Document:

Unassociated Document

     

    Exhibit 10.4

     

    RIDER
TO DEED OF TRUST WITH ASSIGNMENT OF RENTS

    
      

      This
Rider to Deed of Trust with Assignment of Rents is hereby attached to and made a
part of that certain Deed of Trust with Assignment of Rents (Long Form) (the
“Trust
Deed”) dated for reference purposes August 30, 2010, by and between SPT-LAKE ELSINORE HOLDING CO.,
LLC, a Delaware limited liability company (“Trustor”),
CARDINAL INVESTMENT
PROPERTIES-UNDERWOOD, L.P., a California limited partnership (“Beneficiary”),
and FIRST AMERICAN TITLE
INSURANCE COMPANY, a California corporation (“Trustee”),
with reference to the following matters:

      

      RECITALS:

      

      A. Trustor has executed that
certain Promissory Note Secured by Deed of Trust dated concurrently with the
Trust Deed (the “Note”),
and pursuant to which Trustor has borrowed from Beneficiary the principal sum of
One Million and No/100 Dollars ($1,000,000.00) (the “Loan”).
The Note, the Trust Deed and such other agreements and/or instruments as may
have been entered into or made by Trustor for the benefit of Beneficiary in
connection with the Loan may hereinafter be referred to as the “Loan
Documents”.

      

      B. The
lien of the Trust Deed is a monetary encumbrance upon and against the property
more particularly described on Exhibit “A” to the Trust Deed and by this
reference incorporated herein (the “Property”).

      

      C.
Trustor intends this Rider to supplement and supersede, where applicable, the
terms and provisions of the Trust Deed.

      

      Now,
therefore, in consideration of the above Recitals, and other good and valuable
consideration, receipt of which is hereby acknowledged, Trustor hereby agrees to
be bound by, and further supplement and modify the Trust Deed with the following
provisions which shall supersede any provision addressing (or silence
concerning) the same issue in the Trust Deed:

      

      
        	
                1.

              	
                Due on
      Sale/Encumbrance: Trustor shall not sell, transfer, assign, further
      encumber, hypothecate, or in any way dispose of or use as collateral for
      another loan or obligation of Trustor, the Property or any interest
      therein without first obtaining the prior written consent of Beneficiary,
      which consent may be granted, conditioned or withheld in the sole
      discretion of Beneficiary. Any violation of the restrictions set forth
      herein, whether by act, omission or by virtue of law, shall be considered
      a default in the performance of the obligations of Trustor under the Trust
      Deed and Beneficiary shall have the same rights with respect thereto as
      are provided to Beneficiary under the Trust Deed with respect to any
      default by Trustor in the payment of any indebtedness secured under the
      Trust Deed or in Trustor’s performance of any agreement
      thereunder.

              

      

       

      
        	
                2.

              	
                Assignment of Leases
      and Rents: The following provisions supersede the provisions of
      Paragraph
      B(5) of the Trust Deed:

              

      

      

      a.           Assignment. Trustor
hereby irrevocably assigns to Beneficiary all of Trustor’s right, title and
interest in, to and under: (a) all leases and/or subleases of the Property, all
licenses and agreements relating to the management, leasing or operation of the
Property and all other agreements of any kind relating to the use or occupancy
of the Property, whether now existing or entered into after the date hereof
(collectively, the “Leases”);
and (b) the rents, issues and profits of the Property, including, without
limitation, all amounts payable and all rights and benefits accruing to Trustor
under the Leases (collectively, the “Payments”).
The term “Leases” shall also include all guarantees of and security for the
lessees’ performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Beneficiary’s right to the Leases and Payments is not contingent upon, and may
be exercised without possession of, the Property.

