Exhibit 10.106

 

 

DEED OF TRUST

 

THIS DEED OF TRUST (this “Deed of Trust”) is made as of the 27th day of January
2006, by DALLAS S&W, L.P., a Texas limited partnership, having an address at c/o
The Smith & Wollensky Restaurant Group, Inc. (the “Grantor”), 1114 First Avenue,
New York, New York 10021 to CHRISTOPHER MAYROSE (“Trustee”), for the benefit of
MORGAN STANLEY DEAN WITTER COMMERCIAL FINANCIAL SERVICES, INC., a Delaware
corporation, having an address at 2000 Westchester Avenue, Purchase, New York
10577 (the “Beneficiary”).

 

W I T N E S S E T H:

 

WHEREAS, the Grantor is the owner of the premises described in Exhibit A
attached hereto (the “Premises”);

 

WHEREAS, subject to the terms of a certain Line of Credit Agreement of even date
herewith among the Beneficiary, The Smith & Wollensky Restaurant Group, Inc.
(the "Borrower") and the Grantor (such agreement and any and all amendments,
modifications, extensions, renewals or replacements thereto, is referred to
herein as the “Loan Agreement” all capitalized terms used herein which are not
defined herein shall have the meanings given to them in the Loan Agreement), the
Beneficiary has agreed to extend a line of credit (the "Loan") to the Borrower,
which Loan is evidenced by a Revolving Credit Note of even date herewith in the
principal amount of up to Five Million and 00/100 ($5,000,000.00) Dollars, with
final payment due on January __, 2009 (or on such earlier date on which the
Termination Date (as defined in the Loan Agreement) may occur (as the same may
be amended or restated from time to time, the “Note”);

 

WHEREAS, the Grantor has guarantied all of the obligations of Borrower, now or
hereafter evidenced by the Note, the Loan Agreement and the other Loan Documents
(as defined herein) pursuant to a certain Guaranty of Payment of even date
herewith (the "Guaranty") made by the Grantor to the Beneficiary;

 

NOW THEREFORE, IN CONSIDERATION OF THE USES AND TRUSTS (the “Trust”) ESTABLISHED
AND CONTINUED BY THIS DEED OF TRUST AND IN CONSIDERATION OF TEN DOLLARS ($10)
AND OTHER VALUABLE CONSIDERATION PAID BEFORE DELIVERY OF THIS DEED OF TRUST BY
EACH OF THE TRUSTEE AND THE BENEFICIARY TO THE GRANTOR, WHO HEREBY ACKNOWLEDGES
ITS RECEIPT AND THAT IT IS REASONABLY EQUIVALENT VALUE FOR THIS DEED OF TRUST
AND ALL OTHER SECURITY AND RIGHTS GIVEN BY THE GRANTOR, AND TO SECURE PAYMENT OF
PRINCIPAL AND LAWFUL

 

 

 

 

 

 

 

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INTEREST AND PERFORMANCE OF THE FOLLOWING OBLIGATIONS (collectively, the
“Obligations”):

 

(i)          Prompt payment and performance of all obligations of the Grantor
under, with respect to and arising in connection with the Loan Agreement, the
Guaranty, this Deed of Trust and the other Loan Documents to which the Grantor
is a party, including without limitation, all obligations to the Beneficiary for
fees, costs and expenses, including attorneys’ fees, as provided herein or
therein;

 

(ii)         Payment of all sums advanced by the Beneficiary or the Trustee to
protect the Trust Property (as defined herein), with interest thereon at the
Default Rate (as defined herein);

 

(iii)       All renewals, extensions, amendments, restatements and changes of,
or substitutions or replacements for, all or any part of any of the obligations
described in clause (i) hereof; and

 

(iv)        Payment of all sums advanced and costs and expenses incurred by the
Beneficiary (or by the Trustee) in connection with any of the foregoing
obligations or in connection with the perfection and the security therefor,
whether such advances, costs and expenses were made or incurred at the request
of the Grantor or the Beneficiary (or the Trustee);

 

THE GRANTOR BY THESE PRESENTS HEREBY IRREVOCABLY (i) grants, gives, bargains,
sells, alienates, enfeoffs, conveys, confirms, sets over, delivers, assigns and
transfers to the Trustee and its successors and assigns, IN TRUST FOREVER, WITH
POWER OF SALE, pursuant to this Deed of Trust and applicable law, for the
benefit of the Beneficiary, all right, title and interest of the Grantor now
owned, or hereafter acquired, in and to the property, rights and interests
hereinafter described in granting clauses (a) through (n) (all property of any
kind described in said clauses (a) through (n) being collectively the “Trust
Property”) including, without limitation, (i) such Trust Property that is real
property (such Trust Property that is real property being collectively the “RP
Collateral”); (ii) any RP Collateral or UCC Collateral (defined below) that is
deemed a fixture under the Uniform Commercial Code of the state of Texas (the
“Texas UCC”); and (iii) such Trust Property that is not RP Collateral to the
full extent that such Trust Property may be subject to the Texas UCC
(collectively, the “UCC Collateral”):

 

(a)         the Premises and the buildings and improvements owned by the Grantor
now or hereafter located on the Premises (including all water, sewage and
drainage facilities, wells, treatment plants, supply, collection and
distribution systems or other improvements (the “Improvements”);

 

 

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(b)         all of the estate, right, title, claim or demand of any nature
whatsoever of the Grantor, either in law or in equity, in possession or
expectancy, in and to the Premises or any part thereof;

 

(c)         all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Premises (including, without limitation, any and
all development rights, air rights or similar or comparable rights of any nature
whatsoever now or hereafter appurtenant to the Premises or now or hereafter
transferred to the Premises);

 

(d)         all machinery, apparatus, equipment, fittings, fixtures and other
property of every kind and nature whatsoever and all additions thereto and
renewals and replacements thereof, and all substitutions therefor now owned or
hereafter acquired by the Grantor, or in which the Grantor has or shall have an
interest, now or hereafter located upon or in, or attached to, any portion of
the Premises or appurtenances thereto, or located off-site from the Premises but
purchased with the proceeds of the Loan and used or usable in connection with
the present or future operation and occupancy of the Premises and all building
equipment, materials and supplies of any nature whatsoever owned by the Grantor,
or in which the Grantor has or shall have an interest, now or hereafter located
upon the Premises and whether stored at the Premises or off-site if used in
connection with such operation and occupancy (collectively, the “Equipment”),
and the right, title and interest of the Grantor in and to any of the Equipment
which may be subject to any security agreements (as defined in the Texas UCC)
superior in lien to the lien of this Deed of Trust and all proceeds and products
of any of the above;

 

(e)         all awards or payments, including interest thereon, and the right to
receive the same, which may be made with respect to the Premises, whether from
the exercise of the right of eminent domain (including any transfer made in lieu
of the exercise of said right), or for any other injury to or decrease in the
value of the Premises;

 

(f)         all leases and other agreements affecting the use or occupancy of
the Premises now or hereafter entered into (the “Leases”);

 

(g)         all right, title and interest of the Grantor in and to (i) all
contracts from time to time executed by the Grantor or any manager or agent on
its behalf relating to the ownership, construction, maintenance, repair,
operation, occupancy, sale or financing of the Premises or any part thereof and
all agreements relating to the purchase or lease of any portion of the Premises
or any property which is adjacent or peripheral to the Premises, together with
the right to exercise such options and all leases of Equipment, (ii) all
consents, licenses (to the extent such grant is permitted by law), building
permits, certificates of occupancy and other governmental approvals relating to
construction, completion, occupancy, use or operation of the Premises or any
part thereof, and (iii) all drawings, plans, specifications and similar or
related items relating to the Premises;

 

 

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(h)         all trade names, trademarks, logos, copyrights, good will and books
and records relating to or used in connection with the operation of the Premises
or any part thereof; all general intangibles related to the operation of the
Premises now existing or hereafter arising;

 

(i)          all accounts and revenues arising from the operation of the
Premises, including, without limitation, (i) any right to payment now existing
or hereafter arising for goods sold or for services rendered, whether or not yet
earned by performance, arising from the operation of the Premises and (ii) all
rights to payment from any consumer credit-charge card organization or entity,
including, without limitation, payments arising from the use of the American
Express Card, the Visa Card, the Carte Blanche Card, the Mastercard, the
Discover Card or any other credit card, including those now existing or
hereafter created, substitutions therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or intangible) received upon the sale,
exchange, transfer, collection or other disposition or substitution thereof and
any and all of the foregoing and proceeds therefrom;

 

(j)          all proceeds of and any unearned premiums on any insurance policies
covering the Premises, including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or settlements made in lieu
thereof, for damage to the Premises and all refunds of Taxes (as herein
defined);

 

(k)         all wastewater, fresh water and other utilities capacity and
facilities (the “Utilities Capacity”) available or allocable to the Premises and
Improvements or dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private utility, and
all related or incidental licenses, rights and interests, whether considered to
be real, personal or mixed property, including the right and authority to
transfer or relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities construction or
installation or for any reservation fee, standby fee or capital recovery charge
promised, provided or paid for by the Grantor, to the full extent now allocated
or allocable to the Premises or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Premises or Improvements but
which is now or hereafter owned or controlled by the Grantor, to the full extent
that such additional Utilities Capacity is necessary to allow development,
marketing and use of the Premises or Improvements for their highest and best
use;

 

(l)        all existing and future minerals, oil, gas and other hydrocarbon
substances in, upon, under or through the Premises;

 

(m)       the right, in the name and on behalf of the Grantor, to appear in and
defend any action or proceeding brought with respect to the Premises and to
commence any action or proceeding to protect the interest of the Beneficiary in
the Premises; and

 

(n)         all rights and estates in reversion or remainder to any existing and
future corrections, modifications, supplements or amendments to, or renewals,
extensions or ratifications of, or replacements or substitutions for, or
accessions, additions or attachments to, or

 

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proceeds (both cash and non-cash) of, any of the foregoing, and all privileges
and appurtenances thereunto belonging.

 

IN FURTHERANCE OF THE FOREGOING GRANTS, BARGAINS, SALES, ASSIGNMENTS, TRANSFERS,
AND CONVEYANCES, AND TO PROTECT THE TRUST PROPERTY AND THE SECURITY GRANTED BY
THIS DEED OF TRUST, THE GRANTOR COVENANTS AND AGREES WITH AND REPRESENTS AND
WARRANTS TO THE BENEFICIARY AS FOLLOWS:

 

 

1.

Payment of Obligations.

