DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

EXHIBIT 10.5

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

made by

PHOTO RESEARCH, INC.

(Trustor)

in favor of

FIRST AMERICAN TITLE INSURANCE COMPANY

(Trustee)

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Collateral Agent

(Beneficiary)

Property Location:

9731 Topanga Canyon Place

Los Angeles, California 91311

Dated as of July 23, 2010

This Deed of Trust Was Prepared By and When Recorded, Return to:

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Attention: Gregory P. Pressman, Esq.

Ref. No.: 035064.0001

TABLE OF CONTENTS

 

 

- i -

 

- ii -

 

- iii -

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (hereinafter, together with any and all amendments, supplements, modifications or restatements of any kind, referred to as this “ Deed of Trust ”), is made as of July 23, 2010, by PHOTO RESEARCH, INC., a California corporation, having its principal place of business at 9731 Topanga Canyon Place, Chatsworth, California 91311-4135 (“ Trustor ”), to First American Title Insurance Company, a California corporation, having its principal place of business at 1 First American Way, Santa Ana, California 92705, Attention: Deed of Trust Department (including any successor trustee at the time acting as such hereunder “ Trustee ”), for the benefit of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, having its principal place of business at 525 William Penn Place, 38th Floor, Pittsburgh, Pennsylvania 15259, Attention: Leslie Lockhart, as Collateral Agent (in such capacity, together with its successors and assigns, “ Beneficiary ”), for itself and for each of the financial institutions and their respective successors and assigns which from time to time shall be a “ Holder ” under the Indenture (as hereinafter defined).

R E C I T A L S:

WHEREAS , Trustor is the owner and holder of fee simple title in and to the Land (as hereinafter defined) described on Exhibit A attached hereto and made a part hereof;

WHEREAS , on the date hereof, GSI Group Corporation (“ Issuer ”), Trustor and the other Guarantors (as hereinafter defined), entered into that certain Indenture, dated of even date herewith (as the same may be amended, modified or otherwise supplemented and in effect from time to time, the “ Indenture ”), with the Holders (as defined in the Indenture), and Beneficiary, as Collateral Agent for the Holders, pursuant to which the Holders agreed to extend to Issuer certain term loan facilities in the aggregate original principal amount of up to One Hundred Seven Million Forty Thousand and 00/100 Dollars ($107,040,000.00) (collectively, the “ Loan ”);

WHEREAS , Trustor will derive indirect economic benefit from the Loan and, in order to induce the Holders to make the Loan, the Trustor is executing this Deed of Trust and the Guarantors have executed the Indenture;

WHEREAS , as a condition to Beneficiary executing the Indenture, Beneficiary is requiring that Trustor grant to Beneficiary, as trustee and as collateral agent for the Holders, a security interest in and a first mortgage lien upon the Trust Property (as hereinafter defined), to secure (a) the payment of all of the obligations of Trustor under the Indenture, this Deed of Trust and the other Security Documents (as hereinafter defined), and (b) the performance of all terms, covenants, conditions, provisions, agreements and liabilities contained in the Indenture, this Deed of Trust and the other Security Documents.

NOW , THEREFORE , in order to comply with the terms and conditions of the Indenture and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Trustor hereby agrees with Beneficiary as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Terms Defined Above . As used in this Deed of Trust, the terms defined in the introductory paragraph to this Deed of Trust and in the Recitals set forth above shall have the meanings respectively assigned to such terms in such paragraph and Recitals.

Section 1.02 Definitions . As used herein, the following terms shall have the following meanings:

“ Agent ” has the meaning assigned to such term in the Indenture.

“ Applicable UCC ” means the Uniform Commercial Code as presently in effect in the State or Commonwealth where the Trust Property is located.

“ Bankruptcy Code ” means the United States Bankruptcy Code (11 U.S.C. § 101, et . seq .), as amended, and any successor statute.

“ Buildings ” means any and all buildings, structures, garages, utility sheds, workrooms, air conditioning towers, open parking areas and other improvements, and any and all additions, alterations, betterments or appurtenances thereto, now or at any time hereafter situated, placed or constructed upon the Land or any part thereof.

“ Default ” has the meaning assigned to such term in the Indenture.

“ Default Rate ” has the meaning assigned to such term in the Indenture.

“ Event of Default ” has the meaning assigned to such term in Section 7.01 hereof.

“ Fixtures ” means all materials, supplies, equipment, apparatus and other items of Personalty now or hereafter acquired by Trustor and incorporated into the Trust Property so as to constitute fixtures under the Applicable UCC or otherwise under the laws of the state or commonwealth in which such items are located.

