THIS INSTRUMENT WAS PREPARED BY
AND AFTER RECORDING SHOULD BE
RETURNED TO:
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
City of Seattle, Washington
DEED OF TRUST,
WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
THE PARTIES TO THIS DEED OF TRUST, WITH ABSOLUTE
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT,
ASSIGNMENT OF EQUIPMENT LEASES, ASSIGNMENT OF PERMITS
AND FIXTURE FILING ("Deed of Trust"), made as of
December 13, 1996, are PRUDENTIAL-BACHE/EQUITEC REAL
ESTATE PARTNERSHIP, a California limited partnership
("Trustor"), having its chief executive office at c/o
Glenborough Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, 11th
Floor, San Mateo, California 94402, Chicago Title
Insurance Company, a Missouri corporation ("Trustee"),
having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ FARGO BANK,
NATIONAL ASSOCIATION ("Beneficiary"), having an office
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, (as may be modified, amended, supplemented or
restated from time to time the "Deed of Trust").
ARTICLE 1. GRANT IN TRUST
1.1 GRANT. For the purposes of and upon the terms
and conditions in this Deed of Trust, Trustor
irrevocably grants, conveys and assigns to
Trustee, in trust for the benefit of
Beneficiary, with power of sale and right of
entry and possession, all of Trustor's right,
title and interest in all of the real property
located in the City of Seattle, Washington and
described on Exhibit A attached hereto and made
a part hereof, together with all of Trustor's
right, title and interest in all development
rights or credits, air rights, water, water
rights and water stock related to the real
property, and all minerals, oil and gas, and
other hydrocarbon substances in, on or under
the real property, and all appurtenances,
easements, rights and rights of way appurtenant
or related thereto; all streets, roads and
alleys (whether open, proposed or vacated); all
of Trustor's right, title and interest as
lessee under that certain Lease Agreement dated
March 5, 1987, by and between Burlington
Northern Railroad Company ("Ground Lessor"), as
lessor, and Trustor, as lessee, a memorandum of
which was recorded under Recording Number
8801211404 (the "Original Ground Lease") (the
Original Ground Lease as the same may
heretofore have been, or may hereafter be,
amended, restated, modified, supplemented or
extended from time to time, together with any
and all consents of the Ground Lessor to the
encumbrance of the Ground Leased Property (as
hereinafter defined) by this Deed of Trust, are
collectively referred to herein as the "Ground
Lease"), which Ground Lease confers upon
Trustor certain rights to use that certain real
property located adjacent to the real estate in
the City of Seattle, County of King, State of
Washington, and legally described on Exhibit A-1
attached hereto (together with all
improvements, fixtures, appurtenances,
hereditaments, easements, rights-of-way and
other rights or privileges attached, upon,
appurtenant or relating thereto, the "Ground
Leased Property"), together with any after-acquired
right, title and interest of Trustor,
its successors and assigns in and to the Ground
Leased Property (provided, however, that if and
to the extent the Trustor's grant, conveyance
and assignment hereinabove with respect to the
Ground Lease and the Ground Leased Property
only results in a breach of the Ground Lease
because such grant, conveyance and assignment
requires the consent of the Ground Lessor and
such consent has not been given or deemed
given, such grant, conveyance and assignment
shall not be effective (to the extent necessary
to avoid any such breach, such breach not being
intended hereby) unless and until the Ground
Lessor's consent is given or deemed given); all
buildings, other improvements and fixtures now
or hereafter located on the real property,
including, but not limited to, all apparatus,
equipment, and appliances used in the operation
or occupancy of the real property or the Ground
Leased Property, it being intended by the
parties that all such items shall be
conclusively considered to be a part of the
real property, whether or not attached or
affixed to the real property (collectively, the
"Improvements"); all interest or estate which
Trustor may hereafter acquire in the property
described above, and all additions and
accretions thereto, and the proceeds of any of
the foregoing (all of the foregoing being
collectively referred to as the "Subject
Property"). The listing of specific rights or
property shall not be interpreted as a limit of
general terms.
1
1.2 NON-AGRICULTURAL USE. Trustor represents and
warrants to Beneficiary and Trustee that the
Subject Property is not used principally for
agricultural or farming purposes.
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Trustor makes this grant
and assignment for the purpose of securing the
following obligations ("Secured Obligations"):
(a) Payment to Beneficiary of all sums at any
time owing under that certain Amended,
Restated and Consolidated Promissory Note,
of even date herewith, in the aggregate
principal amount of Twenty-Six Million Six
Hundred Fifty Thousand and No/100 Dollars
($26,650,000.00), executed by Trustor and
Montrose Office Park Joint Venture, a
Maryland joint venture ("Co-Borrower";
Trustor and Co-Borrower collectively,
"Borrowers") and payable to the order of
Beneficiary (as may be modified, amended,
supplemented, replaced or restated from
time to time, the "Note"); and
(b) Payment and performance of all covenants
and obligations of Trustor under this Deed
of Trust; and
(c) Payment and performance of all covenants
and obligations on the part of Trustor
under that certain Loan Agreement, of even
date herewith, by and between Trustor and
Co-Borrower and Beneficiary (as may be
modified, amended, supplemented or
restated from time to time, the "Loan
Agreement") (capitalized terms used herein
but not defined herein shall have the
meaning provided for such terms in the
Loan Agreement); and
(d) Payment and performance of all covenants
and obligations on the part of each of the
Borrowers under all of the Loan Documents;
and
(e) Payment and performance of all future
advances and other obligations that the
then record owner of all or part of the
Subject Property may agree to pay and/or
perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary,
when such future advance or obligation is
evidenced by a writing which recites that
it is secured by this Deed of Trust; and
3
(f) All modifications, extensions and renewals
of any of the obligations secured hereby,
however evidenced, including, without
limitation: (i) modifications of the
required principal payment dates or
interest payment dates or both, as the
case may be, deferring or accelerating
payment dates wholly or partly; and (ii)
modifications, extensions or renewals at a
different rate of interest whether or not
in the case of the Note, the modification,
extension or renewal is evidenced by a new
or additional promissory note or notes.
2.2 OBLIGATIONS. The term "obligations" is used
herein in its broadest and most comprehensive
sense and shall be deemed to include, without
limitation, all protective advances and all
sums advanced to protect the Subject Property
or the lien of this Deed of Trust or otherwise
disbursed or incurred under the terms of the
Loan Documents, all interest and charges,
prepayment charges (if any), late charges and
loan fees at any time accruing or assessed on
any of the Secured Obligations; provided,
however, that the terms "obligations" and
"Secured Obligations" as used herein shall in
no event include any obligations arising under
the Guaranty or the Hazardous Materials
Indemnity.
2.3 INCORPORATION. All terms of the Secured
Obligations and the documents evidencing such
obligations are incorporated herein by this
reference. All persons who may have or acquire
an interest in the Subject Property shall be
deemed to have notice of the terms of the
Secured Obligations and to have notice that the
rate of interest on one or more Secured
Obligations may vary from time to time.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Trustor hereby irrevocably assigns
to Beneficiary all of Trustor's right, title
and interest in, to and under: (a) all leases
of the Subject Property or any portion thereof,
and all other agreements of any kind relating
to the use or occupancy of the Subject Property
or any portion thereof, whether now existing or
entered into after the date hereof ("Leases");
and (b) the rents, issues, deposits, profits
and revenues of the Subject Property and the
operations conducted thereon, including,
without limitation, all amounts payable and all
rights and benefits accruing to Trustor under
the Leases ("Payments"). The term "Leases"
shall also include all guarantees of and
security for the lessees' performance
thereunder, and all amendments, extensions,
renewals or
4
modifications thereto which are
permitted hereunder. This is a present and
absolute assignment, not an assignment for
security purposes only, and Beneficiary's right
to the Leases and Payments is not contingent
upon, and may be exercised without possession
of, the Subject Property, and without the
commencement of a foreclosure action or the
appointment of a receiver. Furthermore, upon
any Default, Beneficiary shall be entitled to
receive pursuant to the foregoing assignment,
and Trustor shall be obligated to deliver to
Beneficiary or its designee (including any
receiver), any and all Payments collected by
Trustor which remain in the possession or
control of Trustor, whether or not commingled
with other funds or Trustor, and whether
collected by Trustor before or after the
occurrence of the Default.