 

The Grantor will pay the Obligations at the time and in the manner provided for
its payment in the Guaranty, the Loan Agreement and the other Loan Documents to
which the Grantor is a party.

 

 

2.

Habendum and Warranty of Title.

 

TO HAVE AND TO HOLD the Trust Property, together with every right, privilege,
hereditament and appurtenance belonging or appertaining to it, unto the Trustee,
his successors or substitutes in the Trust and his or their assigns, forever.
The Grantor represents that the Grantor is the lawful owner of the RP Collateral
with good right and authority to encumber and convey it, and that the RP
Collateral is free and clear of all liens, claims and encumbrances, subject to
the terms and conditions of the title exceptions expressly set forth in the
title insurance policy issued to the Beneficiary in connection with the Loan and
insuring the lien of this Deed of Trust. The Grantor hereby binds the Grantor
and the Grantor’s successors and assigns to forever WARRANT and DEFEND the Trust
Property and every part of it unto the Trustee, his successors or substitutes in
the Trust, and his or their assigns, against the claims and demands of every
person whomsoever lawfully claiming or to claim it or any part of it (such
warranty to supersede any provision contained in this Deed of Trust limiting the
liability of the Grantor), subject to the terms and condition of the title
exceptions expressly set forth in the title insurance policy issued to the
Beneficiary in connection with the Loan and insuring the lien of this Deed of
Trust.

 

 

3.

Insurance.

 

At all times prior to the termination of this Deed of Trust, the Grantor
(i) will keep the Improvements and the Equipment insured against loss or damage
by fire, standard extended coverage perils and such other hazards as the
Beneficiary shall from time to time require in amounts approved by the
Beneficiary on a so-called “special form” policy, which amounts shall in no
event be less than 100% of the full insurable replacement value of the
Improvements and the Equipment and shall be sufficient to meet all applicable
co-insurance requirements and will maintain such other forms of insurance
coverage with respect to the Trust Property as the Beneficiary shall require,
and (ii) will maintain rental and business interruption insurance and such other
insurance as the Beneficiary may from time to time require, in amounts

 

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approved by the Beneficiary, including, without limitation, comprehensive
general public liability insurance covering injury and damage to persons and
property naming the Beneficiary as an additional insured. All policies of
insurance (the “Policies”) shall be issued by insurers having a minimum policy
holders rating of “A-“ per the latest rating publication of Property and
Casualty Insurers by A.M. Best Company and shall have a financial size category
of not less than IX, and who are lawfully doing business in the state of Texas
and are otherwise acceptable in all respects to the Beneficiary. All Policies
shall include a provision that such Policy (a) will not be cancelled, altered or
in any way limited in coverage or reduced in amount unless the Beneficiary is
notified in writing at least thirty (30) days prior to such cancellation or
change and (b) shall contain a mortgagee non-contribution clause endorsement or
an equivalent endorsement satisfactory to the Beneficiary naming the Beneficiary
as the person to which all payments made by the insurer thereunder shall be paid
and shall otherwise be in form and substance satisfactory in all respects to the
Beneficiary. Blanket insurance policies shall not be acceptable for the purposes
of this Paragraph 3 unless otherwise approved to the contrary by the
Beneficiary. The Grantor shall pay the premiums for the Policies as the same
become due and payable. At the request of the Beneficiary, the Grantor will
deliver the Policies to the Beneficiary. Not later than ten (10) days prior to
the expiration date of each of the Policies, the Grantor will deliver to the
Beneficiary a renewal policy or policies marked “premium paid” or accompanied by
other evidence satisfactory to the Beneficiary that the Policies are in effect
and the premiums have been paid. If at any time the Beneficiary is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, the Beneficiary shall have the right without notice to the
Grantor to take such action as the Beneficiary deems necessary to protect its
interest in the Trust Property, including, without limitation, the obtaining of
such insurance coverage as the Beneficiary in its sole discretion deems
appropriate, and all expenses incurred by the Beneficiary in connection with
such action or in obtaining such insurance and keeping it in effect shall be
paid by the Grantor to the Beneficiary upon demand. The Grantor shall at all
times comply with and shall cause the Improvements and Equipment and the use,
occupancy, operation, maintenance, alteration, repair and restoration thereof to
comply with the terms, conditions, stipulations and requirements of the
Policies. If the Premises, or any portion of the Improvements or the Equipment,
is located in a Federally designated “special flood hazard area,” in addition to
the other Policies required under this Paragraph 3, a flood insurance policy
shall be delivered by the Grantor to the Beneficiary. If no portion of the
Premises is located in a Federally designated “special flood hazard area” such
fact shall be substantiated by a certificate in form satisfactory to the
Beneficiary from a licensed surveyor, appraiser or professional engineer or
other qualified person. If the Trust Property shall be damaged or destroyed, in
whole or in part, by fire or other property hazard or casualty, the Grantor
shall give prompt notice thereof to the Beneficiary. Sums paid to the
Beneficiary by any insurer may be retained and applied by the Beneficiary toward
payment of the Obligations, or held as cash collateral therefor, whether or not
then due and payable in such order, priority and proportions as the Beneficiary
in its discretion shall deem proper or, at the discretion of the Beneficiary,
the same may be paid, either in whole or in part, to the Grantor for such
purposes as the Beneficiary shall designate. If the Beneficiary shall receive
and retain such insurance proceeds, the lien of this Deed of Trust shall be
reduced only by the amount thereof received and retained by the Beneficiary and
actually applied by the Beneficiary in reduction of the Obligations.

 

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4.

Payment of Taxes, etc.

 

(a) The Grantor shall pay all taxes, assessments, water rates, sewer rents and
other charges, including vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Premises, now or hereafter levied or
assessed against the Trust Property and the Premises (the “Taxes”) prior to the
date upon which any fine, penalty, interest or cost may be added thereto or
imposed by law for the nonpayment thereof, and the Grantor shall deliver to the
Beneficiary, upon request, receipted bills, canceled checks and other evidence
satisfactory to the Beneficiary evidencing the payment of the Taxes prior to the
date upon which any fine, penalty, interest or cost may be added thereto or
imposed by law for the nonpayment thereof.

 

(b)         After prior notice to the Beneficiary, in the case of any material
item, the Grantor, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the amount or validity or application in whole or in part of any of
the Taxes, provided that (i) no default shall have occurred and shall be
continuing under the Guaranty, the Loan Agreement or this Deed of Trust, (ii)
such proceeding shall suspend the collection of the contested Taxes from the
Grantor and from the Trust Property, (iii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which the Grantor or the Trust Property is subject and shall not constitute a
default thereunder, (iv) neither the Trust Property nor any part thereof nor any
interest therein will in the opinion of the Beneficiary be in danger of being
sold, forfeited, terminated, canceled or lost, and (v) the Grantor shall have
set aside in an interest-bearing account with the Beneficiary, and otherwise in
a manner satisfactory to the Beneficiary, adequate cash reserves for the payment
of the contested Taxes, together will all interest and penalties thereon, or in
the alternative the Grantor shall have furnished such security as may be
required in the proceeding, or as may otherwise be requested or required by the
Beneficiary to insure the payment of the contested Taxes, together with all
interest and penalties thereon, and, provided further, that if at any time the
Beneficiary determines, in its sole and absolute discretion, that payment of any
tax, assessment or other charge shall become necessary to prevent the delivery
of a tax deed conveying the Trust Property or any portion thereof because of
non-payment of any such sums, then the Grantor shall pay or cause to be paid the
sums in sufficient time to prevent the delivery of such tax deed.

 

(c)         If a default shall occur under the Guaranty, the Loan Agreement or
this Deed of Trust either prior to, or after, initiating said proceeding, the
Beneficiary shall have the right to either initiate or continue said proceeding,
as the case may be, either in its own name or as agent of the Grantor. The
Grantor shall cooperate with the Beneficiary and make available to the
Beneficiary upon demand any and all information, and execute any documents or
pleadings, which the Beneficiary may reasonably require. The Beneficiary shall
then conduct said proceeding in a manner it deems appropriate, and at its own
expense, subject to any right of reimbursement from the Grantor in accordance
with the provisions of this Deed of Trust.

 

 

5.

Escrow Fund.

 

 

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The Grantor will, at the option of the Beneficiary, pay to the Beneficiary on
the first day of each calendar month one-twelfth of an amount (the “Escrow
Fund”) which would be sufficient to pay the Taxes payable, or estimated by the
Beneficiary to be payable, during the ensuing twelve (12) months. The
Beneficiary will apply the Escrow Fund to the payment of Taxes which are
required to be paid by the Grantor pursuant to the provisions of this Deed of
Trust. If the amount of the Escrow Fund shall exceed the amount of the Taxes
payable by the Grantor pursuant to the provisions of this Deed of Trust, the
Beneficiary shall, in its discretion, (a) return any excess to the Grantor, or
(b) credit such excess against future payments to be made to the Escrow Fund. In
returning such excess, the Beneficiary may deal with the person shown on the
records of the Beneficiary to be the owner of the Trust Property. If the Escrow
Fund is not sufficient to pay the Taxes, as the same become payable, the Grantor
shall pay to the Beneficiary, upon request, an amount which the Beneficiary
shall estimate as sufficient to make up the deficiency. Any amounts in the
Escrow Fund may not be commingled with the general funds of the Beneficiary and
shall constitute additional security for the Obligations and shall bear
interest.

 

 

6.

Condemnation.

 

Notwithstanding any taking of all or any portion of the Trust Property by any
public or quasi-public authority through eminent domain or otherwise, the
Grantor shall continue to pay the Obligations at the times and in the manner
provided therefor in the Guaranty, the Loan Agreement, this Deed of Trust and
the other Loan Documents, and the Obligations shall not be reduced until any
award or payment therefor shall have been actually received and applied by the
Beneficiary to the reduction of the Obligations. The Beneficiary may hold such
award or payment as cash collateral for the Obligations and/or apply all or any
of the same to the reduction of the Obligations whether or not then due and
payable in such order, priority and proportions as the Beneficiary in its
discretion shall deem proper. If the Trust Property is sold, through foreclosure
or otherwise, prior to the receipt by the Beneficiary of such award or payment,
the Beneficiary shall have the right, whether or not a deficiency judgment shall
have been sought, recovered or denied with respect to the Obligations, to
receive such award or payment, or a portion thereof sufficient to pay the
Obligations, whichever is less. The Grantor shall file and prosecute its claim
or claims for any such award or payment in good faith and with due diligence and
cause the same to be collected and paid over to the Beneficiary. The Grantor
hereby irrevocably authorizes and empowers the Beneficiary, in the name of the
Grantor or otherwise, to collect and receipt for any such award or payment and
to file and prosecute such claim or claims. Although it is hereby expressly
agreed that the same shall not be necessary in any event, the Grantor shall,
upon demand of the Beneficiary, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose of assigning any
such award or payment to the Beneficiary, free and clear of any encumbrances of
any kind or nature whatsoever.

