Exhibit 10.1
 
DUNHAM & ASSOCIATES HOLDINGS, INC.
 
 
 
December 30, 2013
 
American Spectrum Dunham Properties LLC
American Spectrum Realty, Inc.
William J. Carden
2401 Fountain View, Suite 750
Houston, TX 77057
 
Re:           Loan/Issue of Warrant
 
The purpose of this letter ("Letter Agreement") is to set forth the agreements
and understandings of Dunham & Associates Holdings, Inc. ("Dunham"), American
Spectrum Dunham Properties LLC ("American Spectrum") and American Spectrum
Realty, Inc. ("ASR").  Dunham, American Spectrum and ASR agree as follows:
 
1. Loan.  Dunham, or its designated affiliate, agrees to loan or to arrange for
a loan from a third party or parties (collectively, the “Lender”) to American
Spectrum and American Spectrum agrees to borrow from Lender, the original
principal amount of $6,000,000 (the "Loan") upon the terms and conditions set
forth in this Letter Agreement.  Dunham shall cause Lender to advance to
American Spectrum $3,000,000 (the "Tranche 1 Loan") within five (5) business
days after the date of the closing of the transactions set forth in that certain
Contribution Agreement and Joint Escrow Instructions, by and between D&A Daily
Mortgage Fund III, L.P., D&A Semi-Annual Mortgage Fund III, L.P., D&A
Intermediate-Term Mortgage Fund III, L.P., American Spectrum, American Spectrum
Realty Operating Partnership, L.P. and ASR, dated December 30, 2013 (the
“Contribution Agreement”) and Dunham shall cause the Lender to advance to
American Spectrum an additional $3,000,000 (the "Tranche 2 Loan") on or prior to
ninety (90) days after the date of this Letter Agreement, the date of such
advance being determined by Lender in its sole discretion.  The Loan, or so much
thereof as is advanced pursuant to this Letter Agreement, shall bear simple
interest at the per annum rate of 8% from the date of advance thereof to
American Spectrum until the first anniversary of the date of this Letter
Agreement and thereafter shall bear simple interest at the rate of 12% per
annum.  Subject to compliance with applicable law, Dunham may identify the
Lender(s) for the Loan in its sole discretion and American Spectrum and ASR
acknowledge and agree that it shall not have approval rights over such Lender
and that the Lender under the Tranche 1 Loan need not be the Lender(s) under the
Tranche 2 Loan.  The Loan shall be guaranteed by ASR.
 
2. Repayment of the Loan.  The Tranche 1 Loan and the Tranche 2 Loan shall each
be evidenced by a separate promissory note (each a "Note") in the form attached
hereto as Exhibit A, executed by American Spectrum in favor of Lender.  The Note
for Tranche 1 shall be delivered by American Spectrum to Dunham concurrently
with the execution of this Letter Agreement.  The Note for Tranche 2 shall be
delivered by American Spectrum to Dunham concurrently with its initial
funding.  The Note evidencing the Tranche 1 Loan shall be referred to herein as
the “Tranche 1 Note” and the Note evidencing the Tranche 2 Loan shall be
referred to herein as the “Tranche 2 Note.”  American Spectrum shall pay
interest only on the Loan to Lender, in arrears, on the first (1st) day of each
calendar month, commencing on the first day of the month following the month in
which the Tranche 1 Loan is advanced.  All accrued interest and unpaid principal
outstanding under each of the Notes shall be paid in full on the fifth
anniversary of the date of this Letter Agreement ("Maturity Date").   In the
event of any disagreement between the terms of any Note and this Letter
Agreement, the terms set forth in the applicable Note shall prevail in such
dispute.  The Tranche 1 Loan and/or the Tranche 2 Loan may be advanced by more
than one Lender in an aggregate amount of up to $3,000,000, in which case, each
such Lender shall be issued a Note for the aggregate amount of its share of the
applicable Loan and the form of Note shall be amended to provide that all of the
Notes issued with respect to the Tranche 1 Loan and/or the Tranche 2 Loan, as
applicable, shall be held on a pari passu basis and that all payments due and
owing with respect to such Notes shall be made amongst the holders thereof on a
pro rata basis in accordance with the relative principal amount outstanding
under each such Note.  ASR acknowledges that Dunham Trust Company may serve as
Lender in its capacity as a trustee for one or more third-parties and that in
such case Dunham shall hold the applicable Note for the benefit of such
third-parties in its capacity as trustee.
 
 
 

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3. Prepayment.  The outstanding principal amount owing under each of the Notes
may be prepaid at any time without the prior written consent of Lender.
 
4. Use of Proceeds.  American Spectrum agrees to the use of the proceeds from
the Loan for the uses and purposes set forth in Exhibit B attached hereto.
 
5. Security for the Loan.  Concurrently with the execution of this Letter
Agreement, American Spectrum shall grant to Lender a first lien on the property
commonly referred to by Dunham and American Spectrum as San Jacinto (the
"Tranche 1 Loan Property") securing the repayment of the Tranche 1 Note.  The
lien shall be evidenced by a deed of trust securing repayment of the Tranche 1
Note in the form attached hereto as Exhibit C, which shall be executed,
acknowledged and delivered by American Spectrum to Lender upon execution of this
Letter Agreement.  Lender shall have the right, at the cost of American
Spectrum, to obtain from First American Title Insurance Company, a lender's
policy of title insurance insuring the first priority of the lien created by
such deed of trust on the Tranche 1 Loan Property.  Concurrently with the
initial funding of the loan to be evidenced by the Tranche 2 Note, American
Spectrum shall grant to Lender a first lien on the property commonly referred to
by Dunham and American Spectrum as Calimesa and a second lien on the property
commonly referred to by Dunham and American Spectrum as Murrieta  (the "Tranche
2 Loan Properties") securing repayment of the Tranche 2 Note.  The lien shall be
evidenced by a deed of trust securing repayment of the Tranche 2 Note in the
form attached hereto as Exhibit C, which shall be executed, acknowledged and
delivered by American Spectrum to Lender upon the initial funding of the loan to
be evidenced by the Tranche 2 Note.  Lender shall have the right, at the cost of
American Spectrum, to obtain from First American Title Insurance Company, a
lender's policy of title insurance insuring the priority of the lien created by
such deed of trust on the Tranche 2 Loan Properties as described herein.
 
6. Substitution of Security for the Loan.  At any time American Spectrum desires
to refinance or sell a Tranche 1 Loan Property or one of the Tranche 2 Loan
Properties (the "Released Property"), it shall have the right to do so, and upon
request of American Spectrum, Lender shall release such Released Property from
the lien of the applicable deed of trust on the condition that either (a) the
applicable Note is paid in full in connection with such sale, or (b) American
Spectrum grants to Lender a first lien on substitute real property to secure
repayment of the applicable Note in place of the Released Property (the
"Substitute Property").  The lien against the Substitute Property shall be
evidenced by a deed of trust securing repayment of the applicable Note in the
form attached hereto as Exhibit C.  The Substitute Property shall be acceptable
to Lender in its reasonable discretion; provided, however, that American
Spectrum may, without Lender’s consent, elect to replace a Released Property
with a Substitute Property that is a property being contributed to American
Spectrum pursuant to the Contribution Agreement on the sole condition that the
Project Allocation Amount of such Substitute Property equals or exceeds the
Project Allocation Amount of the Released Property.  In any event, the Lender
shall be granted a first priority lien on any such Substitute
Property.  American Spectrum shall give Lender written notice at least five (5)
business days prior to the sale of any Property or Substitute Property, which
notice shall include any request or decision (as the case may be) to replace
such property with a Substitute Property in accordance with the terms of the
Note.  The Lender shall have the right, at the cost of American Spectrum, to
obtain from First American Title Insurance Company a Lender's Policy of Title
Insurance insuring the priority of the lien created on any Substitute Property.
 
 
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If American Spectrum sells (a) the Released Property or (b) a Substitute
Property which is a property contributed to American Spectrum pursuant to the
Contribution Agreement, and in connection with such transaction, such property
is replaced with a Substitute Property, then for purposes of calculating the
“Sale Payment” under the Contribution Agreement, the amount owing under the
applicable Note shall not be included in calculating the aggregate indebtedness
repaid in connection with the sale of such property.
 
7. Representations and Warranties.
 
In addition to the express agreements of the parties contained in this Letter
Agreement, the following constitutes representations and warranties of each
party to the other parties:
 
7.1 Due Formation.  Such party is duly formed and validly existing under the
laws of its organization and has the requisite power and authority to carry out
its businesses now being conducted and such party is duly qualified or licensed
in each state in which it conducts business and is in good standing in such
state to the extent required by law.
 
7.2 Power.  Each party has the legal power, right and authority to enter into
this Letter Agreement and the instruments referenced in this Letter Agreement
and to consummate the transactions contemplated by this Letter Agreement.
 
7.3 Required Action.  All requisite action has been taken by each party in
connection with (a) the entering into of this Letter Agreement and the
instruments referenced in this Letter Agreement, (b) the performance of its
obligations under this Letter Agreement, and (c) the consummation of the
transactions contemplated by this Letter Agreement.  No other consent of any
member, partner, shareholder, creditor, investor, judicial or administrative
body, governmental authority or other person is required in connection
therewith.
 
 
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7.4 Authority.  The individuals executing this Letter Agreement and the
instruments referenced herein on behalf of such party have the legal power,
right and actual authority to bind the party to the terms and conditions of this
Letter Agreement and such instruments.
 
7.5 Enforcement.  This Letter Agreement and all documents required hereby to be
executed by such party is and shall be valid, legally binding obligations of and
enforceable against such party in accordance with their terms subject only to
applicable bankruptcy, insolvency, reorganization, moratorium laws or similar
laws or equitable principles affecting or limiting the rights of contracting
parties generally.
 
7.6 No Conflict.  Neither the execution and delivery of this Letter Agreement
and the documents in this Letter Agreement nor the incurrence of the obligations
set forth in this Letter Agreement, nor the consummation of the transactions
contemplated by this Letter Agreement, nor compliance with the terms of this
Letter Agreement and the documents referenced in this Letter Agreement conflict
with or result in the material breach of any terms, conditions or provisions of
or constitute a default under any bond, note or other evidence of indebtedness
or any contract, indenture, mortgage, deed of trust, loan, partnership
agreement, lease or other agreements or instruments to which such party is a
party.
 
7.7 Prohibited Person in Transactions.  No party or, to such party's knowledge,
its affiliates, is in violation of any laws relating to terrorism, money
laundering, or the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law
107-56 and Executive Order No. 13224 (blocking property and prohibiting
transactions with person who commit, threaten to commit, or support terrorism),
nor is any party, or, to the best of such party's knowledge, its affiliates,
acting directly or indirectly on behalf of any person who is in violation of
such Order.
 
8. Issuance of Warrants.  In consideration of Dunham or its designated affiliate
providing for and arranging for the Loan and the disbursement thereof, ASR shall
issue to Dunham or its designated affiliate warrants (the "Warrants") to
purchase up to 600,000 shares of the common stock of ASR (the "Common Shares")
at any time prior to December 31, 2018 at a price per Common Share of two
dollars ($2.00).  The terms of such Warrants shall be governed by the terms of
the Warrant to Purchase Common Stock being issued by ASR to Dunham concurrently
herewith in the form attached hereto as Exhibit D.
 
