<PAGE>
EXHIBIT 10.6
Prepared by:
Dorothea S. Coy
Hunter, Maclean, Exley & Dunn, P.C.
200 East St, Julian Street
Savannah, Georgia 31401
Recording requested by, and after
recording, return to:
GE Commercial Finance Business Property
Corporation
Attn: Middle Market Risk
10900 Northeast Fourth Street, Suite
500
Bellevue, Washington 98004
Loan No.: 0012744-001
COMMERCIAL DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
FINANCING STATEMENT AND FIXTURE FILING
TRUSTOR:
WESTERN EXPRESS, INC., a Tennessee corporation
TRUSTEE:
MARCY HARDEE, a resident of Williamson County, Tennessee
BENEFICIARY: GE
COMMERCIAL FINANCE BUSINESS PROPERTY CORPORATION, a
Delaware corporation
PROPERTY:
7135 Centennial Place, Nashville, Davidson County, Tennessee,
more particularly described in Exhibit A.
Dated September 29, 2005
$10,150,000.00
NOTICE: THE DEBT SECURED HEREBY IS SUBJECT
TO CALL IN FULL OR THE TERMS THEREOF
BEING MODIFIED IN THE EVENT OF SALE OR
CONVEYANCE OF THE PROPERTY HEREIN
CONVEYED.
THE MAXIMUM PRINCIPAL INDEBTEDNESS FOR
TENNESSEE RECORDING TAX PURPOSES IS
$10,150,000.00
<PAGE>
THIS DEED OF TRUST (herein "Instrument"), made and given as of
September 29, 2005, by the Trustor, WESTERN
EXPRESS, INC., a Tennessee
corporation, whose address is 7135
Centennial Place, Nashville Tennessee (herein
"Borrower"), in favor of MARCY HARDEE, a
resident of Williamson County,
Tennessee, having a business address at
Gullett, Sanford, Robinson & Martin,
PLLC, 315 Deaderick Street, Suite 1100,
Post Office Box 19888, Nashville,
Tennessee 37219-8888 (herein "Trustee"),
for the benefit of the Beneficiary, GE
COMMERCIAL FINANCE BUSINESS PROPERTY
CORPORATION, a Delaware corporation, whose
address is Middle Market Risk, 10900
Northeast Fourth Street, Suite 500,
Bellevue, Washington 98004 (herein
"Lender"), as beneficiary,
WITNESSETH:
THAT, WHEREAS, Borrower is justly indebted to Lender in the
principal sum of $10,150,000.00, pursuant
to a certain Promissory Note of even
date herewith, more particularly described
below,
NOW, THEREFORE, in consideration of the indebtedness herein
recited and the trust herein created, and
for other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged,
Borrower irrevocably grants, conveys and
assigns to Trustee, in trust, WITH
POWER OF SALE, all of Borrower's estate,
right, title and interest, now owned or
hereafter acquired, including any reversion
or remainder interest, in the real
property located in the City of Nashville,
County of Davidson, State of
Tennessee, commonly known as 7135
Centennial Place, and more particularly
described on Exhibit A attached hereto and
incorporated herein including all
heretofore or hereafter vacated alleys and
streets abutting the property, and
all easements, rights, appurtenances,
tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and
profits, water, water rights, and
water stock appurtenant to the property
(collectively "Premises");
TOGETHER with all of Borrower's estate, right, title and
interest, now owned or hereafter acquired,
in, under, and to:
1. all buildings, structures, improvements, parking areas,
landscaping, equipment, fixtures and
articles of property now or hereafter
erected on, attached to, or used or adapted
for use in the operation of the
Premises; including but without being
limited to, all heating, air conditioning
and incinerating apparatus and equipment;
all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing
fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen
equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum
cleaning systems, fire extinguishing
apparatus, gas and electric fixtures,
carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels,
built-in mirrors, window shades,
blinds, draperies, screens, storm sash,
awnings, signs, and shrubbery and
plants, and including also all interest of
any owner of the Premises in any of
such items hereafter at any time acquired
under conditional sale contract,
chattel mortgage or other title retaining
or security instrument, all of which
property mentioned in this clause (a) shall
be deemed part of the realty covered
by this Instrument and not severable wholly
or in part without material injury
to the freehold of the Premises (all of the
foregoing together with replacements
and additions thereto are referred to
herein as "Improvements"); and
2. all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or
the proceeds of any policies of
insurance therefor, arising out of or
relating to (i) a taking or damaging of
the Premises or Improvements thereon by
reason of any public or private
improvement, condemnation proceeding
(including change of grade), sale or