 

 

7.

Leases and Rents.

 

 

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(a)         The Grantor hereby absolutely and unconditionally assigns, sells,
transfers and conveys all of the right, title and interest in and to all Leases
and all renewals, replacements and guarantees thereof along with all of the
rents and the right to receive and apply the rents, issues and profits of the
Premises (the “Rents”) to the Beneficiary. This assignment is absolute in nature
and not an assignment for additional security only. Subject to the terms of this
Paragraph 7, until the occurrence of an Event of Default, the Grantor shall have
the right under a retained and reserved license (but limited as provided herein)
to collect Rents and each tenant may pay Rents directly to Grantor; but after an
Event of Default, the Grantor’s license shall automatically terminate and be
revoked and to the extent Grantor collects any Rents thereafter accruing or
paid, Grantor covenants to hold all such Rents in trust for the use and benefit
of Beneficiary. Following such revocation of Grantor’s license, each tenant is
hereby authorized and directed to pay directly to Beneficiary all Rents
thereafter accruing or payable, and the Beneficiary may retain and apply the
Rents toward payment of the Obligations, in such order, priority and proportions
as the Beneficiary, in its discretion, shall deem proper, or to the operation,
maintenance and repair of the Trust Property, and irrespective of whether the
Beneficiary shall have commenced any sale or foreclosure of this Deed of Trust
or shall have applied or arranged for the appointment of a receiver. The Grantor
represents that as of the date of this Deed of Trust there are no Leases
affecting all or any part of the Trust Property. The Grantor shall not, without
the consent of the Beneficiary, make, or suffer to be made, any Leases or modify
or cancel any Leases, or accept prepayments of installments of the Rents for a
period of more than one (1) month in advance or further assign the whole or any
part of the Rents. Notwithstanding the foregoing, the Beneficiary will not
unreasonably withhold its consent to the Grantor making a new Lease or renewing
an existing Lease provided that (i) no Event of Default has occurred hereunder
and (ii) such new or renewed Lease is (a) for actual occupancy, (b) at market
rents, (c) for a reputable use as reasonably determined by the Beneficiary and
(d) made pursuant to documentation in form and substance satisfactory in all
respects to the Beneficiary. The Grantor shall (a) fulfill or perform each and
every provision of the Leases on the part of the Grantor to be fulfilled or
performed, (b) promptly send copies of all notices of default which the Grantor
shall send or receive under the Leases to the Beneficiary, and (c) enforce the
performance or observance of the provisions thereof by the tenants thereunder.
The Grantor shall from time to time, but not less frequently than once every 180
days, provide to the Beneficiary a complete and detailed leasing status report
with respect to the Improvements, which leasing status report shall be in form
and substance satisfactory in all respects to the Beneficiary. In addition to
the rights which the Beneficiary may have herein, in the event of any default
under this Deed of Trust, the Beneficiary, at its option, may require the
Grantor to pay monthly in advance to the Beneficiary, or any receiver appointed
to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Premises as may be in possession of the Grantor.
Upon default in any such payment, the Grantor will vacate and surrender
possession of the Premises to the Beneficiary, or to such receiver, and, in
default thereof, the Grantor may be evicted by summary proceedings or otherwise.
Nothing contained in this Paragraph shall be construed as imposing on the
Beneficiary any of the obligations of the lessor under the Leases or of a
“mortgagee in possession” (or equivalent).

 

 

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(b)        The Grantor acknowledges and agrees that, upon recordation of this
Deed of Trust, the Beneficiary's interest in the Rents shall be deemed to be
fully perfected, “choate” and enforced as to the Grantor and all third parties,
including without limitation any subsequently appointed trustee in any case
under the Bankruptcy Code (as hereinafter defined), without the necessity of (i)
commencing an action for the sale or foreclosure of the Trust Property, (ii)
furnishing notice to the Grantor or tenants under the Leases, (iii) making
formal demand for the Rents, (iv) taking possession of the Premises, (v)
obtaining the appointment of a receiver of the rents and profits of the
Premises, (vi) sequestering or impounding the Rents, or (vii) taking any other
affirmative action.

 

(c)         For purposes of Section 552(b) of the Bankruptcy Code, the Grantor
and the Beneficiary agree that this Deed of Trust shall constitute a “security
agreement,” that the security interest created by such security agreement
extends to property of the Grantor acquired before the commencement of a case in
bankruptcy and to all amounts paid as Rents and that such security interest
shall extend to all Rents acquired by the estate after the commencement of a
case in bankruptcy.

 

(d)        The Grantor acknowledges and agrees that all Rents shall be deemed to
be “Cash Collateral” under Section 363 of the Bankruptcy Code in the event that
the Grantor files a voluntary petition in bankruptcy or is made subject to any
involuntary bankruptcy proceeding. After the filing of such petition, the
Grantor may not use Cash Collateral without the consent of the Beneficiary
and/or an order of any bankruptcy court pursuant to Section 363(b)(2) of the
Bankruptcy Code.

 

(e)         It is agreed and understood that the Beneficiary hereby reserves the
right and shall have the right, at any time and from time to time, without the
consent or joinder of any other party, to subordinate this Deed of Trust and the
liens, assignments and security interests created by this Deed of Trust to all
or any of the Leases regardless of the respective priority of any of such Leases
and this Deed of Trust. Upon doing so, a foreclosure of the Beneficiary’s liens,
assignments and security interests under this Deed of Trust shall be subject to
and shall not operate to extinguish any of said Leases as to which such
subordination is operative.

 

 

8.

Maintenance of the Trust Property.

 

The Grantor shall cause the Trust Property to be maintained in good condition
and repair and will not commit or suffer to be committed any waste of the Trust
Property. The Improvements and the Equipment shall not be removed, demolished or
materially altered (except for normal replacement of the Equipment), without the
prior written consent of the Beneficiary. The Beneficiary shall not unreasonably
withhold its consent to the Grantor’s request to grant any utility easement
affecting the Trust Property, provided that any such utility easement shall
benefit only the Trust Property and shall exclusively serve the Smith and
Wollensky restaurant constructed on the Premises. The Grantor shall promptly
comply with all existing and future governmental laws, orders, ordinances, rules
and regulations affecting the Trust Property, or any portion thereof or the use
thereof. The Grantor shall promptly repair, replace or rebuild any part

 

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of the Trust Property which may be damaged or destroyed by fire or other
property hazard or casualty (including any fire or other property hazard or
casualty for which insurance was not obtained or obtainable) or which may be
affected by any taking by any public or quasi-public authority through eminent
domain or otherwise, and shall complete and pay for, within a reasonable time,
any structure at any time in the process of construction or repair on the
Premises. If such fire or other property hazard or casualty shall be covered by
the Policies, the Grantor's obligation to repair, replace or rebuild such
portion of the Trust Property shall be contingent upon the Beneficiary paying
the Grantor the proceeds of the Policies, or such portion thereof as shall be
sufficient to complete such repair, replacement or rebuilding, whichever is
less. The Grantor will not, without obtaining the prior consent of the
Beneficiary (which consent shall not be unreasonably withheld or delayed)
initiate, join in or consent to any private restrictive covenant, zoning
ordinance, or other public or private restrictions, limiting or affecting the
uses which may be made of the Trust Property or any part thereof.

 

 

9.

Environmental Provisions.

 

(a)         For the purposes of this Paragraph 9, the following terms shall have
the following meanings: (i) the term “Hazardous Material” shall mean any
material or substance that, whether by its nature or use, is now or hereafter
defined or regulated as a hazardous waste, hazardous substance, pollutant or
contaminant under any Environmental Requirement, or which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous or which is or contains petroleum, gasoline, diesel fuel,
another petroleum hydrocarbon product, asbestos, asbestos-containing materials
or polychlorinated biphenyls, (ii) the “Environmental Requirements” shall
collectively mean all present and future laws, statutes, common law, ordinances,
rules, regulations, orders, codes, licenses, permits, decrees, judgments,
directives or the equivalent of or by any Governmental Authority and relating to
or addressing the protection of the environment or human health, and (iii) the
term “Governmental Authority” shall mean the Federal government, or any state or
other political subdivision thereof, or any agency, court or body of the Federal
government, any state or other political subdivision thereof, exercising
executive, legislative, judicial, regulatory or administrative functions.

 

(b)         The Grantor hereby represents and warrants to the Beneficiary to the
best of its knowledge that (i) except as specifically set forth in the Phase I
Environmental Site Assessment Report, dated November 4, 2005, prepared by
LandAmerica Assessment Corporation, no Hazardous Material is currently located
at, on, in, under or about the Trust Property in violation of any Environmental
Requirements, (ii) no releasing, emitting, discharging, leaching, dumping,
disposing or transporting of any Hazardous Material from the Trust Property onto
any other property or from any other property onto or into the Trust Property
has occurred or is occurring in violation of any Environmental Requirement,
(iii) no notice of violation, non-compliance, liability or potential liability,
lien, complaint, suit, order or other notice with respect to the Trust Property
is presently outstanding under any Environmental Requirement, nor does the
Grantor have knowledge or reason to believe that any such notice will

 

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be received or is being threatened, and (iv) the Trust Property and the
operation thereof are in full compliance with all Environmental Requirements.

 

(c)         The Grantor shall comply, and shall cause all tenants or other
occupants of the Trust Property deriving their interests through the Grantor to
comply, in all respects with all Environmental Requirements, and will not
generate, store, handle, process, dispose of or otherwise use, and will not
permit any tenant or other occupant of the Trust Property to generate, store,
handle, process, dispose of or otherwise use, Hazardous Materials at, in, on, or
about the Trust Property in a manner that could lead or potentially lead to the
imposition on the Grantor, the Beneficiary or the Trust Property of any
liability or lien of any nature whatsoever under any Environmental Requirement.
The Grantor shall notify the Beneficiary promptly in the event of any spill or
other release of any Hazardous Material at, in, on, under or about the Trust
Property which is required to be reported to a Governmental Authority under any
Environmental Requirement, will promptly forward to the Beneficiary copies of
any notices received by the Grantor relating to alleged violations of any
Environmental Requirement or any potential liability under any Environmental
Requirement and will promptly pay when due any fine or assessment against the
Beneficiary, the Grantor or the Trust Property relating to any Environmental
Requirement. If at any time it is determined that the operation or use of the
Trust Property is in violation of any applicable Environmental Requirement or
that there are Hazardous Materials located at, in, on, under or about the Trust
Property which violate any applicable Environmental Requirement or that there
are Hazardous Materials located at, in, on, under or about the Trust Property
which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any form of cleanup or corrective
action, the Grantor shall, within thirty (30) days after receipt of notice
thereof from any Governmental Authority or from the Beneficiary, take, at the
Grantor's sole cost and expense, such actions as may be necessary to fully
comply in all respects with all Environmental Requirements, provided, however,
that if such compliance cannot reasonably be completed within such thirty (30)
day period, the Grantor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously proceed to
fully comply in all respects and in a timely fashion with all Environmental
Requirements.