“ Governmental Requirements ” means any and all present and future judicial decisions, statutes, rulings, rules, regulations, permits, certificates or ordinances of any governmental authority in any way applicable to Trustor or the Trust Property, including the ownership, use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction thereof.

“ Guarantors ” has the meaning assigned to such term in the Indenture. “Guarantor” means any of the Guarantors.

 

- 2 -

“ Impositions ” means any and all real estate and personal property taxes; water, gas, sewer, electricity and other utility rates and charges; charges for any easement, license or agreement maintained for the benefit of the Trust Property; and any and all other taxes, charges and assessments, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of any kind and nature whatsoever which at any time prior to or after the execution hereof may be assessed, levied or imposed upon the Trust Property or the ownership, use, occupancy, benefit or enjoyment thereof, together with any interest, costs or penalties that may become payable in connection therewith.

“ Indemnified Parties ” means, with respect to any Person entitled to the benefit of an indemnity, such Person and its officers, directors, shareholders, partners, members, managers, employees, agents, representatives, attorneys, accountants and experts. The term “ Indemnified Party ” means any one of such Persons.

“ Land ” means the real property or interest therein described in Exhibit A attached hereto, and all rights, titles and interests appurtenant thereto.

“ Leases ” means any and all leases, master leases, subleases, licenses, concessions or other agreements (whether written or oral, and whether now or hereafter in effect) which grant to third Persons a possessory interest in and to, or the right to use, all or any part of the Trust Property, Land, the Buildings, the Fixtures and/or the Personalty, together with all security and other deposits made in connection therewith and any guarantee of the obligations of the landlord or the tenant thereunder.

“ License ” has the meaning assigned to such term in Section 3.02(a) hereof.

“ Lien ” has the meaning assigned to such term in the Indenture.

“ Losses ” means all obligations, damages, claims, causes of action, costs, fines, fees, charges, penalties, deficiencies, losses, diminutions in value, expenses (including court costs, fees and expenses of attorneys, accountants, consultants and other experts) and other liabilities, and, with respect to any indemnity, includes all attorneys’ fees and expenses in connection with the enforcement and collection of such indemnity. The term “ Loss ” means any one of such Losses.

“ Obligation ” has the meaning assigned to such term in the Indenture.

“ Permitted Lien ” has the meaning assigned to such term in the Indenture.

“ Person ” has the meaning assigned to such term in the Indenture.

“ Personalty ” means all of Trustor’s right, title and interest in and to all furniture, furnishings, equipment, machinery, goods, general intangibles, money, insurance proceeds, contract rights, option rights, inventory, together with all refundable, returnable or reimbursable fees, deposits or other funds or evidences of credit or indebtedness deposited by or on behalf of Trustor with any governmental authority, boards, corporations, providers of utility services,

 

- 3 -

public or private including all refundable, returnable or reimbursable tap fees, utility deposits, commitment fees and development costs, and all other personal property of any kind or character (other than Fixtures or the property of any tenant), and including all such property that now or hereafter arise from or are located or to be located upon, within or about the Land and the Buildings, or which are or may be used in or related to the planning, development, financing or operation of the Trust Property, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof.

“ Principal Balance ” has the meaning assigned to such term in Section 7.02 hereof.

“ Rents ” means all of the rents, revenues, income, proceeds, issues, profits, security and other types of deposits (after Trustor acquires title thereto), and other benefits paid or payable by parties (other than Trustor) for using, leasing, licensing, possessing, operating from, residing in, benefiting from or otherwise enjoying all or any part of the Land, the Buildings, the Fixtures and/or the Personalty.

“ Security Documents ” means, collectively, the Indenture, this Deed of Trust, and all other instruments, security agreements, agreements and other documents executed and delivered pursuant hereto or thereto or otherwise included in the definition of the term “ Security Documents ” in the Indenture.

