Exhibit 99.3
Recording requested by and when recorded, return to:
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DEED OF TRUST, SECURITY AGREEMENT, AND FIXTURE FILING
WITH ASSIGNMENT OF RENTS AND AGREEMENTS
This Deed of Trust, Security Agreement, and Fixture Filing with
Assignment of Rents and Agreements (this "Deed of Trust") is made as of November
18, 1996, by ▇▇▇▇▇▇ Raceway Corporation, a California corporation ("Trustor"),
to First American Title Insurance Company, for the benefit of Sonoma Funding
Corporation, a California corporation ("Beneficiary").
Witnesseth:
Trustor does irrevocably grant, transfer, and assign to Trustee, in
trust, with power of sale, all Trustor's right, title, and interest now owned or
later acquired in the real property ("Land") located in Sonoma County,
California, and more particularly described in attached Exhibit A, incorporated
by reference (Trustor agrees that any greater title to the Land later acquired
during the term of this Deed of Trust will be subject to this Deed of Trust),
together with the rents, issues, and profits, subject however, to the right,
power, and authority granted and conferred on Trustor in this Deed of Trust to
collect and apply the rents, issues, and profits; and Trustor also irrevocably
grants, transfers, and assigns to Trustee, in trust, with power of sale, all of
Trustor's right, title, and interest now owned or later acquired to the
following property (including the rights or interests pertaining to the
property) located at the Property:
(1) all buildings ("Buildings") and improvements now or later on the
Land, and all appurtenances, easements, water and water rights, and pumps and
pumping plants, and all shares of stock evidencing these; all machinery,
equipment, appliances, and fixtures for generating or distributing air, water,
heat, electricity, light, fuel, or refrigeration or for ventilating or sanitary
purposes or for the exclusion of vermin or insects or for the removal of dust,
refuse, or garbage; all wall safes, built-in furniture, and installations,
shelving, lockers, partitions, doorstops, vaults, elevators, dumbwaiters,
awnings, window shades, venetian blinds, light fixtures, fire hoses and brackets
and boxes for them, fire sprinklers, alarm systems, draperies, drapery rods and
brackets, screens, linoleum, carpets, furniture, furnishings, fixtures,
plumbing, laundry tubs and trays, iceboxes, refrigerators, heating units,
stoves, water heaters, incinerators, and communication systems and installations
for which any Building is specially designed; all of these items, whether now or
later installed, being declared to be for all purposes of this Deed of Trust a
part of the Land, the specific enumerations in this Deed of Trust not excluding
the general;
(2) the rents, issues, profits, and proceeds; and
(3) the Property to the extent not included in clauses (1) and (2)
above.
For the purpose of securing, in the order of priority that Beneficiary
determines
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(1) payment of the indebtedness evidenced by a note of Trustor of the
same date as this Deed of Trust in the principal amount of Thirteen Million Four
Hundred Fifty-Two Thousand Nine Hundred Eighty-Seven Dollars and Eighty Cents
($13,452,987.80) ("Note"), payable to Beneficiary or to order, and all
extensions, modifications, or renewals of that Note;
(2) payment of the interest on that indebtedness
according to the terms of the Note;
(3) payment of all other sums (with interest as provided in this Deed of
Trust) becoming due and payable to Beneficiary or Trustee pursuant to the terms
of this Deed of Trust;
(4) performance of every obligation contained in this Deed of Trust, the
Note, any instrument now or later evidencing or securing any indebtedness
secured by this Deed of Trust, and any agreements, supplemental agreements, or
other instruments of security executed by Trustor as of the same date of this
Deed of Trust or at any time subsequent to the date of this Deed of Trust for
the purpose of further securing any indebtedness secured by this Deed of Trust,
or any part of it, or for the purpose of supplementing or amending this Deed of
Trust or any instrument secured by this Deed of Trust; and
(5) payment of all other obligations owed by Trustor to Beneficiary that
by their terms recite that they are secured by this Deed of Trust.
Regardless of anything stated above or any other term contained in this
Deed of Trust or in the Loan Documents (as defined in this Deed of Trust),
Trustor's obligations under this Deed of Trust and the Loan Documents shall be
deemed fulfilled to the extent that such obligations (e.g., purchase of
insurance) are performed of Speedway Motorsports, Inc. or its assignee
("Speedway") pursuant to the terms of the lease between Trustor and Speedway
dated November 4, 1996 ("Master Ground Lease"). Furthermore, Trustor shall not
be deemed to be in default under any provision of this Deed of Trust which is
caused by lessee's default under the Master Ground Lease so long as Trustor is
diligently enforcing the Master Ground Lease and seeking all available remedies
thereunder for the mutual benefit of Trustor and Beneficiary.
ARTICLE 1.
DEFINITIONS
SECTION 1.1. CERTAIN DEFINED TERMS.
As used in this Deed of Trust the following terms will have the
following meanings:
BUILDINGS: The Buildings as defined above in this Deed of Trust.
COLLATERAL: The Collateral as defined in Section 9.1 of this Deed of
Trust.
FIXTURES: All fixtures located on the Improvements (as defined in this
Deed of Trust) or now or later installed in, or used in connection with, any of
the Improvements, including, but not limited to, all partitions, screens,
awnings, motors, engines, boilers, furnaces, pipes, plumbing, elevators,
cleaning and sprinkler systems, fire-extinguishing apparatus and equipment,
water tanks, heating, ventilating, air-conditioning and air-cooling equipment,
built-in refrigerators, and gas and electric machinery, appurtenances, and
equipment, whether or not permanently affixed to the Land or the Improvements.
HAZARDOUS SUBSTANCE:
(a) any oil, flammable substance, explosive, radioactive
material, hazardous waste or substance, toxic waste or substance, or any
other waste, material, or pollutant that: (i) poses a hazard to the
Property or to persons on the Property, or (ii) causes the Property to
be in violation of any Hazardous Substance Law;
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(b) asbestos in any form;
(c) urea formaldehyde foam insulation;
(d) transformers or other equipment that contain dielectric
fluid containing levels of polychlorinated biphenyls;
(e) radon gas;
(f) any chemical, material, or substance defined as or included
in the definition of hazardous substance, hazardous substances,
hazardous wastes, hazardous materials, extremely hazardous waste,
restricted hazardous waste, or toxic substances or words of similar
import under any applicable local, state, or federal law or under the
regulations adopted or publications promulgated pursuant to those laws,
including, but not limited to, any Hazardous Substance Law, Code of
Civil Procedure ss. 564, as amended from time to time, Code of Civil
Procedure ss. 726.5, as amended from time to time, Code of Civil
Procedure ss. 736, as amended from time to time, and Civil Code ss.
2929.5, as amended from time to time;
(g) any other chemical, material, or substance, exposure to
which is prohibited, limited, or regulated by any governmental authority
or which may pose a hazard to the health and safety of the occupants of
the Property or the owners or occupants of property adjacent to or
surrounding the Property, or any other person coming on the Property or
any adjacent property; and
(h) any other chemical, material, or substance that may pose a
hazard to the environment.
HAZARDOUS SUBSTANCE CLAIM: Any enforcement, cleanup, removal, remedial,
or other governmental, regulatory, or private actions, agreements, or orders
threatened, instituted, or completed pursuant to any Hazardous Substance Law,
together with all claims made or threatened by any third party against Borrower
or the Property relating to damage, contribution, cost-recovery compensation,
loss, or injury resulting from the presence, release, or discharge of any
Hazardous Substance.
HAZARDOUS SUBSTANCE LAW: Any federal, state, or local law, ordinance,
regulation, or policy relating to the environment, health, and safety, any
Hazardous Substance (including, without limitation, the use, handling,
transportation, production, disposal, discharge, or storage of the substance),
industrial hygiene, soil, groundwater, and indoor and ambient air conditions or
the environmental conditions on the Property, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
[42 USCS ▇▇.▇▇. 9601 ET SEQ.], as amended from time to time; the Hazardous
Substances Transportation Act [49 USCS ▇▇.▇▇. 1801 ET SEQ.], as amended from
time to time; the Resource Conservation and Recovery Act [42 USCS ▇▇.▇▇. 6901 ET
SEQ.], as amended from time to time; the Federal Water Pollution Control Act [33
USCS ▇▇.▇▇. 1251 ET SEQ.], as amended from time to time; the Hazardous Substance
Account Act [HEALTH AND SAFETY CODE ▇▇.▇▇. 25300 ET SEQ.], as amended from time
to time; the Hazardous Waste Control Law [HEALTH AND SAFETY CODE ▇▇.▇▇. 25100 ET
SEQ.], as amended from time to time; the Medical Waste Management Act [HEALTH
AND SAFETY CODE ▇▇.▇▇. 25015 ET SEQ.], as amended from time to time; and the
▇▇▇▇▇▇-Cologne Water Quality Control Act [WATER CODE ▇▇.▇▇. 13000 ET SEQ.], as
amended from time to time.
IMPOSITIONS: All real estate and personal property taxes and other taxes
and assessments, water and sewer rates and charges, and all other governmental
charges and any interest or costs or penalties with respect to those charges,
assessments, or taxes, ground rent and charges for any easement or agreement
maintained for the benefit of the Property, general and special, ordinary and
extraordinary, foreseen or unforeseen, of any kind that at any time prior to or
after the execution of the Loan Documents may be assessed, levied, imposed, or
become a lien on the Property or the rent or income received from the Property,
or any use or occupancy of the Property; and any charges, expenses, payments, or
assessments of any nature, if any, that are or may become a lien on the Property
or the rent or income received from the Property.
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IMPROVEMENTS: All Buildings, improvements, and appurtenances on the
Land, and all improvements, additions, and replacements of those improvements
and other buildings and improvements, at any time later constructed or placed on
the Land.
INDEBTEDNESS: The principal of and interest on, and all other amounts,
payments, and premiums due under, the Note and any extensions or renewals
(including, without limitation, extensions or renewals at a different rate of
interest, regardless of whether evidenced by a new or additional promissory note
or notes), and all other indebtedness of Trustor to Beneficiary under or secured
by the Security Documents (defined in this Deed of Trust), together with all
other sums owed by Trustor to Beneficiary.
LAND: The Land as defined in this Deed of Trust.
LEASES: All leasehold interests, including subleases and tenancies
following attornment, affecting or covering any portion of the Property.
LOAN: The loan secured by this Deed of Trust and evidenced by the Note.
LOAN DOCUMENTS: The Note, the Security Documents, and all other
documents (including guaranties) evidencing, securing, or relating to the Loan.
LOAN PARTIES: Trustor and any guarantors of the loan or any obligations
under the loan, together with their respective affiliates and their respective
employees, representatives, and agents.
NOTE: The Note as defined in this Deed of Trust.
OBLIGATIONS: All of the covenants, promises, and other obligations
(other than the Indebtedness): (i) made or owing by Trustor to or due to
Beneficiary under or as set forth in the Loan Documents, and (ii) made or owing
by Trustor to every other Person, a breach of which would or may affect
Trustor's ownership, development, or operation of the Property, except any
covenants, promises, and other obligations of Trustor to Beneficiary under the
Certification Agreement.
PERSON: Any natural person, corporation, firm, association, government,
governmental agency, or any other entity, whether acting in an individual,
fiduciary, or other capacity.
PERSONALTY: Trustor's interest in all accounts, contract rights, and
general intangibles (specifically including any insurance proceeds and
condemnation awards) arising out of the ownership, development, or operation of
the Property, and all furniture, furnishings, equipment, machinery, construction
materials and supplies, leasehold interests in personal property, and all other
personal property (other than Fixtures) now or later on the Property, together
with all present and future attachments, accessions, replacements,
substitutions, and additions, and the cash and noncash proceeds.