 

(d)         If the Grantor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion (as determined by the
Beneficiary in its sole and absolute discretion), any such action described in
clause (c) above, the Beneficiary may, in its sole and absolute discretion, make
advances or payments toward the performance or satisfaction of the same, but
shall in no event be under any obligation to do so. All sums so advanced or paid
by the Beneficiary (including, without limitation, counsel and consultant fees
and expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from the Grantor and shall bear
interest at the Default Rate from the date any such sums are so advanced or paid
by the Beneficiary until the date any such sums are repaid by the Grantor to the
Beneficiary. The Grantor will execute and deliver, promptly upon request, such
instruments as the Beneficiary may deem useful or necessary to permit the
Beneficiary to take any such action,

 

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and such additional notes and instruments, as the Beneficiary may require to
secure all sums so advanced or paid by the Beneficiary. If a lien is filed
against the Trust Property by any Governmental Authority resulting from the need
to expend or the actual expending of monies arising from an action or omission,
whether intentional or unintentional, of the Grantor or for which the Grantor is
responsible, resulting in the releasing, spilling, leaking, leaching, pumping,
emitting, pouring, emptying or dumping of any Hazardous Material into the waters
or onto land located within or without the state of Texas where the Trust
Property is located, then the Grantor will, within thirty (30) days from the
date that the Grantor is first given notice that such lien has been placed
against the Trust Property (or within such shorter period of time as may be
specified by the Beneficiary if such Governmental Authority has commenced steps
to cause the Trust Property to be sold pursuant to such lien), either (i) pay
the claim and remove the lien, or (ii) furnish a cash deposit, bond, or such
other security with respect thereto as is satisfactory in all respects to the
Beneficiary and is sufficient to effect a complete discharge of such lien on the
Trust Property.

 

(e)         The Beneficiary may, at its option, at any time or times, but not
more than one time per year, cause an environmental audit of the Trust Property
or portions thereof to be conducted to confirm the Grantor's compliance with the
provisions of this Paragraph 9; provided, however, the Grantor shall not
unreasonably withhold its consent to the Beneficiary’s request to cause an
environmental audit more than one time per year. In addition, the Beneficiary
may, at its option if the Beneficiary reasonably believes that a Hazardous
Material or other environmental condition violates or threatens to violate any
Environmental Requirement, cause an environmental audit of the Trust Property or
portions thereof to be conducted to confirm the Grantor’s compliance with the
provisions of this Paragraph 9. The Grantor shall cooperate in all reasonable
ways with the Beneficiary in connection with any such audit. If any audit
discloses that a violation of or a liability under an Environmental Requirement
exists, or if such audit was required by the Beneficiary under the second
sentence of this subparagraph (e), or was prescribed by law, regulation or
governmental or quasi-governmental authority, the Grantor shall pay all costs
and expenses incurred in connection with such audit; otherwise, the costs and
expenses of such audit shall, notwithstanding anything to the contrary set forth
in this Paragraph 9, be paid by the Beneficiary.

 

(f)          If this Deed of Trust is foreclosed, or if the Trust Property is
sold pursuant to the provisions of this Deed of Trust, or if the Grantor tenders
a deed or assignment in lieu of foreclosure or sale, the Grantor shall deliver
the Trust Property to the purchaser at foreclosure or sale or to the
Beneficiary, its nominee, or wholly-owned subsidiary, as the case may be, in a
condition that complies in all respects with all Environmental Requirements.

 

(g)         The Grantor will defend, indemnify, and hold harmless the
Beneficiary, its employees, agents, officers, and directors, from and against
any and all claims, demands, penalties, causes of action, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or otherwise (including, without
limitation, counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, and litigation expenses) arising out
of, or in any way related to, (i) any

 

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breach by the Grantor of any of the provisions of this Paragraph 9, (ii) the
presence, disposal, spillage, discharge, emission, leakage, release, or
threatened release of any Hazardous Material which is at, in, on, under, about,
from or affecting the Trust Property, including, without limitation, any damage
or injury resulting from any such Hazardous Material to or affecting the Trust
Property or the soil, water, air, vegetation, buildings, personal property,
persons or animals located on the Trust Property or on any other property or
otherwise, (iii) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to any such Hazardous
Material, (iv) any lawsuit brought or threatened, settlement reached, or order
or directive of or by any Governmental Authority relating to such Hazardous
Material, or (v) any violation of any Environmental Requirement or any policy or
requirement of the Beneficiary hereunder. The aforesaid indemnification shall,
notwithstanding any exculpatory or other provision of any other document or
instrument now or hereafter executed and delivered in connection with the
Guaranty, constitute the personal recourse undertakings, obligations and
liabilities of the Grantor and the GRANTOR SHALL INDEMNIFY THE BENEFICIARY
REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR CONDITIONS
GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN WHOLE OR IN PART BY
BENEFICIARY’S NEGLIGENCE.

 

(h)         The obligations and liabilities of the Grantor under this Paragraph
9 shall survive and continue in full force and effect and shall not be
terminated, discharged or released, in whole or in part, irrespective of whether
the Obligations have been paid in full and irrespective of any foreclosure of
this Deed of Trust, sale of the Trust Property pursuant to the provisions of
this Deed of Trust or acceptance by the Beneficiary, its nominee or affiliate of
a deed or assignment in lieu of foreclosure or sale and irrespective of any
other fact or circumstance of any nature whatsoever.

 

 

10.

Estoppel Certificates.

 

The Grantor, within fifteen (15) days after request by the Beneficiary and at
its expense, will furnish the Beneficiary with a statement, duly acknowledged
and certified, setting forth the amount of the Obligations and the offsets or
defenses thereto, if any.

 

 

11.

Transfer or Encumbrance of the Trust Property.

 

(a)         No part of the Trust Property nor any interest of any nature
whatsoever therein, nor any interest of any nature whatsoever in the Grantor
(whether stock, equity, beneficial, profit, loss or otherwise) shall in any
manner, directly or indirectly, be further encumbered, sold, transferred or
conveyed, or permitted to be further encumbered, sold, transferred, assigned or
conveyed without the prior consent of the Beneficiary, which consent in any and
all circumstances may be withheld in the sole and absolute discretion of the
Beneficiary. The provisions of the foregoing sentence of this Paragraph 11 shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not the Beneficiary has consented to, or
waived by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and

 

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irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.

 

(b)         Anything contained in this Paragraph 11 to the contrary
notwithstanding, indirect transfers of interests in the Grantor arising from
transfers of interests in the Borrower shall not be a default hereunder provided
that such transfers do not constitute a Change in Control (as defined in the
Loan Agreement) in the Borrower.

 

 

12.

Notice.

 

Any notice, request, demand, statement, authorization, approval or consent made
hereunder shall be in writing and shall be addressed, delivered and deemed
delivered as provided in the Loan Agreement.

 

 

13.

Sale of Trust Property.

 

If this Deed of Trust is foreclosed, the Trust Property, or any interest
therein, may, at the discretion of the Beneficiary, be sold in one or more
parcels or in several interests or portions and in any order or manner.

 

 

14.

Changes in Laws Regarding Taxation.

 

In the event of the passage after the date of this Deed of Trust of any law of
the state of Texas deducting from the value of real property for the purpose of
taxation any lien or encumbrance thereon or changing in any way the laws for the
taxation of deeds of trust or mortgages or the obligations secured by deeds of
trust or mortgages for state or local purposes or the manner of the collection
of any such taxes, and imposing a tax, either directly or indirectly, on the
Loan Agreement, this Deed of Trust, the Guaranty or the Obligations, the Grantor
shall, if permitted by law, pay any tax imposed as a result of any such law
within the statutory period or within twenty (20) days after demand by the
Beneficiary, whichever is less, provided, however, that if, in the opinion of
the attorneys for the Beneficiary, the Grantor is not permitted by law to pay
such taxes, the Beneficiary shall have the right, at its option, to declare the
Obligations due and payable on a date specified in a prior notice to the Grantor
of not less than thirty (30) days.

 

 

15.

No Credits on Account of the Obligations.

 

The Grantor will not claim or demand or be entitled to any credit or credits on
account of the Obligations for any part of the Taxes assessed against the Trust
Property or any part thereof and no deduction shall otherwise be made or claimed
from the taxable value of the Trust Property, or any part thereof, by reason of
this Deed of Trust or the Obligations. If at any time this Deed of Trust shall
secure less than all of the principal amount of the Obligations, it is expressly
agreed that any repayment of any portion of the Obligations shall not reduce the
amount of the lien of this Deed of Trust until the lien amount shall equal the
principal amount of the Obligations outstanding.

 

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16.

Offsets, Counterclaims and Defenses.

 

Any assignee of this Deed of Trust, the Guaranty and/or the Obligations shall
take the same free and clear of all offsets, counterclaims or defenses of any
nature whatsoever which the Grantor may have against any assignor of this Deed
of Trust, the Guaranty and the Loan Agreement, and no such offset, counterclaim
or defense shall be interposed or asserted by the Grantor in any action or
proceeding brought by any such assignee upon this Deed of Trust, the Note or the
Loan Agreement, and any such right to interpose or assert any such offset,
counterclaim or defense in any such action or proceeding is hereby expressly
waived by the Grantor.

 

 

17.

Other Security for the Obligations.

 

The Grantor shall observe and perform all of the terms, covenants and provisions
contained in the Loan Agreement, the Guaranty and the other Loan Documents to
which the Grantor is a party.

 

 

18.

Documentary Stamps.

 

If at any time the United States of America, any state thereof, or any
governmental subdivision of any such state, shall require revenue or other
stamps to be affixed to the Guaranty or this Deed of Trust, then except to the
extent prohibited under the laws of the state of Texas, the Grantor will pay for
the same, with interest and penalties thereon, if any.

