Document:

Prepared by MERRILL CORPORATION

FORBEARANCE

AGREEMENT

 

This Forbearance

Agreement (the “Agreement”) is made effective the 6th day of November, 2001,

and is by and among American Medical Technologies, Inc. a Delaware corporation

(the “Borrower”) and Bank One, Michigan, N. A., a national banking association

(the “Lender”).

 

WITNESSETH:

 

In consideration

of the sum of Ten Dollars ($10.00), the mutual covenants and agreements

contained herein and other valuable consideration, the receipt and sufficiency

of which are hereby acknowledged, the parties agree as follows:

 

1.             Recitations.

 

1.1           The Credit Agreement.  On or about September 21, 2000, the Lender

and the Borrower executed a certain Line of Credit Agreement (the “Credit

Agreement”) providing for certain loans made by Lender to Borrower and

evidenced by a Revolving Business Credit Note (the “Note”). Among other

documents executed contemporaneously with the Credit Agreement were a

Continuing Security Agreement and UCC-1 Financing Statements (collectively, the

“Loan Documents”).

 

1.2           The

First Amendment.  On or about March 20, 2001, the Lender and

Borrower executed that certain letter agreement constituting an amendment to

the Credit Agreement (the “First Amendment”) providing for certain amendments

to the Credit Agreement as set forth therein.

 

1.3           The Second

Amendment.  On or about June 25,

2001, the Lender and Borrower executed that certain letter agreement

constituting an amendment to the Credit Agreement (the “Second Amendment”)

providing for certain amendments to the Credit Agreement as set forth therein.

 

1.3            The Letter of Credit.  Lender is currently committed to a letter of

credit as part of Facility A of the Credit Agreement in the amount of

$462,650.00 (the “Letter of Credit”).

 

1.4           The Credit Card Balance.  Borrower is further indebted to Lender in

the approximate amount of $150,000.00 resulting from charges made by Borrower

utilizing a business charge card line of credit (the “Credit Card Balance”).

 

1.5           Payable Status.  Except for the Credit Card Balance, all

obligations of Borrower are in default and are presently due and payable and

Borrower has requested that Lender: (a) forbear from taking any actions to

collect the amounts due under the Loan Documents, and (b) agree to the other

terms and conditions set forth herein. The Lender is willing to agree to the

Borrower’s request on the condition that the Borrower fully and faithfully

perform its obligations under the Loan Documents, including but not limited to,

the Credit Agreement, as amended.

 

The term “Loan Documents”

shall include the Credit Agreement, the Note, the First Amendment, the Second

Amendment, the Letter of Credit, the Credit Card Balance and all writings,

documents, instruments, security agreements contemplated therein, respectively.  The term “Obligations” shall include the

Note, the Letter of Credit, the Credit Card Balance and all other obligations

pursuant to which Borrower may owe performance or payment to Lender.  The term “Indebtedness” shall include the

Note, the Credit Card Balance and all other indebtedness owning from Borrower

to Lender.

 

2.             Acknowledgment of Amounts Due

and Maturity Date.   Lender and

Borrower acknowledge that as of the beginning of business on November 6, 2001

the outstanding balance in respect of the Indebtedness was as follows:

 

	

   

  	

  Principal

  	

   

  	

  Accrued and Unpaid Interest

  	

   

  
	

  Note:

  	

  $

  	

  1,745,656.25

  	

   

  	

  $

  	

  2,173.10

  	

   

  
	

  Credit

  Card Balance:

  	

  $

  	

  30,528.97

  	

   

  	

   

  	

   

  
							

 

Borrower waives any and

all rights to notice of payment default or any other default, protest and

notice of protest, dishonor, diligence in collecting and the bringing of suit

against any party, notice of intention to accelerate, notice of acceleration,

demand for payment and other notices whatsoever regarding the Credit Agreement,

as amended, the Indebtedness, or any other Loan Documents, and further waive

any claims that any notices previously given are insufficient for any

reason.  Borrower further agrees that

the Indebtedness set forth above is presently due and payable in full to Lender

without discount or offset, and any claims or defenses thereto are waived and

released herein.

 

3.             No Further Advances.  Borrower acknowledges and agrees that it

shall not be entitled to, nor shall Borrower request, any additional advances

under the Credit Agreement, the Note, or any other Loan Documents.  Furthermore, Borrower shall not request nor

shall Lender be obligated to issue any further or additional letters of credit.

 

4.             No Waiver. The execution, delivery and performance of this

Agreement by Lender and the acceptance by Lender of performance of Borrower hereunder

(a) shall not constitute a waiver or release by Lender of any default that may

now or hereafter exist under the Loan Documents, (b) shall not constitute a

novation of the Loan Documents as it is the intent of the parties to modify the

Loan Documents as expressly set out herein, and (c) except as expressly

provided in this Agreement, shall be without prejudice to, and is not a waiver

or release of, Lender's rights at any time in the future to exercise any and

all rights conferred upon Lender by the Loan Documents or otherwise at law or

in equity, including but not limited to the right to accelerate the

Indebtedness, if not already accelerated, and to institute collection

proceedings against Borrower and/or any right against any other person or entity

not a party to this Agreement. 

Similarly, the execution, delivery, and performance of this Agreement by

Borrower and the acceptance by Borrower of the performance by Lender hereunder

shall not, subject to the express provisions of this Agreement, constitute a

waiver or release of any of Borrower's rights under the Loan Documents;

provided, however, that Borrower waives any and all claims now or hereafter

arising from or related to any delay by Lender in exercising any rights or

remedies under the Loan Documents, including, without limitation, any delay in

foreclosing on any collateral securing the Indebtedness.

 

5.             Forbearance. So long as this

Agreement is not terminated as provided herein, the Lender agrees not to

foreclose or attempt to foreclose any collateral securing the Indebtedness,

institute suit for collection of the Indebtedness against Borrower, or exercise

any other remedies available to it under the Loan Documents or under applicable

law for a period of time commencing on the date hereof and extending through

and including December 20, 2001 at 5:00 p.m. (the “Forbearance Period”).  Upon termination of the Forbearance Period,

or otherwise under the provisions of this Agreement, or if all amounts due and

owing under the Credit Agreement, the Indebtedness or other Loan Documents are

not paid in full on or before the expiration of the Forbearance Period, Lender

may seek to foreclose upon any collateral and to exercise any other remedies to

which Lender may be entitled under the Loan Documents, or applicable law to

collect amounts due under the Indebtedness, the Credit Agreement or any other

Loan Documents.  Borrower agrees that

Borrower will not during the Forbearance Period, initiate any action of any

kind against Lender with respect to the Loan Documents, exercise any remedy

available under the Loan Documents or otherwise, or make or suffer to exist any

type of demand upon Lender with respect to the Obligations.