PROPERTY: The Land, the Improvements, the Fixtures, and the Personalty,
together with:
(a) all rights, privileges, tenements, hereditaments,
rights-of-way, easements, and appurtenances of the Land or the
Improvements now or later belonging to the Property, and all right,
title, and interest of Trustor in any streets, ways, alleys, strips, or
gores of land adjoining the Land; and
(b) all of Trustor's right, title, and interest in the Land, the
Improvements, the Fixtures, and the Personalty, including any award for
any change of grade of streets affecting the Land, the Improvements, the
Fixtures, or the Personalty.
RECEIVER: Any trustee, receiver, custodian, fiscal agent, liquidator, or
similar officer.
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RELEASE: Any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing into the
environment, including continuing migration, of Hazardous Substances that goes
into the soil, surface water, or groundwater of the Property, whether or not
caused by, contributed to, permitted by, acquiesced to, or known to Trustor.
SECURITY DOCUMENTS: This Deed of Trust, the Assignment of Leases and all
other documents now or later securing any part of the payment of the
Indebtedness or the observance or performance of the Obligations.
TITLE POLICY: The title insurance policy issued by First American Title
Insurance Company to Beneficiary.
ARTICLE 2.
WARRANTY OF TITLE
Trustor warrants that:
(a) Trustor is the lawful owner of the Property,
(b) Trustor will maintain and preserve the lien of this Deed of
Trust until the Indebtedness has been paid in full,
(c) Trustor has good, right, and lawful authority to grant the
Property as provided in this Deed of Trust, and
(d) Trustor will forever warrant and defend the grant made in
this Deed of Trust against all claims and demands, except as are
specifically set forth in this Deed of Trust.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Trustor makes the following representations to Beneficiary to the best
of Trustor's actual knowledge (for purposes of this Article, "Trustor's actual
knowledge" means the actual knowledge of the officers, directors and key
management employees of Seller) that as of the date of this Deed of Trust:
SECTION 3.1. ORGANIZATION OF THE LOAN PARTIES.
(a) Trustor is a Corporation organized, validly existing, and in good
standing under the laws of the State of California and is qualified to do
business in California.
(b) Trustor has the requisite power and authority to own and manage its
properties, to carry on its business as now being conducted, and to own,
develop, and operate the Property.
(c) Trustor is qualified to do business in every jurisdiction in which
the nature of its business or its properties makes qualification necessary.
(d) Trustor is in compliance with all laws, regulations, ordinances, and
orders of public authorities applicable to it.
SECTION 3.2. VALIDITY OF LOAN DOCUMENTS.
(a) The execution, delivery, and performance by the Loan Parties of the
Loan Documents and the borrowings evidenced by the Note:
(i) are within the power of the Loan Parties,
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(ii) have been duly authorized by all requisite corporate or
partnership actions, as appropriate,
(iii) have received all necessary governmental approval, and
(iv) will not violate any provision of law, any order of any
court or agency of government, the charter documents of any Loan Party,
or any indenture, agreement, or any other instrument to which any Loan
Party is a party or by which any Loan Party or any of its property is
bound, nor will they conflict with, result in a breach of, or constitute
(with due notice and lapse of time) a default under any indenture,
agreement, or other instrument, or result in the creation or imposition
of any lien, charge, or encumbrance of any nature on any of the property
or assets of any Loan Party, except as contemplated by the provisions of
the Loan Documents.
(b) Each of the Loan Documents, when executed and delivered to
Beneficiary, will constitute a valid obligation, enforceable in accordance with
its terms.
SECTION 3.3. TAXES.
Trustor has filed all federal, state, county, and municipal income tax
returns required to have been filed and has paid all taxes that have become due
pursuant to those returns or pursuant to any assessments received by Trustor,
and Trustor does not know of any basis for any additional assessment against
Trustor in respect of those taxes.
SECTION 3.4. COMPLIANCE WITH LAWS.
Except as otherwise provided in this Deed of Trust, the Property and the
proposed and actual use of the Property comply with all laws, ordinances, rules,
and regulations of all local, regional, county, state, and federal governmental
authorities having jurisdiction, and there is no action or proceeding pending
or, to the actual knowledge of Trustor, threatened before any court,
quasi-judicial body, or administrative agency at the time of any disbursement by
Beneficiary relating to the validity of the Loan or the proposed or actual use
of the Property. All rights to appeal any decision rendered will have expired
prior to the date of this Deed of Trust.
ARTICLE 4.
AFFIRMATIVE COVENANTS
Until the entire Indebtedness has been paid in full, Trustor covenants
to and agrees with Beneficiary as follows:
SECTION 4.1. OBLIGATIONS OF TRUSTOR.
Trustor will pay the Indebtedness and Trustor will continue to be liable
for the payment of the Indebtedness until it has been paid in full. Trustor
(a) will timely perform all the covenants, agreements, terms, and
conditions to be performed by Trustor: (i) under this Deed of Trust; and (ii)
under all other agreements between Trustor and Beneficiary in accordance with
the respective terms of the agreement.
(b) will not cancel, surrender, modify, amend, or permit the
cancellation, surrender, modification, or amendment of any of the previously
mentioned agreements or any of the covenants, agreements, terms, or conditions
contained in any of them without the prior written consent, in each case, of
Beneficiary; and
(c) will keep Beneficiary indemnified against all actions, proceedings,
costs (including, without limitation, Beneficiary's counsel fees and
disbursements), claims, and damages incurred or sustained by Beneficiary in
respect of the nonpayment of any charges or the nonobservance or nonperformance
of any of the covenants, agreements, terms, or conditions in any of the
previously mentioned agreements, subject however to the performance by lessee
under the Master Ground Lease.
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SECTION 4.2. INSURANCE.
(a) Trustor, at its sole cost and expense, will keep the Property
insured for the mutual benefit of Trustor and Beneficiary against loss or damage
by earthquake and fire, and against loss or damage by other risks embraced by
coverage of the type now known as the broad form of extended coverage,
including, but not limited to, riot and civil commotion, vandalism, malicious
mischief, burglary, theft, and mysterious disappearance, and against any other
risks or hazards that Beneficiary may from time to time reasonably designate, in
an amount not less than one hundred percent (100%) of the then full replacement
cost of the Improvements, without deduction for physical depreciation. The
policies of insurance carried in accordance with this section will contain the
Replacement Cost Endorsement.
(b) Trustor, at its sole cost and expense, will obtain and maintain
public liability insurance covering the Property and the ownership, use,
occupancy, and maintenance of the Property.
(c) All policies of insurance required pursuant to this Deed of Trust
will be satisfactory in form and substance to Beneficiary and will be approved
by Beneficiary as to amounts, form, risk coverage, deductibles, insurer, loss
payable, and cancellation provisions.
(d) Effective on the occurrence of any Event of Default, all of
Trustor's right, title, and interest in all policies of property insurance and
any unearned premiums paid are assigned to Beneficiary, who may assign them to
any purchaser of the Property at any foreclosure sale.
Notwithstanding the foregoing, Beneficiary acknowledges and agrees that
compliance with the insurance and indemnification provisions of the Master
Ground Lease, including those provision permitting lessee to be self insured,
shall be deemed to satisfy the requirements of this paragraph 4.2.
SECTION 4.3. MAINTENANCE, WASTE, AND REPAIR.
Trustor will maintain the Improvements now or later existing in good and
tenantable repair, and will not structurally alter them without the prior
written consent of Beneficiary, or remove or demolish them in whole or in part,
nor will Trustor suffer any waste of the Property or make any change in the use
of the Property that will in any way increase any ordinary fire or other hazard
insurance premiums or permit anything that may in any way impair the security of
this Deed of Trust. Trustor will not abandon the Property or lease the Property
unprotected, vacant, or deserted.
SECTION 4.4. IMPOSITION; IMPOUNDS.
(a) Impositions Affecting the Property. Trustor will pay when due all
Impositions that are or that may become a lien on the Property or are assessed
against the Property or its rents, royalties, profits, and income.
(b) Taxes Affecting Trustor. Trustor will file all federal, state,
provincial, county, and municipal income tax returns required to be filed and
will pay all taxes that become due pursuant to the returns or pursuant to any
assessments received by Trustor.
SECTION 4.5. COMPLIANCE WITH LAW.
Trustor will preserve and keep in full force its existence, rights, and
powers. Trustor will promptly and faithfully comply with all present and future
laws, ordinances, rules, regulations, and requirements of every governmental
authority or agency and of every board of fire underwriters (or similar body
exercising similar functions) having jurisdiction that may be applicable to it
or to the Property or to the use or manner of occupancy, possession, operation,
maintenance, alteration, or repair of the Property or any part of it, whether
the law, ordinance, rule, order, regulation, or requirement necessitates
structural changes or improvements or interferes with the use or enjoyment of
the Property.
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SECTION 4.6. BOOKS AND RECORDS.
Trustor will maintain complete books of account and other records
reflecting the results of Trustor's operations of the Property, in a form
satisfactory to Beneficiary, and furnish to Beneficiary any information about
the financial condition of the operations of the Property as Beneficiary
reasonably requests, including, but not limited to, the following information,
which will be furnished without request:
(a) within thirty (30) days after the end of each month, a statement of
revenues and expenses relating to the operations of the Property for the month
just ended; and
(b) promptly upon receipt, copies of any reports by independent public
accountants submitted to Trustor concerning the Property or operations.
Beneficiary will have the right, at all reasonable times and on reasonable
notice, to audit, at Trustor's sole cost and expense, Trustor's books of account
and records pertaining to the Property, all of which will be made available to
Beneficiary and Beneficiary's representatives for that purpose, from time to
time, on Beneficiary's request.
SECTION 4.7. FURTHER ASSURANCES.
Trustor, at Trustor's expense and at any time on the reasonable request
of Beneficiary, will execute, acknowledge, and deliver any additional papers and
instruments (including, without limitation, a declaration of no setoff) and any
further assurances of title and will do or cause to be done all further acts and
things that may be proper or reasonably necessary to carry out the purpose of
this Deed of Trust and of the Loan Documents and to subject to the liens any
property intended by the terms to be covered and any renewals, additions,
substitutions, replacements, or betterments.
SECTION 4.8. STATEMENT BY TRUSTOR.
Trustor, on ten (10) days' written request, will furnish a statement of
the amount due or outstanding on the Note and a statement of any offsets,
counterclaims, or defenses to the payment.
SECTION 4.9. INDEMNITY.
(a) If any action or proceeding (whether judicial, regulatory, or
administrative) is threatened or commenced, except an action to foreclose this
Deed of Trust or to collect the Indebtedness: (i) that affects the Property or
any portion of it; (ii) in which Beneficiary is or could be made a party; or
(iii) in which it becomes necessary to defend or uphold the lien of this Deed of
Trust, then all costs, fees, and expenses incurred by Beneficiary with respect
to the action or proceeding (including, without limitation, attorney fees and
expenses) will, within ten (10) days after the submission of bills for the costs
to Trustor, be paid directly to the billing party by Trustor.
