistate Note is subject to the terms and conditions set
forth in Paragraph 19 of the Multistate Note; (ii) under the Nevada
Note is subject to the terms and conditions set forth in Paragraph
19 of the Nevada Note; and (iii) under the Arizona/California Note
is subject to the terms and conditions set forth in Paragraph 19 of
the Arizona/California Note.
IN WITNESS WHEREOF, Assignor has executed this Assignment of
Agreements on the day and year first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
[11128.AGRE]I13401
<PAGE>
Loan No.: 6-102-104
ASSIGNMENT OF AGREEMENTS
THIS ASSIGNMENT OF AGREEMENTS (this "Assignment") is made as
of January 30, 1998, by BEDFORD PROPERTY INVESTORS, INC., a Maryland
corporation ("Assignor"), in favor of THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation ("Assignee").
RECITALS
Assignee has made certain loans (collectively, the "Loan") to
Assignor (or which have been assumed by Assignor), which are
evidenced by (i) that certain Amended and Restated Promissory Note
dated May 24, 1996 (and deemed made as of, and relating back to,
March 20, 1996), executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty-Five Million and No/100 Dollars ($25,000,000.00), and all
modifications, renewals or extensions thereof (the "Multistate
Note"), (ii) that certain Amended and Restated Promissory Note dated
as of even date herewith executed by Assignor, as maker, to and for
the benefit of Assignee, as holder, in the original principal amount
of Eight Million Nine Hundred Thirteen Thousand Seven Hundred Thirty
and 85/100 Dollars ($8,913,730.85), payable to Beneficiary or its
order, and all modifications, renewals or extensions thereof (the
"Nevada Note"), and (iii) that certain Promissory Note dated as of
even date herewith executed by Assignor, as maker, to and for the
benefit of Assignee, as holder, in the original principal amount of
Twenty Million Nine Hundred Thousand Dollars ($20,900,000) (the
"Arizona/California Note," and together with the Multistate Note and
the Nevada Note, collectively, the "Note"), and which is to be
secured by, among other things, a Deed of Trust, Security Agreement
and Fixture Filing with Assignment of Leases, Rents and Agreements
of even date herewith made by Assignor, as trustor, for the benefit
of Assignee, as beneficiary (the "Deed of Trust"), which Deed of
Trust encumbers property located in Maricopa County, Arizona (the
"Property"), as more particularly described in Exhibit A attached
hereto and incorporated herein by this reference.
Assignor has entered into and, from time to time, intends to
enter into certain agreements pertaining to the operation of the
Property and the construction of certain improvements (the
"Improvements") on the Property (as defined in the Deed of Trust).
As a condition to the making of the Loan, Assignee has
required that Assignor execute and deliver this Assignment.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION for the Loan and other good and
valuable consideration, the parties agree as follows:
Assignment. Assignor hereby sells, assigns, transfers, sets
over and delivers to Assignee all of Assignor's right, title and
interest in and to any and all agreements and contracts whatsoever
pertaining to the operation of the Property and any and all
agreements and contracts whatsoever pertaining to the construction
of the Improvements, including all preliminary and final development
plans and specifications, architectural drawings, environmental
impact reports, negative declarations, map approvals, conditional
use permits, management agreements, agreements with contractors and
agreements pertaining to the transfer of development rights or
permitted floor area under all federal, state, regional, county,
local and other laws, regulations, orders, codes, ordinances, rules,
statutes and policies, restrictive covenants and other title
encumbrances, permits and approvals, and agreements, relating to the
development, occupancy, ownership, management, use and/or operation
of the Property or otherwise affecting all or any part of the
Property or Assignor, including, without limitation, those
agreements described in Exhibit B attached hereto and incorporated
herein by this reference (collectively, the "Agreements"), as the
same may be amended or otherwise modified from time to time. The
foregoing assignment shall not include the "Leases" as defined in
that certain Assignment of Lessor's Interest in Leases of even date
herewith, executed by Assignor in favor of Assignee. The foregoing
assignment encompasses the right of Assignor to terminate any of the
Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, together with the
immediate and continuing right to collect and receive all sums which
may become due to Assignor or which Assignor may now or shall
hereafter become entitled to demand or claim, arising from or out of
the Agreements, including claims of Assignor for damages arising out
of, or for breach of, of default under, any of the Agreements and
all rights of Assignor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to any of the
Agreements.
Further Assurances. Assignor shall execute, at its cost, upon
Assignee's request, any documents necessary to cause the specific
assignment of any particular Agreements which are necessary, proper
or desirable in Assignee's judgment to carry out the purposes of
this Assignment.
Obligations. Assignor shall observe, perform, and discharge
duly and punctually all the obligations, terms, covenants,
conditions and warranties to be performed by it pursuant to the
Agreements. Assignor shall not, without the prior written consent
of Assignee, which consent shall not be unreasonably withheld,
terminate, amend, modify or alter in any manner any Agreements, or
waive, execute, condone, discount, set off, compromise, or in any
manner release or discharge the other parties to any Agreements from
any obligations, covenants, conditions, or agreements by such
parties to be kept, or accept or consent to any surrender of the
Agreements.
Revocable License. So long as no event of default shall have
occurred hereunder or under any of the other Loan Documents,
Assignor shall have the right under a revocable license granted
hereby to collect and retain all sums which may become payable to
Assignor under the Agreements. Assignee, upon the occurrence of an
event of default hereunder or under any of the other Loan Documents,
at its option, on written notice to Assignor shall have the right to
terminate and revoke the license herein granted and shall have the
complete right and authority then or thereafter to exercise and
enforce any and all of its rights and remedies provided herein,
under any of the Loan Documents or by law or in equity.
Representations and Warranties. Assignor represents and
warrants that, to the best of its knowledge, it has the right to
assign the Agreements to Assignee as herein provided (except for
those Agreements which by their express terms are not assignable)
and that Assignor has not previously sold, assigned, mortgaged,
pledged or otherwise transferred or encumbered any of its rights,
title or interest therein.
Nonresponsibility. The acceptance by Assignee of this
Assignment with all the rights, powers, privileges and authority so
granted shall not obligate Assignee to assume any obligations under
the Agreements or to take any action thereunder or to expend any
money or incur any expense or perform or discharge any obligation or
responsibility for the nonperformance of the provisions thereof by
Assignor.
Attorney-in-Fact. Assignor does hereby constitute and appoint
Assignee its true and lawful attorney-in-fact, which appointment is
coupled with an interest to (i) exercise any and all rights under
the Agreements and (ii) demand, sue for, collect, attach, levy,
recover and receive any and all sums which may become due to
Assignor, to which Assignor now or shall hereafter become entitled
or which Assignor may demand or claim, arising or issuing from or
out of the Agreements and to give proper notices, receipts, releases
and acquittances therefor and after deducting expenses of
collection, to apply the net proceeds as a credit upon any portion
of the Indebtedness (as hereinafter defined), as selected by
Assignee, notwithstanding that the amount owing thereunder may not
then be due and payable or that the Note is adequately secured.
Assignor does hereby authorize and direct the delivery and payment
of such sums to Assignee and authorizes Assignee to sign and deliver
written instructions to this effect in Assignor's name and stead,
and hereby ratifies and confirms all whatsoever that its said
attorney shall do or cause to be done by virtue of the powers
granted hereby. The power of attorney hereunder is irrevocable and
continuing and such rights, powers and privileges shall be exclusive
in Assignee, it successors and assigns so long as any part of the
Indebtedness remains unpaid; provided, however, Assignee shall not
exercise any of its rights or authority as attorney-in-fact prior to
the occurrence of an event of default hereunder or under any of the
other Loan Documents. As used herein, the term "Indebtedness" shall
mean and refer to the principal of and all other amounts, payments
and premiums due under the Note and any extensions or renewals
thereof (including extensions or renewals at a different rate of
interest, whether or not evidenced by a new or additional promissory
note or notes), and all other indebtedness of Assignor to Assignee
and additional advances under, evidenced by and/or secured by the
Loan Documents, plus interest on all such amounts.
Indemnity. Assignor shall pay any and all costs and expenses
incurred by Assignee in enforcing any rights or remedies under this
Assignment, including, without limitation, reasonable attorneys'
fees. Assignor shall indemnify, defend, protect and hold Assignee
harmless from and against any and all claims, losses, liabilities,
costs and expenses (including, without limitation, reasonable
attorneys' fees) arising out of or resulting from this Assignment,
including the exercise or enforcement of any of the rights of
Assignee hereunder, and Assignor shall reimburse Assignee on demand
for any and all such expenses.
Counterparts. This Assignment may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an
original and all of which together shall constitute but one and the
same Assignment.
Successors and Assigns. The covenants and agreements herein
contained shall bind and inure to the benefit of the parties hereto
and their successors and assigns, subject, however, to the
provisions of the Deed of Trust regarding transfer of the Property
by Assignor.
Governing Law. This Assignment shall be governed by and
construed in accordance with the laws of the State of Arizona.
Limitation on Personal Liabilities. Assignor's liability (i)
under the Multistate Note is subject to the terms and conditions set
forth in Paragraph 19 of the Multistate Note; (ii) under the Nevada
Note is subject to the terms and conditions set forth in Paragraph
19 of the Nevada Note; and (iii) under the Arizona/California Note
is subject to the terms and conditions set forth in Paragraph 19 of
the Arizona/California Note.
IN WITNESS WHEREOF, Assignor has executed this Assignment of
Agreements on the day and year first above written.
"ASSIGNOR":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/ Scott R. Whitney
Scott R. Whitney, Senior Vice President
[Printed Name and Title]
Witness (other than a Notary Public):
/s/ Cindy D. Lynds
Name: Cindy D. Lynds
[11128.AGRE]I13405
EXHIBIT 10.16
Bedford Property Investors, Inc.
AMENDED AND RESTATED
EMPLOYEE STOCK PLAN
(formerly the Employee Stock Option Plan, effective May 20, 1985,
amended April 15, 1986 and June 9, 1993
and amended and restated effective January 1, 1998)
In order to attract and retain the services of qualified
individuals for positions of responsibility and to secure for the
Company the benefits of the incentives inherent in increased ownership
of Common Stock by such individuals, the Company hereby authorizes
grants of Stock Options, Stock Appreciation Rights and Restricted
Stock to the officers, employees and consultants of the Company and
its subsidiaries. Any capitalized term used herein without definition
in the section where first used shall have the meaning ascribed to
such term in Section 12.
1. Administration. The Committee will be responsible for
administering the Plan. The Committee will have authority to adopt
such rules as it may deem appropriate to carry out the purposes of the
Plan, and shall have authority to interpret and construe the
provisions of the Plan and any agreements and notices under the Plan
and to make determinations pursuant to any Plan provision. Each
interpretation, determination or other action made or taken by the
Committee pursuant to the Plan shall be final and binding on all
persons. The Committee shall not be liable for any action or
determination made in good faith, and shall be entitled to
indemnification and reimbursement in the manner provided in the
Company's certificate of incorporation and by-laws as such documents
may be amended from time to time. The Committee shall have the full
power and authority, subject to the express provisions hereof, to
select Participants from the Eligible Individuals and to make Awards
in accordance with the Plan.
2. Shares Available. Subject to the provisions of
Section 9(b) of the Plan, the maximum number of shares of Common Stock
which may be issued under the Plan shall not exceed [ ]
shares (the "Limit"). Authorized and unissued shares of Common Stock
may be delivered pursuant to the Plan. For purposes of determining
the number of shares that remain available for issuance under the
Plan, the following rules shall apply:
(a) the number of Shares subject to outstanding Awards
shall be charged against the Limit; and
(b) the Limit shall be increased by:
(i) the number of shares subject to an Award (or
portion thereof) which lapses, expires or is otherwise
terminated without the issuance of such shares or is settled by
the delivery of consideration other than shares,
(ii) the number of shares tendered to pay the
exercise price of a Stock Option or other Award, and
(iii) the number of shares withheld from any
Award or contributed by a Participant to satisfy a Participant's
tax withholding obligations.
3. Eligible Individuals3. Eligible Individuals.
(a) Eligibility Criteria. Awards may be granted by the
Committee to individuals ("Eligible Individuals") who are officers or
other employees or consultants of the Company or a Subsidiary with the
potential to contribute to the future success of the Company or its
Subsidiaries. Members of the Compensation Committee will not be
permitted to receive Awards under the Plan.