 

 

19.

Right of Entry.

 

Upon prior notice, the Beneficiary and its agents shall have the right to enter
and inspect the Trust Property at all reasonable times.

 

 

20.

Books and Records.

 

In addition to the covenant regarding the keeping of books and records set forth
in the Loan Agreement, the Grantor will keep and maintain or will cause to be
kept and maintained on a fiscal year basis in accordance with generally accepted
accounting practices consistently applied, proper and accurate books, records
and accounts reflecting all of the financial affairs of the Grantor and all
items of income and expense in connection with the operation of the Trust
Property or in connection with any services, equipment or furnishings provided
in connection with the operation of the Trust Property, whether such income or
expense be realized by the Grantor or by any other person whatsoever excepting
lessees unrelated to and unaffiliated with the Grantor who have leased from the
Grantor portions of the Trust Property for the purpose of occupying the same.
The Beneficiary shall have the right from time to time at all times during
normal business hours to examine such books, records and accounts at the office
of the Grantor

 

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or other person maintaining such books, records and accounts and to make copies
or extracts thereof as the Beneficiary shall desire.

 

 

21.

Performance of Other Agreements.

 

The Grantor shall observe and perform each and every term to be observed or
performed by the Grantor pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Trust Property.

 

 

22.

Events of Default.

 

The occurrence of any of the following events (“Events of Default”) shall
(except in the case of clause (a) below where no such exercise of an option
shall be necessary to the extent the effect of an “Event of Default” thereunder
is automatic under the terms of the Loan Agreement itself), at the option of the
Beneficiary, make all amounts then remaining unpaid on the Obligations
immediately due and payable, all without further demand, presentment, notice or
other requirements of any kind, all of which are hereby expressly waived by the
Grantor, and the lien, encumbrance and security interest evidenced or created
hereby shall be subject to sale or foreclosure in any manner provided for herein
or provided for by law:

 

(a)         if an “Event of Default” as defined therein shall occur under the
Loan Agreement;

 

 

(b)

if any Federal tax lien is filed against the Grantor which encumbers the

Trust Property and the same is not discharged of record within thirty (30) days
after the same is filed;

 

(c)         if without the consent of the Beneficiary any Improvement or the
Equipment (except for the normal replacement of the Equipment) is removed,
demolished or materially altered (other than in connection with the Contemplated
Improvements), or if the Trust Property is not kept in good condition and
repair;

 

(d)         if the Grantor shall fail to comply with any requirement or order or
notice of violation of law or ordinance issued by any governmental department
claiming jurisdiction over the Trust Property within three (3) months from the
issuance thereof, or the time period set forth therein, whichever is less;

 

(e)         if the Policies are not kept in full force and effect, or if the
Policies are not delivered to the Beneficiary upon request;

 

(f)         if the Grantor shall fail to pay the Beneficiary on demand for all
Premiums and/or Taxes paid by the Beneficiary pursuant to this Deed of Trust,
together with any late payment charge and interest thereon calculated at the
Default Rate;

 

 

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(g)         except as expressly permitted under paragraph 7 hereof, if without
the consent of the Beneficiary any Leases are made, canceled or modified or if
any portion of the Rents is paid for a period of more than one (1) month in
advance or if any of the Rents are further assigned;

 

(h)         if the Grantor ceases to occupy the entire Premises and the
Improvements for the conducting of the business operated thereon on the date of
this Deed of Trust;

 

(i)          if the Trust Property shall become subject (i) to any tax lien by
virtue of any act or omission of the Grantor, other than a lien for local real
estate taxes and assessments not due and payable, or (ii) to any lis pendens,
notice of pendency, stop order, notice of intention to file mechanic's or
materialman's lien, mechanic's or materialman's lien or other lien of any nature
whatsoever and the same shall not either be discharged of record or in the
alternative insured over to the satisfaction of the Beneficiary by any title
company insuring the lien of this Deed of Trust within 45 days after the same is
filed or recorded, and irrespective of whether the same is superior or
subordinate in lien or other priority to the lien of this Deed of Trust and
irrespective of whether the same constitutes a perfected or inchoate lien or
encumbrance on the Trust Property or is only a matter of record or notice; or

 

(j)          if the Grantor shall continue to be in default under any of the
terms, covenants or conditions of this Deed of Trust (other than as described in
any of Subparagraphs (a) through (i) of this Paragraph 22) for ten (10) days
after notice from the Beneficiary in the case of any default which can be cured
by the payment of a sum of money or for thirty (30) days after notice from the
Beneficiary in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and the Grantor
shall have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it shall require the Grantor in
the exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of ninety (90) days.

 

 

23.

Remedies.

 

(a)         General. Upon the occurrence and during the continuance of any one
or more Events of Default, the Beneficiary may, in addition to any rights or
remedies available to it hereunder or under the other Loan Documents, but
subject to any applicable provisions of the Loan Agreement and to the extent
permitted by applicable law, take such action personally or by its agents or
attorneys, with or without entry, and without notice of intent to accelerate,
notice of acceleration or other notice, demand, presentment or protest (each and
all of which are hereby expressly WAIVED), as it deems necessary or advisable to
protect and enforce the Beneficiary's rights and remedies against the Grantor
and in and to the Trust Property, including, without limitation, the actions
described in this Paragraph 23, each of which may be pursued concurrently or
otherwise, at such time and in such order as the Beneficiary may determine, in
its sole discretion, without impairing or otherwise affecting its other
capitalized rights or remedies.

 

 

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(b)          Acceleration; Notice. Time is of the essence with respect to the
Grantor’s obligations hereunder. Upon the occurrence of any Event of Default, at
the Beneficiary’s option and in addition to any other remedy the Beneficiary may
have under the Loan Agreement, the Guaranty, and the other Loan Documents, the
Beneficiary may, at its option, declare all sums secured by this Deed of Trust
immediately due and payable (except in the case of an Event of Default under
clause 22(a) above where no such exercise of an option shall be necessary to the
extent the effect of an “Event of Default” thereunder is automatic under the
terms of the Loan Agreement itself) and elect to have the Trust Property sold in
the manner provided herein.

(c)         Trustee’s Sale. It shall be the duty of the Trustee and of his
successors and substitutes in the Trust, on the Beneficiary’s request (which
request is hereby presumed) to enforce the Trust by selling the RP Collateral at
a public sale at auction held between 10 A.M. and 4 P.M. of the first Tuesday of
a month. The sale shall take place at the county courthouse in the county in
which the RP Collateral is located, or if it is located in more than one county,
the sale will be made at the courthouse in one of those counties. The sale shall
occur at the area at that courthouse which the commissioners’ court of that
county has designated as the place where such sales are to take place by
designation recorded in the real property records of that county, or if no area
is so designated, then the notice of sale shall designate the area at the
courthouse where the sale covered by that notice is to take place, and the sale
shall occur in that area. Notice of the sale shall include a statement of the
earliest time at which the sale will occur and shall be given at least
twenty-one (21) days before the date of the sale (1) by posting at the
courthouse door of each county in which the RP Collateral is located a written
notice designating the county in which the RP Collateral will be sold, (2) by
filing in the Office of the County Clerk of each county in which the RP
Collateral is located a copy of the notice posted under subsection (1) above and
(3) by the holder of the Obligations to which the power of sale is related
serving written notice of the sale by certified mail on each debtor who,
according to the records of a holder of the Obligations, is obligated to pay
those Obligations. The sale shall begin at the time stated in the notice of sale
or not later than three (3) hours after that time. If and to the extent that
Texas Property Code Section 51.001 requires it, if any of the RP Collateral to
be sold is used as a debtor’s residence, a holder of the Obligations shall serve
that debtor with written notice by certified mail stating that debtor is in
default under this Deed of Trust, and that debtor shall have at least twenty
(20) days to cure the default before the entire Obligations are due and notice
of sale is given. Service of any notice under this Section by certified mail is
complete when the notice is deposited in the United States mail, postage prepaid
and addressed to the debtor entitled to it at that debtor’s last known address
as shown by the records of a holder of the Obligations. The affidavit of a
person knowledgeable of the facts to the effect that service was completed is
prima facie evidence of service. After such written notice shall have been
posted and filed, as aforesaid, and such notice shall have been served upon such
debtor or debtors, as aforesaid, the Trustee (or his successor or substitute
then acting) shall perform his duty to enforce the Trust by selling the RP
Collateral, either as an entirety or in parcels as the Trustee acting may elect,
all rights to a marshalling of assets or sale in inverse order of alienation
being waived, as aforesaid to the highest bidder or bidders for cash, and make
due conveyance to the purchaser or purchasers, with general warranty, and the
title to such purchaser or purchasers, when so made by the Trustee acting, the
Grantor binds itself, its successors and assigns, to warrant and forever

 

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defend against the claims and demands of every person whomsoever lawfully
claiming or to claim the same or any part thereof (such warranty to supersede
any provision contained in this Deed of Trust limiting the liability of the
Grantor). The provisions of this Deed of Trust with respect to posting and
giving notices of sale are intended to comply with the provisions of Section
51.002 of the Texas Property Code as in force and effect on the effective date
of this Deed of Trust, and in the event the requirement for any notice under
such Section 51.002 shall be eliminated or the prescribed manner of giving it
shall be modified by future amendment to, or adoption of any statute
superseding, such Section 51.002, the requirement for such particular notice
shall be deemed stricken from or modified in of this Deed of Trust in conformity
with such amendment or superseding statute, effective as of its effective date.
The manner prescribed in this Deed of Trust for serving or giving any notice,
other than that to be posted or caused to be posted by the Trustee acting, shall
not be deemed exclusive but such notice or notices may be given in any other
manner permitted by applicable law. Said sale shall forever be a bar against the
Grantor, its heirs, legal representatives, successors and assigns, and all other
persons claiming under it. It is expressly agreed that the recitals in each
conveyance to the purchaser shall be full evidence of the truth of the matters
therein stated, and all lawful prerequisites to said sale shall be conclusively
presumed to have been performed. The Trustee may require minimum bids at any
foreclosure sale and may cancel and abandon the sale if no bid is received equal
to or greater than any such minimum bid. If the Trustee or his substitute or
successor should commence the sale, the Beneficiary may at any time before the
sale is completed direct the Trustee to abandon the sale, and may at any time or
times thereafter direct the Trustee to again commence foreclosure; or,
irrespective of whether foreclosure is commenced by the Trustee, the Beneficiary
may at any time after an Event of Default institute suit for collection of the
Obligations or foreclosure of this Deed of Trust. If the Beneficiary should
institute suit for collection of the Obligations or foreclosure of this Deed of
Trust, the Beneficiary may at any time before the entry of final judgment
dismiss it and require the Trustee to sell the RP Collateral in accordance with
the provisions of this Deed of Trust. No single sale or series of sales by the
Trustee or by any substitute or successor and no judicial foreclosure shall
extinguish the lien or exhaust the power of sale under this Deed of Trust except
with respect to the items of property sold, nor shall it extinguish, terminate
or impair the Grantor’s contractual obligations under this Deed of Trust, but
such lien and power shall exist for so long as, and may be exercised in any
manner by law or in this Deed of Trust provided as often as the circumstances
require to give the Beneficiary full relief under this Deed of Trust, and such
contractual obligations shall continue in full force and effect until final
termination of this Deed of Trust. The Beneficiary shall have the right to
become the purchaser at any sale made under this Deed of Trust, being the
highest bidder, and credit given upon all or any part of the Obligations shall
be the exact equivalent of cash paid for the purposes of this Deed of Trust.

