Document:

Exhibit 10.1

 

Loan No. 05-20308

 

PROMISSORY NOTE

 

	
  $9,895,000.00

  	
   

  	
  June 30, 2005

  

 

FOR VALUE RECEIVED, ROBIN HILL BUSINESS PARK, LLC, a
Delaware limited liability company, as maker, having its principal place of
business at 75 Robin Hill Road, Goleta, California 93117  (“Borrower”), hereby unconditionally promises
to pay to the order of MORGAN STANLEY MORTGAGE CAPITAL INC., a New York
corporation, as payee, having an address at 1221 Avenue of the Americas, 27th
Floor, New York, New York  10020 (“Lender”),
or at such other place as the holder hereof may from time to time designate in
writing, the principal sum of NINE MILLION EIGHT HUNDRED NINETY-FIVE THOUSAND
AND 00/100 DOLLARS ($9,895,000.00), in lawful money of the United States of
America with interest thereon to be computed from the date of this Note at the
Applicable Interest Rate (defined below) in accordance with the terms of this
Note.

 

ARTICLE I

PAYMENT TERMS

 

Borrower agrees to pay sums under this Note in
installments as follows:

 

(a)                                  on
the date hereof, a payment of interest only with respect to the period
commencing on the date hereof and ending on, and including, the last day of the
month in which this Note is executed;

 

(b)                                 a
constant payment of $64,825.63
on the first day of August, 2005 and on the first day of each calendar month
thereafter up to and including the first day of June, 2015 (each, a “Payment
Date”); each of the payments to be applied as follows: (i) first, to the
payment of interest computed at the Applicable Interest Rate; and (ii) the
balance toward the reduction of the principal sum; and

 

(c)                                  the
balance of the principal sum and all interest thereon on the first day of July,
2015 (the “Maturity Date”).

 

ARTICLE II

INTEREST

 

The interest rate on this Note is five and sixty five
hundredths percent (5.65%) per annum (the “Applicable Interest Rate”).  Interest on the principal sum of this Note
shall be

 

 

calculated by multiplying
(a) the actual number of days elapsed in the period for which the
calculation is being made by (b) a daily rate based on a three hundred
sixty (360) day year (that is, the Applicable Interest Rate or the Default
Rate, as then applicable, divided by 360) by (c) the outstanding principal
balance.

 

ARTICLE III

DEFAULT AND ACCELERATION

 

Borrower covenants and agrees that if (a) any
payment required hereunder (other than the payment due on the Maturity Date) is
not paid prior to the fifth (5th) day after the same is due, or (b) the
entire Debt (defined below) is not paid on or before the Maturity Date or (c) any
other Event of Default (as defined in the Security Instrument (defined below))
shall occur, then at the option of Lender (i) the whole of the principal
sum of this Note, (ii) interest, default interest, late charges and other
sums, as provided in this Note, the Security Instrument or the Other Security
Documents (as defined in the Security Instrument), (iii) all other monies
agreed or provided to be paid by Borrower in this Note, the Security Instrument
or the Other Security Documents, (iv) all sums advanced pursuant to the
Security Instrument to protect and preserve the Property (defined below) and
the lien and the security interest created thereby, and (v) all sums
advanced and costs and expenses incurred by Lender in connection with the Debt
or any part thereof, any renewal, extension, or change of or substitution for
the Debt or any part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or Lender (all
the sums referred to in (i) through (v) above shall collectively be
referred to as the “Debt”) shall without notice become immediately due and
payable.

 

ARTICLE IV

DEFAULT INTEREST

 

Borrower agrees that upon the occurrence of an Event
of Default, Lender shall be entitled to receive and Borrower shall pay interest
on the entire unpaid principal sum at a per annum rate equal to the lesser of (a) five
percent (5%) plus the Applicable Interest Rate or (b) the maximum interest
rate which Borrower may by law pay (the “Default Rate”).  The Default Rate shall be computed from the
occurrence of the default giving rise to such Event of Default (without regard
to any notice or grace period) until the earlier of the date upon which the
Event of Default is cured or the date upon which the Debt is paid in full.  Interest calculated at the Default Rate shall
be deemed part of the Debt and shall be deemed secured by the Security
Instrument.  This clause, however, shall
not be construed as an agreement or privilege to extend the date of the payment
of the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default.

 

2

 

ARTICLE V

LATE CHARGE

 

If any monthly installment payable under this Note is
not paid prior to the fifth (5th) day after the applicable Payment Date,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law to defray the expenses incurred by Lender in handling and processing the
delinquent payment and to compensate Lender for the loss of the use of the
delinquent payment and the amount shall be secured by the Security Instrument
and the Other Security Documents.

 

ARTICLE VI

PREPAYMENT; DEFEASANCE

 

(a)                                  The
principal balance of this Note may not be prepaid in whole or in part except as
expressly permitted pursuant hereto.

 

(b)                                 Subject
to compliance with and satisfaction of the terms and conditions of this Article 6
and provided that no Event of Default exists, Borrower may elect to obtain a
release (the “Release”) of the Property from the lien of the Security
Instrument on any Payment Date after the Lockout Period Expiration Date
(defined below) by delivering to Lender, as security for the payment of all
interest and principal due and to become due pursuant to this Note through the
Maturity Date, plus the principal balance of this Note scheduled to be
outstanding on the Maturity Date, Defeasance Collateral (defined below)
sufficient to generate Scheduled Defeasance Payments (defined below) (the
Release and the delivery of the Defeasance Collateral, a “Defeasance”).

 

(c)                                  As
a condition precedent to a Defeasance, and prior to any Release, Borrower shall
have complied with all of the following:

 

(i)                                     Borrower
shall provide not less than sixty (60) days prior written notice to Lender
specifying a Payment Date upon which it intends to effect a Defeasance
hereunder (the “Defeasance Date”).

 

(ii)                                  All
accrued and unpaid interest on the principal balance of this Note to and
including the Defeasance Date, the scheduled amortization payment due on such
Defeasance Date, and all other sums then due under this Note, the Security
Instrument and the Other Security Documents, shall be paid in full on or prior
to the Defeasance Date.

 

(iii)                               Borrower shall execute
and deliver to Lender any and all certificates, opinions, documents or
instruments reasonably required by Lender in connection with the Defeasance and
Release, including, without limitation, a pledge and security agreement
reasonably satisfactory to Lender creating a first priority lien on the
Defeasance Collateral (a “Defeasance Security Agreement”).  This Note shall thereafter be secured

 

3

 

by the Defeasance Collateral delivered in connection with the
Defeasance.  After Defeasance, this Note
cannot be prepaid in whole or in part or be the subject of any further
Defeasance.

 

(iv)                              Borrower
shall have delivered to Lender an opinion of Borrower’s counsel that would be
satisfactory to a prudent lender stating (A) that the Defeasance
Collateral and the proceeds thereof have been duly and validly assigned and
delivered to Lender and that Lender has a valid, perfected, first priority lien
and security interest in the Defeasance Collateral delivered by Borrower and
the proceeds thereof, (B) that if the holder of this Note shall at the
time of the Release be a REMIC (defined below), (1) the Defeasance
Collateral has been validly assigned to the REMIC Trust which holds this Note
(the “REMIC Trust”), (2) the Defeasance has been effected in accordance
with the requirements of Treasury Regulation 1.860(g)-2(a)(8) (as such
regulation may be amended or substituted from time to time) and will not be
treated as an exchange pursuant to Section 1001 of the IRS Code and (3) the
tax qualification and status of the REMIC Trust as a REMIC will not be
adversely affected or impaired as a result of the Defeasance and (C) that
the delivery of the Defeasance Collateral and the grant of a security interest
therein to Lender shall not constitute an avoidable preference under Section 547
of the U.S. Bankruptcy Code or applicable state law. The term “REMIC” shall
mean a “real estate mortgage investment conduit” within the meaning of Section 860D
of the IRS Code. The term “IRS Code” shall mean the United States Internal
Revenue Code of 1986, as amended, and the related Treasury Department
regulations, including temporary regulations.

 

(v)                                 Borrower
shall have delivered to Lender written confirmation from the Rating Agencies
(defined in the Security Instrument) that such Defeasance will not result in a
withdrawal, downgrade or qualification of the then current ratings by the
applicable Rating Agencies of the Securities or Participations (each as defined
in the Security Instrument).  If required
by the Rating Agencies, Borrower shall, at Borrower’s expense, also deliver or
cause to be delivered a non-consolidation opinion with respect to the
Defeasance Obligor (as defined below), if any, 
in form and substance that would be satisfactory to a prudent lender.

 

(vi)                              Borrower
shall have delivered to Lender a certificate given by Borrower’s independent
certified public accountant certifying that the Defeasance Collateral shall
generate the Scheduled Defeasance Payments.

 

(d)                                 In
connection with any Defeasance hereunder, Borrower may and, if requested by
Lender shall, at Borrower’s expense, establish or designate a successor entity,
which shall be a single purpose, bankruptcy remote entity which is not directly
or indirectly owned by Borrower and which shall be approved by Lender (the “Defeasance
Obligor”) and Borrower shall transfer and assign all obligations, rights and
duties under and to this Note and the Defeasance Security Agreement together
with the pledged Defeasance Collateral to such Defeasance Obligor.  Such Defeasance Obligor shall assume the
obligations under the Note and any Defeasance Security Agreement and shall be
bound by and obligated under Sections 3.1, 
7.2,  7.4(a), 11.2, 11.7 and 14.2
and Articles 13 and 15 of the Security Instrument; provided, however, that all
references therein to “Property” or “Personal Property” shall be deemed to
refer

 

4

 

only to the Defeasance Collateral delivered to Lender, and Borrower
shall be relieved of its obligations under such documents and, except with
respect to any provisions therein which by their terms expressly survive
payment of the Debt in full, the Other Security Documents.  Borrower shall pay $1,000 to any such
Defeasance Obligor as consideration for assuming such obligations.

 

(e)                                  The
following terms shall have the meaning set forth below:

 

(i)                                     The
term “Defeasance Collateral” as used herein shall mean direct, non- callable
and non-redeemable obligations of the United States of America for the payment
of which its full faith and credit is pledged, each of which shall be duly
endorsed by the holder thereof as directed by Lender or accompanied by a
written instrument of transfer in form and substance wholly satisfactory to
Lender (including, without limitation, such instruments as may be required by
the depository institution holding such securities or by the issuer thereof, as
the case may be, to effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to perfect upon the
delivery of the Defeasance Collateral a first priority security interest
therein in favor of the Lender in conformity with all applicable state and
federal laws governing the granting of such security interests.                                                Borrower
shall authorize and direct that the payments received from such obligations
shall be made directly to Lender or Lender’s designee and applied to satisfy
the obligations of Borrower or, if applicable, the Defeasance Obligor, under
this Note.

 

(ii)                                  The
term “Scheduled Defeasance Payments” as used herein shall mean the scheduled
payments of interest and principal in accordance with the terms of the
Defeasance Collateral (without consideration of any reinvestment of interest
therefrom), providing for payments prior, but as close as possible, to all
successive Payment Dates after the Defeasance Date through and including the
Maturity Date, and in amounts equal to or greater than the scheduled payments
of interest and principal due under this Note, including the principal balance
of this Note scheduled to be outstanding on the Maturity Date.

 

(iii)                               The term “Lockout Period
Expiration Date” shall mean the date which is the earlier of (A) the
second anniversary of the date that is the “startup day,” within the meaning of
Section 860G(a) (9) of the IRS Code, of a REMIC that holds this
Note or (B) the fifth anniversary of the first day of the first full
calendar month following the date of this Note.

 

(f)                                    Upon
Borrower’s compliance with all of the conditions to Defeasance and a Release
set forth in this Article 6, Lender shall release the Property from the
lien of the Security Instrument and the Other Security Documents.  All costs and expenses of Lender, third
parties and the Rating Agencies incurred in connection with the Defeasance and
Release, including, without limitation, Lender’s counsel’s fees and expenses,
shall be paid by Borrower simultaneously with the delivery of the Release
documentation.  Any revenue, documentary
stamp or intangible taxes or any other tax or charge due in connection with the
Defeasance shall be paid by Borrower simultaneously with the occurrence of any
Defeasance.

 

5

 

(g)                                 If
a Default Prepayment (defined below) occurs, Borrower shall pay to Lender the
entire Debt, including, without limitation, an amount (the “Default
Consideration”) equal to the greater of (i) the amount (if any) which when
added to the then outstanding principal amount of this Note will be sufficient
to purchase Defeasance Collateral providing the required Scheduled Defeasance
Payments assuming Defeasance would be permitted hereunder, or (ii) one
percent (1%) of the Default Prepayment. 
For purposes of this Note, the term “Default Prepayment” shall mean a
prepayment of the principal amount of this Note made after the occurrence of
any Event of Default or an acceleration of the Maturity Date under any
circumstances, including, without limitation, a prepayment occurring in
connection with reinstatement of the Security Instrument provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.

 

(h)                                 Notwithstanding
anything to the contrary herein, Borrower may prepay the principal balance of
this Note in whole, without premium or penalty, on any Payment Date during the
twenty-four (24) months prior to the Maturity Date, provided, however,
upon a prepayment of the principal balance of this Note during the period
commencing on August 1, 2013 and ending on July 1, 2014, Borrower
shall pay to Lender, in addition to all amounts then due and owing to Lender
under this Note, the Security Instrument and the Other Security Documents, an
exit fee equal to one percent (1%) of the original principal amount of this
Note.  In addition, Borrower shall prepay
without premium or penalty the principal balance of this Note in an amount
equal to any insurance proceeds or condemnation awards which Lender elects to
have applied to the Debt pursuant to Sections 3.6 and 3.7 of the Security
Instrument or the amount required by Lender due to changes in tax and debt
credit pursuant to Section 7.3 (a) or (b) of the Security
Instrument (provided, however, that in the event any such prepayment pursuant
to this sentence shall be made on a date other than a Payment Date, the amount
so prepaid shall include all interest which would have accrued on such amount
through the next Payment Date).  In each
instance of prepayment permitted under this subparagraph (h), Borrower shall be
required to pay all other sums due hereunder, and no principal amount repaid
may be reborrowed.

 

ARTICLE VII

SECURITY

 

This Note is secured by that certain Deed of Trust and
Security Agreement dated the date hereof in the principal sum of $9,895,000.00
given by Borrower to (or for the benefit of) Lender covering the fee estate of
Borrower in certain premises located in Santa Barbara County, State of
California, and other property, as more particularly described therein
(collectively, the “Property”) and intended to be duly recorded in said County
(the “Security Instrument”), and by the Other Security Documents.

 

6

 

ARTICLE VIII

LOAN CHARGES

 

This Note, the Security Instrument and the Other
Security Documents are subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay.  If by the terms of this Note, the Security
Instrument and the Other Security Documents, Borrower is at any time required
or obligated to pay interest on the principal balance due hereunder at a rate
in excess of such maximum rate, the Applicable Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate shall be
deemed to have been payments in reduction of principal and not on account of
the interest due hereunder.  All sums
paid or agreed to be paid to Lender for the use, forbearance, or detention of
the Debt, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Note
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate of interest from time to time in
effect and applicable to the Debt for so long as the Debt is outstanding.

 

ARTICLE IX

WAIVERS

 

Borrower and all others who may become liable for the
payment of all or any part of the Debt do hereby severally waive presentment
and demand for payment, notice of dishonor, protest and notice of protest and
non-payment and all other notices of any kind, except for notices expressly
provided for in this Note, the Security Instrument or the Other Security
Documents.  No release of any security
for the Debt or extension of time for payment of this Note or any installment
hereof, and no alteration, amendment or waiver of any provision of this Note,
the Security Instrument or the Other Security Documents made by agreement
between Lender or any other person or party shall release, modify, amend,
waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment
of all or any part of the Debt, under this Note, the Security Instrument or the
Other Security Documents.  No notice to
or demand on Borrower shall be deemed to be a waiver of the obligation of
Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Security Instrument or the
Other Security Documents.  If Borrower is
a partnership, corporation or limited liability company, the agreements
contained herein shall remain in full force and effect, notwithstanding any
changes in the individuals or entities comprising the Borrower, and the term “Borrower,”
as used herein, shall include any alternate or successor entity, but any
predecessor entity, and its partners or members, as the case may be, shall not
thereby be released from any liability. (Nothing in the foregoing sentence
shall be construed as a consent to, or a waiver of, any prohibition or
restriction on transfers of interests in Borrower which may be set forth in the
Security Instrument or any Other Security Document.)

 

7

 

ARTICLE X

WAIVER OF TRIAL BY JURY

 

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR
INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN
EVIDENCED BY THIS NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER
SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

 

ARTICLE XI

EXCULPATION

 

(a)                                  Notwithstanding
anything to the contrary contained in this Note, the Security Instrument or any
Other Security Document (but subject to the provisions of subsections (b), (c) and
(d) of this Article 11), Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in this
Note or the Security Instrument by any action or proceeding wherein a money
judgment or any deficiency judgment or other judgment establishing any personal
liability shall be sought against Borrower or any principal, director, officer,
employee, beneficiary, shareholder, partner, member, trustee, agent or
affiliate of Borrower or any person owning, directly or indirectly, any legal
or beneficial interest in Borrower, or any successors or assigns of any of the
foregoing (collectively, the “Exculpated Parties”), except that Lender may
bring a foreclosure action, action for specific performance or other
appropriate action or proceeding to enable Lender to enforce and realize upon
this Note, the Security Instrument, the Other Security Documents, and the
interest in the Property, the Rents (as defined in the Security Instrument) and
any other collateral given to Lender to secure this Note; provided, however,
subject to the provisions of subsections (b), (c) and (d) of this Article 11,
that any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower’s interest in the Property, in the
Rents and in any other collateral given to Lender to secure this Note.  Lender, by accepting this Note and the
Security Instrument, agrees that it shall not, except as otherwise provided in
this Article 11, sue for, seek or demand any deficiency judgment against
Borrower or any of the Exculpated Parties, in any such action or proceeding,
under or by reason of or under or in connection with this Note, the Security
Instrument or the Other Security Documents. 
The provisions of this Article 11 shall not, however, (i) constitute
a waiver, release or impairment of any obligation evidenced or secured by this
Note, the Security Instrument or the Other Security Documents delivered to
Lender; (ii) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument; (iii) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection with
this Note, the Security Instrument, or the Other Security Documents; (iv) impair
the right of Lender to obtain the appointment of a receiver; (v) impair
the

 

8

 

enforcement of the Assignment of Leases and Rents executed in
connection herewith; (vi) impair the right of Lender to enforce the
provisions of Section 12.2 of the Security Instrument or of Section 3.12(e) of
the Security Instrument; or (vii) impair the right of Lender to obtain a
deficiency judgment or other judgment on the Note against Borrower if necessary
to fully realize the security granted by the Security Instrument or to commence
any other appropriate action or proceeding in order for Lender to exercise its
remedies against the Property.

 

(b)                                 Notwithstanding
the provisions of this Article 11 to the contrary, Borrower shall be
personally liable to Lender for the Losses (as defined in the Security
Instrument) Lender incurs due to: (i) fraud or intentional
misrepresentation by Borrower or any of the Exculpated Parties in connection
with the Loan; (ii) the gross negligence or willful misconduct of
Borrower; (iii) the removal or disposal of any portion of the Property
after an Event of Default; (iv) Borrower’s misapplication,
misappropriation or conversion of Rents received by Borrower after the
occurrence of an Event of Default; (v) Borrower’s misapplication,
misappropriation or conversion of tenant security deposits or Rents collected
in advance; (vi) the misapplication, misappropriation or conversion of
insurance proceeds or condemnation awards; (vii) Personal Property (as
defined in the Security Instrument) taken from the Property by or on behalf of
Borrower or any of the Exculpated Parties and not replaced with Personal
Property of the same utility and of the same or greater value; (viii) any
act of arson by Borrower or any of the Exculpated Parties; (ix) any fees
or commissions paid by Borrower after the occurrence of an Event of Default to
any Exculpated Party in violation of the terms of this Note, the Security
Instrument or the Other Security Documents; (x) failure to pay charges for
labor or materials or other charges that can create liens on any portion of the
Property; (xi) any security deposits, advance deposits or any other deposits
collected with respect to the Property not being delivered to Lender upon a
foreclosure of the Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases (as defined in the Security Instrument) prior to the
occurrence of the Event of Default that gave rise to such foreclosure or action
in lieu thereof; (xii) any failure by Borrower to permit on-site inspections of
the Property as required by the Security Instrument and/or the Other Security
Documents; (xiii) any failure of Borrower to appoint a new property manager
upon the request of Lender as required by the terms of the Security Instrument
and/or the Other Security Documents; (xiv) Borrower’s breach of, or failure to
comply with, the representations, warranties and covenants contained in
Articles 5.8(b), 5.19 and/or 12 of the Security Instrument; (xv) any failure by
Innovative Micro Technology, Inc. (“Manager”) to deposit all Rents in the
Restricted Account (as defined in the Cash Management Agreement) in accordance
with the terms and conditions of that certain Cash Management Agreement made by
and between Lender, Borrower and Manager, dated as of the date hereof (“Cash
Management Agreement”); and (xvi) 
Borrower’s failure to obtain a permanent, unconditional certificate of
occupancy for the Property.