“ Trust Property ” means all of Trustor’s right, title, interest and estate, whether now owned or hereafter acquired, in and to the Land, the Buildings, the Fixtures and the Personalty, together with:

(i) all rights, privileges, tenements, hereditaments, rights-of-way, easements, air rights, development rights or credits, zoning rights, appendages and appurtenances in anywise appertaining thereto, and all right, title and interest of Trustor in and to any streets, ways, alleys, strips or gores of land adjoining the Land or any part thereof, and all right, title and interest of Trustor, if any, in and to all rights, royalties and profits with respect to all minerals, coal, oil, gas and other substances of any kind or character on or underlying the Land, together with all right, title and interest of Trustor in and to all water and water rights (whether riparian, appropriative or otherwise and whether or not appurtenant);

(ii) all rights of Trustor (but not its obligations) under any contracts and agreements, including, without limitation, construction contracts and architectural agreements, relating to the Land, the Buildings, the Fixtures or the Personalty;

(iii) all of Trustor’s right, title and interest in and to all permits, licenses, franchises, certificates, authorizations, consents, approvals and other rights and privileges (each, a “ Permit ”) obtained in connection with the Land, the Buildings, the Fixtures or the Personalty or the use or operation thereof;

 

- 4 -

(iv) all of Trustor’s right, title and interest in and to all plans and specifications, designs, schematics, drawings and other information, materials and matters heretofore or hereafter prepared relating to the Land, the Buildings, the Fixtures or the Personalty;

(v) all of Trustor’s right, title and interest in and to all proceeds arising from or by virtue of the sale, lease or other disposition of the Land, the Buildings, the Fixtures or the Personalty or any part thereof or any interest therein or from the operation thereof;

(vi) all of Trustor’s right, title and interest in and to all Leases now or hereafter in effect and all Rents, royalties, bonuses, issues, profits, revenues or other benefits arising from or attributable to the Land, the Buildings, the Fixtures or the Personalty;

(vii) all of Trustor’s right, title and interest in and to all betterments, additions, alterations, appurtenances, substitutions, replacements and revisions to the Land, the Buildings, the Fixtures or the Personalty and all reversions and remainders relating thereto;

(viii) all of Trustor’s right, title and interest in and to any awards, remuneration, settlements or compensation now or hereafter made by any governmental authority pertaining to the Land, the Buildings, the Fixtures or the Personalty, including those arising from or attributable to any vacation of, or change of grade in, any streets affecting the Land or the Buildings;

(ix) all of Trustor’s right, title and interest in and to any and all other security and collateral of any nature whatsoever, whether now or hereafter given, for the repayment, performance and discharge of the Obligations (as hereinafter defined);

(x) all of Trustor’s right, title and interest in and to all awards, payments, and proceeds of conversion, whether voluntary or involuntary, of any of the Land, the Buildings, the Fixtures, the Personalty or any of the property and rights described in the foregoing clauses (i) through (ix), including without limitation, all insurance, condemnation and tort claims, refunds of real estate taxes and assessments, rent claims and other obligations dischargeable in cash or cash equivalents; and

(xi) all other property and rights of Trustor of every kind and character relating to and/or used or to be used in connection with the foregoing, and all proceeds and products of any of the foregoing.

As used in this Deed of Trust, the term “ Trust Property ” shall be expressly defined as meaning all or, where the context permits or requires, any portion of the above, and all or, where the context permits or requires, any interest therein.

Section 1.03 Terminology; Other Defined Terms . Any capitalized term used in this Deed of Trust and not otherwise defined herein shall have the meaning assigned to such term in the Indenture. The rules of construction set forth in Section 1.04 of the Indenture shall apply hereto as if incorporated at length herein.

 

- 5 -

ARTICLE II

GRANT OF LIEN AND SECURITY INTEREST

Section 2.01 Grant of Lien . To secure the full and timely payment, performance and discharge of all of the Obligations, Trustor hereby irrevocably GRANTS, BARGAINS, SELLS, ASSIGNS, TRANSFERS, MORTGAGES, CONVEYS and CONFIRMS unto Trustee and Trustee’s successors, assigns and substitutes in trust hereunder, WITH POWER OF SALE and right of entry and possession, for the use and benefit of Beneficiary, as trustee and as collateral agent for the Holders pursuant to the Indenture, all right, title, interest and estate in, to and under the Trust Property, subject, however, to the Permitted Liens; TO HAVE AND TO HOLD the Trust Property unto Trustee and Trustee’s successors, assigns and substitutes in trust hereunder, subject to the terms and conditions of this Deed of Trust, with POWER OF SALE, forever, and Trustor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Trust Property unto Beneficiary against every Person whomsoever lawfully claiming or to claim the same or any part thereof, subject, however, to the Permitted Liens; provided , however , that if Trustor shall pay (or cause to be paid) and perform and discharge (or cause to be performed and discharged) all of the Obligations on or before the date on which the same are to be paid, performed and discharged, then the Liens, estates and rights granted by this Deed of Trust shall cease and terminate.