 

(d)         No Remedy Exclusive. No remedy conferred upon or reserved to the
Beneficiary under this Deed of Trust shall be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Deed of Trust or any other
Loan Document, or now or hereafter existing at law or in equity or by statute.
No delay or failure to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but

 

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any such right or power may be exercised from time to time and as often as may
be deemed expedient.

 

 

24.

Right to Cure Defaults.

If default in the performance of any of the covenants of the Grantor herein
occurs, the Beneficiary may, at its discretion, remedy the same and for such
purpose shall have the right to enter upon the Trust Property or any portion
thereof without thereby becoming liable to the Grantor or any person in
possession thereof holding under the Grantor. If the Beneficiary shall remedy
such a default or appear in, defend, or bring any action or proceeding to
protect its interest in the Trust Property or to foreclose this Deed of Trust or
collect the Obligations, the costs and expenses thereof (including reasonable
attorneys' fees to the extent permitted by law), with interest as provided in
this Paragraph 24, shall be paid by the Grantor to the Beneficiary upon demand.
All such costs and expenses incurred by the Beneficiary in remedying such
default or in appearing in, defending, or bringing any such action or proceeding
shall be paid by the Grantor to the Beneficiary upon demand, with interest
(calculated for the actual number of days elapsed on the basis of a 365-366 day
year) at a rate equal to two percentage points above the then applicable rate
under the Note (the “Default Rate”); provided, however, that the Default Rate
shall in no event exceed the maximum interest rate which the Grantor may by law
pay, for the period after notice from the Beneficiary that such costs or
expenses were incurred to the date of payment to the Beneficiary. In each such
event, such costs, expenses and amounts, together with interest thereon at the
Default Rate, shall be added to the indebtedness secured by this Deed of Trust
and shall be secured by this Deed of Trust.

 

 

25.

Non-Waiver.

 

The failure of the Beneficiary to insist upon strict performance of any term of
this Deed of Trust shall not be deemed to be a waiver of any term of this Deed
of Trust. The Grantor shall not be relieved of the Grantor's obligation to pay
the Obligations at the time and in the manner provided therefor in the Guaranty,
this Deed of Trust or any other Loan Documents by reason of (a) failure of the
Beneficiary to comply with any request of the Grantor to take any action to
foreclose this Deed of Trust or otherwise enforce any of the provisions hereof
or of any other deed of trust, instrument or document evidencing, securing or
guaranteeing payment of the Obligations or any portion thereof, (b) the release,
regardless of consideration, of the whole or any part of the Trust Property or
any other security for the Obligations, or (c) any agreement or stipulation
between the Beneficiary and any subsequent owner or owners of the Trust Property
or other person extending the time of payment of the Obligations or otherwise
modifying or supplementing the terms of the Guaranty or this Deed of Trust or
any other deed of trust, instrument or document evidencing, securing or
guaranteeing payment of the Obligations or any portion thereof (or of any of the
obligations of the Borrower under the Note, the Loan Agreement or any other Loan
Document), without first having obtained the consent of the Grantor, and in the
latter event, the Grantor shall continue to be obligated to pay the Obligations
at the times and in the manner provided in the Guaranty and this Deed of Trust,
as so extended, modified and supplemented, unless expressly released and
discharged from such obligation by the Beneficiary

 

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in writing. Regardless of consideration, and without the necessity for any
notice to or consent by the holder of any subordinate lien, encumbrance, right,
title or interest in or to the Trust Property, the Beneficiary may release any
person at any time liable for the payment of the Obligations or any portion
thereof or any part of the security held for the Obligations and may extend the
time of payment of the Obligations or otherwise modify the terms of the
Guaranty, this Deed of Trust, the Loan Agreement or any other Loan Document (or
of any of the obligations of the Borrower under the Note, the Loan Agreement or
any other Loan Document) including, without limitation, a modification of the
interest rate, without impairing or affecting this Deed of Trust or the lien or
the priority of this Deed of Trust, as so extended and modified, as security for
the Obligations over any such subordinate lien, encumbrance, right, title or
interest. The Beneficiary may resort for the payment of the Obligations to any
other security held by the Beneficiary in such order and manner as the
Beneficiary, in its discretion, may elect. The Beneficiary may take action to
recover the Obligations, or any portion thereof, or to enforce any covenant
hereof without prejudice to the right of the Beneficiary thereafter to realize
on the collateral covered by this Deed of Trust. The Beneficiary shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every additional right and remedy now or hereafter afforded by law.
The rights of the Beneficiary under this Deed of Trust shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of the Beneficiary shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision.

 

 

26.

Liability.

 

If the Grantor consists of more than one person, the obligations and liabilities
of each such person hereunder shall be joint and several.

 

 

27.

Construction/Severability.

 

(a) The proceeds of the Loan guaranteed under the Guaranty were disbursed from
and the Guaranty was executed in the state of New York, which state the parties
agree has a substantial relationship to the underlying transaction embodied
hereby, and in all respects, including, without limiting the generality of the
foregoing, matters of construction, validity and performance. This Deed of Trust
and the obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the state of New York applicable to contracts made
and performed in New York State and any applicable laws of the United States of
America, without regard to conflict of law rules and principles. Notwithstanding
such provisions, however, (i) matters respecting title to the RP Collateral and
the creation, perfection, priority and foreclosure (including the nature of any
interest in property that results therefrom) of the liens on the RP Collateral
shall be governed by, and construed and enforced in accordance with, the
internal law of the state of Texas without giving effect to the conflicts-of law
rules and principals of such state; (ii) the Grantor agrees that whether or not
deficiency judgments are available under the laws of the state of Texas, after a
foreclosure (judicial or nonjudicial) of the Trust Property, or any portion
thereof, or any other realization thereon by the Beneficiary, the Beneficiary
shall have the right to seek such a deficiency judgment against the Grantor in
other states or foreign

 

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jurisdictions; and (iii) the Grantor agrees that, to the extent the Beneficiary
obtains a deficiency judgment in any other state or foreign jurisdiction, then
such party shall have the right to enforce such judgment in the state of Texas,
as well as in other states or foreign jurisdictions.

 

(b)         Whenever possible, each provision of this Deed of Trust shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Deed of Trust shall be unenforceable or prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such unenforceability, prohibition or invalidity, without invalidating
the remaining provisions of this Deed of Trust.

 

 

28.

Security Agreement.

 

(a)         This Deed of Trust constitutes both a real property mortgage or deed
of trust and a “security agreement,” within the meaning of the Texas UCC, and
the Trust Property includes both real and personal property and all other rights
and interest, whether tangible or intangible in nature, of the Grantor in the
Trust Property. The Grantor by executing and delivering this Deed of Trust has
granted to the Beneficiary, as security for the Obligations, a security interest
in the UCC Collateral. If an Event of Default shall occur hereunder, the
Beneficiary, in addition to any other rights and remedies which it may have,
shall have and may exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under the Uniform
Commercial Code as in effect in the state of New York (the “UCC”), including,
without limiting the generality of the foregoing, the right to take possession
of the UCC Collateral or any part thereof, and to take such other measures as
the Beneficiary may deem necessary for the care, protection and preservation of
the UCC Collateral. Upon request or demand of the Beneficiary, the Grantor shall
at its expense assemble the UCC Collateral and make it available to the
Beneficiary at a convenient place acceptable to the Beneficiary. The Grantor
shall pay to the Beneficiary on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by the Beneficiary in protecting
its interest in the UCC Collateral and in enforcing its rights hereunder with
respect to the UCC Collateral. Any notice of sale, disposition or other intended
action by the Beneficiary with respect to the UCC Collateral sent to the Grantor
in accordance with the provisions of this Deed of Trust at least ten (10) days
prior to the date of any such sale, disposition or other action, shall
constitute reasonable notice to the Grantor, and the method of sale or
disposition or other intended action set forth or specified in such notice shall
conclusively be deemed to be commercially reasonable within the meaning of the
UCC unless objected to in writing by the Grantor within five (5) days after
receipt by the Grantor of such notice. The proceeds of any sale or disposition
of the UCC Collateral, or any part thereof, may be applied by the Beneficiary to
the payment of the Obligations in such order, priority and proportions as the
Beneficiary in its discretion shall deem proper. If any change shall occur in
the Grantor's name, the Grantor shall promptly cause to be filed at its own
expense, new financing statements as required under the UCC to replace those on
file in favor of the Beneficiary. Conflicts between this Paragraph 28 and any
provision of the Security Agreement of even date herewith between the Grantor
and the Beneficiary shall be resolved in favor of the Security Agreement.

 

 

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(b)         Certain of the UCC Collateral is or will become “fixtures” (as that
term is defined in the Texas UCC), and when this Deed of Trust is filed for
record in the real estate records of the county where such fixtures are
situated, it shall also automatically operate as a financing statement upon such
of the UCC Collateral which is or may become fixtures.

 

 

29.

Further Acts, etc.

 

The Grantor will, at the cost of the Grantor, and without expense to the
Beneficiary, do, execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of
assignments, transfers and assurances as the Beneficiary shall, from time to
time, demand for the better assuring, conveying, assigning, transferring and
confirming unto the Beneficiary the property and rights conveyed, assigned and
transferred hereunder or intended now or hereafter so to be, or which the
Grantor may be or may hereafter become bound to convey, assign or transfer to
the Beneficiary, or for carrying out the intention or facilitating the
performance of the terms of this Deed of Trust or for filing, registering or
recording this Deed of Trust and, on demand, will execute, deliver and/or file,
and hereby authorizes the Beneficiary to execute and/or file in the name of the
Grantor to the extent the Beneficiary may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments, to evidence
more effectively the interests in the Trust Property granted to the Beneficiary
hereunder.