3.2 GRANT OF LICENSE. Beneficiary confers upon
Trustor a license ("License") to collect and
retain the Payments as they become due and
payable, until the occurrence of a Default.
Upon a Default, the License shall be
automatically revoked and Beneficiary may
collect and apply the Payments pursuant to
Section 6.4 without notice and without taking
possession of the Subject Property. Trustor
hereby irrevocably authorizes and directs the
lessees under the Leases to rely upon and
comply with any notice or demand by Beneficiary
for the payment to Beneficiary of any rental or
other sums which may at any time become due
under the Leases, or for the performance of any
of the lessees' undertakings under the Leases,
and the lessees shall have no right or duty to
inquire as to whether any Default has actually
occurred or is then existing hereunder.
Trustor hereby relieves the lessees from any
liability to Trustor by reason of relying upon
and complying with any such notice or demand by
Beneficiary.
3.3 EFFECT OF ASSIGNMENT. The foregoing
irrevocable assignment shall (in and of itself)
not cause Beneficiary to be: (a) a mortgagee
in possession; (b) responsible or liable for
the control, care, management or repair of the
Subject Property or for performing any of the
terms, agreements, undertakings, obligations,
representations, warranties, covenants and
conditions of the Leases; (c) responsible or
liable for any waste committed on the Subject
Property by the lessees under any of the Leases
or any other parties; (d) responsible or liable
for any dangerous or defective condition of the
Subject Property; or (e) responsible or liable
for any negligence in the management, upkeep,
repair or control of the Subject Property
resulting in loss or injury or death to any
lessee, licensee, employee, invitee or other
person. Beneficiary shall not
5
directly or indirectly be liable to Trustor or any
other person as a consequence of: (i) the exercise
or failure to exercise any of the rights,
remedies or powers granted to Beneficiary
hereunder; or (ii) the failure or refusal of
Beneficiary to perform or discharge any
obligation, duty or liability of Trustor
arising under the Leases.
3.4 COVENANTS. Trustor covenants and agrees at
Trustor's sole cost and expense to: (a)
perform the obligations of lessor contained in
the Leases and enforce by all available
remedies performance by the lessees of the
obligations of the lessees contained in the
Leases; (b) deliver to Beneficiary fully
executed, counterpart original(s) of each and
every Lease if requested to do so; and (c)
execute and record (or cause to be executed and
recorded) such additional assignments of any
Lease or specific subordinations of any Lease
to this Deed of Trust, in form and substance
acceptable to Beneficiary, as Beneficiary may
reasonably request. Trustor shall not, without
Beneficiary's prior written consent or as
otherwise permitted by any provision of the
Loan Agreement or as otherwise permitted above:
(i) execute any other assignment relating to
any of the Leases; (ii) discount any rent or
other sums due under the Leases or collect the
same in advance, other than to collect rent one
(1) month in advance of the time when it
becomes due; (iii) modify, amend (if such
modification or amendment would result in the
Lease being less favorable to Trustor or
Beneficiary than presently existing) or
terminate any of the Leases or in any manner
release or discharge the lessees from any
obligations thereunder; (iv) consent to any
assignment or subletting by any lessee; or (v)
subordinate or agree to subordinate any of the
Leases to any other deed of trust or encumbrance.
Any such attempted action in violation
of the provisions of this Section 3.4 shall be
null and void.
3.5 ESTOPPEL CERTIFICATES. Within thirty (30) days
after request by Beneficiary, Trustor shall use
its reasonable efforts to deliver to
Beneficiary and to any party designated by
Beneficiary estoppel certificates executed by
Trustor and by the lessees, certifying: (i)
that the foregoing assignment and the Leases
are in full force and effect; (ii) the date of
each lessee's most recent payment of rent;
(iii) that there are no defenses or offsets
outstanding, or stating those claimed by
Trustor or the lessees under said Leases; (iv)
that no default exists under any of the Leases
and no condition exists that after the giving
of notice, the passage of time or both would
constitute a default
6
under any of the Leases; and (v) any other information
reasonably requested by Beneficiary.
ARTICLE 4. SECURITY AGREEMENT, ASSIGNMENT OF EQUIPMENT LEASES,
ASSIGNMENT OF PERMITS AND FIXTURE FILING
4.1 SECURITY INTEREST. Trustor hereby grants and
assigns to Beneficiary, as of the Effective
Date, a security interest, to secure payment
and performance of all of the Secured
Obligations, in all of the following described
personal property in which Trustor now or at
any time hereafter has any interest
(collectively, the "Collateral"):
All goods, building and other
materials, supplies, work in process,
equipment, machinery, fixtures,
furniture, furnishings, signs and
other personal property, wherever
situated, which are or are to be
incorporated into, used in connection
with, or appropriated for use on the
real property described on Exhibit A
attached hereto and incorporated by
reference herein (to the extent the
same are not effectively made a part
of the real property pursuant to
Section 1.1 above); together with all
rents, issues, deposits and profits of
the Subject Property; all inventory,
accounts, cash receipts, deposit
accounts, accounts receivable,
contract rights, general intangibles,
judgments, chattel paper, instruments,
documents, notes, drafts, letters of
credit, insurance policies, insurance
and condemnation awards and proceeds,
any other rights to the payment of
money, trade names, trademarks and
service marks arising from or related
to the Subject Property or any
business now or hereafter conducted
thereon by Trustor; subject to Section
4.8, all permits, consents, approvals,
licenses, authorizations and other
rights granted by, given by or
obtained from, any governmental entity
with respect to the Subject Property;
all deposits or other security now or
hereafter made with or given to
utility companies by Trustor with
respect to the Subject Property; all
advance payments of insurance premiums
made by Trustor with respect to the
Subject Property; all plans, drawings
and specifications relating to the
Subject Property; all loan funds held
by Beneficiary, whether or not
disbursed; all funds deposited
7
with Beneficiary pursuant to any loan
agreement or any other document or
right of Beneficiary; all reserves,
deferred payments, deposits, accounts,
refunds, cost savings and payments of
any kind related to the Subject
Property or any portion thereof; all
other items of personal property (of
whatever kind or nature) used in the
operation of the Subject Property; all
of the rights and interest of Trustor
in and under all management
agreements, franchise agreements and
leasing agreements affecting all or
any portion of the Subject Property;
all of the rights and interest of
Trustor in and to those accounts that
have been (or may hereafter be)
established with Beneficiary; all of
the rights and interest of Trustor in
and to any interest rate protection
agreement that may have been (or may
hereafter be) entered into by Trustor
in connection with the Loan; all
rents, revenues, issues, profits and
income generated from the operation of
the Subject Property; subject to
Section 4.7, all rights of Trustor as
lessee under all chattel leases
relating to furniture, fixtures,
equipment or any other item used in
connection with the operation of the
Subject Property; together with all
replacements and proceeds of, and
additions and accessions to, any of
the foregoing; together with all
books, records and files relating to
any of the foregoing.
As to all of the above described personal
property which is or which hereafter becomes a
"fixture" under applicable law, this Deed of
Trust constitutes a fixture filing under the
Washington Uniform Commercial Code, as amended
or recodified from time to time ("UCC").
4.2 REPRESENTATIONS AND WARRANTIES. Trustor
represents and warrants that (subject to the
Permitted Encumbrances): (a) Trustor has good
title to the Collateral; and (b) Trustor has
not previously assigned or encumbered the
Collateral, and no financing statement covering
any of the Collateral has been delivered by
Trustor to any other person or entity.
4.3 RIGHTS OF BENEFICIARY. In addition to
Beneficiary's rights as a "Secured Party" under
the UCC, Beneficiary may, but shall not be
obligated to, at any time without notice
(except as provided below) and at the expense
of Trustor: (a) give notice to any person of
Beneficiary's
8
rights hereunder and enforce such
rights at law or in equity; (b) insure,
protect, defend and preserve the Collateral or
any rights or interests of Beneficiary therein;
and (c) inspect the Collateral at reasonable
times and upon reasonable prior notice.
Notwithstanding the above, in no event shall
Beneficiary be deemed to have accepted any
property other than cash in satisfaction of any
obligation of Trustor to Beneficiary unless
Beneficiary shall make an express written
election of said remedy under the UCC, or other
applicable law.
