EXHIBIT 10.48
WHEN RECORDED RETURN TO:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING WITH ABSOLUTE ASSIGNMENT OF RENTS
THIS DOCUMENT CONSTITUTES A FIXTURE FILING IN ACCORDANCE WITH SECTION
9501(a)(1)(B) OF THE CALIFORNIA UNIFORM COMMERCIAL CODE.
THIS INDENTURE (this "Deed of Trust"), is made and given as of the 6 day of
April, 2005, by MISSION WEST PROPERTIES, L.P., a Delaware limited partnership
("Borrower"), as trustor, to FIRST AMERICAN TITLE COMPANY ("Trustee"), as
trustee, for the benefit of ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA, a
Minnesota corporation ("Lender"), as beneficiary.
WITNESSETH:
In consideration of the acceptance by Lender of the Note, defined below,
and for the purposes of securing payment of the Indebtedness, as defined herein,
Borrower hereby GRANTS, BARGAINS, SELLS, TRANSFERS AND CONVEYS UNTO THE TRUSTEE,
ITS SUCCESSORS AND ASSIGNS, IN TRUST, WITH POWER OF SALE, AND GRANTS TO LENDER A
SECURITY INTEREST IN all of the following properties hereinafter set forth (all
the following being hereinafter collectively referred to as the "Property"):
A. That certain real property with the buildings and improvements thereon
situated in the City of San ▇▇▇▇, County of Santa ▇▇▇▇▇, State of California,
and described in Exhibit A, attached hereto and incorporated herein, together
with all the estates and rights in and to the real property and in and to lands
lying within the right-of-way of any streets, roads and public places, opened or
proposed, adjoining the said land and any and all sidewalks, alleys, strips and
gores and all buildings, structures, improvements, fixtures and annexations,
access rights, easements, rights of way or use, servitudes, licenses, tenements,
hereditaments and appurtenances now or hereafter belonging or pertaining to the
real property (the "Real Property").
B. Except for any personal property owned by any tenants of the Real
Property, all right, title, and interest of Borrower now or hereafter acquired
in and to all fixtures, fittings, furnishings, appliances, goods, equipment, and
machinery, including, without limitation, all gas and electric fixtures,
radiators, heaters, engines and machinery, boilers, ranges, ovens, elevators and
motors, escalators, bathtubs, sinks, water closets, basins, pipes, faucets and
other ventilating and air conditioning, plumbing, lighting and heating fixtures,
and systems, maintenance and repair machinery, vehicles or equipment, and all
building materials, supplies and equipment now or hereafter delivered to the
Property and installed or used or intended to be installed or used therein; all
other fixtures and personal property of whatever kind and nature at present
contained in or hereafter placed in any building standing on the Property; such
other goods, equipment, chattels and personal property as are furnished by
Borrower in such letting; and all renewals or replacements thereof or articles
in substitution therefor. All of the estate, right, title and interest of
Borrower in and to all property of any nature whatsoever, now or hereafter
situated on the Property or used or intended to be used solely in connection
with the operation thereof, all of which (i) shall be deemed to be fixtures and
accessions to the freehold and a part of the realty as between the parties
hereto, and all persons claiming by, through or under them, and (ii) shall be
deemed to be a portion of the security for the indebtedness herein mentioned and
secured by this Deed of Trust. Should the lien of this Deed of Trust on any
fixtures or personal property be or become subject to a lease agreement,
conditional sale agreement or chattel mortgage covering such property, then all
the rights, title and interest of Borrower in and to any and all deposits made
thereon or therefor are hereby assigned to Lender, together with the benefit of
any payments now or hereafter made thereon. There is also transferred, set over
and assigned hereby by Borrower to Lender, its successors and assigns, all
leases and use agreements of machinery, equipment and other personal property of
Borrower in the categories hereinabove set forth used in connection with the
Property, under which Borrower is the lessee of, or entitled to use, such items,
and Borrower agrees to execute and deliver to Lender specific separate
assignments to Lender of such leases and agreements when requested by Lender;
but nothing herein constitutes Lender's consent to any financing of any fixtures
or personal property, and nothing herein shall obligate Lender to perform any
obligations of Borrower under any such leases or agreements unless it so
chooses, which obligations Borrower hereby covenants and agrees to well and
punctually perform.
C. All rents, income, contract rights, leases and profits now due or which
may hereafter become due under or by virtue of any lease, license or agreement,
whether written or verbal, for the use or occupancy of the Property or any part
thereof together with all tenant security deposits under leases of the Property
("Rents, Leases and Profits").
D. All awards, compensation and settlements in lieu thereof made as a
result of any insurance or any action or proceeding affecting the Property or
any interest therein including but not by way of limitation an action as a
result of the taking by power of eminent domain of the whole or any part of the
Property, including any awards for damages sustained to the Property, for a
temporary taking, change of grade of streets or taking of access and the like.
E. All of the estate, interest or other claim or demand, which Borrower now
has or may hereafter acquire, in and with respect to said Property, including
without limitation all deposits made with or other security given to utility
companies by Borrower with respect to said Property and the improvements
thereon, and all advance payments of insurance premiums made by Borrower with
respect thereto and claims or demands relating to insurance and all monies held
by Borrower as security deposits from lessees or licensees.
F. To the extent assignable, all insurance policies covering all or any
portion of the Property; all "Reserves" (as defined in Section 1.2) and funds
held in escrow by Lender or other entity for Lender's benefit; all names by
which the Property is now or hereafter known; all interests in the security
deposits of tenants and all management agreements, certificates, licenses,
approvals, contracts, entitlements, building permits, environmental or
warranties, guaranties, blueprints, plans, maps, documents, books and records
relating to the construction, development and use of the Property.
G. Borrower's interest in and to all minerals, royalties, gas or oil
rights, water, water rights, water stock, flowers, shrubs, lawn plants, crops,
trees, timber and other emblements now or hereafter located on, under or above
all or any part of the Property.
H. All proceeds of the conversion, voluntary or involuntary of any of the
foregoing into cash or liquidated claims.
The items set forth in paragraphs A through H above are sometimes
hereinafter separately referred to as "Collateral", and this Deed of Trust is
hereby declared by Borrower to be a security agreement with respect to the
Collateral; and to the extent that the Collateral are goods which are, or are to
become fixtures, this Deed of Trust is recorded as a fixture filing, with the
Borrower as the Debtor, and the Lender as the Secured Party.
It is specifically understood that the enumeration of any specific articles
of property shall in no way exclude or be held to exclude any items of property
not specifically mentioned. All of the land, estate and property herein above
described, real, personal and mixed, whether affixed or, annexed or not, and all
rights hereby conveyed and mortgaged are intended to be as a unit and are hereby
understood and agreed and declared to be appropriated to the use of the real
estate, and shall for the purposes of this Deed of Trust be deemed to be real
estate and conveyed and mortgaged hereby.
It is further specifically understood and agreed that all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutions and replacements of, and all additions and appurtenances
to, the Property, hereafter acquired by or released to Borrower, or constructed,
assembled or placed by Borrower on the Property, and all conversions of the
security constituted thereby, immediately upon such acquisition, release,
construction assembly, placement or conversion, as the case may be, and in each
such case, without any further grant, encumbrances, conveyance, assignment or
other act by Borrower, shall become subject to the lien of this Deed of Trust as
fully and completely and with the same effect as though now owned by Borrower
and specifically described herein, but at any and all times Borrower will
execute and deliver to Lender any and all such further assurances, deeds,
conveyances, or assignments thereof or security interests therein as Lender may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien of this Deed of Trust.
THIS CONVEYANCE IS MADE, IN TRUST, TO SECURE:
(i) Payment by Borrower, its successors and assigns, as maker, of that
certain Secured Installment Note (the "Note") of even date herewith, to the
order of Lender, its successors and assigns, the sum of TWENTY-FIVE MILLION
EIGHT HUNDRED THOUSAND DOLLARS ($25,800,000.00), with interest thereon at
the "Note Rate" (as defined in the Note), according to the terms and
conditions of the Note, together with any substitutions, modifications,
amendments, extensions or renewals thereof;
(ii) Payment to the Lender, its successors and assigns, at the times
demanded and with interest at the "Default Rate" (as defined in the Note),
to accrue from the date of advance, of all sums advanced, if any, in
protecting the interests of the Lender under this Deed of Trust, and
payment of taxes on the Property, and payment of insurance premiums
covering improvements thereon, and payment of principal and interest on
prior liens, and payment of out-of-pocket expenses and attorneys' fees
herein provided for and payment of any Trustee's fees herein provided for,
and any and all sums advanced under this Deed of Trust; and
(iii) Payment and performance by Borrower of all other liabilities and
obligations of Borrower under the Note, this Deed of Trust, and all other
documents and instruments now or hereafter evidencing or securing the
Indebtedness (collectively, the "Security Documents").
The Note and all such other sums, together with interest thereon as
aforesaid, being collectively referred to as the "Indebtedness".