Section 2.02 Grant of Security Interest . This Deed of Trust shall be construed as a mortgage on the Land and the Buildings and it shall also constitute and serve as a “ security agreement ” within the meaning of, and shall constitute a first and prior security interest under, the Applicable UCC with respect to the Personalty and the Fixtures. To this end, Trustor by these presents does GRANT, BARGAIN, CONVEY, ASSIGN, SELL, TRANSFER and SET OVER unto Beneficiary, as trustee and as collateral agent for the Holders pursuant to the Indenture, a security interest in all of Trustor’s right, title and interest in, to and under the Personalty and the Fixtures, to secure the full and timely payment, performance and discharge of the Obligations. Trustor hereby consents to Beneficiary filing and recording financing statements (and continuations thereof) with the appropriate filing and recording offices in order to perfect (and maintain the perfection of) the security interests granted herein. To the extent the Indenture serves as a security agreement and in the event that there is an inconsistency in the terms of this Section 2.02 and the terms of the Indenture, the terms of the Indenture shall prevail pursuant to Section 8.17 of this Deed of Trust.

Section 2.03 No Obligation of Beneficiary . The assignment and security interest herein granted to Beneficiary shall not be deemed or construed to constitute Beneficiary as a mortgagee-in-possession of the Trust Property, obligate Beneficiary to lease the Trust Property or attempt to do the same, or to take any action, incur any expense or perform or discharge any obligation, duty or liability whatsoever.

Section 2.04 Fixture Filing . Without in any manner limiting the generality of any of the other provisions of this Deed of Trust: (a) some portions of the goods described or to which reference is made herein are or are to become fixtures on the Land described or to which reference is made herein or on Exhibit A attached to this Deed of Trust; (b) this Deed of Trust is

 

- 6 -

to be filed of record in the real estate records as a financing statement and shall constitute a “ fixture filing ” for purposes of the Applicable UCC; and (c) Trustor is the record owner of the real estate or interests in the real estate constituting the Trust Property hereunder. Information concerning the security interest herein granted may be obtained at the addresses set forth on the first page hereof. The addresses of the Secured Party (Beneficiary) and of the Debtor (Trustor) are set forth on the first page hereof. In that regard, the information required in connection with the fixture filing and by California Civil Code Section 3097(j) is as follows:

(1) Name and Address of Secured Party: The Bank of New York Mellon Trust Company, N.A., as Trustee and Collateral Agent for itself and for each of the financial institutions and their respective successors and assigns which from time to time shall be a “Holder” under the Indenture, 222 Berkeley Street, 2nd Floor, Boston, Massachusetts 02116.

 

Section 2.05 Future Advances . It is the intention of Trustor and Beneficiary that this Deed of Trust (as renewed and extended from time to time) shall secure future advances and readavances, and the lien and security interest created by this Deed of Trust shall attach upon execution and have priority from the time of recording as to all advances, whether obligatory or discretionary, to the fullest extent permitted by law, until this Deed of Trust is released of record.

Section 2.06 Advances Secured by Deed of Trust . Upon a Default of Trustor for failure to comply with any covenants and agreements hereunder as to the payment of taxes, assessments, insurance premiums, repairs, protection of the Trust Property or Beneficiary’s lien thereon, and other charges and the costs of procurement of title evidence and insurance as aforesaid, Beneficiary may, at its option, pay the same in accordance with applicable provisions of the Indenture, and any sums so paid by Beneficiary, together with the reasonable fees of counsel employed by Beneficiary in consultation and in connection therewith, shall be charged against Trustor, shall be due and payable (together with interest at the applicable rate) by Trustor and shall be a lien upon the Trust Property and be secured by the Deed of Trust in accordance with applicable provisions of the Indenture.

ARTICLE III

ASSIGNMENT OF LEASES AND RENTS

Section 3.01 Assignment . For Ten Dollars ($10.00) and other good and valuable consideration, including the indebtedness evidenced by the Indenture, the receipt and sufficiency of which are hereby acknowledged and confessed, Trustor has presently, absolutely

 

- 7 -

and irrevocably GRANTED, BARGAINED, SOLD, ASSIGNED, TRANSFERRED, CONVEYED and CONFIRM, and by these presents does presently, absolutely and irrevocably GRANT, BARGAIN, SELL, ASSIGN, TRANSFER, CONVEY and CONFIRM, unto Beneficiary, as Collateral Agent for the Holders pursuant to the Indenture, as security for the payment, performance and discharge of the Obligations, all of the Leases and Rents (if any), subject only to the Permitted Liens applicable thereto and the License (as hereinafter defined); TO HAVE AND TO HOLD the Leases and the Rents unto Beneficiary, forever, and Trustor does hereby bind itself, its successors and assigns to warrant and forever defend the title to the Leases and the Rents unto Beneficiary against every Person whomsoever lawfully claiming or to claim the same or any part thereof; provided , however , that if Trustor shall pay (or cause to be paid) and perform and discharge (or cause to be performed and discharged) all of the Obligations on or before the date on which the same are to be paid, performed and discharged, then this assignment shall terminate, and all rights, titles and interests conveyed pursuant to this assignment shall become vested in Trustor.

