exv4w31



 






Execution Copy




Exhibit 4.31




Maysa Vahidi, Esq.



King & Spalding LLP



1185 Avenue of the Americas



New York, New York 10036



LEASEHOLD DEED OF TRUST


(SAN MATEO, CALIFORNIA LOCATION)




     LEASEHOLD
DEED OF TRUST (“Deed of Trust”), dated as of Nov. 9th, 2004, by
GOLFSMITH USA, L.L.C., a Delaware limited liability company (being hereinafter called
“Grantor”) to CHICAGO TITLE COMPANY, as Trustee (the “Trustee”) for the benefit of
U.S. BANK TRUST NATIONAL ASSOCIATION, as Collateral Agent (the “Collateral Agent”) under
the Indenture, dated as of October 15, 2002, by and among Golfsmith International, Inc.
(“Borrower”), the Grantor, U.S. Bank Trust National Association, as Trustee and the
Guarantors, as defined therein (as amended, restated or otherwise modified from time to time, the
“Indenture”), as collateral agent for the Holders, as defined in the Indenture;



     That for and in consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged, and in order to secure
the indebtedness and other obligations of Grantor, hereinafter set forth, Grantor does hereby
GRANT, BARGAIN, SELL and CONVEY unto Trustee and its heirs, successors and assigns, in trust, with
power of sale, for the benefit of the Collateral Agent, and its successors and assigns, the
following:



     (A) Grantor’s leasehold interest and estate created by and arising pursuant to that certain
lease, dated September 7, 2004 and recorded in the San mateo, CA
County Recorders Office,
as Doc-#2004-227411 on Nov. 18, 2004, between J.D. Molex
One, LLC, a California limited liability company, as landlord, and Grantor, as tenant (the
“Mortgaged Lease”) and which demises to Grantor certain premises more particularly
described therein (the “Premises”) and located on that certain tract or parcel of land more
particularly described in Exhibit “A” attached hereto and incorporated herein by reference
(the “Land”); TOGETHER WITH all of Grantor’s right, title and interest in and to the
Mortgaged Lease, and all modifications, extensions and renewals and assignments of the Mortgaged
Lease and in and to all rights to renew or extend the term of, or to purchase, the Mortgaged Lease,
and all credits, deposits, options, privileges and rights of Grantor, as tenant, under the
Mortgaged Lease;



     (B) TOGETHER WITH all of Grantor’s right, title and interest under the Mortgaged Lease in and
to (1) the buildings, structures and improvements of every nature whatsoever now or hereafter
situated on the Land, and (2) the fixtures, machinery, appliances, equipment,



 









 




furniture and personal property of every nature whatsoever now or hereafter owned by Grantor
and located in or on, attached to, and used or intended to be used in connection with or with the
operation of the Land, buildings, structures or other improvements, or in connection with any
construction being conducted or which may be conducted thereon, and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to all of the foregoing, and
all of the right, title and interest of Grantor under the Mortgaged Lease in and to any such
personal property and fixtures, which, to the fullest extent permitted by law, shall be
conclusively deemed fixtures and a part of the real property encumbered hereby (hereinafter called
the “Improvements”);




     (C) TOGETHER WITH all of Grantor’s right, title and interest under the Mortgaged Lease in and
to all easements, rights-of-way, gores of land, streets, ways, alleys, passages, sewer rights,
water courses, water rights and powers, other real property and interests therein, and all
appurtenances whatsoever, in any way belonging, relating or appertaining to any of the property
described in paragraphs (A) and (B) hereof, or which hereafter shall in any way belong, relate or
be appurtenant thereto, whether now owned or hereafter acquired by Grantor by adverse possession or
in any other manner;



     (D) TOGETHER WITH all of Grantor’s right, title and interest under the Mortgaged Lease in and
to (i) all of the estate, right, title and interest of Grantor of, in and to all judgments,
insurance proceeds, awards of damages and settlements hereafter made or resulting from condemnation
proceedings or the taking of the property described in paragraphs (A), (B) and (C) hereof or any
part thereof under the power of eminent domain, or for any damage (whether caused by such taking or
otherwise) to the property described in paragraphs (A), (B) and (C) hereof or any part thereof, or
to any rights appurtenant thereto, and all proceeds of any sale or other disposition of the
property described in paragraphs (A), (B) and (C) hereof or any part thereof; and Collateral Agent
is, subject to the provisions of this Deed of Trust, hereby authorized to collect and receive said
awards and proceeds and to give proper receipts and acquittances therefor, and (if it so elects) to
apply the same toward the payment of indebtedness and other sums secured hereby, notwithstanding
the fact that the amount owing thereon may not then be due and payable; and (ii) all contract
rights, general intangibles, actions and rights in action, including without limitation all rights
to insurance proceeds and unearned premiums arising from or relating to the property described in
paragraphs (A), (B) and (C) above; and (iii) all proceeds, products, replacements, additions,
substitutions, renewals and accessions of and to the property described in paragraphs (A), (B) and
(C);



     (E) TOGETHER WITH all rents, income and other benefits to which Grantor may now or hereafter
be entitled from the property described in paragraphs (A), (B) and (C) hereof to be applied against
the indebtedness and other sums secured hereby; provided, however, that permission is hereby given
to Grantor, so long as no Event of Default (as defined in Section 2.01) has occurred
hereunder and is continuing, to collect and use such rents, income and other benefits as they
become due and payable, but not more than one (1) month in advance thereof. Upon the occurrence of
any such Event of Default, the permission hereby given to Grantor to collect such rents, income and
other benefits from the property described in paragraphs (A), (B) and (C) hereof shall terminate
and such permission shall be reinstated upon a cure of such Event of Default;



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     The foregoing provisions hereof shall constitute an absolute and present assignment of the
rents, income and other benefits from the property described in (A), (B) and (C) above, subject,
however, to the conditional permission given to Grantor to collect and use such rents, income and
other benefits as hereinabove provided; and the existence or exercise of such right of Grantor
shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part,
by Grantor, and any such subsequent assignment by Grantor shall be subject to the rights of the
Trustee and Holders hereunder;



     (F) TOGETHER WITH all right, title and interest of Grantor in and to any and all subleases now
or hereafter on or affecting the property described in paragraphs (A), (B) and (C) hereof
(including all billboard and/or advertising leases), and all books and records which contain
payments made under the subleases and all security therefore; and



     (G) TOGETHER WITH (i) Grantor’s rights further to encumber the property described in
paragraphs (A), (B) and (C) and (F) above for debt; and (ii) all of the Grantor’s rights to enter
into any sublease or sublease agreement.



     All of the property described in paragraphs (A), (B), (C), (D), (E), (F) and (G) above, and
each item of property therein described, is hereinafter referred to collectively as the
“Property.”



     TO HAVE AND TO HOLD the Property and all parts thereof unto the Trustee, its heirs, successors
and assigns, for the benefit of the Collateral Agent, its successors and assigns, forever upon the
trust, terms and conditions contained herein.