 

(c)                                  Notwithstanding
the foregoing, the agreement of Lender not to pursue recourse liability as set
forth in subsection (a) above SHALL BECOME NULL AND VOID and shall be
of no further force and effect and the Debt shall be fully recourse to Borrower
in the event that: (i) the first full monthly payment of principal and
interest under this Note is not paid when due; (ii) Borrower fails to
provide financial information to Lender as required by Section 3.12 of the
Security Instrument or fails to comply with any provision of Section 4.2
of the Security Instrument; (iii) Borrower defaults under Article 8
of the Security Instrument;

 

9

 

(iv) Borrower files a voluntary petition under the U.S. Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law; (v) an
affiliate, officer, director or representative which controls Borrower,
directly or indirectly, files, or joins in the filing of, an involuntary
petition against Borrower under the U.S. Bankruptcy Code or any other Federal
or state bankruptcy or insolvency law, or solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower from any
person or entity; (vi)  Borrower files an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other person or entity under the U.S. Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, or solicits or causes to be
solicited petitioning creditors for any involuntary petition from any person or
entity; (vii) any affiliate, officer, director or representative which
controls Borrower consents to or acquiesces in or joins in an application for
the appointment of a custodian, receiver, trustee, or examiner for Borrower or
any portion of the Property; or (viii) Borrower makes an assignment for
the benefit of creditors, or admits, in writing or in any legal proceeding, its
insolvency or inability to pay its debts as they become due.

 

(d)                                 Nothing
herein shall be deemed to be a waiver of any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file
a claim for the full amount of the indebtedness secured by the Security
Instrument or to require that all collateral shall continue to secure all of
the indebtedness owing to Lender in accordance with this Note, the Security
Instrument and the Other Security Documents.

 

ARTICLE XII

AUTHORITY

 

Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Security Instrument and the Other
Security Documents and that this Note, the Security Instrument and the Other
Security Documents constitute valid and binding obligations of Borrower.

 

ARTICLE XIII

GOVERNING LAW

 

This Note shall be governed, construed, applied and
enforced in accordance with the laws of the state in which the Property is
located.

 

ARTICLE XIV

NOTICES

 

All notices required or permitted hereunder shall be
given as provided in the Security Instrument.

 

10

 

ARTICLE XV

INCORPORATION BY REFERENCE

 

All of the terms, covenants and conditions contained
in the Security Instrument and the Other Security Documents are hereby made
part of this Note to the same extent and with the same force as if they were
fully set forth herein.

 

ARTICLE XVI

 

MISCELLANEOUS

 

(a)                                  Wherever
pursuant to this Note it is provided that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, reasonable legal
fees and disbursements of Lender, whether with respect to retained firms, the
reimbursement for the expenses of in-house staff, or otherwise.  Borrower shall pay to Lender on demand any
and all expenses, including legal expenses and reasonable attorneys’ fees,
incurred or paid by Lender in enforcing this Note, whether or not any legal
proceeding is commenced hereunder, together with interest thereon at the
Default Rate from the date paid or incurred by Lender until such expenses are
paid by Borrower.

 

(b)                                 This
Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom enforcement
of any modification, amendment, waiver, extension, change, discharge or
termination is sought.

 

(c)                                  If
Borrower consists of more than one person or party, the obligations and
liabilities of each person or party shall be joint and several.

 

(d)                                 Whenever
used, the singular number shall include the plural, the plural number shall
include the singular, and the words “Lender” and “Borrower” shall include their
respective successors, assigns, heirs, executors and administrators.

 

[NO FURTHER TEXT ON THIS PAGE]

 

11

 

IN WITNESS WHEREOF, Borrower has duly executed this
Note as of the day and year first above written.

 

	
   

  	
  BORROWER

  
	
   

  	
   

  	
   

  
	
   

  	
  ROBIN HILL
  BUSINESS PARK, LLC, a

  
	
   

  	
  Delaware limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Innovative Micro
  Technology, Inc., a

  
	
   

  	
   

  	
  Delaware
  corporation, its

  
	
   

  	
   

  	
  sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: John S.
  Foster

  
	
   

  	
   

  	
   

  	
  Title: President and
  Chief Executive

  
	
   

  	
   

  	
   

  	
   

  	
   OfficerExhibit 10.2

 

 

MSMC Loan No. 05-20308

 

ROBIN HILL BUSINESS PARK, LLC, as grantor

(Borrower)

 

 

to

 

 

FIRST AMERICAN TITLE COMPANY, as trustee

(Trustee)

 

 

and

 

 

MORGAN STANLEY MORTGAGE CAPITAL INC, as beneficiary

(Lender)

 

 

 

DEED OF TRUST AND

SECURITY AGREEMENT

 

 

 

	
   

  	
  Dated as of:

  	
  June 30,
  2005

  
	
   

  	
   

  	
   

  
	
   

  	
  Location:

  	
  75 Robin Hill
  Road

  
	
   

  	
   

  	
  Goleta,
  California

  
	
   

  	
   

  	
   

  
	
   

  	
  PREPARED BY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILLS CUMMIS
  EPSTEIN & GROSS P.C.

  	
   

  
	
   

  	
  One Riverfront
  Plaza

  	
   

  
	
   

  	
  Newark, New
  Jersey  07102

  	
   

  
	
   

  	
  Attention:  Robert Hempstead, Esq.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UPON RECORDATION
  RETURN TO:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILLS CUMMIS
  EPSTEIN & GROSS P.C.

  	
   

  
	
   

  	
  One Riverfront
  Plaza

  	
   

  
	
   

  	
  Newark, New
  Jersey  07102

  	
   

  
	
   

  	
  Attention:  Jacqueline Cichoracki

  	
   

  
				

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
  GRANTS OF SECURITY

  	
   

  
	
   

  	
  Section 1.1

  	
   

  	
  Property Mortgaged

  	
   

  
	
   

  	
  Section 1.2

  	
   

  	
  Assignment of Leases and Rents

  	
   

  
	
   

  	
  Section 1.3

  	
   

  	
  Security Agreement

  	
   

  
	
   

  	
  Section 1.4

  	
   

  	
  Pledge of Monies Held

  	
   

  
	
   

  	
  Section 1.5

  	
   

  	
  Conditions to Grant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  DEBT AND OBLIGATIONS SECURED

  	
   

  
	
   

  	
  Section 2.1

  	
   

  	
  Debt

  	
   

  
	
   

  	
  Section 2.2

  	
   

  	
  Other Obligations

  	
   

  
	
   

  	
  Section 2.3

  	
   

  	
  Debt and Other Obligations

  	
   

  
	
   

  	
  Section 2.4

  	
   

  	
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  BORROWER COVENANTS

  	
   

  
	
   

  	
  Section 3.1

  	
   

  	
  Payment of Debt

  	
   

  
	
   

  	
  Section 3.2

  	
   

  	
  Incorporation by Reference

  	
   

  
	
   

  	
  Section 3.3

  	
   

  	
  Insurance

  	
   

  
	
   

  	
  Section 3.4

  	
   

  	
  Payment of Taxes, etc,

  	
   

  
	
   

  	
  Section 3.5

  	
   

  	
  Escrow Fund

  	
   

  
	
   

  	
  Section 3.6

  	
   

  	
  Condemnation

  	
   

  
	
   

  	
  Section 3.7

  	
   

  	
  Restoration After Casualty/Condemnation

  	
   

  
	
   

  	
  Section 3.8

  	
   

  	
  Leases and Rents

  	
   

  
	
   

  	
  Section 3.9

  	
   

  	
  Maintenance and Use of Property

  	
   

  
	
   

  	
  Section 3.10

  	
   

  	
  Waste

  	
   

  
	
   

  	
  Section 3.11

  	
   

  	
  Compliance With Laws

  	
   

  
	
   

  	
  Section 3.12

  	
   

  	
  Books and Records

  	
   

  
	
   

  	
  Section 3.13

  	
   

  	
  Payment For Labor and Materials

  	
   

  
	
   

  	
  Section 3.14

  	
   

  	
  Performance of Other Agreements

  	
   

  
	
   

  	
  Section 3.15

  	
   

  	
  Change of Name, Identity or Structure

  	
   

  
	
   

  	
  Section 3.16

  	
   

  	
  Existence

  	
   

  
	
   

  	
  Section 3.17

  	
   

  	
  Management

  	
   

  
	
   

  	
  Section 3.18

  	
   

  	
  ERISA

  	
   

  

 

i

 

	
  ARTICLE IV

  	
  SPECIAL COVENANTS

  	
   

  
	
   

  	
  Section 4.1

  	
   

  	
  Property Use

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
  Section 5.1

  	
   

  	
  Warranty of Title

  	
   

  
	
   

  	
  Section 5.2

  	
   

  	
  Legal Status and Authority

  	
   

  
	
   

  	
  Section 5.3

  	
   

  	
  Validity of Documents

  	
   

  
	
   

  	
  Section 5.4

  	
   

  	
  Litigation

  	
   

  
	
   

  	
  Section 5.5

  	
   

  	
  Status of Property

  	
   

  
	
   

  	
  Section 5.6

  	
   

  	
  No Foreign Person

  	
   

  
	
   

  	
  Section 5.7

  	
   

  	
  Separate Tax Lot

  	
   

  
	
   

  	
  Section 5.8

  	
   

  	
  Leases

  	
   

  
	
   

  	
  Section 5.9

  	
   

  	
  Financial Condition

  	
   

  
	
   

  	
  Section 5.10

  	
   

  	
  Business Purposes

  	
   

  
	
   

  	
  Section 5.11

  	
   

  	
  Taxes

  	
   

  
	
   

  	
  Section 5.12

  	
   

  	
  Mailing Address

  	
   

  
	
   

  	
  Section 5.13

  	
   

  	
  No Change in Facts or Circumstances

  	
   

  
	
   

  	
  Section 5.14

  	
   

  	
  Disclosure

  	
   

  
	
   

  	
  Section 5.15

  	
   

  	
  Third Party Representations

  	
   

  
	
   

  	
  Section 5.16

  	
   

  	
  Illegal Activity

  	
   

  
	
   

  	
  Section 5.17

  	
   

  	
  Regulations T, U and X

  	
   

  
	
   

  	
  Section 5.18

  	
   

  	
  No Plan Assets

  	
   

  
	
   

  	
  Section 5.19

  	
   

  	
  No Breach of Fiduciary Duty

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  OBLIGATIONS AND RELIANCE

  	
   

  
	
   

  	
  Section 6.1

  	
   

  	
  Relationship of Borrower and Lender

  	
   

  
	
   

  	
  Section 6.2

  	
   

  	
  No Reliance on Lender

  	
   

  
	
   

  	
  Section 6.3

  	
   

  	
  No Lender Obligations

  	
   

  
	
   

  	
  Section 6.4

  	
   

  	
  Reliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  FURTHER ASSURANCES

  	
   

  
	
   

  	
  Section 7.1

  	
   

  	
  Recording of Security Instrument,
  etc

  	
   

  
	
   

  	
  Section 7.2

  	
   

  	
  Further Acts, etc

  	
   

  
	
   

  	
  Section 7.3

  	
   

  	
  Changes in Tax, Debt Credit and
  Documentary Stamp Laws

  	
   

  
	
   

  	
  Section 7.4

  	
   

  	
  Estoppel Certificates

  	
   

  

 

ii

 

	
   

  	
  Section 7.5

  	
   

  	
  Flood Insurance

  	
   

  
	
   

  	
  Section 7.6

  	
   

  	
  Replacement Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  DUE ON
  SALE/ENCUMBRANCE

  	
   

  
	
   

  	
  Section 8.1

  	
   

  	
  No Sale/Encumbrance

  	
   

  
	
   

  	
  Section 8.2

  	
   

  	
  Sale/Encumbrance Defined

  	
   

  
	
   

  	
  Section 8.3

  	
   

  	
  Lender’s Rights

  	
   

  
	
   

  	
  Section 8.4

  	
   

  	
  Permitted Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  PREPAYMENT

  	
   

  
	
   

  	
  Section 9.1

  	
   

  	
  Prepayment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  DEFAULT

  	
   

  
	
   

  	
  Section 10.1

  	
   

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  RIGHTS AND
  REMEDIES

  	
   

  
	
   

  	
  Section 11.1

  	
   

  	
  Remedies

  	
   

  
	
   

  	
  Section 11.2

  	
   

  	
  Application of Proceeds

  	
   

  
	
   

  	
  Section 11.3

  	
   

  	
  Right to Cure Defaults

  	
   

  
	
   

  	
  Section 11.4

  	
   

  	
  Actions and Proceedings

  	
   

  
	
   

  	
  Section 11.5

  	
   

  	
  Recovery of Sums Required To Be
  Paid

  	
   

  
	
   

  	
  Section 11.6

  	
   

  	
  Examination of Books and Records

  	
   

  
	
   

  	
  Section 11.7

  	
   

  	
  Other Rights, etc

  	
   

  
	
   

  	
  Section 11.8

  	
   

  	
  Right to Release Any Portion of
  the Property

  	
   

  
	
   

  	
  Section 11.9

  	
   

  	
  Violation of Laws

  	
   

  
	
   

  	
  Section 11.10

  	
   

  	
  Right of Entry

  	
   

  
	
   

  	
  Section 11.11

  	
   

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  ENVIRONMENTAL
  MATTERS

  	
   

  
	
   

  	
  Section 12.1

  	
   

  	
  Environmental Representations and
  Warranties

  	
   

  
	
   

  	
  Section 12.2

  	
   

  	
  Environmental Covenants

  	
   

  
	
   

  	
  Section 12.3

  	
   

  	
  Lender’s Rights

  	
   

  
	
   

  	
  Section 12.4

  	
   

  	
  Operations and Maintenance
  Programs

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  INDEMNIFICATIONS

  	
   

  
	
   

  	
  Section 13.1

  	
   

  	
  General Indemnification

  	
   

  
	
   

  	
  Section 13.2

  	
   

  	
  Mortgage and/or Intangible Tax

  	
   

  
	
   

  	
  Section 13.3

  	
   

  	
  Duty to Defend; Attorneys’ Fees
  and Other Fees and Expenses

  	
   

  
	
   

  	
  Section 13.4

  	
   

  	
  Environmental Indemnity

  	
   

  

 

iii

 

	
  ARTICLE XIV

  	
   

  	
  WAIVERS

  	
   

  
	
   

  	
  Section 14.1

  	
   

  	
  Waiver of Counterclaim

  	
   

  
	
   

  	
  Section 14.2

  	
   

  	
  Marshalling and Other Matters

  	
   

  
	
   

  	
  Section 14.3

  	
   

  	
  Waiver of Notice

  	
   

  
	
   

  	
  Section 14.4

  	
   

  	
  Waiver of Statute of Limitations

  	
   

  
	
   

  	
  Section 14.5

  	
   

  	
  Sole Discretion of Lender

  	
   

  
	
   

  	
  Section 14.6

  	
   

  	
  WAIVER OF TRIAL BY JURY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  EXCULPATION

  	
   

  
	
   

  	
  Section 15.1

  	
   

  	
  Exculpation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  NOTICES

  	
   

  
	
   

  	
  Section 16.1

  	
   

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
  APPLICABLE LAW

  	
   

  
	
   

  	
  Section 17.1

  	
   

  	
  Choice of Law

  	
   

  
	
   

  	
  Section 17.2

  	
   

  	
  Provisions Subject to Applicable
  Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  	
  SECONDARY MARKET

  	
   

  
	
   

  	
  Section 18.1

  	
   

  	
  Transfer of Loan

  	
   

  
	
   

  	
  Section 18.2

  	
   

  	
  Cooperation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIX

  	
  COSTS

  	
   

  
	
   

  	
  Section 19.1

  	
   

  	
  Performance at Borrower’s Expense

  	
   

  
	
   

  	
  Section 19.2

  	
   

  	
  Legal Fees for Enforcement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XX

  	
  DEFINITIONS

  	
   

  
	
   

  	
  Section 20.1

  	
   

  	
  General Definitions

  	
   

  
	
   

  	
  Section 20.2

  	
   

  	
  Headings, etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXI

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  
	
   

  	
  Section 21.1

  	
   

  	
  No Oral Change

  	
   

  
	
   

  	
  Section 21.2

  	
   

  	
  Liability

  	
   

  
	
   

  	
  Section 21.3

  	
   

  	
  Inapplicable Provisions

  	
   

  
	
   

  	
  Section 21.4

  	
   

  	
  Duplicate Originals; Counterparts

  	
   

  
	
   

  	
  Section 21.5

  	
   

  	
  Number and Gender

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXII

  	
  PARTIAL RELEASE

  	
   

  
	
   

  	
  Section 22.1

  	
   

  	
  Right to Release the Released
  Property

  	
   

  
	
   

  	
  Section 22.2

  	
   

  	
  Reimbursement of Lender Expenses

  	
   

  

 

iv

 

	
   

  	
  Section 22.3

  	
   

  	
  Liens of Security Instrument
  Otherwise Unaffected

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXIII

  	
  I SPECIAL CALIFORNIA PROVISIONS

  	
   

  
	
   

  	
  Section 23.1

  	
   

  	
  Fixture Filing

  	
   

  
	
   

  	
  Section 23.2

  	
   

  	
  Environmental Default and
  Remedies

  	
   

  
	
   

  	
  Section 23.3

  	
   

  	
  Request For Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XXIV

  	
  DEED OF TRUST PROVISIONS

  	
   

  
	
   

  	
  Section 24.1

  	
   

  	
  Concerning The Trustee

  	
   

  
	
   

  	
  Section 24.2

  	
   

  	
  Trustee’s Fees

  	
   

  
	
   

  	
  Section 24.3

  	
   

  	
  Certain Rights

  	
   

  
	
   

  	
  Section 24.4

  	
   

  	
  Retention of Money

  	
   

  
	
   

  	
  Section 24.5

  	
   

  	
  Perfection of Appointment

  	
   

  
	
   

  	
  Section 24.6

  	
   

  	
  Succession Instruments

  	
   

  

 

v

 

THIS
DEED OF TRUST AND SECURITY AGREEMENT (the “Security Instrument”) is made as of
the 30th day of June, 2005, by ROBIN HILL BUSINESS PARK, LLC, a
Delaware limited liability company, having its principal place of business at
75 Robin Hill Road, Goleta, California 93117, as grantor (“Borrower”) to FIRST
AMERICAN TITLE COMPANY, a California corporation, having an address at 3780
State Street, Santa Barbara, California 93105, as trustee (“Trustee”), for the
benefit of MORGAN STANLEY MORTGAGE CAPITAL INC., a New York corporation, having
an address at 1221 Avenue of the Americas, 27th Floor, New York, New
York  10020, as beneficiary (“Lender”).

 

RECITALS:

 

Borrower by its promissory note of even date herewith
given to Lender is indebted to Lender in the principal sum of NINE MILLION
EIGHT HUNDRED NINETY-FIVE THOUSAND AND 00/100 DOLLARS ($9,895,000.00) (the “Loan
Amount”) in lawful money of the United States of America (the note together
with all extensions, renewals, modifications, substitutions and amendments
thereof shall collectively be referred to as the “Note”), with interest from
the date thereof at the rates set forth in the Note, principal and interest to
be payable in accordance with the terms and conditions provided in the Note.

 

Borrower desires to secure the payment of the Debt (as
defined in Article 2) and the performance of all of its obligations under
the Note and the Other Obligations (as defined in Article 2).

 

ARTICLE I

GRANTS OF SECURITY

 

Section 1.1                                      Property
Mortgaged.  Borrower does hereby
irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey to Trustee, its successors and assigns, for the benefit of Lender,
and grant a security interest to Lender and Trustee in, the following property,
rights, interests and estates now owned, or hereafter acquired by Borrower
(collectively, the “Property”):

 

(a)                                  Land.  The real property described in Exhibit A
attached hereto and made a part hereof (the “Land”);

 

(b)                                 Additional
Land.  All additional lands, estates
and development rights hereafter acquired by Borrower for use in connection
with the Land and the development of the Land and all additional lands and
estates therein which may, from time to time, by supplemental mortgage or
otherwise be expressly made subject to the lien of this Security Instrument;

 

(c)                                  Improvements.  The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (the “Improvements”);

 

1

 

(d)                                 Easements.  All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and
all land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;

 

(e)                                  Fixtures
and Personal Property.  All
machinery, equipment, fixtures (including, but not limited to, all heating, air
conditioning, plumbing, lighting, communications and elevator fixtures) and
other property of every kind and nature whatsoever owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon the
Land and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Land and the
Improvements and all building equipment, materials and supplies of any nature
whatsoever owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land and the Improvements, or
appurtenant thereto, or usable in connection with the present or future
operation and occupancy of the Land and the Improvements (collectively, the “Personal
Property”), and the right, title and interest of Borrower in and to any of the
Personal Property which may be subject to any security interests, as defined in
the Uniform Commercial Code, as adopted and enacted by the state or states
where any of the Property is located (the “Uniform Commercial Code”), and all
proceeds and products of the above;

 

(f)                                    Leases
and Rents.  All leases, subleases and
other agreements affecting the use, enjoyment or occupancy of the Land and/or
the Improvements heretofore or hereafter entered into and all extensions,
amendments and modifications thereto, whether before or after the filing by or
against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as
the same may be amended from time to time (the “Bankruptcy Code”) (the “Leases”)
and all right, title and interest of Borrower, its successors and assigns
therein and thereunder, including, without limitation, any guaranties of the
lessees’ obligations thereunder, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations thereunder and all
rents, additional rents, early termination fees and payments and other
termination fees and payments, revenues, issues and profits (including all oil
and gas or other mineral royalties and bonuses) from the Land and the
Improvements, whether paid or accruing before or after the filing by or against
Borrower of any petition for relief under the Bankruptcy Code (the “Rents”) and
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;

 

(g)                                 Insurance
Proceeds.  All proceeds of and any
unearned premiums on any insurance policies covering the Property, including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to the
Property; 

 

2

 

(h)                                 Condemnation
Awards.  All awards or payments,
including interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of eminent
domain (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade, or for
any other injury to or decrease in the value of the Property;

 

(i)                                     Tax
Certiorari.  All refunds, rebates or
credits in connection with a reduction in real estate taxes and assessments
charged against the Property as a result of tax certiorari or any applications
or proceedings for reduction;

 

(j)                                     Conversion.  All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims; 

 

(k)                                  Rights.  The right, in the name and on behalf of
Borrower, to appear in and defend any action or proceeding brought with respect
to the Property and to commence any action or proceeding to protect the
interest of Lender in the Property; 

 

(l)                                     Agreements.  All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including,
without limitation, the right, upon the occurrence and during the continuance
of an Event of Default (defined below), to receive and collect any sums payable
to Borrower thereunder;

 

(m)                               Intangibles.  All trade names, trademarks, servicemarks,
logos, copyrights, goodwill, books and records and all other general
intangibles relating to or used in connection with the operation of the
Property; and

 

(n)                                 Other
Rights.  Any and all other rights of
Borrower in and to the items set forth in Subsections (a) through
(m) above.