transfer in lieu of condemnation, or fire,
earthquake or other casualty, or (ii)
any injury to or decrease in the value of
the Premises or the Improvements for
any reason whatsoever;
3. return premiums or other payments upon any insurance any
time provided with respect to the Premises,
Improvements, and other collateral
described herein for the benefit of or
naming Lender, and refunds or rebates of
taxes or assessments on the Premises;
1
<PAGE>
4. all written and oral leases and rental agreements
(including extensions, renewals and
subleases; all of the foregoing shall be
referred to collectively herein as the
"Leases") now or hereafter affecting the
Premises including, without limitation, all
rents, issues, income, profits and
other revenues and income therefrom and
from the renting, leasing or bailment of
Improvements and equipment ("Rents"), all
guaranties of tenants' performance
under the Leases, and all rights and claims
of any kind that Borrower may have
against any tenant under the Leases or in
connection with the termination or
rejection of the Leases in a bankruptcy or
insolvency proceeding;
5. plans, specifications, contracts and agreements relating to
the design or construction of the
Improvements; Borrower's rights under any
payment, performance, or other bond in
connection with the design or
construction of the Improvements; all
landscaping and construction materials,
supplies, and equipment used or to be used
or consumed in connection with
construction of the Improvements, whether
stored on the Premises or at some
other location; and contracts, agreements,
and purchase orders with contractors,
subcontractors, suppliers, and materialmen
incidental to the design or
construction of the Improvements;
6. all contracts, deposits, deposit accounts, accounts, all
rights, claims or causes of action
pertaining to or affecting the Premises or
the Improvements, including, without
limitation, all supporting obligations and
any and all proceeds thereof, all options
or contracts to acquire other property
for use in connection with operation or
development of the Premises or
Improvements, management contracts, service
or supply contracts, permits,
licenses, franchises and certificates, and
all commitments or agreements, now or
hereafter in existence, intended by the
obligor thereof to provide Borrower with
proceeds to satisfy the loan evidenced
hereby or improve the Premises or
Improvements, and the right to receive all
proceeds due under such commitments
or agreements including refundable deposits
and fees;
7. all books, records, surveys, reports and other documents
related to the Premises, the Improvements,
the Leases, or other items of
collateral described herein; and
8. all additions, accessions, replacements, substitutions,
proceeds and products of the real and
personal property, tangible and
intangible, described herein, including but
not limited to lease and real-estate
proceeds and other amounts relating to the
use, disposition, or sale of the
collateral described herein which proceeds
or other amounts are characterized as
general intangibles.
All of the foregoing described collateral is exclusive of any
equipment, inventory, furniture,
furnishings or trade fixtures owned and
supplied by tenants of the Premises. The
Premises, the Improvements, the Leases
and all of the rest of the foregoing
property are herein referred to as the
"Property."
TO HAVE AND TO HOLD the above-described Property unto Trustee
in trust for the benefit of Lender and its
successors and assigns forever.
BUT THIS IS A TRUST DEED
TO SECURE TO Lender (a) the repayment of the indebtedness
evidenced by that certain [Balloon]
Promissory Note dated of even date herewith
from Borrower, as maker, to Lender, as
payee, in the principal sum of Ten
Million One Hundred Fifty Thousand and no
Dollars ($10,150,000.00), with
interest thereon as set forth therein,
having a maturity date of October 1,
2025, and all renewals, extensions and
modifications thereof (herein "Note");
(b) the repayment of any future advances,
with interest thereon, made by Lender
to Borrower pursuant to Section 30 hereof
(herein "Future Advances"); (c) the
payment of all other sums, with interest
thereon, advanced in accordance
herewith to protect the security of this
Instrument or to fulfill any of
Borrower's obligations hereunder or under
the other Loan Documents (as defined
below); (d) the performance of the
covenants and agreements of Borrower
contained herein or in the other Loan
Documents; and (e) the repayment of all
sums now or hereafter owing to Lender by
Borrower pursuant to any instrument
which recites that it is secured hereby.