PROVIDED, HOWEVER, that if Borrower shall pay, or cause to be paid, to
Lender the Indebtedness and the applicable prepayment premium, if any, to become
due thereupon at the time and in the manner stipulated herein, and in the Note,
then the estate, right, title and interest of the Trustee and Lender in the
Property shall cease, terminate and become void, and upon proof being given to
the satisfaction of the Lender that the Indebtedness and the applicable
prepayment premium, if any, has been paid or satisfied, and upon payment of all
other fees, costs, charges, expenses and liabilities chargeable or incurred or
to be incurred by Trustee or Lender, the Trustee shall, upon receipt of the
written request of the Lender, cancel, release and discharge this Deed of Trust
and cause same to be canceled and marked satisfied of record.
AND IT IS FURTHER COVENANTED, AGREED AND WARRANTED BY BORROWER AS FOLLOWS:
ARTICLE I
COVENANTS
Borrower warrants, represents, covenants and agrees with Lender as follows:
Title. (a) Borrower warrants that as of the date of recordation of this
Deed of Trust in the Official Records of Santa ▇▇▇▇▇ County, California, it has
good and marketable title to an indefeasible fee simple estate in the Property,
subject to no liens, except the lien of general taxes which may be due but not
yet payable and all encumbrances described in Schedule B of the ALTA loan policy
of title insurance (the "Title Policy") in favor of Lender, as insured, covering
the Real Property and dated as of the date of recordation of this Deed of Trust
in the Official Records of Santa ▇▇▇▇▇ County and any other encumbrances that
may hereafter be approved by Lender (the "Permitted Encumbrances"), and further
warrants that as of the date of recordation of this Deed of Trust in the
Official Records of Santa ▇▇▇▇▇ County, (i) it has good right and lawful
authority to grant, bargain, sell and convey the Property in the manner and form
herein provided, and (ii) it has full power and authority to convey the Property
in the manner and form herein done or intended hereafter to be done. Borrower
hereby fully and absolutely waives and releases all rights and claims it may
have in or to said lands, tenements and property as a homestead declaration or
exemption, or other exemption, under and by virtue of any act of the State
Legislature of the State of California now existing or which may hereafter be
passed in relation thereto. This Deed of Trust is and shall remain a valid and
enforceable first lien on the Property subject only to Permitted Encumbrances.
Borrower has and shall maintain title to the Collateral, including any
additions or replacements thereto, free of all security interests, liens and
encumbrances, other than the security interest hereunder, purchase money
personal property security interests and other than as disclosed to and accepted
by Lender in writing or permitted herein, and has good right to subject the
Collateral to the security interest hereunder.
Borrower shall, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, deeds of trust, assignments, notices of assignments, transfers and
assurances as Lender shall from time to time reasonably require, for the better
assuring, conveying, assigning, transferring and confirming unto Lender the
property and rights hereby conveyed or assigned or intended now or hereafter to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention of facilitating the performance of
the terms of this Deed of Trust and, on demand, shall execute and deliver one or
more financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien hereof upon the Collateral.
Borrower forthwith upon the execution and delivery of this Deed of Trust
and thereafter from time to time, shall cause this Deed of Trust, and any
security instrument creating a lien or evidencing the lien hereof upon the
Collateral and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law or order to publish notice of and fully to protect the lien hereof
upon the interest of Lender in the Property.
Borrower shall pay all filing, registration or recording fees, and all
out-of-pocket expenses incident to the preparation, execution and acknowledgment
of this Deed of Trust, any deed of trust supplemental hereto, any security
instrument with respect to the Property including the Collateral and any
instrument of further assurance, and all federal, state, county and municipal
stamp taxes and other taxes, duties, imposts, assessments and charges arising
out of or in connection with the execution and delivery of the Note, this Deed
of Trust, any deed of trust supplemental hereto, any security instrument with
respect to the Property, including the Collateral, or any instrument of further
assurance. Notwithstanding the foregoing, Borrower shall have no obligation to
pay any taxes assessed upon the net income of Lender.
Borrower shall do all things necessary to preserve and keep in full force
and effect its existence, franchises, rights and privileges as a corporation
under the laws of the state of its formation and shall comply in all material
respects with all regulations, rules, ordinances, statutes, orders and decrees
of any governmental authority or court applicable to the Property or any part
thereof.
Payment of Note and Reserves. (a) Borrower shall promptly and punctually
pay all principal and interest, prepayment premium, if any, and all other sums
to become due in respect to the Note, according to the true intent and meaning
thereof. Borrower shall also pay to Lender, together with and in addition to the
monthly payments of principal and interest payable under the terms of the Note,
on the date set forth therein for the making of monthly payments, until said
Note is fully paid, a sum, as estimated by Lender, equal to one-twelfth (1/12)
of the last annual taxes and assessments on said Property (unless said taxes
were based upon assessments which excluded the current improvements or any
portions thereof, in which event the amount of such deposits shall be based upon
Lender's reasonable estimate as to the total amount of taxes to be levied and
assessed), the taxes and assessments next due on the Property covered by this
Deed of Trust, plus the premiums that will next become due and payable on
insurance policies as may be required hereunder, Borrower agreeing to deliver
promptly to Lender all bills and notices thereof, less all sums already paid
therefor, divided by the number of months to elapse before one month prior to
the date when such premiums, taxes and assessments will become delinquent, such
sums to be held by Lender to pay said premiums, taxes and assessments. Such
payments, hereinafter referred to as "Reserves", are to be held without any
allowance of interest or dividend to Borrower and need not be kept separate and
apart from other funds of Lender. In lieu of monthly payment of Reserves
hereunder, Lender in its sole discretion may require Borrower to pay insurance
premiums and taxes and assessments directly and to deliver to Lender copies of
paid insurance premium receipts and copies of paid tax and assessment receipts
within thirty (30) days after receipt of the same by Borrower. Lender from time
to time thereafter may require payment of Reserves upon ten (10) days, prior
written notice to Borrower.
The Reserves are solely for the added protection of Lender and entail no
responsibility on Lender's part beyond the allowing of due credit, without
interest, for the sums actually received by it. Upon assignment of the Deed of
Trust by Lender, any Reserves on hand shall be turned over to the assignee and
any responsibility of the assignor with respect thereto shall terminate. When
the Indebtedness has been fully paid, any remaining deposits shall be paid to
Borrower or to the then owner or owners of the Property as the case may be. Such
deposits are hereby pledged as additional security for the Indebtedness and
shall be held in trust to be irrevocably applied for the purposes for which made
hereunder and shall not be subject to the direction or control of Borrower;
provided, however, that the Lender shall not be liable for any failure to apply
to the payment of taxes and assessments and insurance premiums any amount so
deposited unless Borrower shall have been furnished with invoices for such
charges.
If the total of the Reserves shall exceed the amount of payments actually
applied by Lender, such excess may be credited by Lender on subsequent payments
to be made by Borrower or its successors in interest as may appear on the
records of Lender. If, however, the Reserves shall not be sufficient to pay the
sums required when the same shall become due and payable, Borrower shall
immediately deposit with Lender the full amount of any such deficiency. If there
shall be an "Event of Default" (as defined in Article IV) under any of the
provisions of this Deed of Trust, Lender may apply, at any time, the balance of
the Reserves against such sums due and payable under the Note, or under any
instrument constituting additional security for said Note.
Lender, in making any payment hereby authorized: (i) relating to taxes and
assessments, may do so according to any ▇▇▇▇, statement or estimate procured
from the appropriate public office without inquiry into the accuracy of such
▇▇▇▇, statement or estimate or into the validity of any tax, assessments, sale,
forfeiture, tax lien or title or claim thereof; or (ii) for the purchase,
discharge, compromise or settlement of any other prior lien, may do so only upon
reasonable inquiry as to the validity or amount of any claim for lien which may
be asserted.
Maintenance and Repair; Inspection. Borrower shall keep the Property in the
current operating order, repair and condition, reasonable wear and tear
excepted, and shall not commit or permit any waste thereof. Borrower shall make
or cause to be made all repairs, replacements, renewals, additions and
improvements and, subject to the provisions of Section 1.6 hereof, complete and
restore promptly and in good workmanlike manner any building or improvements
which may be constructed, damaged, or destroyed thereon, and pay when due all
costs incurred therefor (unless Borrower is contesting such costs in good
faith). Except as otherwise permitted herein, Borrower shall not remove from the
Property or demolish any of the improvements or the Collateral conveyed hereby,
nor demolish or materially alter such Property without prior written consent of
Lender, which shall not be unreasonably withheld or delayed. Borrower shall upon
reasonable prior notice permit Lender, its agents and authorized representatives
the opportunity to inspect the Property, including the interior of any
structures, at any reasonable times subject to the rights of all lessees
thereof.