 

Section 1.2                                      Assignment
of Leases and Rents.  Borrower hereby
absolutely and unconditionally assigns to Lender and Trustee Borrower’s right,
title and interest in and to all current and future Leases and Rents; it being
intended by Borrower that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only.  Nevertheless, subject to the terms of this Section 1.2
and Section 3.8, Lender grants to Borrower a revocable license to collect
and receive the Rents.  Borrower shall
hold a portion of the Rents sufficient to discharge all current sums due on the
Debt for use in the payment of such sums.

 

Section 1.3                                      Security
Agreement.  This Security Instrument
is both a real property mortgage and a “security agreement” within the meaning
of the Uniform Commercial Code.  The
Property includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower in the
Property.  By executing and delivering
this Security Instrument, Borrower hereby grants to Lender and Trustee, as
security

 

3

 

for the Obligations (defined in Section 2.3), a security interest
in the Personal Property to the full extent that the Personal Property may be
subject to the Uniform Commercial Code.

 

Section 1.4                                      Pledge
of Monies Held.  Borrower hereby
pledges to Lender any and all monies now or hereafter held by Lender,
including, without limitation, any sums deposited in the Escrow Fund (as
defined in Section 3.5), Net Proceeds (as defined in Section 3.7) and
condemnation awards or payments described in Section 3.6, as additional
security for the Obligations until expended or applied as provided in this
Security Instrument.

 

Section 1.5                                      Conditions
to Grant.  TO HAVE AND TO HOLD the
above granted and described Property unto and to the use and benefit of Lender
and of Trustee, and for their successors and assigns, forever; IN TRUST, WITH
POWER OF SALE, to secure payment to Lender of the Debt at the time and in the
manner provided for its payment in the Note and in this Security Instrument;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the manner
provided in the Note and this Security Instrument, shall well and truly perform
the Other Obligations as set forth in this Security Instrument and shall well
and truly abide by and comply with each and every covenant and condition set
forth herein and in the Note, these presents and the estate hereby granted
shall cease, terminate and be void.

 

ARTICLE II

DEBT AND OBLIGATIONS SECURED

 

Section 2.1                                      Debt.  This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the payment of the following, in such order of priority as Lender may
determine in its sole discretion (the “Debt”):

 

(a)                                  the
indebtedness evidenced by the Note in lawful money of the United States of
America;

 

(b)                                 interest,
default interest, late charges and other sums, as provided in the Note, this
Security Instrument or the Other Security Documents (defined below); 

 

(c)                                  the
Default Consideration (as defined in the Note), if any; 

 

(d)                                 all
other moneys agreed or provided to be paid by Borrower in the Note, this
Security Instrument or the Other Security Documents;

 

(e)                                  all
sums advanced pursuant to this Security Instrument to protect and preserve the
Property and the lien and the security interest created hereby; and

 

(f)                                    all
sums advanced and costs and expenses incurred by Lender in connection with the
Debt or any part thereof, any renewal, extension, or change of or substitution
for the Debt or any part thereof, or the acquisition or perfection of the
security therefor, whether made or incurred at the request of Borrower or
Lender.

 

4

 

Section 2.2                                      Other
Obligations.  This Security
Instrument and the grants, assignments and transfers made in Article 1 are
also given for the purpose of securing the performance of the following (the “Other
Obligations”):

 

(a)                                  all
other obligations of Borrower contained herein;

 

(b)                                 each
obligation of Borrower contained in the Note and in the Other Security
Documents; and

 

(c)                                  each
obligation of Borrower contained in any renewal, extension, amendment,
modification, consolidation, change of, or substitution or replacement for, all
or any part of the Note, this Security Instrument or the Other Security
Documents.

 

Section 2.3                                      Debt
and Other Obligations.  Borrower’s
obligations for the payment of the Debt and the performance of the Other
Obligations shall be referred to collectively below as the “Obligations.”

 

Section 2.4                                      Payments.  Unless payments are made in the required
amount in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender’s sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any
check or draft may be handled for collection in accordance with the practice of
the collecting bank or banks.  Acceptance
by Lender of any payment in an amount less than the amount then due shall be
deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default.

 

ARTICLE III

BORROWER COVENANTS

 

Borrower
covenants and agrees that:

 

Section 3.1                                      Payment
of Debt.  Borrower will pay the Debt
at the time and in the manner provided in the Note and in this Security
Instrument.

 

Section 3.2                                      Incorporation
by Reference.  All the covenants,
conditions and agreements contained in (a) the Note and (b) all and
any of the documents other than the Note or this Security Instrument now or
hereafter executed by Borrower and/or others and by or in favor of Lender,
which wholly or partially secure or guaranty payment of the Note (the “Other
Security Documents”), are hereby made a part of this Security Instrument to the
same extent and with the same force as if fully set forth herein.

 

5

 

Section 3.3                                      Insurance.

 

(a)               Borrower
shall obtain and maintain, or cause to be maintained, insurance for Borrower
and the Property providing at least the following coverages:

 

(i)                    Property
Insurance.  Insurance with respect to
the Improvements and building equipment insuring against any peril now or
hereafter included within the classification “All Risks of Physical Loss” in
amounts at all times sufficient to prevent Lender from becoming a co-insurer
within the terms of the applicable policies and under applicable law, but in
any event such insurance shall be maintained in an amount which, after
application of deductible, shall be equal to the full insurable value of the
Improvements and building equipment, the term “full insurable value” to mean
the actual replacement cost of the Improvements and building equipment (without
taking into account any depreciation, and exclusive of excavations, footings
and foundations, landscaping and paving) determined annually by an insurer, a
recognized independent insurance broker or an independent appraiser selected
and paid by Borrower and in no event less than the coverage required pursuant
to the terms of any Lease;

 

(ii)                 Liability
Insurance.  Comprehensive general
liability insurance, including bodily injury, death and property damage
liability, insurance against any and all claims, including all legal liability
to the extent insurable and imposed upon Lender and all court costs and
attorneys’ fees and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Property in such
amounts as are generally available at commercially reasonable premiums and are
generally required by institutional lenders for properties comparable to the
Property but in any event for a combined single limit of at least $5,000,000;

 

(iii)              Workers’ Compensation Insurance.  Statutory workers’ compensation insurance
with respect to any work on or about the Property;

 

(iv)             Business
Interruption Insurance.  Business
income insurance (A) with loss payable to Lender; (B) covering all
risks required to be covered by the insurance provided for in subsection (i) above
for a period commencing at the time of loss for such length of time as it takes
to repair or replace with the exercise of due diligence and dispatch; (C) containing
an extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been repaired, the
continued loss of income will be insured until such income either returns to
the same level it was at prior to the loss, or the expiration of twelve (12)
months from the date that the Property is repaired or replaced and operations
are resumed, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period; and (D) in an amount equal to one
hundred percent (100%) of the projected gross income from the Property for a
period from the date of loss to a date (assuming total destruction) which is
twelve (12) months from the date that the Property is repaired or replaced and
operations are resumed. The amount of such business income insurance shall be
determined prior to the date hereof and at least once each year thereafter
based on Borrower’s reasonable estimate of the gross income from the Property
for the succeeding twelve (12) month period, based upon the assumption that no
casualty has or will occur.  All proceeds
payable to Lender pursuant to this subsection shall be held by Lender and
shall be applied to the obligations secured by the Loan documents from time to
time due and payable

 

6

 

hereunder and under the Note and the Other Security Documents;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured by the Loan
documents on the respective dates of payment provided for herein and in the
Note and the Other Security Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

 

(v)                Boiler
and Machinery Insurance.  Broad form
boiler and machinery insurance (without exclusion for explosion) covering all
boilers or other pressure vessels, machinery, and equipment located in, on or
about the Property and insurance against loss of occupancy or use arising from
any breakdown in such amounts as are generally required by institutional
lenders for properties comparable to the Property;

 

(vi)             Flood
Insurance.  If required by Subsection 5.5(j)
hereof, flood insurance in an amount at least equal to the lesser of (A) the
principal balance of the Note, or (B) the maximum limit of coverage
available for the Property under the National Flood Insurance Act of 1968, The
Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended;

 

(vii)          Builder’s Risk Insurance.  At all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements (A) owner’s contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in Subsection 3.3(a)(i) written in a so-called
builder’s risk completed value form (1) on a non-reporting basis, (2) against
all risks insured against pursuant to Subsection 3.3(a)(i), (3) including
permission to occupy the Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions; and

 

(viii)       Other Insurance.  Such other insurance with respect to the
Property against loss or damage of the kinds from time to time customarily
insured against and in such amounts as are required by institutional lenders
for properties comparable to the Property.

 

The comprehensive all risk insurance and business
income insurance policies required under subsections (i) and (iv) above
shall be required to cover perils of terrorism and acts of terrorism (for the
amounts set forth in subsections (i) and (iv) above and with
deductibles no greater than those provided in subsections (i) and (iv) above).

 

(b)              All
insurance provided for in Subsection 3.3(a) hereof shall be obtained
under valid and enforceable policies (the “Policies” or in the singular, the “Policy”),
and shall be issued by one or more domestic primary insurer(s) having (i) a
general policy rating of A or better and a financial class of VI or better by A.M.
Best Company, Inc. (or if a rating of A.M. Best Company Inc. is no
longer available, a similar rating from a similar or successor service) and (ii) a
claims paying ability rating by a credit rating agency approved by Lender (a “Rating
Agency”) of not less than AA by Standard & Poor’s Ratings Services or
such comparable rating by such other Rating Agency.  All insurers providing insurance required by
this Security Instrument shall be authorized to issue insurance in the state in
which the Property is located.  The
Policy referred to in Subsection 3.3(a)(ii) above shall name Lender
as an additional named insured and the Policies

 

7

 

referred to in Subsection 3.3(a)(i), (iv), (v), (vi) and
(vii), and as applicable (viii), above shall provide that all proceeds be payable
to Lender as set forth in Section 3.7 hereof.  The Policies referred to in
Subsections 3.3(a)(i), (v), (vi) and (vii) shall also
contain:  (i) a standard “non-contributory
mortgagee” endorsement or its equivalent relating, inter
alia, to recovery by Lender notwithstanding the negligent or
willful acts or omission of Lender; (ii) to the extent available at
commercially reasonable rates, a waiver of subrogation endorsement as to
Lender; and (iii) an endorsement providing for a deductible per loss of an
amount not more than that which is customarily maintained by prudent owners of
similar properties in the general vicinity of the Property, but in no event in
excess of $10,000.  The Policy referred
to in Subsection 3.3(a)(i) above shall provide coverage for
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together with an “Ordinance or Law
Coverage” or “Enforcement” endorsement if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures or
uses.  All Policies shall contain (i) a
provision that such Policies shall not be cancelled or terminated, nor shall
they expire, without at least thirty (30) days’ prior written notice to Lender
in each instance; and (ii) include effective waivers by the insurer of all
claims for Insurance Premiums (defined below) against any loss payees,
additional insureds and named insureds (other than Borrower).  Certificates of insurance with respect to all
renewal and replacement Policies shall be delivered to Lender not less than
twenty (20) days prior to the expiration date of any of the Policies required
to be maintained hereunder, which certificates shall bear notations evidencing
payment of applicable premiums (the “Insurance Premiums”).  Certificates of such replacement Policies
shall be delivered to Lender promptly after Borrower’s receipt thereof but in
any case within thirty (30) days after the effective date thereof.  If Borrower fails to maintain and deliver to
Lender the certificates of insurance required by this Security Instrument, upon
ten (10) days’ prior notice to Borrower, Lender may procure such insurance
at Borrower’s sole cost and expense.

 

(c)                                  Borrower
shall comply with all insurance requirements and shall not bring or keep or
permit to be brought or kept any article upon any of the Property or cause
or permit any condition to exist thereon which would be prohibited by an
insurance requirement, or would invalidate the insurance coverage required
hereunder to be maintained by Borrower on or with respect to any part of the
Property pursuant to this Section 3.3.

 

Section 3.4                                      Payment
of Taxes, etc.

 

(a)                                  Borrower
shall promptly pay all taxes, assessments, water rates, sewer rents,
governmental impositions, and other charges, including without limitation vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Land,  now or hereafter
levied or assessed or imposed against the Property or any part thereof (the “Taxes”),
all ground rents, maintenance charges and similar charges, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the “Other
Charges”), and all charges for utility services provided to the Property as
same become due and payable.  Borrower
will deliver to Lender, promptly upon Lender’s request, evidence satisfactory
to Lender that the Taxes, Other Charges and utility service charges have been
so paid or are not then delinquent. 
Borrower shall not suffer and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or
charge against the Property.  Except to
the extent sums sufficient to pay all Taxes and Other Charges have been deposited
with Lender in accordance with the terms

 

8

 

of this Security Instrument, Borrower shall furnish to Lender paid
receipts for the payment of the Taxes and Other Charges prior to the date the
same shall become delinquent.

 

(b)                                 After
prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in whole or in
part of any of the Taxes, provided that (i) no Event of Default has
occurred and is continuing under the Note, this Security Instrument or any of
the Other Security Documents, (ii) Borrower is permitted to do so under
the provisions of any other mortgage, deed of trust or deed to secure debt affecting
the Property, (iii) such proceeding shall suspend the collection of the
Taxes from Borrower and from the Property or Borrower shall have paid all of
the Taxes under protest, (iv) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder, (v) neither
the Property nor any part thereof or interest therein will be in danger of
being sold, forfeited, terminated, cancelled or lost, and (vi) Borrower
shall have deposited with Lender adequate reserves for the payment of the
Taxes, together with all interest and penalties thereon, unless Borrower has
paid all of the Taxes under protest, or Borrower shall have furnished the security
as may be required in the proceeding, or as may be reasonably requested by
Lender to insure the payment of any contested Taxes, together with all interest
and penalties thereon, taking into consideration the amount in the Escrow Fund
available for payment of Taxes.

 

Section 3.5                                      Escrow
Fund.  In addition to the initial
deposits with respect to Taxes and Insurance Premiums made by Borrower to
Lender on the date hereof to be held by Lender in escrow, Borrower shall pay to
Lender on the first day of each calendar month (a) one-twelfth of an
amount which would be sufficient to pay the Taxes payable, or estimated by
Lender to be payable, during the next ensuing twelve (12) months and (b) one-twelfth
of an amount which would be sufficient to pay the Insurance Premiums due for
the renewal of the coverage afforded by the Policies upon the expiration
thereof (the amounts in (a) and (b) above shall be called the “Escrow
Fund”).  Borrower agrees to notify Lender
immediately of any changes to the amounts, schedules and instructions for
payment of any Taxes and Insurance Premiums of which it has or obtains
knowledge and authorizes Lender or its agent to obtain the bills for Taxes
directly from the appropriate taxing authority. 
The Escrow Fund and the payments of interest or principal or both,
payable pursuant to the Note shall be added together and shall be paid as an
aggregate sum by Borrower to Lender. 
Provided there are sufficient amounts in the Escrow Fund and no Event of
Default exists, Lender shall be obligated to pay the Taxes and Insurance
Premiums as they become due on their respective due dates on behalf of Borrower
by applying the Escrow Fund to the payments of such Taxes and Insurance
Premiums required to be made by Borrower pursuant to Sections 3.3 and 3.4 hereof.  If the amount of the Escrow Fund shall exceed
the amounts due for Taxes and Insurance Premiums pursuant to Sections 3.3 and
3.4 hereof, Lender shall, in its discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Escrow Fund.  In allocating such excess, Lender may deal
with the person shown on the records of Lender to be the owner of the
Property.  If the Escrow Fund is not
sufficient to pay the items set forth in (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall
reasonably estimate as sufficient to make up the deficiency.  The Escrow Fund shall not constitute a trust
fund and may be commingled with other monies held by Lender.  Unless otherwise required by Applicable Laws
(defined in Section 3.11), no earnings or interest on the Escrow Fund
shall be payable to

 

9

 

Borrower. Notwithstanding anything contained herein to the contrary, if
the insurance coverage required by Section 3.3 of this Security Instrument
is provided under a blanket policy covering the Property and other properties
and assets not part of the Property, and such blanket policy complies in all
respects with the requirements of Section 3.3 of this Security Instrument
and is otherwise acceptable in form and substance to Lender in Lender’s sole
and absolute discretion, then, provided no Event of Default has occurred,
Borrower’s obligation to make the monthly deposits to the Escrow Fund for Insurance
Premiums (i.e., those deposits required under clause (b) of this Section 3.5)
shall be waived.

 

Section 3.6                                      Condemnation.  Borrower shall promptly give Lender notice of
the actual or threatened commencement of any condemnation or eminent domain proceeding
and shall deliver to Lender copies of any and all papers served in connection
with such proceedings.  Notwithstanding
any taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note and
in this Security Instrument and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by Lender,
after the deduction of expenses of collection, to the reduction or discharge of
the Debt.  Borrower shall cause the award
or payment made in any condemnation or eminent domain proceeding, which is
payable to Borrower, to be paid directly to Lender.  Lender shall not be limited to the interest
paid on the award by the condemning authority but shall be entitled to receive
out of the award interest at the rate or rates provided herein or in the
Note.  Lender may apply any award or
payment to the reduction or discharge of the Debt whether or not then due and
payable.  If the Property is sold,
through foreclosure or otherwise, prior to the receipt by Lender of the award
or payment, Lender shall have the right, whether or not a deficiency judgment
on the Note (to the extent permitted in the Note or herein) shall have been
sought, recovered or denied, to receive the award or payment, or a portion
thereof sufficient to pay the Debt.

 

Section 3.7                                      Restoration
After Casualty/Condemnation.  In the
event of a casualty or a taking by eminent domain, the following provisions
shall apply in connection with the Restoration (defined below) of the Property:

 

(a)                                  If
the Property shall be damaged or destroyed, in whole or in part, by fire or
other casualty, or if the Property or any portion thereof is taken by the power
of eminent domain Borrower shall give prompt notice of such damage or taking to
Lender and shall promptly commence and diligently prosecute the completion of
the repair and restoration of the Property as nearly as possible to the
condition the Property was in immediately prior to such fire or other casualty
or taking, with such alterations as may be approved by Lender (the “Restoration”).

 

(b)                                 The
term “Net Proceeds” for purposes of this Section 3.7 shall mean:  (i) the net amount of all insurance
proceeds under the Policies carried pursuant to Subsections 3.3(a)(i),
(iv), (v), (vi), (vii) and (viii) of this Security Instrument as a
result of such damage or destruction, after deduction of Lender’s reasonable
costs and expenses (including, but not limited to reasonable counsel fees), if
any, in collecting the same, or (ii) the net amount of all awards and
payments received by Lender with respect to a taking referenced in Section 3.6
of this Security Instrument, after deduction of Lender’s reasonable costs and
expenses (including, but not limited

 

10

 

to reasonable counsel fees), if any, in collecting the same, whichever
the case may be.  If (i) the Net
Proceeds do not exceed $50,000 (the “Net Proceeds Availability Threshold”); (ii) the
costs of completing the Restoration as reasonably estimated by Borrower shall
be less than or equal to the Net Proceeds; (iii) no Event of Default shall
have occurred and be continuing under the Note, this Security Instrument or any
of the Other Security Documents; (iv) the Property and the use thereof
after the Restoration will be in compliance with, and permitted under, all
applicable zoning laws, ordinances, rules and regulations (including,
without limitation, all applicable Environmental Laws (defined in Section 12.1));
(v) (A) in the event that the Net Proceeds are insurance proceeds,
less than twenty-five percent (25%) of the total floor area of the Improvements
has been damaged or destroyed, or rendered unusable as a result of such fire or
other casualty; or (B) in the event that the Net Proceeds are condemnation
awards, less than 25% of the Land constituting the Property is taken, such Land
that is taken is located along the perimeter or periphery of the Property, no
portion of the Improvements is located in such Lands, and such taking does not
materially impair access to the Property; and (vi) Lender shall be satisfied
that any operating deficits, including all scheduled payments of principal and
interest under the Note which will be incurred with respect to the Property as
a result of the occurrence of any such fire or other casualty or taking,
whichever the case may be, will be covered out of (1) the Net Proceeds, or
(2) other funds of Borrower, then the Net Proceeds will be disbursed
directly to Borrower.

