Unassociated Document


     

    Exhibit 10.5


    SECURITY
AGREEMENT

     

    THIS
SECURITY AGREEMENT
(this “Agreement”)
is dated for reference purposes August 30, 2010, and is made by and between
SPT-LAKE ELSINORE HOLDING CO.,
LLC, a Delaware limited liability company (the “Debtor”),
and the CARDINAL INVESTMENT
PROPERTIES-UNDERWOOD, L.P., a California limited partnership (the “Secured
Party”), with reference to the following facts:

     

    RECITALS:

    


    A.           Debtor
has entered into certain agreements as “Borrower”
with Secured Party as “Lender”
including that certain Loan Agreement, Promissory Note Secured by Deed of Trust,
Deed of Trust with Assignment of Rents, and such other documents of an even date
herewith (collectively, the “Loan
Documents”) as may have been entered into by and between Debtor and
Secured Party in connection with that certain loan from Secured Party to Debtor
in the amount One Million and No/100 Dollars ($1,000,000.00) (the “Loan”),
and pursuant to which Debtor has assumed certain obligations as more
particularly described therein.

    


    B.            Debtor
has agreed to provide for the benefit of Secured Party certain collateral
security for the performance by Debtor of its obligations thereunder in the form
of a security interest in certain collateral as described herein.

    


    C.            The
parties now wish to enter into this Agreement to provide for such security
interest and such matters as are set forth herein.

    


    NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:

     

    1. Debtor
hereby (i) grants Secured Party a security interest in all of Debtor’s right,
title and interest in and to the property more particularly described below and
all products thereof (collectively, the “Collateral”),
to be held and/or disposed of in accordance with the terms of this
Agreement:

     

    A. All
fixtures and arising of property now or hereafter attached hereto, or used or
adapted for use in the development, construction and/or operation of, the real
property and all improvements thereto located in the City of Menifee, County of
Riverside, State of California, and more particularly described on the attached
Schedule
1 to this Exhibit
“A” (the “Real
Property”), or delivered to the Real Property for such attachment, use
and/or adaptation for use (whether such items are leased, owned absolutely or
subject to any title retaining or security instrument, or otherwise used or
possessed, but excluding those items owned by tenants in accordance with their
leases), including, without limitation, all building and construction materials,
heating, cooling, air-conditioning, ventilating, refrigerating, plumbing,
generating, power, lighting, laundry, maintenance, incinerating, lifting,
cleaning, fire prevention and extinguishing, security and access control,
cooking, gas, electric, and communication fixtures, equipment, and apparatus,
all engines, motors, conduits, pipes, pumps, tanks, ducts, compressors, boilers,
water heaters, and furnaces, all ranges, stoves, disposers, refrigerators, and
other appliance, all escalators and elevators, all cabinets, partitions,
mantels, built-in mirrors, window shades, blinds, screens, awnings, storm doors,
windows, and sash, all capering, under padding, and draperies, all furnishings
of public spaces, halls, and lobbies, and all shrubbery and plants.

     

    
      
         


      

      
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    B.            All
proceeds and rights thereto which may be or become payable by virtue of any
insurance contracts or policies which insure the Real Property or any building,
structures, or improvements thereon, or any such fixtures or personal property,
against casualties and theft (including all deposit accounts and/or investment
property in which such proceeds are deposited or held).

     

    C.            All
the rents, revenues, issues, profits and income of the Real Property, and all
right, title and interest of Debtor in and to all present and future leases and
other agreements for the occupancy or use of all or any part of the Real
Property, and all right, title and interest of Debtor thereunder, including,
without limitation, all cash or security deposits, advance rentals, and deposit
or payments of similar nature (including all deposit accounts and/or investment
property in which the same are deposited or held or are otherwise related
thereto), together with all guarantees of tenants or occupants’ performance
thereunder.

     

    D.            All
deposit accounts, investment property, tangible property and all general
intangibles relating to the development of the Real Property including, but not
limited to, all plans and specifications, architectural plans and renderings,
development rights, utility or other deposits or prepaid fees, reports, studies,
entitlements, permits, licenses, franchises, all names under or by which the
Real Property may at any time be operated or known and all rights to carry on
business under any such names or any variant thereof.

     

    E. All
products and proceeds of all of the foregoing and all deposit accounts and/or
investment property in which the same are deposited or held or are otherwise
related thereto.

     

    2.      
     The granting of this security interest is security
for the performance by Debtor of its obligations to Secured Party, pursuant to
the terms of the Loan Documents, including, but not limited to, repayment of the
Loan and any and all sums hereafter advanced and expenditures hereafter made by
Secured Party to or for the account or benefit of Debtor, and any and all
indebtedness and obligations now or hereafter owing or due or becoming owing or
due from Debtor to Secured Party.

     

    3.      
     Debtor hereby represents and warrants to Secured
Party that (i) Debtor is the absolute owner of all of the Collateral, (ii) the
Collateral is free and clear of all security interests, liens and encumbrances
and adverse claims except such claims in favor of Secured Party as are created
hereunder and (iii) Debtor has the right to grant to Secured Party the security
interest in the Collateral created herein without obtaining the consent of any
person or, in the event the consent of any person is required, Debtor shall
obtain such consent in form and content reasonably satisfactory to Lender and
deliver the same to Lender prior to the funding of the Loan.