9. Participation Rights.  In the event ASR or its affiliates negotiates for the
redemption of any of ASR’s issued and outstanding stock (or securities
exercisable or convertible into ASR capital stock), other than the redemption
and/or purchase of any ASR preferred stock, including the Senior Preferred Stock
issued in connection with the Contribution Agreement (a “Non-Preferred Stock
Transaction”), ASR shall give Dunham notice of such Non-Preferred Stock
Transaction not less than thirty (30) days prior to the closing of such
Non-Preferred Stock Transaction, which notice shall set forth the terms and
conditions of such Non-Preferred Stock Transaction.  Dunham shall have a period
of twenty-five (25) days following receipt of notice of such Non-Preferred Stock
Transaction to elect to purchase up to fifty percent (50%) of the shares of
issued and outstanding capital stock (or securities exercisable or convertible
into ASR capital stock) subject to the Non-Preferred Stock Transaction on the
same terms and conditions set forth in the applicable notice delivering written
notice of such election to ASR. The terms of this Section 9 shall survive the
repayment in full of the Notes.
 
 
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10. Miscellaneous.
 
10.1 Entire Agreement.  This Letter Agreement, together with the Notes, the
Deeds of Trust and the Warrant, is the final expression of and contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto.  This Letter
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by instrument signed by the party to be
charged or by its agent duly authorized in writing.  No party hereto intends to
confer any benefit under this Letter Agreement on any person other than the
parties hereto.
 
10.2 Agreement Binding on Parties.  This Letter Agreement, and the terms,
covenants, and conditions herein contained, shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors, and assigns of the
parties hereto.
 
10.3 Governing Law.  This Letter Agreement and all documents executed and
delivered in connection herewith shall be construed in accordance with the
internal laws of the State of California without regard to the principles of
choice of law or conflicts of law.
 
10.4 Notice.  Any notice, communication, request, reply or advice provided for
or permitted by this Letter Agreement to be made by a party must be in writing,
and must be given or served on the other parties (a) by depositing the same in
the United States mail, postage paid, certified, and addressed to the party to
be notified, with return receipt requested, (b) by delivering the same to such
party, or an agent of such party, in person or by commercial courier, (c) by
facsimile transmission, evidenced by confirmed receipt and concurrently followed
by a "hard" copy of same delivered to the party by mail, personal delivery or
overnight delivery pursuant to clauses (a), (b) or (c) hereof, or (d) by
depositing the same into custody of a nationally recognized overnight delivery
service such as Federal Express, Overnight Express, Airborne Express, Emery or
Purolator.  Any such notices shall be addressed as follows:
 
If to American Spectrum or ASR:
 
American Spectrum, Inc.
2401 Fountain View, Suite 750
Houston, TX 77057
Attn: William J. Carden, President
Tel: (713) 706-6200
Fax: (713) 706-6201
 
If to Dunham:
 
Dunham & Associates Holdings, Inc.
10251 Vista Sorrento Parkway, Suite 200
San Diego, CA 92121
Attn: Jeffrey Dunham
Tel: (858) 964-0500
Fax: (858) 964-0505
 
 
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10.5 Multiple Counterparts.  This Letter Agreement may be executed in multiple
counterparts, each of which is to be deemed original for all purposes.  This
Letter Agreement may be executed by facsimile or PDF electronic transmission.
 
The undersigned have executed this Letter Agreement effective as of the date
first set forth above.
 
 

  DUNHAM & ASSOCIATES HOLDINGS, INC.               By: /s/ Jeffrey A. Dunham  
Name: Jeffrey A. Dunham   Title: President and CEO               AMERICAN
SPECTRUM DUNHAM PROPERTIES LLC,   a Delaware limited liability company          
    By: /s/ William J. Carden   Name: William J. Carden   Title: President      
        AMERICAN SPECTRUM REALTY, INC.,   a Maryland corporation              
By: /s/ William J. Carden   Name: William J. Carden   Title: President

 
 
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EXHIBIT A
 
 
FORM OF NOTES
 
SECURED PROMISSORY NOTE
(the "Note")
(Tranche 1)
 

  San Diego, California   December ___, 2013

$3,000,000                                                                                                
 
FOR VALUE RECEIVED, American Spectrum Dunham Properties LLC, a Delaware Limited
Liability Company, ("Borrower") promises to pay to the order of Dunham Trust
Company, Trustee of the Balgrosky Hinshaw Children's Trust, or the lawful holder
of this Note (the "Holder"), without grace, deduction, offset, extension,
credit, notice or demand, at the address set forth below, or at such other place
or to such other party as the Holder may from time to time designate in writing,
the principal sum of Three Million ($3,000,000).  This Note shall bear interest
at the rate of Eight Percent (8%) to Borrower per annum upon the principal
amount outstanding from time to time until the first anniversary of the date of
this Note whereupon this Note shall bear interest at the rate of Twelve Percent
(12%) per annum upon the principal amount outstanding from time to
time.  Interest only payments shall be payable, in arrears, on the first day of
each calendar month beginning January 1, 2014, without notice, grace, demand,
deduction or offset, until the Maturity Date, as that term is defined below, on
which date, the principal amount hereof, together with all accrued and unpaid
interest and other charges payable hereunder, shall be all due and payable.
 
The interest rate on this Note shall be computed on the basis of a 360-day year,
based on the number of days actually elapsed.  Payments for any month which is
not a full calendar month shall be prorated on the basis of a thirty (30) day
month, based on the actual number of days elapsed.  All payments under this Note
shall be paid electronically via a wire transfer of immediately available funds
to an account designated by the Holder.
 
Holder and Borrower acknowledge and agree that the proceeds advanced by Holder
to Borrower hereunder shall only be used by Borrower as set forth on Schedule 1,
attached hereto.
 
This Note shall mature on the first to occur of (a) the transfer, sale,
conveyance or assignment of the Property (as defined below) or the Substitute
Property (as defined below), unless such Property or Substitute Property is
replaced with a Substitute Property in accordance with the provisions of this
Note, or (b) December 31, 2018 (the "Maturity Date").  On the Maturity Date, the
balance of the outstanding principal sum of this Note, together with any and all
accrued but unpaid interest and other charges payable under this Note shall all
be due and payable.  After the Maturity Date, all amounts owing under this Note
are due on demand.  All installments of principal and interest of this Note, and
other amounts paid or due hereunder, shall be payable in lawful money of the
United States of America, in immediately available funds, to the Holder via a
wire transfer of immediately available funds to an account designated by Holder,
or such other place(s) as the Holder may designate in writing to Borrower from
time to time.  Each payment hereunder shall, when made, be credited first to any
late charges and other expenses then payable to Holder, then to interest, and
the remainder to principal.
 
EXHIBIT A
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The occurrence of any of the following events shall constitute an “Event of
Default” hereunder:  (a) Borrower's failure to pay any installment of interest,
principal or other charges when due hereunder (whether by scheduled maturity,
acceleration, demand or otherwise) and such breach is not cured within thirty
(30) days; (b) Borrower's failure to perform or comply with any of the terms,
conditions, covenants or agreements contained herein or in the other Loan
Documents (as defined below) and such breach or failure is not cured within
thirty (30) days of the date of such failure; (c) any warranty, representation
or statement made in this Note or in the other Loan Documents by the Borrower
proves to be false or incorrect in any material respects, and such breach is not
cured (to the extent it is capable of being cured) within thirty (30) days of
the date of such breach or failure; (d) (i) a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law or statute is filed by or against the Borrower; (ii) the
Borrower makes an assignment for the benefit of creditors or takes any action to
authorize any of the foregoing; or, (iii) in the case of an involuntary
proceeding filed against the Borrower, such proceedings not discharged or
dismissed within 60 days; or (e) the Borrower voluntarily or involuntarily
dissolved or the Borrower is dissolved or becomes insolvent or fails generally
to pay its debts as they become due.  Upon the occurrence of any Event of
Default and, at the option of the Holder hereof, the entire debt then remaining
unpaid shall at once become due and payable without presentment, demand, protest
or further notice of any kind; provided, however, that if an Event of Default
described in clause (d) or (e) of such definition exists or occurs, all of the
amounts owing with respect to this Note automatically, without notice of any
kind, shall become immediately due and payable.  During the period commencing
upon the occurrence of any such Event of Default and continuing until such Event
of Default is cured, but without limiting or waiving, in any way, Borrower's
liability resulting from such Event of Default, and without limiting any rights
or remedies of Holder under this Note, the other Loan Documents, or at law or
equity, any and all delinquent amounts shall be added to the principal balance
hereunder and shall bear interest at the rate set forth in this Note.  In
addition, upon any Event of Default, the interest rate hereunder on the
principal amount hereof shall automatically increase to an interest rate of
Fifteen Percent (15%) per annum.  Any references in this Note or in any of the
other Loan Documents to the "rate set forth in the Note" or similar designation
shall be deemed to include such increased interest rate.  In addition, such
increased interest rate shall take effect and continue irrespective of any
bankruptcy or similar action affecting Borrower and irrespective of the
commencement or continuation of any legal proceedings (including judicial and/or
non-judicial foreclosure proceedings) by Holder.
 
Borrower recognizes that default by Borrower in making any payment herein agreed
to be paid when due will result in the Holder incurring additional expenses in
servicing the loan, in loss to the Holder of the use of the money due and in
frustration to the Holder in meeting its other financial and loan
commitments.  Borrower agrees that, if for any reason Borrower fails to pay any
amounts due under this Note or under the other Loan Documents when due, Holder
shall be entitled to compensation for the detriment caused thereby, but that it
is extremely difficult and impractical to ascertain the amount of such
compensation.  Borrower therefore agrees that a sum equal to Two Percent (2.0%)
of each payment of principal, interest, or other amounts to be paid hereunder
which becomes delinquent is a reasonable estimate of said compensation to the
Holder of this Note, which sum Borrower agrees to pay upon the earlier of (a)
ten (10) days after the date that the applicable missed payment was due and
payable to Holder, or (b) on demand of the Holder.  This clause is not intended
to limit Borrower's liability resulting from its Event of Default in any way, or
Holder's rights or remedies with respect to such Event of Default, but is
intended solely to compensate Holder in the event of Borrower's delay in making
any payment due hereunder.
 
EXHIBIT A
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The Borrower and endorsers severally waive presentment, protest and demand,
notice of protest, demand and of dishonor and nonpayment of this Note, and
expressly agree that this Note, or any payment hereunder, may be extended from
time to time without in any way affecting the liability of the Borrower and
endorsers hereof.
 