(b) In addition, Trustor agrees to pay all costs, including, without
limitation, attorney fees and expenses, incurred by Beneficiary in enforcing the
terms of this Deed of Trust or the terms of any of the Loan Documents, whether
or not suit is filed. Trustor agrees to indemnify and hold Beneficiary harmless
from all liability, loss, damage, or expense (including, without limitation,
attorney fees) that it may incur under this Deed of Trust, or in connection with
the making of any of the loans or financial arrangements secured by this Deed of
Trust, the enforcement of any of Beneficiary's rights or remedies, any action
taken by Beneficiary under this Deed of Trust, or by reason or in defense of any
claims and demands that may be asserted against Beneficiary arising out of the
Collateral.
(c) On the failure of Trustor to make timely payment pursuant to the
terms of Section 4.9(a) of this Deed of Trust, the payment may be paid by
Beneficiary. Sums of money paid by Beneficiary, and sums owed to Beneficiary
pursuant to Section 4.9(b) of this Deed of Trust, together with interest at the
Rate set forth in the note from the date
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Beneficiary makes the payment or incurs the loss, will be secured by this Deed
of Trust, prior to any right, title, or interest in or claim on the Property
attaching or accruing subsequent to the lien of this Deed of Trust, and will be
payable by Trustor to Beneficiary on demand.
(d) The provisions of this Section 4.9 will survive the termination of
this Deed of Trust and the repayment of the Indebtedness.
SECTION 4.10. REIMBURSEMENT.
Beneficiary will have the right to declare immediately due any amount
paid by it for any tax, stamp tax, assessment, water rate, sewer rate, insurance
premium, repair, rent charge, debt, claim, inspection, or lien having priority
over this Deed of Trust, or over any other agreement given to secure the
Indebtedness.
SECTION 4.11. LITIGATION.
Trustor will promptly give written notice to Beneficiary of any
litigation commenced or threatened affecting Trustor or the Property other than
unlawful detainer proceedings brought by Trustor.
SECTION 4.12. TAX RECEIPTS.
Subject to the provisions of Section 4.4 of this Deed of Trust, Trustor
will exhibit to Beneficiary, within thirty (30) days after demand, bills (that
will be receipted from and after the date receipted bills are obtainable)
showing the payment to the extent then due of all taxes, assessments (including
those payable in periodic installments), water rates, sewer rates, or any other
Imposition that may have become a lien on the Property or any Personalty prior
to the lien of this Deed of Trust.
SECTION 4.13. DUPLICATE PLANS.
Trustor will submit to Beneficiary a duplicate set of plans and
specifications for approval before any material improvements, repairs, or
alterations are begun that affect the Property.
SECTION 4.14. ADDITIONAL INFORMATION.
Trustor will furnish to Beneficiary, within thirty (30) days after
written request, all information that Beneficiary may request concerning the
performance by Trustor of the covenants of the Loan Documents, and Trustor will
permit Beneficiary or its representatives at all reasonable times to make
investigation or examination concerning that performance.
SECTION 4.15. RIGHT OF ENTRY.
Subject to the rights of tenants in possession, Trustor grants to
Beneficiary and its agents, employees, consultants, and contractors the right to
enter on the Property for the purpose of making any inspections, reports, tests
(including, without limitation, soils borings, groundwater testing, ▇▇▇▇▇, or
soils analysis), inquiries, and reviews that Beneficiary, in its sole and
absolute discretion, deems necessary to assess the then current condition of the
Property. Beneficiary will provide Trustor with three (3) Business Day's notice
of the entry. However, Trustor's consent will not be required for entry or for
the performance of tests.
ARTICLE 5.
NEGATIVE COVENANTS
Until the entire Indebtedness has been paid in full, Trustor covenants
to and agrees with Beneficiary as follows:
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SECTION 5.1. RESTRICTIVE USES.
Trustor covenants not to initiate, join in, or consent to any change in
any zoning ordinance, private restrictive covenant, assessment proceedings, or
other public or private restriction limiting or restricting the uses that may be
made of the Property or any part of it without the prior written consent of
Beneficiary.
SECTION 5.2. OTHER FINANCING.
Except for the liens securing the Indebtedness, Trustor will not create
or permit to continue in existence any mortgage, pledge, encumbrance, lien, or
charge of any kind (including purchase money and conditional sale liens) on any
of the Property except for:
(a) liens for taxes not yet delinquent, and
(b) any other liens or charges that are specifically approved in writing
by Beneficiary prior to the recordation. Any transaction in violation of this
section will cause all Indebtedness, irrespective of the maturity dates, at the
option of the holder and without demand or notice, to immediately become due,
together with any prepayment premium in accordance with the terms of the Note.
SECTION 5.3. TRANSFERABILITY.
Trustor will not, prior to the third anniversary of the recordation of
this Deed of Trust, sell, convey, assign, transfer, alienate, or otherwise
dispose of its interest in the Property, either voluntarily or by operation of
law, or agree to do so, without the prior written consent of Beneficiary.
Thereafter, Trustor will not, prior to the third anniversary of the recordation
of this Deed of Trust, sell, convey, assign, transfer, alienate, or otherwise
dispose of its interest in the Property, either voluntarily or by operation of
law, or agree to do so, without the prior written consent of Beneficiary, which
consent will not be unreasonably withheld, delayed or conditioned. Consent to
one transaction by Beneficiary will not be deemed a waiver of the right to
require consent to further or successive transactions. If Trustor is a
corporation, any sale, transfer, or disposition of fifty percent (50%) or more
of the voting stock of Trustor or of any corporation that directly or indirectly
owns or controls Trustor, including, without limitation, the parent company of
Trustor and the parent company of the parent company of Trustor, will constitute
a sale of the Property for purposes of this article. If Trustor is a
partnership, any change or addition of a general partner of Trustor, change of a
partnership interest of Trustor, or sale, transfer, or disposition of fifty
percent (50%) or more of the voting stock or partnership interest of any partner
of Trustor or of any corporation or partnership that directly or indirectly owns
or controls any partner of Trustor, including, without limitation, each parent
company of a partner of Trustor and each parent company of any parent company of
a partner of Trustor, will constitute a sale of the Property for purposes of
this section. Any transaction in violation of this section will cause all
Indebtedness, irrespective of the maturity dates, at the option of the holder
and without demand or notice, immediately to become due, together with any
prepayment premium in accordance with the terms of the Note.
SECTION 5.4. REPLACEMENT OF FIXTURES AND PERSONALTY.
Trustor will not permit any of the Fixtures or Personalty to be removed
at any time from the Property without the prior written consent of Beneficiary
unless actually replaced by articles of equal suitability and value owned by
Trustor free and clear of any lien or security interest except as may be
approved in writing by Beneficiary.
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ARTICLE 6.
ENVIRONMENTAL PROVISIONS
SECTION 6.1. COVENANTS.
After the Master Ground Lease terminates, Trustor agrees, except in the
ordinary course of business and in strict compliance with all applicable
Hazardous Substance Laws, as follows:
(a) not to cause or permit the Property to be used as a site for the
use, generation, manufacture, storage, treatment, Release, discharge, disposal,
transportation, or presence of any Hazardous Substance;
(b) not to cause, contribute to, permit, or acquiesce in any Release or
threatened Release;
(c) not to change or modify the use of the Property without the prior
written consent of Beneficiary;
(d) to comply with and to cause the Property and every User of the
Property to comply with all Hazardous Substance Laws;
(e) to immediately notify Beneficiary in writing and to provide
Beneficiary with a reasonably detailed description of:
(i) any noncompliance of the Property with any Hazardous
Substance Laws;
(ii) any Hazardous Substance Claim;
(iii) any Release or Threatened Release;
(iv) the discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Property that would cause
the Property or any part of it to be designated as hazardous waste
property or border zone property under the provisions of Health and
Safety Code ▇▇.▇▇. 25220 et seq. and any regulation adopted in
accordance with that section;
(f) in the event that Trustor discovers a Release or the presence of any
Hazardous Substance on or about the Property in violation of any Hazardous
Substance Law, to:
(i) notify Lender of that discovery together with a reasonably
detailed description;
(ii) promptly after a request by Beneficiary, engage a qualified
environmental engineer reasonably satisfactory to Beneficiary to
investigate these matters and prepare and submit to Beneficiary a
written report containing the findings and conclusions resulting from
that investigation, all at the sole expense of Trustor; and
(iii) take, at Trustor's sole expense, all necessary actions to
remedy, repair, clean up, or detoxify any Release or Hazardous
Substance, including, but not limited to, any remedial action required
by any Hazardous Substance Laws or any judgment, consent, decree,
settlement, or compromise in respect of any Hazardous Substance Claims,
these actions to be performed:
(A) in accordance with Hazardous Substance Laws;
(B) in a good and proper manner;
(C) under the supervision of a qualified environmental
engineer approved in writing by Beneficiary;
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(D) in accordance with plans and specifications for
these actions approved in writing by Beneficiary; and
(E) using licensed and insured qualified contractors
approved in writing by Beneficiary;
(g) immediately furnish to Beneficiary copies of all written
communications received by Trustor from any governmental authority or
other person or given by Trustor to any person and any other information
Beneficiary may reasonably request concerning any Release, threatened
Release, Hazardous Substance Claim, or the discovery of any Hazardous
Substance on or about the Property in violation of any Hazardous
Substance Law; and
(h) keep Beneficiary generally informed regarding any Release,
threatened Release, Hazardous Substance Claim, or the discovery of any
Hazardous Substance on or about the Property in violation of any
Hazardous Substance Law.
SECTION 6.2. INSPECTION AND RECEIVERSHIP RIGHTS.
After the termination of the Master Ground Lease, upon Beneficiary's
reasonable belief of the existence of a past or present Release or threatened
Release not previously disclosed by Trustor in connection with the making of the
Loan or the execution of this Deed of Trust or upon Beneficiary's reasonable
belief that Trustor has failed to comply with any environmental provision of
this Deed of Trust or any other Loan Document and upon reasonable prior notice
(except in the case of an emergency) to Trustor, Beneficiary or its
representatives, employees, and agents, may from time to time and at all
reasonable times (or at any time in the case of an emergency) enter and inspect
the Property and every part of it (including all samples of building materials,
soil, and groundwater, and all books, records, and files of Trustor relating to
the Property) and perform those acts and things that Beneficiary deems necessary
or desirable to inspect, investigate, assess, and protect the security of this
Deed of Trust, for the purpose of determining:
(a) the existence, location, nature, and magnitude of any past or
present Release or threatened Release;
(b) the presence of any Hazardous Substances on or about the Property in
violation of any Hazardous Substance Law; and
(c) the compliance by Trustor of every environmental provision of this
Deed of Trust and every other Loan Document. In furtherance of the purposes
above, without limitation of any of its other rights, Beneficiary may:
(i) obtain a court order to enforce Beneficiary's right to enter
and inspect the Property under Civil Code ss. 2929.5, to which the
decision of Beneficiary as to whether there exists a Release, a
threatened Release, any Hazardous Substances on or about the Property in
violation of any Hazardous Substance Law, or a breach by Trustor of any
environmental provision of this Deed of Trust or any other Loan
Document, will be deemed reasonable and conclusive as between the
parties; and
(ii) have a receiver appointed under Code of Civil Procedure ss.
564 to enforce Beneficiary's right to enter and inspect the Property for
the purpose set forth above.
All costs and expenses incurred by Beneficiary with respect to the audits,
tests, inspections, and examinations that Beneficiary or its agents,
representatives, or employees may conduct, including the fees of the engineers,
laboratories, contractors, consultants, and attorneys, will be paid by Trustor.