4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the
occurrence of a Default, in addition to all of
Beneficiary's rights as a "Secured Party" under
the UCC or otherwise at law:
(a) Beneficiary may (i) upon written notice,
require Trustor to assemble any or all of
the Collateral and make it available to
Beneficiary at a place designated by
Beneficiary; (ii) without prior notice,
enter upon the Subject Property or other
place where any of the Collateral may be
located and take possession of, collect,
sell, and dispose of any or all of the
Collateral, and store the same at
locations acceptable to Beneficiary at
Trustor's expense; and (iii) sell, assign
and deliver at any place or in any lawful
manner all or any part of the Collateral
and bid and become purchaser at any such
sales; and
(b) Beneficiary may, for the account of
Trustor and at Trustor's expense: (i)
operate, use, consume, sell or dispose of
the Collateral as Beneficiary deems
appropriate for the purpose of performing
any or all of the Secured Obligations;
(ii) enter into any agreement, compromise,
or settlement, including insurance claims,
which Beneficiary may deem desirable or
proper with respect to any of the
Collateral; (iii) endorse, collect and
receive any right to payment of money
owing to Trustor under or from the
Collateral; and (iv) endorse and deliver
evidences of title for, and receive,
enforce and collect by legal action or
otherwise, all indebtedness and
obligations now or hereafter owing to
Trustor in connection with or on account
of any or all of the Collateral.
Trustor acknowledges and agrees that a
disposition of the Collateral in accordance
with Beneficiary's rights and remedies as
heretofore provided is a disposition thereof in
a commercially reasonable manner and that
9
five (5) days prior notice of such disposition is
commercially reasonable notice.
4.5 POWER OF ATTORNEY. Trustor hereby irrevocably
appoints Beneficiary as Trustor's
attorney-in-fact (such agency being coupled
with an interest), and as such attorney-in-fact
Beneficiary may, without the obligation to do
so, in Beneficiary's name, or in the name of
Trustor, prepare, execute and file or record
financing statements, continuation statements,
applications for registration and like papers
necessary to create, perfect or preserve any of
Beneficiary's security interests and rights in
or to any of the Collateral, and, upon a
Default hereunder, take any other action
required of Trustor; provided, however, that
Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually
received by Beneficiary.
4.6 POSSESSION AND USE OF COLLATERAL. Except as
otherwise provided in this Article or in the
other Loan Documents, so long as no Default
exists under this Deed of Trust or any of the
Loan Documents, Trustor may possess, use, move,
transfer or dispose of any of the Collateral in
the ordinary course of Trustor's business and
in accordance with the Loan Agreement.
4.7 ASSIGNMENT OF EQUIPMENT LEASES. To secure the
payment and performance of the Secured
Obligations, Trustor (to the extent assignable)
hereby sells, assigns, grants, transfers and
sets over to Beneficiary all of Trustor's
right, title and interest in and to the
Equipment Leases relating to the Subject
Property and in and to the furniture, fixtures,
equipment and other items (herein called the
"Leased Equipment") and any rights to acquire
the Leased Equipment as set forth in the
Equipment Leases relating thereto, or
otherwise, and any and all extensions and
renewals thereof and any and all substitutions
therefor. Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due and promptly perform all covenants and
obligations required of the lessee under each
Equipment Lease, including, to the extent
required by the lessor under any Equipment
Lease, keeping the Leased Equipment in good
condition and repair, and making all necessary
replacements or renewals thereof. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Equipment Lease,
including, but not limited to, the payment of
rent, until such time as Beneficiary takes
actual possession
10
of the Leased Equipment and the Subject Property.
So long as there shall exist no Default,
Beneficiary shall not demand from the
lessor under any Equipment Lease any
rights of Trustor thereunder, nor shall
Beneficiary be entitled to the use and
possession of the Leased Equipment. Upon or at
any time after a Default, Trustor agrees to
turn over and give up possession of the Leased
Equipment to Beneficiary at the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, manage and operate the Leased
Equipment, and in connection therewith: (x)
Beneficiary may make, cancel, enforce or modify
any Equipment Lease, repair, maintain and
improve the Leased Equipment, employ agents,
attorneys and accountants in connection with
the enforcement of Beneficiary's rights
hereunder and pay the reasonable fees and
expenses thereof, and otherwise do and perform
any and all acts and things which Beneficiary
may deem necessary or appropriate in the
protection of the Leased Equipment or the
enforcement of Beneficiary's rights hereunder
or under the Loan Agreement or any other Loan
Document; and any and all amounts expended by
Beneficiary in connection with the exercise of
any rights granted under this Section 4.7 shall
constitute additional Secured Obligations
secured by this Deed of Trust; (y) the entering
upon the Subject Property and taking possession
of the Leased Equipment and the exercise of any
of the rights hereinabove specified shall not
cure, waive, modify or affect any Default
hereunder or under the Loan Agreement or any
other Loan Document; and (z) Beneficiary may
acquire the Leased Equipment in accordance with
the provisions of any Equipment Lease. Except
as otherwise permitted hereunder and except for
amendments that do not result in an Equipment
Lease being less favorable to Trustor or
Beneficiary, Trustor shall keep each Equipment
Lease in full force and effect and will not
modify, change, alter, supplement or amend any
Equipment Lease. Trustor hereby warrants and
represents that, with respect to each of the
Equipment Leases, the execution and delivery of
this Deed of Trust (and the performance of
Trustor's obligations hereunder) do not cause
or create a default under any Equipment Lease,
a right to terminate any Equipment Lease or any
other event that after the giving of notice,
the passage of time or both could constitute a
default (or provide the lessor under an
Equipment Lease with a right to terminate). At
the request of Beneficiary, Trustor shall cause
this Deed of Trust to be served upon the lessor
under any
11
Equipment Lease and shall use
reasonable efforts to cause such lessor to
acknowledge receipt of such notice. Without
limiting anything herein contained, this Deed
of Trust shall vest in Beneficiary a security
interest in each Equipment Lease and Trustor's
interest in the Leased Equipment (subject to
the ownership and security interest in the
Leased Equipment of lessor, as provided for in
the Equipment Lease). The Equipment Leases and
Leased Equipment shall constitute "Collateral"
hereunder.
4.8 ASSIGNMENT OF PERMITS. To secure the payment
and performance of the Secured Obligations,
Trustor hereby sells, assigns, grants,
transfers and sets over to Beneficiary all of
Trustor's right, title and interest in and to
all Required Permits now or hereafter in
effect, but only to the extent that the
Required Permits may be lawfully assigned; and
any and all substitutions therefor (and said
Required Permits shall constitute "Collateral"
hereunder). Trustor will, from time to time,
execute upon request of the Beneficiary, any
and all reasonable instruments requested by
Beneficiary to carry this instrument into
effect. Trustor agrees to pay all sums when
due under each Required Permit relating to the
Subject Property and promptly perform all
covenants and obligations required of the
licensee or permittee, as the case may be,
under each such Required Permit. Beneficiary
shall not be responsible for or liable upon any
of the agreements, undertakings or obligations
imposed upon Trustor under any Required Permit,
including, but not limited to, the payment of
fees, until such time as Beneficiary takes
actual possession of the Subject Property and
the Required Permits relating thereto. Upon or
at any time after a Default, Trustor agrees (to
the extent not prohibited by law) to turn over
and give up possession of the assignable
Required Permits relating to the Subject
Property, and Beneficiary may without notice,
either in person or by agent, with or without
bringing any action or proceeding, or by a
receiver to be appointed by a court or to the
extent permitted under the terms of this Deed
of Trust, enter upon the Subject Property, take
possession of, and manage and operate the
Subject Property; and in connection therewith:
(x) Beneficiary may make, cancel, enforce or
modify any Required Permit relating to the
Subject Property or cause the same to be issued
or reissued in its own name or the name of its
designee or operator of the Subject Property or
receiver, and otherwise do and perform any and
all acts and things which Beneficiary may deem
necessary or appropriate in the protection of
such Required Permits or the enforcement of
Beneficiary's rights hereunder or under the
Loan Agreement or any
12
other Loan Document; and
any and all amounts expended by Beneficiary in
connection with the foregoing shall constitute
additional Secured Obligations secured by this
Deed of Trust; and (y) the entering upon the
Subject Property and taking possession of the
same and the operation thereof under the
assignable Required Permits relating thereto,
and the exercise of any of the rights
hereinabove specified shall not cure, waive,
modify or affect any Default hereunder or under
the Loan Agreement or any other Loan Document.