The payment of this Note and all interest and other charges thereon, whether now
or hereafter owing, arising, due or payable, is secured by a first priority lien
on certain real property and improvements thereon commonly referred to by
Borrower and Holder as the San Jacinto Property (collectively, the “Property”)
pursuant to that certain Deed of Trust, Assignment of Rents and Security
Agreement and Fixture Filing (the “Deed of Trust”), executed by Borrower in
favor of Holder on or about even date hereof.  For purposes hereof, this Note,
the Deed of Trust and the Guaranty (defined below) shall be collectively
referred to as the "Loan Documents".  Holder shall have the right, at Borrower’s
sole cost and expense, to obtain from First American Title Insurance Company, a
lender’s policy of title insurance insuring first priority of the lien created
by the Deed of Trust.  In the event Borrower desires to refinance or sell the
Property, it shall have the right to do so, and upon request of Borrower, Holder
shall release the Property from the lien of the Deed of Trust on the condition
that either (a) this Note is paid in full in connection with such transaction,
or (b) Borrower grants to Holder a first lien on substitute real property to
secure repayment of the Note (the “Substitute Property”).  The lien against the
Substitute Property shall be evidenced by a deed of trust securing repayment of
the Note in substantially the form as the original Deed of Trust.  The
Substitute Property shall be acceptable to Holder in its reasonable discretion;
provided, however, that Borrower may, without Holder’s consent, elect to replace
the Property with a Substitute Property that is a property being contributed to
Borrower pursuant to that certain Contribution Agreement and Joint Escrow
Instructions, dated December 30, 2013, by and between D&A Daily Mortgage Fund
III, L.P., D&A Semi-Annual Mortgage Fund III, L.P., D&A Intermediate-Term
Mortgage Fund III, L.P., American Spectrum Realty, Inc., American Spectrum
Realty Operating Partnership, L.P. and American Spectrum Dunham Properties (the
“Contribution Agreement”) on the only condition that that the Project Allocation
Amount (as such term is defined in the Contribution Agreement) of such
Substitute Property equals or exceeds the Project Allocation Amount of the
Property.  Borrower shall give Holder written notice at least five (5) business
days prior to the sale of any Property or Substitute Property, which notice
shall include any request or decision (as the case may be) to replace such
property with a Substitute Property in accordance with the terms hereof.  Holder
shall have the right, at the cost of Borrower, to obtain from First American
Title Insurance Company, a lender’s policy of title insurance insuring the
priority of the lien created by such replacement Deed of Trust.
 
If the Borrower sells (a) the Property or (b) a Substitute Property which is a
property contributed to the Borrower pursuant to the Contribution Agreement
(either, a "Released Property"), and in connection with such transaction, the
Released Property is replaced with a Substitute Property, then for purposes of
calculating the "Sale Payment" under the Contribution Agreement, the amount
owing under this Note shall not be included in calculating the aggregate
indebtedness repaid in connection with the sale of such Released Property.
 
EXHIBIT A
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The Borrower promises to pay all attorneys' fees and costs and/or other fees,
costs and charges relating thereto (including, without limitation, trustees',
accountants', and appraisers' fees and expenses) incurred by the Holder hereof
in connection with the interpretation, collection or enforcement of the Loan
Documents (whether or not legal proceedings are brought by Holder), and/or the
protection of the security under the Deed of Trust, including, without
limitation any such fees and expenses incurred by Holder in connection with,
related to, or arising out of any judicial or non-judicial foreclosure
proceedings.
 
If fulfillment of any provision hereof or of the other Loan Documents shall be
deemed by a court of competent and final jurisdiction to violate any applicable
usury restrictions, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and any amount received in excess of such
limit shall be applied to reduce the unpaid principal balance hereof and not to
the payment of interest, it being understood that in no event shall interest or
any other amount paid or agreed to be paid to Holder for the use, forbearance or
detention of money to be advanced hereunder or pursuant to the other Loan
Documents exceed the highest lawful rate permissible under applicable usury
laws.
 
The obligations of Borrower under this Note and the Deed of Trust shall be
guaranteed by American Spectrum Realty, Inc., pursuant to a separate Guaranty to
be entered into concurrently herewith (the “Guaranty”).
 
The Borrower hereby represents and warrants to Holder as follows:
 
(i)  Borrower is duly formed and validly existing under the laws of its
organization and has the requisite power and authority to carry out its
businesses now being conducted and is duly qualified or licensed in each state
in which it conducts business and is in good standing in such state to the
extent required by law;
 
(ii)  Borrower has the legal power, right and authority to enter into Note and
to consummate the transactions contemplated by Note;
 
(iii)  All requisite action has been taken by Borrower in connection with (a)
the entering into of this Note, (b) the performance of its obligations under
Note, and (c) the consummation of the transactions contemplated by this
Note.  No other consent of any member, partner, shareholder, creditor, investor,
judicial or administrative body, governmental authority or other person is
required in connection therewith;
 
(iv)  The individuals executing this Note on behalf of Borrower have the legal
power, right and actual authority to bind the Borrower to the terms and
conditions of this Note;
 
(v)  The Loan Documents are and shall be the valid, legally binding obligation
of and enforceable against Borrower in accordance with their terms subject only
to applicable bankruptcy, insolvency, reorganization, moratorium laws or similar
laws or equitable principles affecting or limiting the rights of contracting
parties generally;
 
EXHIBIT A
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(vi)  Neither the execution and delivery of this Note nor the incurrence of the
obligations set forth herein, nor compliance with the terms of this Note
conflict with or result in the material breach of any terms, conditions or
provisions of or constitute a default under any bond, note or other evidence of
indebtedness or any contract, indenture, mortgage, deed of trust, loan,
partnership agreement, lease or other agreements or instruments to which
Borrower is a party; and
 
(vii)  The Borrower is and, upon the incurrence of the obligations set forth
herein, will be, solvent.  For purposes hereof, “solvent” means (a) that the
value of the assets of the Borrower (both at fair value and present fair
saleable value) is greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of the Borrower, (b) that the Borrower
is able to pay its liabilities as such liabilities mature, and (c) that the
Borrower does not have unreasonably small capital.
 
The Borrower covenants and agrees that so long as any of the obligations set
forth herein remain outstanding:
 
(i)  the Borrower will give notice to the Holder of the following: (a) any and
all Events of Default as soon as practicable (but in any event not more than
five (5) days after the Borrower obtains knowledge of the occurrence of an event
or the existence of a circumstance giving rise to any Event of Default), or (b)
with reasonable promptness, such other business or financial data as the Holder
may reasonably request;
 
(ii)  the Borrower will at all times preserve and keep in full force and effects
it existence in its jurisdiction of organization and all rights and franchises
material to its business;
 
(iii)  the Borrower shall comply with the requirements of all applicable laws,
rules, regulations and orders of any government authority (including all
environmental laws), noncompliance with which could reasonably be expected to
result in, individually or in the aggregate, a material adverse effect on the
business or financial condition of Borrower;
 
(iv)  the Borrower will maintain or cause to be maintained, with financially
sound and reputable insurers, such insurance as may customarily be carried or
maintained under similar circumstances by persons of established reputation of
similar size engaged in similar businesses; and
 
(v)  the Borrower will continue to be engaged in the businesses engaged in by
the Borrower on the date hereof.
 
This Note (a) remains in full force and effect until payment in full of the
obligations owing hereunder, (b) is binding upon Borrower, its respective
permitted successors and assigns, and (c) inures to the benefit of and in
enforceable by the Holder and it successors, transferees and assigns. Borrower
acknowledges and agrees that Holder has the right to transfer, assign or
hypothecate all or any part of the Note, and/or the other Loan Documents, to
sell participations therein (provided, however, that such transfer, assignment,
hypothecation or participation shall be at no expense to Borrower).  Borrower
agrees that it shall cooperate fully with Holder in connection with this
paragraph and shall execute, and where appropriate, acknowledge, such documents
as Holder may require in connection therewith.  The Borrower may not voluntarily
assign or transfer its rights under this Note without the Holder’s prior written
consent.
 
EXHIBIT A
-5-
 
 

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No single or partial exercise of any power granted to Holder under this Note or
the other Loan Documents or any other agreement shall preclude any other or
further exercise thereof or the exercise of any other power.  No delay or
omission on the part of Holder in exercising any right under this Note or the
other Loan Documents shall operate as a waiver of such right or any other right.
 
Holder shall have the full right, but not the obligation, to cure any default
under, or to acquire, pay down, pay off or otherwise satisfy, any lien,
encumbrance, security interest or claim which affects or may affect the
Property, or any part thereof or interest therein (whether or not prior to the
Deed of Trust), and if Holder pays or satisfies any such lien, encumbrance,
security interest or claim or makes any payment or cures any default thereunder,
or makes any other advance hereunder or under the Deed of Trust, Holder may add
any amounts so paid to the amounts secured by the Deed of Trust, and any and all
such amounts shall be paid by Borrower to Holder upon demand, shall bear
interest at the same rate specified to be paid on outstanding indebtedness under
this Note, until paid, and all such amounts shall be secured by the Deed of
Trust until paid.
 
Borrower represents and warrants for the benefit of Holder that it does not
intend to use the proceeds of the Note for personal, family or household
purposes.  Borrower further represents for the benefit and reliance of Holder
that the proceeds of this Note will be solely used for a business or commercial
enterprise.
 
If "Borrower" consists of more than one person or entity, each and every such
person and/or entity shall be jointly and severally liable with respect to all
obligations of "Borrower" under this Note.
 
EACH PARTY HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM,
LAWSUIT OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i)
THE NOTE OR ANY SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN ANY OF THE PARTIES HERETO; (iii) ANY
BREACH, CONDUCT, ACTS OR OMISSIONS OF ANY OF THE PARTIES HERETO OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSON
AFFILIATED WITH OR REPRESENTING ANY OF THE PARTIES HERETO; IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
 
This Note shall be governed by and construed in accordance with the laws of the
State of California.
 
Borrower hereby irrevocably submits to the jurisdiction of any California court,
or federal court sitting in San Diego County, over any suit, action or
proceeding arising out of or relating to this Note or the Loan Documents; and
Borrower consents to San Diego County as the venue for any such suit, action or
proceeding and irrevocably waives to the fullest extent permitted by law, any
objection to such venue as being an inconvenient forum.
 
EXHIBIT A
-6-
 
 

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Any notice, request, or other communication required or permitted under this
Note must be in writing and will be deemed to have been duly given (except as
otherwise specifically provided in this Note) (i) when received if personally
delivered, (ii) within five days after being sent by registered or certified
mail, return receipt requested, postage prepaid, (iii) upon receipt after being
sent by facsimile, with confirmed answer back or (iv) within one business day of
being sent by priority delivery by established overnight courier to the parties
at their respective addresses set forth as follows:
 
    If to Borrower:
 
    American Spectrum Dunham Properties
2401 Fountain View, Suite 750
Houston, TX 77057
Attn: William J. Carden
Tel: (713) 706-6200
Fax: (713) 706-6201
 
    If to Holder:
 
    Dunham Trust Company
241 Ridge Street, Suite 100
Reno, NV 89501
Attn: Shanna Coressel
Tel: (775) 826-7900
Fax: (775) 826-7904
 
This Note and the Deed of Trust represent the entire agreement of the parties
with regard to the subject matter of this Note and the terms of any letters and
other documentation entered into between the Borrower and the Holder prior to
the execution of this Note which relate to loans to be made by Holder to
Borrower shall be replaced by the terms of this Note and the Deed of
Trust.  This Note is in all respects a continuing agreement and remains in full
force and effect until the obligations have been paid in full.
 
None of the terms or provisions of this Note may be waived, altered, modified or
amended except as the Holder may agree  in writing.
 