The indebtedness and obligations
described in clauses (a)-(e) above are
collectively referred to herein as the
2
<PAGE>
"Indebtedness." The Note, this Instrument,
and all other documents evidencing,
securing or guaranteeing the Indebtedness
(except the Environmental Indemnity
Agreement Regarding Hazardous Materials
("Indemnity")), as the same may be
modified or amended from time to time, are
referred to herein as the "Loan
Documents." The terms of the Note secured
hereby may provide that the interest
rate or payment terms or balance due may be
indexed, adjusted, renewed, or
renegotiated from time to time, and this
Instrument shall continue to secure the
Note notwithstanding any such indexing,
adjustment, renewal or renegotiation.
Borrower represents and warrants that Borrower has good,
marketable and insurable title to, and has
the right to grant, convey and assign
an indefeasible fee simple estate in, the
Premises, Improvements, Rents and
Leases (or, if this Instrument is on a
leasehold, good, marketable and insurable
title to, and the right to convey the
leasehold estate and that the Ground Lease
is in full force and effect without
modification except as noted above and
without default on the part of either
lessor or lessee thereunder), and the
right to convey the other Property, that
the Property is unencumbered except as
disclosed in writing to and approved by
Lender prior to the date hereof, and
that Borrower will warrant and forever
defend unto Trustee the title to the
Property against all claims and demands,
subject only to the exceptions set
forth in Schedule 1 attached hereto
("Permitted Exceptions").
Borrower represents, warrants, covenants and agrees for the
benefit of Lender as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly
pay when due the principal of and interest
on the Indebtedness, any prepayment
and other charges provided in the Loan
Documents and all other sums secured by
this Instrument.
2. IMPOUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Except as
is hereinafter provided with respect to the
impounding of such payments by
Lender following the occurrence of an Event
of Default, Borrower shall pay or
cause to be paid when due, prior to
delinquency, all annual real estate taxes,
insurance premiums, assessments, water and
sewer rates, ground rents and other
charges (herein "Impositions") payable with
respect to the Property. Upon the
occurrence of an Event of Default
(hereinafter defined), and at Lender's sole
option at any time thereafter, Borrower
shall pay in addition to each monthly
payment on the Note, one-twelfth of the
annual Impositions (as estimated by
Lender in its sole discretion), to be held
by Lender without interest to
Borrower, for the payment of such
Impositions (such payments being referred to
herein as "Impounds").
Annually during the term of this Instrument, Lender shall
compare the Impounds collected to the
Impositions paid or to be paid. If the
amount of such Impounds held by Lender at
such time shall exceed the amount
deemed necessary by Lender to provide for
the payment of Impositions as they
fall due, if no Event of Default shall have
occurred and be continuing, such
excess shall be at Borrower's option,
either repaid to Borrower or credited to
Borrower on the next monthly installment or
installments of Impounds due. If at
any time the amount of the Impounds held by
Lender shall be less than the amount
deemed necessary by Lender to pay
Impositions as they fall due, Borrower shall
pay to Lender any amount necessary to make
up the deficiency within thirty (30)
days after notice from Lender to Borrower
requesting payment thereof. Upon the
occurrence of an Event of Default
hereunder, Lender may apply, in any amount and
in any order as Lender shall determine in
Lender's sole discretion, any Impounds
held by Lender at the time of application
(i) to pay Impositions which are now
or will hereafter become due, or (ii) as a
credit against sums secured by this
Instrument. Upon payment in full of all
sums secured by this Instrument, Lender
shall refund to Borrower any Impounds then
held by Lender. If requested by
Lender, Borrower shall promptly furnish to
Lender all notices of Impositions
which become due, and in the event Borrower
shall make payment directly,
Borrower shall promptly furnish to Lender
receipts evidencing such payments.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
otherwise, each complete installment
payment received by Lender from Borrower
under the Note or this Instrument shall be
applied by Lender first in payment of
amounts payable to Lender by Borrower under
Section 2 hereof, then to interest
payable on the Note, then to principal of
the Note, and then to interest and
principal on
3
<PAGE>
any Future Advances in such order as
Lender, at Lender's sole discretion, shall
determine. Upon the occurrence of an Event
of Default, Lender may apply, in any
amount and in any order as Lender shall
determine in Lender's sole discretion,
any payments received by Lender under the
Note or this Instrument. Any partial
payment received by Lender shall, at
Lender's option, be held in a non-interest
bearing account until Lender receives funds
sufficient to equal a complete
installment payment.