All costs or expenses incurred by Trustee and Beneficiary pursuant to this
subsection (including without limitation court costs, consultant's fees, and
attorney fees, whether incurred in litigation and whether before or after
judgment) will bear interest at the Rate set forth in the note from the date
they are incurred until those sums have been paid in full. Except as provided by
law, any inspections or tests made by Beneficiary or its representatives,
employees, and agents will be for Beneficiary's purposes only and
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will not be construed to create any responsibility or liability on the part of
Beneficiary to Trustor or to any other person. Beneficiary will have the right,
but not the obligation, to communicate with any governmental authority regarding
any fact or reasonable belief of Beneficiary that constitutes or could
constitute a breach of any of Trustor's obligations under any environmental
provision contained in this Deed of Trust or any Loan Document.
SECTION 6.3. RELEASE AND INDEMNITY.
Trustor:
(a) releases and waives any future claims against Beneficiary for
indemnity or contribution in the event Trustor becomes liable for cleanup or
other costs under any Hazardous Substance Laws or under any Hazardous Substance
Claim;
(b) agrees to reimburse Beneficiary, on demand, for all costs and
expenses incurred by Beneficiary in connection with any review, approval,
consent, or inspection relating to the environmental provisions in this Deed of
Trust together with interest, after demand, at the Rate set forth in the note;
and
(c) agrees to indemnify, defend, and hold Beneficiary and Trustee
harmless from all losses, costs, claims, damages, penalties, liabilities, causes
of action, judgments, court costs, attorney fees and other legal expenses, costs
of evidence of title, cost of evidence of value, and other expenses
(collectively, "Expenses"), including, but not limited to, any Expenses incurred
or accruing after the foreclosure of the lien of this Deed of Trust, which
either may suffer or incur and which directly or indirectly arises out of or is
in any way connected with the breach of any environmental provision either in
this Deed of Trust or in any Loan Document or as a consequence of any Release or
threatened Release on the presence, use, generation, manufacture, storage,
disposal, transportation, Release, or threatened Release of any Hazardous
Substance on or about the Property, including the soils and groundwaters, caused
or permitted by Trustor, any prior owner or operator of the Property, any
adjoining landowner or any other party, including, without limitation, the cost
of any required or necessary repair, cleanup, remedy, or detoxification of any
Hazardous Substance and the preparation of any closure, remedial action, or
other required plans, whether that action is required or necessary by reason of
acts or omissions occurring prior to or following the recordation of this Deed
of Trust. Trustor's obligations will survive the satisfaction, release, or
cancellation of the Indebtedness, the release and reconveyance or partial
release and reconveyance of this Deed of Trust, and the foreclosure of the lien
of this Deed of Trust or deed in lieu of the Deed of Trust.
SECTION 6.4. REQUEST FOR INFORMATION.
Trustor and Beneficiary agree that:
(a) this Section 6.5 is intended as Beneficiary's written request for
information and Trustor's written response concerning the environmental
condition of the Property as provided by Code of Civil Procedure ss. 726.5; and
(b) each representation, warranty, covenant, or indemnity made by
Trustor in this Article or in any other provision of this Deed of Trust or any
Loan Document that relates to the environmental condition of the Property is
intended by Trustor and Beneficiary to be an environmental provision for
purposes of Code of Civil Procedure ss. 736 and will survive the payment of the
Indebtedness and the termination or expiration of this Deed of Trust and will
not be affected by Lender's acquisition of any interest in the Property, whether
by full credit bid at foreclosure, deed in lieu of that, or otherwise. If there
is any transfer of any portion of Trustor's interest in the Property, any
successor-in-interest to Trustor agrees by its succession to that interest that
the written request made pursuant to this Article will be deemed remade to the
successor-in-interest without any further or additional action on the part of
Beneficiary and that by assuming the debt secured by this Deed of Trust or by
accepting the interest of Trustor subject to the lien of this Deed of Trust, the
successor remakes each of the representations and warranties in this Deed of
Trust and agrees to be bound by each covenant in this Deed of Trust, including,
but not limited to, any indemnity provision.
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ARTICLE 7.
CASUALTIES AND CONDEMNATION
SECTION 7.1. CASUALTIES.
After termination of the Master Ground Lease:
(a) Trustor will promptly notify Beneficiary in writing after any loss
or damage caused by fire or other casualty to the Property, and prior to the
making of any repairs. Trustor will furnish to Beneficiary within ninety (90)
days after the loss or damage the following:
(i) evidence satisfactory to Beneficiary of the cost of repair
or reconstruction;
(ii) evidence satisfactory to Beneficiary that sufficient funds
are available or committed for the benefit of Beneficiary, including
insurance proceeds, payment and performance bonds, or otherwise, to
complete the repair or reconstruction; and
(iii) evidence satisfactory to Beneficiary that the repair or
reconstruction may be completed in accordance with all applicable laws,
rules, regulations, and ordinances and that all necessary permits and
approvals have been or will be obtained.
If Trustor does not furnish this evidence to Beneficiary within the
ninety-day period, or if Beneficiary in its sole discretion determines that
repair or reconstruction is not economically feasible, then within thirty (30)
days after the expiration of the ninety-day period, Beneficiary will have the
option (in this Deed of Trust, Repayment Option") to have all insurance proceeds
applied against the Indebtedness. If Beneficiary elects the Repayment Option,
Trustor will immediately transfer to Beneficiary all insurance proceeds received
by it, if any, to the extent of the Indebtedness, and Beneficiary will apply the
insurance proceeds received by it, if any, against the Indebtedness. If the
insurance proceeds held by Trustor and Beneficiary will exceed the Indebtedness,
any excess insurance proceeds will belong and be paid over to or be retained by
Trustor.
(b) If Beneficiary does not elect the Repayment Option within the
specified time period, Trustor will with all diligence repair or otherwise
reconstruct the damage to the Property, all according to the original plans and
specifications for the improvements and elevations or any modified plans and
specifications conforming to the then laws and regulations as will first have
been approved in writing by Beneficiary and any occupants of the Improvements
having the right to approve. Beneficiary will use all insurance proceeds, if
any, received by it relating to the damage or destruction to reimburse Trustor
from time to time for expenditures made for repair of the damage or for the
erection of any building, structure, or improvements in their place if permitted
as follows:
(i) At the end of each month against Trustor's architect's
certificate, an amount that will be that proportion of the insurance
proceeds held in trust that eighty-five percent (85%) of the payments to
be made to the contractors or materialmen for work done, materials
supplied, and services rendered during that month bears to the total
contract price.
(ii) At the completion of the work, the balance of the proceeds
required for completing the payments for the work will be paid to or for
the account of Trustor, provided that at the time of the payment:
(1) there are no liens (as evidenced by an endorsement
satisfactory to Beneficiary issued by Trustee) against the
Property by reason of the work, or proof satisfactory to
Beneficiary has been submitted that all costs of the work have
been paid; and
(2) Trustor's architect will certify that all required
work is completed and is proper and of a quality and class of
the original work required by the original plans and
specifications and in accordance with the approved plans and
specifications.
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If the insurance proceeds exceed the costs of completing the work, the
excess insurance proceeds will belong and be retained by or be paid over to
Beneficiary to be applied against the Indebtedness. If the costs of completing
the work exceed the insurance proceeds, Trustor will pay the balance of the
costs of completing the work within thirty (30) days after the completion.
SECTION 7.2. CONDEMNATION.
Trustor, immediately upon obtaining knowledge of the institution of any
proceedings for the condemnation of the Property or any portion of it, will
notify Trustee and Beneficiary of the pendency of the proceedings. Trustee and
Beneficiary may participate in any proceedings and Trustor from time to time
will deliver to Beneficiary all instruments requested by Beneficiary to permit
participation. If there are condemnation proceedings, the award or compensation
payable is assigned to and will be paid to Beneficiary. Beneficiary will be
under no obligation to question the amount of any award or compensation and may
accept it in the amount in which it is paid. In any condemnation proceedings,
Beneficiary may be represented by counsel selected by Beneficiary. The proceeds
of any award or compensation received will, at the option of Beneficiary, either
be applied, without premium, to the prepayment of the Note or be paid over to
Trustor for restoration of the Improvements in accordance with the provisions of
Section 7.1 of this Deed of Trust.
ARTICLE 8.
EVENTS OF DEFAULT AND REMEDIES OF BENEFICIARY
SECTION 8.1. EVENTS OF DEFAULT.
The following events are each an Event of Default :
(a) Default in the payment of any sum of principal or interest if not
paid within 20 days from the date due under the Note or any other sum due under
the Loan Documents.
(b) The failure (without cure during the applicable period, if any, for
cure) of any Loan Party to observe, perform, or discharge any obligation, term,
covenant, or condition of Loan Documents, any agreement relating to the
Property, or any agreement or instrument between any Loan Party and Beneficiary.
(c) The entry of an order for relief under federal bankruptcy laws as to
Trustor or the adjudication of Trustor as insolvent or bankrupt pursuant to the
provisions of any state insolvency or bankruptcy act; the commencement by
Trustor of any case, proceeding, or other action seeking any reorganization,
arrangement, composition, adjustment, liquidation, dissolution, or other relief
for debtors; Trustor's consent to, acquiescence in, or attempt to secure the
appointment of, any Receiver of all or any substantial part of its properties or
of the Property; Trustor's generally not paying its debts as they become due or
admitting in writing its inability to pay its debts or making a general
assignment for the benefit of creditors; or Trustor's taking of any action to
authorize any of the acts set forth above in this section.
(d) Any case, proceeding, or other action against Trustor is commenced,
seeking to have an order for relief entered against it as a debtor or seeking
any reorganization, arrangement, composition, adjustment, liquidation,
dissolution, or similar relief under any present or future statute, law, or
regulation relating to bankruptcy, insolvency, reorganization, or other relief
for debtors, or seeking appointment of any Receiver for Trustor or for all or
any substantial part of its property or for the Property, and that case,
proceeding, or other action:
(i) results in the entry of an order for relief against it that
is not fully stayed within seven (7) Business Days after the entry, or
15
(ii) remains undismissed for an aggregate of thirty (30) days
(whether or not consecutive);
or the possibility that any portion of the Property would, by operation of law
or otherwise, devolve on or pass to any Person other than Trustor and that
situation continues and is not remedied by Trustor within thirty (30) days after
the happening of the event.
(e) The assignment by Trustor, as lessor or sublessor, as the case may
be, of the rents or the income of the Property or any part of it (other than to
Beneficiary) without first obtaining the written consent of Beneficiary.
(f) The following events:
(i) The filing of any claim or lien against the Property or any
part of it, whether or not the lien is prior to this Deed of Trust, and
the continued maintenance of the claim or lien for a period of thirty
(30) days without discharge, satisfaction, or adequate bonding in
accordance with the terms of this Deed of Trust;
(ii) the existence of any interest in the Property other than
those of Trustor, Beneficiary, and any tenants of Trustor; or
(iii) the sale, hypothecation, conveyance, or other disposition
of the Property except in accordance with Sections 5.2 or 5.3 of this
Deed of Trust, any of which will be an Event of Default because
Trustor's obligation to own and operate the Property is one of the
inducements to Beneficiary to make the Loan;
(g) Default under any agreement to which Trustor is a party, which
agreement relates to the borrowing of money by Trustor from any Person.
(h) Any representation or warranty made by any Loan Party or any other
Person under this Deed of Trust or in, under, or pursuant to the Loan Documents,
is false or misleading in any material respect as of the date on which the
representation or warranty was made.
(i) Any of the Loan Documents, at any time after their respective
execution and delivery and for any reason, cease to be in full force or are
declared null and void, or the validity or enforceability is contested by any
Loan Party or any stockholder or partner of any Loan Party, or any Loan Party
denies that it has any or further liability or obligation under any of the Loan
Documents to which it is a party.