Section 3.02 Revocable License .

(a) Beneficiary hereby grants to Trustor a revocable license (the “ License ”), nonexclusive with the rights of Beneficiary reserved in Sections 3.02(b) , 3.04 and 3.05 hereof, to exercise and enjoy all incidences of the status of a lessor under the Leases and the Rents, including, without limitation, the right to collect, demand, sue for, attach, levy, recover and receive the Rents and to give proper receipts, releases and acquittances therefor. During the pendency of an Event of Default, Trustor hereby agrees to receive all Rents and hold the same as a trust fund to be applied, and to apply the Rents so collected, except to the extent otherwise provided in the Indenture, first to the payment, performance and discharge of the Obligations and then to the payment of the Impositions. Thereafter, Trustor may use the balance of the Rents collected in any manner not inconsistent with the Security Documents.

(b) If an Event of Default shall occur and be continuing, the License shall immediately and automatically terminate without the necessity of any action by Beneficiary or any other Person, and Beneficiary shall have the right in such event to exercise the rights and remedies provided under this Deed of Trust or otherwise available to Beneficiary under applicable law. Upon demand by Beneficiary at any time that an Event of Default shall have occurred and be continuing, to the extent allowed by applicable law, Trustor shall promptly pay to Beneficiary all security deposits under the Leases and all Rents allocable to any period commencing from and after the occurrence of such Event of Default and during the period such Default shall be continuing. Any Rents received hereunder by Beneficiary shall be applied and disbursed to the payment, performance and discharge of the Obligations, subject to the terms of the Indenture; provided , however , that, subject to any applicable requirement of law, any security deposits actually received by Beneficiary shall be held, applied and disbursed as provided in the applicable Leases.

Section 3.03 Enforcement of Leases . Trustor shall (a) submit any and all proposed material Leases that affect the Trustor’s operations on the Trust Property (including subleases provided to Trustor for approval) to Beneficiary for approval prior to the execution thereof or consent thereto, as applicable, such consent not to be unreasonably conditioned,

 

- 8 -

withheld or delayed; (b) duly and punctually perform and comply with any and all representations, warranties, covenants and agreements expressed as binding upon the lessor under any Lease; (c) except for a termination right granted to a tenant pursuant to the terms of a Lease, maintain each Lease in full force and effect during the term thereof; (d) provide Beneficiary with prompt notice of each notice of default sent to a tenant under a Lease, provide Beneficiary with prompt notice of each notice of default received from (or relating to) a tenant under a Lease, and otherwise promptly reasonably indicate that a material default or termination of a Lease may occur (other than by reason of the expiration of the term of such Lease); (e) appear in and defend any action or proceeding in any manner connected with any of the Leases; (f) deliver to Beneficiary true and complete copies of all Leases; and (g) deliver to Beneficiary all such further information, and execute and deliver to Beneficiary such further assurances and assignments, with respect to the Leases as Beneficiary may from time to time reasonably request. Without Beneficiary’s prior written consent, which consent shall not be unreasonably withheld with respect to clause (iv) below, Trustor shall not (i) do or knowingly permit to be done anything to materially impair the value of any of the Leases; (ii) except for security or similar deposits, collect any of the Rent more than one (1) month in advance of the time when the same becomes due under the terms of any Lease; (iii) discount any future accruing Rents; (iv) amend, modify, accept the surrender of or terminate any of the Leases; or (v) assign or grant a security interest in or to the License or any of the Leases or Rents.

Section 3.04 Direction to Tenants . Upon and at any time following the occurrence and during the continuance of an Event of Default, Trustor hereby authorizes and directs, and shall, at the direction of Beneficiary, further authorize and direct, in writing, the tenant under each Lease to pay directly to, or as directed by, Beneficiary all Rents accruing or due under its Lease, without proof to the tenant of the occurrence and continuance of such Event of Default. Trustor hereby authorizes the tenant under each Lease to rely upon and comply with any notice or demand from Beneficiary for payment of Rents to Beneficiary, and Trustor shall have no claim against any tenant for Rents paid by such tenant to Beneficiary pursuant to such notice or demand. All Rents actually collected by Beneficiary pursuant to this Section 3.04 shall be applied in accordance with the Indenture.