(b) Maximum Number of Shares per Eligible Individual(b)
Maximum Number of Shares per Eligible Individual. In
accordance with the requirements under Section 162(m) of the Code, no
Eligible Individual shall receive grants of Awards with respect to an
aggregate of more than 400,000 shares of Common Stock in respect of
any fiscal year of the Company. For purposes of the preceding
sentence, any Award that is made as bonus compensation, or is made in
lieu of compensation that otherwise would be payable to an Eligible
Individual, shall be considered made in respect of the fiscal year to
which such bonus or other compensation relates or otherwise was
earned.
4. Awards Generally. Awards under the Plan may consist
of Stock Options, Stock Appreciation Rights and Restricted Stock. The
terms and provisions of an Award shall be set forth in a written Award
Agreement approved by the Committee and delivered or made available to
the Participant as soon as practicable following the date of the
Award. The vesting, exercisability, payment and other restrictions
applicable to an Award (which may include, without limitation,
restrictions on transferability or provision for mandatory resale to
the Company) shall be determined by the Committee and set forth in the
applicable Award Agreement. Notwithstanding the foregoing, the
Committee may accelerate (i) the vesting or payment of any Award, (ii)
the lapse of restrictions on any Award or (iii) the date on which any
Option or Stock Appreciation Right first becomes exercisable. The
date of a Participant's termination of employment for any reason shall
be determined in the sole discretion of the Committee. The Committee
shall also have full authority to determine and specify in the
applicable Award Agreement the effect, if any, that a Participant's
termination of employment for any reason will have on the vesting,
exercisability, payment or lapse of restrictions applicable to an
outstanding Award.
5. Stock Options. Stock Options.
(a) Terms of Stock Options Generally. Subject to the
terms of the Plan and the applicable Award Agreement, each Stock
Option shall entitle the Participant to whom such Stock Option was
granted to purchase the number of shares of Common Stock specified in
the applicable Award Agreement and shall be subject to the terms and
conditions established by the Committee in connection with the Award
and specified in the applicable Award Agreement. Upon satisfaction
of the conditions to exercisability specified in the applicable Award
Agreement, a Participant shall be entitled to exercise the Stock
Option in whole or in part and to receive, subject to the terms of the
Award Agreement, upon satisfaction or payment of the exercise price or
an irrevocable notice of exercise in the manner contemplated by
Section 5(d) below, the number of shares of Common Stock in respect of
which the Stock Option shall have been exercised. Stock Options may
be either Nonqualified Stock Options or Incentive Stock Options.
(b) Exercise Price. The exercise price per share of
Common Stock purchasable under a Stock Option shall be determined by
the Committee at the time of grant and set forth in the Award
Agreement, provided, that the exercise price per share shall be no
less than 85% of the Fair Market Value per share on the date of grant.
(c) Option Term. The term of each Stock Option shall be
fixed by the Committee and set forth in the Award Agreement; provided,
however, that a Stock Option shall not be exercisable after the
expiration of ten years after the date the Stock Option is granted.
(d) Method of Exercise. Subject to the provisions of the
applicable Award Agreement, the exercise price of a Stock Option may
be paid (i) by personal check, bank draft or postal or express money
order (such modes of payment are collectively referred to as Acash@)
payable to the order of the Company in U.S. dollars, (ii) by delivery
of previously owned shares of Common Stock, (iii) by a combination
thereof and (iv) if the applicable Award Agreement so provides, in
whole or in part through the withholding of shares subject to the
Stock Option with a value equal to the exercise price. Payment of the
exercise price in shares of Common Stock shall be made (i) by
delivering to the Company the share certificate(s) representing the
required number of shares, with the Participant signing his or her
name on the back or by attaching executed stock powers (the signature
of the Participant must be guaranteed in either case) or
(ii) attesting to ownership of a sufficient number of shares of Common
Stock. In addition to the exercise methods described above, a
Participant may exercise a Stock Option through a procedure whereby
the Participant delivers to the Company an irrevocable notice of
exercise in exchange for the Company issuing the shares of Common
Stock subject to the Stock Option to a broker previously designated or
approved by the Company, subject to such rules and procedures as the
Committee may determine (for purposes of such a transaction the value
of shares of the Common Stock shall be deemed to equal the Fair Market
Value of the Common Stock on the date of exercise of the Stock
Option).
(e) Limitation on Exercise. No Option shall be
exercisable unless the Common Stock subject thereto has been
registered under the Securities Act and qualified under applicable
state "blue sky" laws in connection with the offer and sale thereof,
or the Company has determined that an exemption from registration
under the Securities Act and from qualification under such state "blue
sky" laws is available.
(f) Issuance of Shares. Subject to the foregoing
conditions and the terms of the applicable Award Agreement, as soon as
reasonably practicable after its receipt of a proper notice of
exercise and payment of the exercise price of the Stock Option for the
number of shares with respect to which the Stock Option is exercised,
the Company shall deliver to the Participant, at the principal office
of the Company or at such other location as may be acceptable to the
Company and the Participant, one or more stock certificates for the
appropriate number of shares of Common Stock issued in connection with
such exercise. Shares sold in connection with a broker-assisted
Acashless exercise@ shall be delivered to the broker designated or
appointed by the Company in the time and manner described in Section
5(d) above. Any such shares shall be fully paid and nonassessable.
6. Stock Appreciation Rights. Stock Appreciation Rights
shall be subject to the terms and conditions established by the
Committee in connection with the Award thereof and specified in the
applicable Award Agreement. Upon satisfaction of the conditions to
the payment specified in the applicable Award Agreement, each Stock
Appreciation Right shall entitle a Participant to an amount, if any,
equal to the Fair Market Value of a share of Common Stock on the date
of exercise over the Stock Appreciation Right exercise price specified
in the applicable Award Agreement. At the discretion of the
Committee, payments to a Participant upon exercise of a Stock
Appreciation Right may be made in Shares, cash or a combination
thereof. A Stock Appreciation Right may be granted alone or in
addition to other Awards, or in tandem with a Stock Option. If
granted in tandem with a Stock Option, a Stock Appreciation Right
shall cover the same number of shares of Common Stock as covered by
the Stock Option (or such lesser number of shares as the Committee may
determine) and shall be exercisable only at such time or times and to
the extent the related Stock Option shall be exercisable, and shall
have the same term and exercise price as the related Stock Option.
Upon exercise of a Stock Appreciation Right granted in tandem with a
Stock Option, the related Stock Option shall be cancelled
automatically to the extent of the number of shares covered by such
exercise; conversely, if the related Stock option is exercised as to
some or all of the shares covered by the tandem grant, the tandem
Stock Appreciation Right shall be cancelled automatically to the
extent of the number of shares covered by the Stock Option exercise.
7. Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant Restricted
Stock under the Plan in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole
discretion determine. The vesting of Restricted Stock granted under
the Plan may be conditioned upon the completion of a specified period
of employment with the Company or any Affiliate, upon the attainment
of specified performance goals, and/or upon such other criteria as the
Committee may determine in its sole discretion.
(b) Payment. Each Award Agreement with respect to a grant
of Restricted Stock shall set forth the amount (if any) to be paid by
the grantee with respect to such award. If a grantee makes any
payment for Restricted Stock which does not vest, appropriate payment
may be made to the grantee following the forfeiture of such award on
such terms and conditions as the Committee may determine.
(c) Forfeiture upon Termination of Employment. Each Award
Agreement with respect to a grant of Restricted Stock award shall set
forth such terms and conditions as the Committee may determine
regarding the vesting and forfeiture of Restricted Stock.
(d) Issuance of Shares. The Committee may provide that
one or more certificates representing Restricted Stock shall be
registered in the grantee's name and bear an appropriate legend
specifying that such shares are not transferable and are subject to
the terms and conditions of the Plan and the applicable Plan
agreement, or that such certificate or certificates shall be held in
escrow by the Company on behalf of the grantee until such shares vest
or are forfeited, all on such terms and conditions as the Committee
may determine. Unless the applicable Award Agreement otherwise
provides, no Restricted Stock may be assigned, transferred, otherwise
encumbered or disposed of by the grantee until such Restricted Stock
has vested in accordance with the terms of such award. Subject to the
provisions of Section 11(d), as soon as practicable after any
Restricted Stock vests, the Company shall issue or reissue to the
grantee (or to the grantee's estate in the event of the grantee's
death) one or more certificates for the Common Stock represented by
such Award.
8. Change in Control.
Anything in the Plan to the contrary notwithstanding, in
the event of a Change in Control of the Company, any Awards
outstanding as of the date such Change in Control is determined to
have occurred that are not yet exercisable and vested on such date
shall become fully exercisable and vested; provided, however, that if
the Committee shall receive an opinion from a nationally recognized
firm of accountants to the Company that the accelerated vesting of
some or all of the Awards will prohibit the utilization of "pooling of
interests" accounting in connection with the transaction resulting in
the Change in Control of the Company, then such Awards shall not
become fully exercisable and vested upon the Change in Control.
9. Recapitalization or Reorganization
(a) Authority of the Company and Stockholders. The
existence of the Plan shall not affect or restrict in any way the
right or power of the Company or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible
into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) Change in Capitalization. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization,
reorganization, merger, consolidation, stock split, combination or
exchange of shares (a "Change in Capitalization"), (i) such
proportionate adjustments as may be necessary (in the form determined
by the Committee in its sole discretion) to reflect such change shall
be made to prevent dilution or enlargement of the rights of
Participants under the Plan with respect to the aggregate number of
shares of Common Stock authorized to be awarded under the Plan, the
number of shares of Common Stock covered by each outstanding Option
and the exercise prices in respect thereof and the number of shares of
Common Stock covered by future Option grants and (ii) the Committee
may make such other adjustments, consistent with the foregoing, as it
deems appropriate in its sole discretion.
(c) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, each outstanding
Award will vest and become exercisable on a date prior to the
consummation of the proposed action that is reasonably sufficient to
enable the Participants to exercise their Awards.
10. Termination and Amendment of the Plan
(a) Termination. The Plan shall terminate upon the first
to occur of (i) the adoption of a resolution of the Board terminating
the Plan or (ii) April 30, 2003 (the ATermination Date@). Following
the Termination Date, no further grants of Awards shall be made
pursuant to the Plan.
(b) General Power of Board. Notwithstanding anything
herein to the contrary, the Board may at any time and from time to
time terminate, modify, suspend or amend the Plan in whole or in part;
provided, however, that no such termination, modification, suspension
or amendment shall be effective without stockholder approval if such
approval is required to comply with any applicable law or stock
exchange rule; and provided further that the Board may not, without
stockholder approval, increase the maximum number of shares issuable
under the Plan except as provided in Section 9(b) above.
(c) When Participants= Consents Required. The Board may
not alter, amend, suspend, or terminate the Plan without the consent
of any Participant to the extent that such action would adversely
affect his or her rights with respect to Awards that have previously
been granted.
11. Miscellaneous
(a) No Right to Grants or Employment. No Eligible
Individual or Participant shall have any claim or right to receive
grants of Awards under the Plan. Nothing in the Plan or in any Award
or Award Agreement shall confer upon any employee of the Company or
any Subsidiary any right to continued employment with the Company or
any Subsidiary, as the case may be, or interfere in any way with the
right of the Company or a Subsidiary to terminate the employment of
any of its employees at any time, with or without cause.
(b) Unfunded Plan. The Plan is intended to constitute an
unfunded plan for incentive compensation. With respect to any
payments not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company. In its sole
discretion, the Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to
deliver Common Stock or payments in lieu thereof with respect to
awards hereunder.
(c) Other Employee Benefit Plans. Payments received by a
Participant under any Award made pursuant to the provisions of the
Plan shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan or
similar arrangement provided by the Company.
(d) Securities Law Restrictions. The Committee may
require each Participant purchasing or acquiring shares of Common
Stock pursuant to the Plan to agree with the Company in writing that
such Participant is acquiring the shares for investment and not with a
view to the distribution thereof. All certificates for shares of
Common Stock delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission or the New York Stock Exchange and
any other exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. No shares of Common Stock
shall be issued hereunder unless the Company shall have determined
that such issuance is in compliance with, or pursuant to an exemption
from, all applicable federal and state securities laws.
(e) Expenses. The costs and expenses of administering the
Plan shall be borne by the Company.