Compliance With Laws/Maintenance of Permits. Borrower shall comply in all
material respects with all laws, ordinances, regulations, covenants, conditions
and restrictions affecting said Property or the operation thereof, and shall pay
all fees or charges of any kind in connection therewith (except to the extent
Borrower is contesting the same in good faith). Borrower shall obtain, keep and
constantly maintain in full force and effect during the entire term of this Deed
of Trust, all certificates, licenses and permits necessary for the operation of
the Real Property and, except as specifically provided for in this Deed of
Trust, Borrower shall not assign, transfer or in any manner change such
certificates, licenses or permits without first receiving the written consent of
Lender. Except with respect to the Permitted Encumbrances, Borrower shall not by
act or omission, permit any property which is not subject to this Deed of Trust
to rely on the Property or any part thereof or any interest therein to fulfill
any governmental requirement for the existence or use of such property;
and the Property shall not rely on any property which is not subject to this
Deed of Trust to fulfill any governmental requirement for the existence or use
of the Property. Borrower shall not by act or omission impair the integrity of
the Property as a separate tax parcel or subdivided zoning lot or lots, separate
and apart from all other lots.
Insurance. (a) Borrower shall keep all buildings and improvements now or
hereafter situated on the Real Property insured against loss or damage by fire
and other hazards as may reasonably be required by Lender, including, without
limitation, rent loss insurance, flood insurance, and earthquake insurance.
Flood insurance will be waived upon receipt by Lender of evidence satisfactory
to Lender that flood insurance is not required for the Property. Earthquake
insurance will be waived upon receipt by Lender of evidence satisfactory to
Lender that the Scenario Upper Loss ("SUL") rating of the Property is equal to
or less than twenty percent (20%). In the event that conditions arise with
respect to the Property which would lead a prudent lender to require additional
inspection or testing of the Property to insure that adequate levels of
insurance are in place, Lender reserves the right to require Borrower to provide
an updated SUL rating report not more often than annually. Borrower shall also
provide liability insurance with such limits for personal injury and death and
property damage as Lender may reasonably require with the right of Lender to
reasonably require increases in the amount of insurance when such increases are
justified by changed circumstances.
Borrower shall initially maintain, until Lender shall otherwise indicate in
writing, (i) all risk insurance in an amount of not less than the full
replacement cost of the Property, with "all risk", "boiler and machinery", and
"earth quake" coverage, "agreed amount", "inflation guard", "replacement cost",
"vandalism" and "malicious mischief" endorsements, together with an "ordinance
or law coverage" or "enforcement" endorsement, and terrorism insurance (if
commercially available at commercially reasonable rates), with a deductible of
not more than ONE HUNDRED THOUSAND DOLLARS ($100,000.00), which policy shall be
written by a company or companies having a current rating of A:X or better under
Best's Insurance Guide or a rating otherwise approved in writing by Lender, (ii)
general commercial liability insurance (occurrence form) in the amount of at
least FIVE MILLION DOLLARS ($5,000,000.00) combined single limit for personal
injury and property damage, which policy shall be written by a company or
companies having a current rating of A:X or better under Best's Insurance Guide
or a rating otherwise approved in writing by Lender, and (iii) rental insurance
in an amount sufficient to cover any loss of rents for the Property (including
expenses payable by tenants) suffered by Borrower for a period of up to twelve
(12) months. Borrower shall be entitled to maintain all of the insurance
required above in the form of "blanket" policies.
All certificates of insurance coverage to be furnished hereunder shall be
in forms, companies and amounts reasonably satisfactory to Lender with standard
non-contributory mortgagee clauses or lender's loss payable clause attached to
all casualty policies in favor of and in form reasonably satisfactory to Lender,
including a provision requiring that the coverage evidenced thereby shall not be
materially modified without thirty (30) days, prior written notice to Lender or
terminated for non-payment of premiums without ten (10) days prior notice to
Lender. Borrower shall deliver all certificates, including additional and
renewal certificates, to Lender, and, in the case of insurance about to expire,
shall deliver renewal certificates of insurance prior to their respective dates
of expiration. Borrower shall be entitled to pay insurance premiums in
installments.
Borrower shall not take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained hereunder
unless Lender is included thereon under a standard mortgagee clause or Lender's
loss payable clause reasonably acceptable to Lender. Borrower shall immediately
notify Lender whenever any such separate insurance is taken out and shall
promptly deliver to Lender the certificates evidencing such policy or policies
of such insurance.
Casualty. (a) Borrower shall promptly notify Lender of any loss in excess
of ONE HUNDRED THOUSAND DOLLARS ($100,000.00), whether covered by insurance or
not. In case of loss or damage by fire or other casualty, Lender, or after
foreclosure, the holder of the certificate or certificates of purchase, is
authorized (i) to settle and adjust any claim under insurance policies which
insure against such risks (with the duty of Lender to meet and confer with
Borrower), or (ii) to allow Borrower to agree with the insurance company or
companies on the amount to be paid in regard to such loss; provided, however, so
long as no Event of Default then exists, Borrower shall have the right to settle
all insurance claims involving amounts up to ONE HUNDRED THOUSAND DOLLARS
($100,000.00) without Lender's involvement or consent and to receive the
proceeds directly for application to the costs of restoration. In either case,
Lender is authorized to collect and receipt for insurance proceeds in excess of
ONE HUNDRED THOUSAND DOLLARS ($100,000.00).
Subject to the preceding Section 1.6(a), provided no Event of Default then
exists and Borrower certifies as to same, the net insurance proceeds (after
deduction of Lender's out of pocket costs and expenses, if any, in collecting
the same) shall be made available for the restoration or repair of the Property
if, in Lender's sole and absolute discretion: (i) restoration or repair and the
continued operation of the Property is economically feasible; (ii) no lease has
terminated as a result of the loss or damage and all leases remain enforceable
under their terms, without modification; (iii) the loss does not occur in the
six (6) month period preceding the stated Maturity Date and Lender's independent
consultant certifies that the restoration of the Property can be completed at
least ninety (90) days prior to the Maturity Date; and (iv) the insurance
proceeds are sufficient to complete the restoration or repair or Borrower has
deposited with Lender an amount, in cash, which Lender, in its sole discretion,
determines is necessary, in addition to the net insurance proceeds, to pay in
full the cost of the restoration or repair (Borrower's deposit shall be
disbursed prior to any disbursement of insurance proceeds held by Lender). Any
excess proceeds remaining after completion of such repair shall be distributed
first to Borrower to the extent Borrower has
deposited funds with Lender for such repair with the balance applied against the
Indebtedness. Notwithstanding the foregoing, it shall be a condition precedent
to any disbursement of insurance proceeds held by Lender hereunder that Lender
shall have approved (x) all plans and specifications for any proposed repair or
restoration, (y) the construction schedule, and (z) the architect's and general
contractor's contract for all restoration that exceeds ONE HUNDRED THOUSAND
DOLLARS ($100,000.00) in the aggregate. Lender may establish other conditions it
deems reasonably necessary to assure the work is fully completed in a good and
workmanlike manner free of all liens or claims by reason thereof, and in
compliance with all applicable laws, rules and regulations. At Lender's option,
the net insurance proceeds shall be disbursed pursuant to a construction escrow
acceptable to Lender. If an Event of Default then exists, or any of the
conditions set forth in clauses (i) through (iv) of this Section 1.6(b) have not
been met or satisfied, the net insurance proceeds shall be applied to the
Indebtedness in such order and manner as Lender may elect, whether or not due
and payable, with any excess paid to Borrower; provided that if no Event of
Default then exists, the prepayment of the Indebtedness resulting from the
application of the insurance proceeds to the Indebtedness shall not be subject
to payment of a prepayment premium. Lender may apply any insurance proceeds
remaining after completion of restoration to the Indebtedness, or if the above
conditions are not met, Lender may apply all insurance proceeds to the
Indebtedness.
In case of loss after foreclosure proceedings have been instituted, the
proceeds of any such insurance policy or policies, if not applied as aforesaid
in rebuilding or restoring the buildings or improvements, shall be used to pay
the Indebtedness and the balance, if any, shall be paid to the persons entitled
thereto.
Condemnation. Borrower, immediately upon obtaining knowledge of the
institution of any proceeding for the condemnation of the Property or any
portion thereof, shall notify Lender of the pendency thereof. Borrower hereby
assigns, transfers and sets over unto Lender all compensation, rights of action,
the entire proceeds of any award and any claim for damages for any of the
Property taken or damaged under the power of eminent domain or by condemnation
or by sale in lieu thereof. While any Event of Default is continuing, Lender
may, at its option, commence, appear in and prosecute, in its own name, any
action or proceeding, or make any compromise or settlement, in connection with
such condemnation, taking under the power of eminent domain or sale in lieu
thereof with the duty to meet and confer with Borrower. Such proceeds shall be
made available in the manner and under the same conditions that Lender may
require in the manner provided under Section 1.6. If the proceeds are made
available by Lender to reimburse Borrower for the cost of said rebuilding or
restoration, any surplus which may remain out of said award after payment of
such cost of rebuilding or restoration shall, at the option of Lender, be
applied on account of the Indebtedness (without the payment of any prepayment
premium) or be paid to Borrower. Borrower agrees to execute such further
assignments of any compensation, award, damages, right of action and proceeds,
as Lender may require.