     This Deed of Trust is executed and delivered by Grantor to secure the following described
obligations, liabilities and indebtedness of the Grantor and Guarantors to Collateral Agent and
Holders (hereinafter collectively referred as the “Obligations”):



     (a) All loans, advances, indebtedness, obligations and liabilities now or from time to time
hereafter owing by Grantor, including the “Obligations” as defined in the Indenture, to Collateral
Agent, Holders, and any other Person under the Indenture, or under any agreement, instrument or
document executed or delivered to Collateral Agent or Holders in respect of the Indenture (all such
agreements, instruments or documents, collectively, the “Indenture Documents”) or the transactions
contemplated thereby, pursuant to which Holders have duly authorized the creation of an issue of
8.375% Senior Notes due 2009 (the “Initial Notes”), and Series B 8.375% Exchange Notes due
2009 (the “Exchange Notes,” and together with the Initial Notes and any Additional Notes,
as defined in the Indenture, collectively, the “Notes”) as described in the Indenture;



     (b) All indebtedness, obligations and liabilities of Guarantors arising under the Guarantees
(as defined in the Indenture);



     (c) All indebtedness, obligations and liabilities of Grantor arising under this Deed of Trust;




     (d) All advances made by Collateral Agent and the other Holders to protect or preserve the
Property or the lien hereof on the Property, or for taxes, assessments, insurance



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premiums, or other advances authorized under the terms of this Deed of Trust (whether or not
Grantor remains the owner of the Property at the time of such advance);




     (e) Any and all renewals, extensions, modifications, substitutions, replacements or
consolidations of the indebtedness, liabilities and obligations described in paragraphs (a), (b),
(c) or (d) above; and



     (f) All other obligations, liabilities and indebtedness of every kind and character now or
hereafter owing by the Grantor or any Guarantor to Collateral Agent and/or Holders, however
created, incurred or evidenced, direct or indirect, absolute or contingent, and whether owing under
the Indenture, Indenture Documents, this Deed of Trust or the Notes, including without limitation,
all “Obligations” (as defined in the Indenture) of the Grantor and Guarantors to Collateral Agent
and Holders.



     PROVIDED, HOWEVER, that if the Grantor and Guarantors shall promptly pay or cause to be paid
the Obligations secured hereby in accordance with the terms thereof when the same shall become due
and payable and shall keep, perform and observe all the terms, conditions and requirements of the
Notes, the Indenture, the Indenture Documents and of this Deed of Trust, then, upon complete
payment and satisfaction thereof, this Deed of Trust shall be null and void and of no further force
and effect and shall be released by Collateral Agent and Trustee upon the written request and at
the expense of Grantor.



ARTICLE ONE




COVENANTS OF GRANTOR




     Grantor covenants and agrees with the Trustee, Collateral Agent and Holders, or any successor
in title as holder of the Obligations secured hereby, as follows:



     1.01 Performance of Notes. Grantor shall cause to be performed, observed and complied
with all provisions of the Notes and will promptly pay or cause to be paid to Collateral Agent the
principal with interest thereon of all Obligations required to be paid by Grantor under the Notes
and the Indenture Documents when payment shall become due.



     1.02 General Representations, Covenants and Warranties. Grantor represents, warrants
and covenants that: (a) Grantor is seized of a good and valid leasehold estate in and to the
Premises, and has good right, full power and lawful authority to encumber the same as provided
herein and Collateral Agent may at all times peaceably and quietly enter upon, hold, occupy and
enjoy the Premises in accordance with the terms hereof; (b) the Property is free and clear of all
liens, security interests, charges and encumbrances whatsoever except to the extent permitted by
clauses (1), (2), (3), (4), (5), (8), (15) and (16) of the definition of Permitted Liens, as
defined in the Indenture; (c) Grantor will maintain and preserve the lien of this Deed of Trust
until the Obligations secured hereby have been paid in full; (d) the Premises has frontage on, and
direct access of ingress, egress, and regress to, public rights of way; (e) electric, gas, sewer,
water facilities and any other necessary utilities are, and at all times hereafter shall be,
available in sufficient capacity to service the Premises satisfactorily for its current use, and
any easements necessary to the furnishing of such utility service to Grantor have been obtained;
and (f) the



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representations, warranties and covenants made by Grantor in the Notes and the Indenture
Documents are incorporated herein by reference and made a part hereof.




     1.03 Compliance with Laws. Grantor covenants and warrants that the Premises presently
complies in all material respects with and will continue to comply in all material respects with
all applicable restrictive covenants, applicable zoning and subdivision ordinances and building
codes, all applicable health and environmental laws and regulations and other applicable laws,
rules and regulations which affect the Premises and the operations of Grantor on the Premises. If
Grantor receives notice from any federal, state or other governmental body that it is not in
compliance with any such covenant, ordinance, code, law or regulation, Grantor will provide
Collateral Agent with a copy of such notice and comply or cause the landlord under the Mortgaged
Lease to comply with the provisions of such notice promptly if failure to comply could reasonably
be expected to result in a material adverse effect on the Premises or the use, operation or value
thereof, or on the Grantor.



     1.04 Taxes and Other Charges.



     (a) Taxes and Assessments. To the extent required under Section 4.04 of the
Indenture, Grantor shall pay promptly when due all taxes, assessments, rates, dues, charges, fees,
levies, fines, impositions, liabilities, obligations and encumbrances of every kind whatsoever now
or hereafter imposed, levied or assessed upon or against the Premises or any part thereof, or upon
or against this Deed of Trust or the Obligations secured hereby, or upon or against the security
interest of Collateral Agent in the Premises, as well as all income taxes, assessments and other
governmental charges levied and imposed by the United States of America or any state, county,
municipality or other taxing authority upon or against Grantor or in respect of the Premises or any
part thereof.



     (b) Mechanic’s and Other Liens. Except to the extent permitted by clause (2) of the
definition of Permitted Liens, as defined in the Indenture, Grantor shall not permit or suffer any
mechanic’s, laborer’s, materialman’s, statutory or other lien (other than any lien for taxes not
yet due) to be created upon or filed against the Property.



     (c) Taxes Affecting Holders’ Interest. Grantor will promptly pay all income,
franchise and other taxes owing by Grantor and any stamp, documentary, recordation and transfer
taxes or other taxes (unless such payment by Grantor is prohibited by law) which may be required to
be paid with respect to this Deed of Trust or any instrument evidencing or securing any of the
Obligations. In the event of the enactment after this date of any law of any governmental entity
applicable to Collateral Agent, the Obligations, the Property or this Deed of Trust imposing upon
Collateral Agent the payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Grantor, or changing in any way the laws relating to the
taxation of deeds of trust or mortgages or security agreements or debts secured by deeds of trust
or mortgages or security agreements or the interest of the mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes, so as to affect this Deed of
Trust or the Obligations or Collateral Agent, then, and in any such event, Grantor, upon demand by
Collateral Agent, shall pay such taxes, assessments, charges or liens, or reimburse Collateral
Agent therefor.



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     (d) Tax Escrow. In order to secure the performance and discharge of Grantor’s
obligations under this Section 1.04, but not in lieu of such obligations, Grantor, upon
Collateral Agent’s request after the occurrence of and during the continuance of an Event of
Default, will pay over to Collateral Agent an amount equal to one-twelfth (1/12th) of
the next maturing annual ad valorem taxes, assessments and charges (which taxes, assessments and
charges, for purposes of this paragraph, shall include without limitation water and sewer rents,
and shall hereinafter be collectively called “Taxes”) of the nature described in
Section 1.04(a) for each month that has elapsed since the last date to which the Taxes were
paid; and Grantor will, in addition, upon Collateral Agent’s request, pay over to Collateral Agent
together with each installment of the Obligations sufficient funds (as estimated from time to time
by Collateral Agent in its sole discretion) to permit Collateral Agent to pay when due the Taxes.
Upon Collateral Agent’s request, Grantor shall also deliver to Collateral Agent such additional
monies as are required to make up any deficiencies in the amounts necessary to enable Collateral
Agent to pay the Taxes. In such case, Collateral Agent must timely pay the Taxes or return the
additional monies to Grantor to allow Grantor to pay such Taxes. Such deposits shall not be, nor
be deemed to be, trust funds but may be commingled with the general funds of Collateral Agent, and
no interest shall be payable in respect thereof. Upon the occurrence of an Event of Default,
Collateral Agent may apply to the reduction of the Obligations secured hereby, in such manner as
Collateral Agent shall determine, any amount under this Section 1.04(d) remaining to
Grantor’s credit.



     (e) No Credit Against the Obligations Secured Hereby. Grantor shall not claim, demand
or be entitled to receive any credit, against the principal or interest payable on the Obligations
for so much of the Taxes assessed against the Property or any part thereof or that are applicable
to the Obligations secured hereby or to Collateral Agent’s interest in the Property. No deduction
shall be claimed from the taxable value of the Property or any part thereof by reason of the
Obligations, this Deed of Trust or any other instrument securing the Obligations.