Trustor shall keep each Required Permit
relating to the Subject Property in full force
and effect and will renew the same prior to
expiration and pay all fees in connection
therewith. Trustor hereby warrants and
represents that with respect to each Required
Permit relating to the Subject Property, the
execution and delivery of this Deed of Trust
(and the performance of Trustor's obligations
hereunder) do not cause or create (1) a default
with respect to any such Required Permit, (2) a
right to terminate or revoke any such Required
Permit or (3) any other event that after the
giving of notice, the passage of time or both
could constitute a default (or give rise to a
right to terminate). At the request of
Beneficiary, Trustor shall cause this Deed of
Trust to be served upon the issuer of each
assignable Required Permit relating to the
Subject Property and shall use its best efforts
to cause such issuer to acknowledge receipt of
such notice. Without limiting anything
contained herein, this Deed of Trust shall vest
in Beneficiary a security interest in each such
assignable Required Permit.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 TITLE. Trustor represents and warrants that,
except as disclosed to Beneficiary in a writing
which refers to this warranty and except for
the Permitted Encumbrances, Trustor lawfully
holds and possesses fee simple title to the
Subject Property without limitation on the
right to encumber, and that this Deed of Trust
is a first and prior lien on the Subject
Property.
5.2 TAXES AND ASSESSMENTS. Subject to Section 7.3
of the Loan Agreement, Trustor shall pay prior
to delinquency, all taxes, assessments, levies
and charges imposed by any public or
quasi-public authority or utility company which
are or which may become a lien upon or cause a
loss in value of the Subject Property or any
interest therein. Trustor shall also pay prior
to delinquency all taxes, assessments, levies
and charges imposed by any public authority
upon Beneficiary by reason of its interest in
any Secured Obligation or in the Subject
13
Property, or by reason of any payment made to
Beneficiary pursuant to any Secured Obligation;
provided, however, Trustor shall have no
obligation to pay taxes which may be imposed
from time to time upon Beneficiary and which
are measured by and imposed upon Beneficiary's
capital or net income.
5.3 TAX AND INSURANCE IMPOUNDS. At Beneficiary's
election and demand, Trustor shall, until all
Secured Obligations have been paid in full, pay
to Beneficiary monthly, annually or as
otherwise directed by Beneficiary an amount
estimated by Beneficiary to be equal to: (i)
all taxes, assessments and levies imposed by
any public or quasi-public authority or utility
company which are or may become a lien upon the
Subject Property and will become due for the
tax year during which such payment is so
directed; and (ii) premiums for fire and other
hazard insurance next due. If Beneficiary
determines that any amounts paid by Trustor are
insufficient for the payment in full of such
taxes, assessments, levies and/or insurance
premiums, Beneficiary shall notify Trustor of
the increased amounts required to pay all
amounts due, whereupon Trustor shall pay to
Beneficiary within thirty (30) days thereafter
the additional amount as stated in
Beneficiary's notice. All sums so paid shall
earn interest at the rate then paid on current
market rate accounts maintained with
Beneficiary. The funds deposited with
Beneficiary may be commingled by Beneficiary
with its general funds. Beneficiary shall,
unless Trustor is otherwise in Default
hereunder or under any Secured Obligation,
apply said funds to the payment of, or at the
sole option of Beneficiary release said funds
to Trustor for the application to and payment
of, such sums, taxes, assessments, levies,
charges, and insurance premiums. Upon Default
by Trustor hereunder or under any Secured
Obligation, Beneficiary may apply all or any
part of said sums to any Secured Obligation
and/or to cure such Default, in which event
Trustor shall be required to restore all
amounts so applied, as well as to cure any
other events or conditions of Default not cured
by such application. Upon assignment of this
Deed of Trust, Beneficiary shall have the right
to assign all amounts collected and in its
possession to its assignee whereupon
Beneficiary shall be released from all
liability with respect thereto. Within ninety-five
(95) days following full repayment of the
Secured Obligations (other than full repayment
of the Secured Obligations as a consequence of
a foreclosure or conveyance in lieu of
foreclosure of the liens and security interests
securing the Secured Obligations) or at such
earlier time as Beneficiary may elect, the
balance of all
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amounts collected and in Beneficiary's possession shall
be paid to Trustor and no other party shall have any
right or claim thereto.
5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor
shall promptly pay and perform each Secured
Obligation when due.
5.5 LIENS, ENCUMBRANCES AND CHARGES. Subject to
Section 7.3 of the Loan Agreement, Trustor
shall immediately discharge any lien not
approved by Beneficiary in writing that has or
may attain priority over this Deed of Trust.
Subject to Section 7.3 of the Loan Agreement,
Trustor shall pay when due all obligations
secured by or reducible to liens and
encumbrances which shall now or hereafter
encumber or appear to encumber all or any part
of the Subject Property or any interest
therein, whether senior or subordinate hereto.
5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS.
All insurance and condemnation proceeds shall
be paid and applied in accordance with the
terms contained in the Loan Agreement.
5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT
PROPERTY. Subject to the provisions of the
Loan Agreement, Trustor covenants:
(a) to maintain the insurance provided for in
the Loan Agreement, and to comply with the
requirements of any insurance companies
insuring the Subject Property; provided,
however, neither Beneficiary nor Trustee,
by reason of accepting, rejecting,
approving or obtaining insurance shall
incur any liability for (x) the existence,
nonexistence, form or legal sufficiency of
any insurance, (y) the solvency of any
insurer, or (z) the payment of claims;
(b) to keep the Subject Property in good
condition and repair, reasonable wear and
tear excepted;
(c) except as otherwise permitted under the
Loan Documents, not to remove or demolish
the Subject Property or any part thereof,
not to alter, restore or add to the
Subject Property and not to initiate or
acquiesce in any change in any zoning or
other land classification which affects
the Subject Property without Beneficiary's
prior written consent (which consent shall
not be unreasonably withheld or delayed);
15
(d) to complete or restore promptly and in
good and workmanlike manner the Subject
Property, or any part thereof which may be
damaged or destroyed, without regard to
whether Beneficiary elects to require that
insurance proceeds be used to reduce the
Secured Obligations as provided in the
Loan Agreement;
(e) to comply with all laws, ordinances,
regulations and standards, and all
covenants, conditions, restrictions and
equitable servitudes, whether public or
private, of every kind and character which
affect the Subject Property and pertain to
acts committed or conditions existing
thereon, including, without limitation,
any work, alteration, improvement or
demolition mandated by such laws,
covenants or requirements;
(f) not to commit or permit waste of the
Subject Property; and
(g) to do all other acts which from the
character or use of the Subject Property
may be necessary to maintain and preserve
its value.
5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND
ACTIONS. At Trustor's sole expense, Trustor
shall protect, preserve and defend the Subject
Property and title to and right of possession
of the Subject Property, the security hereof
and the rights and powers of Beneficiary and
Trustee hereunder against all adverse claims.
5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF
TRUSTEE. Trustee accepts this trust when this
Deed of Trust is recorded. From time to time
upon written request of Beneficiary and presentation
of this Deed of Trust or a certified
copy thereof for endorsement, and without
affecting the personal liability of any person
for payment of any indebtedness or performance
of any obligations secured hereby, Trustee may,
without liability therefor and without notice:
(i) release all or any part of the Subject
Property from the lien of this Deed of Trust;
(ii) consent to the making of any map or plat
thereof; and (iii) join in any grant of
easement thereon, any declaration of covenants
and restrictions, or any extension agreement or
any agreement subordinating the lien or charge
of this Deed of Trust. Except as may be
required by applicable law, Trustee or
Beneficiary may from time to time apply to any
court of competent jurisdiction for aid and
direction in the execution of the trust
hereunder and the enforcement of the rights and
remedies available hereunder, and may obtain
orders or decrees directing
16
or confirming or approving acts in the execution
of said trust and the enforcement of said remedies.
Trustee has no obligation to notify any party of any
pending sale or any action or proceeding,
including, without limitation, actions in which
Trustor, Beneficiary or Trustee shall be a
party unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee
shall not be obligated to perform any act
required of it hereunder unless the performance
of the act is requested in writing and Trustee
is reasonably indemnified and held harmless
against loss, cost, liability or expense.