Liens and Encumbrances. Except as provided in Section 1.11, Borrower shall
not, without Lender's express written consent, permit the creation of any liens
or encumbrances on the Property other than the lien of this Deed of Trust and
any lien for real property taxes so long as they are not yet delinquent, and
shall pay when due all obligations, lawful claims or demands of any person
which, if unpaid, might result in, or permit the creation of, a lien or
encumbrance on the Property or on the rents, issues, income and profits arising
therefrom, whether such lien would be senior or subordinate hereto, including,
but without limiting the generality of the foregoing, all claims of mechanics,
materialmen, laborers, and others for work or labor performed, or materials or
supplies furnished in connection with any work of demolition, alteration,
improvement of or construction upon the Property, and Borrower will do or cause
to be done everything necessary so that the priority of the lien of this Deed of
Trust shall be fully preserved, at the cost of Borrower, without expense to
Lender. So long as no Event of Default exists hereunder, Borrower shall have the
right to contest the validity of any lien by appropriate judicial proceedings
timely and diligently prosecuted and to withhold payment of any contested
amount, and shall, as a condition to such challenge and withholding, furnish to
Lender such surety undertaking as may be required by law or otherwise provide
such security to Lender as Lender shall reasonably request. Any lien or
encumbrance on the Property created hereafter shall contain, or shall by virtue
hereof be deemed to contain, a provision subordinating such lien or encumbrance
to all leases then or in the future affecting the Property, unless the holder of
such lien grants the lessees under the leases nondisturbance rights.
Taxes and Assessments. Borrower shall pay in full when due, and in any
event before any penalty or interest attaches, all general taxes and
assessments, special taxes, special assessments, water charges, sewer service
charges and all other charges against the Property and shall furnish to Lender
official receipts evidencing the payment thereof. Notwithstanding the foregoing,
so long as no Event of Default then exists hereunder, Borrower may contest any
tax or assessment which Borrower may desire to contest in accordance with
Section 1.8.
Indemnification. Borrower shall appear in and defend any suit, action or
proceeding that might in any way adversely affect the value of the Property, the
priority of this Deed of Trust or the rights and powers of Lender under this
Deed of Trust. Borrower shall, at all times, indemnify, defend, hold harmless
and on demand, reimburse Lender for any and all loss, damage, expense or cost,
including cost of evidence of title and attorneys' fees, arising out of or
incurred in connection with any such suit, action or proceeding, and the sum of
such expenditures shall be secured by this Deed of Trust and shall bear interest
if not paid when due at the rate provided in the Note secured hereby and shall
be due and payable within ten (10) days following Lender's written demand.
Notwithstanding the foregoing, nothing contained herein shall be deemed to
require Borrower to indemnify, defend, protect or hold harmless Lender from any
claim, loss, liability, damage, cause of action, judgment, court costs,
attorneys' fees or other expenses, to the extent resulting from Lender's or
Lender's employees', contractors' or agents' negligence, willful misconduct or
breach of its obligations under any Loan Document. In
addition, if Borrower is obligated to indemnify and defend Lender under the
foregoing indemnity, Borrower shall be entitled to indemnify and defend Lender
with counsel selected by Borrower, but reasonably acceptable to Lender, and
Borrower shall be entitled to control the litigation and any settlements
thereof. Nothing contained in this indemnity shall prevent Lender from obtaining
its own counsel in any proceedings, at Lender's sole expense, provided further,
that Lender shall have the right to employ separate counsel at Borrower's
expense if there are legal defenses available to Lender that are different from
or additional to those available to Borrower and which, in the reasonable
opinion of Lender's counsel, are sufficient to make it undesirable for the same
counsel to represent both Borrower and Lender, or, in the reasonable opinion of
Lender's counsel, a conflict of interest exists between Borrower and Lender that
would make such separate representation advisable. Borrower shall pay the cost
of suit, cost of evidence of title and attorneys' fees in any proceeding, suit,
and foreclosure proceedings through the court brought by the Lender to foreclose
this Deed of Trust.
Transfer of Title or Further Encumbrances. (a) Except as otherwise provided
herein, Borrower and all endorsers, guarantors, sureties, accommodation parties
hereof and all other persons liable or to become liable for all or any part of
the Indebtedness agree that if the Property or any part thereof or interest
therein, or any interest in Borrower, is sold, assigned, transferred, conveyed,
encumbered, hypothecated, mortgaged or otherwise alienated (excepting leases in
the ordinary course of managing income property, transfers of personal property
authorized herein and purchase money encumbrances of personalty) whether
voluntarily, involuntarily or by operation of law, without the prior written
consent of Lender, Lender, at its option, may declare the Note to be forthwith
due and payable.
Notwithstanding anything to the contrary set forth in this Section 1.11,
provided that there shall not then exist any "Event of Default" (as defined in
Section 4.1) Borrower shall have a one-time right to transfer the Property to a
bona fide third party purchaser (a "Purchaser"), which shall be subject to
Lender's consent and approval, in Lender's sole and absolute discretion. The
Purchaser shall be required to assume all of Borrower's liabilities and
obligations under the Note, this Deed of Trust, and all other Security
Documents, and to execute and deliver an Environmental Indemnity Agreement
satisfactory to Lender, and upon the closing of such transfer and assumption,
Borrower and any guarantor(s) of the Indebtedness shall be relieved from all
liability under the Security Documents, including the Note, and under that
certain Environmental Indemnity Agreement of even date herewith from Borrower
and "Principal" (defined below), first arising or occurring after the date of
such transfer and assumption, and Lender shall confirm the same in writing to
Borrower. Borrower and/or Purchaser shall pay all of Lender's actual costs and
expenses, including attorneys' fees, in connection with such transfer and
assumption, and shall pay to Lender a transfer fee, equal to one percent (1.0%)
of the outstanding balance of the Note as of the date of such transfer and
assumption, and shall execute and provide to Lender such other documents or
instruments as Lender may require.
Borrower shall not create or permit to be created or to remain any lien on
the Property, or any part thereof, except for the lien of this Deed of Trust.
Notwithstanding the foregoing, provided that there shall not then exist any
Event of Default, and subject to Lender's prior written consent, in its sole and
absolute discretion, Borrower shall be permitted to place a lien on the Property
securing additional financing on the Property (the "Additional Financing"),
provided that (i) the lien of the Additional Financing shall at all times be
secondary and subordinate to the lien of this Deed of Trust, (ii) the Additional
Financing shall have a fixed rate of interest, (iii) the aggregate loan-to-value
ratio of the loan evidenced by the Note (the "Loan") and the Additional
Financing shall not exceed seventy percent (70%), as evidenced by an appraisal
satisfactory to Lender by an appraiser satisfactory to Lender; (iv) the
aggregate debt service coverage ratio of the Loan and Additional Financing shall
not be less than 1.45:1, (v) the Additional Financing shall have a scheduled
maturity date after the maturity date of the Loan, (vi) Lender shall have the
right to approve the documentation for the Additional Financing; and (vii) the
lender under the Additional Financing shall execute an intercreditor agreement
satisfactory to Lender.
Borrower hereby agrees that Lender will have the first right of refusal to
provide the Additional Financing. All out of pocket costs incurred by Lender in
connection with making the Additional Financing, or with reviewing the
Additional Financing if the same is not made by Lender, shall be paid by
Borrower.
Lender may, without notice to Borrower, waive any default under this
Section 1.11 and deal with such successor or successors in interest in the
Property in the same manner as with Borrower, without in any way releasing,
discharging or otherwise affecting the liability of Borrower, the endorsers,
guarantors, sureties, accommodation parties hereof and all other persons liable
or to become liable for all or any part of this Indebtedness. No sale of the
Property, no forbearance on the part of the Lender, no extension of the time for
the payment of the Indebtedness or any change in the terms of the Note or the
Security Documents consented to by the Lender and Borrower shall in any way
whatsoever operate to release, discharge, modify, change or affect the original
liability of Borrower and all such persons liable or to become liable for all or
any part of this Indebtedness, either in whole or in part.
Advances. If Borrower shall fail to perform any of the covenants herein
contained or contained in any instrument constituting additional security for
the Note (and any notice and/or cure period provided herein or therein shall
have expired), Lender may, but without obligation to do so, and with written
notice to Borrower, make advances to perform same in its behalf, and all sums so
advanced shall be a lien upon the Property and shall be secured by this Deed of
Trust and become part of the Indebtedness. Borrower shall repay on demand all
sums so advanced in its behalf with interest thereon at the Default Rate,
defined in the Note from the time of such advance. Nothing herein contained
shall prevent any such failure to perform on the part of Borrower from
constituting an Event of Default as defined below.