     1.05 Insurance.



     (a) Grantor shall, at its sole expense, keep the Premises insured in such amounts and against
such risks and damages as is required under Section 4.05 of the Indenture. All policies of
insurance shall contain an endorsement, in form and substance reasonably acceptable to Collateral
Agent, showing loss payable to Collateral Agent as its interests appear. Such endorsement, or an
independent instrument delivered to Collateral Agent, shall provide that the insurance companies
will give Collateral Agent at least fifteen (15) days prior written notice before any such policy
or policies of insurance shall be altered in any way that may affect Collateral Agent’s rights
thereunder or cancelled and that no act of default of Grantor or any other person shall affect the
right of Collateral Agent to recover under such policy or policies or insurance in case of loss or
damage (10 days in the case of cancellation for non-payment of premium).



     (b) In order to secure the performance and discharge of Grantor’s obligations under this
Section 1.05(b), but not in lieu of such obligations, Grantor, upon Collateral Agent’s
request after the occurrence of and during the continuance of an Event of Default, will pay over to
Collateral Agent an amount equal to one-twelfth (1/12th) of the next maturing annual
insurance premiums for each month that has elapsed since the last date to which such premiums were
paid;



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and Grantor will, in addition, upon Collateral Agent’s request, pay over to Collateral Agent
together with each installment on the Obligations sufficient funds (as estimated from time to time
by Collateral Agent in its sole discretion) to permit Collateral Agent to pay said premiums when
due. Such deposits shall not be, nor be deemed to be, trust funds but may be commingled with the
general funds of Collateral Agent, and no interest shall be payable in respect thereof. Upon
Collateral Agent’s request, Grantor shall also deliver to Collateral Agent such additional monies
as are necessary to make up any deficiencies in the amounts necessary to enable Collateral Agent to
pay such premiums when due. In such case, Collateral Agent must timely pay the premiums or return
the additional monies to Grantor to allow Grantor to pay the premiums.




     (c) Pursuant to its rights granted hereunder in all proceeds from any insurance policies,
Collateral Agent is hereby authorized and empowered at its option to adjust or compromise any loss
under any insurance policies on the Premises and to collect and receive the proceeds from any such
policy or policies. Each insurance company is hereby authorized and directed to make payment for
all such losses directly to Collateral Agent alone and not to Grantor and Collateral Agent jointly.
After deducting from such insurance proceeds any expenses incurred by Collateral Agent and the
other Holders in the collection or handling of such funds, the net proceeds received by Collateral
Agent shall apply such amounts as requested by Grantor for the restoration. In no event, however,
shall any advance be made which will result in the funds remaining with Collateral Agent being less
than the cost of completion of restoration of the Premises as estimated by an architect or engineer
reasonably satisfactory to Collateral Agent. If, upon completion of restoration of the Premises
there remain funds with Collateral Agent, Collateral Agent shall pay the remaining funds. Any
funds applied against the Obligations secured hereby shall be applied to particular Obligations,
whether then matured or to mature in the future, in accordance with the terms of the Indenture.
Although Collateral Agent intends to use its best efforts to collect such payments in a timely
fashion, Collateral Agent shall not be responsible for any failure to collect any insurance
proceeds due under the terms of any policy regardless of the cause of such failure. The provisions
of this Section 1.05 are subject to any provisions of the Mortgaged Lease pertaining to the
maintenance, collection, use and application of insurance proceeds.



     (d) Non-Impairment of Collateral Agent’s Rights. Nothing contained in either of
Sections 1.04(d) and 1.05(b) shall be deemed to affect any right or remedy of
Collateral Agent under any provision of this Deed of Trust or of any statute or rule of law to pay
any amount required to be paid by Sections 1.04(d) and 1.05(b) and to add the
amount so paid to the Obligations hereby secured. Although Collateral Agent intends to use its
best efforts to make such payments in a timely fashion, the arrangements provided in Sections
1.04(d) and 1.05(b) are solely for the added protection of Collateral Agent and the
other Holders and entail no responsibility on Collateral Agent’s or Holders’ part beyond the
allowing of due credit, without interest, for sums actually received by it. Upon assignment of
this Deed of Trust, any funds on hand shall be turned over to the assignee and any responsibility
of Collateral Agent with respect thereto shall terminate.



     1.06 Condemnation. Collateral Agent shall be entitled to all compensation, awards,
damages, claims, rights of action and proceeds of, or on account of, any damage or taking through
condemnation and is hereby authorized, at its option, to commence, appear in and prosecute in its
own or the Grantor’s name any action or proceeding relating to any



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condemnation and to settle or compromise any claim in connection therewith. All such
compensation, awards, damages, claims, rights of action and proceeds, and any other payments or
relief, and the right thereto, are included in the Property and Collateral Agent and the other
Holders, after deducting therefrom all of their expenses including reasonable attorneys’ fees
incurred in the collection or handling of such funds, shall apply such amounts as requested by
Grantor for the restoration of the Premises. In no event, however, shall any advance be made which
will result in the funds remaining with Collateral Agent being less than the cost of completion of
restoration of the Premises as estimated by an architect or engineer reasonably satisfactory to
Collateral Agent. If, upon completion of restoration of the Premises there remain funds with
Collateral Agent, Collateral Agent shall pay the remaining funds to Grantor. Grantor agrees to
execute such further assignments of any compensation, awards, damages, claims, rights of action and
proceeds as Collateral Agent may reasonably require. Notwithstanding any such condemnation, Grantor
shall continue to pay interest, computed at the rate provided in the Notes, on the entire unpaid
principal amount thereof. The provisions of this Section 1.06 are subject to any
provisions of the Mortgaged Lease pertaining to the collection, use and application of any
compensation, awards, damages, claims, rights of action and insurance proceeds.



     1.07 Care of Property.



     (a) Grantor shall preserve and maintain the Property in good condition and repair, ordinary
wear and tear excepted. Grantor shall not permit, commit or suffer any material waste, impairment
or deterioration of the Property or of any part thereof, and will not take any action which will
materially increase the risk of fire or other hazard to the Property or to any part thereof.



     (b) Grantor will not, without the prior written consent of Collateral Agent, (i) remove from
the Premises any fixtures or personal property covered by this Deed of Trust which materially
impairs the value of the Property or (ii) make any structural alteration to the Premises or any
other alteration thereto which materially impairs the value thereof.



     (c) Collateral Agent may enter upon and inspect the Premises at any reasonable time during the
life of this Deed of Trust and upon reasonable prior notice.



     1.08 Further Assurances. At any time and from time to time, upon Collateral Agent’s
reasonable request, Grantor shall make, execute and deliver, or cause to be made, executed and
delivered, to Collateral Agent and where appropriate shall cause to be recorded or filed, and from
time to time thereafter to be re-recorded and refiled at such time and in such offices and places
as shall be deemed desirable by Collateral Agent, any and all such further deeds of trust,
instruments or further assurance, certificates and other documents as Collateral Agent may consider
necessary or desirable in order to effectuate, complete, or perfect, or to continue and preserve
the obligations of Grantor under the Notes, the Indenture Documents and this Deed of Trust, and the
lien of this Deed of Trust as a lien upon all of the Property, whether now owned or hereafter
acquired by Grantor. Upon any failure by Grantor to do so, Collateral Agent may make, execute,
record, file, re-record or refile any and all such deeds of trust, instruments, certificates and
documents for and in the name of Grantor, and Grantor hereby irrevocably appoints Collateral Agent
as the agent and attorney-in-fact of Grantor to do so.



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     1.09 Security Agreements and Financing Statements.



     (a) Grantor (as debtor) hereby grants to Collateral Agent and Holders (as creditor and secured
party) a security interest in all fixtures, machinery, appliances, equipment, furniture and
personal property of every nature whatsoever constituting part of the Property.