BORROWER:
 

AMERICAN SPECTRUM DUNHAM PROPERTIES LLC         By:     Name: William J. Carden
  Title: President  

 
EXHIBIT A
-7-
 
 

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EXHIBIT B
 
 
USE OF PROCEEDS
 
Graph [graph.jpg]
                 
 
EXHIBIT B
-1-
 
 

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EXHIBIT C
 
 
FORM OF DEED OF TRUST

RECORDING REQUESTED BY
AND WHEN RECORDED, MAIL TO:
 
Dunham Trust Company
241 Ridge Street, Suite 100
Reno, Nevada 89501
 
APN:
436-040-001-0 (Affects Parcel A), 436-040-002-1 (Affects Parcel C) and
436-040-005-4 (Affects Parcel B).

 
DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(Tranche 1)
 
This Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
("Deed of Trust") is made to be effective as of December __, 2013, by American
Spectrum Dunham Properties LLC, a Delaware limited liability company,
("Trustor"), whose address is 2401 Fountainview, Suite 750, Houston, TX 77057,
to Asset Managers, Inc., a California corporation ("Trustee"), for the benefit
of Dunham Trust Company, Trustee of the Balgrosky Hinshaw Children's Trust, as
Beneficiary (including its assignees, "Lender").
 
THIS DEED OF TRUST ALSO CONSTITUTES A FIXTURE FILING UNDER DIVISION 9 OF THE
CALIFORNIA UNIFORM COMMERCIAL CODE AND COVERS GOODS WHICH ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY DESCRIBED ON EXHIBIT "A" ATTACHED HERETO AND MADE
A PART HEREOF.  TRUSTOR IS A RECORD OWNER OF AN INTEREST IN SAID REAL PROPERTY.
 
GRANT IN TRUST:
 
Trustor irrevocably grants, transfers and assigns to Trustee, in trust, for the
benefit of Lender, with power of sale, all of Trustor's interest in that certain
real property located in the County of Riverside, California, described as:
 
[SEE EXHIBIT "A" ATTACHED HERETO AND
INCORPORATED HEREIN BY THIS REFERENCE]
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in such real property and all appurtenances, easements, covenants,
rights of way, tenements, hereditaments and appurtenances thereunto belonging or
in any way appertaining thereto now or hereafter, and all of the estate, right,
title, interest, claim, demand, reversion or remainder whatsoever of Trustor
therein or thereto, at law or in equity, now or hereafter in possession or
expectancy, including, without limitation, all mineral, oil, and gas rights and
royalties and profits therefrom, all water and water rights and shares of stock
pertaining to water and water rights, and all sewers, pipes, conduits, wires and
other facilities furnishing utility or services to the real property
(collectively, the "Land");
 
 
 

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TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in and to all buildings, structures and improvements now or hereafter
erected on the Land, including, without limitation, all plant equipment,
apparatus, machinery and fixtures of every kind and nature whatsoever now or
hereafter located on and affixed to said buildings, structures and improvements
(collectively, the "Improvements"; the Land and Improvements being hereinafter
sometimes collectively referred to as the "Premises");
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in and to the land lying in the bed of any street, road, highway or
avenue now or hereafter in front of or adjoining the Premises;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all awards heretofore or hereafter made by any governmental
authorities (federal, state, local or otherwise) to Trustor and all subsequent
owners of the Property (as defined below) which may be made with respect to the
Property as a result of the exercise of the right of eminent domain, the
alteration of the grade of any street or any other injury to or decrease of
value of the Premises, which said award or awards are hereby assigned to Lender;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all unearned premiums accrued, accruing or to accrue, and the
proceeds of insurance now or hereafter in effect with respect to all or any
portion of the Property;
 
TOGETHER WITH:  Any and all claims or demands which Trustor now has or may
hereafter acquire against anyone with respect to any damage to all or any
portion of the Property;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all claims under and proceeds of any insurance policies by
reason of or related to a loss of any kind sustained to the Property, now or
hereafter, whether or not such policies name Lender as an insured and whether or
not such policies are required by Lender, and whether or not such claims
thereunder are characterized as personal claims;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all instruments, investment property, deposit accounts,
accounts, contract rights, general intangibles, and other intangible property
and rights now or hereafter relating to the foregoing property, or the operation
thereof or used in connection therewith, including, without limitation, all
options, letters of intent, and rights of first refusal of any nature
whatsoever, covering all or any portion of such property, together with any
modifications thereof, and deposits or other payments made in connection
therewith, existing and future development rights, permits and approvals, air
rights, density bonus rights, and transferable development rights; all of
Trustor's right, title, and interest in and to any awards, remunerations,
settlements, or compensation heretofore made or hereafter made by any and all
courts, boards, agencies, commissions, offices, or authorities, of any nature
whatsoever for any governmental unit (federal, state, local or otherwise) to the
present or any subsequent owner of the foregoing property, including those for
any vacation of, or change of grade in, any streets affecting the foregoing
property and all licenses and privileges obtained by Trustor from
non-governmental sources;
 
 
-2-

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TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all leases of the Premises, Fixtures (as defined below), or
any part thereof, now or hereafter entered into and all right, title and
interest of Trustor thereunder, including, without limitation, cash or
securities deposited thereunder to secure performance by the lessees of their
obligations thereunder (whether such cash or securities are to be held until the
expiration of the terms of such leases or applied to one or more of the
installments of rent coming due immediately prior to the expiration of such
terms); all other rights and easements of Trustor now or hereafter existing
pertaining to the use and enjoyment of the Premises; and all right, title and
interest of Trustor in and to all declarations of covenants, conditions and
restrictions as may affect or otherwise relate to the Property;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all permits, plans, licenses, specifications, subdivision
rights, security interests, contracts, contract rights, public utility deposits,
prepaid sewer and water hook-up charges, or other rights as may affect or
otherwise relate to the Property;
 
TOGETHER WITH:  All right, title and interest which Trustor now has or may later
acquire in any and all rents, income, issues and profits (subject, however, to
the rights given in this Deed of Trust to Lender to collect and apply same),
including, without limitation, prepaid municipal and utility fees, bonds,
revenues, income, and other benefits to which Trustor may now or hereafter be
entitled to, or which are derived from, the Property or any portion thereof or
interest therein.
 
The foregoing listing is intended only to be descriptive of the property
encumbered hereby, and not exclusive or all inclusive.  It is the intent of
Trustor to encumber hereby all real property located or to be located upon the
above-described real property in which Trustor now has or may later acquire an
interest.  Said real property (or the leasehold estate if this Deed of Trust
encumbers a leasehold estate), Premises, buildings, Improvements, appurtenances,
Fixtures, additions, accretions, and other property are hereinafter referred to
as the "Property."  As used herein, the term "Fixtures" shall include all
articles of personal property hereinabove described (in which Trustor now has or
may later acquire an interest), now or hereafter affixed to the Property, but
shall not include trade fixtures.  As used herein, the term "Property" shall
include all affixed furniture, furnishings, equipment, machinery, goods,
contract rights, general intangibles, revenues, equipment leases, vehicles,
money, deposit accounts, instruments, accounts, chattel paper and other personal
property (in which Trustor now has or may later acquire an interest) of any kind
or character now existing or hereafter arising or acquired in connection with
Trustor's business operations at the Property, and all products and proceeds
thereof.
 
Trustor makes the foregoing grant to Trustee, and to Lender, as applicable, to
hold the Property in trust for the benefit of Lender and for the purposes and
upon the terms and conditions hereinafter set forth.
 
 
-3-

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FOR THE PURPOSE OF SECURING:
 
(1)           Payment of the sum of Three Million ($3,000,000), together with
interest thereon and certain additional costs and expenses related to or
incurred in connection with or as provided in that certain Secured Promissory
Note of even date herewith (the "Note"), executed by Trustor payable to Lender,
or order, and all extensions, modifications or renewals thereof (including,
without limitation, any extension, modification, or renewal of the Note at a
different rate of interest or on different terms);
 
(2)           Payment of all other sums, with interest, advanced, paid, or
incurred by Lender or Trustee under the terms of this Deed of Trust to protect
the Property or Lender's security interest therein;
 
(3)           Payment of such additional sums, with interest, as the then record
owner of the Property may later borrow from Lender, in those instances in which
the later obligations are evidenced by a promissory note or notes reciting that
it or they are so secured (which additional obligations shall be referred to as
"future advances" in this Deed of Trust); and
 
(4)           Trustor's performance of each agreement in this Deed of Trust.
 
TRUSTOR AND LENDER AGREE AS FOLLOWS:
 
RIGHTS AND DUTIES OF THE PARTIES:
 
PAYMENT AND PERFORMANCE BY TRUSTOR; TITLE:  Trustor represents and warrants to
and for the benefit of Lender and Trustee that Trustor holds good and marketable
title of record to the Land and Improvements in fee simple.  Trustor shall
promptly:  (a) pay when due all sums payable under the Note and all future
advances; and (b) perform each and every term, covenant and condition of this
Deed of Trust and any other obligation secured by this Deed of Trust.
 
PAYMENT BY TRUSTOR OF TAXES AND OTHER IMPOSITIONS:  The term "Taxes" shall mean
all taxes, bonds and assessments, both general and special, affecting or levied
upon the Property or any part thereof, assessments on water company stock, if
any, all taxes or excises levied or assessed against Trustor, the Property, or
any part thereof, in addition to or as a substitution in whole or in part for
any real estate taxes or assessments, all taxes or excises measured by or based
in whole or in part upon the rents, operating income, or any other factor
relating to the Property, or any part thereof, and all license fees, taxes and
excises imposed upon Lender (but not any federal or state income taxes imposed
upon Lender) and measured by or based in whole or in part upon the obligations
secured hereby.  The term "Other Impositions" shall mean any fine, fee, charge,
or other imposition in connection with the Property or Trustor, payment of which
Lender shall deem to be necessary to protect, preserve, and defend Lender's
interests hereunder.  Trustor shall pay all Taxes, insurance premiums, and Other
Impositions attributable to the Property, at least five (5) days before
delinquency directly to the payee thereof, or in such other manner as Lender may
designate in writing.  Trustor shall promptly furnish to Lender all notices of
amounts due under this Paragraph, and if Trustor shall make payment directly,
Trustor shall furnish to Lender receipts evidencing payments of Taxes before
delinquency and shall promptly deliver to Lender receipts evidencing all other
payments above required.
 
 
-4-

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In the event of the passage, after the date of this Deed of Trust, of any law or
judicial decision deducting from the value of the Property for the purposes of
taxation any lien thereon, or changing in any way the laws now in force for the
taxation of deeds of trust or obligations secured by deeds of trust, or the
manner of operation of any such Taxes so as to adversely affect the interest of
Lender, or imposing payment of the whole or any portion of any Taxes upon
Lender, then and in such event, Trustor shall bear and pay the full amount of
such Taxes; provided that if for any reason payment by Trustor of any such new
or additional Taxes would be unlawful or if the payment thereof would constitute
usury or render the Note, or other indebtedness secured hereby, wholly or
partially usurious under any of the terms or provisions of the Note, or this
Deed of Trust, or otherwise, Lender may, at its option, upon thirty (30) days'
written notice to Trustor, or (i) pay that amount or portion of such Taxes as
render the Note, or other indebtedness secured hereby, unlawful or usurious, in
which event Trustor shall concurrently therewith pay the remaining lawful
nonusurious portion or balance of such Taxes, or (ii) in the event that Lender
is prohibited from collecting such payment as provided in (i) declare the whole
indebtedness secured by this Deed of Trust, together with accrued interest
thereon, to be immediately due and payable.
 