4. CHARGES, LIENS. Borrower shall promptly discharge or bond
off any lien which has, or may have,
priority over or equality with, the lien of
this Instrument, and Borrower shall pay,
when due, the claims of all persons
supplying labor or materials to or in
connection with the Property. Without
Lender's prior written permission, Borrower
shall not allow any lien inferior to
this Instrument to be perfected against the
Property. If any lien inferior to
this Instrument is filed against the
Property without Lender's prior written
permission and without the consent of
Borrower, Borrower shall, within thirty
(30) days after receiving notice of the
filing of such lien, cause such lien to
be released of record or bonded off and
deliver evidence of such release or
bonding to Lender. Borrower may contest any
such lien by appropriate proceedings
in good faith, timely filed, provided that
enforcement of the lien is stayed
pending such contest. Lender may require
that Borrower post security for payment
of such lien.
5. INSURANCE. Borrower shall obtain and maintain the following
types of insurance upon and relating to the
Property:
(a) "Special Form" property and fire insurance (with extended
coverage endorsement including malicious
mischief and vandalism) in an amount
not less than the full replacement value of
the Property (with a deductible not
to exceed $10,000), naming Lender under a
lender's loss payable endorsement
naming Lender as mortgagee and loss payee
and including agreed amount, inflation
guard, replacement cost and waiver of
subrogation endorsements;
(b) Commercial general liability insurance in an amount not
less than $2,000,000 per occurrence and on
an occurrence basis, insuring against
personal injury, death and property damage
and naming Lender as additional
insured;
(c) Business interruption insurance or rent-loss insurance, as
applicable, covering loss of rental or
other income (including all expenses
payable by tenants) for up to twelve (12)
months;
(d) Flood hazard insurance with respect to the Property in
amounts not less than the maximum limit of
coverage then available with respect
to the Property or the amount of the
Indebtedness, whichever is less if the
Property is located in an area designated
by the Federal Emergency Management
Act or is hereafter designated or
identified as an area having special flood
hazards by the Department of Housing and
Urban Development or such other
official as shall from time to time be
authorized by federal or state law to
make such designation pursuant to any
national or state program of flood
insurance;
(e) Such other types of insurance or endorsements to existing
insurance as may be required from time to
time by Lender in accordance with its
standard commercial lending practices for
similar properties and transactions.
Upon the request of Lender, Borrower shall increase the
coverages under any of the insurance
policies required to be maintained
hereunder or otherwise modify such policies
in accordance with Lender's standard
commercial lending practices for similar
properties and transactions. All of the
insurance policies required hereunder shall
be issued by corporate insurers
licensed to do business in the state in
which the Property is located and having
a Best's Rating-Financial Size Rating of
A:VIII or better as determined and
published by A.M. Best Company, and shall
be in form acceptable to Lender.
Certificates of all insurance required to
be maintained hereunder shall be
delivered to Lender (which may include the
requirement of an Acord 28 "Evidence
of Property Insurance" form as to property
insurance) prior to or
contemporaneously with Borrower's execution
of this Instrument. All such
certificates shall be in form acceptable to
Lender and shall require the
insurance company to give to Lender at
least thirty (30) days' prior written
notice before canceling the policy for any
reason or materially amending it.