Financial Statements/Records. Borrower shall deliver or cause to be
delivered to Lender, within ninety (90) days after the end of each of the
respective party's fiscal years, (i) an annual operating statement of income and
expenses (which shall be audited if an Event of Default exists) with respect to
the operation of the Property, prepared in accordance with generally accepted
accounting principles, consistently applied ("GAAP") and certified by the chief
financial officer or manager of Borrower as complete and correct in all material
respects, (ii) financial statements of Borrower and Mission West Properties,
Inc., a Maryland corporation, the general partner of Borrower ("Principal")
(which shall be audited if an Event of Default exists), in reasonable detail and
certified as complete and correct in all material respects by the party
furnishing the statement, and (iii) financial statements of all tenants under
leases of the Property, if available according to such leases. Borrower agrees
to keep adequate books and records of account in accordance with GAAP and shall
permit Lender, and its agents, accountants and attorneys, upon reasonable prior
notice, to visit and inspect the Property and examine the Property's books and
records of account at Borrower's office during normal business hours, and to
discuss the Property's affairs, finances and accounts with Borrower, at such
reasonable times as Lender may request. Such statements shall be prepared in a
form acceptable to Lender, to include, without limitation, a current leasing
summary (which shall disclose, among other things, names of tenants, square
footage of leased area, commencement dates and expiration dates of the leases as
well as concessions granted to Lessees), gross rental income, other income, real
estate taxes, insurance, operating expenses and depreciation deduction
accompanied by financial statements received by Borrower from tenants. If the
operating statements for the Property provided by Borrower are not in a form
acceptable to Lender or Borrower fails to furnish such statements and reports,
Lender shall have the right to audit the respective books and records of the
Property at the expense of Borrower and if Borrower prevents Lender from
conducting such audit, Lender may at the election of Lender declare this Deed of
Trust in default.
Time. Borrower agrees that time is of the essence hereof in connection with
all obligations of Borrower herein or in said Note or any other instruments
constituting additional security for said Note.
Estoppel Certificates. Borrower, within ten (10) days after written
request, shall furnish a duly acknowledged written statement confirming the
amount secured by this Deed of Trust, and stating either that to the best of
Borrower's knowledge no setoffs or defenses exist against the Deed of Trust or,
if such setoffs or defenses are alleged to exist, the nature thereof.
Maintenance of Parking and Access; Prohibition Against Alteration. Borrower
shall construct, keep and constantly maintain, as the case may be, all curbs,
drives, parking areas and the number of parking spaces heretofore approved by
Lender or heretofore or hereafter required by any governmental body, agency or
authority having jurisdiction over Borrower or the Property, and shall not
alter, erect, build or construct upon any portion of the Property, any building
or structure of any kind whatsoever, the erection, building or construction of
which has not been previously approved by Lender in writing, which approval
shall not be unreasonably withheld. Nothing contained herein shall, however, be
construed to prohibit Borrower (or any tenant of the Property) from or require
Lender's consent to, construction of any alterations permitted, required or
contemplated under any lease of the Property, to the extent Lender has approved
such lease.
Property Manager. The exclusive manager of the Property shall be Borrower
or Principal, or such other manager as may be first approved in writing by
Lender, which approval shall not be unreasonably withheld. The exclusive leasing
agent of the Property, if other than the foregoing parties, shall be first
approved in writing by Lender, which approval shall not be unreasonably withheld
The management and leasing contracts and all tenant leases shall be satisfactory
to and subject to the written approval of Lender, which approval shall not be
unreasonably withheld, throughout the term of the Indebtedness, and shall be
subordinate to this Deed of Trust; provided that upon the request of any tenant
not affiliated with Borrower, any member of Borrower or any shareholder, member
or partner of any member of Borrower, Lender shall grant to such tenant written
nondisturbance rights in form satisfactory to Lender so long as the lease has
been approved by Lender. Upon default in any of these requirements, not cured
within the applicable cure period, if any, then the whole of the Indebtedness
shall, at the election of Lender, become immediately due and payable, and Lender
shall be entitled to exercise any or all remedies provided for or referenced in
this Deed of Trust.
Payment of Junior Encumbrances. Borrower shall not permit any default or
delinquency under any other lien, imposition, charge or encumbrance against the
Property, even though junior and inferior to the lien of this Deed of Trust;
provided, however, the foregoing shall not be construed to permit any other lien
or encumbrances against the Property, except as otherwise specifically provided
herein.
Alteration, Removal and Change in Use of Property Prohibited. Borrower
agrees not to permit or suffer any of the following without the prior written
consent of Lender, which consent shall not be unreasonably withheld:
ANY STRUCTURAL ALTERATION OF, OR ADDITION TO, THE PROPERTY AS NOW OR
HEREAFTER SITUATED UPON THE PROPERTY OR THE ADDITION OF ANY NEW BUILDINGS
OR OTHER STRUCTURE(S) THERETO, EXCEPT FOR THE ERECTION OF NON-LOAD-BEARING
INTERIOR WALLS; PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE
DEEMED TO REQUIRE THE CONSENT OF LENDER IN CONNECTION WITH ANY ALTERATION
OR IMPROVEMENT REQUIRED OR PERMITTED BY ANY LEASE OF THE PROPERTY APPROVED
BY LENDER; OR
THE REMOVAL, TRANSFER, SALE OR LEASE OF THE COLLATERAL, EXCEPT THAT
THE RENEWAL, REPLACEMENT OR SUBSTITUTION OF COLLATERAL (REPLACEMENT OR
SUBSTITUTED ITEMS MUST BE OF LIKE OR BETTER QUALITY THAN THE REMOVED ITEMS
IN THEIR ORIGINAL CONDITION) ENCUMBERED HEREBY MAY BE MADE IN THE NORMAL
COURSE OF BUSINESS.
Conveyance of Mineral Rights Prohibited. Borrower agrees that the making of
any oil, gas or mineral lease or the sale or conveyance of any oil, gas or
mineral lease or the sale or conveyance of any mineral interest or right to
explore for minerals under, through or upon the Property would impair the value
of the Property securing the Note; and that Borrower shall have no right, power
or authority to lease the Property, or any part thereof, for oil, gas or other
mineral purposes, or to grant, assign or convey any mineral interest of any
nature, or the right to explore for oil, gas and other minerals, without first
obtaining from Lender express written permission therefor, which permission
shall not be valid until recorded among the real property records of the County
in which the Real Property is situated. Borrower further agrees that if Borrower
shall make, execute or enter into any such lease or attempt to grant any such
mineral rights without the prior written consent of Lender, then Lender shall
have the option, without notice, to declare the same to be a default hereunder
and to declare the Indebtedness immediately due and payable. Whether Lender
shall consent to such lease or grant of mineral rights, Lender shall receive the
entire consideration to be paid for such lease or grant of mineral rights, with
the same to be applied to the Indebtedness, notwithstanding the fact that the
amount owing thereon may not then be due and payable or the said indebtedness is
otherwise adequately secured; provided, however, that the acceptance of such
consideration shall in no way impair the lien of this Deed of Trust on the
Property.
ARTICLE II
SECURITY AGREEMENT AND FINANCING STATEMENT
UNDER CALIFORNIA UNIFORM COMMERCIAL CODE
Security Agreement. To the extent any Collateral covered by this Deed of
Trust consists of rights in action or personal property covered by the
California Uniform Commercial Code (the "Commercial Code"), this Deed of Trust
constitutes a security agreement and financing statement as defined in the
Commercial Code.
Financing Statement. THIS DEED OF TRUST SHALL BE EFFECTIVE AS A FINANCING
STATEMENT FILED AS A FIXTURE FILING WITH RESPECT TO ALL GOODS CONSTITUTING A
PART OF THE COLLATERAL WHICH ARE OR ARE TO BECOME FIXTURES RELATED TO THE
PREMISES. FOR PURPOSES OF THE CALIFORNIA UNIFORM COMMERCIAL CODE THE FOLLOWING
INFORMATION IS FURNISHED:
THE NAME AND ADDRESS OF THE RECORD OWNER OF THE REAL ESTATE DESCRIBED
IN THIS INSTRUMENT ARE:
Mission West Properties, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THE NAME AND ADDRESS OF THE DEBTOR ARE:
Mission West Properties, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(Organization No. 2500587)
THE NAME AND ADDRESS OF THE LENDER ARE:
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA
c/o Allianz of America, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P.O. Box 5160
Westport, Connecticut 06881-5160
Attn: Real Estate Department
INFORMATION CONCERNING THE SECURITY INTEREST EVIDENCED BY THIS
INSTRUMENT MAY BE OBTAINED FROM THE SECURED PARTY AT ITS ADDRESS ABOVE;
THIS DOCUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES; AND
PRODUCTS OF THE COLLATERAL ARE ALSO COVERED.