 

(c)                                  If
the Net Proceeds are greater than the Net Proceeds Availability Threshold or
Borrower is not otherwise entitled to have the Net Proceeds disbursed directly
to Borrower pursuant to Subsection 3.7(b), such Net Proceeds shall be
forthwith paid to Lender to be held by Lender in a segregated account to be
made available to Borrower for the Restoration in accordance with the
provisions of this Subsection 3.7(c).

 

The
Net Proceeds held by Lender pursuant to this Subsection 3.7(c) shall
be made available to Borrower for payment or reimbursement of Borrower’s
expenses in connection with the Restoration, subject to the following
conditions:

 

(i)                                     no
Event of Default shall have occurred and be continuing under the Note, this
Security Instrument or any of the Other Security Documents;

 

(ii)                                  Lender
shall, within a reasonable period of time prior to request for initial
disbursement, be furnished with an estimate of the cost of the Restoration
accompanied by an independent architect’s certification as to such costs and
appropriate plans and specifications for the Restoration, such plans and
specifications and cost estimates to be subject to Lender’s approval, not to be
unreasonably withheld or delayed;

 

(iii)                               the Net Proceeds,
together with any cash or cash equivalent deposited by Borrower with Lender,
are sufficient to cover the cost of the Restoration as such costs are certified
by the independent architect;

 

(iv)                              Net
Proceeds are less than the then outstanding principal balance of the Note;

 

11

 

(v)                                 (A) in
the event that the Net Proceeds are insurance proceeds, less than twenty-five
percent (25%) of the total floor area of the Improvements has been damaged or
destroyed, or rendered unusable as a result of such fire or other casualty; or (B) in
the event that the Net Proceeds are condemnation awards, less than 25% of the
Land constituting the Property is taken, such Land that is taken is located
along the perimeter or periphery of the Property, no portion of the
Improvements is located in such Lands and such taking does not materially
impair access to the Property;

 

(vi)                              Lender
shall be satisfied that any operating deficits, including all scheduled
payments of principal and interest under the Note which will be incurred with
respect to the Property as a result of the occurrence of any such fire or other
casualty or taking, whichever the case may be, will be covered out of (1) the
Net Proceeds, or (2) other funds of Borrower;

 

(vii)                           Lender shall be satisfied
that, upon the completion of the Restoration, the net cash flow of the Property
will be restored to a level sufficient to cover all carrying costs and
operating expenses of the Property, including, without limitation, debt service
on the Note and all required replacement reserves, reserves for tenant
improvements and leasing commissions;

 

(viii)                        the Restoration can reasonably
be completed on or before the earliest to occur of (A) six (6) months
prior to the Maturity Date (as defined in the Note), (B) the earliest date
required for such completion under the terms of any Major Leases (defined
below) and (C) such time as may be required under applicable zoning law,
ordinance, rule or regulation in order to repair and restore the Property
to as nearly as possible the condition it was in immediately prior to such fire
or other casualty or to such taking, as applicable; and

 

(ix)                                the
Property and the use thereof after the Restoration will be in compliance with,
and permitted under, all applicable zoning laws, ordinances, rules and
regulations (including, without limitation, all applicable Environmental Laws
(defined in Section 12.1).

 

(d)                                 The
Net Proceeds held by Lender until disbursed in accordance with the provisions
of this Section 3.7 shall constitute additional security for the
Obligations.  The Net Proceeds other than
the Net Proceeds paid under the Policy described in Subsection 3.3(a)(iv) which
shall be applied by Lender pursuant to and in accordance with the provisions of
Subsection 3.3(a)(iv)) shall be disbursed by Lender to, or as directed by,
Borrower, in an amount equal to the costs actually incurred from time to time
for work in place as part of the Restoration less customary retainage from time
to time during the course of the Restoration, not more frequently than once per
month, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that
they are to be paid for out of the requested disbursement) in connection with
the Restoration have been paid for in full, and (B) there exist no notices
of pendency, stop orders, mechanic’s or materialman’s liens or notices of
intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property arising out of the Restoration which have not either
been fully bonded and discharged of record or in the alternative fully insured
to the satisfaction of Lender by the title

 

12

 

company insuring the lien of this Security Instrument.  Final payment shall be made after submission
to Lender of all licenses, permits, certificates of occupancy and other
required approvals of governmental authorization having jurisdiction and
Casualty Consultant’s (as defined below) certification that the Restoration has
been fully completed.

 

(e)                                  Lender
shall have the use of the plans and specifications and all permits, licenses
and approvals required or obtained in connection with the Restoration.  The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts under which they have been engaged, shall be subject to prior review
and acceptance by Lender and an independent consulting engineer selected by
Lender (the “Casualty Consultant”), such acceptance not to be unreasonably
withheld or delayed.  All costs and
expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable counsel
fees and disbursements and the Casualty Consultant’s fees, shall be paid by
Borrower.

 

(f)                                    If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of Lender, be sufficient to pay in full the balance of
the costs which are estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit the
deficiency (the “Net Proceeds Deficiency”) with Lender before any further
disbursement of the Net Proceeds shall be made. 
The Net Proceeds Deficiency deposited with Lender shall be held by
Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the
Net Proceeds, and until so disbursed pursuant to this Section 3.7 shall
constitute additional security for the Obligations.

 

(g)                                 Except
upon the occurrence and continuance of an Event of Default, Borrower shall
settle any insurance claims with respect to the Net Proceeds which in the
aggregate are less than the Net Proceeds Availability Threshold.  Lender shall have the right to participate in
and reasonably approve any settlement for insurance claims with respect to the
Net Proceeds which in the aggregate are greater than the Net Proceeds
Availability Threshold.  If an Event of
Default shall have occurred and be continuing, Borrower hereby irrevocably
empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment.  If the Net
Proceeds are received by Borrower, such Net Proceeds shall, until the
completion of the related work, be held in trust for Lender and shall be
segregated from other funds of Borrower to be used to pay for the cost of the
Restoration in accordance with the terms hereof.

 

(h)                                 The
excess, if any, of the Net Proceeds and the remaining balance, if any, of the
Net Proceeds Deficiency deposited with Lender after (i) the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 3.7, and (ii) the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full and all required
permits, licenses, certificates of occupancy and other required approvals of
governmental authorities having jurisdiction have been issued, shall be remitted
by Lender to Borrower, provided no Event of Default shall have occurred and
shall be continuing under the Note, this Security Instrument or any of the
Other Security Documents.

 

13

 

(i)                                     All
Net Proceeds not required (i) to be made available for the Restoration or (ii) to
be returned to Borrower as excess Net Proceeds pursuant to Subsection 3.7(h) shall
be retained and applied by Lender toward the payment of the Debt whether or not
then due and payable in such order, priority and proportions as Lender in its
discretion shall deem proper or, at the discretion of Lender, the same shall be
paid, either in whole or in part, to Borrower. 
If Lender shall receive and retain Net Proceeds, the lien of this
Security Instrument shall be reduced only by the amount received and retained
by Lender and actually applied by Lender in reduction of the Debt.

 

Section 3.8                                      Leases
and Rents.

 

(a)                                  Borrower
may enter into a proposed Lease (including the renewal or extension of an existing
Lease (“a Renewal Lease”)) without the prior written consent of Lender,
provided such proposed Lease or Renewal Lease (i) provides for rental
rates and terms comparable to existing local market rates and terms (taking
into account the type and quality of the tenant) as of the date such Lease is
executed by Borrower (unless, in the case of a Renewal Lease, the rent payable
during such renewal, or a formula or other method to compute such rent, is
provided for in the original Lease), (ii) is an arms-length transaction
with a bona fide, independent third party tenant, (iii) does not have a
materially adverse effect on the value of the Property taken as a whole, (iv) is
subject and subordinate to the Security Instrument and the lessee thereunder
agrees to attorn to Lender, and (v) is written on the standard form of
lease approved by Lender.  All proposed
Leases which do not satisfy the requirements set forth in this Subsection 3.8(a) shall
be subject to the prior approval of Lender and its counsel, at Borrower’s
expense.  Borrower shall promptly deliver
to Lender copies of all Leases which are entered into pursuant to this Subsection together
with Borrower’s certification that it has satisfied all of the conditions of
this Subsection.

 

(b)                                 Borrower
(i) shall observe and perform all the obligations imposed upon the lessor
under the Leases and shall not do or permit to be done anything to impair the
value of any of the Leases as security for the Debt; (ii) upon request,
shall promptly send copies to Lender of all notices of default which Borrower
shall send or receive thereunder; (iii) shall enforce all of the material
terms, covenants and conditions contained in the Leases upon the part of the
tenant thereunder to be observed or performed, (iv) shall not collect any
of the Rents more than one (1) month in advance (except security deposits
shall not be deemed Rents collected in advance); (v) shall not execute any
other assignment of the lessor’s interest in any of the Leases or the Rents;
and (vi) shall not consent to any assignment of or subletting under any
Leases not in accordance with their terms, without the prior written consent of
Lender.  

 

(c)                                  Borrower
may, without the consent of Lender, amend, modify or waive the provisions of
any Lease or terminate, reduce rents under, accept a surrender of space under,
or shorten the term of, any Lease (including any guaranty, letter of credit or
other credit support with respect thereto) provided that such action (taking
into account, in the case of a termination, reduction in rent, surrender of
space or shortening of term, the planned alternative use of the affected space)
does not have a materially adverse effect on the value of the Property taken as
a whole, and provided that such Lease, as amended, modified or waived, is
otherwise in compliance with the requirements of this Security Instrument and
any subordinate agreement binding upon Lender with respect to such Lease.  A termination of a Lease with a tenant who is

 

14

 

in default beyond applicable notice and grace periods shall not be
considered an action which has a materially adverse effect on the value of the
Property taken as a whole.  Any
amendment, modification, waiver, termination, rent reduction, space surrender
or term shortening which does not satisfy the requirements set forth in this
Subsection shall be subject to the prior approval of Lender and its
counsel, at Borrower’s expense.  Borrower
shall promptly deliver to Lender copies of amendments, modifications and
waivers which are entered into pursuant to this Subsection together with
Borrower’s certification that it has satisfied all of the conditions of this
Subsection.

 

(d)                                 Notwithstanding
anything contained herein to the contrary, Borrower shall not, without the
prior written consent of Lender, enter into, renew, extend, amend, modify,
waive any provisions of, terminate, reduce rents under, accept a surrender of
space under, or shorten the term of, any Major Lease.  The term “Major Lease” shall mean any Lease
demising in the aggregate more than the lesser of (i) 15,000 rentable
square feet or (ii) fifteen percent (15%) of the total rentable square
feet at the Property. 

 

Section 3.9                                      Maintenance
and Use of Property.  Borrower shall
cause the Property to be maintained in a good and safe condition and
repair.  The Improvements and the
Personal Property shall not be removed, demolished or materially altered
(except for normal replacement of the Personal Property) without the consent of
Lender.  Borrower shall promptly repair,
replace or rebuild any part of the Property which may be destroyed by any
casualty, or become damaged, worn or dilapidated or which may be affected by
any proceeding of the character referred to in Section 3.6 hereof and
shall complete and pay for any structure at any time in the process of
construction or repair on the Land. 
Borrower shall not initiate, join in, acquiesce in, or consent to any
change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Property or any part thereof.  If under
applicable zoning provisions the use of all or any portion of the Property is
or shall become a nonconforming use, Borrower will not cause or permit the
nonconforming use to be discontinued or the nonconforming Improvement to be
abandoned without the express written consent of Lender.  Notwithstanding anything contained herein to
the contrary, Borrower may make alterations to the Improvements, which cost is
less than $100,000 in the aggregate without Lender’s consent, provided that
such alterations do not affect the structure of the Improvements or affect the
proper functioning of any of the mechanical, electrical, HVAC, plumbing,
sanitary or other systems of the Improvements.

 

Section 3.10                                Waste.  Borrower shall not commit or suffer any waste
of the Property or make any change in the use of the Property which will in any
way materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security
of this Security Instrument.  Borrower
will not, without the prior written consent of Lender, permit any drilling or
exploration for or extraction, removal, or production of any minerals from the
surface or the subsurface of the Land, regardless of the depth thereof or the
method of mining or extraction thereof.

 

15

 

Section 3.11                                Compliance
With Laws.  

 

(a)                                  Borrower
shall promptly comply with all existing and future federal, state and local
laws, orders, ordinances, governmental rules and regulations or court
orders affecting Borrower, the Property, or the use thereof, including, without
limitation, Prescribed Laws (collectively, “Applicable Laws”).  The term “Prescribed Laws” shall mean,
collectively, (a) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)
(The USA PATRIOT Act), (b) Executive No. 13224 on Terrorist
Financing, effective September 24, 2001, and relating to Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism, (c) the International Emergency Economic Power Act, 50
U.S.C. §1701 et. seq. and (d) all other legal requirements relating to
money laundering or terrorism.

 

(b)                                 Borrower
shall from time to time, upon Lender’s request, provide Lender with evidence
reasonably satisfactory to Lender that each of Borrower and the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.

 

(c)                                  Notwithstanding
any provisions set forth herein or in any document regarding Lender’s approval
of alterations of the Property, Borrower shall not alter the Property in any
manner which would materially increase Borrower’s responsibilities for
compliance with Applicable Laws without the prior written approval of
Lender.  Lender’s approval of the plans,
specifications, or working drawings for alterations of the Property shall
create no responsibility or liability on behalf of Lender for their
completeness, design, sufficiency or their compliance with Applicable
Laws.  The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants.  Lender may condition any such approval upon
receipt of a certificate of compliance with Applicable Laws from an independent
architect, engineer, or other person acceptable to Lender.

 

(d)                                 Borrower
shall give prompt notice to Lender of the receipt by Borrower of any notice
related to a violation of any Applicable Laws and of the commencement of any
proceedings or investigations which relate to compliance with Applicable Laws.

 

(e)                                  After
prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the Applicable Laws affecting the Property, provided
that (i) no Event of Default has occurred and is continuing under the
Note, this Security Instrument or any of the Other Security Documents; (ii) Borrower
is permitted to do so under the provisions of any other mortgage, deed of trust
or deed to secure debt affecting the Property; (iii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower or the Property is subject and shall not
constitute a default thereunder; (iv) neither the Property, any part
thereof or interest therein, any of the tenants or occupants thereof, nor
Borrower shall be affected in any material adverse way as a result of such
proceeding; (v) non-compliance with the Applicable Laws shall not impose
civil or criminal liability on Borrower or Lender; and (vi) Borrower shall
have furnished to Lender all other items reasonably requested by Lender.

 

16

 

Section 3.12        Books and Records.

 

(a)                                  Borrower
and any Guarantors (defined in Subsection 10.1(e)) and Indemnitor(s)
(defined in Section 13.4), if any, shall keep adequate books and records
of account in accordance with generally accepted accounting principles (“GAAP”),
or in accordance with other methods acceptable to Lender in its sole
discretion, consistently applied and furnish to Lender:  

 

(i)                                     monthly,
or if the Loan (defined below) has been securitized or sold as a whole loan by
Lender, quarterly and annual certified rent rolls signed and dated by Borrower,
detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the expiration
date, the extent to which any tenant is in default under any Lease, and any
other information as is reasonably required by Lender, within twenty (20) days
after the end of each calendar month, thirty (30) days after the end of each
fiscal quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;

 

(ii)                                  on
a monthly basis, operating statements of the Property for the immediately
preceding month (and for previous periods if required by Lender), or if the
Loan has been securitized or sold as a whole loan by Lender, quarterly and
annual operating statements of the Property, all of which shall be prepared and
certified by Borrower in the form required by Lender, detailing the revenues
received, the expenses incurred and the net operating income before and after
debt service (principal and interest) and major capital improvements for each
month and containing appropriate year to date information, within twenty (20)
days after the end of each calendar month, thirty (30) days after the end of
each fiscal quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;

 

(iii)                               an annual operating
statement of the Property detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt service and total
cash flow, to be prepared and certified by Borrower in the form required by
Lender, or if required by Lender, an audited annual operating statement
prepared and certified by an independent certified public accountant acceptable
to Lender, within sixty (60) days after the close of each fiscal year of
Borrower;

 

(iv)                              quarterly
and annual balance sheet and profit and loss statements of Borrower, any
Guarantors and any Indemnitor(s) in the form required by Lender, prepared and
certified by the respective Borrower, Guarantors and/or Indemnitor(s), or if
required by Lender, audited financial statements prepared by an independent
certified public accountant acceptable to Lender, within thirty (30) days
after the end of each fiscal quarter or sixty (60) days after the close of
each fiscal year of Borrower, Guarantors and Indemnitor(s), as the case may be;
and

 

(v)                                 an
annual operating budget presented on a monthly basis consistent with the annual
operating statement described above for the Property, including cash flow
projections for the upcoming year, and all proposed capital replacements and
improvements at least fifteen (15) days prior to the start of each fiscal year.

 

17

 

(b)                                 Upon
request from Lender, Borrower, any Guarantor and any Indemnitor shall furnish
in a timely manner to Lender:

 

(i)                                     a
property management report for the Property, showing the number of inquiries
made and/or rental applications received from tenants or prospective tenants
and deposits received from tenants and any other information requested by
Lender, in reasonable detail and certified by Borrower (or an officer, general
partner, member or principal of Borrower if Borrower is not an individual)
under penalty of perjury to be true and complete, but no more frequently than
quarterly; and

 

(ii)                                  an
accounting of all security deposits held in connection with any Lease of any
part of the Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of
the person to contact at such financial institution, along with any authority
or release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions.

 

(c)                                  Borrower,
any Guarantor and any Indemnitor shall furnish Lender with such other
additional financial or management information (including State and Federal tax
returns) as may, from time to time, be reasonably required by Lender in form
and substance satisfactory to Lender.

 

(d)                                 Borrower,
any Guarantor and any Indemnitor shall furnish to Lender and its agents
convenient facilities for the examination and audit of any such books and
records.

 

(e)                                  Borrower
acknowledges the importance to Lender of the timely delivery of each of the
items required by this Section 3.12 (each, a “Required Financial Item” and
collectively, the “Required Financial Items”). 
In the event Borrower fails to deliver to Lender any of the Required
Financial Items within the time frame specified herein (each such event, a “Reporting
Failure”), in addition to constituting an Event of Default hereunder and
without limiting Lender’s other rights and remedies with respect to the
occurrence of such an Event of Default, Borrower shall pay to Lender the sum of
$1,000.00 per occurrence for each Reporting Failure.  It shall constitute a further Event of
Default hereunder if any such payment is not received by Lender within thirty
(30) days of the date on which such payment is due, and Lender shall be
entitled to the exercise of all of its rights and remedies provided hereunder.

 

(f)                                    In
the event that two (2) Reporting Failures occur during any twelve (12)
month period during the term of the Loan, Borrower agrees to establish a
lockbox and lockbox account pursuant to Lender’s requirements, each in the name
of Lender, and to execute Lender’s standard form Cash Management Agreement,
together with any documentation ancillary thereto as required by Lender,
including, without limitation, a lockbox agreement with a bank acceptable to
Lender, signature cards and letters to tenants, credit card companies and other
account receivable counterparties directing them to pay all rents, receivables
and other sums directly to the lockbox account.

 

Section 3.13                                Payment
For Labor and Materials.  Borrower
will promptly pay when due all bills and costs for labor, materials, and
specifically fabricated materials incurred in

 

18

 

connection with the Property and never permit to exist in respect of
the Property or any part thereof any lien or security interest, even though
inferior to the liens and the security interests hereof, and in any event never
permit to be created or exist in respect of the Property or any part thereof
any other or additional lien or security interest other than the liens or
security interests hereof, except for the Permitted Exceptions (defined below).

 

Section 3.14                                Performance
of Other Agreements.  Borrower shall
observe and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose of
further securing an Obligation secured hereby and any amendments, modifications
or changes thereto.

 

Section 3.15                                Change
of Name, Identity or Structure. 
Except as may be permitted under Article 8 hereof, Borrower will
not change Borrower’s name, identity (including its trade name or names) or, if
not an individual, Borrower’s corporate, partnership or other structure without
first (a) notifying the Lender of such change in writing at least thirty
(30) days prior to the effective date of such change, (b) taking all
action required by Lender for the purpose of perfecting or protecting the lien
and security interest of Lender and (c) in the case of a change in
Borrower’s structure, without first obtaining the prior written consent of the
Lender.  Borrower shall promptly notify
Lender in writing of any change in its organizational identification
number.  If Borrower does not now have an
organizational identification number and later obtains one, Borrower shall
promptly notify Lender in writing of such organizational identification number.

 

Section 3.16                                Existence.  Borrower will continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights
to do business in the state where the Property is located and (c) its
franchises and trade names, if any.