Certificates
4
<PAGE>
evidencing all renewal and substitute
policies of insurance shall be delivered
to Lender at least fifteen (15) days before
termination of the policies being
renewed or substituted. If any loss shall
occur at any time when Borrower shall
be in default hereunder, Lender shall be
entitled to the benefit of all
insurance policies held or maintained by
Borrower, to the same extent as if same
had been made payable to Lender, and upon
foreclosure hereunder, Lender shall
become the owner thereof. Lender shall have
the right, but not the obligation,
to make premium payments, at Borrower's
expense, to prevent any cancellation,
endorsement, alteration or reissuance of
any policy of insurance maintained by
Borrower, and such payments shall be
accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any
casualty for which insurance was not
obtained or obtainable) shall result in
damage to or destruction of the Property
(such event being called a "Loss"),
Borrower will give prompt written notice
thereof to Lender. If no Event of
Default has occurred hereunder and is
continuing, Lender shall apply all such
insurance proceeds to the restoration,
replacement and rebuilding of the damaged
portion of the Property, and such
restoration, replacement and rebuilding shall
be accomplished, upon satisfaction of each
and all of the following conditions:
(i) except as provided in (ii) below,
Lender shall be satisfied that by the
expenditure of such insurance proceeds the
Property will be fully restored
within a reasonable period of time to its
value immediately preceding the loss
or damage, free and clear of all liens,
except the lien of this Instrument, the
Permitted Exceptions set forth in Schedule
1 attached hereto, and such other
liens as are specifically approved by
Lender in writing under this Instrument;
(ii) in the event such proceeds shall be
insufficient to restore or rebuild the
Property, Borrower shall deposit promptly
with Lender funds which, together with
the insurance proceeds, shall be sufficient
in Lender's judgment to restore and
rebuild the Property; (iii) Borrower shall
make reasonable efforts to obtain a
waiver of the right of subrogation from any
insurer under such policies of
insurance who, at that time, claims that no
liability exists as to Borrower or
the then owner or the assured under such
policies; (iv) the excess of such
insurance proceeds above the amount
necessary to complete such restoration and
compensate Borrower for all other insured
losses shall be applied on account of
the Indebtedness (first to interest, then
to expenses reimbursable to Lender and
then to principal amounts falling due under
the Note without Prepayment Fee (as
defined in the Note)); (v) Lender reviews
and approves in writing the plans and
specifications for the restoration work and
Lender receives written evidence
satisfactory to Lender that the same have
been approved by all governmental
authorities having jurisdiction; (vi)
Borrower shall have furnished to Lender,
for Lender's approval, a detailed budget
and cost breakdown for said restoration
work signed by Borrower and describing the
nature and type of expenses and
amounts thereof estimated by Borrower for
said restoration work including, but
not limited to, the cost of material and
supplies, architect and designer fees,
general contractor's fees, and the
anticipated monthly disbursement schedule,
and Lender shall have given to Borrower
written approval of such budget and cost
breakdown (if Borrower determines at any
time that its actual expenses differ or
will differ from its estimated budget, it
will so advise Lender promptly); (vii)
Borrower has delivered to Lender evidence
satisfactory to Lender that all Leases
existing at the time of the Loss will
remain in full force and effect subject
only to abatement of rent in accordance
with the terms of the Leases until
completion of such repair and restoration;
and (viii) in Lender's reasonable
judgment, such restoration work can be
completed at least six (6) months prior
to the maturity of the Note.
In the event any of such conditions are not or cannot be
satisfied, then all of the insurance
proceeds payable with respect to such Loss
will be applied to the payment of the
Indebtedness in such order as Lender may
elect.
Under no circumstances shall Lender become obligated to take
any action to restore the Property; all
proceeds released or applied by Lender
to the restoration of the Property pursuant
to the provisions of this Section 5
shall be released and/or applied to the
cost of restoration (including within
the term "restoration" any repair,
reconstruction or alteration) as such
restoration progresses, in amounts which
shall equal ninety percent (90%) of the
amounts from time to time certified by an
architect approved by Lender to have
been incurred in such restoration of any
and all of the Property (i.e., 90% of
the total amount expended by the contractor
for the project under a contract
approved by Lender and billed by the
contractor to Borrower) and performed by a
contractor reasonably satisfactory to
Lender and who shall furnish such
corporate surety bond, if any, as may be
reasonably required by Lender in
accordance with the plans and
specifications therefor approved by Lender and the
remaining ten percent (10%) upon completion
of such
5
<PAGE>
restoration and delivery to Lender of
evidence reasonably satisfactory to Lender
that no mechanics' lien exists with respect
to the work of such restoration;
that the restoration work has been
completed and fully paid for in accordance
with plans and specifications for said work
approved by Lender; and that all
Leases existing at the time the Loss
occurred are in full force and effect with
all tenants in possession and paying full
Lease rental; and that all
governmental approvals required for the
completion of said restoration work and
occupancy of the Property have been
obtained and the same are in form and
substance satisfactory to Lender.