Additional Documents. This Deed of Trust shall be self-operative with
respect to any Collateral covered by this Deed of Trust which consists of rights
in action or personal property covered by the Commercial Code, but Borrower
agrees to execute and deliver on demand such security agreements, financing
statements or other instruments as Lender may reasonably request to impose the
lien hereof more specifically upon any of such property and to pay the recording
and/or filing fees associated therewith. Borrower hereby authorizes Lender to
file UCC-1 financing statements or such other financing statements as may be
necessary under the Commercial Code to fully perfect the security interests
granted herein by Borrower.
Nature of Collateral. The remedies for any violation of the covenants,
terms and conditions of the agreements herein contained shall be (a) as
prescribed herein, or (b) by general law, or (c) as to such part of the security
which is covered by the Commercial Code by the specific statutory consequences
now or hereafter enacted and specified in said Commercial Code, all at Lender's
sole election. Borrower and Lender agree that nothing herein contained shall be
construed as in any way derogating from or impairing this declaration and hereby
stated intention of the parties hereto, that everything used in connection with
the production of income from the Property and/or adapted for the use therein
and/or which is described or reflected in this Deed of Trust is, and at all
times and for all purposes and in all proceedings, both legal or equitable,
shall be regarded as part of the real estate irrespective of whether (i) any
such item is physically attached to the improvements, (ii) serial numbers are
used for the better identification of certain equipment items capable of being
thus identified in a recital contained therein or in any list filed with the
Lender, or (iii) any such item is referred to or reflected in any financing
statement filed at any time. Similarly, the mention in any financing statement
of (x) the rights in or the proceeds of any fire and/or hazard insurance policy,
or (y) any award in eminent domain proceedings for a taking or for loss of
value, or (z) the Borrower's interest as lessor in any present or future lease
or rights to income growing out of the use and/or occupancy of the Property,
whether pursuant to lease or otherwise, shall never be construed as in any way
altering any of the rights of Lender as determined by this instrument or
impugning the priority of Lender's lien granted hereby or by any other recorded
document, but such mention in said financing statement is declared to be for the
protection of Lender in the event any Court or Judge shall at any time hold with
respect to clauses (x), (y) and (z) above that notice of Lender's priority of
interest to be effective against a particular class of person, including, but
not limited to, the Federal Government, must be filed in the Office of the
California Secretary of State, Commercial Code Records. For purposes of treating
this Deed of Trust as a security agreement and financing statement, Lender shall
be deemed to be the Secured Party and Borrower shall be deemed to be the Debtor.
ARTICLE III
LEASES AND RENTS
Borrower to Comply with Leases. Borrower covenants and agrees that it will,
at its own cost and expense:
FAITHFULLY ABIDE BY, PERFORM AND DISCHARGE EACH AND EVERY MATERIAL
OBLIGATION, COVENANT AND AGREEMENT UNDER EACH AND EVERY LEASE OF THE
PROPERTY TO BE PERFORMED BY THE LANDLORD THEREUNDER ON OR BEFORE THE
EXPIRATION OF THE APPLICABLE NOTICE AND CURE PERIOD SET FORTH THEREIN;
USE REASONABLE EFFORTS, IN GOOD FAITH, TO ENFORCE OR SECURE THE
PERFORMANCE OF EACH AND EVERY MATERIAL OBLIGATION, COVENANT, CONDITION AND
AGREEMENT OF SAID LEASES BY THE TENANTS THEREUNDER TO BE PERFORMED;
NOT BORROW AGAINST, PLEDGE OR FURTHER ASSIGN ANY RENTALS DUE UNDER
SAID LEASES EXCEPT PURSUANT TO THE SECURITY DOCUMENTS;
NOT PERMIT THE PREPAYMENT OF ANY RENTS DUE UNDER ANY LEASE FOR MORE
THAN THIRTY (30) DAYS IN ADVANCE NOR FOR MORE THAN THE NEXT ACCRUING
INSTALLMENT OF RENTS, NOR ANTICIPATE, DISCOUNT, COMPROMISE, FORGIVE OR
WAIVE ANY SUCH RENTS WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER;
NOT WAIVE, EXCUSE CONDONE OR IN ANY MANNER RELEASE OR DISCHARGE ANY
TENANTS OF OR FROM THE MATERIAL OBLIGATIONS, COVENANTS, CONDITIONS AND
AGREEMENTS BY SAID TENANTS TO BE PERFORMED UNDER THE LEASES WITHOUT THE
PRIOR WRITTEN CONSENT OF LENDER;
NOT PERMIT ANY MATERIAL MODIFICATION OR AMENDMENT TO ANY OF THE LEASES
UNLESS SUCH MODIFICATION OR AMENDMENT IS NOT MATERIALLY LESS FAVORABLE
OVERALL ON A COMMERCIAL BASIS WHEN COMPARED TO THE ORIGINAL TERMS, WITHOUT
THE PRIOR WRITTEN CONSENT OF LENDER;
NOT TO TERMINATE ANY LEASE OR ACCEPT A SURRENDER THEREOF EXCEPT BY
REASON OF A DEFAULT BY THE TENANT THEREUNDER, OR AS OTHERWISE PROVIDED BY
SUCH LEASE; AND
PROVIDE EXECUTED COPIES OF ANY NEW LEASES, AND AMENDMENTS, RENEWALS OR
MODIFICATIONS TO LEASES (SUBJECT TO THE PROHIBITION IN PARAGRAPH (F) ABOVE)
ENTERED INTO BY BORROWER FROM AND AFTER THE DATE OF THIS DEED OF TRUST.
Lender's Right to Perform under Leases. Should the Borrower fail to
perform, comply with or discharge any material obligations of Borrower under any
lease or should the Lender become aware of or be notified by any tenant under
any lease of a failure on the part of Borrower to so perform, comply with or
discharge its material obligations under said lease, Lender may upon the
expiration of the applicable cure period provided in the lease for the
obligation in question, but shall not be obligated to, with prior written notice
to Borrower but without waiving or releasing Borrower from any obligation in
this Deed of Trust contained, remedy such failure, and the Borrower agrees to
repay upon demand all out-of-pocket sums incurred by the Lender in remedying any
such failure together with interest pursuant to Section 1.12 above. All such
sums, together with interest as aforesaid shall become so much additional
Indebtedness, but no such advance shall be deemed to relieve the Borrower from
any default hereunder.
Absolute Assignment of Leases and Rents. (a) Borrower does hereby
absolutely assign and transfer unto Lender for security purposes all of the
Rents, Leases and Profits now due and which may hereafter become due under or by
virtue of any lease, whether written or verbal, or any agreement for the use or
occupancy of the Property, it being the intention of this Deed of Trust to
establish an absolute transfer and assignment of all Rents, Leases and Profits
from the Property unto the Lender and, upon the occurrence and during the
continuation of an Event of Default, the Borrower does hereby appoint
irrevocably the Lender its true and lawful attorney in its name and stead, which
appointment is coupled with an interest, to collect all of said Rents, Leases
and Profits; provided, however, Lender grants the Borrower the revocable license
and privilege to collect and retain such Rents, Leases and Profits except upon
the occurrence and during the continuation of an Event of Default under this
Deed of Trust.
Upon the occurrence and during the continuation of an Event of Default, and
whether before or after the institution of proceedings to sell the Property or
foreclose this Deed of Trust, or during any period of redemption, and without
regard to waste, adequacy of the security or solvency of the Borrower, Lender
may revoke the revocable license and privilege granted Borrower hereunder to
collect the Rents, Leases and Profits of the Property, and may, at its option,
without notice in person or by agent, with or without taking possession of or
entering the Property, with or without bringing any action or proceeding or by a
receiver duly appointed, give, or require Borrower to give, notice to any or all
tenants under any lease authorizing and directing the tenant to pay such Rents,
Leases and Profits, to Lender, such agent, or receiver as the case may be;
collect all of the Rents, Leases and Profits; enforce the payment thereof and
exercise all of the rights of the landlord under any lease and all of the rights
of Lender hereunder; enter upon, take possession of, manage and operate said
Property, or any part thereof; cancel, enforce or modify any leases, and fix or
modify Rents, and do any acts which the Lender-deems proper to protect the
security hereof. At such time as Borrower cures an Event of Default, Borrower's
license to collect the Rents, Leases and Profits shall automatically be
reinstated. Supplementing the remedies set forth herein and after the date
hereof, Lender shall have all rights and remedies under California Civil Code
Section 2938.
Any Rents, Leases and Profits collected shall be applied to the costs and
expenses of operation, management and collection, including attorneys' fees, to
the payment of the fees and expenses of any agent or receiver so acting, to the
costs incurred by the Lender, including attorneys' fees, to the payment of
taxes, assessments, insurance premiums and expenditures for the management,
repair and upkeep of the Property, to the performance of landlord's obligations
under any leases and to the Indebtedness all in such order as the Lender may
require. To the extent permitted by law, Borrower waives any right to require
Lender to utilize Rents, Leases and Profits for purposes other than as provided
under the Loan Documents, including without limitation any rights of Borrower
under California Civil Code Section 2938(g). All Rents, Leases and Profits
received by Borrower after Lender has exercised any of its rights under this
assignment (and after Lender has revoked the above license) shall be held by
Borrower in trust for Lender and shall be delivered to Lender immediately
without demand.