(j) Any of the Security Documents, at any time after their respective
execution and delivery and for any reason, cease to constitute valid and
subsisting liens or valid and perfected security interests in and to the
property purported to be subject to any of the Security Documents;
(k) Any representation made by any Loan Party in the Certification
Agreement is false or misleading in any material respect as of the date made, or
any breach or default in any of Trustor's obligations under the Certification
Agreement;
If one or more Event of Default occurs and is continuing, then
Beneficiary may declare all the Indebtedness to be due and the Indebtedness will
become due without any further presentment, demand, protest, or notice of any
kind, and Beneficiary may:
(i) in person, by agent, or by a receiver, and without regard to
the adequacy of security, the solvency of Trustor, or the existence of
waste, enter on and take possession of the Property or any part of it in
its own name or in the name of Trustee, ▇▇▇ for or otherwise collect the
rents, issues, and profits, and apply them, less costs and expenses of
operation and collection, including reasonable attorney fees, upon the
Indebtedness, all in any order that Beneficiary may determine. The
entering on and taking possession of the Property, the collection of
rents, issues, and profits, and the application of them will not cure or
waive any default or notice of default or invalidate any act done
pursuant to the notice;
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(ii) commence an action to foreclose this Deed of Trust in the
manner provided by law for the foreclosure of mortgages of real
property;
(iii) deliver to Trustee a written declaration of default and
demand for sale, and a written notice of default and election to cause
the Property to be sold, which notice Trustee or Beneficiary will cause
to be filed for record;
(iv) with respect to any Personalty, proceed as to both the real
and personal property in accordance with Beneficiary's rights and
remedies in respect of the Land, or proceed to sell the Personalty
separately and without regard to the Land in accordance with
Beneficiary's rights and remedies; or
(v) exercise any of these remedies in combination or any other
remedy at law or in equity.
SECTION 8.2. POWER OF SALE.
(a) If Beneficiary elects to foreclose by exercise of the power of sale
in this Deed of Trust, Beneficiary will also deposit with Trustee this Deed of
Trust, the Note, and any receipts and evidence of expenditures made and secured
as Trustee may require. If notice of default has been given as then required by
law, and after lapse of the time that may then be required by law, after
recordation of the notice of default, Trustee, without demand on Trustor, will,
after notice of sale having been given as required by law, sell the Property at
the time and place of sale fixed by it in the notice of sale, either as a whole
or in separate parcels as Trustee determines, and in any order that it may
determine, at public auction to the highest bidder. Trustee may postpone sale of
all or any portion of the Property by public announcement at the time and place
of sale, and from time to time after that may postpone the sale by public
announcement at the time fixed by the preceding postponement, and without
further notice make the sale at the time fixed by the last postponement; or
Trustee may, in its discretion, give a new notice of sale. Beneficiary may
rescind any notice of default at any time before Trustee's sale by executing a
notice of rescission and recording it. The recordation of the notice will
constitute a cancellation of any prior declaration of default and demand for
sale and of any acceleration of maturity of Indebtedness affected by any prior
declaration or notice of default. The exercise by Beneficiary of the right of
rescission will not constitute a waiver of any default then existing or
subsequently occurring, or impair the right of Beneficiary to execute other
declarations of default and demand for sale, or notices of default and of
election to cause the Property to be sold, nor otherwise affect the Note or this
Deed of Trust, or any of the rights, obligations, or remedies of Beneficiary or
Trustee. After sale, Trustee will deliver to the purchaser its deed conveying
the property sold, but without any covenant or warranty, express or implied. The
recitals in the deed of any matters or facts will be conclusive proof of their
truthfulness. Any Person, including Trustor, Trustee, or Beneficiary, may
purchase at that sale. If allowed by law, Beneficiary, if it is the purchaser,
may turn in the Note at the amount owing on it toward payment of the purchase
price (or for endorsement of the purchase price as a payment on the Note if the
amount owing exceeds the purchase price). Trustor expressly waives any right of
redemption after sale that Trustor may have at the time of sale or that may
apply to the sale.
(b) Trustee, upon the sale, will make (without any covenant or warranty,
express or implied), execute and, after due payment made, deliver to a purchaser
and its heirs or assigns a deed or other record of interest, as the case may be,
to the Property sold, which will convey to the purchaser all the title and
interest of Trustor in the Property and will apply the proceeds of the sale in
payment:
(i) first, of the expenses of the sale together with the
expenses of the trust, including, without limitation, attorney fees,
that will become due on any default made by Trustor, and also any sums
that Trustee or Beneficiary have paid for procuring a search of the
title to the Property subsequent to the execution of this Deed of Trust;
and
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(ii) second, in payment of the Indebtedness then remaining
unpaid, and the amount of all other monies with interest in this Deed of
Trust agreed or provided to be paid by Trustor.
Trustee will pay the balance or surplus of the proceeds of sale to Trustor and
its successors or assigns as its interests may appear.
SECTION 8.3. PROOF OF DEFAULT.
If there is a sale of the Property, or any part of it, and the execution
of a deed for it, the recital of default and of recording notice of breach and
election of sale, and of the elapsing of the required time between the recording
and the following notice, and of the giving of notice of sale, and of a demand
by Beneficiary that the sale should be made, will be conclusive proof of the
default, recording, election, elapsing of time, and the due giving of notice,
and that the sale was regularly and validly made on proper demand by
Beneficiary. Any deed with these recitals will be effectual and conclusive
against Trustor, its successors, and assigns, and all other Persons. The receipt
for the purchase money recited or in any deed executed to the purchaser will be
sufficient discharge to the purchaser from all obligations to see to the proper
application of the purchase money.
SECTION 8.4. PROTECTION OF SECURITY.
If an Event of Default occurs and is continuing, Beneficiary or Trustee,
without limitation to do so, without notice to or demand upon Trustor, and
without releasing Trustor from any obligations or defaults may:
(a) enter on the Property in any manner and to any extent that either
deems necessary to protect the security of this Deed of Trust;
(b) appear in and defend any action or proceeding purporting to affect,
in any manner, the Obligations or the Indebtedness, the security of this Deed of
Trust, or the rights or powers of Beneficiary or Trustee;
(c) pay, purchase, or compromise any encumbrance, charge, or lien that
in the judgment of Beneficiary or Trustee is prior or superior to this Deed of
Trust; and
(d) pay necessary expenses, employ counsel, and pay reasonable attorney
fees.
Trustor agrees to repay on demand all sums expended by Trustee or Beneficiary
pursuant to this section with interest at the Rate set forth in the note, and
those sums, with interest, will be secured by this Deed of Trust.
SECTION 8.5. RECEIVER.
If an Event of Default occurs and is continuing, Beneficiary, as a
matter of strict right and without notice to Trustor or anyone claiming under
Trustor and without regard to the then value of the Property, will have the
right to apply ex parte to any court having jurisdiction to appoint a Receiver
of the Property, and Trustor waives notice of any application for that, provided
a hearing to confirm the appointment with notice to Trustor is set within
fourteen (14) days after the appointment. Any Receiver will have all the powers
and duties of receivers in similar cases and all the powers and duties of
Beneficiary in case of entry as provided in this Deed of Trust, and will
continue as such and exercise all those powers until the date of confirmation of
sale, unless the receivership is terminated sooner.
SECTION 8.6. CURING THE DEFAULTS.
If Trustor at any time fails to perform or comply with any of the terms,
covenants, and conditions required on Trustor's part to be performed and
complied with under this Deed of Trust, the Note, any of the other Loan
Documents, or any other agreement that, under the terms of this Deed of Trust,
Trustor is required to perform, then
18
Beneficiary, after seven (7) Business Days' notice to Trustor (or without notice
if Beneficiary determines that an emergency exists), and without waiving or
releasing Trustor from any of the Obligations, may, subject to the provisions of
any of the agreements:
(a) make from its own funds any payments payable by Trustor and take
out, pay for, and maintain any of the insurance policies provided for; and
(b) perform any other acts on the part of Trustor to be performed and
enter on the Property for that purpose. The making by Beneficiary of payments
out of Beneficiary's own funds will not, however, be deemed to cure the default
by Trustor, and they will not be cured unless and until Trustor reimburses
Beneficiary for the payments. All sums paid and all reasonable costs and
expenses incurred by Beneficiary in connection with the performance of any act,
together with interest on unpaid balances at the Rate set forth in the note from
the respective dates of Beneficiary's making of each payment, will be added to
the principal of the Indebtedness, will be secured by the Security Documents and
by the lien of this Deed of Trust, prior to any right, title, or interest in or
claim on the Property attaching or accruing subsequent to the lien of this Deed
of Trust, and will be payable by Trustor to Beneficiary on demand.
SECTION 8.7. INSPECTION RIGHTS.
On reasonable notice (except in the case of an emergency), and without
releasing Trustor from any obligation to cure any default of Trustor,
Beneficiary or its agents, representatives, and employees acting by themselves
or through a court-appointed receiver, may, from time to time and at all
reasonable times (or at any time in the case of an emergency) enter and inspect
the Property and every part of it (including all samples of building materials,
soil, and groundwater, and all books, records, and files of Trustor relating to
the Property) and perform any acts and things as Beneficiary deems necessary or
desirable to inspect, investigate, assess, and protect the security of this Deed
of Trust, for the purpose of determining:
(a) the existence, location, nature, and magnitude of any past or
present Release or threatened Release,
(b) the presence of any Hazardous Substances on or about the Property in
violation of any Hazardous Substance Law, and
(c) the compliance by Trustor of every environmental provision of this
Deed of Trust and every other Loan Document.
In furtherance of these purposes, without limitation of any of its other
rights, Beneficiary may:
(a) obtain a court order to enforce Beneficiary's right to enter and
inspect the Property under Civil Code ss. 2929.5, to which the decision of
Beneficiary as to whether there exists a Release, threatened Release, any
Hazardous Substances on or about the Property in violation of any Hazardous
Substance Law, or a breach by Trustor of any environmental provision of this
Deed of Trust or any other Loan Document, will be deemed reasonable and
conclusive as between Trustor, Trustee, and Beneficiary; and
(b) have a receiver appointed under Code of Civil Procedure ss. 564 to
enforce Beneficiary's right to enter and inspect the Property for Hazardous
Substances.
All costs and expenses incurred by Beneficiary with respect to the
audits, tests, inspections, and examinations that Beneficiary or its agents,
representatives, or employees may conduct, including the fees of the engineers,
laboratories, contractors, consultants, and attorneys, will be paid by Trustor.
All costs or expenses incurred by Trustee and Beneficiary pursuant to this
subsection (including, without limitation, court costs, consultants fees, and
attorney fees, whether incurred in litigation and whether before or after
judgment) will bear interest at the Rate set forth in the note from the date
they are incurred until they have been paid in full. Except as provided by law,
any inspections or tests made by Beneficiary or its representatives, employees,
and agents, will be for Beneficiary's purposes only and will not be construed to
create any responsibility or liability on the part of Beneficiary to Trustor or
to any other
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person. Beneficiary will have the right, but not the obligation, to communicate
with any governmental authority regarding any fact or reasonable belief of
Beneficiary that constitutes or could constitute a breach of any of Trustor's
obligations under any environmental provision in this Deed of Trust or any Loan
Document.
SECTION 8.8. JUDGMENT ON ENVIRONMENTAL PROVISION.