(f) Tax Withholding. Where applicable, upon the exercise
or vesting of an Award, the Company shall be entitled to require as a
condition to delivery of Common Stock or cash that a Participant
remit, or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all federal, state and local withholding and
employment tax requirements relating to such exercise or vesting. A
Participant will be entitled to elect to have the Company withhold
from the Common Stock to be delivered upon the exercise or vesting of
an Award, or to elect to deliver to the Company from shares of Common
Stock owned separately by the Participant, a sufficient number of such
shares of Common Stock to satisfy the federal, state and local
withholding and employment tax obligations relating to the
Participant's exercise of the Award or the Award's vesting (and the
Company's withholding obligations) to the extent permitted under rules
and regulations adopted by the Committee and in effect at the time of
such exercise or vesting. In such case, the Common Stock withheld or
the Common Stock surrendered will be valued at the Fair Market Value
on the date of exercise or vesting determined in accordance with the
Plan.
(g) Loans. On such terms and conditions as shall be
approved by the Committee, the Company may directly or indirectly lend
money to a Participant to accomplish the purposes of the Plan,
including to assist such Participant to acquire or carry shares of
Common Stock acquired upon the exercise of Stock Options granted
hereunder, and the Committee may also separately lend money to any
Participant to pay taxes with respect to any of the transactions
contemplated by the Plan.
(h) Stockholder Rights. A Participant shall have no
rights as a stockholder with respect to any shares of Common Stock
issuable upon exercise of a Stock Option or a Stock Appreciation Right
until a certificate evidencing such shares shall have been issued to
the Participant, and no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which the
record date is prior to the date upon which the Participant shall
become the holder of record thereof.
(i) Compliance with Rule 16b-3.
(i) The Plan is intended to comply with Rule
16b-3 under the Exchange Act or its successors under the
Exchange Act and the Committee shall interpret and administer
the provisions of the Plan or any Award Agreement in a manner
consistent therewith. To the extent any provision of the Plan
or Award Agreement or any action by the Committee fails to so
comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
Moreover, in the event the Plan or an Award Agreement does not
include a provision required by Rule 16b-3 to be stated therein,
such provision (other than one relating to eligibility
requirements, or the price and amount of Awards) shall be deemed
automatically to be incorporated by reference into the Plan or
such Award Agreement insofar as Participants subject to Section
16 of the Exchange Act are concerned.
(ii) Notwithstanding anything contained in the
Plan or any Award Agreement to the contrary, if the consummation
of any transaction under the Plan would result in the possible
imposition of liability on a Participant pursuant to
Section 16(b) of the Exchange Act, the Committee shall have the
right, in its sole discretion, but shall not be obligated, to
defer such transaction to the extent necessary to avoid such
liability.
(j) Award Agreement. In the event of any conflict or
inconsistency between the Plan and any Award Agreement, the Plan shall
govern, and the Award Agreement shall be interpreted to minimize or
eliminate any such conflict or inconsistency.
(k) Governing Law. Except as to matters of federal law,
the Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Maryland without
giving effect to conflicts of law principles.
12. Definitions.
"Annual Meeting" means an annual meeting of the Company's
stockholders.
"Award" means an award made pursuant to the terms of the
Plan to an Eligible Individual in the form of Stock Options,
Stock Appreciation Rights or Restricted Stock (including all
grants of Restricted Stock made by the Company during calendar
year 1997).
"Award Agreement" means a written agreement or certificate
granting an Award. An Award Agreement shall be executed by an
officer on behalf of the Company and shall contain such terms
and conditions as the Committee deems appropriate and that are
not inconsistent with the terms of the Plan. The Committee may
in its discretion require that an Award Agreement be executed by
the Participant to whom the relevant Award is made.
"Board" means the Board of Directors of the Company.
"Change in Control" shall mean the occurrence of any of the
following:
(i) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity
or person, or any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act (other than (A) AEW Capital
Management, (B) the Company or any of its subsidiaries or (C)
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of any of its
subsidiaries), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities entitled to vote in
the election of directors of the Company;
(ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the
Board and any new directors, whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least three-fourths (:) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof;
(iii) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the
Company, in each case with respect to which the stockholders of
the Company immediately prior to such transaction do not,
immediately after such transaction, own more than 50% of the
combined voting power of the Company or other corporation
resulting from such transaction; or
(iv) all or substantially all of the assets of the Company
are sold, liquidated or distributed.
"Code" means the Internal Revenue Code of 1986, as amended,
and the applicable rules and regulations promulgated thereunder.
"Committee" means the Compensation Committee of the Board,
any successor committee thereto or any other committee appointed
by the Board to administer the Plan.
"Common Stock" means the common stock of the Company, par
value $0.02 per share.
"Company" means Bedford Property Investors, Inc., a
Maryland corporation, or any successor to substantially all of
its business.
"Effective Date" shall mean January 1, 1998.
"Eligible Individuals" means the individuals described in
Section 3 who are eligible for Awards under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the applicable rules and regulations promulgated
thereunder.
"Fair Market Value" means the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on the New York Stock
Exchange or any other established stock exchange or a national
market system (including without limitation the Nasdaq National
Market), its Fair Market Value shall be the mean between the
high and low sales prices for such stock or the closing bid if
no sales were reported, as quoted on such system or exchange (or
the exchange with the greatest volume of trading in the Common
Stock) for the date of determination or, if the date of
determination is not a trading day, the immediately preceding
trading day, as reported in The Wall Street Journal or such
other source as the Committee deems reliable.
(ii) If the Common Stock is regularly quoted on the Nasdaq
system (but not on the Nasdaq National Market) or quoted by a
recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the
high and low asked prices for the Common Stock on the date of
determination or, if there are no quoted prices on the date of
determination, on the last day on which there are quoted prices
prior to the date of determination.
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Committee.
"Incentive Stock Option" means a Stock Option which is an
"incentive stock option" within the meaning of Section 422 of
the Code and designated by the Committee as an Incentive Stock
Option in an Award Agreement.
"Nonqualified Stock Option" means a Stock Option which is
not an Incentive Stock Option.
"Participant" means an Eligible Individual to whom an Award
has been granted under the Plan.
"Plan" means the Bedford Property Investors, Inc. Amended
and Restated Employee Stock Plan.
"Restricted Stock" means an Award to receive a specified
number of shares of Common Stock granted to an Eligible
Individual pursuant to Section 7 hereof.
"Stock Appreciation Right" means an Award to receive all or
some portion of the appreciation on shares of Common Stock
granted to an Eligible Individual pursuant to Section 6 hereof.
"Stock Option" means an Award to purchase shares of Common
Stock granted to an Eligible Individual pursuant to Section 5
hereof.
"Subsidiary" means any corporation which is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code
with respect to the Company.
13. Effective Date. The amendments to the Plan set forth
herein by restatement shall be effective as of the Effective Date,
subject to the approval thereof by the stockholders of the Company by
no later than the next Annual Meeting to occur after the Effective
Date. If such stockholder approval is not obtained on or before the
date of such Annual Meeting, the amendments to the Plan herein shall
be void ab initio.
EXHIBIT 10.17
NONQUALIFIED STOCK OPTION AGREEMENT (this "agreement") dated as of the
Date of Grant (as defined below) between BEDFORD PROPERTY INVESTORS,
INC., a Maryland corporation (the "Company"), and the other party
signatory hereto (the "Participant").
WHEREAS, the Participant is currently an employee or consultant of the
Company and, pursuant to the Company's Amended and Restated Employee
Stock Plan (the "Plan") and upon the terms and subject to the
conditions hereinafter set forth, the Company desires to provide the
Participant with an incentive to remain in its service and to increase
his or her interest in the success of the Company by granting to the
Participant a nonqualified stock option (the "Stock Option") to
purchase shares of common stock, par value $0.02 per share, of the
Company (the "Common Stock");
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto agree as follows:
1. Definitions; Incorporation of Plan Terms. Capitalized terms used
herein without definition shall have the meanings assigned to them in
the Plan, a copy of which is attached hereto. This Agreement and the
Stock Option shall be subject to the Plan, the terms of which are
hereby incorporated herein by reference, and in the event of any
conflict or inconsistency between the Plan and this Agreement, the
Plan shall govern. The date of grant of the Stock Option shall be the
date specified at the foot of the signature page hereof.
2. Grant of Stock Option. Subject to the terms and conditions
contained herein and in the Plan, the Company hereby grants the Stock
Option to the Participant. The Stock Option granted hereunder is not
intended to qualify as, and shall not be treated as, an "incentive
stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Set forth at the foot
of the signature hereof are (i) the number of shares of Common Stock
underlying the Stock Option, (ii) the per share exercise price of the
Stock Option and (iii) the date of grant of the Stock Option (the
"Date of Grant").
3. Terms and Conditions of Stock Option. The Stock Option evidenced
hereby is subject to the following terms and conditions:
(a) Vesting. The Stock Option awarded hereunder shall vest and
become exercisable as follows:
Anniversary of
Date of Grant
Amount Vesting on
Anniversary Date
Cumulative Amount
Vested as of
Anniversary Date
First
25%
25%
Second
25%
50%
Third
25%
75%
Fourth
25%
100%
(b) Stock Option Period. The Stock Option shall expire ten
years from the Date of Grant, subject to earlier termination as
pro vided herein and in the Plan.
(c) Exercise Following Death of Participant.
(i) Upon termination of the Participant's employment or
consulting relationship with the Company by reason of the
Participant's death, the Stock Option, to the extent exercisable
at such time, may be exercised by the Participant's Beneficiary
at any time within one year after the date of such termination
of employment, subject to the earlier expiration of the Stock
Option as provided for in Section 3(b); provided, that any
portion of the Stock Option not exercised within such one-year
period shall expire at the end of such period. Any portion of
the Stock Option that is not exercisable at the date of
termination of employment shall expire on such date.
(ii) In the event of the Participant's death during the first
three months of the period during which the Participant may
exercise the Stock Option following his or her termination of
employment or consulting relationship as provided in Sections
3(d) and 3(e) (the "Post-Termination Exercise Period"), the
Stock Option, to the extent exercisable at such time, may be
exercised by the Participant's Beneficiary at any time within
one year after the Participant's death, subject to the earlier
expiration of such Stock Option as provided for in Section 3(b);
provided, that any portion of the Stock Option not exercised
within such one-year period shall expire at the end of such
period.
(d) Exercise Following Termination Due to Disability. Upon
termination of the Participant's employment or consulting
relationship with the Company by reason of a condition that
entitles the Participant to benefits under the Company's long-
term disability plan (a "Disability"), the Stock Option, to the
extent exercisable at such time, may be exercised by the
Participant at any time within one year after the date of such
termination of employment or consulting relationship, subject to
the earlier expiration of such Stock Option as provided for in
Section 3(b); provided, that any portion of the Stock Option not
exercised within such one-year period shall expire at the end of
such period. Any portion of the Stock Option that is not
exercisable at the date of termination of employment shall
expire on such date.
(e) Exercise Following Other Terminations. Upon termination of
the Participant's employment or consulting relationship with the
Company other than by reason of the Participant's death or
Disability or the termination of the Participant's employment or
consulting relationship for Cause, the Stock Option, to the
extent exercisable at such time, may be exercised by the
Participant at any time within three months after the date of
such termination of employment, subject to the earlier
expiration of such Stock Option as provided for in Section 3(b);
provided, that any portion of the Stock Option not exercised
within such three-month period shall expire at the end of such
period. Any portion of the Stock Option that is not exercisable
at the date of termination of employment shall expire on such
date.
(f) Termination for Cause. Upon termination of the
Participant's employment or consulting relationship with the
Company for Cause, the entire Stock Option, whether vested or
unvested, shall immediately expire and be forfeited. For
purposes of this Agreement, ACause@ shall mean a willful act by
the Participant in contravention of the interests of the Company
as determined in the sole discretion of the Committee.
(g) Notice of Exercise. Subject to the other terms and
conditions hereof and in the Plan, the Participant may exercise
the Stock Option, to the extent vested and exercisable, by
giving written notice of exercise to the Company; provided,
however, that in no event shall the Stock Option be exercisable
for a fractional share.