The entering upon and taking possession of the Property, the collection of
such Rents, Leases and Profits and the application thereof as aforesaid shall
not cure or waive any defaults under this Deed of Trust or affect any notice of
default or invalidate any act done pursuant to such notice nor in any way
operate to prevent the Lender from pursuing any other remedy which it may now or
hereafter have under the terms of this Deed of Trust or any other security given
for the Indebtedness nor shall it in any way be deemed to constitute the Lender
to be a "mortgagee-in-possession." Each lease of the Property hereinafter
entered into shall at Lender's option be filed for record in the local recording
office of the county where the Property is located. Also, to the extent required
by the Lender, each tenant shall execute an estoppel certificate and acknowledge
receipt of a notice of the assignment of its lease, all reasonably satisfactory
in form and content to the Lender.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
Events of Default. Each of the following shall be deemed to be an "Event of
Default" hereunder:
FAILURE TO MAKE ANY PAYMENT OF PRINCIPAL AND/OR INTEREST WHEN SUCH
PAYMENT IS DUE UNDER THE NOTE;
FAILURE TO MAKE ANY PAYMENT, OTHER THAN A PAYMENT OF PRINCIPAL AND/OR
INTEREST UNDER THE NOTE, UNDER ANY OF THE SECURITY DOCUMENTS WITHIN TEN
(10) DAYS AFTER THE DATE SUCH PAYMENT IS DUE;
EXCEPT AS OTHERWISE PERMITTED IN THIS DEED OF TRUST, TRANSFER OF TITLE
TO THE PROPERTY OR ANY INTEREST IN BORROWER OR CREATION OF AN ENCUMBRANCE
ON THE PROPERTY OR ANY INTEREST IN BORROWER WITHOUT THE PRIOR WRITTEN
CONSENT OF LENDER, AS GOVERNED BY THE PROVISIONS OF SECTION 1.11;
FAILURE TO PERFORM ANY OF THE OTHER TERMS, COVENANTS AND CONDITIONS OF
THE NOTE, THIS DEED OF TRUST, OR ANY OTHER SECURITY DOCUMENTS, PROVIDED
THAT SUCH DEFAULT SHALL HAVE CONTINUED FOR A PERIOD OF THIRTY (30) DAYS
AFTER WRITTEN NOTICE OF SUCH DEFAULT FROM LENDER, OR, TO THE EXTENT SUCH
PERFORMANCE CANNOT REASONABLY BE COMPLETED WITHIN THIRTY (30) DAYS, FAILURE
OF BORROWER TO COMMENCE AND DILIGENTLY PROSECUTE THE PERFORMANCE TO CURE
THE DEFAULT, BUT IN ANY EVENT NOT LATER THAN NINETY (90) DAYS AFTER SUCH
NOTICE;
A MATERIAL MISSTATEMENT BY BORROWER OF ANY WARRANTIES OR
REPRESENTATIONS CONTAINED HEREIN, IN THE NOTE, THE BORROWER'S CERTIFICATE
DATED AS OF THE DATE HEREOF (BUT ONLY TO THE EXTENT THE REPRESENTATION OR
WARRANTY WAS MATERIALLY NOT ACCURATE WHEN MADE), OR THE ASSIGNMENT;
SHOULD BORROWER OR PRINCIPAL, OR ANY SUCCESSORS AND ASSIGNS THEREOF,
INCLUDING, WITHOUT LIMITATION, THE THEN CURRENT OWNERS OF ANY INTEREST IN
THE PROPERTY:
File a petition under the Federal Bankruptcy Code or any similar
law, state or federal, whether now or hereafter existing (hereafter
referred to as a "Bankruptcy Proceeding"); or
File any answer admitting insolvency or inability to pay its
debts generally as they become due; or
Fail to obtain a vacation or stay of any involuntary Bankruptcy
Proceeding within ninety (90) days, as hereinafter provided; or
Be the subject of an order for relief against it in any
Bankruptcy Proceeding; or
Have a custodian or trustee or receiver appointed for or have any
court take jurisdiction of all of its property, or the major part
thereof, in any involuntary proceeding for the purpose of
reorganization, arrangement, dissolution, or liquidation if such
trustee or receiver shall not be discharged or if such jurisdiction
shall not be relinquished, vacated or stayed on appeal or otherwise
within ninety (90) days; or
Make an assignment for the benefit of its creditors; or
Admit in writing its inability to pay its debts generally as they
become due; or
Consent to an appointment of a custodian, receiver or trustee of
all of its property, or the major part thereof.
PRINCIPAL SHALL FAIL TO MAINTAIN THE "NET WORTH" REQUIRED BY THAT
CERTAIN LIMITED GUARANTY DATED AS OF THE DATE HEREOF FROM PRINCIPAL TO
LENDER.
Remedies. (a) Upon and during any such Event of Default, Lender, without
notice, may declare the entire principal of the Note then outstanding (if not
then due and payable), and all accrued and unpaid interest thereon, all premiums
payable thereunder and all other obligations of Borrower hereunder to be due and
payable immediately, and upon any such declaration the principal of the Note and
said accrued and unpaid interest shall become due and payable, anything in the
Note or in this Deed of Trust to the contrary notwithstanding.
Upon and after any such Event of Default, Lender shall have all of the
remedies of a Secured Party under the Commercial Code, including, without
limitation, the right and power to sell, or otherwise dispose of, the
Collateral, or any part thereof, and for that purpose may take with or without
judicial process, enter upon any of the Property, on which the Collateral, or
any part thereof, may be situated and remove the same therefrom without being
deemed guilty of trespass and without liability for damages thereby occasioned,
or at Lender's option, Borrower shall assemble the Collateral and make it
available to Lender at the place and at the time designated in the demand.
Lender shall be entitled to hold, maintain, preserve and prepare the Collateral
for sale. Lender, without removal, may render the Collateral unusable and
dispose of the Collateral on the Property.
Upon and during any such Event of Default, Lender, with or without entry,
personally or by its agents or attorneys, insofar as applicable, may:
Institute proceedings for the complete foreclosure of this Deed of
Trust; or
Apply to any court of competent jurisdiction for the appointment of a
receiver or receivers for the Property and of all the earnings, revenues,
rents, issues, profits and income thereof; or
Take such steps to protect and enforce its rights whether by action,
suit or proceeding in equity or at law for the specific performance of any
covenant, condition or agreement in the Note or in this Deed of Trust, or
in aid of the execution of any power herein granted, or for any foreclosure
hereunder, or for the enforcement of any other appropriate legal or
equitable remedy or otherwise as Lender shall elect.
Upon and after any such Event of Default, Lender shall have the right to
execute a written notice of such default and of its election to cause the
Property to be sold to satisfy the Indebtedness. Trustee shall give and record
such notice as the law then requires as a condition precedent to a Trustee's
sale. When the minimum period of time required by law after such notice has
elapsed, Trustee, without notice to or demand upon Borrower except as otherwise
required by law, shall sell the Property at the time and place of sale fixed by
it in the notice of sale, either as a whole or in separate parcels and in such
order as it or Lender may determine, at public auction to the highest bidder for
cash, in lawful money of the United States, payable at time of sale (the
Indebtedness being the equivalent of cash for purposes of said sale). Trustee
may, if so instructed by Lender, postpone sale of all or any portion 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 such time fixed
by the preceding postponement. Trustee shall deliver to the purchaser at such
sale a deed conveying the Property or portion thereof so sold, but without
covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Borrower
or Lender, but not Trustee, may purchase at such sale.
In connection with any sale or sales hereunder, Lender may elect to treat
any of the Property which consists of a right in action or which is Property
that can be severed from the real property covered hereby or any improvements
thereon without causing structural damage thereto as if the same were personal
property, and dispose of some or all of the same in any sequence in accordance
with applicable law, separate and apart from the sale of real property. Sales
hereunder of any personal property only shall be conducted in any manner
permitted by the Commercial Code. Where the Property consists of real property
and personal property located on or within the real property, Lender may elect
in its discretion to dispose of some or all of the real property and some or all
of the personal property together in one sale pursuant to real property law as
permitted by the Commercial Code. Lender shall not be deemed to have elected
irrevocably to proceed as to both real and personal property fixtures unless and
until the particular Property has been actually disposed of pursuant to a
unified sale (judicial or nonjudicial), and then only as to the Property so
sold. Lender shall also have the right, exercisable in its sole discretion, to
proceed in any sequence as to some or all of the real property and personal
property as provided in the Commercial Code and as to other real property and
personal property in accordance with the procedures applicable to real property.
Should Lender elect to sell the Property, or any part thereof which is real
property, or which Lender has elected to treat as real property as provided
above, Lender or Trustee shall give such notice of default and election to sell
as may then be required by law.