     (b) Grantor shall execute any and all such documents, including without limitation, financing
statements pursuant to the applicable enactment of the Uniform Commercial Code, as Collateral Agent
may reasonably request, to preserve and maintain the priority of the lien created hereby on
property which may be deemed personal property or fixtures, and shall pay to Collateral Agent on
demand any expenses incurred by Collateral Agent and Holders in connection with the preparation,
execution and filing of any such documents. This Deed of Trust shall also constitute a “fixture
filing” for purposes of the applicable enactment of the Uniform Commercial Code. Grantor hereby
authorizes and empowers Collateral Agent to execute and file, on Grantor’s behalf, all financing
statements and refilings and continuations thereof as Collateral Agent reasonably deems necessary
or advisable to create, preserve and protect said lien. This Deed of Trust shall be deemed a
security agreement as defined in said Uniform Commercial Code and the remedies for any violation of
the covenants, terms and conditions of the agreements herein contained shall be (i) as prescribed
herein, (ii) by general law, or (iii) as to such part of the security which is also reflected in
said financing statement by the specific statutory consequences now or hereafter enacted and
specified in the Uniform Commercial Code, all at Collateral Agent’s sole election.



     (c) Grantor and Collateral Agent agree that the filing of a financing statement in the records
normally having to do with personal property shall never be construed as in any way derogating from
or impairing the express declaration and intention of the parties hereto, hereinabove stated, that
everything used in connection with the production of income from the Property and/or adapted for
use therein and/or which is described or reflected in this Deed of Trust is, and at all times and
for all purposes and in all proceedings both legal or equitable, shall be regarded as part of the
real estate encumbered by this Deed of Trust irrespective of whether: (i) any such item is
physically attached to the Improvements; (ii) serial numbers are used for the better identification
of certain equipment items capable of being thus identified in a recital contained herein or in any
list filed with Collateral Agent; or (iii) any such item is referred to or reflected in any such
financing statement so filed at any time. Similarly, the mention in any such financing statement of
(1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in
eminent domain proceedings for a taking or for loss of value, or (3) Grantor’s interest as lessor
in any present or future lease or rights to income growing out of the use and/or occupancy of the
Property, whether pursuant to lease or otherwise, shall never be construed as in any way altering
any of the rights of Collateral Agent as determined by this instrument or impugning the priority of
the lien granted hereby or by any other recorded document, but such mention in the financing
statement is declared to be for the protection of Holders in the event any court or judge shall at
any time hold with respect to (1), (2) and (3) that notice of the priority of the interest of
Collateral Agent and the other Holders to be effective against a particular class of persons,
including but not limited to the federal government and any subdivisions or entity of the federal
government, must be filed in the Uniform Commercial Code records.



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     1.10 Assignment of Rents. The assignment contained in paragraph (E) of this Deed of
Trust shall be fully operative without any further action on the part of either party and
specifically Collateral Agent shall be entitled, at its option, upon the occurrence and during the
continuance of an Event of Default hereunder, to all rents, income and other benefits from the
property described in paragraphs (A), (B), (C) and (D) hereof whether or not Collateral Agent or
Holders take possession of such property. Grantor hereby further grants to Collateral Agent the
right after the occurrence and during the continuance of an Event of Default: (i) to enter upon and
take possession of the Premises for the purpose of collecting the said rents, income and other
benefits; (ii) to dispossess by the usual summary ejectment proceedings any tenant; (iii) to let
the Premises or any part thereof; and (iv) to apply said rents, income and other benefits, after
payment of all necessary charges and expenses, on account of the Obligations secured hereby. Such
assignment and grant shall continue in effect until the Obligations secured hereby are paid, the
execution of this Deed of Trust constituting and evidencing the irrevocable consent of Grantor to
the entry upon and taking possession of the Premises by Collateral Agent pursuant to such grant,
whether or not foreclosure has been instituted. Neither the exercise of any rights under this
paragraph by Collateral Agent nor the application of any such rents, income or other benefits to
the Obligations secured hereby, shall cure or waive any default or notice of default hereunder or
invalidate any act done pursuant hereto or to any such notice, but shall be cumulative of all other
rights and remedies. Neither this assignment nor the receipt of rents, income and other benefits by
Collateral Agent shall effect a pro tanto payment of the indebtedness evidenced by
or arising under the obligations, and such rents shall be applied as provided in Section
3.10 hereof.



     1.11 After-Acquired Property. To the extent permitted by and subject to applicable
law, the lien of this Deed of Trust will automatically attach, without further act, to all
after-acquired property located in or on, or attached to the Property or any part thereof.



     1.12 Subleases Affecting Encumbered Property. Grantor represents that Grantor has
delivered to Collateral Agent true, correct and complete copies of all subleases of any portion of
the Premises, that all such subleases are presently in effect and that no default by Grantor exists
in such subleases. As any such sublease shall expire or terminate or as any new sublease shall be
made, Grantor shall so notify Collateral Agent in order that at all times Collateral Agent shall
have a current list of all subleases affecting the property described in paragraphs (A), (B) and
(C) hereof. The assignment contained in paragraph (F) of this Deed of Trust shall not be deemed to
impose upon Collateral Agent any of the obligations or duties of Grantor provided in any such
sublease (including, without limitation, any liability under the covenant of quiet enjoyment
contained in any sublease in the event that any tenant shall have been joined as a party defendant
in any action to foreclose this Deed of Trust and shall have been barred and foreclosed thereby of
all right, title and interest and equity of redemption in the Property or any part thereof), and
Grantor shall comply with and observe its obligations in all material respects as landlord under
all subleases affecting the Property or any part thereof. Grantor, if required by Collateral Agent,
shall furnish promptly to Collateral Agent original or certified copies of all such subleases now
existing or hereafter created. Grantor shall not, without the express prior written consent of
Collateral Agent, enter into any sublease affecting the Property, or amend, modify, extend,
terminate or cancel, accept the surrender of, subordinate, accelerate the payment of rent as to, or
change the terms of any renewal option of any such sublease now existing or hereafter created,



10









 




or permit or suffer an assignment or sublease. Grantor shall not accept payment of rent more
than one (1) month in advance without the prior written consent of Collateral Agent.




     With respect to the assignment contained in paragraph (F) of this Deed of Trust, Grantor
shall, from time to time upon request of Collateral Agent, specifically assign to Collateral Agent
as additional security hereunder, by an instrument in writing in such form as may be approved by
Collateral Agent in its reasonable discretion, all right, title and interest of Grantor in and to
any and all subleases now or hereafter on or affecting the Property, together with all security
therefor and all monies payable thereunder, subject to the conditional permission hereinabove given
to Grantor to collect the rentals under any such sublease. Grantor shall also execute and deliver
to Collateral Agent any notification, financing statement or other document reasonably required by
Collateral Agent to perfect the foregoing assignment as to any such sublease. The provisions of
this Section 1.12 shall be subject to the provisions of paragraph (E).



     1.13 Collateral Agent’s Performance of Defaults. If Grantor defaults in the payment
of any tax, assessment, encumbrance or other imposition, in its obligation to furnish insurance
hereunder, or in the performance or observance of any other covenant, condition or term in this
Deed of Trust, the Indenture Documents or the Notes, Collateral Agent may, to preserve its interest
in the Property, perform or observe the same, and all payments made (whether such payments are
regular or accelerated payments) and costs and expenses incurred or paid by Collateral Agent in
connection therewith shall become due and payable immediately. The amounts so incurred or paid by
Collateral Agent together with interest thereon at the rate per annum specified in Section 2.13 of
the Indenture from the date incurred until paid by Grantor, shall be added to the Obligations and
secured by the lien of this Deed of Trust. Collateral Agent is hereby empowered to enter and
authorize others to enter upon the Premises or any part thereof for the purposes of performing or
observing any such defaulted covenant, condition or term, without thereby becoming liable to
Grantor or any person in possession holding under Grantor.