 

Section 3.17                                Management.  The management of the Property shall be by
either:  (a) Borrower or an entity
affiliated with Borrower approved by Lender for so long as Borrower or said
affiliated entity is managing the Property in a first class manner; or (b) a
professional property management company approved by Lender.  Such management by an affiliated entity or a
professional property management company shall be pursuant to a written
agreement approved by Lender.  In no event
shall any manager be removed or replaced or the terms of any management
agreement modified or amended without the prior written consent of Lender.  In the event of default hereunder or under
any management contract then in effect, which default is not cured within any
applicable grace or cure period, Lender shall have the right to immediately
terminate, or to direct Borrower to immediately terminate, such management
contract and to retain, or to direct Borrower to retain, a new management agent
approved by Lender.  All Rents generated
by or derived from the Property shall first be utilized solely for current
expenses directly attributable to the ownership and operation of the Property,
including, without limitation, current expenses relating to Borrower’s
liabilities and obligations with respect to the Note, this Security Instrument
and the Other Security Documents, and none of the Rents generated by or derived
from the Property shall be diverted by Borrower and utilized for any other
purpose unless all such current expenses attributable to the ownership and
operation of the Property have been fully paid and satisfied.

 

19

 

Section 3.18                                ERISA.  Borrower shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under the Note, this Security
Instrument or the Other Security Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  Borrower shall deliver to Lender such
certifications or other evidence from time to time throughout the term of the
loan, as requested by Lender in its sole discretion, that (A) Borrower is
not an “employee benefit plan” as defined in Section 3(3) of ERISA,
which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any
state statute regulating investments of, or fiduciary obligations with respect
to, governmental plans; and (C) one or more of the following circumstances
is true:

 

(i)                                     Equity
interests in Borrower are publicly offered securities, within the meaning of 29
C.F.R. §2510.3-101(b)(2);

 

(ii)                                  Less
than twenty-five percent (25%) of each outstanding class of equity interests in
Borrower is held by “benefit plan investors” within the meaning of 29 C.F.R.
§2510.3-101(f)(2); or

 

(iii)                               Borrower qualifies as an
“operating company” or a “real estate operating company” within the meaning of
29 C.F.R. §2510.3-101(c) or (e).

 

Section 3.19                                Parking Area.    Borrower shall not allow the parking area
to be used by anyone except for Borrower’s employees, customers and for parking
of buses.  

 

ARTICLE IV

SPECIAL COVENANTS

 

Borrower
covenants and agrees that:

 

Section 4.1                                      Property
Use.  The Property shall be used only
for general office and research and development uses, and for no other use,
without the prior written consent of Lender.

 

Section 4.2                                      Single
Purpose Entity.  It has not since the
date of its formation and shall not and agrees that its general partner(s), if
Borrower is a partnership, or its managing member(s), if Borrower is a limited
liability company (in each case, “Principal”), has not since the date of its
formation and shall not:

 

(a)                                  with
respect to any Principal, fail to be organized as a corporation;

 

(b)                                 with
respect to Borrower, fail to be organized solely for the purpose of (i) acquiring,
developing, owning, managing or operating the Property, (ii) entering into
this Security Instrument and the documents related hereto, and (iii) engaging
in any activity that is incidental, necessary or appropriate to accomplish the
foregoing and, with respect to a Principal, be organized for any purpose other
than (I) owning at least a 0.5% interest in Borrower, (II)

 

20

 

serving as a manager of
Borrower and (III) engaging in any activity that is incidental, necessary or
appropriate to owning an interest in Borrower and serving as a manager of
Borrower;

 

(c)                                  with
respect to Borrower, engage in any business or activity other than the
ownership, operation and maintenance of the Property, and activities incidental
thereto and with respect to Principal, engage in any business or activity other
than the ownership of its interest in Borrower, and activities incidental
thereto including the management of the Property;

 

(d)                                 with
respect to Borrower, acquire or own any material assets other than (i) the
Property, and (ii) such incidental Personal Property as may be necessary
for the operation of the Property and with respect to Principal, acquire or own
any material asset other than (i) its interest in Borrower, and (ii) such
incidental Personal Property as may be necessary to effectuate its purpose;

 

(e)                                  merge
into or consolidate with any person or entity or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure;

 

(f)                                    fail
to preserve its existence as an entity duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, and qualification to do business in the state where
the Property is located, if applicable, or without the prior written consent of
Lender, amend, modify, terminate or fail to comply with the provisions of
Borrower’s Partnership Agreement, Articles or Certificate of Incorporation,
Articles of Organization, Certificate of Formation, Operating Agreement or
similar organizational documents, as the case may be, or of Principal’s
Articles or Certificate of Incorporation or similar organizational documents,
as the case may be;

 

(g)                                 own,
form or acquire any subsidiary or make any investment in, any person or entity,
other than Principal’s investment in Borrower;

 

(h)                                 commingle
its assets with the assets of any of its members, general partners, affiliates,
principals or of any other person or entity nor fail to hold all of its assets
in its own name;

 

(i)                                     with
respect to Borrower, incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt, except for (1) trade
payables in the ordinary course of its business of owning and operating the
Property, provided that such debt is not evidenced by a note and is paid when
due, (2) with respect to Principal, incur any debt secured or unsecured,
direct or contingent (including guaranteeing any obligations), except for trade
payables in the ordinary course of its business of owning an interest in
Borrower and serving as a manager of Borrower, provided that such debt is not
evidenced by a note and is paid when due and (3) other subordinate
financing (the “Subordinate Debt”)
approved by Lender pursuant this Security Instrument, provided that (a) the
aggregate debt service coverage ratio applicable to the Debt and all
Subordinate Debt equals no less than 1.50:1.00, as determined by Lender in its
sole and absolute discretion, (b) all such Subordinate Debt shall be
subject and subordinate in all respects to the Debt to Lender’s satisfaction, (iii) the
documents evidencing and otherwise relating to the Subordinate Debt (“Subordinate Debt

 

21

 

Documents”)
shall be acceptable to Lender in its sole discretion, (d) the
holder(s) of all such Subordinate Debt is acceptable to Lender in its sole
discretion, (e) the holder of all such Subordinate Debt shall execute and
deliver to Lender, Lender’s then standard and customary form of Subordination
and Standstill Agreement, (f) the loan to value ratio applicable to the
Debt and all such Subordinate Debt equals no more than 50%, as determined by
Lender in its sole discretion, (g) the holder(s) of all such Subordinate
Debt shall not exercise any of it’s rights under the Subordinate Debt Documents
without the prior written consent of Lender and the Rating Agencies, which
consent shall not be unreasonably withheld; and (h) the holder(s) of all
such Subordinate Debt shall have no lien or security interest in or to the
Property.

 

(j)                                     become
insolvent or fail to pay its debts and liabilities from its assets as the same
shall become due;

 

(k)                                  fail
to maintain its records, books of account and bank accounts separate and apart
from those of the members, general partners, principals and affiliates of
Borrower or of Principal, as the case may be, the affiliates of a member,
general partner or principal of Borrower or Principal, as the case may be, and
any other person or entity or fail to maintain such books and records in the
ordinary course of its business;

 

(l)                                     enter
into any contract or agreement with any member, general partner, principal or
affiliate of Borrower or of Principal, as the case may be, Guarantor or
Indemnitor, or any member, general partner, principal or affiliate thereof,
except upon terms and conditions that are intrinsically fair, commercially
reasonable and substantially similar to those that would be available on an
arms-length basis with third parties other than any member, general partner,
principal or affiliate of Borrower or of Principal, as the case may be,
Guarantor or Indemnitor, or any member, general partner, principal or affiliate
thereof;

 

(m)                               seek
the dissolution or winding up in whole, or in part, of Borrower or of
Principal, as the case may be;

 

(n)                                 fail
to correct any known misunderstandings regarding the separate identity of
Borrower, or of Principal, as the case may be, from any member, general
partner, principal or affiliate thereof or any other person;

 

(o)                                 guaranty
or become obligated for the debts of any other person or entity or hold out its
credit as being able to satisfy the debts of another person or entity, except
if a Principal is a general partner of Borrower, such an entity may be under
state law liable for the debts of Borrower in its capacity as a “general
partner”;

 

(p)                                 make
any loans or advances to any third party, including any member, general
partner, principal or affiliate of Borrower, or of Principal, as the case may
be, or any member, general partner, principal or affiliate thereof, nor buy or
hold evidence of indebtedness issued by any other person or entity (other than
cash or investment grade securities);

 

(q)                                 fail
to file its own tax returns, nor file a consolidated federal income tax return
with any other entity, unless required by law;

 

22

 

(r)                                    fail
to hold itself out to the public as a legal entity separate and distinct from
any other entity or person, fail to conduct its business solely in its own
name, mislead others as to the identity with which such other party is
transacting business, or suggest that Borrower or Principal, as the case may
be, is responsible for the debts of any third party (including any member,
general partner, principal or affiliate of Borrower, or of Principal, as the
case may be, or any member, general partner, principal or affiliate thereof);

 

(s)                                  fail
to maintain adequate capital for the normal obligations reasonably foreseeable
in a business of its size and character and in light of its contemplated
business operations;

 

(t)                                    share
any common logo with or hold itself out as or be considered as a department or
division of (i) any general partner, principal, member or affiliate of
Borrower or of Principal, as the case may be, (ii) any affiliate of a
general partner, principal or member of Borrower or of Principal, as the case
may be, or (iii) any other person or entity;

 

(u)                                 fail
to maintain separate financial statements and accounting records, showing its
assets and liabilities separate and apart from those of any other person or
entity;

 

(v)                                 have
its assets listed on the financial statement of any other entity;

 

(w)                               fail
to observe all applicable organizational formalities;

 

(x)                                   fail
to pay the salaries of its own employees (if any) from its own funds;

 

(y)                                 fail
to maintain a sufficient number of employees in light of its contemplated
business operations;

 

(z)                                   fail
to allocate fairly and reasonably any overhead expenses that are shared with an
affiliate, including paying for office space and services performed by any
employee of an affiliate; 

 

(aa)                            fail
to use separate stationery, invoices and checks bearing its own name; 

 

(bb)                          pledge
its assets for the benefit of any other person or entity, other than in the
case of Borrower, in connection with the loan secured hereby;

 

(cc)                            acquire
the obligations or securities of any member, general partner, principal or
affiliate of Borrower or of Principal, as the case may be, Guarantor or
Indemnitor, or any member, general partner, principal or affiliate thereof;

 

(dd)                          fail to
maintain its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
entity;

 

(ee)                            with
respect to Borrower, have any obligation to indemnify its partners, officers,
directors or members, as the case may be, or have such an obligation only if it
is fully subordinated to the Debt and will not constitute a claim against it in
the event that cash flow in excess of the amount required to pay the Debt is
insufficient to pay such obligation;

 

23

 

(ff)                                fail,
to the fullest extent permitted by law, to consider the interests of its
creditors in connection with all actions if such entity is a corporation; 

 

(gg)                          have any
of its obligations guaranteed by any member, general partner, principal or
affiliate except Guarantor or Indemnitor;

 

(hh)                          if
Borrower is a single member limited liability company, fail to be organized in
the State of Delaware; or

 

(ii)                                  if
Borrower is a single member limited liability company, fail to have a springing
member which, upon the dissolution of the sole member of Borrower or the
withdrawal or the disassociation of such sole member from Borrower, shall
immediately become the sole member of Borrower.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

Borrower
represents and warrants to Lender that:

 

Section 5.1                                      Warranty
of Title.  Borrower has good title to
the Property and has the right to mortgage, grant, bargain, sell, pledge,
assign, warrant, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it owns the Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown in the title insurance policy
insuring the lien of this Security Instrument (the “Permitted Exceptions”).  Borrower shall forever warrant, defend and
preserve the title and the validity and priority of the lien of this Security
Instrument and shall forever warrant and defend the same to Lender and/or
Trustee against the claims of all persons whomsoever.

 

Section 5.2                                      Legal
Status and Authority.  (a)  Borrower (i) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (ii) is duly qualified to transact business
and is in good standing in the state where the Property is located; (iii) has
all necessary approvals, governmental and otherwise, and full power and
authority to own, operate and lease the Property; and (iv) is in
compliance with all Prescribed Laws. 
Borrower (and the undersigned representative of Borrower, if any) has
full power, authority and legal right to execute this Security Instrument, and
to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey
the Property pursuant to the terms hereof and to keep and observe all of the
terms of this Security Instrument on Borrower’s part to be performed.

 

(b)                                 Borrower’s
exact legal name is correctly set forth in the first paragraph of this Security
Instrument.  Borrower is an organization
of the type specified in the first paragraph of this Security Instrument.  Borrower is incorporated in or organized
under the laws of the state specified in the first paragraph of this Security
Instrument.  Borrower’s principal place
of business and chief executive office, and the place where Borrower keeps its
books and records, including recorded data of any kind or nature, regardless of
the medium or recording, including software, writings, plans, specifications
and schematics, has been for the preceding four (4)

 

24

 

months (or, if less than four (4) months, the entire period of the
existence of Borrower) and will continue to be the address of Borrower set
forth in the first paragraph of this Security Instrument (unless Borrower
notifies Lender in writing at least thirty (30) days prior to the date of such
change).  Borrower’s organizational
identification number, if any, assigned by the state of incorporation or
organization is 3967963.

 

Section 5.3                                      Validity
of Documents.  (a)  The
execution, delivery and performance of the Note, this Security Instrument and
the Other Security Documents and the borrowing evidenced by the Note (i) are
within the power and authority of Borrower; (ii) have been authorized by
all requisite organizational action; (iii) have received all necessary
approvals and consents, corporate, governmental or otherwise; (iv) will
not violate, conflict with, result in a breach of or constitute (with notice or
lapse of time, or both) a material default under any provision of law, any
order or judgment of any court or governmental authority, the articles of
incorporation, by-laws, partnership or trust agreement, articles of
organization, operating agreement, or other governing instrument of Borrower,
or any indenture, agreement or other instrument to which Borrower is a party or
by which it or any of its assets or the Property is or may be bound or
affected; (v) will not result in the creation or imposition of any lien,
charge or encumbrance whatsoever upon any of its assets, except the lien and
security interest created hereby; and (vi) will not require any
authorization or license from, or any filing with, any governmental or other
body (except for the recordation of this Security Instrument in appropriate
land records in the State where the Property is located and except for Uniform
Commercial Code filings relating to the security interest created hereby); and (b) to
the best knowledge of Borrower, the Note, this Security Instrument and the
Other Security Documents constitute the legal, valid and binding obligations of
Borrower.

 

Section 5.4                                      Litigation.  There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower’s knowledge, threatened or
contemplated against Borrower, a Guarantor, if any, an Indemnitor, if any, or
against or affecting the Property that (a) has not been disclosed to
Lender by Borrower in writing, and has a material adverse affect on the
Property or Borrower’s, any Guarantor’s or any Indemnitor’s ability to perform
its obligations under the Note, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by insurance, each as
determined by Lender in its sole discretion.

 

Section 5.5                                      Status
of Property.  

 

(a)                                  Borrower
has obtained all necessary certificates, licenses and other approvals,
governmental and otherwise, necessary for the operation of the Property and the
conduct of its business and all required zoning, building code, land use,
environmental and other similar permits or approvals, all of which are in full
force and effect as of the date hereof and not subject to revocation,
suspension, forfeiture or modification.

 

(b)                                 The
Property and the present and contemplated use and occupancy thereof are in full
compliance with all applicable zoning ordinances, building codes, land use
laws, Environmental Laws, and other similar laws.

 

25

 

(c)                                  The
Property is served by all utilities required for the current or contemplated
use thereof.  All utility service is
provided by public utilities and the Property has accepted or is equipped to
accept such utility service.

 

(d)                                 All
public roads and streets necessary for service of and access to the Property
for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by the
public.

 

(e)                                  The
Property is served by public water and sewer systems.

 

(f)                                    The
Property is free from damage caused by fire or other casualty.

 

(g)                                 All
costs and expenses of any and all labor, materials, supplies and equipment used
in the construction of the Improvements have been paid in full.

 

(h)                                 Borrower
has paid in full for, and is the owner of, all furnishings, fixtures and
equipment (other than tenants’ property) used in connection with the operation
of the Property, free and clear of any and all security interests, liens or
encumbrances, except the lien and security interest created hereby.

 

(i)                                     All
liquid and solid waste disposal, septic and sewer systems located on the
Property are in a good and safe condition and repair and in compliance with all
Applicable Laws.

 

(j)                                     No
portion of the Improvements is located in an area identified by the Secretary
of Housing and Urban Development or any successor thereto as an area having
special flood hazards pursuant to the Flood Insurance Acts or, if any portion
of the Improvements is located within such area, Borrower has obtained and will
maintain the insurance prescribed in Section 3.3 hereof.

 

(k)                                  All
the Improvements lie within the boundaries of the Land.

 

Section 5.6                                      No
Foreign Person.  Borrower is not a “foreign
person” within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended and the related Treasury Department
regulations.

 

Section 5.7                                      Separate
Tax Lot.  The Property is assessed
for real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of
such lot or lots, and no other land or improvements is assessed and taxed together
with the Property or any portion thereof.

 

Section 5.8                                      Leases.  (a) Except as disclosed in the rent roll
for the Property delivered to and approved by Lender in writing prior to the
date hereof, (i) Borrower is the sole owner of the entire lessor’s interest
in the Leases; (ii) the Leases are valid and enforceable and in full force
and effect; (iii) all of the Leases are arms-length agreements with bona
fide, independent third parties; (iv) no party under any Lease is in
default; (v) all Rents due have been paid in full; (vi) the terms of
all alterations, modifications and amendments to the Leases are reflected in
the certified occupancy statement delivered to and approved by Lender; (vii) none
of the Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated;

 

26

 

(viii) none of the Rents have been collected for more than one (1) month
in advance (except a security deposit shall not be deemed rent collected in
advance); (ix) the premises demised under the Leases have been completed
and the tenants under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis; (x) there exist no offsets
or defenses to the payment of any portion of the Rents and Borrower has no
monetary obligation to any tenant under any Lease; (xi) Borrower has
received no notice from any tenant challenging the validity or enforceability
of any Lease; (xii) there are no agreements with the tenants under the
Leases other than expressly set forth in each Lease; (xiii) the Leases are
valid and enforceable against Borrower and the tenants set forth therein;
(xiv) no Lease contains an option to purchase, right of first refusal to
purchase, or any other similar provision; (xv) no person or entity has any
possessory interest in, or right to occupy, the Property except under and
pursuant to a Lease; (xvi) each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recordable subordination
agreement; (xvii) no Lease has the benefit of a non-disturbance agreement
that would be considered unacceptable to prudent institutional lenders,
(xviii) all security deposits relating to the Leases reflected on the
certified rent roll delivered to Lender have been collected by Borrower; and
(xix) no brokerage commissions or finders fees are due and payable
regarding any Lease. 

 

(b)                                 Notwithstanding
anything contained herein to the contrary, Borrower shall not willfully
withhold from Lender any information regarding renewal, extension, amendment,
modification, waiver of provisions of, termination, rental reduction of,
surrender of space of, or shortening of the term of, any Lease during the term
of the Loan.  Borrower further covenants
and agrees that all tenants at the Property as of the date hereof are in
physical occupancy of the premises demised under their Leases, are paying full
rent under their Leases, and have not exercised any right to “go dark” that
they may have under the provisions of their Leases.  Borrower further agrees to provide Lender
with written notice of a tenant “going dark” under such tenant’s lease within
five (5) business days after such tenant “goes dark” and Borrower’s
failure to provide such notice shall constitute an Event of Default under this
Security Instrument.

 

Section 5.9                                      Financial
Condition.  (a)  (i) Borrower
is solvent, and no bankruptcy, reorganization, insolvency or similar proceeding
under any state or federal law with respect to Borrower has been initiated, and
(ii) Borrower has received reasonably equivalent value for the granting of
this Security Instrument.

 

(b)                                 Except
as previously disclosed to Lender in writing, No petition in bankruptcy has
ever been filed by or against Borrower, any Guarantor, any Indemnitor or any
related entity, or any principal, general partner or member thereof, in the
last seven (7) years, and neither Borrower, any Guarantor, any Indemnitor
nor any related entity, or any principal, general partner or member thereof, in
the last seven (7) years has ever made any assignment for the benefit of
creditors or taken advantage of any insolvency act or any act for the benefit
of debtors.

 

Section 5.10                                Business
Purposes.  The loan evidenced by the
Note secured by the Security Instrument and the Other Security Documents (the “Loan”)
is solely for the business purpose of Borrower, and is not for personal,
family, household, or agricultural purposes.

 

Section 5.11                                Taxes.  Borrower, any Guarantor and any Indemnitor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been

 

27

 

filed by them and have paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments
received by them.  Neither Borrower, any
Guarantor nor any Indemnitor knows of any basis for any additional assessment
in respect of any such taxes and related liabilities for prior years.  Borrower confirms that its federal tax identification
number is:  87-0745812.

 

Section 5.12                                Mailing
Address.  Borrower’s mailing address,
as set forth in the opening paragraph hereof or as changed in accordance with
the provisions hereof, is true and correct.

 

Section 5.13                                No
Change in Facts or Circumstances. 
All information in the application for the Loan submitted to Lender (the
“Loan Application”) and in all financing statements, rent rolls, reports,
certificates and other documents submitted in connection with the Loan
Application or in satisfaction of the terms thereof, are accurate, complete and
correct in all respects.  There has been
no adverse change in any condition, fact, circumstance or event that would make
any such information inaccurate, incomplete or otherwise misleading.