Section 3.05 Appointment of Attorney-in-Fact .

(a) Trustor hereby constitutes and appoints Beneficiary the true and lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby confers upon Beneficiary the right, in the name, place and stead of Trustor, to, upon the occurrence and during the continuance of an Event of Default, demand, sue for, attach, levy, recover and receive any of the Rents and any premium or penalty payable upon the exercise by any third Person under any Lease of a privilege of cancellation originally provided in such Lease and to give proper receipts, releases and acquittances therefor and, after deducting expenses of collection, to apply the net proceeds as provided in the Indenture. Trustor hereby authorizes and directs any such third Person to deliver such payment to Beneficiary in accordance with this Article III , and Trustor hereby ratifies and confirms all that its said attorney-in-fact, the Beneficiary, shall do or cause to be done in accordance with this Deed of Trust and by virtue of the powers granted hereby. The foregoing appointment is irrevocable and continuing, and such rights, powers and privileges shall

 

- 9 -

be exclusive in Beneficiary, and its successors and assigns, so long as any part of the Obligations remains unpaid or unperformed and undischarged, and until the commitments under the Indenture have been terminated.

(b) Trustor hereby constitutes and appoints Beneficiary the true and lawful attorney-in-fact, coupled with an interest, of Trustor and Trustor hereby confers upon Beneficiary the right, in the name, place and stead of Trustor, to subject and subordinate at any time and from time to time any Lease or any part thereof to the lien, assignment and security interest of this Deed of Trust and to the terms hereof, or to any other mortgage, deed of trust, assignment or security agreement, or to any ground lease or surface lease, with respect to all or a portion of the Trust Property, or to request or require such subordination, where such reservation, option or authority was reserved to Trustor under any such Lease, or in any case where Trustor otherwise would have the right, power or privilege so to do. The foregoing appointment is irrevocable and continuing, and such rights, powers and privileges shall be exclusive in Beneficiary, and its successors and assigns, so long as any part of the Obligations remains unpaid or unperformed and undischarged and until the commitments under the Indenture have been terminated. Trustor hereby represents and warrants that it has not exercised, and no Person has the current right to exercise, any of the rights described in this Section 3.05(b) , and Trustor hereby covenants not to exercise (or appoint any other Person as attorney-in-fact to exercise) any such right, nor (except at Beneficiary’s written request) to subordinate any such Lease to the lien of this Deed of Trust or to any other mortgage, deed of trust, assignment or security agreement or to any ground lease or surface lease.

Section 3.06 No Liability of Beneficiary . Neither the acceptance hereof nor the exercise of the rights and remedies hereunder nor any other action on the part of Beneficiary or any Person exercising the rights of Beneficiary or any Holder hereunder shall be construed to: (a) be an assumption by Beneficiary or any such Person or to otherwise make Beneficiary or such Person liable or responsible for the performance of any of the obligations of Trustor under or with respect to the Leases or for any Rent, security deposit or other amount delivered to Trustor, provided that Beneficiary or any such Person exercising the rights of Beneficiary shall be accountable for any Rents, security deposits or other amounts actually received by Beneficiary or such Person, as the case may be; or (b) obligate Beneficiary or any such Person to take any action under or with respect to the Leases or with respect to the Trust Property, to incur any expense or perform or discharge any duty or obligation under or with respect to the Leases or with respect to the Trust Property, to appear in or defend any action or proceeding relating to the Leases or the Trust Property, to constitute Beneficiary as a mortgagee-in-possession (unless Beneficiary actually enters and takes possession of the Trust Property), or to be liable in any way for any injury or damage to Persons or property sustained by any Person in or about the Trust Property, other than to the extent caused by the bad faith, willful misconduct or gross negligence of Beneficiary or any Person exercising the rights of Beneficiary hereunder. In connection with its appointment and acting hereunder, Beneficiary is otherwise entitled to all rights, privileges, protections, benefits, immunities and indemnities provided to it as Trustee and Collateral Agent under the Security Documents.