     1.14 Use of Property. Grantor covenants that the Property will be used for the
purposes set forth in the Mortgaged Lease.



     1.15 Required Notices. Grantor shall notify Collateral Agent promptly of the
occurrence of any of the following: (i) receipt of any material notice from any governmental
authority relating to the Property; (ii) receipt of any material notice from any tenant leasing all
or any portion of the Premises; (iii) any material change in the occupancy of the Premises; (iv)
receipt of any material notice from the holder of any lien or security interest in the Property; or
(v) commencement of any judicial or administrative proceedings by or against or otherwise affecting
the Property.



     1.16 Covenants Regarding Mortgaged Lease.



     (a) Grantor hereby warrants and represents as follows: (i) the Mortgaged Lease is in full
force and effect, and, except as disclosed in writing to Collateral Agent, unmodified by any
writing or otherwise; (ii) all rent and other charges and impositions reserved therein have been
paid to the extent they are payable to the date hereof; (iii) Grantor enjoys the quiet and peaceful
possession of the Premises demised thereby; (iv) Grantor is not in default under any of the terms
thereof and there are no circumstances which, with the passage of time or the giving of notice or



11









 




both, would constitute an event of default thereunder; and (v) the landlord under the
Mortgaged Lease is not in default under any of the terms or provisions thereof on the part of the
landlord to be observed or performed.




     (b) Further, with respect to the Mortgaged Lease, Grantor covenants and agrees as follows:
(i) to promptly and faithfully observe, perform and comply with all of the material terms,
covenants and provisions thereof on its part to be observed, performed and complied with, at all
times set forth therein; (ii) not to do, permit, suffer or refrain from doing anything, as a result
of which, there would be a default under or a breach of any of the terms thereof; (iii) not to
cancel, surrender, modify, amend or in any way alter or permit the alteration of any of the
material terms of the Mortgaged Lease; (iv) to give the Collateral Agent immediate notice of any
default by anyone thereunder and to promptly deliver to the Collateral Agent a copy of each notice
of default received or delivered by Grantor in connection therewith; (v) to furnish to the
Collateral Agent copies of such information and evidence as the Collateral Agent may reasonably
require concerning Grantor’s due observance, performance and compliance with the terms, covenants
and provisions thereof; and (vi) that any default of Grantor under the Mortgaged Lease shall
constitute an additional Event of Default under this Deed of Trust.



     (c) In the event of any default by Grantor in the performance of any of its obligations under
the Mortgaged Lease, including, without limitation, any default in the payment of rent and other
charges and impositions made payable by the lessee thereunder, then, in each and every case,
Collateral Agent may, at its option and without notice, cause the default or defaults to be
remedied and otherwise exercise any and all of the rights of Grantor therein in the name of and on
behalf of Grantor. Grantor shall, on demand, reimburse Collateral Agent, as applicable, for all
advances made and expenses incurred by Collateral Agent in curing any such default (including,
without limitation, reasonable attorneys’ fees).



     (d) It is hereby agreed that the fee title and the leasehold estate in the property demised by
the Mortgaged Lease shall not merge but shall always be kept separate and distinct, notwithstanding
the union of said estates in Grantor or a third party whether by purchase or otherwise. If Grantor
acquires the fee title or any other estate, title or interest in the property demised by the
Mortgaged Lease, or any part thereof, the lien of the Deed of Trust shall attach to, cover and be a
lien upon such acquired estate, title or interest and the same shall thereupon be and become a part
of the Mortgaged Property with the same force and effect as if specifically encumbered therein.
Grantor agrees to execute all instruments and documents which Collateral Agent may reasonably
require to ratify, confirm and further evidence Collateral Agent’s lien on the acquired estate,
title or interest. Furthermore, Grantor hereby appoints Collateral Agent its true and lawful
attorney-in-fact to execute and deliver all such instruments and documents in the name and on
behalf of Grantor.



     (e) If the Mortgaged Lease is cancelled or terminated, and if Collateral Agent or a nominee of
Collateral Agent shall enter into any new lease of the property demised thereby, Grantor shall have
no right, title or interest in or to the new lease or the leasehold estate created by such new
lease.



     (f) Notwithstanding anything to the contrary contained herein, this Deed of Trust shall not
constitute an assignment of the Mortgaged Lease within the meaning of any provisions



12









 




thereof prohibiting its assignment, and Collateral Agent, as applicable, shall have no
liability or obligation thereunder by reason of its acceptance of this Deed of Trust. Collateral
Agent, as applicable, shall be liable for the obligations of the lessee arising under the Mortgaged
Lease for only that period of time which Collateral Agent is in possession of the Mortgaged
Property or has acquired, by foreclosure or otherwise, and is holding all of Grantor’s right, title
and interest therein.




     (g) Notwithstanding anything contained herein to the contrary, and in addition to any rights,
privileges and remedies granted to Collateral Agent elsewhere in this Deed of Trust, Collateral
Agent shall have, and Grantor hereby grants to Collateral Agent, any and all rights, privileges and
remedies of leasehold lenders provided for in the Mortgaged Lease without the necessity of
particularly specifying any or all of such rights, privileges and remedies that are or could be
granted to leasehold Collateral Agents pursuant to the Mortgaged Lease.



     1.17 Future Indebtedness of Grantor. The lien of this Deed of Trust secures, as of
the date hereof, without further act, all Obligations of Grantor to Collateral Agent and the other
Holders, including any and all future loans and advances made by Collateral Agent and the other
Holders pursuant to the Indenture to or for the benefit of Grantor from time to time hereafter.



ARTICLE TWO




DEFAULTS




     2.01 Event of Default. The term “Event of Default”, wherever used in this
Deed of Trust, shall mean the occurrence of an “Event of Default” as such term is defined in
Section 6.01 of the Indenture.



ARTICLE THREE




REMEDIES




     3.01 Acceleration of Maturity. If an Event of Default shall have occurred and be
continuing, then all of the Obligations secured hereby shall, at Collateral Agent’s option,
immediately become due and payable without notice or demand, time being of the essence hereof; and
no omission on the part of Collateral Agent to exercise such option when entitled to do so shall be
construed as a waiver of such right, provided that upon an Event of Default under clauses (7) or
(8) of the definition of “Event of Default” in Section 6.01 of the Indenture, all Obligations shall
immediately become due and payable.



     3.02 Collateral Agent’s Power of Enforcement. If an Event of Default shall have
occurred and be continuing, Collateral Agent may, either with or without entry or taking possession
as hereinabove provided or otherwise, and without regard to whether or not the Obligations shall be
due and without prejudice to the right of Collateral Agent or Holders thereafter to bring an action
of foreclosure or any other action for any default existing at the time such earlier action was
commenced, proceed by any appropriate action or proceeding: (a) to enforce payment of the
Obligations or the performance of any term hereof or any other right; (b) to foreclose this Deed of
Trust and to sell, as an entirety or in separate lots or parcels, the



13









 




Property under the power of sale hereinafter provided or the judgment or decree of a court or
courts of competent jurisdiction; and (c) to pursue any other remedy available to it. Collateral
Agent shall take action either by such proceedings or by the exercise of its power with respect to
entry or taking possession or both, as Collateral Agent may determine.




     3.03 Collateral Agent’s Right to Enter and Take Possession, Operate and Apply Income.



     (a) If an Event of Default shall have occurred and be continuing, (i) Grantor upon demand of
Collateral Agent shall forthwith surrender to Collateral Agent the actual possession and if and to
the extent permitted by law, Collateral Agent itself, or by such officers or agents as it may
appoint, may enter upon and take possession of the Property and may exclude Grantor and its agents
and employees wholly therefrom and may have joint access with Grantor to the books, papers and
accounts of Grantor; and (ii) Grantor will pay monthly in advance to Collateral Agent on Collateral
Agent’s entry into possession, or to any receiver appointed to collect the rents, income and other
benefits of the Property, the fair and reasonable rental value for the use and occupation of such
part of the Property as may be in possession of Grantor, and upon default in any such payment will
vacate and surrender possession of such part of the Property to Collateral Agent or to such
receiver and, in default thereof, Grantor may be evicted by summary proceedings or otherwise.