 

6.             Borrower Management.  Borrower has advised the Bank that it has appointed a “Crisis Manager”

for the Borrower.  The Borrower agrees

that it will maintain the engagement of a Crisis Manager during the Forbearance

Period, which Crisis Manager shall provide and maintain direct responsibility

for the following:

 

The

Crisis Manager shall submit to the Bank by 10:00 a.m. each Thursday during the

Forbearance Period, a verbal report on the status, progress and terms of

refinancing the indebtedness owed to the Lender and the condition of Borrower.

 

The

Borrower shall permit the Crisis Manager access at all times to all information

of the Borrower, whether financial in nature or otherwise, necessary for the

Crisis Manager to perform its duties hereunder and under its terms of

engagement by the Borrower.

 

7.             Interest

Rate.  During the Forbearance Period,

all Indebtedness owed by Borrower to Lender under the Loan Documents shall bear interest at the per annum rate equal

to the sum of the Prime Rate plus four percent (4.0%).  The Prime Rate shall be that variable per

annum rate announced, from time to time, by the Lender as its Prime Rate.

 

8.             Interest

Payments. Commencing on November 6,

2001, and continuing thereafter on the 30th day of each successive

month thereafter during the Forbearance Period, Borrower shall pay Lender all

accrued interest in respect of the Obligations.

 

9.             Loan

Fee.  Simultaneously with the

execution of this Agreement, Borrower shall pay to Lender a non-refundable loan

fee to Lender in the sum of Ten Thousand and no\100s dollars ($10,000.00) which

loan fee shall be earned when paid.

 

10.           Real

Estate Mortgage.  The Borrower shall

make, execute and deliver to Lender a deed of trust, mortgage, assignment of

rents, subordination of leases and collateral assignment of land contracts

sufficient to provide Lender with a valid and legally enforceable lien (the

"Mortgage”) on the property owned by Borrower and located at 5555 Bear

Lane Corpus Christi, Texas (the “Property”). 

The Mortgage shall have first priority on the Property except for one

first mortgage in an amount not greater than $750,000.00 (the “First

Mortgage”).  Borrower shall provide

Lender with the Mortgage, a copy of that certain recently issued title

insurance policy and copies of the environmental study and survey already

completed.  The Mortgage will secure all

Obligations.

 

11.           Letter of Credit. 

Prior to the expiration of the Forbearance Period, Borrower shall have arranged for the

issuance of substitute letters of credit to replace the Letter of Credit and

return to Lender the original Letter of Credit.

 

12.           Cross-Collateralization

of Credit Card Balance. Any and all

Obligations and Indebtedness accrued under the Credit Card Balance shall be

cross-collateralized to the Obligations of the Borrower, and shall enjoy the

same rights under any of the Loan Documents granting Lender liens or security

interests all other Indebtedness under the Credit Agreement. The Borrower

acknowledges that, as a result of the amendment herein to the definition of the

term “Obligations” effected by this Amendment, the prompt payment of all of the

Credit Card Balance Indebtedness will be secured by a valid and perfected first

priority security interest in all of the now existing and after-acquired

tangible and intangible property of the Borrower in which Lender currently has

a security interest and by the Mortgage required by this Agreement.  All of the Loan Documents which grant the

Lender a lien or security interest in Borrower’s assets are hereby amended to

include the Credit Card Balance as a part of the secured Indebtedness.

 

13.           Financing

Statements.  Borrower shall take

whatever steps are necessary to provide Lender with a first and prior security

interest in all personal property securing the Obligations.  If necessary to assure Lender’s first lien

status, Borrower will provide Lender with executed and filed releases of

Financing Statements or liens held by other parties or with additional

Financing Statements in Lender’s favor.  

The Borrower hereby irrevocably authorizes the Secured Party at any time

and from time to time to file in any Uniform Commercial Code jurisdiction any

initial financing statements and amendments thereto that: (a) indicates the

Collateral as all assets of the Borrower or words of similar effect, regardless

of whether any particular asset comprised in the Collateral falls within the

scope of Article 9 of the UCC, or as being of an equal or lesser scope or with

greater detail; and (b) contains any other information required by part 5 of

Article 9 of the UCC for the sufficiency or filing office acceptance of any

financing statement or amendment, including whether the Borrower is an

organization, the type of organization and any organization identification

number issued to the Borrower.  The

Borrower agrees to furnish any of the foregoing information to Lender promptly

upon request.  The Borrower ratifies its

authorization for Lender to have filed any like initial financing statements or

amendments thereto if filed prior to the date hereof.  Lender may add any supplemental language to any such financing

statement as Secured Party may determine to be necessary or helpful in

acquiring or preserving rights against third parties.

 

14.           Compliance

with Loan Documents. During the term of this Agreement, Borrower shall

fully and faithfully comply with all of the terms of the Loan Documents.  Upon Borrower’s failure to fully and

faithfully timely pay Lender any of the payments set forth in this Agreement,

the term of this Agreement shall immediately end and terminate without the

necessity of notice or demand, and Lender shall be entitled to pursue any and

all remedies.  Upon the occurrence of

Borrower’s failure to fully and faithfully perform any other obligation with

respect to the Loan Documents or, they shall be entitled to such notice and

opportunity to cure, if any, as provided in the Loan Documents.

 

15.           Representations and Warranties. In

order to induce Lender to execute, deliver, and perform this Agreement,

Borrower warrants and represents to Lender that:

 

(a)           this

Agreement is not being made or entered into with the actual intent to hinder,

delay, or defraud any entity or person;

 

(b)           this

Agreement is not intended by the parties to be a novation of the Loan Documents

and, except as expressly modified herein, all terms, conditions, rights and

obligations as set out in the Loan Documents are hereby reaffirmed and shall

otherwise remain in full force and effect as originally written and agreed;

 

(c)           no

action or proceeding, including, without limitation, a voluntary or involuntary

petition for bankruptcy under any chapter of the Federal Bankruptcy Code, has

been instituted by or against any Borrower;

 

(d)           to the best of Borrower’s knowledge,

and with the sole exception of financial statements projecting profitability

for the period ending December 31, 2001, all balance sheets, and cash flow

statements, and all information provided by Borrower to Lender prior to the

date hereof, including, without limitation, all financial statements, balance

sheets, and cash flow statements, was, at the date of delivery, and is, as of

the date hereof, true and correct in all respects.  Borrower recognizes and acknowledges that Lender is entering into

this Agreement based in part on the financial information provided to Lender by

each of them and that the truth and correctness of that financial information

is a material inducement to Lender in entering into this Agreement.  During the term of this Agreement, Borrower

agrees to advise Lender promptly in writing of any and all new information,

facts, or occurrences that would in any way materially supplement, contradict,

or affect any financial statements, balance sheets, cash flow statements, or

similar items furnished to Lender.

 

(e)           This Agreement and the Loan Documents

constitute the entire agreement among Lender and Borrower with respect to this

matter.