Section 3.07 Trustor’s Indemnities . Trustor hereby agrees to protect, indemnify and hold harmless Beneficiary and of the Holders and each Indemnified Party related to Beneficiary or such other Holders from and against any and all Losses which Beneficiary or any such other Holders or Indemnified Party may incur under or by reason of this Article III , or for

 

- 10 -

any action taken by Beneficiary or any such other Holder or Indemnified Party hereunder, or by reason or in defense of any and all claims and demands whatsoever which may be asserted against Beneficiary or any such other Holders or Indemnified Party arising out of the Leases, including, without limitation, any claim by any third Person for credit on account of Rents paid to and received by Trustor, but not delivered to Beneficiary or its agents, representatives or employees, for any period under any Lease more than one (1) month in advance of the due date thereof. The foregoing indemnity shall include, in any case, such Loss as may result from the ordinary good faith negligence of Beneficiary or such other Holders or Indemnified Party, but not any such Loss that is caused by the bad faith, gross negligence or willful misconduct of Beneficiary or any such other Holders or Indemnified Party. In the event that Beneficiary or any of the other Holders or any Indemnified Party incurs any Losses covered by the indemnity set forth in this Section 3.07 , the amount thereof, including reasonable attorneys’ fees, with interest thereon at the Default Rate, shall be payable by Trustor to Beneficiary within ten (10) days after demand therefor, and shall be secured hereby and by all other security for the payment and performance of the Obligations, including, without limitation, the lien and security interest of this Deed of Trust. The liabilities of Trustor as set forth in this Section 3.07 shall survive the termination of this Deed of Trust and the repayment of the Obligations.

Section 3.08 No Modification of Trustor’s Obligations . Nothing herein contained shall modify or otherwise alter the obligation of Trustor to make prompt payment of all Obligations as and when the same become due, regardless of whether the Rents described in this Article III are sufficient to pay the Obligations, and the security provided to Beneficiary pursuant to this Article III shall be cumulative of all other security of any and every character now or hereafter existing to secure payment of the Obligations.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Trustor hereby unconditionally represents and warrants to Beneficiary as follows:

Section 4.01 Title to Trust Property and Lien of this Deed of Trust . To the best of its knowledge, Trustor has good, marketable and indefeasible fee simple title to the Land and the Buildings, and, to the best of its knowledge, has good, marketable and indefeasible title to the Fixtures, the Personalty and the other Trust Property. The Trust Property is free and clear of any and all Liens, charges, encumbrances, security interests and adverse claims whatsoever, except for all Permitted Liens.

Section 4.02 Taxes and Other Payments . Trustor has filed all federal, state, commonwealth, county, municipal and city income and other material tax returns required to have been filed by it and has paid all taxes and other Impositions which have become due pursuant to such returns or pursuant to any assessments or charges received by it, and Trustor does not know of any basis for any additional assessment or charge in respect of any such taxes or other Impositions. Trustor has paid in full all sums owing or claimed for labor, material, supplies, personal property (whether or not forming a Fixture hereunder) and services of every

 

- 11 -

kind and character used, furnished or installed in or on the Trust Property that are now due and owing and no claim for same exists or will be permitted to be created, except such claims as may arise in the ordinary course of business and that are not yet past due.

Section 4.03 Power to Create Lien and Security . Trustor has full power and lawful authority to grant, bargain, sell, assign, transfer, mortgage and convey a Lien and security interest in all of the Trust Property in the manner and form herein provided and without obtaining the authorization, approval, consent or waiver of any grantor, lessor, sublessor, governmental authority or other Person whomsoever.

Section 4.04 Loan and Security Documents . Trustor has received a copy of and is fully familiar with the terms and provisions of the Indenture and the other Security Documents. All representations and warranties made by Trustor in the Indenture and the other Security Documents are incorporated herein by reference and are hereby made by Trustor as to itself and the Trust Property as though such representations and warranties were set forth at length herein as the representations and warranties of Trustor.

Section 4.05 Compliance with Laws . To the actual knowledge of Trustor, all of the improvements on the Land (i) comply with all material requirements of all applicable laws and ordinances with respect to zoning, subdivision, construction, building and land use, including, without limitation, requirements with respect to parking, access and certificates of occupancy (and similar certificates) and (ii) comply with, and shall remain in compliance with, applicable health, fire and building codes. Except as set forth on any surveys delivered by Trustor to Beneficiary, all of the Buildings lie wholly within the boundaries and building restriction lines of the Land. Except as set forth on any surveys delivered by Trustor to Beneficiary, to the actual knowledge of Trustor, no improvements on adjoining properties encroach upon the Land, and no easements or other encumbrances upon the Land encroach upon or under any of the Buildings or any portion of the Trust Property. To the actual knowledge of Trustor, all of the Buildings and the use of the Trust Property materially comply with, and shall remain in material compliance with, all applicable statutes, rules, regulations and private covenants now or hereafter relating to the ownership, construction, use or operation of the Trust Property, including all applicable statutes, rules and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, environmental protection, zoning and land use. All certifications, permits, licenses and approvals, including, without limitation, certificates of completion and occupancy permits required for the legal use, occupancy and operation of the Trust Property have been obtained and are in full force and effect. Trustor has not received any notice of, or other communication with respect to, an alleged violation with respect to any of the foregoing.