5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION.
(a) Trustor shall pay Trustee's fees and
reimburse Trustee and Beneficiary for
expenses in the administration of this
trust, including attorneys' fees.
Beneficiary shall not directly or
indirectly be liable to Trustor or any
other person as a consequence of (i) the
exercise of the rights, remedies or powers
granted to Beneficiary in this Deed of
Trust (unless the loss is caused by the
gross negligence or willful misconduct of
Beneficiary); (ii) the failure or refusal
of Beneficiary to perform or discharge any
obligation or liability of Trustor under
any agreement related to the Subject
Property or under this Deed of Trust; or
(iii) any loss sustained by Trustor or any
third party resulting from Beneficiary's
failure to lease the Subject Property
after a Default or from any other act or
omission of Beneficiary in managing the
Subject Property after a Default (unless
the loss is caused by the gross negligence
or willful misconduct of Beneficiary) and
no such liability shall be asserted
against or imposed upon Beneficiary, and
all such liability is hereby expressly
waived and released by Trustor.
(b) Trustor indemnifies Trustee and
Beneficiary against, and holds Trustee and
Beneficiary harmless from, all losses,
damages, liabilities, claims, causes of
action, judgments, court costs, reasonable
attorneys' fees and other legal expenses,
cost of evidence of title, cost of
evidence of value, and other expenses
which either may suffer or incur: (i) by
reason of this Deed of Trust; (ii) by
reason of the execution of this trust or
in performance of any act required or
permitted hereunder or by law; (iii) as a
result of any failure of Trustor to
perform Trustor's obligations hereunder or
under any other Loan
17
Documents; or (iv) by
reason of any alleged obligation or
undertaking on Beneficiary's part to
perform or discharge any of the
representations, warranties, conditions,
covenants or other obligations contained
in any other document related to the
Subject Property. The above obligation of
Trustor to indemnify and hold harmless
Trustee and Beneficiary shall survive the
release and cancellation of the Secured
Obligations and the release and
reconveyance or partial release and
reconveyance of this Deed of Trust.
(c) Trustor shall pay all amounts and
indebtedness arising under this Section
5.10 immediately upon demand by Trustee or
Beneficiary together with interest thereon
from the date the indebtedness arises at
the rate of interest then applicable to
the principal balance of the Note as
specified therein.
5.11 PROHIBITION OF TRANSFER OF SUBJECT
PROPERTY OR INTERESTS IN TRUSTOR. Trustor
acknowledges that Beneficiary has relied
upon the principals of Trustor and Co-Borrower
and their experience in owning
and operating properties similar to the
Subject Property in connection with the
closing of the Loan. Accordingly, except
with the prior written consent of
Beneficiary or as otherwise expressly
permitted in the Note, Trustor shall not
cause or permit any sale, exchange,
mortgage, pledge, hypothecation,
assignment, encumbrance or other transfer,
conveyance or disposition, whether
voluntarily, involuntarily, conditionally,
unconditionally or by operation of law
("Transfer") of all or any part of, or all
or any direct or indirect interest in, the
Subject Property or the Collateral (except
for equipment and inventory in the
ordinary course of its business), or cause
or permit a Transfer of any direct or
indirect interest (whether general or
limited partnership interest, stock,
limited liability company interest, trust,
or otherwise) in Trustor or Co-Borrower.
In the event of any Transfer that is not
expressly permitted in the Note and is
without the prior written consent of
Beneficiary, Beneficiary shall have the
absolute right at its option, without
prior demand or notice, to declare all of
the Secured Obligations immediately due
and payable, except to the extent
prohibited by law, and pursue its rights
and remedies under Section 6.2 herein.
Trustor agrees to pay any prepayment fee
as set forth in the Note in the event the
Secured Obligations are accelerated
pursuant to the terms of this Section.
Consent to one such Transfer shall not be
deemed to be a waiver of the
18
right to require the consent to future or successive
Transfers.
5.12 RELEASES, EXTENSIONS, MODIFICATIONS AND
ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any
persons or entities having any interest at
any time in the Subject Property or in any
manner obligated under the Secured
Obligations ("Interested Parties"),
Beneficiary may, from time to time,
release any person or entity from
liability for the payment or performance
of any Secured Obligation, take any action
or make any agreement extending the
maturity or otherwise altering the terms
or increasing the amount of any Secured
Obligation, or accept additional security
or release all or a portion of the Subject
Property and other security for the
Secured Obligations. None of the
foregoing actions shall release or reduce
the personal liability of any of said
Interested Parties, or release or impair
the priority of the lien of this Deed of
Trust upon the Subject Property.
5.13 RECONVEYANCE. Upon Beneficiary's written
request, and upon surrender to Trustee for
cancellation of this Deed of Trust or a
certified copy thereof, Trustee shall
reconvey or release, without warranty, the
Subject Property or that portion thereof
then held hereunder. To the extent
permitted by law, the reconveyance or
release may describe the grantee as "the
person or persons legally entitled
thereto" and the recitals of any matters
or facts in any reconveyance or release
executed hereunder shall be conclusive
proof of the truthfulness thereof.
Neither Beneficiary nor Trustee shall have
any duty to determine the rights of
persons claiming to be rightful grantees
of any reconveyance or release. When the
Subject Property has been fully reconveyed
or released, the last such reconveyance or
release shall operate as a reassignment of
all future rents, issues and profits of
the Subject Property to the person or
persons legally entitled thereto.
5.14 SUBROGATION. Beneficiary shall be
subrogated to the lien of all
encumbrances, whether released of record
or not, paid in whole or in part by
Beneficiary pursuant to this Deed of Trust
or by the proceeds of any loan secured by
this Deed of Trust.
5.15 RIGHT OF INSPECTION. Beneficiary, its
agents and employees, may enter the
Subject Property at any reasonable time,
upon reasonable advance notice, for the
purpose of inspecting the Subject Property
and
19
ascertaining Trustor's compliance with the terms
hereof.
5.16 SUBSTITUTION OF TRUSTEES. From time to
time, by a writing, signed and
acknowledged by Beneficiary and recorded
in the Office of the Recorder of the
County in which the Subject Property is
situated, Beneficiary may appoint another
trustee to act in the place and stead of
Trustee or any successor. Such writing
shall set forth any information required
by law. The recordation of such
instrument of substitution shall discharge
Trustee herein named and shall appoint the
new trustee as the trustee hereunder with
the same effect as if originally named
Trustee herein. A writing recorded
pursuant to the provisions of this Section
5.16 shall be conclusive proof of the
proper substitution of such new Trustee.
5.17 HAZARDOUS MATERIALS. Without limiting any
other provision of this Deed of Trust,
Trustor agrees as follows:
(a) Prohibited Activities. Trustor shall not
cause or permit the Subject Property to be
used as a site for the use, generation,
manufacture, storage, treatment, release,
discharge, disposal, transportation or
presence of any Hazardous Materials. The
foregoing to the contrary notwithstanding:
(i) Trustor may store, maintain and use on
the Subject Property janitorial and
maintenance supplies, paint and other
Hazardous Materials of a type and in a
quantity readily available for purchase by
the general public and normally stored,
maintained and used by owners and managers
of properties of a type similar to the
Subject Property; and (ii) tenants of the
Subject Property may store, maintain and
use on the Subject Property (and, if any
tenant is a retail business, hold in
inventory and sell in the ordinary course
of such tenant's business) Hazardous
Materials of a type and quantity readily
available for purchase by the general
public and normally stored, maintained and
used (and, if tenant is a retail business,
sold) by tenants in similar lines of
business on properties similar to the
Subject Property.
(b) Hazardous Materials Laws. Trustor shall
comply and cause the Subject Property to
comply with all Hazardous Materials Laws.
(c) Notices. Trustor shall immediately notify
Beneficiary in writing of: (i) the
discovery of
20
any Hazardous Materials on,
under or about the Subject Property (other
than Hazardous Materials permitted under
Section 6.2 (a)); (ii) any knowledge by
Trustor that the Subject Property does not
comply with any Hazardous Materials Laws;
and (iii) any Hazardous Materials Claims
pending or threatened against Trustor or
the Subject Property by any governmental
entity or agency or any other person or
entity relating to Hazardous Materials or
pursuant to the Hazardous Materials Laws.