If within a reasonable period of time after the occurrence of
any Loss, Borrower shall not have submitted
to Lender and received Lender's
approval of plans and specifications for
the repair, restoration or rebuilding
of such Loss or shall not have obtained
approval of such plans and
specifications from all governmental
authorities whose approval is required, or
if, after such plans and specifications are
approved by Lender and by all such
governmental authorities, Borrower shall
fail to commence promptly such repair,
restoration or rebuilding, or if thereafter
Borrower fails to carry out
diligently such repair, restoration or
rebuilding or is delinquent in the
payment to mechanics, materialmen or others
of the costs incurred in connection
with such work, or if any other condition
of this Section 5, is not satisfied
within a reasonable period of time after
the occurrence of any such Loss, then
Lender may, in addition to all other rights
herein set forth, at Lender's
option, (A) declare that an Event of
Default has occurred and/or apply all of
the insurance proceeds payable with respect
to such Loss to the payment of the
Indebtedness in such order as Lender may
elect, and/or (B) Lender, or any
lawfully appointed receiver of the Property
may at their respective options,
perform or cause to be performed such
repair, restoration or rebuilding, and may
take such other steps as they deem
advisable to carry out such repair,
restoration or rebuilding, and may enter
upon the Property for any of the
foregoing purposes, and Borrower hereby
waives, for itself and all others
holding under it, any claim against Lender
and such receiver (other than a claim
based upon the alleged gross negligence or
intentional misconduct of Lender or
any such receiver) arising out of anything
done by them or any of them pursuant
to this Section 5 and Lender may in its
discretion apply any proceeds held by it
to reimburse itself and/or such receiver
for all amounts expended or incurred by
it in connection with the performance of
such work, including attorneys' fees,
and any excess costs shall be paid by
Borrower to Lender and Borrower's
obligation to pay such excess costs shall
be secured by the lien of this
Instrument and shall bear interest at the
Default Rate set forth in the Note,
until paid.
Nothing herein, and no authority given to Borrower to repair,
rebuild or restore the Property or any
portion thereof, shall be deemed to
constitute Borrower the agent of Lender for
any purpose, or to create, either
expressly or by implication, any liens or
claims or rights on behalf of
laborers, mechanics, materialmen or other
lien holders which could in any way be
superior to the lien or claim of Lender, or
which could be construed as creating
any third party rights of any kind or
nature to the insurance funds. At
reasonable times during the work of
restoration, and upon reasonable notice,
Lender, either personally or by duly
authorized agents, shall have the right to
enter upon the Property for inspection of
the work. Borrower expressly assumes
all risk of loss, including a decrease in
the use, enjoyment or value of the
Property from any casualty whatsoever,
whether or not insurable or insured
against.
Borrower waives any and all right to claim or recover against
Lender or its officers, employees, agents
and representatives, for loss of or
damage to Borrower, the Property,
Borrower's property or the property of others
under Borrower's control from any cause
insured against or required to be
insured against under this Section 5.