(h) Method of Exercise. The exercise price of a Stock Option
may be paid (i) by personal check, bank draft or postal or
express money order (such modes of payment are collectively
referred to as "cash") payable to the order of the Company in
U.S. dollars, (ii) by delivery of previously owned shares of
Common Stock and (iii) by a combination thereof. Payment of the
exercise price in shares of Common Stock shall be made (i) by
delivering to the Company the share certificate(s) representing
the required number of shares, with the Participant signing his
or her name on the back or by attaching executed stock powers
(the signature of the Participant must be guaranteed in either
case) or (ii) attesting to ownership of a sufficient number of
shares of Common Stock. In addition to the exercise methods
described above, the Participant may exercise a Stock
Option through a procedure whereby the Participant delivers to
the Company an irrevocable notice of exercise in exchange for
the Company issuing the shares of Common Stock subject to the
Stock Option to a broker previously designated or approved by
the Company, subject to such rules and procedures as the
Committee may determine (for purposes of such a transaction the
value of shares of the Common Stock shall be deemed to equal the
Fair Market Value of the Common Stock on the date of exercise of
the Stock Option).
(i) Limitation on Exercise. The Stock Option shall not be
exercisable unless the Common Stock subject thereto has been
registered under the Securities Act and qualified under
applicable state "blue sky" laws in connection with the offer
and sale thereof, or the Company has determined that an
exemption from registration under the Securities Act and from
qualification under such state "blue sky" laws is available.
(j) Stockholder Rights. The Participant shall have no rights as
a stockholder with respect to any shares of Common Stock
issuable upon exercise of the Stock Option until a certificate
evidencing such shares shall have been issued to the
Participant, and no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which
the record date is prior to the date upon which the Participant
shall become the holder of record thereof.
(k) Deferral of Profit Shares. The Participant may elect to
defer receipt of the shares of Common Stock otherwise
deliverable upon exercise of the Stock Option. An election to
defer such delivery shall be irrevocable and shall be made in
writing on a stock option deferral election form prescribed by
the Committee at least six months prior to exercise. If the
Participant exercises the Stock Option at any time after
delivery of the stock option deferral election form by tendering
previously-owned shares of Common Stock, a deferred compensation
account established by the Company for the Participant will be
credited with a number of phantom stock units equal to the
number of shares of Common Stock for which delivery is deferred.
Phantom stock units shall be paid by delivery of one share of
Common Stock for each phantom stock unit in accordance with the
timing and manner of payment elected by the Participant on his or her
stock option deferral election form filed with the Company in
connection with the Participant's first such deferral. In the event
of a Change in Control, phantom stock units credited to the Participant's
deferred compensation account shall be paid to the Participant by
delivery of shares of Common Stock on or prior to the date of the
Change in Control. Dividend equivalents will be paid on the phantom
stock units by crediting the Participant's deferred compensation
account with additional phantom stock units in accordance with such
rules as the Committee shall adopt from time to time.
(l) Issuance of Shares. Subject to the foregoing conditions and
the terms of the Plan, as soon as reasonably practicable after
its receipt of a proper notice of exercise and payment of the
exercise price of the Stock Option for the number of shares with
respect to which the Stock Option is exercised, the Company
shall deliver to the Participant (or following the Participant's
death, the Beneficiary entitled to exercise the Stock Option),
at the principal office of the Company or at such other location
as may be acceptable to the Company and the Participant (or such
Beneficiary), one or more stock certificates for the appropriate
number of shares of Common Stock issued in connection with such
exercise.
(m) Transferability. The Stock Option may, with the approval of
the Committee, be transferred to one or more members of the
Participant's immediate family (as defined in the Plan) or to
one or more trusts or partnerships established in whole or in
part for the benefit of one or more of such immediate family
members (collectively, "Permitted Transferees"), subject to such
rules and procedures as may from time to time be adopted or
imposed by the Committee. If the Stock Option is transferred to
a Permitted Transferee, it shall be further transferable only by
will or the laws of descent and distribution or, for no
consideration, to another Permitted Transferee of the
Participant. The Participant shall notify the Company in writing
prior to any proposed transfer of the Stock Option to a
Permitted Transferee and shall furnish the Company, upon
request, with information concerning such Permitted Transferee's
financial condition and investment experience.
(n) Tax Withholding. Upon the exercise of the Stock Option, the
Participant shall remit an amount sufficient to satisfy all
federal, state and local withholding and employment tax
requirements relating to such exercise. The Participant may
elect to have the Company withhold from the Common Stock to be
delivered upon the exercise of the Stock Option, or to elect to
deliver to the Company from shares of Common Stock owned
separately by the Participant, a sufficient number of such
shares of Common Stock to satisfy the federal, state and local
withholding tax obligations relating to the Participant's
exercise of the Stock Option (and the Company's withholding
obligations) to the extent permitted under rules and regulations
adopted by the Committee and in effect at the time of such
exercise. The Common Stock withheld or the Common Stock
surrendered will be valued at the Fair Market Value on the date
of exercise determined in accordance with the Plan.
4. Accelerated Vesting.
(a) Change in Control. In the event of a Change in Control of
the Company, the Stock Option, if not yet vested and exercisable
on such date, shall become fully vested and exercisable;
provided, however, that if the Committee shall receive an
opinion from a nationally recognized firm of accountants to the
Company that the accelerated vesting of the Stock Option will
prohibit the utilization of "pooling of interests" accounting in
connection with the transaction resulting in the Change in
Control of the Company, then the Stock Option shall not become
fully vested and exercisable upon the Change in Control.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Stock Option will
vest and become exercisable on a date prior to the consummation
of the proposed action that is reasonably sufficient to enable
the Participant to exercise the Stock Option.
5. No Restriction on Right of Company to Effect Corporate Changes.
This Agreement shall not affect or restrict in any way the right or
power of the Company or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger
or consolidation of the Company, any issuance of stock or of stock
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible
into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
6. Survival; Assignment. Reference in this Agreement to either
party shall be deemed to include the heirs and permitted successors
and assigns of such party; and all agreements herein by or on behalf
of the Participant shall bind and inure to the benefit of the heirs
and permitted successors and assigns of such parties hereto. The
Participant agrees to cause any future spouse of his or hers to
deliver to the Company a consent in the form of the consent set forth
in Exhibit A hereto validly executed by such spouse promptly after any
such person becomes his or her spouse.
7. No Right to Employment. Nothing herein shall confer upon the
Participant any right to continued employment or a continued
consulting relationship with the Company, or interfere with the right
of the Company to terminate the employment or consulting relationship
of the Participant at any time and for any reason.
8. Notices. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or sent by
certified or registered mail, return receipt requested, postage
prepaid, addressed, if to the Participant, to his or her attention at
the mailing address set forth at the foot of the signature page of
this Agreement (or to such other address as the Participant shall have
specified to the Company in writing) and, if to the Company, to
Bedford Property Investors, Inc., 270 Lafayette Circle, Lafayette,
California 94549, Attention: Secretary. All such notices shall be
conclusively deemed to be received and shall be effective, if sent by
hand delivery, upon receipt, or if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.
9. Waiver. The waiver by either party of compliance with any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of
any subsequent breach by such party of a provision of this Agreement.
10. Headings. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same
agreement. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the
meaning of any of the provisions of this Agreement.
11. Governing Law. This Agreement shall shall be governed by and
construed in accordance with the laws of the Maryland without giving
effect to conflicts of law principles.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Participant has
executed this Agreement, both as of the day and year first above
written.
BEDFORD PROPERTY INVESTORS, INC.
By:
Name:
Title:
PARTICIPANT
Name:
Address:
Number of Shares
Underlying Stock Option:
Exercise Price: $
Date of Grant:
EXHIBIT A
Consent of Spouse
The undersigned, as the spouse of the Participant who is the signatory
to the foregoing Agreement, (a) hereby consents to, confirms and
ratifies any sale by such Participant of any Stock Option or shares of
Common Stock acquired upon exercise of any such Stock Option
contemplated by the foregoing Agreement and for purposes of any
community property laws and all other laws conveys all of his or her
right, title and interest in and to such Stock Option and such shares
of Common Stock to the purchaser of such Stock Option and such shares
of Common Stock and (b) agrees to be bound by all of the Participant's
obligations under the foregoing Agreement.
EXHIBIT 10.18
Bedford Property Investors, Inc.
AMENDED AND RESTATED
1992 DIRECTORS STOCK OPTION PLAN
(effective May 20, 1992, amended September 13, 1995 and
May 16, 1996 and amended and restated effective September 4, 1997)
In order to attract and retain the services of qualified
individuals to serve as members of the Board and to secure for the
Company the benefits of the incentives inherent in increased ownership
of Common Stock by such individuals, the Company hereby authorizes
(i) grants to such individuals of Options and (ii) deferrals by such
individuals who are not employees of the Company of a portion of their
Director's Fees in accordance with the terms and conditions set forth
herein. Any capitalized term used herein without definition in the
section where first used shall have the meaning ascribed to such term
in Section 10.
1. Administration. The Administrator will be responsible
for administering the Plan. The Administrator will have authority to
adopt such rules as it may deem appropriate to carry out the purposes
of the Plan, and shall have authority to interpret and construe the
provisions of the Plan and any agreements and notices under the Plan
and to make determinations pursuant to any Plan provision. Each
interpretation, determination or other action made or taken by the
Administrator pursuant to the Plan shall be final and binding on all
persons. The Administrator shall not be liable for any action or
determination made in good faith, and shall be entitled to
indemnification and reimbursement in the manner provided in the
Company's certificate of incorporation and by-laws as such documents
may be amended from time to time.
2. Shares Available. Subject to the provisions of
Section 7(b) of the Plan, the maximum number of shares of Common Stock
which may be issued under the Plan shall not exceed 500,000 shares
(the "Limit"). Either authorized and unissued shares of Common Stock
or treasury shares may be delivered pursuant to the Plan. For
purposes of determining the number of shares that remain available for
issuance under the Plan, the following rules shall apply:
(a) the number of outstanding Phantom Stock Units and
shares of Common Stock underlying Options shall be charged
against the Limit; and
(b) the Limit shall be increased by:
(i) the number of shares subject to an Option which
lapses, expires or is otherwise terminated without the issuance
of such shares,
(ii) the number of shares tendered to pay the
exercise price of an Option, and
(iii) the number of shares withheld from the
shares deliverable upon exercise of an Option or contributed by
a Director to satisfy a Director's tax withholding obligations,
if any.
3. Options. Each Director shall receive grants of
Options under the Plan as follows:
(a) Option Grants.
(i) Initial Grant. On the date of a Director's initial
election or appointment to the Board, such Director (including
any Director reelected or reappointed after a period of at least
12 calendar months during which he did not serve on the Board)
shall be granted, subject to Section 3(a)(iii), an Option to
purchase 25,000 shares of Common Stock. Such Option shall have
a per share exercise price equal to the Fair Market Value of the
Common Stock determined as of the date of grant and shall be
subject to the vesting schedule provided for in Section 3(b) and
the other terms and conditions provided for herein.
(ii) Annual Grants. At each Annual Meeting during the term
of the Plan, each individual who has continuously served as a
Director for a period ending on the date of such Annual Meeting
and who is reelected at such Annual Meeting or who will
otherwise continue to serve on the Board following such Annual
Meeting will receive, subject to Section 3(a)(iii), an Option to
purchase 10,000 shares of Common Stock. The Option shall have a
per share exercise price equal to the Fair Market Value of the
Common Stock determined as of the date of grant and shall be
subject to the vesting schedule provided for in Section 3(b) and
the other terms and conditions provided for herein.
(iii) Insufficient Shares. If the number of shares
underlying Options to be granted under Section 3(a)(i) or
3(a)(ii) exceeds the Limit, each Director to be granted an
Option at such time shall receive a pro rata grant determined by
multiplying (A) the number of shares underlying the Option which
the Director would have been granted at such time had the number
of shares available for grant under the Plan been sufficient by
(B) a fraction, the numerator of which equals the Limit at such
time and the denominator of which equals the total number of
shares underlying Options which all Directors would have been
granted had the number of shares available for grant under the
Plan been sufficient.
(b) Vesting Schedule of Options. Options awarded pursuant
to the Plan shall vest and become exercisable on the date that is six
months from the date of grant (the "Vesting Date") of the Option.
(c) Term of Options.
(i) Ten-Year Term. Each Option shall expire ten years
from its date of grant, subject to earlier termination as
provided herein.