(d) Remedial Action. In response to the
presence of any Hazardous Materials on,
under or about the Subject Property,
Trustor shall immediately take, at
Trustor's sole expense, all remedial
action required by any Hazardous Materials
Laws or any judgment, consent decree,
settlement or compromise in respect to any
Hazardous Materials Claims.
(e) Inspection By Beneficiary. Upon
reasonable prior notice to Trustor,
Beneficiary, its employees and agents, may
from time to time (whether before or after
the commencement of a nonjudicial or
judicial foreclosure proceeding), enter
and inspect the Subject Property for the
purpose of determining the existence,
location, nature and magnitude of any past
or present release or threatened release
of any Hazardous Materials into, onto,
beneath or from the Subject Property.
5.18 GROUND LEASE PROVISIONS. Trustor covenants
and agrees as follows:
(a) Trustor represents and warrants to
Beneficiary and Trustee that: (i) the
Ground Lease has not been amended,
modified, supplemented or assigned; and
(ii) no defaults by the lessee under the
Ground Lease or Ground Lessor of any
obligations under the Ground Lease have
occurred, and the Ground Lease is in full
force and effect. Trustor agrees that it
will not amend, modify, supplement or
assign or sublet its rights, title or
interest in the Ground Lease, or take any
actions to enforce, or give any notice,
approval or consent to exercise, waive or
modify any rights under or in respect to
the Ground Lease without Beneficiary's
prior written consent.
(b) Trustor shall pay all rent and other
charges required under the Ground Lease as
and when the same are due. Trustor shall
keep, observe and
21
perform all of the other
terms, covenants, provisions and
agreements of the Ground Lease on its part
thereunder to be kept, observed and
performed, and shall not cancel, terminate
or surrender, or permit any cancellation,
termination of surrender of the Ground
Lease, in whole or in part.
(c) Trustor covenants and agrees that unless
Beneficiary shall otherwise expressly
consent in writing, the fee title to the
Ground Leased Property and the leasehold
estate created by the Ground Lease or any
subleasehold estate derived therefrom
shall not merge but shall always remain
separate and distinct, notwithstanding the
union of said estates either in the lessor
under the Ground Lease, Trustor, or a
third party by purchase or otherwise. In
the event Trustor acquires the fee title
or any other estate, title or interest in
the Ground Leased Property, this Deed of
Trust shall attach to and cover and be a
lien upon the fee title or such other
estate so acquired, and such fee title or
other estate shall, without further
assignment, mortgage or conveyance, become
due and be subject to the lien of and
covered by this Deed of Trust.
(d) Trustor shall do all things necessary to
preserve and keep unimpaired the rights of
the lessee under the Ground Lease.
Trustor will enforce the material
obligations of the lessor under the Ground
Lease to the end that Trustor may enjoy
all of the rights granted under the Ground
Lease, and will promptly notify Trustor in
writing of any material default known to
Trustor by the lessor under the Ground
Lease in the performance or observance of
any of the terms, covenants and conditions
on the part of the lessor to be performed
or observed under the Ground Lease.
Trustor will promptly advise Beneficiary
in writing of the occurrence of any
default under the Ground Lease known to
Trustor and of the giving of any notice by
the lessor under the Ground Lease to
Trustor of any alleged default by the
lessee under the Ground Lease in
performance or observance of any of the
terms, covenants or conditions of the
Ground Lease, on the part of the lessee to
be performed or observed, and of which
notice Trustor shall have knowledge, and
will immediately upon receipt thereof
deliver to Beneficiary a true copy of each
such notice. If, pursuant to the Ground
Lease, the lessor under the Ground Lease
shall deliver to Beneficiary a copy of any
notice of
22
default given to Trustor, such
notice shall constitute full authority and
protection to Beneficiary for any action
taken or omitted to be taken by
Beneficiary in good faith in reliance
thereon to cure such default.
(e) If any action or proceeding shall be
instituted to terminate the Ground Lease
or to recover possession of the
Improvements or any portion thereof, or
for any other purpose affecting the Ground
Lease or this Deed of Trust, Trustor will,
immediately upon service thereof on or to
Trustor, deliver to Beneficiary a true
copy of each petition, summons, complaint,
notice of motion, order to show cause and
all of the other provisions, pleadings,
and papers, however designated, served in
any such action of proceeding.
(f) No release or forbearance, by the lessor
under the Ground Lease or otherwise, of
any of the Trustor's obligations under the
Ground Lease, shall release Trustor from
its obligations under this Deed of Trust.
(g) Trustor represents and warrants to
Beneficiary and Trustee that this Deed of
Trust is lawfully executed and delivered
in conformity with, and shall not create a
default under, the Ground Lease and is and
will be kept a valid lien on the interest
of Trustor in and to the Ground Leased
Property.
(h) Without the prior written consent of
Beneficiary, Trustor will not consent to
the subordination of the Ground Lease to
any mortgage or deed of trust on or of the
interest of the lessor under the Ground
Lease in any of the real property demised
by the Ground Lease.
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term
"Default" shall mean the existence of any
Default as defined in the Loan Agreement.
6.2 RIGHTS AND REMEDIES. At any time after
Default, Beneficiary and Trustee shall each
have all the following rights and remedies (in
addition to (and without limiting) any rights
and remedies that are available under
applicable law):
23
(a) With or without prior notice, to declare
all Secured Obligations immediately due
and payable;
(b) With or without notice, and without
releasing Trustor from any Secured
Obligation, and without becoming a
mortgagee in possession, to enter upon the
Subject Property from time to time and to
do such acts and things as Beneficiary or
Trustee deem necessary or desirable in
order to inspect, investigate, assess and
protect the security hereof or to cure any
Default, including, without limitation:
(i) to appear in and defend any action or
proceeding purporting to affect the
security of this Deed of Trust or the
rights or powers of Beneficiary or Trustee
under this Deed of Trust; (ii) to pay,
purchase, contest or compromise any encumbrance,
charge, lien or claim of lien
which, in the sole judgment of either
Beneficiary or Trustee, is or may be
senior in priority to this Deed of Trust,
the judgment of Beneficiary or Trustee
being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to
pay any premiums or charges with respect
to insurance required to be carried under
the Loan Documents; and (v) to employ
legal counsel, accountants, engineers,
consultants, contractors and other
appropriate persons to assist them;
(c) To commence and maintain an action or
actions in any court of competent
jurisdiction to foreclose this instrument
as a mortgage or to obtain specific
enforcement of the covenants of Trustor
hereunder, and Trustor agrees that such
covenants shall be specifically
enforceable by injunction or any other
appropriate equitable remedy and that for
the purposes of any suit brought under
this subparagraph, Trustor waives the
defense of laches and any applicable
statute of limitations;
(d) To apply to a court of competent
jurisdiction for and obtain appointment of
a receiver of the Subject Property as a
matter of strict right, ex parte and
without notice to Trustor (Trustor hereby
waiving any notice), and without regard to
the adequacy of the security for the
Secured Obligations, the existence of a
declaration that the Secured Obligations
are immediately due and payable, the
filing of a notice of default, or the
commencement of any foreclosure, and
Trustor hereby consents to such
appointment. Such receiver shall have the
right to take possession of and protect
the Subject Property and operate the same
and collect the rents, issues, profits,
24
revenues and Payments therefrom, which
receiver shall have the right to remain in
possession of the Subject Property
thereafter, during the pendency of any
foreclosure proceeding and all redemption
periods until the issuance of a Trustee's
deed. All expenses and costs incurred by
the receiver or its agents shall
constitute a part of the Secured
Obligations;
(e) To enter upon, possess, manage and operate
the Subject Property or any part thereof,
to take and possess all documents, books,
records, papers and accounts of Trustor or
the then owner of the Subject Property, to
make, terminate, enforce or modify Leases
of the Subject Property upon such terms
and conditions as Beneficiary deems
proper, to make repairs, alterations and
improvements to the Subject Property as
necessary, in Trustee's or Beneficiary's
sole judgment, all to protect or enhance
the security hereof;
(f) To execute a written notice of such
Default and of its election to cause the
Subject Property to be sold to satisfy the
Secured Obligations. As a condition
precedent to any such sale, Trustee and/or
Beneficiary shall give and record such
notices as the law then requires. When
the minimum period of time required after
such notices has elapsed, Trustee, without