6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a)
shall not commit waste or permit impairment
or deterioration of the Property,
(b) shall not abandon the Property, (c)
shall restore or repair promptly and in
a good and workmanlike manner all or any
part of the Property to the equivalent
of its original condition, or such other
condition as Lender may approve in
writing, in the event of any damage, injury
or loss thereto, whether or not
insurance proceeds are available to cover
in whole or in part the costs of such
restoration or repair, (d) shall keep the
Property, including all Improvements
thereon, in good repair and shall replace
fixtures, equipment, machinery and
appliances on the Property when necessary
to keep such items in good repair, (e)
shall comply with all laws, ordinances,
regulations and requirements of any
governmental body applicable to the
Property, (f) if all or
6
<PAGE>
part of the Property is for rent or lease,
then Lender, at its option after the
occurrence of an Event of Default, may
require Borrower to provide for
professional management of the Property by
a property manager satisfactory to
Lender pursuant to a contract approved by
Lender in writing, unless such
requirement shall be waived by Lender in
writing, and (g) shall give notice in
writing to Lender of and, unless otherwise
directed in writing by Lender, appear
in and defend any action or proceeding
purporting to affect the Property, the
security of this Instrument or the rights
or powers of Lender hereunder. Neither
Borrower nor any tenant or other person,
without the written approval of Lender,
shall remove, demolish or alter any
Improvement now existing or hereafter
erected on the Premises or any Property,
except when incident to the replacement
of fixtures, equipment, machinery and
appliances with items of like kind.
Borrower represents, warrants and covenants that the Property
is and shall be in substantial compliance
with the Americans with Disabilities
Act of 1990 and all of the regulations
promulgated thereunder, as the same may
be amended from time to time.
7. USE OF PROPERTY. Unless required by applicable law or
unless Lender has otherwise agreed in
writing, Borrower shall not allow changes
in the use for which all or any part of the
Property was intended at the time
this Instrument was executed. Borrower
shall not, without Lender's prior written
consent, (i) initiate or acquiesce in a
change in the zoning classification
(including any variance under any existing
zoning ordinance applicable to the
Property), (ii) permit the use of the
Property to become a non-conforming use
under applicable zoning ordinances, (iii)
file any subdivision or parcel map
affecting the Property, or (iv) amend,
modify or consent to any easement or
covenants, conditions and restrictions
pertaining to the Property.
8. PROTECTION OF LENDER'S SECURITY. If Borrower fails to
perform any of the covenants and agreements
contained in this Instrument, or if
any action or proceeding is commenced which
affects the Property or title
thereto or the interest of Lender therein,
including, but not limited to,
eminent domain, insolvency, code
enforcement, or arrangements or proceedings
involving a bankrupt or decedent, then
Lender at Lender's option may make such
appearances, disburse such sums and take
such action as Lender deems necessary,
in its sole discretion, to protect Lender's
interest, including, but not limited
to, (i) disbursement of attorneys' fees,
(ii) entry upon the Property to make
repairs, and (iii) procurement of
satisfactory insurance as provided in Section
5 hereof. If this Instrument is on a
leasehold, such action may include exercise
of any option to renew or extend the Ground
Lease on behalf of Borrower and the
curing of any default of Borrower in the
terms and conditions of the Ground
Lease.
Any amounts disbursed by Lender pursuant to this Section 8,
with interest thereon, shall become
additional Indebtedness of Borrower secured
by this Instrument. Unless Borrower and
Lender agree to other terms of payment,
such amounts shall be immediately due and
payable and shall bear interest from
the date of disbursement at the Default
Rate (as defined in the Note). Borrower
hereby covenants and agrees that Lender
shall be subrogated to the lien of any
mortgage or other lien discharged, in whole
or in part, by the Indebtedness.
Nothing contained in this Section 8 shall
require Lender to incur any expense or
take any action hereunder.
9. INSPECTION. Lender may make or cause to be made reasonable
entries upon the Property to inspect the
interior and exterior thereof. Except
in case of emergency, such inspection shall
be with reasonable prior notice and
shall in any case be with due regard to
rights of tenants.
10. FINANCIAL DATA. Borrower will furnish to Lender, and will
cause any guarantor of the Indebtedness to
furnish to Lender on request, within
ninety (90) days after the close of its
fiscal year (i) annual balance sheet and
profit and loss statements prepared in
accordance with generally accepted
accounting principles and practices
consistently applied and, if Lender so
requires, accompanied by the annual audit
report of an independent certified
public accountant reasonably acceptable to
Lender, (ii) an annual operating
statement, together with a complete rent
roll and other supporting data
reflecting all material information with
respect to the operation of the
Property and Improvements, and (iii) all
other financial information and reports
that Lender may from time to time
reasonably request, including, if Lender so
requires, income tax returns of Borrower
and any guarantor of any portion of the
Indebtedness, and financial statements of
any tenants designated by Lender.