 

 

30.

Headings, etc.

 

The headings and captions of various paragraphs of this Deed of Trust are for
convenience of reference only and are not to be construed as defined or
limiting, in any way, the scope or intent of the provisions hereof.

 

 

31.

Filing of Instrument, etc.

 

The Grantor forthwith upon the execution and delivery of this Deed of Trust and
thereafter, from time to time, will cause this Deed of Trust, and any security
instrument creating a lien or evidencing the lien hereof upon the Trust Property
and each instrument of further assurance to be filed, registered or recorded in
such manner and in such places as may be required by any present or future law
in order to publish notice of and fully to protect, preserve and perfect the
lien hereof upon, and the interest of the Beneficiary in, the Trust Property.
The Grantor will pay all filing, registration and recording fees, and all
expenses incident to the preparation, execution and acknowledgment of this Deed
of Trust, any deed of trust supplemental hereto, any security instrument with
respect to the Trust Property, and any instrument of further assurance, and all
Federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Deed of Trust, any deed of trust supplemental hereto, any security instrument
with respect to the Trust Property or any instrument of further assurance. The
Grantor shall hold harmless and indemnify the Beneficiary, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Deed of Trust.

 

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32.

Usury Laws.

 

The Grantor and the Beneficiary stipulate and agree that it is their common and
overriding intent to contract in strict compliance with applicable usury laws.
In furtherance thereof, none of the terms of this Deed of Trust shall ever be
construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the maximum rate
permitted by applicable laws. The Grantor shall never be liable for interest in
excess of the maximum rate permitted by applicable laws. If, for any reason
whatever, such interest paid or received during the full term of the applicable
indebtedness produces a rate which exceeds the maximum rate permitted by
applicable laws, the Beneficiary shall credit against the principal of such
indebtedness (or, if such indebtedness shall have been paid in full, shall
refund to the payor of such interest) such portion of said interest as shall be
necessary to cause the interest paid to produce a rate equal to the maximum rate
permitted by applicable laws. All sums paid or agreed to be paid to the
Beneficiary for the use, forbearance or detention of money shall, to the extent
required to avoid or minimize usury and to the extent permitted by applicable
laws, be amortized, prorated, allocated and spread throughout the full term of
the applicable indebtedness so that the interest rate thereon does not exceed
the maximum rate permitted by applicable laws. The provisions of this Paragraph
32 shall control all agreements, whether now or hereafter existing and whether
written or oral, between the Grantor and the Beneficiary.

 

 

33.

Sole Discretion of the Beneficiary.

 

Except as may otherwise be expressly provided to the contrary, wherever pursuant
to this Deed of Trust, the Beneficiary exercises any right given to it to
consent or not consent, or to approve or disapprove, or any arrangement or term
is to be satisfactory to the Beneficiary, the decision of the Beneficiary to
consent or not consent, or to approve or disapprove, or to decide that
arrangements or terms are satisfactory or not satisfactory, shall be in the sole
and absolute discretion of the Beneficiary and shall be final and conclusive.

 

 

34

Reasonableness.

 

If at any time the Grantor believes that the Beneficiary has not acted
reasonably in granting or withholding any approval or consent under this Deed of
Trust as to which approval or consent either (a) the Beneficiary has expressly
agreed to act reasonably, or (b) absent such agreement, applicable law would
nonetheless require the Beneficiary to act reasonably, then the Grantor's sole
remedy shall be to seek injunctive relief or specific performance, and no action
for monetary damages or punitive damages shall in any event or under any
circumstance be maintained by the Grantor against the Beneficiary.

 

 

35.

Recovery of Sums Required to be Paid.

 

 

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The Beneficiary shall have the right from time to time to take action to recover
any sum or sums which constitute a part of the Obligations as the same become
due, without regard to whether or not the balance of the Obligations shall be
due, and without prejudice to the right of the Beneficiary thereafter to bring
an action of foreclosure, or any other action, for a default or defaults by the
Grantor existing at the time such earlier action was commenced.

 

 

36.

Actions and Proceedings.

 

The Beneficiary shall have the right to appear in and defend any action or
proceeding brought with respect to the Trust Property and to bring any action or
proceeding, in the name and on behalf of the Grantor, which the Beneficiary, in
its discretion, determines should be brought to protect the Beneficiary’s
interest in the Trust Property.

 

 

37.

Inapplicable Provisions.

 

If any term, covenant or condition of this Deed of Trust shall be held to be
invalid, illegal or unenforceable in any respect, this Deed of Trust shall be
construed without such provision.

 

 

38.

Duplicate Originals.

 

This Deed of Trust may be executed in any number of duplicate originals and each
such duplicate original shall be deemed to constitute but one and the same
Instrument.

 

 

39.

Certain Definitions.

 

Unless the context clearly indicates a contrary intent or unless otherwise
specifically provided in this Deed of Trust, words used in this Deed of Trust
shall be used interchangeably in singular or plural form; the word “Grantor”
shall mean each Grantor and any subsequent owner or owners of the Trust Property
or any part thereof or interest therein; the word “Loan Documents” shall have
the meaning set forth in the Loan Agreement; the word “person” shall include an
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity; the words “Trust Property”
shall include any portion of the Trust Property or interest therein; and the
word “Obligations” shall mean all sums secured by this Deed of Trust; the word
“default” shall mean both an Event of Default hereunder, and the occurrence of
any default by the Grantor or other person in the observance or performance of
any of the terms, covenants or provisions of this Deed of Trust on the part of
the Grantor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Deed of Trust; and words such as
“herein” or “hereunder” shall be deemed to refer to this Deed of Trust as a
whole and not merely to the sentence or paragraph in which they appear.
References to “the lien of this Deed of Trust” or words to that effect are also
references to this Deed of Trust. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns

 

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shall include the plural and vice versa. Any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modification set forth herein or
therein). The words, “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Deed of Trust in its entirety and
not to any particular provision of this Deed of Trust. Words such as
“including”, ‘include” and “includes” shall be construed to be followed by the
words “without limitation”.

 

 

40.

Waiver of Notice.

 

The Grantor shall not be entitled to any notices of any nature whatsoever from
the Beneficiary except with respect to matters for which this Deed of Trust
specifically and expressly provides for the giving of notice by the Beneficiary
to the Grantor, and the Grantor hereby expressly waives the right to receive any
notice from the Beneficiary with respect to any matter for which this Deed of
Trust does not specifically and expressly provide for the giving of notice by
the Beneficiary to the Grantor.

 

 

41.

No Oral Change.

 

This Deed of Trust may only be modified, amended or changed by an agreement in
writing signed by the Grantor, the Beneficiary and, to the extent required by
applicable law, the Trustee, and may only be released, discharged or satisfied
of record by an agreement in writing signed by the Beneficiary and, to the
extent required by applicable law, the Trustee. No waiver of any term, covenant
or provision of this Deed of Trust shall be effective unless given in writing by
the Beneficiary and if so given by the Beneficiary shall only be effective in
the specific instance in which given. No course of dealing between the parties,
no usage of trade and no extrinsic or parol evidence may be used to supplement
or modify the terms of this Deed of Trust. The Grantor acknowledges that the
Guaranty, this Deed of Trust, the Loan Agreement and the other Loan Documents
set forth the entire agreement and understanding of the Grantor and the
Beneficiary with respect to the Obligations secured hereby and that no oral or
other agreements, understanding, representation or warranties exist with respect
to the Obligations secured hereby other than those set forth in the Guaranty,
this Deed of Trust, the Loan Agreement and the other Loan Documents.

 

 

42.

Absolute and Unconditional Obligation.

 

The Grantor acknowledges that the Grantor's obligation to pay the Obligations in
accordance with the Guaranty, this Deed of Trust and the other Loan Documents to
which the Grantor is a party and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to the payment of the Obligations in
accordance with the Guaranty, this Deed of Trust or the other Loan Documents to
which the Grantor is a party, and the Grantor absolutely, unconditionally and

 

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irrevocably waives any and all right to assert any defense, setoff, counterclaim
or crossclaim of any nature whatsoever with respect to the payment of the
Obligations in accordance with the provisions of the Guaranty, this Deed of
Trust and the other Loan Documents or otherwise with respect to the Obligations
secured hereby in any action or proceeding brought to collect the Obligations,
or any portion thereof, or to enforce, the trust or foreclose and realize upon
the Beneficiary’s interest in the Trust Property created by this Deed of Trust.

 

 

43.

WAIVER OF TRIAL BY JURY.

 

THE GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND THE BENEFICIARY
BY ITS ACCEPTANCE OF THE GUARANTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY
AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING IN
CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS DEED OF TRUST, THE
GUARANTY OR THE OTHER LOAN DOCUMENTS.

 

 

44.

Waiver of Statutory Rights.

 

The Grantor shall not and will not apply for or avail itself of any
appraisement, valuation, stay, extension or exemption laws, or any so-called
“Moratorium Laws,” now existing or hereafter enacted, in order to prevent or
hinder the enforcement or foreclosure of this Deed of Trust, but hereby waives
the benefit of such laws to the full extent that the Grantor may do so under
applicable law. The Grantor for itself and all who may claim through or under it
waives any and all right to have the property and estates comprising the Trust
Property marshalled upon any foreclosure of the lien of this Deed of Trust and
agrees that the Trust Property may be sold as an entirety or in separate parcels
and in such order as may be determined by the Beneficiary, or by any court in
which any action or suit hereunder may be pending. The Grantor hereby waives for
itself and all who may claim through or under it, and to the full extent the
Grantor may do so under applicable law, any and all rights of redemption from
sale under any order or decree of foreclosure of this Deed of Trust or granted
under any statute now existing or hereafter enacted.

 

 

45.

Brokerage.

 

The Grantor covenants and agrees that no brokerage commission or other fee,
commission or compensation is to be paid by the Beneficiary on account of the
Loan or any other obligations secured by this Deed of Trust and the Grantor
agrees to indemnify the Beneficiary against any claims for any of the same.

 

 

46.

Indemnity.