After deducting all costs, fees and expenses of Trustee and of this trust,
including cost of evidence of title and attorneys' fees in connection with the
sale, Trustee shall apply the proceeds of sale to payment of (i) all sums so
expended under the terms hereof not then repaid, with accrued interest at the
Default Rate, (ii) the payment of all other sums then secured hereby in such
order as Lender may direct, and (iii) the remainder, if any, to the person or
persons legally entitled thereto.
In the event of any sale whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale, the entire principal of, and interest on, the Note, if
not previously due and payable, and all other sums required to be paid by
Borrower pursuant to this Deed of Trust, immediately thereupon shall, anything
in the Note or in this Deed of Trust to the contrary notwithstanding, become due
and payable.
Limited Liability. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, but without in any manner affecting the
validity of the Note or the lien of this Deed of Trust or any other Security
Document, this Deed of Trust and all of Borrower's obligations hereunder are
subject to the provisions of Paragraph 15 of the Note, which are incorporated
herein by this reference.
ARTICLE V
MISCELLANEOUS
Taxation of Note and Deed of Trust. If, at any time before the Indebtedness
is fully paid, any law be enacted, deducting from the value of said real estate,
for the purposes of taxation, any lien thereon, or revising or changing in any
way the laws now in force for the taxation of deeds of trust or bonds, or the
debts secured hereby, for state or local purposes, or the manner of collection
of such taxes, so as to affect adversely this Deed of Trust or the debt hereby
secured, or the owner and holder thereof in respect thereto, then this Deed of
Trust and the Note hereby secured shall at the option of Lender, upon notice to
Borrower, become due and payable without prepayment premium ninety (90) days
following the giving of such notice. If any such law should be enacted, then to
the extent permitted by such law, Borrower shall have the option of paying to
Lender the amount of any additional cost or taxes to Lender from such law, and
upon demand by Lender, shall pay such taxes or assessments, or reimburse Lender
therefor.
Marshaling of Assets. Borrower on its own behalf and on behalf of its
successors and assigns hereby expressly waives all rights to require a
marshaling of assets by Lender or to require Lender, upon a foreclosure, to
first resort to the sale of any portion of the Property that might have been
retained by Borrower before foreclosing upon and selling any other portion as
may be conveyed by Borrower subject to this Deed of Trust. Borrower hereby
waives and relinquishes any right to designate which portion of the Indebtedness
may be satisfied by a partial payment, whether pursuant to California Civil Code
Section 2822 or otherwise.
Partial Reconveyance. Lender may, without notice, release any person so
liable, extend the maturity or with the consent of Borrower, modify the terms of
any such obligation, or grant other indulgences, release or reconvey or cause to
be released or reconveyed at any time all or any part of the Property described
herein, take or release any other security or make compromises or other
arrangements with debtors. Lender may also accept additional security, either
concurrently herewith or hereafter, and sell the same or otherwise release
thereon either before, concurrently with, or after sale hereunder.
Non-Waiver. (a) By accepting payment of any sum secured hereby after its
due date or altered performance of any obligation secured hereby, Lender shall
not waive its right against any person obligated directly or indirectly
hereunder or with respect to any indebtedness hereby secured, either to require
prompt payment when due of all other sums so secured or to take remedy for
failure to make such prompt payment or full performance (except with respect to
the payment made). No exercise of any right or remedy by Borrower or Lender
hereunder shall constitute a waiver of any other right or remedy herein
contained or provided by law.
No delay or omission of Borrower or Lender in the exercise of any right,
power or remedy accruing hereunder or arising otherwise shall impair any such
right, power or remedy, or be construed to be a waiver of any default or
acquiescence therein.
Receipt of rents, awards, and any other monies or evidences thereof,
pursuant to the Provisions of this Deed of Trust and any disposition of the same
by Trustee or Lender shall not constitute a waiver of the right of foreclosure
by Trustee or Lender in the event of default or failure of performance by
Borrower of any covenant or agreement contained herein or in any note secured
hereby, which default remains uncured at the expiration of the applicable cure
period set forth herein.
Protection of Security. Should Borrower fail to make any payment or to
perform any covenant as herein provided (after the expiration of any applicable
notice and/or cure period), Lender (but without obligation so to do and without
notice (in cases of emergency) to or demand upon Borrower and without releasing
Borrower from, any obligation hereof) may: (a) make or do the same in the manner
and to such extent as Lender may deem necessary to protect the security hereof,
Lender being authorized to enter upon the Property for such purposes; (b)
commence, appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Lender; or (c) pay, purchase,
contest, or compromise any encumbrance, charge or lien which in the reasonable
judgment of Lender is prior or superior hereto and, in exercising any such
power, incur any liability and expend whatever amounts in its reasonable
discretion may deem necessary therefor, including cost of evidence of title and
attorneys' fees. Any expenditures in connection herewith shall constitute an
advance hereunder and shall be repaid in accordance with Section 1.12.
Future Advances Secured. (a) This Deed of Trust secures any and all
advances to be made by Lender to Borrower pursuant to the Additional Funding
Agreement, which advances shall be considered to be mandatory future advances
for the purpose of this Deed of Trust.
Any advances or disbursements made while any Event of Default is continuing
for the benefit or protection of or the payment of taxes, assessments, levies or
insurance upon the Property, with interest on such disbursements as provided
herein, shall be added to the principal balance of the Note and collected as a
part thereof. To the extent that this Deed of Trust may secure more than one
note, a default in the payment of any such note shall constitute a default in
the payment of all such notes.
Rule of Construction. When the identity of the parties hereto or other
circumstances make it appropriate, the masculine gender shall include the
feminine and/or neuter, and the singular number shall include the plural. The
headings of each paragraph are for information and convenience only and do not
limit or construe the contents of any provision hereof. The language in all
parts of this Deed of Trust shall be in all cases construed simply, according to
its fair meaning and not for or against Borrower or Lender, regardless of which
party drafted the particular language which is being construed, both parties
having been represented by adequate counsel. Except as otherwise specifically
indicated, all references in this Deed of Trust to "Articles" or "Sections"
shall be references to the Articles and Sections of this Deed of Trust.
Severability. If any term of this Deed of Trust or the application thereof
to any person or circumstances, shall to any extent, be invalid or
unenforceable, the remainder of this Deed of Trust or the application of such
term to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term of this Deed of
Trust shall be valid and enforceable to the fullest extent permitted by law.
Successors In Interest. This Deed of Trust applies to, inures to the
benefit of, and is binding not only on the parties hereto, but also on their
heirs, executors, administrators, successors and assigns. All obligations of
Borrower hereunder are joint and several. The term "Lender" shall mean the
holder and owner of the Note secured hereby, whether or not named as Lender
herein.
Notices. (a) All notices to be given by Lender to Borrower or by Borrower
to Lender pursuant to the Note secured hereby or under this Deed of Trust shall
be sufficient if mailed either (i) by postage prepaid, U.S. certified mail,
return receipt requested, or (ii) by delivery to a nationally recognized
overnight delivery service, to the following described addresses of the parties
hereto, or to such other address as a party may request in writing:
If to Borrower:
Mission West Properties, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Lender:
Allianz Life Insurance Company of North America
c/o Allianz of America, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
P.O. Box 5160
Westport, Connecticut 06881-5160
Attn: Real Estate Department
If to Trustee:
First American Title Company
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any time period provided in the giving of any notice hereunder shall commence
three (3) business days after the date such notice is deposited in the mail or
upon the date following delivery to said overnight delivery service, as the case
may be.
Borrower hereby requests that a copy of any notice of default under
California Civil Code Section 2924 and that a copy of any notice of sale under
such Code be mailed to the address of Borrower provided herein.
Modifications. This Deed of Trust may not be amended, modified or changed
nor shall any waiver of any provision hereof be effective, except only by an
instrument in writing and signed by the party against whom enforcement of any
waiver, amendment, change, modification or discharge is sought.
Governing Law. This Deed of Trust shall be construed according to and
governed by the Laws of the State of California.
Rights and Remedies of Lender Cumulative. The rights and remedies of Lender
arising under the clauses and covenants contained in this Deed of Trust shall be
separate, distinct and cumulative and none of them shall be in exclusion of the
others; and no act of Lender shall be construed as an election to proceed under
any one provision herein to the exclusion of any other provisions, anything
herein or otherwise to the contrary notwithstanding.
Captions. The captions set forth at the beginning of the various sections
of this Deed of Trust are for convenience only and shall not be used to
interpret or construe the provisions of this Deed of Trust.
IN WITNESS WHEREOF, Borrower has caused this instrument to be signed as of
the date first written above.
MISSION WEST PROPERTIES, L.P.,
a Delaware limited partnership
By: Mission West Properties, Inc.,
a Maryland corporation, General Partner
By: /s/ ▇▇▇▇ ▇ ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇,
Chief Executive Officer