 

16.           Bankruptcy.  

In entering into this Agreement, Borrower and Lender hereby stipulate,

acknowledge and agree that Lender gave up valuable rights and agreed to forbear

from exercising legal remedies available to it in exchange for the promises,

representations, acknowledgments and warranties of Borrower as contained herein

and that Lender would not have entered into this Agreement but for such

promises, representations, acknowledgments, agreements, and warranties, all of

which have been accepted by Lender in good faith, the breach of which by

Borrower in any way, at any time, now or in the future, would admittedly and

confessedly constitute cause for dismissal of any such bankruptcy petition

pursuant to 11 U.S.C. § 1112(b).  As

additional consideration for Lender agreeing to forbear from immediately

enforcing its rights and remedies under this Agreement and in the Loan

Documents, including but not limited to the institution of foreclosure or

collection proceedings, Borrower agrees that in the event a bankruptcy petition

under any Chapter of the Bankruptcy Code (11 U.S.C. §101, et seq.)

is filed by or against any Borrower at any time after the execution of this

Agreement, Lender shall be entitled to the immediate entry of an order from the

appropriate bankruptcy court granting Lender complete relief from the automatic

stay imposed by §362 of the bankruptcy Code (11 U.S.C. §362) to exercise its

foreclosure and other rights, including but not limited to obtaining a

foreclosure judgment and foreclosure sale, upon the filing with the appropriate

court of a motion for relief from the automatic stay with a copy of this

Agreement attached thereto.  Borrower

specifically agrees (i) that upon filing a motion for relief from the automatic

stay, Lender shall be entitled to relief from the stay without the necessity of

an evidentiary hearing and without the necessity or requirement of the Lender

to establish or prove the value of any collateral, the lack of adequate

protection of its interest in any collateral, or the lack of equity in any

collateral; (ii) that the lifting of the automatic stay hereunder by the

appropriate bankruptcy court shall be deemed to be "for cause"

pursuant to §362(d)(1) of the bankruptcy Code (11 U.S.C. §362 (d)(1); and (iii)

that Borrower will not directly or indirectly oppose or otherwise defend

against Lender's efforts to gain relief from the automatic stay. This provision

is not intended to preclude Borrower from filing for protection under any

Chapter of the Bankruptcy Code.  The

remedies prescribed in this paragraph are not exclusive and shall not limit

Lender's rights under the Loan Documents, this Agreement or under any law.  All of the above terms and conditions have

been freely bargained for and are all supported by reasonable and adequate consideration

and the provisions herein are material inducements for Lender entering into

this Agreement.

 

17.           Release. 

Borrower hereby remises, releases, and forever discharges Lender, its

successors and assigns, its officers, directors, employees, agents and

attorneys (collectively, “Released Parties”) of and from all actions, causes of

action, suits, proceedings, debts, contracts, claims, damages, liability and

demands whatsoever, known or unknown, in law or equity, which Borrower ever had

or now has, by reason of any matter, cause, or thing whatsoever arising from

the actions or inactions of the Released Parties prior to the date hereof

including any matter relating to the Agreement, the Loan Documents

(collectively, “Released Matters”); and Borrower covenants not to sue any of

the Released Parties with respect to the Released Matters.  The release and covenant not to sue set

forth in this Section are intended by the parties to be as broad and

comprehensive as possible.  However,

this release will not cover any intentional torts or acts of gross negligence.

 

18.           Default.  Lender shall be entitled to pursue each and

every remedy hereunder and under the Loan Documents, at Lender’s sole option,

upon the occurrence of any of the following:

 

(a)           Borrower

files a petition for bankruptcy under any chapter of the Federal Bankruptcy

Code or takes advantage of any other debtor relief law, or an involuntary

petition for bankruptcy under any chapter of the Federal Bankruptcy Code is

filed against Borrower, or any other judicial action is taken with respect to

Borrower by any creditor;

 

(b)           Bank

discovers that any representation or warranty made herein by Borrower was or is

untrue, incorrect or misleading in any material respect;

 

(c)           After the date of this Agreement, and

except for financial covenants relating to the Borrower’s profitability for the

periods ending September 30, 2001 and December 31, 2001, Borrower’s breach or

default in the performance of any covenant or agreement contained in this

Agreement or the Loan Documents;

 

(d)           Lender receives any draft or request

for payment in respect of any Letter of Credit.

 

19.           Miscellaneous.

 

19.1         Successors and

Assigns. All of the grants, covenants, terms, conditions and agreements

hereof shall be binding upon and inure to the benefit of all of the assigns and

successors in interest of the parties hereto.

 

19.2         Modification.  Neither this Agreement nor any provision hereof may be changed, altered, waived,

amended, or discharged orally, but only by an instrument reduced to writing,

signed by all parties hereto.

 

19.3         Choice of Law.  It is the intention of the parties hereto

that the laws of the State of Michigan shall govern the validity of this Agreement, construction of its terms and the

interpretation of the rights and duties of the parties.

 

19.4.        Paragraph Headings.  Headings contained in this Agreement are for reference purposes only and

shall not affect in any way the meaning or interpretation of this agreement.

 

19.5.        Authority.  Each party, for itself, its successors and

assigns, hereby represents and warrants that it has the full capacity and

authority to enter into, execute, deliver and perform this Agreement, and that such execution, delivery and

performance does not violate any contractual or other obligation by which it is

bound.

 

19.6.        Controlling

Agreement.  This Agreement shall be

construed to govern and control over any inconsistent provisions that may be

contained in the Agreement or any other Loan Documents.

 

THIS AGREEMENT REPRESENTS

THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF

AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR ORAL OR WRITTEN,

CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG

THE PARTIES.

 

IN

WITNESS WHEREOF, the parties have executed this agreement as of the date and

year first above written.

 

	

   

  	

  BORROWER:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  AMERICAN MEDICAL

  TECHNOLOGIES, INC. a Delaware corporation

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Benjamin J. Gallant

  
				

 

 

	

   

  	

  LENDER:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  BANK ONE, MICHIGAN, NATIONAL

  ASSOCIATION, a national banking association

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Tipton BurchPrepared by MERRILL CORPORATION

DEED

OF TRUST,

ASSIGNMENT

OF RENTS AND LEASES

AND

SECURITY AGREEMENT

 

THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND

SECURITY AGREEMENT (this

"Deed of Trust") is made this 8th day of November,

2001, by Grantor, in favor of Trustee for the benefit of Lender.

 

ARTICLE 1

 

Definitions; Granting Clauses; Secured Indebtedness

 

Section 1.1.  Principal

Secured.  This Deed of Trust secures

the aggregate principal amount of one million seven hundred forty five thousand

six hundred fifty six dollars and 25/100 Dollars ($1,745,656.25) plus such additionalamounts as Lender may from

time to time advance pursuant to the terms and conditions of this Deed of Trust

and not met by Grantor, with respect to an obligation secured by a lien or

encumbrance prior to the lien of this Deed of Trust or for the protection of

the lien of this Deed of Trust, together with interest thereon.