 

Anything in this Deed of Trust, the Guaranty, the Loan Agreement or the other
Loan Documents to the contrary notwithstanding, the Grantor shall indemnify and
hold the Beneficiary harmless and defend the Beneficiary at the Grantor's sole
cost and expense against

 

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any loss or liability, cost or expense (including, without limitation, title
insurance premiums and charges and reasonable attorneys' fees and disbursements
of the Beneficiary's counsel, whether in-house staff, retained firms or
otherwise), and all claims, actions, procedures and suits arising out of or in
connection with (a) any ongoing matters arising out of the deed of trust
transaction contemplated hereby, this Deed of Trust, and/or the Trust Property,
including, but not limited to, all costs of reappraisal of the Trust Property or
any part thereof, whether required by law, regulation, the internal policies of
the Beneficiary or any governmental or quasi-governmental authority, (b) any
amendment to, or restructuring of this Deed of Trust and (c) any and all lawful
action that may be taken by the Beneficiary in connection with the enforcement
of the provisions of this Deed of Trust, whether or not suit is filed in
connection with the same, or in connection with the Borrower, the Grantor, any
other guarantor of the Loan and/or any partner, member, joint venturer or
shareholder thereof becoming a party to a voluntary or involuntary federal or
state bankruptcy, insolvency or similar proceeding. GRANTOR SHALL INDEMNIFY THE
BENEFICIARY REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR
CONDITIONS GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN WHOLE OR IN PART
BY BENEFICIARY’S NEGLIGENCE; provided, however, that the foregoing indemnity
shall not apply to matters caused by the gross negligence willful misconduct or
bad faith of the Beneficiary. All sums expended by the Beneficiary shall be
payable within (5) days after written demand and, until reimbursed by the
Grantor pursuant hereto, shall be deemed additional principal of the Obligations
and secured hereby and shall bear interest at the Default Rate.

 

 

47.

Relationship.

 

The relationship of the Beneficiary to the Grantor hereunder is strictly and
solely that of lender and obligor and grantor and beneficiary, and nothing
contained in the Guaranty, the Loan Agreement, this Deed of Trust or any other
Loan Document is intended to create, or shall in any event or under any
circumstance be construed as creating, a partnership, joint venture,
tenancy-in-common, joint tenancy or other relationship of any nature whatsoever
between the Beneficiary and the Grantor other than as set forth in this
Paragraph 47.

 

 

48.

Loan Agreement.

 

The Grantor shall fully and faithfully observe and perform all of the terms,
covenants, conditions, provisions and agreements contained in the Loan
Agreement.

 

 

49.

The Trustee.

 

(a)         Successor Trustee. The Trustee may resign by the giving of notice of
such resignation in writing addressed to the Beneficiary, or may be removed at
any time, with or without cause, by an instrument in writing duly executed by
the Beneficiary. The Beneficiary shall concurrently give notice of any such
resignation or removal to the Grantor. In case of the death, resignation or
removal of the Trustee, a successor Trustee may be appointed by the Beneficiary
without other formality than an appointment and designation in writing unless

 

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otherwise required by applicable law. Such appointment and designation will be
full evidence of the right and authority to make the same and of all facts
therein recited, and upon the making of any such appointment and designation,
this Deed of Trust will vest in the named successor the Trustee all the right,
title and interest of the Trustee in the Trust Property, and said successor will
thereupon succeed to all the rights, powers, privileges, immunities and duties
hereby conferred upon the Trustee. All references herein to the Trustee will be
deemed to refer to the Trustee or trustees from time to time acting hereunder.

 

(b)       Trustee's Powers. At any time, or from time to time without liability
therefor and without notice, upon written request of the Beneficiary and
presentation of this Deed of Trust for endorsement, and without affecting the
personal liability of any person for payment of the indebtedness secured hereby
or the effect of this Deed of Trust upon the remainder of the Trust Property,
the Trustee may (i) reconvey any part of the Trust Property, (ii) consent in
writing to the making of any map or plat thereof, (iii) join in granting any
easement thereon, or (iv) join in any extension agreement or any agreement
subordinating the lien or charge hereof.

 

(c)         Request for Notice. The Grantor hereby requests that a copy of any
notice of default and a copy of any notice of sale hereunder be mailed to the
Grantor at the address set forth in the heading of this Deed of Trust.

 

(d)         Full Reconveyance by the Trustee. To the extent that the Trustee’s
signature is necessary on any full reconveyance of this Deed of Trust then, upon
written request of the Beneficiary stating that all sums secured hereby have
been paid, and upon surrender of this Deed of Trust to the Trustee for
cancellation and retention (or disposal in accordance with applicable law), the
Trustee shall reconvey to the Grantor, or to the person or persons legally
entitled thereto, without warranty, any portion of the Trust Property then held
hereunder. The recitals in such reconveyance of any matters or facts shall be
conclusive proof of the truthfulness thereof. The grantee in any reconveyance
may be described as the person or persons legally entitled thereto.

 

(e)         Indemnity. The Grantor shall indemnify the Trustee against all
claims, actions, liabilities, judgments, costs, attorneys' fees or other charges
of whatsoever kind or nature made against or incurred by the Trustee, and
arising out of the performance by the Trustee of the duties of the Trustee
hereunder REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF
TRUSTEE (except those arising from the Trustee’s grossly negligent acts). The
foregoing indemnity shall not terminate upon release, foreclosure or other
termination of this Deed of Trust.

 

 

(f)

The Beneficiary Action in Lieu of The Trustee. Notwithstanding anything

contained in this Paragraph 49 or this Deed of Trust to the contrary, the
Beneficiary may take any actions (other than the exercise of the power of sale)
which the Trustee is authorized to take in all cases where trustees are not
required by custom, practice or law to take such actions on behalf of a
beneficiary under a deed of trust.

 

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50.        Cash Collateral. In any situation hereunder where the Beneficiary is
or may be entitled under this Deed of Trust to apply the Rents, the proceeds of
the Policies, the proceeds from a condemnation or any other monies against any
portion of the Obligations, the Beneficiary shall have the right at its option
to hold the monies in question as cash collateral. Until expended or applied
against such remaining Obligations, any cash collateral retained by the
Beneficiary may be commingled with the general funds of the Beneficiary and
shall constitute additional security for the Obligations and shall not bear
interest. The election of whether to make such application or to hold such
monies as cash collateral shall be in the sole and absolute discretion of the
Beneficiary.

 

51.        Homestead Disclaimer. The Grantor warrants and represents that at the
time of execution and delivery of this Deed of Trust, no part of the Trust
Property forms any part of any property owned, used or claimed by the Grantor or
the Grantor’s spouse or children either as a residence or a business homestead,
or as otherwise exempt from forced sale under the laws of the State of Texas or
the United States.

 

52.        Waiver. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE
GRANTOR HEREBY WIAVES ALL RIGHTS, REMEDIES, CLAIMS AND DEFENSES BASED UPON OR
RELATED TO SECTIONS 51.003, 51.004 AND 51.005 OF THE TEXAS PROPERTY CODE, TO THE
EXTENT THE SAME PERTAIN OR MAY PERTAIN TO ANY ENFORCEMENT OF THIS DEED OF TRUST.

 

53.        Notice. TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION
INSURANCE NOTICE: (A) GRANTOR IS REQUIRED TO: (i) KEEP THE TRUST PROPERTY
INSURED AGAINST DAMAGE IN THE AMOUNT BENEFICIARY SPECIFIES; (ii) PURCHASE THE
INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF
TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (III) NAME BENEFICIARY AS THE
PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS; (B) GRANTOR MUST, IF
REQUIRED BY BENEFICIARY, DELIVER TO BENEFICIARY A COPY OF THE POLICY AND PROOF
OF THE PAYMENT OF PREMIUMS; AND (C) IF GRANTOR FAILS TO MEET ANY REQUIREMENT
LISTED IN PARAGRAPH (A) OR (B), BENEFICIARY MAY OBTAIN COLLATERAL PROTECTION
INSURANCE ON BEHALF OF GRANTOR AT GRANTOR’S EXPENSE.

 

54.        Counterparts. This Deed of Trust may be executed in one or more
counterparts each of which shall be an original but all of which when taken
together shall constitute one and the same instrument.

 

 

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NOTICE PURSUANT TO TEX. BUS. & COMM. CODE § 26.02

 

THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS TOGETHER CONSTITUTE A WRITTEN
LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

 

MORGAN STANLEY DEAN WITTER

DALLAS S&W, L.P.,

 

COMMERCIAL FINANCIAL SERVICES, INC.

a Texas limited partnership

 

 

By: S&W of Dallas, LLC, its general

 

partner

 

By:

/s/ Brian Tworney

 

Name: Brian Tworney

 

Title: Vice President

By:/s/ Eugene Zuriff

 

Name: Eugene Zuriff

 

 

Title: President

 

 

 

IN WITNESS WHEREOF, the Grantor has duly executed this Deed of Trust the day and
year first above written.

 

 

DALLAS S&W, L.P.,

a Texas limited partnership

 

 

By: S&W of Dallas, LLC, its general partner

 

 

 

By:/s/ Eugene Zuriff

 

Name: Eugene Zuriff

 

 

Title: President

 

 

 

 

 

 

32

 

 

 

 

 

 

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STATE OF NEW YORK

)

) ss.:

COUNTY OF NEW YORK

)

 

 

On the 20th day of January in the year 2006, before me, the undersigned, a
Notary Public in and for said State, personally appeared Eugene Zuriff,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

 

 

/s/ Maria A. Chang

 

Notary Public, State of NY
Maria A. Chang
No.  01CH6093157

 

 

STATE OF NEW YORK

)

) ss.:

COUNTY OF NEW YORK

)

 

 

On the ____ day of January in the year 2006, before me, the undersigned, a
Notary Public in and for said State, personally appeared ______________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

 

 

_______________________________

 

Notary Public

 

 

 

 

33

 

 

 

 

 

 

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EXHIBIT A

 

Legal Description

 

34

 

 

 

 

 

 

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NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR
STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S
LICENSE NUMBER.

 

______________________________________________________________________________________

______________________________________________________________________________________

 

 

DALLAS S&W, L.P.

 

AND

 

MORGAN STANLEY DEAN WITTER

COMMERCIAL FINANCIAL SERVICES, INC.

 

_____________________________________

 

DEED OF TRUST

( TEXAS )

 

_____________________________________

 

 

 

Dated:

As of January 27, 2006

 

 

Location:

Lot 8, Block C/8763,

Greenway Addition, Dallas, Texas

 

 

 

RECORD AND RETURN TO:

 

 

Herrick, Feinstein LLP

 

 

Two Park Avenue

 

 

New York, New York 10016

 

 

Attention: Stephen D. Brodie, Esq.

 

 

______________________________________________________________________________________

______________________________________________________________________________________

 

 

 

 

 

 

 

 

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