     (b) If Grantor shall for any reason fail to surrender or deliver the Property or any part
thereof after Collateral Agent’s demand, Collateral Agent may obtain a judgment or decree, on
behalf of all of the Holders, conferring on Collateral Agent the right to immediate possession or
requiring Grantor to deliver immediate possession of all or part of the Property to Collateral
Agent, to the entry of which judgment or decree Grantor hereby specifically consents. Grantor
shall pay to Collateral Agent, upon demand, all reasonable costs and expenses of obtaining such
judgment or decree and compensation to Collateral Agent and the other Holders, its attorneys and
agents, and all such costs, expenses and compensation shall, until paid, be secured by the lien of
this Deed of Trust.



     (c) Upon every such entering upon or taking of possession of the Property under this
Section 3.03, Collateral Agent may hold, store, use, operate, manage and control the
Property and conduct the business thereof, and, from time to time:




     (i) Make all necessary and proper maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon and purchase or otherwise
acquire additional fixtures, personalty and other property;




     (ii) Insure or keep the Property insured;




     (iii) Manage and operate the Property and exercise all the rights and powers of Grantor
in its name or otherwise with respect to the same;




     (iv) Enter into agreements with others to exercise the powers herein granted Collateral
Agent, all as Collateral Agent from time to time may determine; and Collateral Agent may
collect and receive all the rents, income and other benefits thereof, including those past
due as well as those accruing thereafter; and shall apply the monies so received



14









 






by Collateral Agent in such priority as Collateral Agent may determine to (1) the
payment of the Obligations; (2) the deposits for taxes and assessments and insurance
premiums due; (3) the cost of insurance, taxes, assessments and proper charges upon the
Property or any part thereof; (4) the expenses of operating, maintaining, repairing and
improving the Property, including with limitation renting commissions and rental collection
commissions paid to Collateral Agent or agent on behalf of Collateral Agent and the other
Holders or of the receiver; and (5) the reasonable compensation, expenses and disbursements
of the agents, attorneys and other representatives of Collateral Agent. All costs, expenses
and liabilities of every character incurred by Collateral Agent in managing, operating and
maintaining the Property shall constitute additional Obligations secured hereby. While in
possession of the Property, Collateral Agent or the receiver shall be liable to account only
for the rents, issues and profits actually received.


Collateral Agent shall surrender possession of the Property to Grantor only when all Obligations
secured hereby and all amounts under any of the terms of this Deed of Trust shall have been paid
and all defaults cured or waived. The same right of taking possession, however, shall exist if any
subsequent Event of Default shall occur and be continuing.




     3.04 Foreclosure.



          (a) If an Event of Default shall have occurred and be continuing, Collateral Agent shall be
entitled to proceed to foreclose this Deed of Trust and to take any and all necessary legal steps
to pay the Indebtedness secured hereby and accrued interest thereon and insurance premiums, liens,
assessments, taxes and charges, including utility charges, if any, with accrued interest therein,
and all expenses of all proceedings in connection therewith, including reasonable attorneys’ fees.
In the event of any such foreclosure sale, Grantor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at such sale or be summarily
dispossessed according to provisions of law applicable to tenants holding over.



          (b) Intentionally omitted.



          (c) Collateral Agent may adjourn from time to time any sale by it to be made under or by
virtue of this Deed of Trust by announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and, except as otherwise provided by any applicable provision of law,
Collateral Agent, without further notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.



          (d) Upon the completion of any sale or sales made by Collateral Agent under or by virtue of
this Section 3.04, Collateral Agent, Trustee, or an officer of any court empowered to do
so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold. Each of Trustee and Collateral
Agent is hereby irrevocably appointed the true and lawful attorney of Grantor, in its name and
stead, to make all necessary conveyances, assignments, transfers and deliveries of the Property and
rights so sold and for that purpose Collateral Agent or Trustee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or more persons



15









 




with like power, Grantor hereby ratifying and confirming all that its said attorney or such
substitute or substitutes shall lawfully do by virtue hereof. Any such sale or sales made under or
by virtue of this Section 3.04 shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Grantor in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in equity against
Grantor and against any and all persons claiming or who may claim the same, or any part thereof
from, through or under Grantor.




     (e) Upon any sale made under or by virtue of this Section 3.04, Collateral Agent may
bid for and acquire the Property or any part thereof and in lieu of paying cash therefor may make
settlement for all or a portion of the purchase price by crediting upon the Obligations the net
sales price after deducting therefrom the expenses of the sale and the costs of the action and any
other sums which Collateral Agent is authorized to deduct under this Deed of Trust.



     3.05 Leases. Trustee, at Collateral Agent’s option, is authorized to foreclose this
Deed of Trust subject to the rights of any tenants of the Property, and the failure to make any
such tenants parties defendant to any such foreclosure proceedings and to foreclose their rights
will not be, nor be asserted by Grantor to be, a defense to any proceedings instituted by
Collateral Agent to collect the sums secured hereby or to collect any deficiency remaining unpaid
after the foreclosure sale of the Property.



     3.06 Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws. Grantor
agrees to the full extent permitted by law that in case of a default on its part hereunder, neither
Grantor nor anyone claiming through or under Grantor shall or will set up, claim or seek to take
advantage of any appraisement, valuation, extension or redemption laws now or hereafter in force,
in order to prevent or hinder the enforcement or foreclosure of this Deed of Trust or the absolute
sale of the Property or the final and absolute putting into possession thereof, immediately after
such sale, of the purchasers thereat, and Grantor, for itself and all who may at any time claim
through or under Grantor, hereby waives, to the full extent that Grantor may lawfully so do, the
benefit of all such laws, and any and all right to have the assets comprising the Property
marshaled upon any foreclosure of the lien hereof and agrees that Trustee or any court having
jurisdiction to foreclose such lien may sell the Property in part or as an entirety.



     3.07 Receiver. If an Event of Default shall have occurred and be continuing,
Collateral Agent, to the extent permitted by law and without regard to the value or adequacy of the
security for the Obligations secured hereby, shall be entitled as a matter of right if it so elects
to the appointment of a receiver to enter upon and take possession of the Property and to collect
all rents, income and other benefits thereof and apply the same as the court may direct, and any
such receiver shall be entitled to hold, store, use, operate, manage and control the Property and
conduct the business thereof as would Collateral Agent pursuant to Section 3.03(c) above.
The expenses, including receiver’s fees, reasonable attorney’s fees, costs and agent’s
compensation, incurred pursuant to the powers herein contained shall be secured by this Deed of
Trust. The right to enter and take possession of and to manage and operate the Property and to
collect all rents, income and other benefits thereof, whether by a receiver or otherwise, shall be
cumulative to any other right or remedy hereunder or afforded by law and may be exercised
concurrently therewith or independently thereof. Collateral Agent shall be liable to account only
for such



16









 




rents, income and other benefits actually received by Collateral Agent, whether received
pursuant to this paragraph or Section 3.03. Notwithstanding the appointment of any
receiver or other custodian, Collateral Agent shall be entitled as pledgee to the possession and
control of any cash, deposit, or instruments at the time held by, or payable or deliverable under
the terms of this Deed of Trust to, Collateral Agent.




     3.08 Suits to Protect the Property. Collateral Agent shall have the power and
authority to institute and maintain any suits and proceedings as Collateral Agent may deem
advisable (a) to prevent any impairment of the Property by any acts which may be unlawful or any
violation of this Deed of Trust, (b) to preserve or protect its interest in the Property, and (c)
to restrain the enforcement of or compliance with any legislation or other government enactment,
rule or order that may be unconstitutional or otherwise invalid, if the enforcement or compliance
with such enactment, rule or order might impair the security hereunder or be prejudicial to
Collateral Agent’s or Holders’ interest.