(ii) Exercise Following Termination of Service Due to
Death. If a Director ceases to be a member of the Board by
reason of such Director's death, the Options granted to such
Director that are then exercisable may be exercised by such
Director's Beneficiary at any time within one year after the
date of such termination of service, subject to the earlier
expiration of such Options as provided for in Section 3(c)(i)
above. At the end of such one-year period, the exercisable
Options shall expire. Options that are not exercisable at the
date of termination of service shall expire on such date.
(iii) Exercise Following Termination of Service Due to
Disability. If a Director ceases to be a member of the Board by
reason of such Director's Disability, the Options granted to
such Director that are then exercisable may be exercised by the
Director at any time within one year after the date of such
termination of service, subject to the earlier expiration of
such Options as provided for in Section 3(c)(i) above. At the
end of such one-year period, the exercisable Options shall
expire. Options that are not exercisable at the date of
termination of service shall expire on such date.
(iv) Exercise Following Other Terminations of
Service. If a Director ceases to be a member of the Board for
any reason other than death or Disability, then the Director
shall have the right, subject to the terms and conditions
hereof, to exercise the Option, at any time within three months
after the date of such termination, subject to the earlier
expiration of the Option as provided for in Section 3(c)(i)
above, but only to the extent that such Option was exercisable
by the Director on the date of such termination of service;
provided, however, that in the event that a Director is also an
employee of the Company or becomes an employee upon ceasing to
be a member of the Board, the Option shall vest and become
exercisable in accordance with its terms and conditions and
shall remain exercisable for a period of three months after such
individual=s employment with the Company terminates for any
reason. Except as provided in the previous sentence, the
unvested portion of the Option shall expire on the date of the
Director's termination of service with the Board. At the end of
such three-month period, the exercisable Options shall expire.
(d) Time and Manner of Exercise of Options.
(i) Notice of Exercise. Subject to the other terms and
conditions hereof, a Director may exercise any Options, to the
extent such Options are vested, by giving written notice of
exercise to the Company; provided, however, that in no event
shall an Option be exercisable for a fractional share. The date
of exercise of an Option shall be the later of (A) the date on
which the Company receives such written notice and (B) the date
on which the conditions provided in Section 3(d)(ii) are
satisfied.
(ii) Payment. Subject to the last sentence of this
Section 3(d)(ii), prior to the issuance of a certificate
pursuant to Section 3(d)(v) hereof evidencing the shares of
Common Stock in respect of which all or a portion of an Option
shall have been exercised, a Director shall have paid to the
Company the exercise price of the Option for all such shares
purchased pursuant to the exercise of such Option. Payment may
be made by personal check, bank draft or postal or express money
order (such modes of payment are collectively referred to as
"cash") payable to the order of the Company in U.S. dollars, or
in shares of Common Stock already owned by the Director for at
least six months at the time of exercise valued at their Fair
Market Value as of the last business day preceding the date of
exercise, or in a combination of cash and shares. Payment of
the exercise price in shares of Common Stock shall be made
(i) by delivering to the Company the share certificate(s)
representing the required number of shares, with the Director
signing his or her name on the back or by attaching executed
stock powers (the signature of the Director must be guaranteed
in either case) or (ii) attesting to ownership of a sufficient
number of shares of Common Stock. In addition to the exercise
methods described above, a Director may exercise an
Option through a procedure whereby the Director delivers to the
Company an irrevocable notice of exercise in exchange for the
Company issuing the shares of Common Stock subject to the Option
to a broker previously designated or approved by the Company,
subject to such rules and procedures as the Administrator may
determine (for purposes of such a transaction the value of
shares of the Common Stock shall be deemed to equal the Fair
Market Value of the Common Stock on the date of exercise of the
Option).
(iii) Stockholder Rights. A Director shall have no
rights as a stockholder with respect to any shares of Common
Stock issuable upon exercise of an Option until a certificate
evidencing such shares shall have been issued to the Director
pursuant to Section 3(d)(v), and no adjustment shall be made for
dividends or distributions or other rights in respect of any
share for which the record date is prior to the date upon which
the Director shall become the holder of record thereof.
(iv) Limitation on Exercise. No Option shall be
exercisable unless the Common Stock subject thereto has been
registered under the Securities Act and qualified under
applicable state "blue sky" laws in connection with the offer
and sale thereof, or the Company has determined that an
exemption from registration under the Securities Act and from
qualification under such state "blue sky" laws is available.
(v) Issuance of Shares. Subject to the foregoing
conditions and Section 3(d)(vi), as soon as reasonably
practicable after its receipt of a proper notice of exercise and
payment of the exercise price of the Option for the number of
shares with respect to which the Option is exercised, the
Company shall deliver to the Director (or following the
Director's death, the Beneficiary entitled to exercise the
Option), at the principal office of the Company or at such other
location as may be acceptable to the Company and the Director
(or such Beneficiary), one or more stock certificates for the
appropriate number of shares of Common Stock issued in
connection with such exercise. Shares sold in connection with a
broker-assisted Acashless exercise@ shall be delivered to the
broker designated or appointed by the Company in the time and
manner described in Section 3(d)(ii) above. Any such shares
shall be fully paid and nonassessable.
(vi) Deferral of Profit Shares. Directors may elect to
defer receipt of shares of Common Stock otherwise deliverable
upon exercise of an Option. An election to defer such delivery
shall be irrevocable and shall be made in writing on a form (the
"Option Deferral Election Form") acceptable to the Company at
least six months prior to exercise. If a Director exercises an
Option at any time after delivery of an Option Deferral Election
Form with respect to such Option by tendering previously-owned
shares of Common Stock, the Director's Deferred Compensation
Account will be credited with a number of Phantom Stock Units
equal to the number of shares of Common Stock for which delivery
is deferred. Phantom Stock Units shall be paid by delivery of
shares of Common Stock in accordance with the timing and manner
of payment elected by the Director on his or her first Deferral
Election Form filed in accordance with Section 4, or, if no such
election form has previously been filed by the Director, then in
accordance with the timing and manner of payment elected by the
Director on such Option Deferral Election Form.
(vii) Tax Withholding. Where applicable, upon the
exercise of the Option (or upon settlement of Phantom Stock
Units), the Company shall be entitled to require as a condition
of delivery of Common Stock that a Director remit, or, in
appropriate cases, agree to remit when due, an amount sufficient
to satisfy all federal, state and local withholding and
employment tax requirements relating to such exercise. A
Director will be entitled to elect to have the Company withhold
from the Common Stock to be delivered upon the exercise of the
Option, or to elect to deliver to the Company from shares of
Common Stock owned separately by the Director, a sufficient
number of such shares of Common Stock to satisfy the federal,
state and local withholding and employment tax obligations
relating to the Director's exercise of the Option (and the
Company's withholding obligations) to the extent, if any,
permitted under rules and regulations adopted by the
Administrator and in effect at the time of such exercise. In
such case, the Common Stock withheld or the Common Stock
surrendered will be valued at the Fair Market Value on the date
of exercise determined in accordance with the Plan.
(e) Transferability of Options. Options may not be
transferred, pledged, assigned or otherwise disposed of except by will
or the laws of descent and distribution; provided, however, that
Options may be, with the approval of the Administrator, transferred to
a member or members of a Director's immediate family (as defined
below) or to one or more trusts or partnerships established in whole
or in part for the benefit of one or more of such immediate family
members (collectively, "Permitted Transferees"), subject to such rules
and procedures as may from time to time be adopted or imposed by the
Administrator. If an Option is transferred to a Permitted Transferee,
it shall be further transferable only by will or the laws of descent
and distribution or, for no consideration, to another Permitted
Transferee of the Director. A Director shall notify the Company in
writing prior to any proposed transfer of an Option to a Permitted
Transferee and shall furnish the Company, upon request, with
information concerning such Permitted Transferee's financial condition
and investment experience. For purposes of the Plan, a Director's
"immediate family" means any child, stepchild, grandchild, spouse,
son-in-law or daughter-in-law and shall include adoptive
relationships; provided, however, that if the Company adopts a
different definition of "immediate family" (or similar term) in
connection with the transferability of employee stock options awarded
to employees of the Company, such definition shall apply, without
further action by the Board, to the Plan.
4. Deferral of Director's Fees.
(a) Deferral Elections.
(i) General Provisions. Directors may elect to defer all
or a specified percentage of their Director's Fees with respect
to a Deferral Period in the manner provided in this Section 4.
A Director's Deferred Benefit is at all times nonforfeitable.
(ii) Deferral Election Forms. Before the Election
Date applicable to a Deferral Period, each Director will be
provided with a Deferral Election Form and a Beneficiary
Designation Form (which may, in the discretion of the
Administrator, be combined in one form). In order for a
Director to participate in the deferral portion of the Plan for
a given Deferral Period, a Deferral Election Form, completed and
signed by him, must be delivered to the Company on or prior to
the applicable Election Date. A Director electing to
participate in the Plan for a given Deferral Period shall
indicate on his Deferral Election Form:
(A) the percentage of the Director's Fees for
the Deferral Period to be deferred;
(B) if the Deferral Election Form is the first such
form filed by the Director, the Director's election, in
accordance with Sections 4(f) and 4(g), as to the timing
and manner of payment of the Deferred Benefits. A
Director's election as to the timing and manner of payment
of Deferred Benefits in the initial Deferral Election Form
shall govern the timing and manner of payment of all
subsequent deferrals under the Plan and may not be changed
or revoked; and
(C) whether amounts deferred for the Deferral Period
will be credited to the Deferred Compensation Account as
Phantom Stock Units in accordance with Section 4(b) below
or Phantom Cash Amounts in accordance with Section 4(c)
below. A Director's election as to the method of crediting
deferred amounts for a given Deferral Period may not be
subsequently changed or revoked. Director's Fees for a
given Deferral Period may be deferred in part in Phantom
Cash Amounts and in part in Phantom Stock Units. Any such
allocation shall be in multiples of 10% (not to exceed
100%) of the amounts deferred.
(iii) Effect of No Deferral Election. A Director who
does not submit a completed and signed Deferral Election Form to
the Company on or prior to the applicable Election Date may not
defer his Director's Fees for the Deferral Period. However, a
Director's Deferral Election Form filed for one Deferral Period
shall be effective for subsequent Deferral Periods if not
otherwise revoked by the Director.
(b) Establishment of Deferred Compensation Accounts. A
Director's deferrals will be credited to a Deferred Compensation
Account set up for that Director by the Company in accordance with the
provisions of this Section 4.
(c) Crediting of Phantom Cash Amounts to Deferred
Compensation Accounts. The portion of the Director's Fees that a
Director elects to defer in the form of Phantom Cash Amounts shall be
credited to the Deferred Compensation Account (i) for any cash
retainer payable to a Director, as of the last business day of the
fiscal quarter in which such amount would otherwise have been payable
to the Director and (ii) for all other Director's Fees (including, but
not limited to, fees payable for attendance at a meeting of the Board
or a committee thereof or in connection with a site inspection of
property in which the Company is contemplating making an investment),
as of the date such services are performed. The Phantom Cash Amount
credited to the Deferred Compensation Account shall thereafter be
credited with notional interest as of the last day of each month. The
annual rate of interest in effect for a Deferral Period shall be the
"applicable federal rate" for short-term loans with monthly
compounding, as promulgated by the Internal Revenue Service under
section 1274 of the Code for the first month in such Deferral Period.
(d) Crediting of Phantom Stock Units to Deferred
Compensation Accounts.
(i) Number of Phantom Stock Units. The portion of the
Director's Fees that a Director elects to defer in the form of
Phantom Stock Units shall be credited to the Deferred
Compensation Account (i) for any cash retainer payable to a
Director, as of the last business day of the fiscal quarter in
which such amount would otherwise have been payable to the
Director and (ii) for all other Director's Fees (including, but
not limited to, fees payable for attendance at a meeting of the
Board or a committee thereof or in connection with a site
inspection of property in which the Company is contemplating
making an investment), as of the date such services are
performed. The number of Phantom Stock Units to be credited to
the Deferred Compensation Account shall be determined by
dividing (1) the amount of the Director's Fees deferred by
(2) the Fair Market Value of a share of Common Stock as of the
date of crediting. Any partial Phantom Stock Unit that results
from the application of the previous sentence shall be rounded
to the nearest whole Phantom Stock Unit.