notice to or demand upon Trustor, except
as required by law, shall sell the Subject
Property at the time and place of sale
fixed by it in the notice of sale, at one
or several sales, either as a whole or in
separate parcels and in such manner and
order, all as Beneficiary in its sole
discretion may determine, at public
auction to the highest bidder for cash, in
lawful money of the United States, payable
at time of sale. Neither Trustor nor any
other person or entity other than
Beneficiary shall have the right to direct
the order in which the Subject Property is
sold. Subject to requirements and limits
imposed by law, Trustee may from time to
time postpone sale of all or any portion
of the Subject Property by public
announcement at such time and place of
sale. Trustee shall deliver to the purchaser
at such sale a deed conveying the
Subject Property or portion thereof so
sold, but without any covenant or
warranty, express or implied. The
recitals in the deed of any matters or
facts shall be conclusive proof of the
truthfulness thereof. Any person (other
than Trustee), including Trustor or
Beneficiary may purchase at the sale;
25
(g) To resort to and realize upon the security
hereunder and any other security now or
later held by Beneficiary concurrently or
successively and in one or several
consolidated or independent judicial
actions or lawfully taken non-judicial
proceedings, or both, and to apply the
proceeds received upon the Secured Obligations
all in such order and manner as
Trustee and Beneficiary, or either of
them, determine in their sole discretion;
(h) Upon sale of the Subject Property at any
judicial or non-judicial foreclosure,
Beneficiary or any Affiliate or designee
of Beneficiary may credit bid (as
determined by Beneficiary in its sole and
absolute discretion) all or any portion of
the Secured Obligations. In determining
such credit bid, Beneficiary may, but is
not obligated to, take into account all or
any of the following: (i) appraisals of
the Subject Property as such appraisals
may be discounted or adjusted by
Beneficiary in its sole and absolute
underwriting discretion; (ii) expenses and
costs incurred by Beneficiary with respect
to the Subject Property prior to
foreclosure; (iii) expenses and costs
which Beneficiary anticipates will be
incurred with respect to the Subject
Property after foreclosure, but prior to
resale, including, without limitation,
costs of structural reports and other due
diligence, costs to carry the Subject
Property prior to resale, costs of resale
(e.g. commissions, attorneys' fees, and
taxes), costs of any hazardous materials
clean-up and monitoring, costs of deferred
maintenance, repair, refurbishment and
retrofit, costs of defending or settling
litigation affecting the Subject Property,
and lost opportunity costs (if any),
including the time value of money during
any anticipated holding period by
Beneficiary; (iv) declining trends in real
property values generally and with respect
to properties similar to the Subject
Property; (v) anticipated discounts upon
resale of the Subject Property as a
distressed or foreclosed property; (vi)
the fact of additional collateral (if
any), for the Secured Obligations; and
(vii) such other factors or matters that
Beneficiary (in its sole and absolute
discretion) deems appropriate. In regard
to the above, Trustor acknowledges and
agrees that: (w) Beneficiary is not
required to use any or all of the
foregoing factors to determine the amount
of its credit bid; (x) this Section does
not impose
26
upon Beneficiary any additional
obligations that are not imposed by law at
the time the credit bid is made; (y) the
amount of Beneficiary's credit bid need
not have any relation to any loan-to-value
ratios specified in the Loan Documents or
previously discussed between Trustor and
Beneficiary; and (z) Beneficiary's credit
bid may be (at Beneficiary's sole and
absolute discretion) higher or lower than
any appraised value of the Subject
Property.
6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS.
After deducting all costs, fees and expenses of
Trustee, and of this trust (including, without
limitation, the payment of the Trustee's fees
and attorneys' fees, the cost of evidence of
title in connection with sale and costs and
expenses of sale and of any judicial proceeding
wherein such sale may be made), Trustee shall
apply all proceeds of any foreclosure sale:
(i) to discharge all taxes, levies and
assessments, with costs and interest if they
have priority over the lien of this Deed of
Trust, including the pro rata portion thereof
due for the current year; (ii) to payment of
all sums expended by Beneficiary under the
terms hereof and not then repaid, with accrued
interest at the rate of interest specified in
the Note to be applicable on or after maturity
or acceleration of the Note; (iii) to payment
of all other Secured Obligations; and (iv) the
remainder, if any, to Trustor or Trustor's
assigns.
6.4 ORDER OF APPLICATION OF PROCEEDS. All sums
received by Beneficiary under Section 6.2
(subject to Section 6.3) or Section 3.2, less
all costs and expenses incurred by Beneficiary
or any receiver under Section 6.2 or
Section 3.2, including, without limitation,
attorneys' fees, shall be applied in payment of
the Secured Obligations in such order as
Beneficiary shall determine in its sole
discretion; provided, however, Beneficiary
shall have no liability for funds not actually
received by Beneficiary.
6.5 NO CURE OR WAIVER. Neither Beneficiary's nor
Trustee's nor any receiver's entry upon and
taking possession of all or any part of the
Subject Property, nor any collection of rents,
issues, profits, insurance proceeds,
condemnation proceeds or damages, other
security or proceeds of other security, or
other sums, nor the application of any
collected sum to any Secured Obligation, nor
the exercise or failure to exercise of any
other right or remedy by Beneficiary or Trustee
or any receiver shall cure or waive any breach,
Default or notice of default under this Deed of
Trust, or nullify the effect of any notice of
default or sale (unless all
27
Secured Obligations then due have been paid and
performed and Trustor has cured all other defaults),
or impair the status of the security, or prejudice
Beneficiary or Trustee in the exercise of any
right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy,
lease or option or a subordination of the lien
of this Deed of Trust.
6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S FEES.
Trustor agrees to pay to Beneficiary
immediately and without demand all reasonable
costs and expenses incurred by Trustee and
Beneficiary in connection with the exercise of
the rights and remedies provided for herein
and/or in any of the other Loan Documents
(including, without limitation, court costs,
appraisal fees and reasonable attorneys' fees,
whether incurred in litigation or not) with
interest from the date of expenditure until
said sums have been paid at the rate of
interest then applicable to the principal
balance of the Note as specified therein. In
addition, Trustor shall pay to Trustee and/or
Beneficiary all Trustee's fees hereunder and
shall reimburse Trustee for all reasonable
expenses incurred in the administration of this
trust, including, without limitation, any
attorneys' fees.
6.7 POWER TO FILE NOTICES AND CURE DEFAULTS.
Trustor hereby irrevocably appoints Beneficiary
and its successors and assigns, as its
attorney-in-fact, which agency is coupled with
an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or
any other notices that Beneficiary deems
appropriate to protect Beneficiary's interest,
(b) upon the issuance of a deed pursuant to the
foreclosure of this Deed of Trust or the
delivery of a deed in lieu of foreclosure, to
execute all instruments of assignment or
further assurance with respect to the Leases
and Payments in favor of the grantee of any
such deed, as may be necessary or desirable for
such purpose, (c) to prepare, execute and file
or record financing statements, continuation
statements, applications for registration and
like papers necessary to create, perfect or
preserve Beneficiary's security interests and
rights in or to any of the Collateral and any
other property or interests securing the
payment and the performance of the Secured
Obligations, and (d) upon the occurrence of a
Default, Beneficiary may perform any obligation
of Trustor hereunder; provided, however, that:
(i) Beneficiary as such attorney-in-fact shall
only be accountable for such funds as are
actually received by Beneficiary; and (ii)
Beneficiary shall not be liable to Trustor or
any other person or entity for any failure to
act under this Section.
28
6.8 REMEDIES CUMULATIVE. All rights and remedies
of Beneficiary and Trustee provided hereunder
are cumulative and are in addition to all
rights and remedies provided by applicable law
(including specifically that of foreclosure of
this instrument as though it were a mortgage)
or in any other agreements between Trustor and
Beneficiary. Beneficiary may enforce any one
or more remedies or rights hereunder
successively or concurrently.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents
contain or incorporate by reference the entire
agreement of the parties with respect to
matters contemplated herein and supersede all
prior negotiations. The Loan Documents grant
further rights to Beneficiary and contain
further agreements and affirmative and negative
covenants by Trustor which apply to this Deed
of Trust and to the Subject Property and such
further rights and agreements are incorporated
herein by this reference.