 

Section 5.14                                Disclosure.  Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.

 

Section 5.15                                Third
Party Representations.  Each of the
representations and the warranties made by each Guarantor and Indemnitor herein
or in any Other Security Document(s) is true and correct in all material
respects.

 

Section 5.16                                Illegal
Activity.  No portion of the Property
has been or will be purchased, improved, equipped or furnished with proceeds of
any illegal activity and to the best of Borrower’s knowledge, there are no
illegal activities or activities relating to controlled substance at the
Property.

 

Section 5.17                                Regulations T, U and X.   Borrower does not own any “margin stock” as
such term is defined in Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR Part 221), as amended.  Borrower will not use any part of the
proceeds from the loan to be made under this Security Instrument (a) directly
or indirectly, to purchase or carry any such stock or to reduce or retire any
Obligations originally incurred to purchase any such stock within the meaning
of such Regulation, (b) so as to involve Borrower in a violation of
Regulation T, U or X of such Board (12 CFR Parts 220, 221 and 224), as amended,
or (c) for any other purpose not permitted by Section 7 of the
Securities Exchange Act of 1934, as amended, or any of the rules and
regulations respecting the extension of credit promulgated thereunder.

 

Section 5.18                                No Plan Assets.  As of the date hereof and
throughout the term of the loan (a) Borrower is not and will not be an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to Title
I of ERISA, (b) none of the assets of Borrower constitutes or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101,
(c) Borrower is not and will not be a “governmental plan” within the
meaning of Section 3(32) of ERISA, and (d) transactions by or with
Borrower are not and will

 

28

 

not be subject to any state statute regulating investments of, or
fiduciary obligations with respect to, governmental plans.

 

Section 5.19                                No
Breach of Fiduciary Duty.  No person
or entity currently owning a direct or indirect membership or partnership
interest in Borrower (nor any past or current affiliate of such person or
entity), has breached any fiduciary duty owed by such person or entity to any
other person or entity now or previously owning a direct or indirect membership
or partnership interest in Borrower or any prior owner of the Property.

 

ARTICLE VI

OBLIGATIONS AND RELIANCE

 

Section 6.1                                      Relationship
of Borrower and Lender.  The
relationship between Borrower and Lender is solely that of debtor and creditor,
and Lender has no fiduciary or other special relationship with Borrower, and no
term or condition of any of the Note, this Security Instrument and the Other
Security Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.

 

Section 6.2                                      No
Reliance on Lender.  The members,
general partners, principals and (if Borrower is a trust) beneficial owners of
Borrower are experienced in the ownership and operation of properties similar
to the Property, and Borrower and Lender are relying solely upon such expertise
and business plan in connection with the ownership and operation of the
Property.  Borrower is not relying on
Lender’s expertise, business acumen or advice in connection with the Property.

 

Section 6.3                                      No
Lender Obligations.  Notwithstanding
the provisions of Subsections 1.1(f) and (l) or Section 1.2,
Lender is not undertaking the performance of (i) any obligations under the
Leases; or (ii) any obligations with respect to such agreements,
contracts, certificates, instruments, franchises, permits, trademarks, licenses
and other documents.  By accepting or
approving anything required to be observed, performed or fulfilled or to be
given to Lender pursuant to this Security Instrument, the Note or the Other
Security Documents, including without limitation, any officer’s certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not
constitute any warranty or affirmation with respect thereto by Lender.

 

Section 6.4                                      Reliance.  Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Security Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in Article 5 and Article 12
without any obligation to investigate the Property and notwithstanding any
investigation of the Property by Lender; that such reliance existed on the part
of Lender prior to the date hereof; that the warranties and representations are
a material inducement to Lender in accepting the Note, this Security Instrument
and the Other Security

 

29

 

Documents; and that
Lender would not be willing to make the Loan and accept this Security
Instrument in the absence of the warranties and representations as set forth in
Article 5 and Article 12.

 

ARTICLE VII

FURTHER ASSURANCES

 

Section 7.1                                      Recording
of Security Instrument, etc. 
Borrower forthwith upon the execution and delivery of this Security
Instrument and thereafter, from time to time, will cause this Security
Instrument and any of the Other Security Documents creating a lien or security
interest or evidencing the lien hereof upon the Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to publish
notice of and fully to protect and perfect the lien or security interest hereof
upon, and the interest of Lender in, the Property.  Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation, execution,
acknowledgment and/or recording of the Note, this Security Instrument, the
Other Security Documents, any note or deed of trust or mortgage supplemental
hereto, any security instrument with respect to the Property and any instrument
of further assurance, and any modification or amendment of the foregoing
documents, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of this Security Instrument, any deed of trust or mortgage supplemental
hereto, any security instrument with respect to the Property or any instrument
of further assurance, and any modification or amendment of the foregoing
documents, except where prohibited by law so to do.

 

Section 7.2                                      Further
Acts, etc.  Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, notices of assignments, transfers and assurances as
Lender shall, from time to time, require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender and Trustee the Property
and rights hereby deeded, mortgaged, granted, bargained, sold, conveyed,
confirmed, pledged, assigned, warranted and transferred or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Security Instrument or for filing,
registering or recording this Security Instrument, or for complying with all
Applicable Laws.  Borrower, on demand,
will execute and deliver and hereby authorizes Lender, following 10 days’
notice to Borrower, to execute in the name of Borrower or without the signature
of Borrower to the extent Lender may lawfully do so, (i) one or more
financing statements (including, without limitation, initial financing
statements, amendments thereto and continuation statements) with or without the
signature of Borrower as authorized by applicable law, chattel mortgages or
other instruments, to evidence more effectively the security interest of Lender
in the Property and (ii) any amendments or modifications to the Note, this
Security Instrument and/or the Other Security Documents in order to correct any
scrivener’s errors contained herein or therein, including, without limitation,
any errors with respect to the spelling of Borrower’s name, the address of the
Property, the legal description of the Property and/or the date of execution of
the Note, this

 

30

 

Security Instrument and/or the Other Security Documents. Borrower also
ratifies its authorization for Lender to have filed any like initial financing
statements, amendments thereto and continuation statements, if filed prior to
the date of this Security Instrument. 
Borrower grants to Lender an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender pursuant to this Section 7.2.  To the extent not prohibited by applicable
law, Borrower hereby ratifies all acts Lender has lawfully done in the past or
shall lawfully do or cause to be done in the future by virtue of such power of attorney.

 

Section 7.3                                      Changes
in Tax, Debt Credit and Documentary Stamp Laws.  

 

(a)                                  If
any law is enacted or adopted or amended after the date of this Security
Instrument which deducts the Debt from the value of the Property for the
purpose of taxation or which imposes a tax, either directly or indirectly, on
the Debt or Lender’s interest in the Property, Borrower will pay the tax, with
interest and penalties thereon, if any. 
If Lender is advised by counsel chosen by it that the payment of tax by
Borrower would be unlawful or taxable to Lender or unenforceable or provide the
basis for a defense of usury, then Lender shall have the option, exercisable by
written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.  

 

(b)                                 Borrower
will not claim or demand or be entitled to any credit or credits on account of
the Debt for any part of the Taxes or Other Charges assessed against the
Property, or any part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Property, or any part thereof, for real
estate tax purposes by reason of this Security Instrument or the Debt.  If such claim, credit or deduction shall be
required by law, Lender shall have the option, exercisable by written notice of
not less than ninety (90) days, to declare the Debt immediately due and
payable.  

 

(c)                                  If
at any time the United States of America, any State thereof or any subdivision
of any such State shall require revenue or other stamps to be affixed to the
Note, this Security Instrument, or any of the Other Security Documents or
impose any other tax or charge on the same, Borrower will pay for the same,
with interest and penalties thereon, if any.

 

Section 7.4                                      Estoppel
Certificates.  

 

(a)                                  After
request by Lender, Borrower, within ten (10) days, shall furnish Lender or
any proposed assignee with a statement, duly acknowledged and certified,
setting forth (i) the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the
Note, (iv) the terms of payment and maturity date of the Note, (v) the
date installments of interest and/or principal were last paid, (vi) that,
except as provided in such statement, there are no defaults or events which
with the passage of time or the giving of notice or both, would constitute an
event of default under the Note or the Security Instrument, (vii) that the
Note and this Security Instrument are valid, legal and binding obligations and
have not been modified or if modified, giving particulars of such modification,
(viii) whether any offsets or defenses exist against the obligations
secured hereby and, if any are alleged to exist, a detailed description
thereof, (ix) that all Leases are in full force and effect and (provided
the Property is not a residential multifamily property) have not been modified
(or if modified, setting forth all

 

31

 

modifications), (x) the date to which the Rents thereunder have
been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xii) the amount of security deposits
held by Borrower under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other matters
reasonably requested by Lender and reasonably related to the Leases, the
obligations secured hereby, the Property or this Security Instrument.

 

(b)                                 Borrower
shall use its best efforts to deliver to Lender, promptly upon request, duly
executed estoppel certificates from any one or more lessees as required by
Lender attesting to such facts regarding the Lease as Lender may require,
including but not limited to attestations that each Lease covered thereby is in
full force and effect with no defaults thereunder on the part of any party,
that none of the Rents have been paid more than one month in advance, and that
the lessee claims no defense or offset against the full and timely performance
of its obligations under the Lease.

 

(c)                                  Upon
any transfer or proposed transfer contemplated by Section 18.1 hereof, at
Lender’s request, Borrower, any Guarantors and any Indemnitor(s) shall provide
an estoppel certificate to the Investor (defined in Section 18.1) or any
prospective Investor in such form, substance and detail as Lender, such
Investor or prospective Investor may require.

 

Section 7.5                                      Flood
Insurance.  After Lender’s request,
Borrower shall deliver evidence satisfactory to Lender that no portion of the
Improvements is situated in a federally designated “special flood hazard area”
or if it is, that Borrower has obtained insurance meeting the requirements of Section 3.3(a)(vi).

 

Section 7.6                                      Replacement
Documents.  Upon receipt of an
affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any Other Security Document which is not of public
record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or Other Security Document, Borrower will issue, in
lieu thereof, a replacement Note or Other Security Document, dated the date of
such lost, stolen, destroyed or mutilated Note or Other Security Document in
the same principal amount thereof and otherwise of like tenor.

 

ARTICLE VIII

DUE ON SALE/ENCUMBRANCE

 

Section 8.1                                      No
Sale/Encumbrance.  Borrower agrees
that Borrower shall not, without the prior written consent of Lender, sell,
convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise
transfer the Property or any part thereof or any interest therein or any direct
or indirect interest in Borrower or permit the Property or any part thereof or
any interest therein or any direct or indirect interest in Borrower to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred, other than pursuant to Leases of space in the
Improvements to tenants in accordance with the provisions of Section 3.8.

 

32

 

Section 8.2                                      Sale/Encumbrance
Defined.  A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Article 8 shall be deemed to include, but not be
limited to, (a) an installment sales agreement wherein Borrower agrees to
sell the Property or any part thereof for a price to be paid in installments; (b) an
agreement by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale, assignment
or other transfer of, or the grant of a security interest in, Borrower’s right,
title and interest in and to any Leases or any Rents; (c) if Borrower, any
Guarantor, any Indemnitor, or any general or limited partner or member of
Borrower, any Guarantor or any Indemnitor is a corporation, any merger,
consolidation or voluntary or involuntary sale, conveyance, transfer or pledge
of such corporation’s stock (or the stock of any corporation directly or
indirectly controlling such corporation by operation of law or otherwise) or
the creation or issuance of new stock in one or a series of transactions by
which an aggregate of more than 10% of such corporation’s stock shall be vested
in a party or parties who are not now stockholders; (d) if Borrower, any
Guarantor or any Indemnitor or any general or limited partner or member of
Borrower, any Guarantor or any Indemnitor is a limited or general partnership
or joint venture, the change, removal or resignation of a general partner or
the transfer or pledge of the partnership interest of any general partner or
any profits or proceeds relating to such partnership interest or the voluntary
or involuntary sale, conveyance, transfer or pledge of limited partnership
interests (or the limited partnership interests of any limited partnership
directly or indirectly controlling such limited partnership by operation of law
or otherwise); and (e) if Borrower, any Guarantor, any Indemnitor or any
general or limited partner or member of Borrower, any Guarantor or any
Indemnitor is a limited liability company, the change, removal or resignation
of a managing member (or if no managing member, any member or non-member
manager) or the transfer of the membership interest of a managing member (or if
no managing member, any member) or any profits or proceeds relating to such
membership interest or the voluntary or involuntary sale, conveyance, transfer
or pledge of membership interests (or the membership interests of any limited
liability company directly or indirectly controlling such limited liability
company by operation of law or otherwise).

 

Section 8.3                                      Lender’s
Rights.  Lender reserves the right to
condition the consent required hereunder upon a modification of the terms hereof
and on assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
equal to one percent (1%) of the then outstanding principal balance of the
Note, and all of Lender’s expenses incurred in connection with such transfer,
the approval by a Rating Agency of the proposed transferee, the proposed
transferee’s continued compliance with the covenants set forth in this Security
Instrument, including, without limitation, the covenants in Section 4.2
hereof, or such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. 
All of Lender’s expenses incurred shall be payable by Borrower whether
or not Lender consents to the transfer.  Lender shall not be required to demonstrate
any actual impairment of its security or any increased risk of default
hereunder in order to declare the Debt immediately due and payable upon
Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property without Lender’s consent.  This provision shall apply to every sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property regardless of whether voluntary or not, or whether or
not Lender has consented to any previous sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, or transfer of the Property.

 

33

 

Section 8.4                                      Permitted
Transfers.  Notwithstanding the
foregoing provisions of this Section, Lender shall not unreasonably withhold
consent to up to two (2) sales, conveyances or transfers of the Property
in its entirety (hereinafter, “Sale”) after the first anniversary of the first
day of the first calendar month after the date hereof (or the date hereof if
dated the first day of a calendar month) and with respect to each such Sale,
Lender shall not require a modification of the material economic terms hereof
(other than a corresponding increase in Borrower’s deposits into the Escrow
Fund with respect to Taxes in the event each such Sale results in an increase
in the real property tax assessment by the applicable taxing authority), to any
person or entity provided that each of the following terms and conditions are
satisfied with respect to each such Sale:

 

(i)                                     no
default after the expiration of notice or grace periods is then continuing
hereunder, under the Note or under any of the Other Security Documents;

 

(ii)                                  Borrower
gives Lender written notice of the terms of such prospective Sale not less than
thirty (30) days before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the
proposed transferee of the Property (hereinafter, “Buyer”) as Lender would
reasonably require in evaluating an initial extension of credit to a borrower
and pays to Lender a non-refundable application fee in the amount of
$2,500.00.  Lender shall have the right
to approve or disapprove the proposed Buyer, such approval not to be
unreasonably withheld.  In determining
whether to give or withhold its approval of the proposed Buyer, Lender shall
consider the Buyer’s experience and track record in owning and operating
facilities similar to the Property, the Buyer’s financial strength, the Buyer’s
general business standing and the Buyer’s relationships and experience with
contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Lender’s agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such approval
shall be given or withheld based on what Lender determines to be commercially
reasonable and, if given, may be given subject to such conditions as Lender may
deem reasonably appropriate;

 

(iii)                               Borrower pays Lender,
concurrently with the closing of such Sale, a non-refundable assumption fee in
an amount equal to all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys’ fees, incurred by Lender in connection with
the Sale plus an amount equal to one percent (1.0%) of the then outstanding
principal balance of the Note.  Borrower
also pays, concurrently with the closing of such Sale, all costs and expenses
of all third parties and Rating Agencies in connection with the Sale;

 

(iv)                              Buyer
assumes and agrees to pay the indebtedness secured hereby as and when due
subject to the provisions of Article 11 of the Note and, prior to or
concurrently with the closing of such Sale, the Buyer executes, without any
cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption;

 

34

 

(v)                                 Borrower
and the Buyer execute, without any cost or expense to Lender, new financing
statements or financing statement amendments and any additional documents
reasonably requested by Lender;

 

(vi)                              Borrower
delivers to Lender, without any cost or expense to Lender, such endorsements to
Lender’s title insurance policy, hazard insurance endorsements or certificates
and other similar materials as Lender may deem necessary at the time of the
Sale, all in form and substance satisfactory to Lender, including, without
limitation, an endorsement or endorsements to Lender’s title insurance policy
insuring the lien of this Security Instrument insuring that fee simple title to
the Property is vested in the Buyer;

 

(vii)                           Buyer shall furnish, if the
Buyer is a corporation, partnership or other entity, all appropriate papers
evidencing the Buyer’s capacity and good standing, and the qualification of the
signers to execute the assumption of the indebtedness secured hereby, which
papers shall include certified copies of all documents relating to the
organization and formation of the Buyer and of the entities, if any, which are
partners or members of the Buyer.  The
Buyer and such constituent partners, members or shareholders of Buyer (as the
case may be), as Lender shall require, shall be single purpose, “bankruptcy
remote” entities which satisfy the requirements of Article IV hereof and
the requirements of the Rating Agencies, and whose formation documents shall be
approved by counsel to Lender;

 

(viii)                        Buyer shall assume the
obligations of Borrower under any management agreements pertaining to the
Property or assign to Lender as additional security any new management
agreement entered into in connection with such Sale;

 

(ix)                                Buyer
shall furnish an opinion of counsel satisfactory to Lender and its counsel (A) that
the Buyer’s formation documents provide for the matters described in
subparagraph (vii) above, (B) that the assumption of the indebtedness
evidenced hereby has been duly authorized, executed and delivered, and that the
Note, this Security Instrument, the assumption agreement and the Other Security
Documents are valid, binding and enforceable against the Buyer in accordance
with their terms, (C) that the Buyer and any entity which is a controlling
stockholder, member or general partner of Buyer, have been duly organized, and
are in existence and good standing, (D) if required by Lender, that the
assets of the Buyer will not be consolidated with the assets of any other
entity having an interest in, or affiliation with, the Buyer, in the event of
bankruptcy or insolvency of any such entity, and (E) with respect to such
other matters as Lender may reasonably request;

 

(x)                                   Lender
shall have received confirmation in writing from the Rating Agencies that rate
the Securities or Participations (as defined in Section 18.1) to the effect
that the Sale will not result in a qualification, downgrade or withdrawal of
any rating initially assigned or then currently assigned or to be assigned to
the Securities or Participations, as applicable; and

 

35

 

(xi)                                Borrower’s
obligations under the contract of sale pursuant to which the Sale is proposed
to occur shall expressly be subject to the satisfaction of the terms and
conditions of this Section 8.4.

 

ARTICLE IX

PREPAYMENT

 

Section 9.1                                      Prepayment.  The Debt may not be prepaid in whole or in
part except in strict accordance with the express terms and conditions of the
Note. 

 

ARTICLE X

DEFAULT

 

Section 10.1                                Events
of Default.  The occurrence of any
one or more of the following events shall constitute an “Event of Default”:

 

(a)                                  if
any portion of the Debt (other than the payment due on the Maturity Date (as
defined in the Note)) is not paid prior to the fifth (5th) day after the same
is due or if the entire Debt is not paid on or before the Maturity Date;

 

(b)                                 if
any of the Taxes or Other Charges is not paid when the same is due and payable
except to the extent sums sufficient to pay such Taxes and Other Charges have
been deposited with Lender in accordance with the terms of this Security
Instrument;

 

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

 

(d)                                 if
Borrower violates or does not comply with any of the provisions of Section 3.12,
Section 4.2 or Article 8;

 

(e)                                  if
any representation or warranty of Borrower, any Indemnitor or any person
guaranteeing payment of the Debt or any portion thereof or performance by
Borrower of any of the terms of this Security Instrument (a “Guarantor”), or
any member, general partner, principal or beneficial owner of any of the
foregoing, made herein or in the Environmental Indemnity (defined below) or in
any guaranty, or in any certificate, report, financial statement or other
instrument or document furnished to Lender shall have been false or misleading
in any material respect when made;

 

(f)                                    if
(i) Borrower or any managing member or general partner of Borrower, or any
Guarantor or Indemnitor shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator

 

36

 

or other similar official for it or for all or any substantial part of
its assets, or the Borrower or any managing member or general partner of
Borrower, or any Guarantor or Indemnitor shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against
Borrower or any managing member or general partner of Borrower, or any
Guarantor or Indemnitor any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there
shall be commenced against the Borrower or any managing member or general
partner of Borrower, or any Guarantor or Indemnitor any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of any order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty (60) days
from the entry thereof; or (iv) the Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any managing member or general partner of Borrower,
or any Guarantor or Indemnitor shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due; 

 

(g)                                 if
Borrower shall be in default beyond applicable notice and grace periods under
any other mortgage, deed of trust, deed to secure debt or other security
agreement covering any part of the Property whether it be superior or junior in
lien to this Security Instrument;

 

(h)                                 if
the Property becomes subject to any mechanic’s, materialman’s or other lien
other than a lien for local real estate taxes and assessments not then due and
payable and the lien shall remain undischarged of record (by payment, bonding
or otherwise) for a period of thirty (30) days;

 

(i)                                     if
any federal tax lien is filed against Borrower, any member or general partner
of Borrower, any Guarantor, any Indemnitor or the Property and same is not
discharged of record within thirty (30) days after same is filed;

 

(j)                                     if
any default occurs under any guaranty or indemnity executed in connection
herewith (including the Environmental Indemnity, defined in Section 13.4)
and such default continues after the expiration of applicable grace periods, if
any; 

 

(k)                                  if
Borrower shall fail to comply with the covenants as to Prescribed Laws set
forth in Section 3.11 hereof;

 

(l)                                     if
Borrower shall fail to deliver to Lender, within ten (10) days after
request by Lender, the estoppel certificates required pursuant to Section 7.4;
or

 

(m)                               if
any default occurs under any other term, covenant or condition of the Note,
this Security Instrument or the Other Security Documents and such default
continues (i) in the case of any default which can be cured by the payment
of a sum of money, for more than ten (10) days after notice from Lender or
(ii) in the case of any other such default, for thirty (30) days after
notice from Lender, provided that if such default cannot reasonably be cured
within

 

37

 

such thirty (30) day period and Borrower shall have commenced to cure
such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of sixty (60) days.