TRUSTOR TO PAY GROUND RENTS AND OBLIGATIONS THAT COULD RESULT IN LIENS ON THE
PROPERTY:  Trustor shall fully and faithfully pay and perform each and every
obligation, and otherwise satisfy all conditions and covenants, which are or may
be secured by any deed of trust upon the Property, or any portion thereof,
existing of record as of the date this Deed of Trust is recorded.  Trustor shall
pay at or prior to the due date, or, if applicable, at maturity, any and all
ground rents and any liens, charges and encumbrances that are, later become,
claim to be or appear to Lender to be prior or superior to the lien of this Deed
of Trust, including, without limiting the generality of the foregoing, any and
all claims for (a) work or labor performed, (b) materials and services supplied
in connection with any work of demolition, alteration, improvement of or
construction upon the Property, and (c) fees, charges and liens for utilities
provided to the Property.
 
TRUSTOR TO MAINTAIN INSURANCE:  (a) Trustor shall maintain insurance covering
the Property against loss or damage by fire, and other risks as shall from time
to time be reasonably required by Lender as necessary to protect the security
interest of Lender in the Property.  The insurance shall be maintained with such
companies, in such amounts, for such terms, and in form and content satisfactory
to Lender, in Lender's reasonable opinion and judgment.  Lender shall be named
as loss payee and mortgagee/additional insured, if possible, under all of the
insurance policies, and Trustor shall assure that Lender receive a certificate
from each insurance company that acknowledges Lender's position as loss payee
and that states that the insurance policy cannot be terminated as to Lender
except upon thirty (30) days' prior written notice to Lender.  Such policies of
insurance shall include, without limitation, the following:  (i) insurance
against loss or damage to the Property (including contents) by fire or other
risk embraced by coverage of the type known as the broad form or extended
coverage (or special extended coverage) in the amount required by Lender, but in
no event less than one hundred percent (100%) of the full replacement cost of
the Improvements and Fixtures included within the Property without deduction for
depreciation of any kind or the unpaid balance of the Note, whichever is
greater, (ii) insurance against the loss of rental value of the Property on a
"rented or vacant basis," including business interruption insurance, arising out
of the perils insured against pursuant to clause (i) above in the amount not
less than one (1) year's gross rental income and other revenues from the
Property, and (iii) commercial general liability insurance against claims for
personal injury, death, or property damage occurring on, in, or about the
Property, or arising from or connected with the use, conduct, or operation of
Trustor's business in the amount from time to time reasonably required by
Lender; (b) If such insurance, together with written evidence of the premium
having been paid, are not delivered to Lender at least five (5) days prior to
the expiration of such insurance, Lender shall have the right, but without
obligation to do so, without notice to or demand upon Trustor and without
releasing Trustor from any obligation under this Deed of Trust, to obtain such
insurance or like insurance through or from any insurance agency or company
acceptable to it, pay the premium for such insurance, and add the amount of the
premium to the loan secured by this Deed of Trust, and this amount shall bear
interest at the applicable rate of interest set forth in the Note.  Neither the
Trustee nor Lender shall be responsible for such insurance or for the collection
of any insurance monies, or for any insolvency of any insurer or insurance
underwriter.  (c) In the event that the Property is sold to Lender at any
trustee's sale under this Deed of Trust (see Paragraph 17, below), Trustor
hereby assigns to Lender all unearned premiums on all policies of insurance
covering the Property and agrees that any and all unexpired insurance covering
the Property shall inure to the benefit of and pass to Lender at the time of
such Trustee's sale.
 
 
-5-

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INSURANCE PROCEEDS, CONDEMNATION PROCEEDS AND OTHER RECOVERIES:  (a) All
settlements, awards, damages and proceeds received by Trustor or any other
person under any fire, earthquake or other hazard insurance policy, for losses
existing as of or occurring after the effective date of this Deed of Trust, or
in connection with any condemnation for public use of or injury to the Property
(or any part of or interest in the Property) are assigned to Lender and may, at
the option of Lender, be applied by Lender as provided in section (c) of this
Paragraph 5.  (b) All right, title and interest which Trustor now has or may
later acquire in and to all causes of action, whether accrued before or after
the date of this Deed of Trust, of any type for any damage or injury to the
Property (or any portion of or interest in the Property), or adversely affecting
the value of the Property (or any portion of or interest in the Property),
including causes of action arising in tort or contract and causes of action in
fraud or concealment of a material fact, are assigned to Lender, and the
proceeds of any such causes of action may, at the option of Lender, be applied
by Lender as provided in section (c) of this Paragraph 5.  Subsequent to a
default hereunder, which is not remedied during any applicable cure period,
Lender may, at its option, appear in and prosecute in its own name any action or
proceeding to enforce any such cause of action and may make any compromise or
settlement of any such action or proceeding.  Trustor agrees to execute such
further assignments of any settlements, awards, damages and causes of action as
Lender from time to time may reasonably request.  (c) Subject to the further
provisions of this Paragraph 5, settlements, awards, proceeds and damages
(collectively, "Awards") received by Lender under the provisions of section
(a) and section (b) of this Paragraph 5, at the option of Lender, may (i) be
applied by Lender to the outstanding balance due on the Note, or any other
obligation secured by this Deed of Trust, in such order as Lender may determine;
(ii) be used by Lender, without reducing the principal balance of the Note or
any other obligation secured by this Deed of Trust, to replace, restore or
reconstruct the Property to its condition just prior to the loss, as determined
by Lender; or (iii) any such amount may be divided in any manner among any such
application, use or release.  No such application, use or release of the Award
shall cure or waive any default or invalidate any act done pursuant to any
notice of such default, except to the extent such default is actually cured.
 
 
-6-

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Trustor agrees to endorse in favor of Lender any Award which is made payable to
Trustor or to Lender and Trustor and deliver same to Lender immediately upon
receipt.  Notwithstanding anything herein to the contrary, the amount collected
under any fire or other insurance policy may be applied by Lender, first, to
reimbursement of all costs of collection of the proceeds.  Thereafter, the
proceeds shall be applied to repair, replace, restore or construct the Property
(hereafter collectively referred to as "Repair") to its physical condition
immediately prior to the act or occurrence that caused the loss, damage or
destruction, as the case may be, but only if (a) no default has occurred
hereunder and is continuing and (b) the insurance proceeds (together with such
additional funds as are required to be paid by Trustor pursuant to this
Paragraph), are sufficient for the Repair.  Otherwise, at the election of
Lender, in Lender's reasonable opinion and judgment, the proceeds may be applied
to reduce the principal balance of the Note or any obligation secured hereby in
such order as Lender may determine, whether or not then due, unless such
application is prohibited by applicable law, or be released to Trustor.  Such
application or release shall not cure or waive any default, except to the extent
such default is actually cured, invalidate any act done pursuant to any notice
of such default or extend due dates of payments or modify any obligations of
Trustor.
 
Should insurance proceeds be used for Repair, Lender may condition such
application upon (a) evidence satisfactory to Lender, in Lender's discretion,
that Trustor has sufficient additional funds on hand from its own financial
resources as Lender reasonably determines are necessary to pay all costs of
Repair; (b) delivery of plans and specifications, executed construction
contracts, and cost breakdowns satisfactory to Lender, in its reasonable opinion
and judgment; (c) establishment of a procedure satisfactory to Lender for lien
waivers and disbursement of funds, disbursement being conditioned upon Lender
having sufficient proceeds to pay the cost of Repair free of liens; and
(d) evidence acceptable to Lender that the Property after completion will be in
at least the same condition as existed prior to the damage, destruction or loss,
as the case may be, and that there has been no material adverse change in the
financial condition of Trustor since the date of this Deed of Trust.  In the
event Trustor does not comply with the foregoing conditions within sixty
(60) days of the casualty, Lender may, at its option, use the proceeds to reduce
the principal balance of the Note or pay any other obligation secured by this
Deed of Trust.
 
MAINTENANCE AND PRESERVATION OF THE PROPERTY:
 
Trustor shall:  (i) keep the Property, and every portion thereof, in good
condition and repair and replace from time to time, or at any time, any
Fixtures, or other items comprising the Property which may become obsolete or
worn out, with Fixtures, or other items of at least the same utility, quality
and value, each such replacement to be free of any liens or security interests
of any kind or character other than the lien of this Deed of Trust, or any other
document or instrument securing the indebtedness hereunder; (ii) not remove or
demolish the Property, or any part thereof, except as part of alterations to the
Property permitted hereunder; (iii) complete or restore promptly and in good and
workmanlike manner the Property, or any part thereof, which may be damaged or
destroyed; (iv) comply with and not suffer violations of (A) any and all laws,
ordinances, rules, regulations, standards and orders, including, without
limitation, making any alterations or additions required to be made to, or
safety appliances and devices required to be installed or maintained in or
about, the Property, or any portion thereof, under any such laws, ordinances,
rules, regulations, standards or orders now or hereafter adopted, enacted or
made applicable to the Property, or any portion thereof, and payment of any
fees, charges or assessments arising out of or in any way related to treatment
of the Property, or any portion thereof, as a source of air pollution, traffic,
storm water runoff, or other adverse environmental impacts or effects, and
(B) any and all covenants, conditions, restrictions, equitable servitudes and
easements, whether public or private, of every kind and character, and (C) any
and all requirements of insurance companies and any bureau or agency which
establishes standards of insurability, which laws, covenants or requirements
affect the Property and/or pertain to acts committed or conditions existing
thereon, or the use, management, operation or occupancy thereof by Trustor and
anyone holding under Trustor, including (but without limitation) such work of
alteration, improvement or demolition as such laws, covenants or requirements
mandate; (v) not commit or permit waste of the Property, or any portion thereof;
(vi) do all other acts which from the character or use of the Property may be
reasonably necessary to maintain, preserve and enhance its value, including,
without limitation, keeping all plants, lawns and other landscaping in a good
and thriving condition, and otherwise performing such appropriate upkeep and
maintenance to the Property to insure that the Property, and each part thereof,
is maintained in the manner and retains at all times the same appearance and
condition, as exists as of the date of this Deed of Trust, reasonable wear and
tear excepted, such upkeep to include, without limitation, appropriate measures
to protect wood, stucco and concrete surfaces from weathering, deterioration and
aging, and to protect from and immediately remove graffiti or other defacement
from such surfaces; (vii) perform all obligations required to be performed in
leases or conditional sales or like agreements affecting the Property or the
operation, occupation or use thereof (and, if not previously assigned, in the
event of default, all right, title and interest of Trustor under any such
leases, conditional sales or like agreements shall be automatically assigned to
Lender hereunder, together with any deposits made in connection therewith);
(viii) make payment of any and all charges, assessments or fees imposed in
connection with the delivery, installation or maintenance of any utility
services or installations on, to or for the Property, or any portion thereof;
(ix) not create any deed of trust, liens or encumbrances upon the Property
subsequent hereto, the parties hereby having specifically bargained in
contemplation of the fact that any subsequent encumbrance upon the Property
would adversely affect Lender's reasonable security interests hereunder;
(x) make no further assignment of rents of the Property; and (xi) execute and,
where appropriate, acknowledge and deliver such further documents or instruments
as Lender or Trustee deem necessary or appropriate to preserve, continue,
perfect and enjoy the security provided for herein, including (but without
limitation) assignments of Trustor's interest in leases of the Property.
 