 

Section 1.2.  Definitions.  (a) In addition to other terms defined

herein, each of the following terms shall have the meaning assigned to it, such

definitions to be applicable equally to the singular and the plural forms of

such terms and to all genders:

 

"Grantor":  American Medical Technologies, Inc. f/k/a

American Dental Technologies, by merger with Texas Airsonics, Inc., a Delaware corporation, whose

address is 5555 Bear Lane, Corpus Christi, Texas  78405, and its permitted successors and assigns.

 

"Lender":  

Bank One, Michigan, its successors and assigns.

 

"Promissory Note":  All Indebtedness described in that certain Forbearance Agreement of

even date herewith made by Grantor and payable to the order of Lender including

that certain Revolving Business Credit Note in the principal face amount of

Seven Million Five Hundred Thousand and no\100s $7,500,000.00, bearing interest

as therein provided, containing a provision for, among other things, the

payment of attorneys' fees.

 

"Trustee":

Barbara D. Christian, 1717 Main Street,

Dallas, TX  75201, Texas, or any successor or

substitute appointed and designated as herein provided from time to time acting

hereunder, any one of whom may act alone.

 

(b)           Any term used or defined in the Texas

Business and Commercial Code, as in effect from time to time, and not defined

in this Deed of Trust has the meaning given to the term in the Texas Business

and Commercial Code, as in effect from time to time, when used in this Deed of

Trust.

Section 1.3.  Granting

Clause.  In consideration of the

provisions of this Deed of Trust and the sum of TEN DOLLARS ($10.00) cash in

hand paid and other good and valuable consideration the receipt and sufficiency

of which are acknowledged by the Grantor, Grantor does hereby GRANT, BARGAIN,

SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to Trustee, with GENERAL WARRANTY,

the following:  (a)  the real property described in Exhibit A

which is attached hereto and incorporated herein by reference (the "Land")

together with: (i) any and all buildings, structures, improvements, alterations

or appurtenances now or hereafter situated or to be situated on the Land

(collectively the "Improvements"); and (ii) all right, title

and interest of Grantor, now owned or hereafter acquired, in and to (1) all

streets, roads, alleys, easements, rights–of–way, licenses, rights of ingress and

egress, vehicle parking rights and public places, existing or proposed,

abutting, adjacent, used in connection with or pertaining to the Land or the

Improvements; (2) any strips or gores between the Land and abutting or adjacent

properties; (3) all options to purchase the Land or the Improvements or any

portion thereof or interest therein, and any greater estate in the Land or the

Improvements; and (4) all water and water rights, timber, crops and mineral

interests on or pertaining to the Land (the Land, Improvements and other

rights, titles and interests referred to in this clause (a) being herein

sometimes collectively called the "Premises"); (b) all

fixtures, equipment, systems, machinery, furniture, furnishings, appliances,

inventory, goods, building and construction materials, supplies, and articles

of personal property, of every kind and character, tangible and intangible

(including software embedded therein), now owned or hereafter acquired by

Grantor, which are now or hereafter attached to or situated in, on or about the

Land or the Improvements, or used in or necessary to the complete and proper

planning, development, use, occupancy or operation thereof, or acquired

(whether delivered to the Land or stored elsewhere) for use or installation in

or on the Land or the Improvements, and all renewals and replacements of, substitutions

for and additions to the foregoing (the properties referred to in this clause

(b) being herein sometimes collectively called the "Accessories,"

all of which are hereby declared to be permanent accessions to the Land); (c)

all (i) plans and specifications for the Improvements; (ii) Grantor's rights,

but not liability for any breach by Grantor, under all commitments (including

any commitments for financing to pay any of the Secured Indebtedness, as

defined below), insurance policies, contracts and agreements for the design,

construction, operation or inspection of the Improvements and other contracts

and general intangibles (including but not limited to trademarks, trade names,

goodwill, software and symbols) related to the Premises or the Accessories or

the operation thereof; (iii) deposits (including but not limited to Grantor's

rights in tenants' security deposits, deposits with respect to utility services

to the Premises, and any deposits or reserves hereunder or under any other Loan

Documents (hereinafter defined) for taxes, insurance or otherwise), rebates or

refunds of impact fees or other taxes, assessments or charges, money, accounts,

instruments, documents, promissory notes and chattel paper (whether tangible or

electronic) arising from or by virtue of any transactions related to the

Premises or the Accessories; (iv) permits, licenses, franchises, certificates,

development rights, commitments and rights for utilities, and other rights and

privileges obtained in connection with the Premises or the Accessories; (v)

leases, rents, royalties, bonuses, issues, profits, revenues and other benefits

of the Premises and the Accessories (without derogation of Article 3 hereof);

(vi) as-extracted collateral produced from or allocated to the Land including,

without limitation, oil, gas and other hydrocarbons and other minerals and all

products processed or obtained therefrom, and the proceeds thereof; and (vii)

engineering, accounting, title, legal, and other technical or business data

concerning the Property which are in the possession of Grantor or in which

Grantor can otherwise grant a security interest; and (d) all (i) accounts and

proceeds (cash or non-cash) of or arising from the properties, rights, titles and

interests referred to above in this Section 1.3, including but not limited to

proceeds of any sale, lease or other disposition thereof, proceeds of each

policy of insurance relating thereto (including premium refunds), proceeds of

the taking thereof or of any rights appurtenant thereto, including change of

grade of streets, curb cuts or other rights of access, by condemnation, eminent

domain or transfer in lieu thereof for public or quasi–public use under any law, and proceeds

arising out of any damage thereto; (ii) all letter-of-credit

rights (whether or not the letter of credit is evidenced by a writing) Grantor

now has or hereafter acquires relating to the properties, rights, titles and

interests referred to in this Section 1.3; (iii) all commercial tort claims

Grantor now has or hereafter acquires relating to the properties, rights,

titles and interests referred to in this Section 1.3; and (iv)other interests of every kind and

character which Grantor now has or hereafter acquires in, to or for the benefit

of the properties, rights, titles and interests referred to above in this

Section 1.3 and all property used or useful in connection therewith, including

but not limited to rights of ingress and egress and remainders, reversions and

reversionary rights or interests; and if the estate of Grantor in any of the

property referred to above in this Section 1.3 is a leasehold estate, this

conveyance shall include, and the lien and security interest created hereby

shall encumber and extend to, all other or additional title, estates, interests

or rights which are now owned or may hereafter be acquired by Grantor in or to

the property demised under the lease creating the leasehold estate; TO HAVE AND

TO HOLD the foregoing rights, interests and properties, and all rights,

estates, powers and privileges appurtenant thereto (herein collectively called

the "Property"), unto Trustee, and his or their successors or

substitutes in this trust, and to his or their successors and assigns, in

trust, in fee simple forever, subject to the terms, provisions and conditions

herein set forth, to secure the obligations of Grantor under the Note and Loan

Documents (as hereinafter defined) and all other indebtedness and matters

defined as "Secured Indebtedness" in Section 1.5 of this Deed of

Trust.