(ii) Dividend Equivalents. In the event that the Company
pays any cash or other dividend or makes any other distribution
in respect of the Common Stock, each Phantom Stock Unit credited
to the Deferred Compensation Account of a Director will be
credited with an additional number of Phantom Stock Units
(including fractions thereof) determined by dividing (A) the
amount of cash, or the value (as determined by the
Administrator) of any securities or other property, paid or
distributed in respect of one outstanding share of Common Stock
by (B) the Fair Market Value of a share of Common Stock as of
the date of such payment or distribution. If the sum of such
additional Phantom Stock Units (or fractions thereof) would
cause the crediting of a partial Phantom Stock Unit, such
partial Phantom Stock Unit shall be rounded to the nearest whole
Phantom Stock Unit. Such credit shall be made effective as of
the date of the dividend or other distribution in respect of the
Common Stock.
(iii) No Rights as Stockholder. The crediting of
Phantom Stock Units to a Director's Deferred Compensation
Account shall not confer on the Director any rights as a
stockholder of the Company.
(e) Written Statements of Account. The Company will
furnish each Director with a statement setting forth the value of such
Director's Deferred Compensation Account as of the end of each
Deferral Period and all credits to and payments from the Deferred
Compensation Account during the Deferral Period. Such statement will
be furnished no later than 60 days after the end of the Deferral
Period.
(f) Manner of Payment of Deferred Benefit. Payment
of the portion of the Deferred Benefits under the Plan credited as
Phantom Cash Amounts shall be in cash and payment of the portion of
the Deferred Benefits credited in Phantom Stock Units shall be in
shares of Common Stock. Payment shall be made either in a single lump
sum or in a series of five or fewer annual installments. The amount
of each installment payment to a Director shall be determined in
accordance with the formula B/(N - P), where "B" is the total value of
the Deferred Compensation Account as of the installment calculation
date, "N" is the number of installments elected by the Director and
"P" is the number of installments previously paid to the Director. If
a Director's Deferred Benefit is credited in part in Phantom Cash
Amounts and in part in Phantom Stock Units and the Director elects the
payment of Deferred Benefits in more than one installment, then the
formula in the previous sentence shall be applied separately with
respect to each such portion of the Deferred Compensation Account.
(g) Commencement of Payment of Deferred Benefit.
Payment of a Director's Deferred Benefit shall commence as soon as
practicable (but in no event more than 60 days) after the earlier to
occur of:
(i) termination of service as a member of the Board or, in
the case of a member of the Board who is also an employee of the
Company or who becomes an employee upon such individual's
termination of service as a member of the Board, after such
individual's termination of service as an employee of the
Company; or
(ii) the date specified in the Deferral Election Form
executed by the Director.
(h) Death. In the event of a Director's death, the
Director's entire Deferred Benefit (including any unpaid portion
thereof corresponding to installments not yet paid at the time of
death), to the extent not distributed earlier pursuant to
Section 4(g), will be distributed in a lump sum to the Director's
Beneficiary as soon as practicable after the date of death, but in no
event more than six months after the Director's date of death.
(i) Restrictions on Transfer. The Company shall pay all
Deferred Benefits payable under the Plan only to the Director or
Beneficiary designated under the Plan to receive such amounts.
Neither a Director nor his Beneficiary shall have any right to
anticipate, alienate, sell, transfer, assign, pledge, encumber or
change any benefits to which he may become entitled under the Plan,
and any attempt to do so shall be void. A Deferred Benefit shall not
be subject to attachment, execution by levy, garnishment, or other
legal or equitable process for a Director's or Beneficiary's debts or
other obligations.
(j) Early Payment of Deferred Benefits. In the event that
the Internal Revenue Service shall make a final determination that all
or a portion of a Director's Deferred Benefits are subject to ordinary
income tax prior to the scheduled date of payment of such Deferred
Benefit pursuant to the terms of this Plan and the applicable deferral
election made by the Director, such Deferred Benefits shall, to the
extent determined to be subject to current taxation, be immediately
paid to the Director.
5. Designation of Beneficiary.
(a) Beneficiary Designations. Each Director may
designate a Beneficiary to receive any Deferred Benefit due under the
Plan or to exercise an Option upon the Director's death by executing a
Beneficiary Designation Form.
(b) Change of Beneficiary Designation. A Director
may change an earlier Beneficiary designation by executing a later
Beneficiary Designation Form and delivering it to the Administrator.
The execution of a Beneficiary Designation Form and its receipt by the
Administrator revokes and rescinds any prior Beneficiary Designation
Form.
6. Change in Control.
Anything in the Plan to the contrary notwithstanding, in
the event of a Change in Control of the Company, the following
provisions shall apply:
(a) Any Options outstanding as of the date such Change in
Control is determined to have occurred that are not yet exercisable
and vested on such date shall become fully exercisable and vested;
provided, however, that if the Administrator shall receive an opinion
from a nationally recognized firm of accountants to the Company that
the accelerated vesting of some or all of the Options will prohibit
the utilization of "pooling of interests" accounting in connection
with the transaction resulting in the Change in Control of the
Company, then such Options shall not become fully exercisable and
vested upon the Change in Control.
(b) All Deferred Benefits credited to a Director's
Deferred Compensation Account shall be paid to the Director (or to the
Director's Beneficiary if the Director dies prior to payment) on or
prior to the date of the Change in Control. Payment of the portion of
the Deferred Benefits under the Plan credited as Phantom Cash Amounts
shall be in cash and payment of the portion of the Deferred Benefits
credited in Phantom Stock Units shall be in shares of Common Stock.
7. Recapitalization or Reorganization
(a) Authority of the Company and Stockholders. The
existence of the Plan shall not affect or restrict in any way the
right or power of the Company or the stockholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible
into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) Change in Capitalization. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization,
reorganization, merger, consolidation, stock split, combination or
exchange of shares (a "Change in Capitalization"), (i) such
proportionate adjustments as may be necessary (in the form determined
by the Administrator in its sole discretion) to reflect such change
shall be made to prevent dilution or enlargement of the rights of
Directors under the Plan with respect to the aggregate number of
shares of Common Stock authorized to be awarded under the Plan, the
number of shares of Common Stock covered by each outstanding Option
and the exercise prices in respect thereof, the number of shares of
Common Stock covered by future Option grants and the number of Phantom
Stock Units credited to a Director's Deferred Compensation Account and
(ii) the Administrator may make such other adjustments, consistent
with the foregoing, as it deems appropriate in its sole discretion.
(c) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, each outstanding
Option will vest and become exercisable on a date prior to the
consummation of the proposed action that is reasonably sufficient to
enable the Directors to exercise their Options. All Deferred Benefits
credited to the Director's Deferred Compensation Account as of the
date of the consummation of a proposed dissolution or liquidation
shall be paid in cash to the Director or, in the event of death of the
Director prior to payment, to the Beneficiary thereof on the date of
the consummation of such proposed action. The cash amount paid for
each Phantom Stock Unit shall be the Fair Market Value of a share of
Common Stock as of the date of the consummation of such proposed
action.
8. Termination and Amendment of the Plan.
(a) Termination. The Plan shall terminate upon the first
to occur of (i) the adoption of a resolution of the Board terminating
the Plan or (ii) May 19, 2002 (the ATermination Date@). Following the
Termination Date, no further grants of Options shall be made pursuant
to the Plan and no further Director's Fees may be deferred by a
Director.
(b) General Power of Board. Notwithstanding anything
herein to the contrary, the Board may at any time and from time to
time terminate, modify, suspend or amend the Plan in whole or in part;
provided, however, that no such termination, modification, suspension
or amendment shall be effective without stockholder approval if such
approval is required to comply with any applicable law or stock
exchange rule; and provided further that the Board may not, without
stockholder approval, increase the maximum number of shares issuable
under the Plan except as provided in Section 7(b) above.
(c) When Directors' Consents Required. The Board may not
alter, amend, suspend, or terminate the Plan without the consent of
any Director to the extent that such action would (i) adversely affect
his or her rights with respect to Options that have previously been
granted or (ii) result in the distribution to such Director of amounts
then credited to his Deferred Compensation Account in any manner other
than as provided in the Plan or could reasonably be expected to result
in the immediate taxation to such Director of Deferred Benefits.
9. Miscellaneous
(a) No Right to Reelection. Nothing in the Plan shall be
deemed to create any obligation on the part of the Board to nominate
any of its members for reelection by the Company's stockholders, nor
confer upon any Director the right to remain a member of the Board for
any period of time, or at any particular rate of compensation.
(b) Unfunded Plan.
(i) Generally. This Plan is unfunded. Amounts payable
under the Plan will be satisfied solely out of the general
assets of the Company subject to the claims of the Company's
creditors.
(ii) Deferred Benefits. A Deferred Benefit represents at
all times an unfunded and unsecured contractual obligation of
the Company and each Director or Beneficiary will be an
unsecured creditor of the Company. No Director, Beneficiary or
any other person shall have any interest in any fund or in any
specific asset of the Company by reason of any amount credited
to him hereunder, nor shall any Director, Beneficiary or any
other person have any right to receive any distribution under
the Plan except as, and to the extent, expressly provided in the
Plan. The Company will not segregate any funds or assets for
Deferred Benefits or issue any notes or security for the payment
of any Deferred Benefits. Any reserve or other asset that the
Company may establish or acquire to assure itself of the funds
to provide benefits under the Plan shall not serve in any way as
security to any Director, Beneficiary or other person for the
performance of the Company under the Plan.
(c) Other Compensation Arrangements. Benefits received by
a Director pursuant to the provisions of the Plan shall not be
included in, nor have any effect on, the determination of benefits
under any other arrangement provided by the Company.
(d) Securities Law Restrictions. The Administrator may
require each Director purchasing or acquiring shares of Common Stock
pursuant to the Plan to agree with the Company in writing that such
Director is acquiring the shares for investment and not with a view to
the distribution thereof. All certificates for shares of Common Stock
delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Administrator may deem advisable
under the rules, regulations, and other requirements of the Securities
and Exchange Commission or any exchange upon which the Common Stock is
then listed, and any applicable federal or state securities law, and
the Administrator may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. No
shares of Common Stock shall be issued hereunder unless the Company
shall have determined that such issuance is in compliance with, or
pursuant to an exemption from, all applicable federal and state
securities laws.
(e) Expenses. The costs and expenses of administering the
Plan shall be borne by the Company.
(f) Governing Law. Except as to matters of federal law,
the Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Maryland without
giving effect to conflicts of law principles.
10. Definitions.
"Administrator" means the Chief Financial Officer of the
Company or the individual appointed by the Chief Executive
Officer of the Company to administer the Plan.
"Annual Meeting" means an annual meeting of the Company's
stockholders.
"Beneficiary" or "Beneficiaries" means an individual or
entity designated by a Director on a Beneficiary Designation
Form to receive Deferred Benefits and to exercise Options in the
event of the Director's death; provided, however, that if no
such individual or entity is designated or if no such designated
individual is alive at the time of the Director's death,
Beneficiary shall mean the Director's estate.
"Beneficiary Designation Form" means a document, in a form
approved by the Administrator to be used by Directors to name
their respective Beneficiaries. No Beneficiary Designation Form
shall be effective unless it is signed by the Director and
received by the Administrator prior to the date of death of the
Director.
"Board" means the Board of Directors of the Company.
"Change in Control" shall mean the occurrence of any of the
following:
(i) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity
or person, or any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act (other than (A) AEW Capital
Management, (B) the Company or any of its subsidiaries or (C)
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of any of its
subsidiaries), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities entitled to vote in
the election of directors of the Company;
(ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the
Board and any new directors, whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least three-fourths (:) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof;
(iii) there occurs a reorganization, merger,
consolidation or other corporate transaction involving the
Company, in each case with respect to which the stockholders of
the Company immediately prior to such transaction do not,
immediately after such transaction, own more than 50% of the
combined voting power of the Company or other corporation
resulting from such transaction; or
(iv) all or substantially all of the assets of the Company
are sold, liquidated or distributed.
"Code" means the Internal Revenue Code of 1986, as amended,
and the applicable rules and regulations promulgated thereunder.
"Common Stock" means the common stock of the Company, par
value $0.02 per share.
"Company" means Bedford Property Investors, Inc., a
Maryland corporation, or any successor to substantially all of
its business.
"Deferral Election Form" means a document, in a form
approved by the Administrator, pursuant to which a Director
makes a deferral election under the Plan.