Beneficiary or its agents, representatives, and employees may seek a
judgment that Trustor has breached its covenants, representations, or warranties
in Article 6 of this Deed of Trust or any other covenants, representations, or
warranties that are deemed to be environmental provisions pursuant to Code of
Civil Procedure ss. 736 (each an Environmental Provision"), by commencing and
maintaining an action or actions in any court of competent jurisdiction pursuant
to Code of Civil Procedure ss. 736, whether commenced prior to or after
foreclosure of the lien of this Deed of Trust. Beneficiary or its agents,
representatives, and employees may also seek an injunction to cause Trustor to
▇▇▇▇▇ any action in violation of any Environmental Provision and may seek the
recovery of all costs, damages, expenses, fees, penalties, fines, judgments,
indemnification payments to third parties, and other out-of-pocket costs or
expenses actually incurred by Beneficiary (collectively, "Environmental Costs")
incurred or advanced by Beneficiary relating to the cleanup, remedy, or other
response action required by any Hazardous Substances Law, or any Hazardous
Substance Claim, or which Beneficiary believes necessary to protect the
Property. It will be conclusively presumed between Beneficiary and Trustor that
all Environmental Costs incurred or advanced by Beneficiary relating to the
cleanup, remedy, or other response action of or to the Property were made by
Beneficiary in good faith. All Environmental Costs incurred by Beneficiary under
this subsection (including, without limitation, court costs, consultant fees,
and attorney fees, whether incurred in litigation and whether before or after
judgment) will bear interest at the Rate set forth in the note from the date of
expenditure until those sums have been paid in full. Beneficiary will be
entitled to bid, at any trustee's or foreclosure sale of the Property, the
amount of the costs, expenses, and interest in addition to the amount of other
Indebtedness.
SECTION 8.9. WAIVE LIEN.
Beneficiary or its agents, representatives, and employees may waive its
lien against the Property or any portion of it, including the Improvements and
the Personal Property, to the extent that the Property is found to be
environmentally impaired in accordance with Code of Civil Procedure ss. 726.5,
and to exercise all rights and remedies of an unsecured creditor against Trustor
and all of Trustor's assets and property for the recovery of any deficiency and
Environmental Costs, including, but not limited to, seeking an attachment order
under Code of Civil Procedure ss. 483.010. As between Beneficiary and Trustor,
for purposes of Code of Civil Procedure ss. 726.5, Trustor will have the burden
of proving that Trustor or any related party (or any affiliate or agent of
Trustor or any related party) was not in any way negligent in permitting the
Release or threatened Release of the Hazardous Substances.
SECTION 8.10. EXCEPTION TO NONRECOURSE.
Trustor agrees that regardless of anything in this Deed of Trust or in
the Loan Documents, the Environmental Costs will be exceptions to any
nonrecourse or exculpatory provision of the Loan Documents, and Trustor will be
fully and personally liable for the Environmental Costs. That liability will not
be limited to the original principal amount of the obligations secured by this
Deed of Trust, and Trustor's obligations will survive the foreclosure, deed in
lieu of foreclosure, release, reconveyance, or any other transfer of the
Property or this Deed of Trust. For the purposes of any action brought under
this subsection, Trustor waives the defense of laches and any applicable statute
of limitations.
SECTION 8.11. REMEDIES CUMULATIVE.
All remedies of Beneficiary provided for in this Deed of Trust are
cumulative and will be in addition to all other rights and remedies provided in
the other Loan Documents or provided by law, including any banker's lien and
right of offset. The exercise of any right or remedy by Beneficiary will not in
any way constitute a cure or waiver of
20
default, will not invalidate any act done pursuant to any notice of default, nor
will it prejudice Beneficiary in the exercise of any of its rights unless, in
the exercise of those rights, Beneficiary collects the total amount of the
Indebtedness.
ARTICLE 9.
SECURITY AGREEMENT
SECTION 9.1. GRANT OF SECURITY INTEREST.
Trustor also grants to Beneficiary a security interest in all of
Trustor's right, title, and interest now owned or later acquired to the
following property (collectively, "Collateral") now or later affixed to or
located on the Property, or used in connection with the operation of the
Property or the Improvements and all the proceeds of that property: the
Personalty; the Fixtures; all machinery, equipment, engines, appliances, and
fixtures for generating or distributing air, water, heat, electricity, light,
fuel, or refrigeration, or for ventilating or sanitary purposes, or for the
exclusion of vermin or insects, or for the removal of dust, refuse, or garbage;
all wallbeds, wall safes, built-in furniture and installations, shelving,
lockers, partitions, doorstops, vaults, motors, elevators, dumbwaiters, awnings,
window shades, venetian blinds, light fixtures, fire hoses and brackets and
boxes for them, fire sprinklers, alarm systems, draperies, drapery rods and
brackets, mirrors, mantles, screens, linoleum, carpets and carpeting, plumbing,
bathtubs, sinks, basins, pipes, faucets, water closets, laundry equipment,
washers, dryers, iceboxes, refrigerators, heating units, stoves, ovens, ranges,
dishwashers, disposals, water heaters, incinerators, furniture, fixtures, and
furnishings; all communication systems; all specifically designed installations
and furnishings; all building materials, supplies, and equipment now or later
delivered to the Property; all office equipment, including, without limitation,
all computers, computer systems, hardware and software, access codes, access
keys, computer programs, file names, typewriters, duplicating machines, word
processing equipment, adding machines, calculators, dictating equipment,
printing presses, and related equipment; all inventories and supplies,
including, without limitation, office supplies, soap, light bulbs, toilet paper,
and linens; all clocks, television sets, radios, and other electronic or
audio/video equipment; all podiums, microphones, movie and slide projectors and
screens, and other property relating to conference and convention facilities;
all security and cleaning deposits collected from any tenants or lessees of any
part of the Property, all deposits collected from purchasers pursuant to
contracts for sale of the Property or any portion of the Property; and, subject
to the other provisions of this Deed of Trust, all proceeds of any fire and
builders' risk insurance policy, or of any policy insuring the Property (and the
contents of the Improvements) against any other perils, all awards made in
eminent domain proceedings, or purchased in lieu of that, made with respect to
the Property, and any compensation, award, payment, or relief given by any
governmental agency or other source because of damage to the Property resulting
from earthquake, flood, windstorm, or any emergency or any other event or
circumstance. The specific enumerations in this Deed of Trust do not exclude the
general.
The security interest also includes all additions to, substitutions for,
changes in, or replacements of the whole or any part of these articles of
property, together with all contract rights of Trustor in construction
contracts, bonds, agreements for purchase and sale of the Property, all policies
of insurance arising out of the improvement or ownership of the Property, and
all accounts, contract rights, chattel paper, instruments, general intangibles,
and other obligations of any kind now or later existing, arising out of, or in
connection with the operation or development of the Property. The security
interest also includes all rights now or later existing in all security
agreements, leases, and other contracts securing or otherwise relating to any
accounts, contract rights, chattel paper, instruments, general intangibles, or
obligations; all causes of action and recoveries now or later existing for any
loss or diminution in value of the Property; all proceeds of any of the
Collateral; and, to the extent not otherwise included, all payments under
insurance (whether Beneficiary is the loss payee), or any indemnity, warranty,
or guaranty payable by reason of loss or damage to or otherwise with respect to
any of the Collateral.
SECTION 9.2. REMEDIES.
This Deed of Trust constitutes a security agreement with respect to the
Collateral in which Beneficiary is granted a security interest. Beneficiary has
all of the rights and remedies of a secured party under the California Uniform
Commercial Code as well as all other rights and remedies available at law or in
equity. Trustor agrees to execute and
21
deliver on demand, and irrevocably constitutes and appoints Beneficiary the
attorney-in-fact of Trustor to execute, deliver, and file, any security
agreements, financing statements, continuation statements, or other instruments
that Beneficiary may request to impose, perfect, or continue the perfection of
the lien or security interest created by this Deed of Trust. On the occurrence
of any Event of Default (taking into account any applicable period of grace or
cure), Beneficiary will have the right to sell at any public or private sales as
permitted by applicable law any of the Collateral that is personal property.
Beneficiary will also have any other rights and remedies, whether at law, in
equity, or by statute that are available to secured creditors. Any disposition
may be conducted by an employee or agent of Beneficiary or Trustee. Any Person,
including both Trustor and Beneficiary, will be eligible to purchase any part or
all of the Collateral at any disposition.
SECTION 9.3. EXPENSES.
Expenses of retaking, holding, and preparing for sale, selling, or the
like will be borne by Trustor and will include Beneficiary's and Trustee's
attorney fees and legal expenses. Trustor, on demand of Beneficiary, will
assemble the Collateral and make it available to Beneficiary at the Property, a
place deemed to be reasonably convenient to Beneficiary and Trustor. Beneficiary
will give Trustor at least ten (10) days' prior written notice of the time and
place of any public sale or other disposition of the Collateral or of the time
of or after which any private sale or any other intended disposition is to be
made. If the notice is sent to Trustor in the manner provided for the mailing of
notices in this Deed of Trust, it is deemed reasonable notice to Trustor.
SECTION 9.4. FIXTURE FILING.
This Deed of Trust constitutes a financing statement filed as a fixture
filing in the Official Records of the County Recorder of the county in which the
Property is located with respect to all Fixtures included within the term
Property as used in this Deed of Trust and with respect to any goods,
Collateral, or other personal property that may now be or later become fixtures.
SECTION 9.5. ASSIGNMENT OF AGREEMENTS.
(a) As partial security for the Loan, Trustor sells, assigns, transfers,
sets over, and delivers to Beneficiary all of Trustor's right, title, and
interest in all agreements, permits, and contracts pertaining to the use or
operation of the Property, including, but not limited to, environmental impact
reports; negative declarations; map approvals; grading and construction permits;
conditional use permits; applications for all permits; management agreements;
all development rights in the Property that Trustor may now or later acquire
(including, without limitation, development rights arising in connection with
any action by a governmental entity, including, by way of illustration, but not
of limitation, inducement resolutions of county, municipal, or other
governmental entities); agreements with contractors, suppliers, and construction
managers; and agreements pertaining to the transfer of development rights or
permitted floor area under applicable laws or ordinances (collectively,
"Agreements"), as they may be amended or otherwise modified from time to time,
including, without limitation, the right of Trustor to terminate any of the
Agreements, to perform under them, and to compel performance and otherwise
exercise all remedies under them, together with the immediate and continuing
right to collect and receive all sums that may become due to Trustor, or which
Trustor may now or later become entitled to demand or claim, arising or issuing
out of the Agreements, including, without limitation, claims of Trustor for
damages arising out of breach of or default under any of the Agreements and all
rights of Trustor to receive proceeds of any insurance, indemnity, warranty, or
guaranty with respect to any of the Agreements. However, so long as no Event of
Default has occurred and is continuing, Trustor will have the right under a
license granted to collect and retain all sums that may become payable to
Trustor under the Agreements.
(b) Trustor covenants and agrees to punctually observe, perform, and
discharge the obligations, terms, covenants, conditions, and warranties to be
observed, performed, and discharged by it under the Agreements. Beneficiary,
upon an Event of Default, at its option and upon written notice to Trustor, will
have the right to declare the assignment in this Section 9.5 to be absolute,
and, in addition, Beneficiary will have the complete right then or later to
exercise and enforce all of the rights and remedies provided by law.