Section 1.4.  Security

Interest.  Grantor hereby grants to

Holder (as hereinafter defined) a security interest in all of the Property

which constitutes personal property or fixtures, all proceeds and

products thereof, and all supporting obligations ancillary to or arising in any

way in connection therewith

(herein sometimes collectively called the "Collateral") to

secure the obligations of Grantor under the Note and Loan Documents and all

other indebtedness and matters defined as Secured Indebtedness in Section 1.5

of this Deed of Trust.  In addition to

its rights hereunder or otherwise, Holder shall have all of the rights of a

secured party under the Texas Business and Commerce Code, as in effect from

time to time, or under the Uniform Commercial Code in force, from time to time,

in any other state to the extent the same is applicable law.

 

Section 1.5.  Secured

Indebtedness, Note, Loan Documents, Other Obligations.  This Deed of Trust is made to secure and

enforce the payment and performance of the following promissory notes, obligations,

indebtedness, duties and liabilities and all renewals, extensions, supplements,

increases, and modifications thereof in whole or in part from time to time

(collectively the "Secured Indebtedness"):  (a) the Promissory Note and all other promissory notes given in

substitution therefor or in modification, supplement, increase, renewal or

extension thereof, in whole or in part (such promissory note or promissory

notes, whether one or more, as from time to time renewed, extended,

supplemented, increased or modified and all other notes given in substitution

therefor, or in modification, renewal or extension thereof, in whole or in

part, being hereinafter called the "Note", and Lender, or the

subsequent holder at the time in question of the Note or any of the Secured

Indebtedness, as hereinafter defined, being herein collectively called "Holder");

(b)  all indebtedness, liabilities,

duties, covenants, promises and other obligations whether joint or several,

direct or indirect, fixed or contingent, liquidated or unliquidated, and the

cost of collection of all such amounts, owed by Grantor to Holder now or

hereafter incurred or arising pursuant to or permitted by the provisions of the

Note, this Deed of Trust, or any other document now or hereafter evidencing, governing,

guaranteeing, securing or otherwise executed in connection with the loan

evidenced by the Note, including but not limited to any loan or credit

agreement, letter of credit or reimbursement agreement, tri–party financing agreement, Interest

Rate Protection Agreement or other agreement between Grantor and Holder, or

among Grantor, Holder and any other party or parties, pertaining to the

repayment or use of the proceeds of the loan evidenced by the Note (the Note,

this Deed of Trust and such other documents, as they or any of them may have

been or may be from time to time renewed, extended, supplemented, increased or

modified, being herein sometimes collectively called the "Loan

Documents"); and (c) all other loans and future advances made by

Holder to Grantor and all other debts, obligations and liabilities of Grantor

of every kind and character now or hereafter existing in favor of Holder,

whether direct or indirect, primary or secondary, joint or several, fixed or

contingent, secured or unsecured, and whether originally payable to Holder or

to a third party and subsequently acquired by Holder, it being contemplated

that Grantor may hereafter become indebted to Holder for such further debts,

obligations and liabilities; provided, however, and notwithstanding the

foregoing provisions of this clause (c), this Deed of Trust shall not secure

any such other loan, advance, debt, obligation or liability with respect to

which Holder is by applicable law prohibited from obtaining a lien on real

estate nor shall this clause (c) operate or be effective to constitute or

require any assumption or payment by any person, in any way, of any debt of any

other person to the extent that the same would violate or exceed the limit

provided in any applicable usury or other law. 

"Interest Rate Protection Agreement" means any interest rate

swap agreement, International Swaps and Derivatives Association, Inc. (ISDA)

Master Agreement, or any similar agreement or arrangement now existing or

hereafter entered into by Grantor and Lender in connection with the loan

evidenced by the Note to hedge the risk of variable interest rate volatility or

fluctuations of interest rates, as any such agreement or arrangement may be

modified, supplemented, and in effect from time to time.

 

ARTICLE 2

 

Representations, Warranties and Covenants

 

Section 2.1.  Grantor

represents, warrants, and covenants as follows:

 

(a)           Payment

and Performance.  Grantor will make

due and punctual payment of the Secured Indebtedness.  Grantor will timely and properly perform and comply with all of

the covenants, agreements, and conditions imposed upon it by this Deed of Trust

and the other Loan Documents and will not permit a default to occur hereunder

or thereunder.  Time shall be of the

essence in this Deed of Trust.

 

(b)           Title

and Permitted Encumbrances.  Grantor

has, in Grantor's own right, and Grantor covenants to maintain, lawful, good

and marketable title to the Property, is lawfully seized and possessed of the

Property and every part thereof, and has the right to convey the same, free and

clear of all liens, charges, claims, security interests, and encumbrances

except for (i) the matters, if any, set forth under the heading "Permitted

Encumbrances" in Exhibit B hereto, which are Permitted Encumbrances

only to the extent the same are valid and subsisting and affect the Property,

(ii) the liens and security interests evidenced by this Deed of Trust, (iii)

statutory liens for real estate taxes and assessments on the Property which are

not yet delinquent, and (iv) other liens and security interests (if any) in

favor of Lender, (the matters described in the foregoing clauses (i), (ii),

(iii), and (iv) being herein called the "Permitted Encumbrances").  Grantor, and Grantor's successors and

assigns, will warrant generally and forever defend title to the Property,

subject as aforesaid, to Trustee and his successors or substitutes and assigns,

against the claims and demands of all persons claiming or to claim the same or

any part thereof.  Grantor will

punctually pay, perform, observe and keep all covenants, obligations and

conditions in or pursuant to any Permitted Encumbrance and will not modify or

permit modification of any Permitted Encumbrance without the prior written

consent of Holder.  Inclusion of any

matter as a Permitted Encumbrance does not constitute approval or waiver by

Holder of any existing or future violation or other breach thereof by Grantor,

by the Property or otherwise.  No part

of the Property constitutes all or any part of the principal residence of Grantor

if Grantor is an individual.  If any

right or interest of Holder in the Property or any part thereof shall be

endangered or questioned or shall be attacked directly or indirectly, Trustee

and Holder, or either of them (whether or not named as parties to legal

proceedings with respect thereto), are hereby authorized and empowered to take

such steps as in their discretion may be proper for the defense of any such

legal proceedings or the protection of such right or interest of Holder,

including but not limited to the employment of independent counsel, the

prosecution or defense of litigation, and the compromise or discharge of

adverse claims.  All expenditures so

made of every kind and character shall be a demand obligation (which obligation

Grantor hereby promises to pay) owing by Grantor to Holder or Trustee (as the

case may be), and the party (Holder or Trustee, as the case may be) making such

expenditures shall be subrogated to all rights of the person receiving such

payment.

(c)           Taxes

and Other Impositions.  Grantor will

pay, or cause to be paid, all taxes, assessments and other charges or levies

imposed upon or against or with respect to the Property or the ownership, use,

occupancy or enjoyment of any portion thereof, or any utility service thereto,

as the same become due and payable, including but not limited to all real

estate taxes assessed against the Property or any part thereof, and shall

deliver promptly to Holder such evidence of the payment thereof as Holder may

require.