 
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Trustor shall not undertake or suffer to be made pursuant to section (a) of this
Paragraph 6, any material alterations, additions, repairs, expansions,
relocations, remodeling or demolition of, or structural or other material
changes in, any Improvements or Fixtures comprising the Property that would
materially diminish the value of the Property except as permitted pursuant to
the written consent of Lender, which consent shall not be unreasonably
withheld.  All such work shall be performed promptly and in good and workmanlike
manner, using first quality materials in conformity with plans and
specifications approved in advance by Lender, and shall be diligently prosecuted
to completion free of liens and encumbrances, other than this Deed of Trust and
any other document or instrument evidencing or securing the indebtedness secured
hereby.
 
Trustor further warrants, represents and covenants to Lender that Trustor will
not, permit any lessee or other user of the Property to use, store, manufacture,
generate, transport to or from, release or dispose of any toxic substances,
hazardous materials, hazardous wastes, radioactive materials, flammable
explosives or related materials on or in connection with the Property or the
business of said lessee or other user of the Property, except as currently in
existence.  Without the prior written consent of Lender, Trustor shall not seek,
make or consent to any change in the zoning, conditions of use, or any other
applicable land use permits, approvals or regulations pertaining to the
Property, or any portion thereof, which would constitute a violation of the
warranties, representations and covenants herein contained, or would otherwise
impair the ability of Trustor to complete construction of any improvements now
underway or to be constructed, constituting the Property, or would change the
nature of the use or occupancy of the Property.  Within five (5) days of (i) any
contact from any federal, state, or local governmental agency concerning any
environmental protection laws, including, but not limited to, any notice of any
proceeding or inquiry with respect to the presence of any hazardous wastes,
toxic substances or hazardous materials on the Property or the migration thereof
from or to other property, (ii) any and all claims made or threatened by any
third party against or relating to the Property concerning any loss or injury
resulting from toxic substances, hazardous wastes, or hazardous materials, or
(iii) Trustor's discovery of any occurrence or condition on any property
adjoining or in the vicinity of the Property that could cause the Property, or
any part thereof, to be subject to any restrictions on the ownership, occupancy,
transferability, or loss of the Property under any federal, state, or local
laws, ordinances, rules, or regulations, Trustor shall deliver to Lender a
report regarding such contact and setting forth in detail and describing any
action which Trustor proposes to take with respect thereto, signed by Trustor.
 
 
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LEGAL ACTIONS AND PAYMENT OF RELATED COSTS:  Trustor shall appear in and defend
any action or proceeding that may, in Lender's judgment, affect Lender's
security interest under this Deed of Trust or any of the rights or powers of
Lender or Trustee under this Deed of Trust.  Whether or not Trustor so appears
or defends, Trustor shall pay all costs and expenses, including, without
limitation, cost of evidence of title and reasonable attorneys' fees, that are
incurred by Trustor, Lender or Trustee in any such action or proceeding in which
Lender or Trustee may appear, by virtue of being made a party defendant or
otherwise, and irrespective of whether the interest of Lender or Trustee in the
Property is directly questioned by such action or proceeding or whether Lender's
rights or interests are otherwise adversely affected thereby, or whether Lender
is or shall become a party, including by way of intervention.  Trustor promises
and agrees to give Lender notice in writing of the pendency of any such action
or proceeding promptly, but in any event no later than five (5) days, after
Trustor first obtains knowledge of the pendency of such action or
proceeding.  Trustor shall cooperate with Lender in any action that is brought
by Lender to protect its security interest under this Deed of Trust.  Trustor
will, upon demand by Lender, commence any action or proceeding reasonably
required to protect or facilitate Lender's recovery of Awards under Paragraph 5
of this Deed of Trust.  If Trustor fails to bring any such action or proceeding,
then Lender may, but need not, do so, and Trustor shall pay to Lender all costs,
expenses and reasonable attorneys' fees that are incurred by Lender in doing
so.  Whenever, under this Deed of Trust, or any other document or instrument
evidencing or securing the indebtedness secured hereby, Trustor is obligated to
appear in and defend Lender or defend or prosecute any action or proceeding,
Lender shall have the right of full participation in any such action or
proceeding, with counsel of Lender's choice, and all costs and expenses incurred
by Lender in connection with such participation (including, without limitation,
reasonable attorneys' fees) shall be reimbursed by Trustor to Lender immediately
upon demand.  In addition, Lender shall have the right to approve any counsel
retained by Trustor in connection with the prosecution or defense of any such
action or proceeding by Trustor, which approval shall not be unreasonably
withheld.  All costs or expenses required to be reimbursed by Trustor to Lender
hereunder shall, if not paid upon demand by Lender, thereafter bear interest at
the applicable rate of interest set forth in the Note.  As used herein,
"proceeding" shall include litigation (whether by way of complaint, answer,
cross-complaint, counter claim or third party claim), arbitration and
administrative hearings or proceedings, and shall include commencement of any
case or the filing of any petition for relief or other action under any Chapter
of the U.S. Bankruptcy Code.
 
 
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LENDER'S RIGHTS TO INSPECT THE PROPERTY:  Subject to the rights of tenants
occupying all or any portion of the Property, Lender and its agents, employees
and contractors, may enter upon the Property at any reasonable time to inspect
the Property for any purpose relating to Lender's rights and interests under the
terms of this Deed of Trust, including, but not limited to, Trustor's compliance
with the terms of Paragraph 6.
 
SUBSTITUTION OF TRUSTEE:  From time to time, by an instrument signed and
acknowledged by Lender, and recorded in the Office of the Recorder of the County
in which the Property is located, Lender may appoint a substitute trustee or
trustees in place of the Trustee.  Such instrument shall refer to this Deed of
Trust and shall set forth the date and instrument number or book and page of its
recordation.  Upon recordation of such instrument, the Trustee shall be
discharged and the new trustee so appointed shall be substituted as Trustee
under this Deed of Trust with the same effect as if originally named Trustee in
this Deed of Trust.  An instrument recorded pursuant to the provisions of this
Paragraph 9 shall be conclusive proof of the proper substitution of such new
Trustee.
 
MISCELLANEOUS POWERS OF LENDER AND TRUSTEE:  In addition to any other powers
granted in this Deed of Trust to the Trustee, from time to time, upon the
written request of Lender and upon the presentation of this Deed of Trust and
any obligation secured by this Deed of Trust for endorsement, and without
affecting any obligation secured by this Deed of Trust or the performance of the
obligations set forth in this Deed of Trust, the Trustee may, without liability
and without notice to any person:  reconvey all or any part of the Property to
Trustor, consent to the making of any map or plat of the Property, join in
granting any easement on the Property, join in any agreement subordinating the
lien of this Deed of Trust, release any obligation secured by this Deed of
Trust, in whole or in part, with regard to any Trustor, extend or renew the Note
or any other obligation secured by this Deed of Trust, accept or release any
additional security under this Deed of Trust, or accept and release the guaranty
of any additional person or any obligation secured by this Deed of Trust.
 
ASSIGNMENT AND COLLECTION OF RENTS:
 
Trustor hereby assigns absolutely to Lender the rents of the Property, with a
revocable license to collect such rents as they become due and payable, prior to
any default by Trustor under Paragraph 14 of this Deed of Trust, being retained
by Trustor.
 
 
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Upon any default by Trustor under Paragraph 14 of this Deed of Trust which
default is not remedied during any applicable cure period, such license will,
automatically, be deemed revoked without the necessity for any act or notice by
Lender, and Lender, in person, by agent or by judicially appointed receiver,
shall be entitled to enter upon, take possession of and manage the Property and
may collect the rents of the Property, and, after so taking possession, shall be
entitled to collect any rents that are past due.  Lender has, however, no duty
to produce rents from the Property or any responsibility for pursuing or
collecting claims or rights of Trustor.  If Trustor, at or immediately prior to
such taking of possession by or on behalf of Lender, has operated a business
upon the Property other than the rental thereof, the authority granted herein to
so take possession of the Property shall also include the authority and power to
take possession of the receipts of such business and, if appropriate, to operate
such business, and the receipts thereof shall be deemed herein to be a form of
rents.  All rents collected by Lender or the receiver shall be applied first to
payment of the costs of management of the Property and of collection of rents,
including, but not limited to, costs and expenses of any receivership and
reasonable attorneys' fees incurred by Lender in connection with the
receivership, and then to the Note and any other obligations secured by this
Deed of Trust.  Lender and the receiver shall be liable to account only for
those rents actually received.
 
At any time, subsequent to a default hereunder, which default is not remedied
during any applicable cure period, Trustor shall, on demand, deliver to Lender
from time to time all security deposits made by lessees to Trustor under the
terms of any lease of all or part of the Property.  These funds shall be held by
Lender without interest payable to Trustor and as a part of and commingled with
Lender's general funds.  These funds, however, will be repayable to lessees
pursuant to the provisions of the leases under which security deposits are
made.  In the event of any conflict between the provisions of this Paragraph 11
and the provisions of a specific separate assignment of rents and/or assignment
of lease(s), the provisions of the specific assignment(s) shall be deemed to
govern over the provisions of this Paragraph.
 
RECONVEYANCE OF THE PROPERTY:  Upon the written request of Lender stating that
the Note and all other obligations secured by this Deed of Trust have been
discharged, and upon surrender of this Deed of Trust, the Note or any other
notes or instruments evidencing such other obligations to the Trustee, and upon
payment of the Trustee's fees, the Trustee shall reconvey, without warranty, the
Property or that portion of the Property then held by the Trustee under this
Deed of Trust.  The recitals in any such reconveyance of any matters or facts
shall be conclusive proof of the truthfulness of such matters or facts.  The
grantee in such reconveyance may be described as "the person or persons legally
entitled thereto."  When the Property has been fully reconveyed, the last such
reconveyance shall operate as a reassignment of all of the rents of the Property
to the person or persons legally entitled to such rents.  Five (5) years after
issuance of such full reconveyance, the Trustee may destroy this Deed of Trust
and any such notes, unless directed in such request to retain them.
 
CHANGE OF LENDER'S RECORDS:  In the event Trustor requests Lender to change any
of its records relating to the Property, the Note or this Deed of Trust
(including, but not limited to, changes in mailing address or ownership of the
Property), Trustor shall pay a reasonable fee prescribed by Lender to so change
its records.
 
 
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ACCELERATION AND DEFAULT:
 
CONDITIONS UNDER WHICH LENDER MAY DECLARE A DEFAULT BY TRUSTOR:  A default under
this Deed of Trust shall occur in the event that:  (a) Trustor fails to pay when
due:  (i) any sum payable under the Note (subject to any express grace period
under the Note); or (ii) any sum the payment of which is required or secured by
this Deed of Trust; (b) Trustor fails to perform any other obligation required
to be performed by Trustor under this Deed of Trust or secured by this Deed of
Trust; (c) the Property is or becomes subject to any proceedings for abatement
of a public nuisance, and such proceedings are not dismissed within thirty
(30) days of the date of commencement thereof; (d) any material information
given to Lender by Trustor, intended to or which does, in fact, induce the
granting of any loan secured by this Deed of Trust, was not true in any respect
when given, or any material information requested or required by Lender is
withheld or concealed by Trustor; (e) there is an event of default under any
other agreement, document or instrument which further evidences or secures the
loan evidenced by the Note, or which encumbers the Property; and/or (f) there is
an event of default under any other agreement, document or instrument which
further evidences or secures the loan secured by this Deed of Trust.
 