"Deferral Period" means each calendar year. A short
Deferral Period under the Plan shall commence on December 9,
1997 and end on December 31, 1997 for purposes of deferring
Board meeting fees scheduled to be paid on December 9, 1997. If
an individual becomes eligible to participate in the Plan after
the commencement of a Deferral Period, the Deferral Period for
the individual shall be the remainder of such Deferral Period.
"Deferred Benefit" means an amount that will be paid on a
deferred basis under the Plan to a Director who has made a
deferral election.
"Deferred Compensation Account" means the bookkeeping
record established for each Director. A Deferred Compensation
Account is established only for purposes of measuring a Deferred
Benefit and not to segregate assets or to identify assets that
may be used to pay a Deferred Benefit.
"Director" means a member of the Board.
"Director's Fees" means the cash portion of (i) any
retainer fee payable to a Director for service on the Board,
(ii) any other fee payable for service on, or for acting as
chairperson of, any committee of the Board, or in connection
with a site inspection of property in which the Company is
contemplating making an investment and (iii) any other fee or
fees payable in respect of service on the board of directors of
any Subsidiary or any committee of any such board of directors.
"Disability" shall have the meaning set forth in the
Company's long-term disability plan, regardless of whether the
Director is a participant in such plan.
"Effective Date" shall mean September 4, 1997.
"Election Date" means the day immediately preceding the
commencement of a Deferral Period. If an individual first
becomes eligible to participate in the Plan on an Annual Meeting
date or after the start of a Deferral Period, the Election Date
shall be the 30th day following such Annual Meeting date or
initial participation date, as the case may be. The Election
Date for the short Deferral Period commencing on December 9,
1997 and ending on December 31, 1997 shall be December 8, 1997.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the applicable rules and regulations promulgated
thereunder.
"Fair Market Value" means the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on the New York Stock
Exchange or any other established stock exchange or a national
market system (including without limitation the Nasdaq National
Market), its Fair Market Value shall be the mean between the
high and low sales prices for such stock or the closing bid if
no sales were reported, as quoted on such system or exchange (or
the exchange with the greatest volume of trading in the Common
Stock) for the date of determination or, if the date of
determination is not a trading day, the immediately preceding
trading day, as reported in The Wall Street Journal or such
other source as the Committee deems reliable.
(ii) If the Common Stock is regularly quoted on the Nasdaq
system (but not on the Nasdaq National Market) or quoted by a
recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the
high and low asked prices for the Common Stock on the date of
determination or, if there are no quoted prices on the date of
determination, on the last day on which there are quoted prices
prior to the date of determination.
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Committee.
"Option" means an option to purchase shares of Common Stock
awarded to a Director pursuant to the Plan.
"Phantom Cash Amounts" means the amounts credited to a
Deferred Compensation Account in accordance with Section 4(c).
"Phantom Stock Unit" means a bookkeeping unit representing
one share of Common Stock credited to a Deferred Compensation
Account in accordance with Section 4(d).
"Plan" means the Bedford Property Investors, Inc. Amended
and Restated 1992 Directors' Stock Option Plan.
"Subsidiary" means any corporation which is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code
with respect to the Company.
11. Effective Date. The amendments to the Plan set forth
herein by restatement shall be effective as of the Effective Date,
subject to the approval thereof by the stockholders of the Company by
no later than the next Annual Meeting to occur after the Effective
Date. If such stockholder approval is not obtained on or before the
date of such Annual Meeting, all Director's Fees previously deferred
under the Plan (together with notional interest credited at the rate
described in the last sentence of Section 4(c) above) shall be paid to
the Directors in cash within ten days following the date of the Annual
Meeting and the amendments to the Plan herein shall be void ab initio.
EXHIBIT 10.19
Bedford Property Investors, Inc.
270 Lafayette Circle
Lafayette, CA 94549
__________ __, 1998
[Addressee]
270 Lafayette Circle
Lafayette, CA 94549
Form of
Retention Agreement
Dear ________:
Bedford Property Investors, Inc., a Maryland corporation
(the Company), considers it essential to the best interests of its stock-
holders to take reasonable steps to retain key management personnel.
Further, the Board of Directors of the Company (the Board) recognizes
that the uncertainty and questions which might arise among management in the
context of a change in control of the Company could result in the departure
or distraction of management personnel to the detriment of the Company and
its stockholders.
The Board has determined, therefore, that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in
control of the Company.
In order to induce you to remain in the employ of the Company, the
Company has determined to enter into this letter agreement (this Agreement)
which addresses the terms and conditions of your employment in the event of a
change in control of the Company. Capitalized words which are not otherwise
defined herein shall have the meanings assigned to such words in
Section 5 of this Agreement.
1. Severance Payments. In the event of your Involuntary
Termination during the Change in Control Period, the Company shall pay you the
following amounts, in one lump sum cash payment, within ten days following your
Involuntary Termination:
(a) the full amount of any earned but unpaid base salary through
the Date of Termination at the rate in effect at the time of the Notice
of Termination;
(b) a payment (calculated on the basis of your Reference Salary)
for all unused vacation time which you may have accrued as of the Date
of Termination;
(c) a pro rata portion of the annual bonus for the year in which your
Involuntary Termination occurs, calculated on the basis of your target
bonus for that year and on the assumption that all performance targets
have been or will be achieved; and
(d) an amount (the Severance Payment) equal to the product of (i)
your Annual Compensation and (ii) your Severance Factor.
Your right to receive the Severance Payment shall be conditioned upon your
execution of a release in favor of the Company which is in a form reasonably
acceptable to the Company and which is not revoked by you within the revocation
period provided therein. The Severance Payment shall be reduced by any
amount of severance payable under any other plan, arrangement
or agreement under which you are entitled to receive cash severance payments.
2. Date and Notice of Termination. Any termination of your
employment by the Company or by you during the Change in Control Period shall
be communicated by a notice of termination to the other party hereto (the
Notice of Termination). The Notice of Termination shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated. The date of
your termination of employment with the Company and its subsidiaries (the
Date of Termination) shall be determined as follows:
(i) if your employment is terminated for Disability, 30 days after a Notice of
Termination is given (provided that your shall not have returned to the
full-time performance of your duties during such 30-day period), (ii) if your
employment is terminated by the Company in an Involuntary Termination, five
days after the date the Notice of Termination is received by you and (iii) if
your employment is terminated by the Company for Cause, the later of the date
specified in the Notice of Termination or ten days following the date such
notice is received by you. If the basis for your Involuntary Termination is
your resignation for Good Reason, the Date of Termination shall be ten days
after the date your Notice of Termination is received by the Company; provided,
that the events or circumstances cited by you as constituting Good Reason
are not cured by the Company during such period in accordance with the terms
hereof. The Date of Termination for a resignation of employment other than
for Good Reason shall be the date set forth in the applicable notice, which
shall be no earlier than ten days after the date such notice is received by
the Company.
3. No Mitigation or Offset. You shall not be required to mitigate
the amount of any payment provided for herein by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for herein
be reduced by any compensation earned by you as the result of employment by
another employer.
4. Successors; Binding Agreement.
(a) Assumption by Successor. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Company expressly
to assume and to agree to perform its obligations under this Agreement in the
same manner and to the same extent that the Company would be required to
perform such obligations if no such succession had taken place; provided,
however, that no such assumption shall relieve the Company of its obligations
hereunder. As used herein, the Company shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform its obligations by operation of law or otherwise.
(b) Enforceability; Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of you (and your personal representatives and
heirs) and the Company and any organization which succeeds to substantially
all of the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of
the Company or otherwise, including, without limitation, as a result of a
Change in Control or by operation of law. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to your devisee, legatee or other designee or, if there is no such designee,
to your estate.
5. Definitions. For purposes of this Agreement, the following
capitalized terms have the meanings set forth below:
Annual Compensation shall mean the sum of your Reference Salary and
Reference Bonus.
Bedford Acquisitions shall mean Bedford Acquisitions, Inc., a
California corporation.
Cause shall mean (a) your felony conviction, (b) your willful
disclosure of material trade secrets or other material confidential information
related to the business of the Company and its subsidiaries or (c) your
willful and continued failure to substantially perform your duties with the
Company (other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure resulting
from your resignation for Good Reason) after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, and which performance is not substantially
corrected by you within ten days of receipt of such demand. For purposes of
the previous sentence, no act or failure to act on your part shall be deemed
willful unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in clause (a), (b) or (c) of the first
sentence of this section and specifying the particulars thereof in detail.
Change in Control shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; provided, that
anything in this Agreement to the contrary notwithstanding, a Change in Control
shall be deemed to have occurred if:
(a) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act (other than (i) AEW Capital Management, (ii) the Company or
any of its subsidiaries or (iii) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of any of
its subsidiaries), is or becomes the beneficial owner (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(b) during any period of two consecutive years (not including any
period prior to the effective date of this Agreement), individuals who at
the beginning of such period constituted the Board and any new directors,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three-fourths of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority thereof;
(c) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company, in each case with respect to
which the stockholders of the Company immediately prior to such
transaction do not, immediately after such transaction, own more than 50%
of the combined voting power of the Company or other corporation
resulting from such transaction; or
(d) all or substantially all of the assets of the Company are sold,
liquidated or distributed.
Change in Control Date shall mean the date on which a Change in
Control occurs.
Change in Control Period shall mean the two-year period commencing on
the Change in Control Date; provided, however, that if your employment with the
Company and its subsidiaries terminates prior to the Change in Control Date
but on or after a Potential Change in Control Date, and it is reasonably
demonstrated that your termination of employment (a) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (b) otherwise arose in connection with or in anticipation of a
Change in Control, then the Change in Control Period shall mean, as applied
to you, the two-year period beginning on the date immediately prior to the
date of your termination of employment.
Code shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder,
and any successor provisions thereto.
Date of Termination has the meaning assigned thereto in Section 2.
Disability shall mean (a) your incapacity due to physical or mental
illness which causes you to be absent from the full-time performance of your
duties with the Company for six consecutive months and (b) your failure to
return to full-time performance of your duties for the Company within 30 days
after written Notice of Termination due to Disability is given to you.
Any question as to the existence a Disability upon which you and the Company
cannot agree shall be determined by a qualified independent physician selected
by you (or, if your are unable to make such selection, such selection shall be
made by any adult member of your immediate family), and approved by the
Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes hereunder.
Exchange Act shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder, and any successor provisions thereto.
Good Reason shall mean the occurrence of any of the following
during the Change in Control Period:
(a) A meaningful and detrimental alteration in your position,
titles, or nature or status of responsibilities (including reporting
responsibilities) from those in effect immediately prior to the Change in
Control Date;
(b) A reduction by the Company in your annual base salary as in
effect immediately prior to the Change in Control Date or as the same may be
increased from time to time thereafter; or a reduction in your target annual
bonus (expressed as a percentage of base salary) below the target in effect for
you prior to the Change in Control Date;
(c) The relocation of the office of the Company where you are
employed immediately prior to the Change in Control Date (the CIC Location) to
a location which is more than 25 miles away from the CIC Location or the
Company's requiring you to be based more than 25 miles away from the CIC
Location (except for required travel on the Company's business to an extent
substantially consistent with your customary business travel obligations in
the ordinary course of business prior to the Change in Control Date);
(d) The failure by the Company to continue to provide you with
benefits at least as favorable in the aggregate to those enjoyed by you under
the Company's savings, life insurance, medical, health and accident, disability,
and fringe benefit plans and arrangements in which you were participating
immediately prior to the Change in Control Date; or the failure by the
Company to provide you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in accordance with
the Company's normal vacation policy in effect immediately prior to the
Change in Control;
(e) The failure of the Company to obtain an agreement from any
successor to assume and agree to perform the Company's obligations under this
Agreement, as contemplated in Section 4(a) hereof;
(f) Any termination of your employment which is not effected
pursuant to the terms of this Agreement; or
(g) A material breach by the Company of the provisions of this
Agreement; provided, however, that an event described above in clause (a),
(b), (d) or (g) shall not constitute Good Reason unless it is communicated
by you to the Company in writing and is not corrected by the Company in a
manner which is reasonably satisfactory to you (including full retroactive
correction with respect to any monetary matter) within ten days of the
Company's receipt of such written notice from you.
Involuntary Termination shall mean (a) your termination of
employment by the Company and its subsidiaries during the Change in Control
Period other than for Cause or Disability or (b) your resignation of
employment with the Company and its subsidiaries during the Change in Control
Period for Good Reason.