 

(d)           Insurance.  Grantor shall obtain and maintain at

Grantor's sole expense: (1) mortgagee title insurance issued to Holder covering

the Premises as required by Holder without exception for mechanics' liens; (2) all–risk insurance with respect to all

insurable Property, against loss or damage by fire, lightning, windstorm,

explosion, hail, tornado and such hazards as are presently included in so–called

"all–risk"

coverage and against such other insurable hazards as Holder may require, in an

amount not less than 100% of the full replacement cost, including the cost of

debris removal, without deduction for depreciation and sufficient to prevent

Grantor and Holder from becoming a coinsurer, such insurance to be in builder's

risk (non–reporting) form during and with respect to any construction on

the Premises; (3) if and to the extent any portion of the Premises is in a

special flood hazard area, a flood insurance policy in an amount equal to the

lesser of the principal face amount of the Note or the maximum amount

available; (4) comprehensive general public liability insurance, on an

"occurrence" basis, for the benefit of Grantor and Holder as named

insureds; (5) statutory workers' compensation insurance with respect to any

work on or about the Premises; and (6) such other insurance on the Property as

may from time to time be required by Holder (including but not limited to

business interruption insurance, boiler and machinery insurance, earthquake

insurance, and war risk insurance) and against other insurable hazards or

casualties which at the time are commonly insured against in the case of

premises similarly situated, due regard being given to the height, type,

construction, location, use and occupancy of buildings and improvements.  All insurance policies shall be issued and

maintained by insurers, in amounts, with deductibles, and in form satisfactory

to Holder, and shall require not less than thirty (30) days' prior written

notice to Holder of any cancellation or change of coverage.  All insurance policies maintained, or caused

to be maintained, by Grantor with respect to the Property, except for public

liability insurance, shall provide that each such policy shall be primary

without right of contribution from any other insurance that may be carried by

Grantor or Holder and that all of the provisions thereof, except the limits of

liability, shall operate in the same manner as if there were a separate policy

covering each insured.  If any insurer

which has issued a policy of title, hazard, liability or other insurance

required pursuant to this Deed of Trust or any other Loan Document becomes

insolvent or the subject of any bankruptcy, receivership or similar proceeding

or if in Holder's reasonable opinion the financial responsibility of such

insurer is or becomes inadequate, Grantor shall, in each instance promptly upon

the request of Holder and at Grantor's expense, obtain and deliver to Holder a

like policy (or, if and to the extent permitted by Holder, a certificate of

insurance) issued by another insurer, which insurer and policy meet the

requirements of this Deed of Trust or such other Loan Document, as the case may

be.  Without limiting the discretion of

Holder with respect to required endorsements to insurance policies, all such

policies for loss of or damage to the Property shall contain a standard

mortgagee clause (without contribution) naming Holder as mortgagee with loss

proceeds payable to Holder notwithstanding (i) any act, failure to act or

negligence of or violation of any warranty, declaration or condition contained

in any such policy by any named insured; (ii) the occupation or use of the

Property for purposes more hazardous than permitted by the terms of any such

policy; (iii) any foreclosure or other action by Holder under the Loan

Documents; or (iv) any change in title to or ownership of the Property or any

portion thereof, such proceeds to be held for application as provided in the

Loan Documents.  The originals of each

initial insurance policy (or to the extent permitted by Holder, a copy of the

original policy and a satisfactory certificate of insurance) shall be delivered

to Holder at the time of execution of this Deed of Trust, with premiums fully

paid, and each renewal or substitute policy (or certificate) shall be delivered

to Holder, with premiums fully paid, at least ten (10) days before the

termination of the policy it renews or replaces.  Grantor shall pay all premiums on policies required hereunder as

they become due and payable and promptly deliver to Holder evidence

satisfactory to Holder of the timely payment thereof.  If any loss occurs at any time when Grantor has failed to perform

Grantor's covenants and agreements in this paragraph, Holder shall nevertheless

be entitled to the benefit of all insurance covering the loss and held by or

for Grantor, to the same extent as if it had been made payable to Holder.  Upon any foreclosure hereof or transfer of

title to the Property in extinguishment of the whole or any part of the Secured

Indebtedness, all of Grantor's right, title and interest in and to the insurance

policies referred to in this Section (including unearned premiums) and all

proceeds payable thereunder shall thereupon vest in the purchaser at

foreclosure or other such transferee, to the extent permissible under such

policies.  Holder shall have the right

(but not the obligation) to make proof of loss for, settle and adjust any claim

under, and receive the proceeds of, all insurance for loss of or damage to the

Property, and the expenses incurred by Holder in the adjustment and collection

of insurance proceeds shall be a part of the Secured Indebtedness and shall be

due and payable to Holder on demand. 

Holder shall not be, under any circumstances, liable or responsible for

failure to collect or exercise diligence in the collection of any of such proceeds

or for the obtaining, maintaining or adequacy of any insurance or for failure

to see to the proper application of any amount paid over to Grantor.  Any such proceeds received by Holder shall,

after deduction therefrom of all reasonable expenses actually incurred by

Holder, including attorneys' fees, at Holder's option be (1) released to

Grantor, or (2) applied (upon compliance with such terms and conditions as may

be required by Holder) to repair or restoration, either partly or entirely, of

the Property so damaged, or (3) applied to the payment of the Secured

Indebtedness in such order and manner as Holder, in its sole discretion, may

elect, whether or not due.  In any

event, the unpaid portion of the Secured Indebtedness shall remain in full

force and effect and the payment thereof shall not be excused.  Grantor shall at all times comply with the

requirements of the insurance policies required hereunder and of the issuers of

such policies and of any board of fire underwriters or similar body as applicable

to or affecting the Property.

(e)           Reserve

for Insurance, Taxes and Assessments. 

Upon request of Holder, to secure certain of Grantor's obligations in

paragraphs (c) and (d) above, but not in lieu of such obligations, Grantor will

deposit with Holder a sum equal to real estate taxes, assessments and charges

(which charges for the purpose of this paragraph shall include without

limitation any recurring charge which could result in a lien against the

Property) against the Property for the current year and the premiums for such

policies of insurance for the current year, all as estimated by Holder and

prorated to the end of the calendar month following the month during which

Holder's request is made, and thereafter will deposit with Holder, on each date

when an installment of principal and/or interest is due on the Note, sufficient

funds (as estimated from time to time by Holder) to permit Holder to pay at

least fifteen (15) days prior to the due date thereof, the next maturing real

estate taxes, assessments and charges and premiums for such policies of

insurance.  Holder shall have the right

to rely upon tax information furnished by applicable taxing authorities in the

payment of such taxes or assessments and shall have no obligation to make any

protest of any such taxes or assessments. 

Any excess over the amounts required for such purposes shall be held by

Holder for future use, applied to any Secured Indebtedness or refunded to

Grantor, at Holder's option, and any deficiency in such funds so deposited shall

be made up by Grantor upon demand of Holder. 