LENDER'S RIGHT TO REQUIRE IMMEDIATE PAYMENT IN FULL:  In the event of a default
under this Deed of Trust, Lender may, at its option and without further notice
to any person, declare the entire principal balance and any other obligations
under the Note and/or any other obligations secured by this Deed of Trust,
together with accrued interest thereon, immediately due and payable.
 
LENDER'S RIGHT TO PERFORM ACTS TRUSTOR FAILS TO PERFORM AND INDEMNIFICATION:
 
If Trustor fails to make any payment when due or to do any act required to be
made or performed under this Deed of Trust, which failure is not remedied during
any applicable express cure period, then Lender or Trustee, without notice to or
demand upon Trustor and without releasing Trustor from any obligation under this
Deed of Trust, may, but are not required to, make or do the same in such manner
and to such extent as either may deem necessary or desirable to protect the
security of this Deed of Trust.  Lender and Trustee are authorized to (i) enter
upon the Property for such purposes; (ii) appear in and defend any action or
proceeding purporting to affect the security of this Deed of Trust or the rights
or powers of Lender or Trustee; and (iii) pay, purchase, contest or compromise
any encumbrance, charge, lien or claim of lien, in whole, in part and/or in
installments, which in the judgment of either Lender or Trustee appears to be
prior or superior to the lien of this Deed of Trust, the judgment of Lender or
Trustee being conclusive of the matter as among the parties to this Deed of
Trust.  In exercising the above powers, Lender or Trustee may pay necessary
costs and expenses, employ counsel, consultants, any other agents or independent
contractors, and pay reasonable fees, compensation, and costs thereof.  Trustor
promises and agrees to pay immediately upon demand all amounts so expended by
Lender or Trustee (including all such costs, expenses and attorneys' fees) under
this Paragraph 16, together with any fees charged by Lender in regard to such
activity by Lender and interest from the date of expenditure at the applicable
rate of interest set forth in the Note, with payment of such amounts being
secured by this Deed of Trust.
 
Trustor hereby indemnifies and agrees to hold harmless Lender and Trustee and
their directors, officers, shareholders, agents and employees (individually and
collectively the "Indemnitees") from and against:  (i) any and all claims,
demands, actions, liabilities, or causes of action that are asserted against any
Indemnitee by any person or entity if the claim, demand, action, liability, or
cause of action, directly or indirectly, relates to a claim, demand, action,
liability, or cause of action that the person or entity has or asserts based
upon, arising out of, or in connection with, the Property, the conduct of
Trustor, or any action or non-action by Trustor in connection with the Property
or this Deed of Trust; and (ii) any and all claims, liabilities, losses, costs,
or expenses (including court costs and attorneys' fees) that any Indemnitee
suffers or incurs as a result of the assertion of any such claim, demand,
action, liability or cause of action.  The foregoing indemnity shall survive the
release of this Deed of Trust, whether such release is as a result of payment of
the indebtedness secured hereby, foreclosure, acceptance of a deed in lieu of
foreclosure, other action, or otherwise.
 
 
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TRUSTEE'S RIGHTS AND DUTIES TO SELL THE PROPERTY:  (a) In the event of a default
under this Deed of Trust by Trustor, which default is not remedied during any
applicable cure period, Lender may then or thereafter execute or cause the
Trustee to execute a written notice of such default and of its election to have
the Property sold to satisfy the obligations secured by this Deed of
Trust.  Such notice shall be recorded in the office of the Recorder of the
County where the Property is located.  (b) When the minimum period of time
required by law following recordation of such notice of default has elapsed, and
notice of sale having been given as then required by law, the Trustee, without
demand upon Trustor, shall sell the Property at the time and place of sale fixed
by it in the notice of sale, either as a whole or in separate parcels, and in
such order as Lender may determine, at public auction to the highest bidder for
cash or a cash equivalent acceptable to Trustee, in lawful money of the United
States, payable at time of sale.  Lender shall have the right, at its option, to
offset Lender's bid(s) to the extent of the total amount due Lender, including
but not limited to all Trustee's fees, costs, expenses (including, without
limitation, premiums for guarantees or other evidence of title), and other
amounts secured by this Deed of Trust.  The Trustee may postpone the sale of all
or any portion of the Property by public notice at such time and place of sale,
and from time to time thereafter may postpone such sale by public announcement
at the time fixed by the preceding postponement.  Additionally, Lender, from
time to time before any Trustee's sale, may rescind or cause to be rescinded any
notice of default and election to sell or notice of sale by executing and
delivering to Trustee a written notice of such rescission, which notice, when
recorded, shall also constitute a cancellation of any prior declaration of
default and demand for sale.  The exercise by Lender of such right of rescission
shall not constitute a waiver of any breach or default then existing or
subsequently occurring, or impair the right of Lender to execute and deliver to
Trustee, as above provided, other declarations or notices of default and demand
for sale of the Property to satisfy the obligations hereof, nor otherwise affect
any provision, covenant or condition of the Note or any of the rights,
obligations or remedies of Trustee to Lender.  (c) The Trustee shall deliver to
the purchaser at such sale its deed conveying the Property so sold, but without
any covenant or warranty, express or implied.  The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof.  (d) Any
person, including Trustor, Lender or Trustee may purchase at such sale.  After
deducting all costs, fees and expenses of the Trustee and of this Trust,
including, without limitation, cost of evidence of title and attorneys' fees in
connection with the sale, the Trustee shall apply the proceeds of the sale to
the payment of:  first, all sums expended under the terms of this Deed of Trust
not then repaid, with interest at the applicable rate of interest set forth in
the Note; second, the payment of all other sums then secured by this Deed of
Trust; and third, the remainder, if any, to the person or persons legally
entitled to such proceeds.
 
 
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OTHER REMEDIES IF TRUSTOR DEFAULTS:  (a) All of the remedies of Lender and
Trustee set forth in this Deed of Trust are intended to be in addition to and
not in substitution for any other remedies available to Lender or Trustee at law
or in equity.  It is expressly understood and agreed that Lender or Trustee, or
both, may bring suit in any court of competent jurisdiction to foreclose this
Deed of Trust by judicial action or to obtain specific performance of the
assignment of rents contained in this Deed of Trust.  In connection with any
such action, Lender or Trustee may apply to the court for the appointment of a
receiver to take possession of the Property, operate the business of Trustor
being conducted on the Property, utilize and enforce all agreements of Trustor
in respect of the operation of such business, the utilization of any such
agreement being at the election of Lender or the receiver, to be exercised at
any time after declaration of a default hereunder, receive the rents of the
Property and apply the same to the obligations of Trustor under this Deed of
Trust and under the Note and any other obligations secured by this Deed of
Trust.  (b) Neither the acceptance of this Deed of Trust nor its enforcement in
any manner shall prejudice the right of Lender or Trustee to realize upon or
enforce any other security now or later held by Lender or Trustee.  Trustor
promises and agrees that the rights of Lender and Trustee under this Deed of
Trust, and with respect to any other security now or later held by Lender, may
be enforced in such order and manner as Lender and Trustee, or either of them,
may determine in their sole and absolute discretion.
 
TRUSTOR'S OBLIGATIONS AND LENDER'S RIGHTS NOT WAIVED:  By accepting payment of
any sum secured by this Deed of Trust after its due date, or by accepting late
performance of any obligation secured by this Deed of Trust, or by making any
payment or performing any act on behalf of Trustor that Trustor was obligated to
make or perform under this Deed of Trust but failed to make or perform, or by
adding any payment so made by Lender to the Note secured by this Deed of Trust,
Lender does not waive its right either to require prompt payment when due of all
other sums so secured or to declare a default for failure to make any such
prompt payment or to perform any such act.  No failure or delay on the part of
Lender, Trustee, or any holder of the Note or this Deed of Trust in the exercise
of any power, right or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any such power, right or privilege
shall preclude any other or further exercise thereof or of any other right,
power or privilege.  No exercise of any right or remedy of Lender or Trustee
under this Deed of Trust shall constitute a waiver of any other right or remedy
contained in this Deed of Trust or provided by law.  All rights and remedies
existing under this Deed of Trust are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
 
SUCCESSORS IN INTEREST:  The terms, agreements, and conditions contained in this
Deed of Trust shall apply to, be binding upon and inure to the benefit of, all
of the parties to this Deed of Trust, their heirs, personal representatives,
successors and assigns.
 
STATEMENTS CONCERNING THE STATUS OF THE LOAN:  From time to time as required by
law, Lender shall furnish to Trustor such statements as may be required
concerning the status of the obligations secured by this Deed of Trust.  Trustor
promises and agrees to pay upon demand for such statements the maximum amount
permitted by law.
 
 
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TRUSTEE'S OBLIGATIONS:  The Trustee accepts this Trust when this Deed of Trust,
duly executed and acknowledged, is made a public record as provided by law.  The
Trustee is not obligated to notify any party to this Deed of Trust of pending
sale under any other deed of trust or of any action or proceeding in which
Trustor, Lender or Trustee is a party unless such action is brought by the
Trustee.  The Trustee shall not be obligated to perform any act required of it
under this Deed of Trust unless the performance of such act is requested in
writing and the Trustee is reasonably indemnified against loss, costs, liability
and expense.
 
OBLIGATIONS OF TRUSTOR ARE JOINT AND SEVERAL; GENDER AND NUMBER:  If more than
one person has executed this Deed of Trust as "Trustor," the obligations of all
such persons under this Deed of Trust shall be joint and several.  In this Deed
of Trust, whenever the context so requires, the masculine gender includes the
feminine and/or neuter, and the singular number includes the plural.
 
NO OFFSETS:  No offset or claims which Trustor now or in the future may have
against Lender shall relieve Trustor from making payments or performing any
other obligations contained in or secured by this Deed of Trust.  Despite any
right or option that may be granted to Lender or Trustee by this Deed of Trust
or in the evidence of any obligations secured by this Deed of Trust or document
ancillary to this Deed of Trust to receive, collect, accept deposit of, use,
apply or in any other manner obtain or dispose of any funds or property, the
same shall not be deemed to constitute any credit against or to satisfy any
obligation secured by this Deed of Trust, in whole or in part, unless and until
such funds or property shall be both so obtained and expressly so applied by
Lender or Trustee to such satisfaction of such obligation and then only in the
manner and to the extent of such application.
 
GOVERNING LAW:  The loan secured by this Deed of Trust is made pursuant to the
laws of the State of California, and the rules and regulations promulgated
thereunder.  The loan contracts between the parties, including this Deed of
Trust, shall be construed and governed by such laws, rules, and regulations.
 
AGREEMENT CHANGED ONLY BY WRITING:  This Deed of Trust cannot be changed except
by agreement in writing signed by Trustor and Lender.
 
TIME:  Time is of the essence in connection with all of Trustor's obligations
under this Deed of Trust.
 