 

ARTICLE XI

RIGHTS AND REMEDIES

 

Section 11.1                                Remedies.  Upon the occurrence of any Event of Default,
Borrower agrees that Lender may or acting by or through Trustee may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Borrower and in and to the Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender or Trustee may determine,
in their sole discretion, without impairing or otherwise affecting the other
rights and remedies of Lender or Trustee:

 

(a)                                  declare
the entire unpaid Debt to be immediately due and payable;

 

(b)                                 institute
proceedings, judicial or otherwise, for the complete foreclosure of this
Security Instrument under any applicable provision of law in which case the
Property or any interest therein may be sold for cash or upon credit in one or
more parcels or in several interests or portions and in any order or manner;

 

(c)                                  with
or without entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial foreclosure
of this Security Instrument for the portion of the Debt then due and payable,
subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without
loss of priority;

 

(d)                                 sell
for cash or upon credit the Property or any part thereof and all estate, claim,
demand, right, title and interest of Borrower therein and rights of redemption
thereof, pursuant to power of sale or otherwise, at one or more sales, in one
or more parcels, at such time and place, upon such terms and after such notice
thereof as may be required or permitted by law;

 

(e)                                  subject
to the provisions of Article 11 of the Note, institute an action, suit or
proceeding in equity for the specific performance of any covenant, condition or
agreement contained herein, in the Note or in the Other Security Documents;

 

(f)                                    subject
to the provisions of Article 11 of the Note, recover judgment on the Note
either before, during or after any proceedings for the enforcement of this
Security Instrument or the Other Security Documents;

 

(g)                                 apply
for the appointment of a receiver, trustee, liquidator or conservator of the
Property, without notice and without regard for the adequacy of the security
for the Debt and

 

38

 

without regard for the solvency of Borrower, any Guarantor, Indemnitor
or of any person, firm or other entity liable for the payment of the Debt;

 

(h)                                 subject
to any applicable law, the license granted to Borrower under Section 1.2
shall automatically be revoked and Lender may enter into or upon the Property,
either personally or by its agents, nominees or attorneys and dispossess
Borrower and its agents and servants therefrom, without liability for trespass,
damages or otherwise and exclude Borrower and its agents or servants wholly
therefrom, and take possession of all books, records and accounts relating
thereto and Borrower agrees to surrender possession of the Property and of such
books, records and accounts to Lender upon demand, and thereupon Lender may (i) use,
operate, manage, control, insure, maintain, repair, restore and otherwise deal
with all and every part of the Property and conduct the business thereat; (ii) complete
any construction on the Property in such manner and form as Lender deems
advisable; (iii) make alterations, additions, renewals, replacements and
improvements to or on the Property; (iv) exercise all rights and powers of
Borrower with respect to the Property, whether in the name of Borrower or
otherwise, including, without limitation, the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property and every part thereof; (v) require
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be occupied by Borrower; (vi) require
Borrower to vacate and surrender possession of the Property to Lender or to
such receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the Property
to the payment of the Debt, in such order, priority and proportions as Lender
shall deem appropriate in its sole discretion after deducting therefrom all
expenses (including reasonable attorneys’ fees) incurred in connection with the
aforesaid operations and all amounts necessary to pay the Taxes, Other Charges,
insurance and other expenses in connection with the Property, as well as just
and reasonable compensation for the services of Lender, its counsel, agents and
employees;

 

(i)                                     exercise
any and all rights and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the generality of the
foregoing:  (i) the right to take
possession of the Personal Property or any part thereof, and to take such other
measures as Lender or Trustee may deem necessary for the care, protection and
preservation of the Personal Property, and (ii) request Borrower at its
expense to assemble the Personal Property and make it available to Lender at a
convenient place acceptable to Lender. 
Any notice of sale, disposition or other intended action by Lender or
Trustee with respect to the Personal Property sent to Borrower in accordance
with the provisions hereof at least five (5) days prior to such action,
shall constitute commercially reasonable notice to Borrower;

 

(j)                                     apply
any sums then deposited in the Escrow Fund and any other sums held in escrow or
otherwise by Lender in accordance with the terms of this Security Instrument or
any Other Security Document to the payment of the following items in any order
in its sole discretion:  (i) Taxes
and Other Charges; (ii) Insurance Premiums; (iii) interest on the
unpaid principal balance of the Note; (iv) amortization of the unpaid
principal balance of the Note; (v) all other sums payable pursuant to the
Note, this Security Instrument and the Other Security Documents, including
without limitation advances made by Lender pursuant to the terms of this
Security Instrument;

 

39

 

(k)                                  surrender
the Policies maintained pursuant to Article 3 hereof, collect the unearned
Insurance Premiums and apply such sums as a credit on the Debt in such priority
and proportion as Lender in its discretion shall deem proper, and in connection
therewith, Borrower hereby appoints Lender as agent and attorney-in-fact (which
is coupled with an interest and is therefore irrevocable) for Borrower to
collect such Insurance Premiums;

 

(l)                                     apply
the undisbursed balance of any Net Proceeds Deficiency deposit, together with
interest thereon, to the payment of the Debt in such order, priority and
proportions as Lender shall deem to be appropriate in its discretion; or

 

(m)                               pursue
such other remedies as Lender may have under applicable law.

 

In the event of a sale, by foreclosure, power of sale,
or otherwise, of less than all of the Property, this Security Instrument shall
continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority.  Notwithstanding the provisions of this Section 11.1
to the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1(f) shall occur, the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by Lender.

 

Section 11.2                                Application
of Proceeds.  The purchase money,
proceeds and avails of any disposition of the Property, or any part thereof, or
any other sums collected by Lender pursuant to the Note, this Security
Instrument or the Other Security Documents, may be applied by Lender to the
payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.

 

Section 11.3                                Right
to Cure Defaults.  Upon the
occurrence of any Event of Default or if Borrower fails to make any payment or
to do any act as herein provided, Lender may, but without any obligation to do
so and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make or do the same in such manner and to such
extent as Lender may deem necessary to protect the security hereof.  Lender or Trustee is authorized to enter upon
the Property for such purposes, or appear in, defend, or bring any action or
proceeding to protect its interest in the Property or to foreclose this
Security Instrument or collect the Debt. 
The cost and expense of any cure hereunder (including reasonable
attorneys’ fees to the extent permitted by law), with interest as provided in
this Section 11.3, shall constitute a portion of the Debt and shall be due
and payable to Lender upon demand.  All
such costs and expenses incurred by Lender or Trustee in remedying such Event
of Default or such failed payment or act or in appearing in, defending, or
bringing any such action or proceeding shall bear interest at the Default Rate
(as defined in the Note), for the period after notice from Lender that such
cost or expense was incurred to the date of payment to Lender.  All such costs and expenses incurred by
Lender together with interest thereon calculated at the Default Rate shall be
deemed to constitute a portion of the Debt and be secured by this Security
Instrument and the Other Security Documents and shall be immediately due and payable
upon demand by Lender therefor.

 

Section 11.4                                Actions
and Proceedings.  Lender or Trustee
has the right to appear in and defend any action or proceeding brought with
respect to the Property and, after the occurrence and during the continuance of
an Event of Default, to bring any action or proceeding,

 

40

 

in the name and on behalf of Borrower, which Lender, in its discretion,
decides should be brought to protect its interest in the Property.

 

Section 11.5                                Recovery
of Sums Required To Be Paid.  Lender
shall have the right from time to time to take action to recover any sum or
sums which constitute a part of the Debt as the same become due, without regard
to whether or not the balance of the Debt shall be due, and without prejudice
to the right of Lender or Trustee thereafter to bring an action of foreclosure,
or any other action, for a default or defaults by Borrower existing at the time
such earlier action was commenced.

 

Section 11.6                                Examination
of Books and Records.  Lender, its
agents, accountants and attorneys shall have the right, upon prior written
notice to Borrower if no Event of Default exists, to examine and audit, during
reasonable business hours, the records, books, management and other papers of
Borrower and its affiliates or of any Guarantor or Indemnitor which pertain to
their financial condition or the income, expenses and operation of the
Property, at the Property or at any office regularly maintained by Borrower,
its affiliates or any Guarantor or Indemnitor where the books and records are
located.  Lender and its agents shall
have the right to make copies and extracts from the foregoing records and other
papers.  

 

Section 11.7                                Other
Rights, etc.  (a)  The
failure of Lender or Trustee to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Security
Instrument.  Borrower shall not be
relieved of Borrower’s obligations hereunder by reason of (i) the failure
of Lender or Trustee to comply with any request of Borrower, any Guarantor or
any Indemnitor to take any action to foreclose this Security Instrument or
otherwise enforce any of the provisions hereof or of the Note or the Other
Security Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending
the time of payment or otherwise modifying or supplementing the terms of the
Note, this Security Instrument or the Other Security Documents.

 

(b)                                 It
is agreed that the risk of loss or damage to the Property is on Borrower, and
Lender shall have no liability whatsoever for decline in value of the Property,
for failure to maintain the Policies, or for failure to determine whether
insurance in force is adequate as to the amount of risks insured.  Possession by Lender shall not be deemed an
election of judicial relief, if any such possession is requested or obtained,
with respect to any Property or collateral not in Lender’s possession.

 

(c)                                  Lender
may resort for the payment of the Debt to any other security held by Lender in
such order and manner as Lender, in its discretion, may elect.  Lender or Trustee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Lender or Trustee thereafter to foreclose this
Security Instrument.  The rights of
Lender or Trustee under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the
others.  No act of Lender or Trustee
shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. 
Neither Lender nor Trustee shall be limited exclusively to the rights
and remedies herein stated but shall be entitled to every right and remedy now
or hereafter afforded at law or in equity.

 

41

 

Section 11.8                                Right
to Release Any Portion of the Property. 
Lender may release any portion of the Property for such consideration as
Lender may require without, as to the remainder of the Property, in any way
impairing or affecting the lien or priority of this Security Instrument, or
improving the position of any subordinate lienholder with respect thereto,
except to the extent that the obligations hereunder shall have been reduced by
the actual monetary consideration, if any, received by Lender for such release,
and may accept by assignment, pledge or otherwise any other property in place
thereof as Lender may require without being accountable for so doing to any
other lienholder.  This Security
Instrument shall continue as a lien and security interest in the remaining portion
of the Property.

 

Section 11.9                                Violation
of Laws.  If the Property is not in
compliance with Applicable Laws, Lender may impose additional requirements upon
Borrower in connection herewith including, without limitation, monetary
reserves or financial equivalents.

 

Section 11.10                          Right
of Entry.  Lender and its agents
shall have the right to enter and inspect the Property at all reasonable times.

 

Section 11.11                          Subrogation.  If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, Lender shall be
subrogated to all of the rights, claims, liens, titles, and interests existing
against the Property heretofore held by, or in favor of, the holder of such
indebtedness and such former rights, claims, liens, titles, and interests, if
any, are not waived but rather are continued in full force and effect in favor
of Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and
discharge of Borrower’s obligations hereunder, under the Note and the Other
Security Documents and the performance and discharge of the Other Obligations.

 

ARTICLE XII

ENVIRONMENTAL MATTERS

 

Section 12.1                                Environmental
Representations and Warranties. 
Borrower represents and warrants, based upon an environmental site
assessment of the Property and information that Borrower knows or should
reasonably have known, that:  (a) there
are no Hazardous Materials (defined below) or underground storage tanks in, on,
or under the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto (if
such permits are required), if any, and (ii) either (A) in amounts not
in excess of that necessary to operate the Property or (B) fully disclosed
to and approved by Lender in writing pursuant to the written reports resulting
from the environmental site assessments of the Property delivered to Lender
(the “Environmental Report”); (b) there are no past, present or threatened
Releases (defined below) of Hazardous Materials in violation of any
Environmental Law and which would require remediation by a governmental
authority in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental
Laws, or with permits issued pursuant thereto, in connection with the Property
except as described in the Environmental Report; (e) Borrower does not
know of, and has not received, any written or

 

42

 

oral notice or other communication from any person or entity (including
but not limited to a governmental entity) relating to Hazardous Materials in,
on, under or from the Property; (f) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to
environmental conditions in, on, under or from the Property known to Borrower
or contained in Borrower’s files and records, including but not limited to any
reports relating to Hazardous Materials in, on, under or migrating to or from
the Property and/or to the environmental condition of the Property; and (g) the
Property currently displays no evidence of water infiltration or water damage; (h) there
are no prior or current complaints by tenants at the Property regarding water
infiltration or water damage or leaks or odors related thereto, and (i) the
Property currently displays no conspicuous evidence of the growth of Microbial
Matter. “Environmental Law” means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations, standards, policies and
other government directives or requirements, as well as common law, including
but not limited to the Comprehensive Environmental Response, Compensation and
Liability Act and the Resource Conservation and Recovery Act, that apply to
Borrower or the Property and relate to Hazardous Materials. “Hazardous
Materials” shall mean petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives, flammable materials;
radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Property is prohibited by any federal,
state or local authority; any substance that requires special handling; and any
other material or substance now or in the future defined as a “hazardous
substance,” “hazardous material”, hazardous waste”, toxic substance”, “toxic
pollutant”, “contaminant”, or pollutant” within the meaning of any
Environmental Law. “Release” of any Hazardous Materials includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Materials.  “Microbial Matter” shall mean fungi or
bacterial matter which reproduces through the release of spores or the
splitting of cells, including, but not limited to, mold, mildew and viruses,
whether or not such Microbial Matter is living.

 

Section 12.2                                Environmental
Covenants.  Borrower covenants and
agrees that so long as Borrower owns, manages, is in possession of, or
otherwise controls the operation of the Property:  (a) all uses and operations on or of the
Property, whether by Borrower or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto; (b) there
shall be no Releases of Hazardous Materials in, on, under or from the Property;
(c) there shall be no Hazardous Materials in, on, or under the Property,
except those that are both (i) in compliance with all Environmental Laws
and with permits issued pursuant thereto, if and to the extent required, and (ii) (A) in
amounts not in excess of that necessary to operate the Property or (B) fully
disclosed to and approved by Lender in writing; (d) Borrower shall keep
the Property free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other person or entity (the “Environmental Liens”); (e) Borrower
shall, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 12.3 below, including but not limited to
providing all relevant information and making knowledgeable persons available
for interviews; (f) Borrower shall, at its sole cost and expense, perform
any environmental site assessment or other investigation of environmental
conditions in connection with the Property,

 

43

 

pursuant to any reasonable written request of Lender, upon Lender’s
reasonable belief that the Property is not in full compliance with all
Environmental Laws, and share with Lender the reports and other results
thereof, and Lender and other Indemnified Parties shall be entitled to rely on
such reports and other results thereof; (g) Borrower shall, at its sole
cost and expense, comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from the
Property; and (ii) comply with any Environmental Law; (h) Borrower
shall not allow any tenant or other user of the Property to violate any
Environmental Law; and (i) Borrower shall immediately notify Lender in
writing after it has become aware of (A) any presence or Release or
threatened Releases of Hazardous Materials in, on, under, from or migrating
towards the Property; (B) any non-compliance with any Environmental Laws
related in any way to the Property; (C) any actual or potential
Environmental Lien; (D) any required or proposed remediation of
environmental conditions relating to the Property; and (E) any written or
oral notice or other communication of which Borrower becomes aware from any
source whatsoever (including but not limited to a governmental entity) relating
in any way to Hazardous Materials; (j) Borrower shall engage an engineering consultant
reasonably acceptable to Lender each calendar year during the term of the Loan
to conduct (and such consultant shall conduct) a yearly inspection for water
damage; (k) Borrower shall engage an environmental consultant reasonably
acceptable to Lender each calendar year during the term of the Loan to conduct
(and such consultant shall conduct) a yearly inspection for evidence of growth
of Microbial Matter; (l) Borrower shall immediately adopt a remediation plan
reasonably acceptable to Lender with respect to any water damage or Microbial
Matter identified as a result of such yearly environmental and engineering
inspections; (m) Borrower shall undertake any course of action recommended by
the Environmental Protection Agency to prevent the growth of Microbial Matter;
and (n) Borrower shall comply with any and all local, state or federal laws,
legislation, guidelines or statutes at any time in effect with respect to
Microbial Matter.  Any failure of
Borrower to perform its obligations pursuant to this Section 12.2 shall
constitute bad faith waste with respect to the Property.

 

Section 12.3                                Lender’s
Rights.  Lender and any other person
or entity designated by Lender, including but not limited to any representative
of a governmental entity, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon the Property at all reasonable times to assess
any and all aspects of the environmental condition of the Property and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender’s sole discretion) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing. 
Borrower shall cooperate with and provide access to Lender and any such
person or entity designated by Lender.

 

Section 12.4                                Operations
and Maintenance Programs.  Where
recommended by the Environmental Report or as a result of any other
environmental assessment or audit of the Property,  Borrower shall establish and comply with an
operations and maintenance program with respect to the Property, in form and
substance reasonably acceptable to Lender, prepared by an environmental
consultant reasonably acceptable to Lender, which program shall address any
asbestos containing material or lead based paint that may now or in the future
be detected at or on the Property. 
Without limiting the generality of the preceding sentence, Lender may
require (a) periodic notices or reports to Lender in form, substance and
at such intervals as Lender may specify, (b) an amendment to such
operations and maintenance program to address changing

 

44

 

circumstances, laws or other matters, (c) at Borrower’s sole
expense, supplemental examination of the Property by consultants specified by
Lender, (d) access to the Property by Lender, its agents or servicer, to
review and assess the environmental condition of the Property and Borrower’s
compliance with any operations and maintenance program, and (e) variation
of the operations and maintenance program in response to the reports provided
by any such consultants.

 

ARTICLE XIII

INDEMNIFICATIONS

 

Section 13.1                                General
Indemnification.  Borrower shall, at
its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties (defined below) from and against any and all
Losses (defined below) imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following: 
(a) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or any part thereof
or on the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (b) any use, nonuse or condition in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) performance of
any labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (d) any failure of the
Property to be in compliance with any Applicable Laws; (e) any and all
claims and demands whatsoever which may be asserted against Lender by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants, or agreements contained in any Lease; or (f) the
payment of any commission, charge or brokerage fee to anyone which may be
payable in connection with the funding of the Loan evidenced by the Note and
secured by this Security Instrument.  Any
amounts payable to Lender by reason of the application of this Section 13.1
shall become immediately due and payable and shall bear interest at the Default
Rate from the date loss or damage is sustained by Lender until paid.

 

The
term “Losses” shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement of whatever kind or
nature (including but not limited to attorneys’ fees and other costs of
defense).  The term “Indemnified Parties”
shall mean (a) Lender, (b) any prior owner or holder of the Note, (c) any
servicer or prior servicer of the Loan, (d) the officers, directors,
shareholders, partners, members, employees and trustees of any of the
foregoing, and (e) the heirs, legal representatives, successors and
assigns of each of the foregoing.

 

Section 13.2                                Mortgage
and/or Intangible Tax.  Borrower
shall, at its sole cost and expense, protect, defend, indemnify, release and
hold harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any tax on the
making and/or recording of this Security Instrument, the Note or any of the
Other Security Documents.

 

Section 13.3                                Duty
to Defend; Attorneys’ Fees and Other Fees and Expenses.  Upon written request by any Indemnified
Party, Borrower shall defend such Indemnified Party

 

45

 

(if requested by any Indemnified Party, in the name of the Indemnified
Party) by attorneys and other professionals approved by the Indemnified
Parties.  Notwithstanding the foregoing,
any Indemnified Parties may, in their sole discretion, engage their own
attorneys and other professionals to defend or assist them, and, at the option
of Indemnified Parties, their attorneys shall control the resolution of any
claim or proceeding.  Upon demand,
Borrower shall pay or, in the sole discretion of the Indemnified Parties,
reimburse, the Indemnified Parties for the payment of reasonable fees and
disbursements of attorneys, engineers, environmental consultants, laboratories
and other professionals in connection therewith.

 

Section 13.4                                Environmental
Indemnity.  Simultaneously with this
Security Instrument, Borrower and any other person(s) or entity(ies) identified
therein (collectively, the “Indemnitors”) have executed and delivered that
certain environmental indemnity agreement dated the date hereof  to Lender (the “Environmental Indemnity”).

 

ARTICLE XIV

WAIVERS

 

Section 14.1                                Waiver
of Counterclaim.  Borrower hereby
waives the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender arising
out of or in any way connected with this Security Instrument, the Note, any of
the Other Security Documents, or the Obligations.