All such funds so deposited shall bear no interest, may be mingled with

the general funds of Holder and shall be applied by Holder toward the payment

of such taxes, assessments, charges and premiums when statements therefor are

presented to Holder by Grantor (which statements shall be presented by Grantor

to Holder a reasonable time before the applicable amount is due); provided,

however, that, if a default shall have occurred hereunder, such funds may at Holder's

option be applied to the payment of the Secured Indebtedness in the order

determined by Holder in its sole discretion, and that Holder may (but shall

have no obligation) at any time, in its discretion, apply all or any part of

such funds toward the payment of any such taxes, assessments, charges or

premiums which are past due, together with any penalties or late charges with

respect thereto.  The conveyance or

transfer of Grantor's interest in the Property for any reason (including

without limitation the foreclosure of a subordinate lien or security interest

or a transfer by operation of law) shall constitute an assignment or transfer

of Grantor's interest in and rights to such funds held by Holder under this

paragraph but subject to the rights of Holder hereunder.

(f)            Condemnation.  Grantor shall notify Holder immediately of

any threatened or pending proceeding for condemnation affecting the Property or

arising out of damage to the Property, and Grantor shall, at Grantor's expense,

diligently prosecute any such proceedings. 

Holder shall have the right (but not the obligation) to participate in

any such proceeding and to be represented by counsel of its own choice.  Holder shall be entitled to receive all sums

which may be awarded or become payable to Grantor for the condemnation of the

Property, or any part thereof, for public or quasi–public use, or by virtue of private sale

in lieu thereof, and any sums which may be awarded or become payable to Grantor

for injury or damage to the Property. 

Grantor shall, promptly upon request of Holder, execute such additional

assignments and other documents as may be necessary from time to time to permit

such participation and to enable Holder to collect and receipt for any such

sums.  All such sums are hereby assigned

to Holder, and shall, after deduction therefrom of all reasonable expenses

actually incurred by Holder, including attorneys' fees, at Holder's option be

(1) released to Grantor, or (2) applied (upon compliance with such terms and

conditions as may be required by Holder) to repair or restoration of the

Property so affected, or (3) applied to the payment of the Secured Indebtedness

in such order and manner as Holder, in its sole discretion, may elect, whether

or not due.  In any event the unpaid

portion of the Secured Indebtedness shall remain in full force and effect and

the payment thereof shall not be excused. 

Holder shall not be, under any circumstances, liable or responsible for

failure to collect or to exercise diligence in the collection of any such sum

or for failure to see to the proper application of any amount paid over to

Grantor.  Holder is hereby authorized,

in the name of Grantor, to execute and deliver valid acquittances for, and to

appeal from, any such award, judgment or decree.  All costs and expenses (including but not limited to attorneys'

fees) incurred by Holder in connection with any condemnation shall be a demand

obligation owing by Grantor (which Grantor hereby promises to pay) to Holder

pursuant to this Deed of Trust.

 

(g)           Compliance

with Legal Requirements.  The

Property and the use, operation and maintenance thereof and all activities

thereon do and shall at all times comply with all applicable Legal Requirements

(hereinafter defined).  The Property is

not, and shall not be, dependent on any other property or premises or any

interest therein other than the Property to fulfill any requirement of any

Legal Requirement.  Grantor shall not,

by act or omission, permit any building or other improvement not subject to the

lien of this Deed of Trust to rely on the Property or any interest therein to

fulfill any requirement of any Legal Requirement.  No improvement upon or use of any part of the Property

constitutes a nonconforming use under any zoning law or similar law or

ordinance.  Grantor has obtained and

shall preserve in force all requisite zoning, utility, building, health,

environmental and operating permits from the governmental authorities having

jurisdiction over the Property.

 

If

Grantor receives a notice or claim from any person that the Property, or any

use, activity, operation or maintenance thereof or thereon, is not in

compliance with any Legal Requirement, Grantor will promptly furnish a copy of

such notice or claim to Holder.  Grantor

has received no notice and has no knowledge of any such noncompliance.  As used in this Deed of Trust:  (i) the term "Legal Requirement"

means any Law (hereinafter defined), agreement, covenant, restriction, easement

or condition (including, without limitation of the foregoing, any condition or

requirement imposed by any insurance or surety company), as any of the same now

exists or may be changed or amended or come into effect in the future; and (ii)

the term "Law" means any federal, state or local law, statute,

ordinance, code, rule, regulation, license, permit, authorization, decision,

order, injunction or decree, domestic or foreign.

(h)           Maintenance,

Repair and Restoration.  Grantor

will keep the Property in first class order, repair, operating condition and

appearance, causing all necessary repairs, renewals, replacements, additions

and improvements to be promptly made, and will not allow any of the Property to

be misused, abused or wasted or to deteriorate.  Notwithstanding the foregoing, Grantor will not, without the

prior written consent of Holder, (i) remove from the Property any fixtures or

personal property covered by this Deed of Trust except such as is replaced by

Grantor by an article of equal suitability and value, owned by Grantor, free

and clear of any lien or security interest (except that created by this Deed of

Trust), or (ii) make any structural alteration to the Property or any other

alteration thereto which impairs the value thereof. If any act or occurrence of

any kind or nature (including any condemnation or any casualty for which

insurance was not obtained or obtainable) shall result in damage to or loss or

destruction of the Property, Grantor shall give prompt notice thereof to Holder

and Grantor shall promptly, at Grantor's sole cost and expense and regardless

of whether insurance or condemnation proceeds (if any) shall be available or

sufficient for the purpose, secure the Property as necessary and commence and

continue diligently to completion to restore, repair, replace and rebuild the

Property as nearly as possible to its value, condition and character

immediately prior to the damage, loss or destruction.

 

(i)            No

Other Liens.   Grantor will not,

without the prior written consent of Holder, create, place or permit to be

created or placed, or through any act or failure to act, acquiesce in the

placing of, or allow to remain, any deed of trust, mortgage, voluntary or

involuntary lien, whether statutory, constitutional or contractual, security

interest, encumbrance or charge, or conditional sale or other title retention document,

against or covering the Property, or any part thereof, other than the Permitted

Encumbrances, regardless of whether the same are expressly or otherwise

subordinate to the lien or security interest created in this Deed of Trust, and

should any of the foregoing become attached hereafter in any manner to any part

of the Property without the prior written consent of Holder, Grantor will cause

the same to be promptly discharged and released.  Grantor will own all parts of the Property and will not acquire

any fixtures, equipment or other property (including software embedded therein)

forming a part of the Property pursuant to a lease, license, security agreement

or similar agreement, whereby any party has or may obtain the right to

repossess or remove same, without the prior written consent of Holder.  If Holder consents to the voluntary grant by