       

      
        
           

        

        
          Page 1 of
4

          
            

          

        

        
           

        

      

      b.           Grant of License. By
acceptance of this Rider, Beneficiary shall be deemed to have conferred upon
Trustor a license (the “License”)
to collect and retain the Payments as they become due and payable, until the
occurrence of a default under any of the Loan Documents. Upon a default and the
passage of the applicable cure period, the License shall be automatically
revoked and Beneficiary may collect and apply the Payments without notice and
without taking possession of the Property. Trustor hereby irrevocably authorizes
and directs the lessees under the Leases to rely upon and comply with any notice
or demand by Beneficiary for the payment to Beneficiary of any rental or other
sums which may at any time become due under the Leases, or for the performance
of any of the lessees’ undertakings under the Leases, and the lessees shall have
no right or duty to inquire as to whether any Default has actually occurred or
is then existing hereunder. Trustor hereby relieves the lessees from any
liability to Trustor by reason of relying upon and complying with any such
notice or demand by Beneficiary.

      

      c.           Effect of Assignment.
The foregoing irrevocable assignment shall not cause Beneficiary to be: (a) a
mortgagee in possession; (b) responsible or liable for the control, care,
management or repair of the Property or for performing any of the terms,
agreements, undertakings, obligations, representations, warranties, covenants
and conditions of the leases; or (c) responsible or liable for any waste
committed on the Property by the lessees or any other parties; for any dangerous
or defective condition of the Property; or for any negligence in the management,
upkeep, repair or control of the Property resulting in loss or injury or death
to any Lessee, licensee, employee, invitee or other person. Beneficiary shall
not directly or indirectly be liable to Trustor or any other person as a
consequence of: (i) the exercise or failure to exercise any of the rights,
remedies or powers granted to Beneficiary hereunder; (Ii) the failure or refusal
of Beneficiary to perform or discharge any obligation, duty or liability of
Trustor arising under the Leases.

      

      d.           Representations and
Warranties. Trustor represents and warrants that: (a) all existing
Leases, if any, are in full force and effect and are enforceable in accordance
with their respective terms, and no breach or default, or event which would
constitute a breach or default after notice or the passage of time, or both,
exists under any existing Leases; and (b) no rent or other payment under any
existing Lease has been paid by any lessee for more than one (1) month in
advance; and (c) none of the lessor’s interests under any of the Leases has been
transferred or assigned.

      

      e.           Covenants. Trustor
covenants and agrees at Trustor’s sole cost and expense to: (a) perform the
obligations of lessor contained in the Leases and enforce by all available
remedies in a commercially reasonable manner performance by the lessees of the
obligations of the lessees contained in the Leases; (b) give Beneficiary prompt
written notice of any default which occurs with respect to any of the Leases,
whether the default be that of the lessee or of the lessor; (c) exercise
commercially reasonable efforts to keep all portions of the Property leased at
all times at rentals not less than the fair market rental value; (d) deliver to
Beneficiary fully executed, counterpart original(s) of each and every Lease if
requested to do so; and (e) execute and record such additional assignments of
any Lease or specific subordinations of any Lease to the Trust Deed, in form and
substance acceptable to Beneficiary, as Beneficiary may reasonably request.
Except with Beneficiary’s prior written consent, which consent shall not be
unreasonably withheld or delayed, Trustor shall not: (i) enter into any Leases
after the date hereof (except for leases executed by Trustor in the ordinary
course of Trustor’s business); (ii) execute any other assignment relating to any
of the Leases; (iii) discount any rent or other sums due under the Leases or
collect the same in advance, other than to collect rent one (1) month in advance
of the time when it becomes due; (iv) terminate, modify or amend any of the
terms of the Leases or in any manner release or discharge the lessees from any
obligations thereunder; (v) consent to any assignment or subletting by any
lessee; or (vi) subordinate or agree to subordinate any of the Leases to any
other deed of trust or encumbrance. Any such attempted action in violation of
the provisions hereof shall be null and void.