 

Section 14.2                                Marshalling
and Other Matters.  Borrower hereby
waives, to the extent permitted by law, the benefit of all appraisement,
valuation, stay, extension, reinstatement and redemption laws now or hereafter
in force and all rights of marshalling in the event of any sale hereunder of
the Property or any part thereof or any interest therein.  Further, Borrower hereby expressly waives any
and all rights of redemption from sale under any order or decree of foreclosure
of this Security Instrument on behalf of Borrower, and on behalf of each and
every person acquiring any interest in or title to the Property subsequent to
the date of this Security Instrument and on behalf of all persons to the extent
permitted by Applicable Laws.

 

Section 14.3                                Waiver
of Notice.  Borrower shall not be
entitled to any notices of any nature whatsoever from Lender or Trustee except (a) with
respect to matters for which this Security Instrument specifically and
expressly provides for the giving of notice by Lender or Trustee to Borrower
and (b) with respect to matters for which Lender or Trustee is required by
Applicable Laws to give notice, and Borrower hereby expressly waives the right
to receive any notice from Lender or Trustee with respect to any matter for
which this Security Instrument does not specifically and expressly provide for
the giving of notice by Lender or Trustee to Borrower.

 

Section 14.4                                Waiver
of Statute of Limitations.  Borrower
hereby expressly waives and releases to the fullest extent permitted by law,
the pleading of any statute of limitations as a defense to payment of the Debt
or performance of its Other Obligations.

 

Section 14.5                                Sole
Discretion of Lender.  Wherever
pursuant to this Security Instrument (a) Lender exercises any right given
to it to approve or disapprove, (b) any arrangement or term is to be
satisfactory to Lender, or (c) any other decision or determination is

 

46

 

to be made by Lender, the decision of Lender to approve or disapprove,
all decisions that arrangements or terms are satisfactory or not satisfactory
and all other decisions and determinations made by Lender, shall be in the sole
discretion of Lender, except as may be otherwise expressly and specifically
provided herein.

 

Section 14.6                                WAIVER
OF TRIAL BY JURY.  BORROWER HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY
INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER,
ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

 

ARTICLE XV

EXCULPATION

 

Section 15.1                                Exculpation.  The provisions of Article 11 of the Note
are hereby incorporated by reference to the fullest extent as if the text of
such Article were set forth in its entirety herein.

 

ARTICLE XVI

NOTICES

 

Section 16.1                                Notices.  All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery,
if delivered in person or by facsimile transmission with receipt acknowledged
by the recipient thereof and confirmed by telephone by sender, (ii) one (1) Business
Day (defined below) after having been deposited for overnight delivery with any
reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed to Borrower or Lender, as
the case may be, at the addresses set forth on the first page of this
Security Instrument or addressed as such party may from time to time designate
by written notice to the other parties.

 

Notices
to Borrower shall be addressed to the attention of Pete Altavilla.  Borrower’s telephone number is (805) 681-2807
and facsimile number is (805) 967-2677.

 

Either
party by notice to the other may designate additional or different addresses for
subsequent notices or communications.

 

For
purposes of this Subsection, “Business Day” shall mean a day on which
commercial banks are not authorized or required by law to close in New York,
New York.

 

47

 

ARTICLE XVII

APPLICABLE LAW

 

Section 17.1                                Choice
of Law.  This Security Instrument
shall be governed, construed, applied and enforced in accordance with the laws
of the state in which the Property is located. 

 

Section 17.2                                Provisions
Subject to Applicable Law.  All
rights, powers and remedies provided in this Security Instrument may be
exercised only to the extent that the exercise thereof does not violate any
applicable provisions of law and are intended to be limited to the extent
necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the
provisions of any Applicable Laws.

 

ARTICLE XVIII

SECONDARY MARKET

 

Section 18.1                                Transfer
of Loan.  Lender may, at any time, sell,
transfer or assign the Note, this Security Instrument and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein (the “Participations”) or issue mortgage pass- through
certificates or other securities evidencing a beneficial interest in a rated or
unrated public offering or private placement (the “Securities”).  Lender may forward to each purchaser,
transferee, assignee, servicer, participant, or investor in such Participations
or Securities (collectively, the “Investor”) or any Rating Agency rating such
Securities, each prospective Investor, and any organization maintaining
databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire
relating to the Debt and to Borrower, any Guarantor, any Indemnitor(s) and the
Property, whether furnished by Borrower, any Guarantor, any Indemnitor(s) or
otherwise, as Lender determines necessary or desirable.  Borrower irrevocably waives any and all
rights it may have under Applicable Laws to prohibit such disclosure, including
but not limited to any right of privacy.

 

Section 18.2                                Cooperation.  Borrower, any Guarantor and any Indemnitor
agree to cooperate with Lender in connection with any transfer made or any
Securities created pursuant to this Article XVIII, including, without
limitation, the taking, or refraining from taking, of such action as may be
necessary to satisfy all of the conditions of any Investor, the delivery of an
estoppel certificate required in accordance with Subsection 7.4(c) hereof
and such other documents as may be reasonably requested by Lender and the
execution of amendments to the Note, this Security Instrument and Other
Security Documents and Borrower’s organizational documents as reasonably
requested by Lender.  Borrower shall also
furnish and Borrower, any Guarantor and any Indemnitor consent to Lender
furnishing to such Investors or such prospective Investors or such Rating
Agency any and all information concerning the Property, the Leases, the
financial condition of Borrower, any Guarantor and any Indemnitor as may be
requested by Lender, any Investor, any prospective Investor or any Rating
Agency in connection with any sale, transfer or Participations or Securities.

 

48

 

ARTICLE XIX

COSTS

 

Section 19.1                                Performance
at Borrower’s Expense.  Borrower
acknowledges and confirms that Lender shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension,
renewal, modification, amendment and termination of the Loan, (b) the
release or substitution of collateral therefor, (c) obtaining certain
consents, waivers and approvals with respect to the Property, or (d) the review
of any Lease or proposed Lease or the preparation or review of any
subordination, non-disturbance agreement (the occurrence of any of the above
shall be called an “Event”).  Borrower
further acknowledges and confirms that it shall be responsible for the payment
of all costs of reappraisal of the Property or any part thereof, whether
required by law, regulation, Lender or any governmental or quasi-governmental
authority.  Borrower hereby acknowledges
and agrees to pay, immediately, with or without demand, all such fees (as the
same may be increased or decreased from time to time), and any additional fees
of a similar type or nature which may be imposed by Lender from time to time,
upon the occurrence of any Event or otherwise. 
Wherever it is provided for herein that Borrower pay any costs and
expenses, such costs and expenses shall include, but not be limited to, all
reasonable legal fees and disbursements of Lender, whether with respect to
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.

 

Section 19.2                                Legal
Fees for Enforcement.  (a) Borrower
shall pay all reasonable legal fees incurred by Lender in connection with (i) the
preparation of the Note, this Security Instrument and the Other Security
Documents and (ii) the items set forth in Section 19.1 above, and (b) Borrower
shall pay to Lender on demand any and all expenses, including legal expenses
and attorneys’ fees, incurred or paid by Lender in protecting its interest in
the Property or in collecting any amount payable hereunder or in enforcing its
rights hereunder with respect to the Property, whether or not any legal
proceeding is commenced hereunder or thereunder, together with interest thereon
at the Default Rate from the date paid or incurred by Lender until such
expenses are paid by Borrower.

 

ARTICLE XX

DEFINITIONS

 

Section 20.1                                General
Definitions.  Unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, words used in this Security Instrument may be used interchangeably in
singular or plural form and the word “Borrower” shall mean “each Borrower and
any subsequent owner or owners of the Property or any part thereof or any
interest therein,” the word “Lender” shall mean “Lender and any subsequent
holder of the Note,” the word “Note” shall mean “the Note and any other
evidence of indebtedness secured by this Security Instrument,” the word “person”
shall include an individual, corporation, partnership, limited liability
company, trust, unincorporated association, government, governmental authority,
and any other entity, the word “Property” shall include any portion of the
Property and any interest therein, and the phrases “attorneys’ fees” and “counsel
fees” shall include any and all attorneys’, paralegal and law clerk fees and
disbursements, including, but not limited to, fees and disbursements at the
pre-trial, trial and appellate levels

 

49

 

incurred or paid by Lender in protecting its interest in the Property,
the Leases and the Rents and enforcing its rights hereunder.

 

Section 20.2                                Headings,
etc.  The headings and captions of
various Articles and Sections of this Security Instrument are for convenience
of reference only and are not to be construed as defining or limiting, in any
way, the scope or intent of the provisions hereof.

 

ARTICLE XXI

MISCELLANEOUS PROVISIONS

 

Section 21.1                                No
Oral Change.  This Security
Instrument, and any provisions hereof, may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

 

Section 21.2                                Liability.  If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint
and several.  This Security Instrument
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.

 

Section 21.3                                Inapplicable
Provisions.  If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid,
illegal or unenforceable in any respect, the Note and this Security Instrument
shall be construed without such provision.

 

Section 21.4                                Duplicate
Originals; Counterparts.  This
Security Instrument may be executed in any number of duplicate originals and
each duplicate original shall be deemed to be an original.  This Security Instrument may be executed in
several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Security
Instrument.  The failure of any party
hereto to execute this Security Instrument, or any counterpart hereof, shall
not relieve the other signatories from their obligations hereunder.

 

Section 21.5                                Number
and Gender.  Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.

 

ARTICLE XXII

 

PARTIAL RELEASE

 

Section 22.1                                Right
to Release the Released Property.  (a) 
Borrower shall have the right to obtain a partial release of (“Partial Release”),
from the Security Instrument and Other Security Documents only upon
satisfaction of the conditions set forth below:

 

(i)                                     Borrower
must provide not less than forty-five (45) days, but not more than ninety (90)
days, prior written notice to Lender requesting a Partial Release and a legal

 

50

 

description of the property to be released (“Release Property”) and
date upon which it desires to have the Release Property released (“Partial
Release Date”). 

 

(ii)                                  No
Event of Default shall have occurred and be continuing at the time Borrower
requests a Partial Release or on the Partial Release Date. 

 

(iii)                               Prior to the Partial
Release Date, Innovative Micro Technology shall provide Lender with financial
statements evidencing a positive net income for three (3) consecutive
years prior to the Requested Release Date.

 

(iv)                              As
of the Partial Release Date, after giving effect to the Partial Release to
occur on such date, the appraised value of the remaining Property is in no
event greater than forty nine percent (49%) of the Loan Amount, as determined
by Lender. 

 

(v)                                 As
of the Partial Release Date, and, after giving effect to the Partial Release to
occur on such date, the debt service coverage ratio is at least equal to the
debt service coverage ratio as of the date hereof,  all as determined by Lender. 

 

(vi)                              The
Release Parcel has been divided into a separate legal tax parcel, and
documentary proof thereof has been delivered to Lender together with the
written notice set forth in subsection (a)(i). 

 

(vii)                           As of the Partial Release
Date, and after giving effect to the Partial Release to occur on such date, the
loan to value ratio for the remaining Property is equal to the loan to value
ratio for the Property, as of the date hereof, as determined by Lender.

 

(viii)                        The Property remaining after
the Partial Release continues to be in compliance with all Applicable Law
(including, without limitation, all zoning and subdivision laws, setback
requirements, parking ratio requirements and use requirements), maintains
reasonable means of ingress of egress, as reasonably determined by Lender, and
suffers no material adverse effect as a result of the Partial Release. 

 

(ix)                                Borrower
has delivered to Lender forms of all documents necessary to release the Release
Property from the liens created by the Security Instrument and the Other
Security Documents, each in appropriate form required by the state in which the
Release Property is located and otherwise satisfactory to Lender in all
respects. 

 

(x)                                   Borrower
has delivered a certificate from a Responsible Officer certifying that the
requirements set forth in this Section 22.1 have been satisfied in all
material respects.

 

(xi)                                Borrower
has paid all amounts then due and unpaid under the Loan documents through (and
including) amounts due on the Release Date and in connection with the Partial
Release.

 

(xii)                             Lender shall have received
a copy of a deed conveying all of the Borrower’s right, title and interest in
and to the Release Property to an entity other than Borrower and any Principal
and a letter from Borrower countersigned by a title insurance

 

51

 

company acknowledging receipt of such deed and agreeing to record such
deed in the real estate records of the appropriate recording office in which
the Release Property is located.

 

Section 22.2                                Reimbursement
of Lender Expenses.  Borrower agrees
to pay all of Lender’s expenses incurred in connection with reviewing and documenting
such Partial Release (including, without limitation, the costs of obtaining
Rating Confirmations if required by Lender), which amounts must be paid by
Borrower whether or not the proposed Partial Release is approved or executed.  Upon Borrower’s failure to pay such amounts,
and in addition to Lender’s remedies for Borrower’s failure to perform, the
unpaid amounts shall be added to principal, shall bear interest at the Default
Rate until paid in full and payment of such amounts shall be secured by the
Security Instrument and other collateral given to secure the Loan.

 

Section 22.3                                Liens
of Security Instrument Otherwise Unaffected.  No Partial Release granted by Lender shall,
in any way, impair or affect the lien or priority of the Security Instrument relating
to the portion of the Property not included in the Partial Release or improve
the position of any subordinate lienholder with respect thereto, except to the
extent that the obligations hereunder shall have been reduced by the actual
monetary consideration, if any, received by Lender for such Partial
Release.  This Security Instrument shall
continue as a lien and security interest on the portion of the Property not
included in a Partial Release.

 

ARTICLE XXIIII

SPECIAL CALIFORNIA PROVISIONS

 

Section 23.1                                Fixture
Filing.  This Security Instrument is
being recorded as a fixture filing in the Official Records of the County
Recorder of the county in which the Land is located and covers goods which are,
and goods which become, fixtures on the Land or the Improvements.

 

Section 23.2                                Environmental
Default and Remedies.  Without
limiting any other rights or remedies granted hereunder or under Applicable
Laws, in the event that any portion of the Property is determined to be “environmentally
impaired” (as “environmentally impaired” is defined in California Code of Civil
Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as “affected
parcel” is defined in California Code of Civil Procedure Section 726.5(e)(1)),
then, without otherwise limiting or in any way affecting Lender’s or Trustee’s
rights and remedies under this Security Instrument, Lender may elect to
exercise its right under California Code of Civil Procedure Section 726.5(a) to
(1) waive its lien on such environmentally impaired or affected portion of
the Property and (2) exercise (i) the rights and remedies of an
unsecured creditor, including reduction of its claim against Borrower to
judgment, and (ii) any other rights and remedies permitted by law.  For purposes of determining Lender’s right to
proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a),
Borrower shall be deemed to have willfully permitted or acquiesced in a release
or threatened release of hazardous materials, within the meaning of California Code
of Civil Procedure Section 726.5(d)(1), if the release or threatened
release of hazardous materials was knowingly or negligently caused or
contributed to by any lessee, occupant or user of any portion of the Property
and Borrower knew or should have known of the activity by such lessee, occupant
or user which caused or

 

52

 

contributed to the release or threatened release.  All costs and expenses, including, but not
limited to, reasonable attorneys’ fees, incurred by Lender in connection with
any action commenced under this Section 12.4, including any action
required by California Code of Civil Procedure Section 726.5(b) to
determine the degree to which the Property is environmentally impaired, plus
interest thereon at the Default Rate until paid, shall be added to the Debt
secured by this Security Instrument and shall be due and payable to Lender upon
its demand made at any time following the conclusion of such action.

 

Section 23.3                                REQUEST FOR NOTICES.  Borrower hereby requests that a copy of any
Notice of Default and Notice of Sale as may be required by law be mailed to
Borrower at its address above stated.

 

ARTICLE XXIV

 

DEED OF TRUST PROVISIONS

 

Section 24.1                                Concerning
The Trustee.  Trustee shall be under
no duty to take any action hereunder except as expressly required hereunder or
by law, or to perform any act which would involve Trustee in any expense or
liability or to institute or defend any suit in respect hereof, unless properly
indemnified to Trustee’s reasonable satisfaction.  Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby
waives any statutory fee and agrees to accept reasonable compensation, in lieu
thereof, for any services rendered by Trustee in accordance with the terms
hereof.  Trustee may resign at any time
upon giving thirty (30) days’ notice to Borrower and to Lender.  Lender may remove Trustee at any time or from
time to time and select a successor trustee. 
In the event of the death, removal, resignation, refusal to act, or
inability to act of Trustee, or in its sole discretion for any reason
whatsoever Lender may, without notice and without specifying any reason
therefor and without applying to any court, select and appoint a successor
trustee, by an instrument recorded wherever this Security Instrument is
recorded and all powers, rights, duties and authority of Trustee, as aforesaid,
shall thereupon become vested in such successor.  Such substitute trustee shall not be required
to give bond for the faithful performance of the duties of Trustee hereunder
unless required by Lender.  The procedure
provided for in this paragraph for substitution of Trustee shall be in addition
to and not in exclusion of any other provisions for substitution, by law or
otherwise.

 

Section 24.2                                Trustee’s
Fees.  Borrower shall pay all
reasonable costs, fees and expenses incurred by Trustee and Trustee’s agents
and counsel in connection with the performance by Trustee of Trustee’s duties
hereunder and all such costs, fees and expenses shall be secured by this
Security Instrument.

 

Section 24.3                                Certain
Rights.  With the approval of Lender,
Trustee shall have the right to take any and all of the following actions:  (i) to select, employ, and advise with
counsel (who may be, but need not be, counsel for Lender) upon any matters
arising hereunder,

 

53

 

including the preparation, execution, and interpretation of the Note,
this Security Instrument or the Other Security Documents, and shall be fully
protected in relying as to legal matters on the advice of counsel, (ii) to
execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through his/her agents or attorneys, (iii) to select
and employ, in and about the execution of his/her duties hereunder, suitable
accountants, engineers and other experts, agents and attorneys-in-fact, either
corporate or individual, not regularly in the employ of Trustee, and Trustee
shall not be answerable for any act, default, negligence, or misconduct of any
such accountant, engineer or other expert, agent or attorney-in-fact, if
selected with reasonable care, or for any error of judgment or act done by
Trustee in good faith, or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee’s gross negligence or bad faith,
and (iv) any and all other lawful action as Lender may instruct Trustee to
take to protect or enforce Lender’s rights hereunder.  Trustee shall not be personally liable in
case of entry by Trustee, or anyone entering by virtue of the powers herein
granted to Trustee, upon the Property for debts contracted for or liability or
damages incurred in the management or operation of the Property.  Trustee shall have the right to rely on any
instrument, document, or signature authorizing or supporting an action taken or
proposed to be taken by Trustee hereunder, believed by Trustee in good faith to
be genuine.  Trustee shall be entitled to
reimbursement for actual expenses incurred by Trustee in the performance of
Trustee’s duties hereunder and to reasonable compensation for such of Trustee’s
services hereunder as shall be rendered.

 

Section 24.4                                Retention
of Money.  All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by applicable law)
and Trustee shall be under no liability for interest on any moneys received by
Trustee hereunder.

 

Section 24.5                                Perfection
of Appointment.  Should any deed,
conveyance, or instrument of any nature be required from Borrower by any
Trustee or substitute trustee to more fully and certainly vest in and confirm
to the Trustee or substitute trustee such estates rights, powers, and duties,
then, upon request by the Trustee or substitute trustee, any and all such
deeds, conveyances and instruments shall be made, executed, acknowledged, and
delivered and shall be caused to be recorded and/or filed by Borrower.

 

Section 24.6                                Succession
Instruments.  Any substitute trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed, or conveyance, become vested with all the estates, properties,
rights, powers, and trusts of its or his/her predecessor in the rights
hereunder with like effect as if originally named as Trustee herein; but
nevertheless, upon the written request of Lender or of the substitute trustee,
the Trustee ceasing to act shall execute and deliver any instrument
transferring to such substitute trustee, upon the trusts herein expressed, all
the estates, properties, rights, powers, and trusts of the Trustee so ceasing
to act, and shall duly assign, transfer and deliver any of the property and
moneys held by such Trustee to the substitute trustee so appointed in the
Trustee’s place.

 

[NO FURTHER TEXT ON THIS PAGE]

 

54

 

IN
WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day
and year first above written.

 

 

	
   

  	
  BORROWER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ROBIN HILL
  BUSINESS PARK, LLC, a

  	
   

  
	
   

  	
  Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Innovative Micro
  Technology, Inc., a

  	
   

  
	
   

  	
   

  	
  Delaware
  corporation, its

  	
   

  
	
   

  	
   

  	
  sole member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: John S.
  Foster

  	
   

  
	
   

  	
   

  	
  Title: President
  and Chief Executive

  	
   

  
	
   

  	
   

  	
   

  	
   Officer

  	
   

  
							

 

 

	
  STATE OF
  CALIFORNIA

  	
  )

  
	
   

  	
   

  
	
   

  	
  ) ss.:

  
	
   

  	
   

  
	
  COUNTY OF SANTA
  BARBARA

  	
  )

  

 

On the
          day of June, 2005,
before me, the undersigned, a Notary Public in and for said State, personally
appeared John S. Foster, the President and Chief Executive Officer of
Innovative Micro Technology, Inc., a Delaware corporation, the sole member
of Robin Hill Business Park, LLC, a Delaware limited liability company
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ties), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

EXHIBIT A

 

[Attach Legal Description of Property]

 

 

 

 

EXHIBIT B

 

[Release Parcel]

 

 

 

2

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