7.2 MERGER. No merger shall occur as a result of
Beneficiary's acquiring any other estate in, or
any other lien on, the Subject Property unless
Beneficiary consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Trustor, for
itself and for all parties claiming through or
under Trustor, and for all parties who may
acquire a lien on or interest in the Subject
Property, hereby waives all rights to have the
Subject Property and/or any other property,
including, without limitation, the Collateral,
which is now or later may be security for any
Secured Obligation ("Other Property")
marshalled upon any foreclosure of this Deed of
Trust or on a foreclosure of any Other
Property. Beneficiary shall have the right to
sell, and any court in which foreclosure proceedings
may be brought shall have the right to
order a sale of, the Subject Property and any
or all of the Collateral or Other Property as a
whole or in separate parcels, in any order that
Beneficiary may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND
REINSTATEMENT. To the fullest extent permitted
by applicable law, Trustor, for itself and for
all parties claiming through or under Trustor,
and for all parties who may acquire a lien on
or interest in the Subject Property, hereby
waives any and all rights of redemption and
reinstatement under law and under any order or decree
29
of foreclosure of this Deed of Trust,
and all such rights of redemption and
reinstatement of Trustor and of all other
persons, are and shall be deemed to be hereby
waived to the full extent permitted by the
provisions of the applicable law.
7.5 EXERCISE OF REMEDIES. Notwithstanding any of
the terms or provisions contained in this Deed
of Trust (or in any of the other Loan
Documents), if at any time after the occurrence
of a Default under any of the Loan Documents
(but prior to the time (if any) that said
Default has been cured to the satisfaction of
Beneficiary), Beneficiary has commenced to
exercise one or more of its remedies provided
for herein (or provided in any of the other
Loan Documents or available at law or in
equity), Beneficiary will not be precluded from
continuing to exercise all of its rights and
remedies upon said Default (notwithstanding the
fact that Trustor may have cured, attempted to
cure or be in the process of curing said
Default). It is the intention of the parties
hereto that (to the extent permitted by law)
once Beneficiary has commenced to exercise one
or more of its rights or remedies (upon a
Default), said Default cannot be cured, unless
Beneficiary expressly agrees in writing to
accept said cure and to cease the exercise of
said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term "Subject
Property" means all and any part of the Subject
Property and any interest in the Subject
Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants,
and conditions herein contained shall be
binding upon and inure to the benefit of the
successors and assigns of the parties hereto;
provided, however, that this section does not
waive or modify any restrictions on transfer
contained herein or in any of the other Loan
Documents.
7.8 GOVERNING LAW. This Deed of Trust shall be
governed by and construed in accordance with
the laws of the State of Washington.
7.9 INCORPORATION. Exhibits A and A-1 as attached,
are incorporated into this Deed of Trust by
this reference.
7.10 NOTICES. All notices, reports, demands,
requests and other communications
authorized or required under this Deed of
Trust to be given to Trustor or
Beneficiary, shall be given in the manner
and to the addresses specified in the Loan
Agreement for the giving of notices.
Trustor shall forward to Beneficiary, without
30
delay, any notices, letters or
other communications delivered to the
Subject Property or to Trustor naming
Beneficiary, "Lender" or any similar
designation as addressee, or which could
reasonably be deemed to affect the ability
of Trustor to perform its obligations to
Beneficiary under the Note, the Loan
Agreement or any other Loan Documents.
7.11 LIMITATION OF LIABILITY. The limitations
on liability set forth in Section 2.8 of
the Loan Agreement shall apply with equal
force to this Deed of Trust, and said
limitations are incorporated herein by
reference as fully and with the same
effect as if recited herein at length.
7.12 SEVERABILITY. If any provision or
obligation under this Deed of Trust shall
be determined by a court of competent
jurisdiction to be invalid, illegal or
unenforceable, that provision shall be
deemed severed from the Deed of Trust and
the validity, legality and enforceability
of the remaining provisions or obligations
shall remain in full force as though the
invalid, illegal or unenforceable
provision had never been a part of the
Deed of Trust.
7.13 TIME. Time is of the essence of each and
every term of this Deed of Trust.
7.14 RELATIONSHIP. The relationship of Trustor
and Beneficiary under this Deed of Trust
and the other Loan Documents is, and shall
at all times remain, solely that of
borrower and lender; and Beneficiary
neither undertakes nor assumes any
responsibility or duty to Trustor or to
any third party with respect to the
Subject Property. Notwithstanding any
other provisions of this Deed of Trust and
the other Loan Documents: (i) Beneficiary
is not, and shall not be construed to be,
a partner, joint venturer, member, alter
ego, manager, controlling person or other
business associate or participant of any
kind of Trustor, and Beneficiary does not
intend to ever assume such status; (ii)
Beneficiary does not intend to ever assume
any responsibility to any person for the
quality, suitability, safety or condition
of the Subject Property; and (iii)
Beneficiary shall not be deemed
responsible for or a participant in any
acts, omissions or decisions of Trustor.
7.15 RIGHT TO DEFICIENCY JUDGMENT. If
Beneficiary, in the event of a Default,
elects to proceed by the summary extra-judicial
foreclosure method of sale by
Trustee, a deficiency judgment shall not
be entered against either maker of the
Note secured by this Deed of Trust.
31
However if, in the event of a default,
Beneficiary elects to (a) judicially
foreclosure this Deed of Trust as a lien
or mortgage or (b) commence an action on
the Secured Obligations secured by this
Deed of Trust, Beneficiary shall be
entitled to a personal judgment against
either or both of the makers, the surety
or any guarantor of such Secured
Obligations.
7.16 EXECUTION IN COUNTERPARTS. This Deed of
Trust may be executed in any number of
counterparts, each of which when executed
and delivered shall be deemed to be an
original and all such counterparts
together, shall constitute one and the
same instrument.
7.17 ORAL AGREEMENTS NOTICE. ORAL AGREEMENTS OR
ORAL COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT, MODIFY LOAN TERMS OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
32
IN WITNESS WHEREOF, Trustor has executed this Deed of
Trust as of the day and year set forth above.
"TRUSTOR"
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE
PARTNERSHIP, a California limited partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation, its general partner
By: /s/ C. A. ▇▇▇▇▇▇▇▇▇▇▇
-------------------------
Its: Vice President
-------------------------
By: Glenborough Corporation, a
California corporation, its
general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------
Its: Chairman/CEO
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, its general
partner
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared _________________________,
personally known to me to be the ___________________ of
Prudential-Bache Properties, Inc., a Delaware
corporation, a general partner of Prudential-Bache/Equitec
Real Estate Partnership, a California
limited partnership, the limited partnership that
executed the foregoing instrument, and acknowledged the
said instrument to be the free and voluntary act and
deed of said limited partnership, for the uses and
purposes therein mentioned, and on oath stated that
he/she is authorized to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared _________________________,
personally known to me to be the ___________________ of
Glenborough Corporation, a California corporation, a
general partner of Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership, the
limited partnership that executed the foregoing
instrument, and acknowledged the said instrument to be
the free and voluntary act and deed of said limited
partnership, for the uses and purposes therein
mentioned, and on oath stated that he/she is authorized
to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
STATE OF_________________)
) SS
COUNTY OF________________)
On this ______ day of December, 1996, before
me, the undersigned, a Notary Public in and for the
State of ________________, duly commissioned and sworn,
personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, personally known
to me to be a general partner of Prudential-Bache/Equitec
Real Estate Partnership, a California
limited partnership, the limited partnership that
executed the foregoing instrument, and acknowledged the
said instrument to be the free and voluntary act and
deed of said limited partnership, for the uses and
purposes therein mentioned, and on oath stated that he
is authorized to execute the said instrument.
WITNESS my hand and official seal hereto
affixed the day and year in this certificate above
written.
__________________________________
Print Name:_______________________
NOTARY PUBLIC in and for the State
of _______________, residing at
__________________________________
My Commission Expires:____________
EXHIBIT A
Seattle Property
Totem Valley Business Center
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
EXHIBIT A-1
GROUND LEASED PROPERTY
283769.03 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. CH January 8, 1997 (6:5p)