     

    4.     
      Debtor covenants and agrees that Debtor
will, upon demand at any time, execute and deliver all such further instruments,
documents and/or agreement, and undertake such acts, as shall be reasonably
required to effectuate the security interest described herein and so as to
render all of the Collateral available for the security and satisfaction of said
indebtedness, according to the intent and purpose herein expressed and so as to
enable the Secured Party to sell and/or convey or otherwise to subject the same
to the lien hereof. Debtor further agrees to appear in and defend any and all
actions and proceedings affecting the title to the Collateral or any part
thereof or affecting the security interest of Secured Party
therein.

     

    
      
         


      

      
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    5.    
       If Debtor shall default in the payment
of any of the indebtedness, obligations or liabilities secured hereby or shall
default in the performance of any agreement herein contained, or if any breach
be made in any obligation, promise, declaration or warranty of Debtor herein
contained or secured hereby, then, subject to Debtor’s cure rights under the
Loan Documents, Secured Party at Secured Party’s option, shall have the remedies
of a Secured Party under the laws of the State of California, including (to the
extent not otherwise prohibited thereby) the right to require Debtor to assemble
the Collateral and make it available to Secured Party where the Collateral may
be and for taking possession thereof by Secured Party, and the removal, sale or
other disposition of the Collateral, or any part thereof, by Secured Party at
public or private sale, upon legal notice to Debtor. Secured Party shall deduct
and retain from the proceeds of such sale or sales all costs, expenses and
charges paid or incurred in the taking, removal, handling and sale of the
Collateral, or otherwise incurred in connection therewith, including any
reasonable attorneys’ fees incurred or paid by Secured Party; the balance of the
proceeds shall be applied by Secured Party upon the indebtedness, obligations
and liabilities secured hereby and the surplus, if any, shall be paid to Debtor
or to the person or persons lawfully entitled to receive the same. If suit be
brought, or any proceedings instituted by Secured Party against Debtor to
enforce the provisions of this Agreement, there shall be due from Debtor to
Secured Party, such sum for reasonable attorneys’ fees and expenses as may be
awarded to Secured Party in said action or proceeding, which sum is hereby
secured. In any
such action, the plaintiff shall be entitled to the appointment of a receiver,
without notice, to take possession of all or any part of the Collateral and to
exercise such powers as the Court shall confer upon him. At any sale or sales
made under this Agreement, or authorized herein, Secured Party or any person on
behalf of Secured Party, or any other person may bid for and purchase any of the
Collateral being sold.

     

    6.      
     Unless otherwise directed by Debtor in writing,
any notices required to be delivered to Debtor hereunder shall be delivered: c/o
Shopoff Advisors, L.P., 8951 Research Drive, Irvine, California 92618,
Attention: William A. Shopoff. Unless otherwise directed by Secured Party in
writing, any notices required to be delivered to Secured Party hereunder shall
be delivered to: c/o Cardinal Development, 375 Bristol Street, Suite 50, Costa
Mesa, California 92626, Attention: David J. Seidner.

     

    7.     
      This Agreement has been entered into by and
between Debtor and Secured Party in addition to, and for the purpose of
complimenting, the rights of Secured Party under the Loan Documents. Debtor
hereby acknowledges and agrees that, to the maximum extent permitted by
applicable law, (i) the rights of, and the remedies available to, Secured Party
under this Agreement or any of the other Loan Documents, shall at all times be
available to and enforceable by Secured Party on a nonexclusive basis and (ii)
the election by Secured Party to pursue anyone course of action thereunder shall
not constitute a waiver or prohibition against the pursuit by Secured Party of
any other right or remedy under any of the Loan Documents.

     

    
      
         


      

      
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    8.     
      The words “Debtor” and “Secured Party”, as
used herein, shall be construed to include the heirs, legatees, devisees,
administrators, executors, successors and assigns of Debtor and Secured Party,
respectively, and this Agreement shall bind and inure to the benefit of said
third persons. Whenever the context so requires, the masculine gender includes
the feminine and/or neuter, the singular number includes the plural and vice
versa. If there be more than one Debtor, it is agreed that the provisions of
this Agreement in reference to Debtor shall be construed to apply jointly and
severally to each of the Debtors. The term “and/or” as used herein means one or
the other or both, or anyone or all, of the things or persons in connection with
which the words are used. This Agreement shall be governed by the laws of the
State of California. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original of this Agreement, but such
counterparts, when taken together, shall constitute but one
agreement.

     

    IN
WITNESS WHEREOF, Secured Party and Debtor have executed this Agreement as of the
date first above written.

     

    SECURED
PARTY:

     

    CARDINAL
INVESTMENT PROPERTIES –

    UNDERWOOD, L.P., a California
limited

    partnership

     

    
      
        	
                By:

              	
                Cardinal
      Investment Properties, LLC, a

              
	 
      	
                California
      limited liability company, General

              
	 
      	
                Partner

              
	 
      	 
      	 
      
	 
      	
                By:

              	/s/
      David J. Seidner
	 
      	 
      	
                David
      J. Seidner, General Manager

              


      

    

     

    DEBTOR:

    


    SPT-LAKE ELSINORE HOLDING CO.,
LLC, a Delaware limited liability company

     

    
      
        	
                By:

              	
                Shopoff
      Partners, L.P., a Delaware limited

              
	 
      	
                partnership,
      sole member

              
	 
      	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                Shopoff
      General Partner, LLC, a Delaware limited

              
	 
      	 
      	
                liability
      company, general partner

              
	 
      	 
      	 
      
	 
      	 
      	
                By:

              	
                Shopoff
      Properties Trust, Inc.,

              
	 
      	 
      	 
      	
                a
      Maryland corporation, manager

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                By:

              	/s/
      William A. Shopoff
	 
      	 
      	 
      	 
      	
                William
      A. Shopoff, President and CEO

              


      

    

     

    
      
         


      

      
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