22
(c) The acceptance by Beneficiary of the assignment in this Article 9.5,
with all the rights, powers, privileges, and authority granted will not, prior
to the exercise of Beneficiary's right to declare the assignment in this Article
9.5 to be absolute, obligate Beneficiary to assume any obligations under the
Agreements or to take any action under them, or to expend any money or incur any
expense or perform or discharge any obligation, duty, or liability under the
Agreements, or to assume any obligation or responsibility for the nonperformance
of the provisions by Trustor.
ARTICLE 10.
ASSIGNMENT OF LEASES AND RENTS
SECTION 10.1. ASSIGNMENT.
Trustor irrevocably assigns to Beneficiary
(a) all of Trustor's right, title, and interest in all leases; licenses;
agreements relating to the management, leasing, or operation of the Property;
and other agreements of any kind relating to the use or occupancy of the
Property, whether now existing or entered into after the date of this Deed of
Trust ("Leases"), and
(b) the rents, issues, and profits of the Property, including, without
limitation, all amounts payable and all rights and benefits accruing to Trustor
under the Leases ("Payments"), for the purposes and on the terms and conditions
below.
The term Leases will also include all guarantees of and security for the
lessees' performance, and all amendments, extensions, renewals, or modifications
that are permitted. 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 on, and may be exercised without, possession of the Property.
SECTION 10.2. LICENSE.
Beneficiary confers on Trustor a license ("License") to collect and
retain the Payments as they become due until the occurrence of an Event of
Default. Upon an Event of Default, the License will be automatically revoked and
Beneficiary may collect and retain the Payments without notice and without
taking possession of the Property. Trustor irrevocably authorizes and directs
the lessees under the Leases to rely on and comply with any notice or demand by
Beneficiary for the payment to Beneficiary of any rental or other sums that may
at any time become due under the Leases, or for the performance of any of the
lessees' undertakings under the Leases. The lessees will have no right or duty
to inquire as to whether any Default has actually occurred or is then existing.
Trustor relieves the lessees from any liability to Trustor by reason of relying
on and complying with any notice or demand by Beneficiary.
SECTION 10.3. EFFECT OF ASSIGNMENT.
The assignment will not impose on Beneficiary any duty to produce rents,
issues, or profits from the Property, or cause Beneficiary to be:
(a) a mortgagee-in-possession for any purpose;
(b) responsible for performing any of the obligations of the lessor
under any of the Leases; or
(c) responsible for any waste committed by lessees or any other parties,
any dangerous or defective condition of the Property, or any negligence in the
management, upkeep, repair, or control of the Property.
Beneficiary will not be liable to Trustor or any other party as a consequence of
the exercise of the rights granted to Beneficiary under this assignment or the
failure of Beneficiary to perform any obligation of Trustor arising under the
Leases.
23
SECTION 10.4. LEASING COVENANTS.
Trustor covenants and agrees as follows:
(a) At Trustor's sole cost to:
(i) perform all obligations of the lessor under the Leases and
enforce performance by the lessees of their obligations under the
Leases;
(ii) subject to the provisions of Section 10.4(b)(iv) below,
enforce all remedies available to Trustor in case of default by the
lessees under any of the Leases and prosecute and defend any action,
arbitration, or other controversy relating to any of the Leases or to
Trustor's interest in any of the Leases;
(iii) give Beneficiary prompt notice of any default that occurs
under any of the Leases, whether by the lessees or Trustor;
(iv) exercise diligent, good-faith efforts to keep all portions
of the Property leased at all times and at rentals not less than the
fair market rental value;
(v) promptly upon execution, deliver to Beneficiary fully
executed counterpart originals of the Leases; and
(b) except with Beneficiary's prior written consent, not to:
(i) enter into any Leases after the date of this Deed of Trust;
(ii) execute any other assignment relating to any of the Leases
or the Payments;
(iii) discount any rent or other sums due under the Leases or
collect them in advance, other than to collect rent one (1) month in
advance of the time when it becomes due;
(iv) terminate, modify, or amend any of the terms of the Leases
or release or discharge the lessees from any obligations;
(v) consent to any assignment or subletting by any lessee; or
(vi) subordinate any of the Leases to any other deed of trust or
encumbrance.
Any attempted action in violation of the provisions of Section 10.4(b) will be
voidable at Beneficiary's election.
SECTION 10.5. APPLICATION OF RENTS.
Beneficiary, in its sole discretion, may apply, or require the
application of, all amounts received pursuant to the assignment to the payment
of any one or more of the Obligations in any order that Beneficiary may elect.
SECTION 10.6. ESTOPPEL CERTIFICATES.
Within twenty (20) days after request by Beneficiary, Trustor will
deliver to Beneficiary and to any party designated by Beneficiary estoppel
certificates executed by Trustor and by each of the lessees, in recordable form,
certifying:
(a) that the assignment and the Leases are in full force;
24
(b) the date of each lessee's most recent payment of rent;
(c) that there are no defenses or offsets outstanding, or stating those
claimed by Trustor or lessees under the assignment or the Leases,; and
(d) any other information reasonably requested by Beneficiary.
SECTION 10.7. REMEDIES.
In addition to any other remedies in this Deed of Trust, Beneficiary
will have the following rights and remedies upon the occurrence of an Event of
Default:
(a) To receive the Payments and any other amounts arising or accruing
under the Leases or from the Property;
(b) To collect, ▇▇▇ for, settle, compromise, and give releases for the
Payments and pursue any remedies for the enforcement of the Leases or Trustor's
rights under the Leases; and
(c) To take possession of the Property, and hold, manage, lease, and
operate it on any terms and for any period of time that Beneficiary may deem
proper and, either with or without taking possession of the Property, in its own
name, make from time to time all alterations, renovations, repairs, or
replacements that Beneficiary may deem proper.
SECTION 10.8. DEFINITIONS.
The terms lessor and lessors as used in this Deed of Trust will include
all owners, landlords, licensors, and other parties in a similar position with
respect to the Leases. The terms lessee and lessees will include any tenants and
licensees and any other parties in a similar position and will also include any
guarantors of or other obligors under the Leases.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.1. SUCCESSOR TRUSTEE.
Beneficiary may remove Trustee or any successor trustee at any time and
appoint a successor trustee by recording a written substitution in the county
where the Property is located, or in any other manner permitted by law. Upon
that appointment, all of the powers, rights, and authority of Trustee will
immediately become vested in the successor.
SECTION 11.2. CHANGE OF LAW.
If any law is passed, after the date of this Deed of Trust, that deducts
from the value of the Property, for the purposes of taxation, any lien on it, or
changes in any way the laws now in force for the taxation of mortgages, deeds of
trust, or debts secured by mortgage or deed of trust (other than laws imposing
taxes on income) or the manner of the collection of any taxes so as to affect
adversely the rights of Beneficiary as holder of the Note and Beneficiary under
this Deed of Trust, the Indebtedness will become due at Beneficiary's option,
exercised by thirty (30) days' notice to Trustor unless Trustor, within that
thirty (30) day period, if permitted by law, assumes the payment of any tax or
other charge imposed on Beneficiary for the period remaining until full payment
by Trustor of the Indebtedness.
SECTION 11.3. NO WAIVER.
No waiver by Beneficiary of any default or breach by Trustor will be
implied from any omission by Beneficiary to take action on account of that
default if the default persists or is repeated. Also, no express waiver will
affect any default other than the default in the waiver and the waiver will be
operative only for the time and to the extent stated.
25
Waivers of any covenant, term, or condition in this Deed of Trust will not be
construed as a waiver of any subsequent breach of the same covenant, term, or
condition. The consent or approval by Beneficiary for any act by Trustor
requiring further consent or approval will not be deemed to waive or render
unnecessary the consent or approval for any subsequent similar act.
SECTION 11.4. ABANDONMENT.
Subject to any chattel mortgages, security agreements, or other liens on
title that may exist with the consent of Beneficiary, or any provided for in
this Deed of Trust, all Personalty that upon foreclosure of the Property is
owned by Trustor and is used in connection with the operation of the Property
will be deemed at Beneficiary's option to have become on that date a part of the
Property and abandoned to Beneficiary in its then condition.
SECTION 11.5. NOTICES.
All notices, advices, demands, requests, consents, statements,
satisfactions, waivers, designations, refusals, confirmations, or denials that
may be required or contemplated under this Deed of Trust for any party to serve
on or give to any other will be in writing, and, if not in writing, will not be
deemed to have been given. Also, they must be either personally served or sent
with return receipt requested by registered or certified mail with postage
(including registration or certification charges) prepaid in a securely enclosed
and sealed envelope as follows:
(a) If to Trustor, addressed to: ▇▇▇▇▇▇ Raceway Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) If to Beneficiary, addressed to: Sonoma Funding Corporation
c/o Speedway Motorsports, Inc.
US Highway 29 North
Post Office ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
SECTION 11.6. SURVIVAL.
The covenants and agreements in this Deed of Trust will bind and inure
to the benefit of Beneficiary and Trustor and their successors and assigns. It
is agreed that Beneficiary may assign to or grant a participation in any one or
more lenders, free from any right of counterclaim, recoupment, or setoff by
Trustor, Beneficiary's rights and obligations in whole or in part under the Loan
Documents. Nothing in this Article 11.6 is intended to limit other provisions in
the Loan Documents that by their terms survive the repayment of the Indebtedness
or the termination of any Loan Document.
SECTION 11.7. SEVERABILITY.
If any term, provision, covenant, or condition of this Deed of Trust or
any application of it is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, in whole or in part, all terms, provisions,
covenants, and conditions of this Deed of Trust and all applications of it not
held invalid, void, or unenforceable will continue in full force and will not be
affected, impaired, or invalidated.
SECTION 11.8. REFERENCES TO FORECLOSURE.
References in this Deed of Trust to foreclosure and related phrases are
references to the appropriate procedure in connection with Trustee's private
power of sale, any judicial foreclosure proceeding, and any deed given in lieu
of foreclosure.
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SECTION 11.9. JOINDER OF FORECLOSURE.
If Beneficiary holds any other or additional security for the payment of
any Indebtedness or performance of any Obligation, its sale or foreclosure, on
any default in the payment or performance, in Beneficiary's sole discretion, may
be prior to, subsequent to, or joined or otherwise contemporaneous with any sale
or foreclosure. In addition to the rights in this Deed of Trust specifically
conferred, Beneficiary, at any time and from time to time, may exercise any
right or remedy now or later given by law to beneficiaries under deeds of trust
generally, or to the holders of any obligations of the kind secured.
SECTION 11.10. RIGHTS OF BENEFICIARY AND TRUSTEE.
At any time and from time to time, without liability and without notice, and
without releasing or otherwise affecting the liability of any person for payment
of any Indebtedness,
(a) Beneficiary, at its sole discretion and only in writing, may extend the time
for or release any Person now or later liable for payment of any Indebtedness,
or accept or release additional security, or subordinate the lien or charge of
this Deed of Trust, or
(b) Trustee, on written request of Beneficiary and presentation of the Note, any
additional notes secured by this Deed of Trust, and this Deed of Trust for
endorsement, may reconvey any part of the Property, consent to the making of any
map or plat of it, join in granting any easement on it, or join in any agreement
of extension or subordination.
On Beneficiary's written request and surrender of the Note, any additional notes
secured by this Deed of Trust, and this Deed of Trust to Trustee for
cancellation, and on payment to Trustee of its fees and expenses, Trustee will
reconvey without warranty the then trust property. The recitals in any
reconveyance will be conclusive proof of the truthfulness of them, and the
grantee in any reconveyance may be described as the person legally entitled.
SECTION 11.11. COPIES.