     3.09 Proofs of Claim. In the case of any receivership, insolvency, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceedings affecting
Grantor or any guarantor, co-maker or endorser of any Grantor’s obligations, its creditors or its
property, Collateral Agent, to the extent permitted by law, shall be entitled to file such proofs
of claim and other documents as may be necessary or advisable in order to have its claims allowed
in such proceedings for the entire amount due and payable by Grantor under this Deed of Trust, the
Indenture, the Indenture Documents and any other instrument securing the Obligations, at the date
of the institution of such proceedings, and for any additional amounts which may become due and
payable by Grantor after such date.



     3.10 Application of Monies by Collateral Agent.



     (a) Upon the occurrence and during the continuance of an Event of Default, Collateral Agent
shall be entitled to sue for and to recover judgment against Grantor for the whole amount of the
Obligations due and unpaid together with costs and expenses, including without limitation, the
reasonable compensation, expenses and disbursements of Collateral Agent’s and Holders’ agents,
attorneys and other representatives, either before, after or during the pendency of any proceedings
for the enforcement of this Deed of Trust, and the right of Collateral Agent to recover such
judgment shall not be affected by any taking possession or foreclosure sale hereunder, or by the
exercise of any other right, power or remedy for the enforcement of the terms of this Deed of
Trust, or the foreclosure of the lien hereof.



     (b) In case of a foreclosure sale of all or any part of the Property and the application of
the proceeds of sale to the payment of the Obligations secured hereby, Collateral Agent shall be
entitled to enforce payment from Grantor of all Obligations then remaining due and unpaid and to
recover judgment against Grantor for any portion thereof remaining unpaid, with interest.



     (c) Grantor hereby agrees, to the extent permitted by law, that no recovery of any such
judgment by Collateral Agent and no attachment or levy of any execution upon any of the Property or
any other property shall in any way affect the lien of this Deed of Trust upon the Property or any
part thereof or any lien, rights, powers or remedies of Holders hereunder, but such lien, rights,
powers and remedies shall continue unimpaired as before.



17









 





     (d) Any monies collected or received by Collateral Agent under this Section 3.10 shall
be applied to the payment of reasonable compensation, expenses and disbursements of the agents,
attorneys, and other representatives of Collateral Agent, and the balance remaining shall be
applied to the payment of the Obligations secured hereby.



     (e) The provisions of this paragraph shall not be deemed to limit or otherwise modify the
provisions of any guaranty of the Obligations of Guarantor to Collateral Agent.



     3.11 Delay or Omission; No Waiver. No delay or omission of Collateral Agent to
exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to waive any such Event of Default or to
constitute acquiescence therein. Every right, power and remedy given to Collateral Agent may be
exercised from time to time and as often as may be deemed expedient by Collateral Agent.



     3.12 No Waiver of One Default to Affect Another. No waiver of any Event of Default
hereunder shall extend to or affect any subsequent or any other Event of Default then existing, or
impair any rights, powers or remedies consequent thereon. If Collateral Agent (a) grants
forbearance or an extension of time for the payment of any Obligations secured hereby; (b) takes
other or additional security for the payment thereof; (c) waives or does not exercise any right
granted in the Indenture; (d) releases any part of the Property from the lien of this Deed of
Trust; (e) consents to the filing of any map, plat or replat of the Land; (f) consents to the
granting of any easement on the Land; or (g) makes or consents to any agreement changing the terms
of this Deed of Trust or subordinating the lien or any charge hereof, no such act or omission shall
release, discharge, modify, change or affect the Obligations of Grantor. No such act or omission
shall preclude Collateral Agent or Holders from exercising any right, power or privilege herein
granted or intended to be granted in case of any Event of Default then existing or of any
subsequent Event of Default nor shall the lien of this Deed of Trust be affected thereby.



     3.13 Discontinuance of Proceedings; Position of Parties Restored. If Trustee or
Collateral Agent or Holders shall have proceeded to enforce any right or remedy under this Deed of
Trust by foreclosure, entry or otherwise and such proceedings shall have been discontinued or
abandoned for any reason, or such proceedings shall have resulted in a final determination adverse
to Collateral Agent or Holders, then and in every such case Grantor and Collateral Agent shall be
restored to their former positions and rights hereunder, and all rights, powers and remedies of
Collateral Agent shall continue as if no such proceedings had occurred or had been taken.



     3.14 Remedies Cumulative. No right, power or remedy conferred upon or reserved to
Collateral Agent by this Deed of Trust or the Notes is exclusive of any other right, power or
remedy, but each and every such right, power and remedy shall be cumulative and concurrent and
shall be in addition to any other right, power and remedy given under the Notes, or now or
hereafter existing at law, in equity or by statute.



18









 





ARTICLE FOUR




TRANSFER OR FURTHER ENCUMBRANCE OF THE PROPERTY




     4.01 Transfer or Further Encumbrance of the Property. In the event of any sale,
conveyance, transfer, lease, pledge or further encumbrance of the Property or any interest in or
any part of the Property, or any further assignment of rents from the Property without the prior
written consent of Collateral Agent then, at Collateral Agent’s option, Collateral Agent may
declare all Obligations of Grantor to be due and payable immediately without demand or notice.
Collateral Agent’s consent shall be within its sole and absolute discretion.



ARTICLE FIVE




MISCELLANEOUS PROVISIONS




     5.01 Successors and Assigns Included in Parties. Whenever one of the parties hereto
is named or referred to herein, the heirs, personal representatives, successors and assigns of such
party shall be included and all covenants and agreements contained in this Deed of Trust, by or on
behalf of Grantor or Collateral Agent shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.



     5.02 Addresses for Notices, Etc.



     (a) Except as may be otherwise provided herein, any notice, report, demand or other instrument
authorized or required to be given or furnished under this Deed of Trust to Grantor or Collateral
Agent shall be in writing, shall be sent by personal delivery or sent by registered or certified
mail (postage prepaid, return receipt requested), overnight courier, at the address set forth
below:



	 	 	 
	If to Collateral Agent at:

	 	U.S. Bank Trust National Association
	

	 	Attn: Barbara A. Nastro, Vice President
	

	 	100 Wall Street, Suite 1600
	

	 	New York, New York 10050
	

	 	Facsimile No.: (212) 509-3384
	 
	 	 
	With a copy to:

	 	Dorsey & Whitney LLP
	

	 	Attn: Robert Rywkin, Esq.
	

	 	250 Park Avenue
	

	 	New York, New York 10177
	

	 	Facsimile No.: (212) 953-7201
	 
	 	 
	If to Guarantor, at:

	 	Golfsmith International, Inc.
	

	 	11000 North IH-35
	

	 	Austin, Texas 78753
	

	 	Attn: Golfsmith Legal
	

	 	Facsimile No.: (512) 837-1019






19









 






	 	 	 
	With a copy to:

	 	King & Spalding LLP
	

	 	Attn: Maysa Vahidi, Esq.
	

	 	1185 Avenue of the Americas
	

	 	New York, New York 10036-4003
	

	 	Facsimile No.: (212) 556-2222






     (b) Either party may change the address to which any such notice, report, demand or other
instrument is to be delivered or mailed, by furnishing written notice of such change to the other
party, but no such notice of change shall be effective unless and until received by such other
party. All notices, reports, demands or other instruments authorized or required to be sent in
accordance with this Section 5.02, shall be deemed received on the earlier of the date of
actual receipt or 3 Business Days (as defined in the Indenture) after the deposit thereof in the
mail.



     5.03 Headings. The headings of the articles, sections, paragraphs and subdivisions of
this Deed of Trust are for convenience of reference only, are not to be considered a part hereof,
and shall not limit or expand or otherwise affect any of the terms hereof.