7
<PAGE>
11. CONDEMNATION. If the Property, or any part thereof, shall
be condemned for any reason, including
without limitation fire or earthquake
damage, or otherwise taken for public or
quasi-public use under the power of
eminent domain, or be transferred in lieu
thereof, (such event being called a
"Taking") and if an Event of Default has
not occurred hereunder and is not
continuing, Lender shall apply all such
proceeds to the restoration, replacement
and rebuilding of the Property, and such
restoration, replacement and rebuilding
shall be accomplished, upon satisfaction of
each and all of the following
conditions: (i) except as provided in (ii)
below, Lender shall be satisfied that
by the expenditure of such proceeds the
Property will be fully restored within a
reasonable period of time to its value
immediately preceding the Taking, free
and clear of all liens, except the lien of
this Instrument, the Permitted
Exceptions set forth in Schedule 1 attached
hereto, and such other liens as are
specifically approved by Lender in writing
under this Instrument; (ii) in the
event such proceeds shall be insufficient
to restore or rebuild the Property,
Borrower shall deposit promptly with Lender
funds which, together with the
proceeds, shall be sufficient in Lender's
judgment to restore and rebuild the
Property; (iii) the excess of such proceeds
above the amount necessary to
complete such restoration and compensate
Borrower for all other losses shall be
applied on account of the Indebtedness
(first to interest, then to expenses
reimbursable to Lender and then to
principal amounts falling due under the Note
without Prepayment Fee); (iv) Lender
reviews and approves in writing the plans
and specifications for the restoration work
and Lender receives written evidence
satisfactory to Lender that the same have
been approved by all governmental
authorities having jurisdiction; (v)
Borrower shall have furnished to Lender,
for Lender's approval, a detailed budget
and cost breakdown for said restoration
work signed by Borrower and describing the
nature and type of expenses and
amounts thereof estimated by Borrower for
said restoration work including, but
not limited to, the cost of material and
supplies, architect and designer fees,
general contractor's fees, and the
anticipated monthly disbursement schedule,
and Lender shall have given to Borrower
written approval of such budget and cost
breakdown (if Borrower determines at any
time that its actual expenses differ or
will differ from its estimated budget, it
will so advise Lender promptly); (vi)
Borrower has delivered to Lender evidence
satisfactory to Lender that all Leases
existing at the time of the Taking will
remain in full force and effect subject
only to abatement of rent in accordance
with the terms of the Leases until
completion of such repair and restoration;
and (vii) in Lender's reasonable
judgment, such restoration work can be
completed at least six (6) months prior
to the maturity of the Note.
In the event any of such conditions are not or cannot be
satisfied, then all of the proceeds payable
with respect to such Taking will be
applied to the payment of the Indebtedness
in such order as Lender may elect.
Under no circumstances shall Lender become obligated to take
any action to restore the Property; all
proceeds released or applied by Lender
to the restoration of the Property pursuant
to the provisions of this Section 11
shall be released and/or applied on the
cost of restoration (including within
the term "restoration" any repair,
reconstruction or alteration) as such
restoration progresses, in amounts which
shall equal ninety percent (90%) of the
amounts from time to time certified by an
architect approved by Lender to have
been incurred in such restoration of any
and all of the Property (i.e., 90% of
the total amount expended by the contractor
for the project under a contract
approved by Lender and billed by the
contractor to Borrower) and performed by a
contractor reasonably satisfactory to
Lender and who shall furnish such
corporate surety bond, if any, as may be
reasonably required by Lender in
accordance with the plans and
specifications therefor approved by Lender and the
remaining ten percent (10%) upon completion
of such restoration and delivery to
Lender of evidence reasonably satisfactory
to Lender that no mechanics' lien
exists with respect to the work of such
restoration; that the restoration work
has been completed and fully paid for in
accordance with plans and
specifications for said work approved by
Lender; and that all Leases existing at
the time the Taking occurred are in full
force and effect with all tenan