       

      
        
           

        

        
          Page 2 of
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      f.           Estoppel
Certificates. Within thirty (30) days after request by Beneficiary,
Trustor shall deliver to Beneficiary and to any party designated by Beneficiary,
estoppel certificates executed by Trustor for any existing Lease (and shall use
commercially reasonable efforts to cause such certificates to be executed by
each of the lessees), in recordable form, certifying (if such be the case): (i)
that the foregoing assignment and the Leases are in full force and effect; (ii)
the date of each lessee’s most recent payment of rent; (iii) that there are no defenses
or offsets outstanding, or stating those claimed by Trustor or lessees under the
foregoing assignment or the Leases, as the case may be; and (iv) any other
information reasonably requested by Beneficiary.

      

      3.           Reinstatement of
Lien. Beneficiary’s rights hereunder shall be reinstated and revived, and
the enforceability of this Trust Deed shall continue, with respect to any amount
at any time paid on account of any obligations secured hereby which Beneficiary
is thereafter required to restore or return in connection with a bankruptcy,
insolvency, reorganization or similar proceeding with respect to any
Borrower.

      

      4.           Insurance.  In
addition to the obligations of Trustor pursuant to Paragraph A(2) of
the Trust Deed, Trustor shall maintain in effect at all times prior to the full
release and reconveyance of the Trust Deed, the following insurance naming
Beneficiary as an additional insured and containing a waiver of subrogation: (a)
commercial general public liability insurance covering claims for bodily injury,
personal injury and property damage with single limit coverage of not less than
$1,000,000 per occurrence and (b) if reasonably requested in writing by
Beneficiary, all risk course of construction insurance in an amount not less
than the full replacement value of the improvements to the
Property.

      

      5.           No Amendment. Neither
this Rider nor the Trust Deed shall be amended without the written consent of
Trustor and Beneficiary.

      

      6.           Notices. Unless
otherwise directed by Trustor in writing, any notices required to be delivered
to Trustor hereunder shall be delivered: c/o Shopoff Advisors, L.P., 8951
Research Drive, Irvine, California 92618, Attention: William A. Shopoff. Unless
otherwise directed by Beneficiary in writing, any notices required to be
delivered to Beneficiary hereunder shall be delivered to:

       

      
        	 
      	
                c/o
      Cardinal Development

              
	 
      	
                375
      Bristol Street, Suite 50

              
	 
      	
                Costa
      Mesa, California 92626

              
	 
      	
                Attention:  David
      J.
      Seidner

              

      

      

      7.           Attorneys Fees. In
addition to the obligations of Trustor pursuant to Paragraph A(3) of the
Trust Deed, Trustor shall pay a reasonable sum as and for the attorneys fees and
legal costs incurred by Beneficiary in connection with any dispute arising
between the parties hereto or their legal representatives, successors and
assigns, concerning any provision of this Rider or the Trust Deed, or the rights
and duties of any person in relation thereto, if Beneficiary is the prevailing
party in such dispute.

      

      8.           Governing Law. The
validity, interpretation and performance of this Rider or the Trust Deed shall
be controlled by and construed under the laws of the State of California. The
parties hereto hereby consent to the jurisdiction of the California courts with
venue in Orange County in the event any dispute arises in conjunction
herewith.

      

      9.           Time of Essence. Time
is of the essence. As used herein, the word “days” shall mean and refer to
calendar days; provided, however, in the event a payment date or deadline falls
on a Saturday, Sunday or federal holiday, such payment date or deadline shall be
extended to the next following calendar day that is not a Saturday, Sunday or
federal holiday.

       

      
        
           

        

        
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4

          
            

          

        

        
           

        

      

      END OF
RIDER

       

      Dated as
of the date first written above.

       

      
        “Trustor”

      

      

      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

                

        

      

    

     

    
      
        
        

      

      
        Page 4 of
4Unassociated 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.

     

    
      
         

      

      
        Page 1 of
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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.

     

    
      
         

      

      
        Page 2 of
4

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
        Page 3 of
4

        
          

        

      

      
         

      

    

    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

              

      

    

     

    
      
         

      

      
        Page 4 of
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