NOTICE:  Except for any notice required under applicable law to be given in
another manner:
 
Any notice to Trustor provided for in this Deed of Trust shall be addressed to
Trustor at the address of Trustor set forth above, or to such other address as
Trustor may designate by notice to Lender pursuant to the terms of Paragraph
28(c), and
 
Any notice to Lender provided for in this Deed of Trust shall be addressed to
Lender at its address shown on the top of the first page of this Deed of Trust,
and/or to such other address as Lender may designate by notice to Trustor,
pursuant to the terms of Paragraph 28(c).
 
 
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Except as otherwise provided by law, all notices, requests, demands, directions,
and other communications provided for in this Deed of Trust must be in writing
mailed, telegraphed, delivered, or sent by telex, facsimile, cable or other form
of electronic written communication to the appropriate party at its respective
address.  Any notice given by telegram, telex, facsimile, cable or other form of
electronic written communication must be confirmed within forty-eight (48) hours
by letter mailed or delivered to the appropriate party at its respective
address.  If any notice is given by mail it will be effective when deposited in
the mails with first-class or airmail postage prepaid; if given by telegraph or
cable, when delivered to the telegraph company with charges prepaid; if given by
telex, facsimile or other form of electronic written communication, when sent;
or if given by personal delivery, when delivered.
 
TITLES, CAPTIONS, AND HEADINGS:  The titles, captions, and headings to
paragraphs contained in this Deed of Trust are for assistance in identification
only and are not to be considered part of the substance of the provisions of
this Deed of Trust.
 
SEVERABILITY OF PROVISIONS:  If any paragraph, clause or provision of this Deed
of Trust is construed or interpreted by a court of competent jurisdiction to be
void, invalid or unenforceable, such decision shall affect only those
paragraphs, clauses or provisions so construed or interpreted and shall not
affect the remaining paragraphs, clauses and provisions of this Deed of Trust.
 
ACKNOWLEDGMENT OF TRUSTOR'S UNDERSTANDING OF DEED OF TRUST:  The foregoing
terms, provisions and conditions of this Deed of Trust have been read and are
understood by Trustor.  Trustor hereby acknowledges receipt of a copy of this
Deed of Trust.
 
LENDER'S RELIANCE:  The financial accommodations made or to be made by Lender to
Trustor are being made, renewed or extended, as applicable, by Lender to Trustor
at the request and urging of Trustor and this Deed of Trust is being given in
consideration of such financial accommodations, and Lender may rely upon the
validity and enforceability of this Deed of Trust in making such financial
accommodations.
 
SECURITY AGREEMENT:
 
Security Interest and Fixture Filing.  This Deed of Trust shall also constitute
and serve as a security agreement and financing statement for Fixtures, and any
of the Property in which a security interest can be perfected under and within
the meaning of Division 9 of the California Uniform Commercial Code, and shall
grant to Lender, until the obligations secured hereby shall be satisfied, a
first priority security interest, including but not limited to a fixture filing,
pursuant to Division 9 of the California Uniform Commercial Code with respect to
the Fixtures.  To this end, Trustor shall and hereby does grant to Lender, a 1st
priority security interest in, under and to the Fixtures, and any of the
Property in which a security interest can be perfected under Division 9 of the
California Uniform Commercial Code, and without the prior written consent of
Lender, Trustor shall not create or suffer to be created any other security
interest in such items, including any replacements and additions.
 
Financing Statements.  Trustor shall deliver to Lender, in form and substance
satisfactory to Lender, such financing statements and further assurances as
Lender may, from time to time, require to create, perfect, and preserve Lender's
security interest herein granted, and Lender may cause such financing statements
and assurances to be recorded and filed at such times and places as may be
required or permitted by law to so create, perfect and preserve such security
interest.  Trustor shall pay all costs of filing such financing statements and
any extensions, renewals, amendments, and releases of such statements, and shall
pay all reasonable costs and expenses of any record searches for financing
statements that Lender may reasonably require.
 
 
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Remedies on Default.  Upon default, Lender may, at its option:  (i) exercise any
remedy permitted by law or in equity, including without limitation, all the
rights and remedies of a secured party under the California Uniform Commercial
Code in any jurisdiction where enforcement is sought, whether in California or
elsewhere; (ii) notify any parties obligated on any of the Fixtures to make
payment to Lender and enforce collection thereof; (iii) apply any sums received
or collected from or on account of any Fixtures, including the proceeds of any
sales thereof, to the payment of any indebtedness of Trustor to Lender in any
order, including the costs and expenses incurred in preserving and enforcing the
rights of Lender and attorneys' fees, in such order and manner as Lender in
Lender's sole discretion determines.  All of Lender's rights and remedies shall
be cumulative and not exclusive.
 
This Deed of Trust shall constitute a fixture filing under the California
Uniform Commercial Code.  Trustor agrees that Lender may file this Deed of
Trust, or a copy of it, in the real estate records or other appropriate index or
in the Office of the Secretary of State of the State of California and such
other states as the Lender may elect, as a financing statement for any of the
items specified above as part of the mortgaged Property. Any reproduction of
this Deed of Trust or executed duplicate original of this Deed of Trust, or a
copy certified by a County Recorder in the State of California, or of any other
security agreement or financing statement, shall be sufficient as a financing
statement.  Lender's address from which information concerning Lender's security
interest can be obtained is set forth in Paragraph 28 above, subject to change
as therein provided.
 
SALE OF INTEREST:  Trustor acknowledges and accepts that Lender may, at any
time, in Lender's sole discretion sell all or any portion of Lender's interest
in the Note and this Deed of Trust to one or more third parties.  The sale of
all or any part of Lender's interest in the Note or Deed of Trust shall not
relieve Trustor of any of Trustor's obligations hereunder.
 
BOOKS AND RECORDS:  Trustor shall keep and maintain at all times at Trustor's
address stated above, or at such other place as Lender may approve in writing
from time to time, complete and accurate books or accounts and records adequate
to reflect correctly the results of the operation of the Property and copies of
all written contracts, leases, rental agreements, concessions, licenses, and
other documents and instruments which affect the Property, or any portion
thereof or interest therein.  Such books, records, contracts, leases, documents,
and other instruments shall be subject to examination and inspection by Lender,
or Lender's agents or designated auditors, at any reasonable time and from time
to time.  Promptly upon request, Trustor shall furnish a rent schedule for the
Property, certified by Trustor, showing the name of each tenant and, for each
tenant, the space occupied, the expiration date of the lease or rental
agreement, the rent payable and the rent paid, the security deposit held, and
such other information regarding the leasing of the Property as Lender shall
require.
 
 
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INSPECTION, APPRAISAL, AND ASSESSMENTS:  Lender may, at any time and from time
to time and as and when Lender deems it to be appropriate, whether or not
Trustor is then in default, (a) enter upon the Premises, directly or through one
or more agents or independent contractors, to inspect any and all Property which
is security for the obligations herein described, subject to the rights of
tenants occupying all or any portion of the Property, and (b) cause to be
performed and prepared one or more appraisals and/or preliminary or other
environmental assessments of the Property, or any portion thereof, in form and
content satisfactory to Lender and meeting all requirements or standards of
applicable laws, regulations, ordinances, orders, and generally recognized
industry standards relating thereto; provided, however, environmental
assessments shall only be performed subject to the Environmental Indemnity.  All
costs and expenses incurred by Lender or Trustee in connection with any such
inspection, appraisal, or assessment, shall be payable by Trustor upon demand
and shall be secured by this Deed of Trust.  All reports and other evidence and
work papers relating to such inspections, appraisals, and assessments, shall be
and remain the sole property of Lender, and Trustor hereby waives any right
which Trustor may have by agreement or by operation of law to receive an
original or duplicate thereof.  Any appraisal or assessment may, at Lender's
sole election, be relied upon by Lender in taking any action Lender deems to be
necessary or appropriate in connection with the enforcement of its rights and
exercise of remedies under or by virtue of this Deed of Trust, or under any
obligation secured hereby, or under any separate obligation pertaining to the
Property, or in connection with the protection, maintenance, preservation,
remediation, restoration, or repair of the Property.  Unless Lender otherwise
expressly declares in writing, neither said appraisal nor assessment shall
constitute conclusive evidence of the value or condition of the Property or as a
representation or warranty by Lender as to the value or condition of the
Property, and may not be used or relied upon by Trustor for any purpose.
 
THE UNDERSIGNED TRUSTOR REQUESTS THAT A COPY OF ANY NOTICE OF DEFAULT AND ANY
NOTICE OF SALE HEREUNDER BE MAILED TO TRUSTOR AT TRUSTOR'S ADDRESS SET FORTH
ABOVE.
 
"TRUSTOR", BORROWER
 

American Spectrum Dunham Properties LLC         By:     Name: William J. Carden
  Title: President  

 
 
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STATE OF CALIFORNIA                                  )
) ss
COUNTY OF LOS ___________                     )
 
On _________________, 2013, before me, ____________________________, a Notary
Public, personally appeared
___________________________________________________________________, who 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, and that by
his/her/their signature on the instrument the person(s), or the entity(ies) upon
behalf of which the person(s) acted, executed the instrument.
 
I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
 
WITNESS my hand and official seal.
 
 
 

 

   

Notary Public
 
 
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EXHIBIT A
 
 
LEGAL DESCRIPTION
 
 
Real property in the City of San Jacinto, County of Riverside, State of
California, described as follows:
 
PARCEL A:
 
The Southeasterly three-fourths of Farm Lot 5 of the San Jacinto Land
Association, in the City of San Jacinto, County of Riverside, State of
California, as per map recorded in Book 8, Page 357 of Maps, in the Office of
the County Recorder of San Diego County.
 
EXCEPTING THEREFROM that portion thereof described as follows:
 
Beginning at the most Easterly corner of said Lot 5;
Thence North 45° West, 6 Rods; Thence South 45° West, 6 Rods; Thence South 45°
East, 6 Rods; Thence North 45° East, 6 Rods to the point of beginning.
 
PARCEL B:
 
All of the Northwest rectangular one-half of Lot 7 of the lands of the San
Jacinto Land Association, in the City of San Jacinto, County of Riverside, State
of California, as per map recorded in Book 8, Page 357 of Maps, in the Office of
the County Recorder of San Diego County.
 
PARCEL C:
 
A Parcel of land 6 rods square in the East corner of Lot 5 in the Land of San
Jacinto Land Association, as per map recorded in Book 8, Page 357 of Maps, in
the Office of the County Recorder of San Diego County Records, and said portion
of Lot 5 being described as follows:
 
Beginning at the East corner of Lot 5;
Thence Northwesterly along the Southwesterly line of Ramona Boulevard formerly
known as Central Avenue, 6 Rods;
Thence Southwesterly on a line drawn at right angles to Central Avenue, 6 Rods;
Thence Southeasterly on a line parallel with Central Avenue, 6 Rods;
Thence Northeasterly along the Southeasterly line of said Lot 5 to the point of
beginning.
 
APN:  436-040-001-0 (Affects Parcel A), 436-040-002-1 (Affects Parcel C) and
436-040-005-4 (Affects Parcel B).
 
EXHIBIT A
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EXHIBIT D
 
 
FORM OF WARRANT
 
 
 
EXHIBIT D
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