     5.04 Invalid Provisions to Affect No Others. In the event that any of the covenants,
agreements, terms or provisions contained in the Notes shall be deemed invalid, illegal or
unenforceable in any respect, the validity of the remaining covenants, agreements, terms or
provisions contained in the Notes shall be in no way affected, prejudiced or disturbed thereby; and
if any application of any term, restriction or covenant to any person or circumstances is deemed
illegal or unenforceable, the application of such term, restriction or covenant to other persons
and circumstances shall remain unaffected to the extent permitted by law.



     5.05 Changes, Etc. Neither this Deed of Trust nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in
writing signed by Collateral Agent or Grantor, as the case may be, against which enforcement of the
change, waiver, discharge or termination is sought. The modification hereof or of any of the Notes
or the release of any part of the Property from the lien hereof shall not impair the priority of
the lien of this Deed of Trust.



     5.06 Governing Law. THIS DEED OF TRUST SHALL BE GOVERNED, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.



     5.07 Substitution of Trustee. If Collateral Agent shall for any reason desire to
remove the Trustee or any of his successors as Trustee hereunder, and to appoint a new Trustee in
his place or stead, Collateral Agent shall have and is hereby granted full power and authority to
remove the Trustee and to appoint his successor by instrument in writing, duly acknowledged or
proved so as to entitle the same to be recorded and such new Trustee shall thereupon become
successor to the title to the Property and the same shall become vested in him in trust for the
purposes and objects of these presents, with all the power, duties, and obligations herein
conferred on the Trustee, in the same manner and to the same effect as though he or it were named
herein as Trustee.



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     5.08 Waivers. To the maximum extent permitted by applicable law, Grantor waives (a)
all rights to require the Collateral Agent to proceed against any Guarantor or Person liable for
the Obligations under the Indenture Documents (each a “Golfsmith Guarantor”) or any other
guarantor, or proceed against, enforce or exhaust any security for the Obligations or to marshal
assets or to pursue any other remedy in Collateral Agent’s power whatsoever; (b) all defenses
arising by reason of any disability or other defense of any Golfsmith Guarantor, the cessation for
any reason of the liability of a Golfsmith Guarantor, any defense that any other indemnity,
guaranty or security was to be obtained, any claim that Collateral Agent has made Grantor’s
obligations more burdensome or more burdensome than any Golfsmith Guarantor’s obligations, and the
use of any proceeds of the Obligations other than as intended or understood by Collateral Agent or
Grantor; (c) all presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, notices of a acceptance of this Deed of Trust, and all
other notices or demands to which Grantor might otherwise be entitled; (d) all rights to require
Collateral Agent to enforce any of its remedies against any Golfsmith Guarantor or the Guarantors;
(e) any defense based upon any lack of authority of the officers, directors, partners or agents
acting or purporting to act on behalf of any Golfsmith Guarantor or any principal of any Golfsmith
Guarantor or any defect in the information of any Golfsmith Guarantor or any principal of any
Golfsmith Guarantor; (f) any defense based upon the application by any Golfsmith Guarantor of the
proceeds of the Indenture for purposes other than the purposes represented by any Golfsmith
Guarantor to Collateral Agent or intended or understood by Collateral Agent or Grantor; (g) any
defense based upon Collateral Agent’s failure to disclose to Grantor any information concerning any
Golfsmith Guarantor’s financial condition or any other circumstances bearing on any Golfsmith
Guarantor’s ability to pay all sums payable under the Indenture or any of the Notes; (h) any
defense based upon Collateral Agent’s election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any
successor statute; and (i) until the Obligations are satisfied or fully paid, with such payment not
subject to return: (i) all rights of subrogation, contribution, indemnification or reimbursement,
(ii) all rights of recourse to any assets or property of any Golfsmith Guarantor or to any
collateral or credit support for the Obligations, (iii) all rights to participate in or benefit
from any security or credit support Collateral Agent may have or acquire, and (iv) all rights,
remedies and defenses Grantor may have or acquire against any Golfsmith Guarantor. Grantor
specifically waives all rights and defenses that Grantor may have because the Obligations are
secured by real property. This means, among other things: (i) Collateral Agent may collect from
Grantor without first foreclosing on any real or personal property collateral pledged by any
Golfsmith Guarantor; and (ii) if Collateral Agent forecloses on any real property collateral
pledged by any Golfsmith Guarantor (A) the amount of the Obligations may be reduced only by the
price for which the collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price; and (B) Collateral Agent may collect from Grantor even if Collateral
Agent, by foreclosing on the real property collateral, has destroyed any right Grantor may have to
collect from any Golfsmith Guarantor. This is an unconditional and irrevocable waiver of any
rights and defenses Grantor may have because the Obligations are secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses based upon Section
580a, 580b, 580d, or 726 of the California Code of Civil Procedure or similar laws in other states.
Without limiting the generality of the foregoing or any other provision hereof, Grantor hereby
expressly waives any and all benefits which might



21









 




otherwise be available to Grantor under California Civil Code Sections 2809, 2810, 2819, 2839,
2845, 2849, 2850, 2899 and 3433, or any of such sections.




22









 










     IN WITNESS WHEREOF, Grantor has caused this Deed of Trust to be duly executed under seal in
its name by its duly authorized officers on the day and year first above written.



	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	

	 	 	 	GOLFSMITH

company
	 	USA, L.L.C., a Delaware limited liability
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ JAMES D. THOMPSON
	

	 	 	 	 	 	

	

	 	 	 	Name:
	 	JAMES D. THOMPSON
	

	 	 	 	Title:
	 	President & CEO
	 
	 	 	 	 	 	 
	STATE OF TEXAS

	 	§	 	 	 	 
	 

	 	§	 	 	 	 
	COUNTY OF TRAVIS

	 	§	 	 	 	 






     This instrument was acknowledged before me on the 9th day of November, 2004 by
James D. Thompson, President & CEO , of Golfsmith USA, L.L.C., a
Delaware limited liability company.



	 	 	 
	Harry J. Behal Jr.


	 	 
	Notary Public, State of Texas
	 	 
	 
	 	 
	

	 	My Commission Expires: 1-26-04
	 
	 	 
	Harry J. Behal Jr.
	 	 
	

	 	 
	(Printed or Typed Name of Notary)
	 	 








23









 






SCHEDULE A

TO




DEED OF TRUST




Legal Description





 









 






EXHIBIT A-l 

LEGAL DESCRIPTION OF THE SHOPPING CENTER




DESCRIPTION




Order No. 7691377




City of San Carlos




Parcel I:




Parcel 2, as shown on that certain map entitled “parcel map being a resubdivision of the lands of
Rainbow Investments Company, a General Partnership, as described in that certain Deed recorded
under document number 54851-AS, records of San Mateo County, California, City of San Carlos, San
Mateo County, Calif”, filed in the office of the County Recorder of San Mateo County, State of
California, on August 8, 1984 in book 54 of parcel maps at page(s) 81.




Parcel II:




A non-exclusive easement for ingress and egress and access purposes within a strip of land 12.50
feet in width of which the southeasterly line is co-incident with northwesterly line of parcel I
above.




Parcel III:




A non-exclusive easement for non-buildable purposes within the following described area:




Beginning at the most northerly corner of parcel one above; thence from said point of beginning
south 47° 54’ 49” west 422.66 feet; thence north 42° 05’ 11” west 116.25 feet; thence north 47°
15’ 30” east 16.25 feet; thence south 42° 05’ 11” east 17.18 feet; thence north 47° 15’ 30” east
13.25 feet; thence south 42° 05’ 11” east 71.16 feet; thence north 47° 54’ 49” east 393.07 feet;
thence south 42° 05’ 40” east 28.25 feet to the point of beginning.




Said easements described in parcels two and three are for the benefit of and appurtenant to
parcel one above.




	 	 	 
	Joint Plant Nos.

	 	046-015-152-11.01A
	

	 	046-015-152-12A