Trustor will promptly give to Beneficiary copies of all
(a) notices of violation that Trustor receives from any governmental agency or
authority, and
(b) notices of default that Trustor receives under any agreement relating to the
borrowing of money by Trustor from any Person.
SECTION 11.12. ERISA COMPLIANCE.
Trustor will at all times comply with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), with respect to any
retirement or other employment benefit plan to which it is a party as employer.
As soon as possible after Trustor knows, or has reason to know, that any
Reportable Event (defined in ERISA) with respect to any plan of Trustor has
occurred, it will furnish to Beneficiary a statement in writing setting forth
details about the Reportable Event and the action, if any, that Trustor proposes
to take, together with a copy of the notice of the Reportable Event furnished to
the Pension Benefit Guaranty Corporation. In addition, if at any time the loan
evidenced by the Note is deemed in whole or in part to be a transaction
prohibited by the provisions of ERISA, Trustor will immediately reimburse
Beneficiary on demand for all taxes levied against or costs incurred by
Beneficiary or Trustee by reason of the Reportable Event.
SECTION 11.13. SUBORDINATION.
At the option of Beneficiary, this Deed of Trust will become subject and
subordinate, in whole or in part (but not with respect to priority of
entitlement to any insurance proceeds, damages, awards, or compensation
resulting from damage to the Property or condemnation or exercise of power of
eminent domain), to any contracts
27
of sale or any leases of the Property on the execution by Beneficiary and
recording of a unilateral declaration to that effect in the official records of
the county and state where the Property is located. Beneficiary may require the
issuance of any title insurance endorsements to the Title Policy in connection
with any subordination that Beneficiary, in its judgment, determines are
appropriate, and Trustor will be obligated to pay any cost or expense incurred
in connection with the issuance.
SECTION 11.14. NO MERGER.
So long as any of the Indebtedness remains unpaid or Beneficiary has any
further obligation under the Loan Documents, unless Beneficiary otherwise
consents in writing, the fee estate of Trustor in the Property or any part of it
will not merge, by operation of law or otherwise, with any leasehold or other
estate in the Property or any part of it, but will always be kept separate and
distinct, regardless of the union of the fee estate and the leasehold or other
estate in Trustor or any other Person.
SECTION 11.15. INSPECTION OF PROPERTY.
Beneficiary is authorized by itself or its agents, employees, or
workers, to enter at any reasonable time on prior written notice to Trustor on
any part of the Property for the purpose of inspecting it, and for the purpose
of performing any of the acts it is authorized to perform under the terms of
this Deed of Trust. Trustor agrees to cooperate with Beneficiary to facilitate
any inspection.
SECTION 11.16. PERFORMANCE BY TRUSTOR.
Trustor will faithfully perform every covenant to be performed by
Trustor under any lien or encumbrance, including, without limiting the
generality of this Deed of Trust, mortgages, deeds of trust, leases,
declarations or covenants, conditions and restrictions, and other agreements
that affect the Property, in law or in equity, that Beneficiary reasonably
believes may be prior and superior to or on a parity with the lien or charge of
this Deed of Trust. A breach of or a default under any lien or encumbrance that
exists after any applicable grace period in the pertinent instrument has expired
without that breach or default having been cured, will constitute an Event of
Default under this Deed of Trust. If Trustor fails to do so, Beneficiary,
without demand or notice and in its sole judgment, may do any things required by
Trustor by any of the provisions in this Deed of Trust and incur and pay
expenses in connection with that. Nothing in this section affects Trustor's
obligations pursuant to Sections 5.2 and 5.3 of this Deed of Trust or limits
Beneficiary's rights.
SECTION 11.17. PERSONALTY SECURITY INSTRUMENTS.
Trustor agrees that if Beneficiary at any time holds additional security
for any obligations secured by this Deed of Trust, it may enforce the terms of
it or otherwise realize on it, at its option, either before or concurrently or
after a sale is made under this Deed of Trust, and may apply the proceeds on the
Indebtedness secured without affecting the status or waiving any right to
exhaust any other security, including the security under this Deed of Trust, and
without waiving any breach or default or any right or power, whether exercised
under this Deed of Trust or in any other security.
SECTION 11.18. SUITS TO PROTECT PROPERTY.
Trustor agrees to appear in and defend any action or proceeding
purporting to affect the security of this Deed of Trust or any additional or
other security for the obligations secured, the interest of Beneficiary or the
rights, powers, or duties of Trustee, and to pay all costs and expenses,
including, without limitation, cost of evidence of title and attorney fees, in
any action or proceeding in which Beneficiary or Trustee may appear or be made a
party, including, but not limited to, foreclosure or other proceeding commenced
by those claiming a right to any part of the Property under subordinate liens,
in any action to partition or condemn all or part of the Property, whether
pursued to final judgment, and in any exercise of the power of sale in this Deed
of Trust, whether the sale is actually consummated.
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SECTION 11.19. JUNIOR LIENS.
Trustor agrees:
(a) that as of the date of this Deed of Trust there are no encumbrances
to secure debts junior to this Deed of Trust and
(b) that there are to be none as of the date when this Deed of Trust
becomes of record.
SECTION 11.20. FURTHER ADVANCES.
On the request of Trustor or its permitted successors in ownership of
the Land, Beneficiary may, at its option, at any time before full payment of the
Indebtedness, make further advances to Trustor or the successors in ownership,
with interest and late charges to be secured by this Deed of Trust. However, the
amount of principal secured by this Deed of Trust and remaining unpaid will not
at the time of and including any advance exceed the original principal sum
secured. Also, if Beneficiary, at its option, makes a further advance or
advances, Trustor or the successors in ownership agree to execute and deliver to
Beneficiary a note, payable on or before the maturity of the Indebtedness
secured and bearing any other terms that Beneficiary will require.
SECTION 11.21. WAIVER OF STATUTE OF LIMITATIONS.
The pleading of any statute of limitations as a defense to any
obligations secured by this Deed of Trust is waived, to the fullest extent
permissible by law.
SECTION 11.22. CHARGES FOR STATEMENTS.
Trustor agrees to pay Beneficiary's reasonable charge, to the maximum
amount permitted by law, for any statement regarding the obligations secured by
this Deed of Trust requested by Trustor or on its behalf.
SECTION 11.23. ENTIRE AGREEMENT.
This Deed of Trust and the other Loan Documents set forth the entire
understanding between Trustor and Beneficiary and they will not be amended
except by a written instrument duly executed by each of Trustor and Beneficiary.
Any previous representations, warranties, agreements, and understandings among
the parties regarding the subject matter of the Loan or the Loan Documents,
whether written or oral, are superseded by this Deed of Trust and the other Loan
Documents.
SECTION 11.24. INCORPORATION.
All terms of the Loan Documents are incorporated in this Deed of Trust
by this reference. All persons who may have or acquire an interest in the
Property will be deemed to have notice of the terms of the Loan Documents and to
have notice, if provided for, that the rate of interest on one or more
Obligations may vary from time to time.
SECTION 11.25. WAIVER OF MARSHALING 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
Property, waives all rights to have the Property or any other property that is
now or later may be security for any Obligation ("Other Property") marshaled on
any foreclosure of this Deed of Trust or on a foreclosure of any other security
for any of the Obligations. Beneficiary will have the right to sell, and any
court in which foreclosure proceedings may be brought will have the right to
order a sale of, the Property and any of the Other Property as a whole or in
separate parcels, in any order that Beneficiary may designate.
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SECTION 11.26. ACCEPTANCE OF TRUST; POWERS
AND DUTIES OF TRUSTEE.
Trustee accepts this trust when this Deed of Trust is recorded. From
time to time on written request of Beneficiary and presentation of this Deed of
Trust for endorsement, and without affecting the personal liability of any
person for payment of any indebtedness or the performance of any obligations,
Trustee may, without liability and without notice:
(a) reconvey all or any part of the Property;
(b) consent to the making of any map or plat; and
(c) join in any grant of easement, any declaration of covenants,
conditions, and restrictions, 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 and the enforcement of the rights and remedies
available, and may obtain orders or decrees directing, confirming, or approving
acts in the execution of the trust and the enforcement of the 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 will be a party, unless held or commenced and maintained
by Trustee under this Deed of Trust. Trustee will not be obligated to perform
any act required of it under this Deed of Trust unless the performance of the
act is requested in writing and Trustee is reasonably indemnified and held
harmless against any loss, cost, liability, or expense.
SECTION 11.27. 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 Property or in any manner
obligated under the Obligations ("Interested Parties"), Beneficiary may, from
time to time, release any person or entity from liability for the payment or
performance of any Obligation; take any action or make any agreement extending
the maturity or otherwise altering the terms or increasing the amount of any
Obligation; or accept additional security or release the Property or other
security for any Obligation. None of these actions will release or reduce the
personal liability of any of the Interested Parties, or release or impair the
lien of this Deed of Trust, or the priority of it on the Property. However, no
action taken or agreement made by Beneficiary to extend the maturity or
otherwise alter the terms or increase the amount of any Obligation will be
binding on Trustor without Trustor's consent.
SECTION 11.28. RECONVEYANCE.
Upon the payment and performance of all Obligations, including, without
limitation, Beneficiary's receipt of all sums owing and outstanding under the
Note, Beneficiary will deliver to Trustee a written request for reconveyance,
and will surrender to Trustee for cancellation this Deed of Trust and any note
or instrument evidencing the Obligations. However, Beneficiary will have no
obligation to deliver the written request and documents until Beneficiary has
been paid by Trustor, in immediately available funds, all escrow, closing, and
recording costs, the costs of preparing and issuing the reconveyance, and any
trustee's or reconveyance fees. On Trustee's receipt of the written request by
Beneficiary and the documents, Trustee will reconvey, without warranty, the
Property or that portion then held. To the extent permitted by law, the
reconveyance may describe the grantee as the person or persons legally entitled
and the recitals of any matters or facts in any reconveyance will be conclusive
proof of the truthfulness of them. Neither Beneficiary nor Trustee will have any
duty to determine the rights of persons claiming to be rightful grantees of any
reconveyance. When the Property has been fully reconveyed, the last reconveyance
will operate as a reassignment of all future rents, issues, and profits of the
Property to the person legally entitled.
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SECTION 11.29. SUBROGATION.
Beneficiary will be subrogated to the lien of all encumbrances, whether
released of record, 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.
SECTION 11.30. RULES OF CONSTRUCTION.
When the identity of the parties or other circumstances make it
appropriate, the singular number includes the plural.
SECTION 11.31. SUCCESSORS IN INTEREST.
The terms, covenants, and conditions in this Deed of Trust will be
binding on and inure to the benefit of the heirs, successors, and assigns of the
parties. However, this section does not waive the provisions of Article 6.11.
SECTION 11.32. NO OFFSET.
Trustor will pay to Beneficiary all amounts owing under the Note, this
Deed of Trust, or any of the other Obligations without deduction, offset, or
counterclaim of any kind.
SECTION 11.33. GOVERNING LAW.
The parties expressly agree that this Deed of Trust (including, without
limitation, all questions regarding permissive rates of interest) will be
governed by or construed in accordance with the laws of California and federal
law, where applicable.
In Witness Whereof, Trustor has executed this Deed of Trust as of the
day and year first above written.
▇▇▇▇▇▇ RACEWAY CORPORATION, a
California corporation
By: /s/ H. Skip ▇▇▇▇
Its: Chairman
ACKNOWLEDGEMENT
State of California )
)ss.
County of Sonoma )
On November 18, 1996, before me, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, personally appeared
▇▇▇▇▇▇ Skip ▇▇▇▇, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
NOTARY PUBLIC
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