Section 4.06 No Condemnation . With the exception of the Permitted Exceptions, no part of any property subject to this Deed of Trust has been taken in condemnation or other like proceeding nor is any proceeding pending, threatened or known to be contemplated for the partial or total condemnation or taking of the Trust Property.

Section 4.07 Flood Zone . To the best of Trustor’s knowledge, the Trust Property is not located in an area identified by the Federal Emergency Management Agency

 

- 12 -

(“ FEMA ”) as having special flood hazards or if the Land or any part thereof is identified by the Federal Emergency Management Agency as an area having special flood hazards (including, without limitation, those areas designated as Zone A or Zone V), then Trustor has obtained the insurance required under Section 5.04(a)(v) of this Deed of Trust.

ARTICLE V

AFFIRMATIVE COVENANTS

Trustor hereby unconditionally covenants and agrees with Beneficiary as follows:

Section 5.01 Lien Status . Except as otherwise expressly provided in the Indenture, Trustor shall not place, or permit to be placed, or otherwise mortgage, hypothecate or encumber the Trust Property, or any portion thereof or interest therein, with any other Lien or security interest of any nature whatsoever (statutory, constitutional or contractual), other than Permitted Liens, regardless of whether such Lien or security interest is inferior to the Lien and security interest created by this Deed of Trust, and, if any such Lien or security interest is asserted against the Trust Property, Trustor shall promptly, at its own cost and expense, (a) pay the underlying claim in full (except for so long as such claim is being contested by Trustor in good faith and as and to the extent permitted in accordance with the terms of the Indenture) or take such other action as may be necessary to cause the same to be released of record and otherwise, and (b) within five (5) days after the date on which such Lien or security interest is so asserted, give Beneficiary notice of such Lien or security interest. Such notice shall specify who is asserting such Lien or security interest and shall detail the origin and nature of the underlying claim giving rise to such asserted Lien or security interest.

Section 5.02 Payment of Impositions . Trustor shall duly pay and discharge, or cause to be paid and discharged, all Impositions not later than the due date thereof, or the day on which any fine, penalty, interest or cost may be added thereto or imposed, or the day on which any Lien may be filed for the nonpayment thereof (if such day is used to determine the due date of the respective item); provided , however , that Trustor may, if permitted by applicable law and if such installment payment would not create or permit the filing of a Lien against the Trust Property, pay the Impositions in installments. Notwithstanding the foregoing, Trustor may in good faith, by appropriate proceedings and upon notice to Beneficiary, contest the validity, applicability or amount of any asserted tax or assessment, subject to any more restrictive provisions applicable to any such contest contained in the Indenture and (without limiting the foregoing) so long as (a) such contest is properly contested in accordance with applicable provisions of the Indenture, and (b) Beneficiary determines, in its opinion reasonably exercised, that such contest suspends the obligation to pay the tax and that nonpayment of such tax or assessment will not result in the sale, loss, forfeiture or diminution of the Trust Property or any part thereof or any interest of Beneficiary therein, and (c) unless expressly provided to the contrary in the Indenture, prior to the earlier of the commencement of such contest or the delinquency date of the asserted tax or assessment, Trustor deposits with Beneficiary an amount reasonably determined by Beneficiary to be adequate to cover the payment of such tax or assessment and a reasonable additional sum to cover possible interest, costs and penalties;

 

- 13 -

provided , however , that Trustor shall promptly cause to be paid any amount adjudged by a court of competent jurisdiction to be due, with all interest, costs and penalties thereon, promptly after such judgment becomes final (and, subject to Beneficiary’s rights and remedies during an Event of Default, Beneficiary shall make any sum deposited pursuant to clause (c) above available for such payment); and provided , further , that in any event each such contest shall be concluded, the taxes, assessments, interest, costs and penalties shall be paid prior to the date any writ or order is issued under which the Trust Property may be sold, lost or forfeited.

Section 5.03 Repair . Trustor shall keep the Trust Property in good order and condition (reasonable wear and