Notice of Termination has the meaning assigned thereto in Section 2.
Potential Change in Control shall mean the earliest to occur of (a)
the date on which the Company executes an agreement or letter of intent, the
consummation of the transactions described in which would result in the
occurrence of a Change in Control, (b) the date on which the Board approves a
transaction or series of transactions, the consummation of which would result
in a Change in Control, or (c) the date on which a tender offer for the
Company's voting stock is publicly announced, the completion of which would
result in a Change in Control; provided, that no such event shall be a
Potential Change in Control unless it is followed by a Change in Control
within 180 days thereafter.
Potential Change in Control Date shall mean the date on which a
Potential Change in Control occurs.
Reference Bonus shall mean the greater of (a) the average of the
aggregate annual bonuses paid to you by the Company and Bedford Acquisitions
for the three calendar years prior to the your Date of Termination and (b)
the average of the aggregate annual bonuses paid to you by the Company and
Bedford Acquisitions for the three calendar years prior to the Change in
Control Date; provided, however, that if you have been eligible to receive
fewer than three annual bonuses prior to your Date of Termination or the Change
in Control Date, as applicable, the amounts described in clauses (a) and
(b) hereof shall be calculated using such lesser number of annual bonuses;
provided further, however, that any annual bonus described in clauses (a) and
(b) shall be annualized for any year during which you were employed by the
Company and its subsidiaries for less than a full calendar year.
Reference Salary shall mean the greater of (a) the annual rate of
your aggregate base salary from the Company and Bedford Acquisitions in effect
immediately prior to the date of your Involuntary Termination and (b) the
annual rate of your aggregate base salary from the Company and Bedford
Acquisitions in effect immediately prior to the Change in Control Date.
Severance Factor shall mean the number set forth on the signature
page hereof.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Board of Directors, Bedford Property Investors, Inc., 270 Lafayette Circle,
Lafayette, CA 94549, with a copy to the General Counsel of the Company,
or to you at the address set forth on the first page of this Agreement or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement
and this Agreement shall supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, with respect to the subject matter hereof; provided, however, that
any employment agreement between you and the Company shall remain in full
force and effect, subject to the last sentence of Section 1.
(b) Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) No Contract of Employment. Nothing in this Agreement shall be
construed as giving you any right to be retained in the employ of the Company
or shall affect the terms and conditions of your employment with the Company
prior to the commencement of the Change in Control Period.
(e) Withholding. Amounts paid to you hereunder shall be subject to
all applicable federal, state and local withholding taxes.
(f) Source of Payments. All payments provided under this Agreement
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made,
to assure payment. You will have no right, title or interest whatsoever in
or to any investments which the Company may make to aid it in meeting its
obligations hereunder. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company.
(g) Headings. The headings contained in this Agreement are intended
solely for convenience of reference and shall not affect the rights of the
parties to this Agreement.
* * * * *
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
BEDFORD PROPERTY
INVESTORS, INC.
By: Name:
Title:
Agreed to as of this ___ day of , 1998
____________________________
Severance Factor: ____
EXHIBIT 10.20
August 4, 1997
Mr. Scott R. Whitney
3530 Candleberry Court
Bonita Springs, FL 34134
Dear Scott:
On behalf of Bedford Property Investors, Inc., I am pleased to confirm
our agreement for employment.
The position you will hold is Senior Vice President and Chief
Financial Officer and you will report directly to me. In this
position, you will be responsible for managing all financial functions
including treasury, bank relations, accounting, human resources,
management information systems, and investor relations. Some of the
primary responsibilities we have talked about are:
* Access to the capital markets to provide for the future
growth of the company.
* Develop and maintain banking relationships.
* Develop and maintain close relationship with the "Wall
Street" analysts who cover the company.
* Maintain financial reporting for senior management at the
direction of the CEO and Board of Directors, as well as
external reporting to regulatory agencies, banks, and
shareholders.
* Develop and maintain close working relations with both
senior management, as well as support staff.
* Implement appropriate corporate controls as directed by the
Audit Committee of the Board of Directors.
* Assist in developing a strategic plan.
* Design a capital plan and implement same.
The effective date of your employment will be September 8, 1997. The
terms of your employment are as follows:
* Your commencing salary will be at the rate of $12,500 per
month, payable in two installments. Any increase to this
base salary will be based on the results of a review of your
performance at intervals commencing September 8, 1998,
December 31, 1998, and every December 31st thereafter. (The
December 31, 1998, performance review will cover a period of
less than one year and therefore any adjustments will be
prorated.)
* Your annual incentive bonus potential will be $200,000, with
a guaranty of a first year bonus of $200,000. With the
exception of the first year bonus, the annual incentive
bonus will be payable in accordance with directives issued
by the CEO and approved by the Board of Directors. Your
first year bonus will be payable (1) $75,000 on September 8,
1997 and (2) $125,000 on September 8, 1998.
* You will be eligible to participate in the standard Bedford
Property Investors, Inc., benefits programs, once the
specific program standards are met, including the company's
401 (k) program, and health, dental and other insurance
benefits as may be offered by the company from time to time.
* You will be entitled to a monthly automobile allowance of
$550.00 per month.
* You will be granted 7,500 restricted shares of Bedford
Property Investors, Inc., common stock on September 8, 1997,
and it is intended that you will be granted 7,500 restricted
shares on each annual performance review (on each date
thereafter subject to any changes in the company's
Restricted Stock Agreement as adopted by the CEO and
approved by the Board of Directors. The restricted share
grants will be subject to the terms and conditions of a
Restricted Stock Agreement between the company and you.
Notwithstanding anything contained therein to the contrary,
it is intended that 20% of the restricted shares granted to
you shall vest and become non-forfeitable upon each
anniversary of the grant. In this manner, you will be 100%
vested in each grant of restricted shares upon the fifth
anniversary of each grant date.
* You will be granted 50,000 stock options on September 8,
1997, entitled you to acquire 50,000 shares of Bedford
Property Investors, Inc., common stock in accordance with
the terms of the Company's Stock Option Plan. In addition,
it is intended that you will be guaranteed an additional
50,000 stock options on each annual performance review each
year thereafter, subject to any changes to the Company's
Stock Option Plan as adopted by the CEO and approved by the
Board of Directors.
* Bedford Property Investors, Inc., recognizes that you will
incur expenses in connection with your relocation to the
Lafayette area, and intends to make your relocation expense
neutral to you. Accordingly, we will reimburse you for:
1. The cost of packing and moving your personal belongings
to the Lafayette area and storage charges for up to six
(6) months, if necessary.
2. Temporary living accommodations for up to six (6) months
at a rate not to exceed $2,000 per month.
3. Up to six (6) percent brokerage commission payable in
connection with the sale of your home in Bonita Springs,
Florida, if at a loss to Scott R. Whitney.
4. Reasonable mortgage points and closing costs in
connection with the purchase of a new home in the
Lafayette area.
5. Expenses incurred by you during the first six (6) months
of your employment with us in connection with bi-monthly
commutes (and house hunting trips) from your Florida
home to Lafayette; and
6. The cost of federal, state or local income taxes that
results from the treatment of these expense
reimbursements as taxable income
7. Items (1) through (6) shall not exceed $100,000.
* You will be guaranteed employment until September 8, 1998.
Further, if at any time during the first three (3) years of
your employment, there occurs a Change in Control of the
Company (as such term is defined in the Restricted Stock
Agreement) or otherwise terminated without cause, then you
will be guaranteed the following:
1. The payment of one year's base salary and maximum annual
bonus on the date of such Change in Control or
termination, and
2. The immediate grant and vesting of the difference
between (a) 22,500 share of common stock pursuant to the
Restricted Stock Program, and 150,000 stock options
pursuant to the Stock Option Plan, and (b) the amount of
restricted stock and stock options previously granted to
you.
It is understood that this is not an employment contract but is
employment at will, and either Bedford Property Investors, Inc., or
you may terminate this employment at any time without further
obligation except as above indicated. In the event Scott R. Whitney
terminates his employment at will during the first twelve (12) months,
the Company's obligation will be the moving expenses and the $75,000
bonus.
Please sign and date a copy of this letter in the space provided below
and return it to me.
We look forward to your arrival.
Sincerely,
/s/ Peter B. Bedford
Peter B. Bedford
Chairman and
Chief Executive Officer
Accepted this 7th day of August, 1997.
/s/ Scott R. Whitney
Scott R. Whitney
EXHIBIT 10.21
November 18, 1997
Mr. Dennis Klimmek
85 Danbury Court
Alamo, CA 94507
Dear Dennis:
On behalf of Bedford Property Investors, Inc., I am pleased to confirm
our agreement for employment.
The position you will hold is Senior Vice President of Bedford
Property Investors, Inc., and Senior Vice President of Bedford
Acquisitions, Inc., and you will report directly to me. You will be
responsible for legal work in connection with property acquisitions,
general corporate legal work, managing escrow, and other work as I
direct.
The effective date of your employment will be October 1, 1997. The
terms of your employment are as follows:
* Your commencing salary will be at the rate of $12,500 per
month, payable in two installments. Any increase to this
base salary will be based on the results of a review of
your performance at intervals commencing October 1, 1998,
December 31, 1998, and every December 31st thereafter. (The
December 31, 1998, performance review will cover a period
of less than one year and therefore any adjustments will be
prorated.)
* Your annual incentive bonus potential will be $100,000,
with a guaranty of a bonus as follows. With the exception
of the minimum guaranteed bonus, the annual incentive bonus
will be payable in accordance with directives issued by the
CEO and approved by the Board of Directors. Your
guaranteed minimum bonus will be payable (1) $25,000 on
January 2, 1998 and (2) $100,000 on January 2, 1999.
* You will be eligible to participate in the standard Bedford
Property Investors, Inc., benefits programs, once the
specific program standards are met, including the Company's
401(k) program, and health, dental and other insurance
benefits as may be offered by the company from time to
time.
* You will be entitled to a monthly automobile allowance of
$550.00 per month.
* You will be granted 7,500 restricted shares of Bedford
Property Investors, Inc., common stock on November 17,
1997. This includes 2,500 shares to compensate you for the
reduction in the value of the stock options from the date
of the attached letter. It is intended that you will be
granted 5,000 restricted shares on each annual performance
review (on each date thereafter subject to any changes in
the company's Restricted Stock Agreement as adopted by the
CEO and approved by the Board of Directors). The
restricted share grants will be subject to the terms and
conditions of a Restricted Stock Agreement between the
company and you. Notwithstanding anything contained
therein to the contrary, it is intended that 20% of the
restricted shares granted to you shall vest and become non-
forfeitable upon each anniversary of the grant. In this
manner, you will be 100% vested in each grant of restricted
shares upon the fifth anniversary of each grant date.
* You will be granted 60,000 stock options on November 17,
1997. This will entitle you to acquire 60,000 shares of
Bedford Property Investors, Inc., common stock in
accordance with the terms of the Company's Stock Option
Plan.
* You will be eligible for four weeks vacation each year to
accrue according to the rules of the Company.
* You will be guaranteed employment until October 1, 1998.
Further, if at any time during the first three (3) years of
your employment, there occurs a Change in Control of the
Company (as such term is defined in the Restricted Stock
Agreement) which results in your termination, relocation to
more than 20 miles from your home or any reduction in your
total compensation; or you are terminated without cause,
then you will be guaranteed the following:
1. The payment of one year's base salary and minimum
annual bonus on the date of such Change in Control or
termination, and
2. The immediate grant and vesting of the amount of
restricted stock previously granted to you, and the
stock options previously granted to you.
* You will remain "of counsel" to your current law firm
through the end of 1997 to finish matters for existing
clients. It is anticipated that the work will generally be
done in the evenings or on weekends and will not interfere
with your performance of your duties for the Company.
It is understood that this is not an employment contract but is
employment at will, and either Bedford Property Investors, Inc., or
you may terminate this employment at any time without further
obligation except as above indicated. If you elect to terminate your
employment, you will not be entitled to any of the severance benefits
set forth in this letter.
Please sign and date a copy of this letter in the space provided below
and return it to me.
Sincerely,
/s/ Peter B. Bedford
Peter B. Bedford
Chairman and
Chief Executive Officer
Agreed to and Accepted.
/s/ Dennis Klimmek
Dennis Klimmek