Grantor of any deed of trust, lien, security interest, or other encumbrance

(hereinafter called "Subordinate Lien") covering any of the

Property or if the foregoing prohibition is determined by a court of competent

jurisdiction to be unenforceable as to a Subordinate Lien, any such Subordinate

Lien shall contain express covenants to the effect that: (1) the Subordinate

Lien is unconditionally subordinate to this Deed of Trust and all Leases

(hereinafter defined); (2) if any action (whether judicial or pursuant to a

power of sale) shall be instituted to foreclose or otherwise enforce the

Subordinate Lien, no tenant of any of the Leases (hereinafter defined) shall be

named as a party defendant, and no action shall be taken that would terminate

any occupancy or tenancy without the prior written consent of Holder; (3) Rents

(hereinafter defined), if collected by or for the holder of the Subordinate

Lien, shall be applied first to the payment of the Secured Indebtedness then

due and expenses incurred in the ownership, operation and maintenance of the

Property in such order as Holder may determine, prior to being applied to any

indebtedness secured by the Subordinate Lien; (4) written notice of default

under the Subordinate Lien and written notice of the commencement of any action

(whether judicial or pursuant to a power of sale) to foreclose or otherwise

enforce the Subordinate Lien or to seek the appointment of a receiver for all

or any part of the Property shall be given to Holder with or immediately after

the occurrence of any such default or commencement; and (5) neither the holder

of the Subordinate Lien, nor any purchaser at foreclosure thereunder, nor

anyone claiming by, through or under any of them shall succeed to any of

Grantor's rights hereunder without the prior written consent of Holder.

(j)            Operation

of Property.  Grantor will operate

the Property in a good and workmanlike manner and in accordance with all Legal

Requirements and will pay all fees or charges of any kind in connection

therewith.  Grantor will keep the

Property occupied so as not to impair the insurance carried thereon.  Grantor will not use or occupy or conduct

any activity on, or allow the use or occupancy of or the conduct of any

activity on, the Property in any manner which violates any Legal Requirement or

which constitutes a public or private nuisance or which makes void, voidable or

cancelable, or increases the premium of, any insurance then in force with

respect thereto.  Grantor will not

initiate or permit any zoning reclassification of the Property or seek any

variance under existing zoning ordinances applicable to the Property or use or

permit the use of the Property in such a manner which would result in such use

becoming a nonconforming use under applicable zoning ordinances or other Legal

Requirement.  Grantor will not impose

any easement, restrictive covenant or encumbrance upon the Property, execute or

file any subdivision plat or condominium declaration affecting the Property or

consent to the annexation of the Property to any municipality, without the

prior written consent of Holder. 

Grantor will not do or suffer to be done any act whereby the value of

any part of the Property may be lessened. 

Grantor will preserve, protect, renew, extend and retain all material

rights and privileges granted for or applicable to the Property.  Without the prior written consent of Holder,

there shall be no drilling or exploration for or extraction, removal or

production of any mineral, hydrocarbon, gas, natural element, compound or

substance (including sand and gravel) from the surface or subsurface of the

Land regardless of the depth thereof or the method of mining or extraction

thereof.  Grantor will cause all debts

and liabilities of any character (including without limitation all debts and

liabilities for labor, material and equipment (including software embedded

therein) and all debts and charges for utilities servicing the Property)

incurred in the construction, maintenance, operation and development of the

Property to be promptly paid.

 

(k)           Financial

Matters.  Grantor is solvent after

giving effect to all borrowings contemplated by the Loan Documents and no

proceeding under any Debtor Relief Law (hereinafter defined) is pending (or, to

Grantor's knowledge, threatened) by or against Grantor, or any affiliate of

Grantor, as a debtor.  All reports,

statements, plans, budgets, applications, agreements and other data and

information heretofore furnished or hereafter to be furnished by or on behalf

of Grantor to Holder in connection with the loan or loans evidenced by the Loan

Documents (including, without limitation, all financial statements and

financial information) are and will be true, correct and complete in all

material respects as of their respective dates and do not and will not omit to

state any fact or circumstance necessary to make the statements contained

therein not misleading.  No material

adverse change has occurred since the dates of such reports, statements and

other data in the financial condition of Grantor or, to Grantor's knowledge, of

any tenant under any lease described therein. 

For the purposes of this paragraph, "Grantor" shall

also include any person liable directly or indirectly for the Secured

Indebtedness or any part thereof and any joint venturer or general partner of

Grantor.

(l)            Status

of Grantor; Suits and Claims; Loan Documents.  If Grantor

is a corporation, partnership, limited liability company, or other legal

entity, Grantor is and will continue to be (i) duly organized, validly existing

and in good standing under the laws of its state of organization, (ii)

authorized to do business in, and in good standing in, each state in which the

Property is located, and (iii) possessed of all requisite power and authority

to carry on its business and to own and operate the Property.  Each Loan Document executed by Grantor has

been duly authorized, executed and delivered by Grantor, and the obligations

thereunder and the performance thereof by Grantor in accordance with their

terms are and will continue to be within Grantor's power and authority (without

the necessity of joinder or consent of any other person), are not and will not

be in contravention of any Legal Requirement or any other document or agreement

to which Grantor or the Property is subject, and do not and will not result in

the creation of any encumbrance against any assets or properties of Grantor, or

any other person liable, directly or indirectly, for any of the Secured

Indebtedness, except as expressly contemplated by the Loan Documents.  There is no suit, action, claim,

investigation, inquiry, proceeding or demand pending (or, to Grantor's

knowledge, threatened) against Grantor or against any other person liable directly

or indirectly for the Secured Indebtedness or which affects the Property

(including, without limitation, any which challenges or otherwise pertains to

Grantor's title to the Property) or the validity, enforceability or priority of

any of the Loan Documents.  There is no

judicial or administrative action, suit or proceeding pending (or, to Grantor's

knowledge, threatened) against Grantor, or against any other person liable

directly or indirectly for the Secured Indebtedness, except as has been

disclosed in writing to Holder in connection with the loan evidenced by the

Note.  The Loan Documents constitute

legal, valid and binding obligations of Grantor enforceable in accordance with

their terms, except as the enforceability thereof may be limited by Debtor

Relief Laws (hereinafter defined) and except as the availability of certain

remedies may be limited by general principles of equity.  Grantor is not a "foreign person"

within the meaning of the Internal Revenue Code of 1986, as amended, Sections

1445 and 7701 (i.e. Grantor is not a non–resident alien, foreign corporation, foreign

partnership, foreign trust or foreign estate as those terms are defined therein

and in any regulations promulgated thereunder).  The loan evidenced by the Note is solely for business and/or

investment purposes, and is not intended for personal, family, household or

agricultural purposes.  Grantor further

warrants that the proceeds of the Note shall be used for commercial purposes

and stipulates that the loan evidenced by the Note shall be construed for all

purposes as a commercial loan.  Grantor's

exact legal name is correctly set forth at the end of this Deed of Trust.  If Grantor is not an individual, Grantor is

an organization of the type and (if not an unregistered entity) is incorporated

in or organized under the laws of the state specified in the introductory

paragraph of this Deed of Trust.  If

Grantor is an unregistered entity (including, without limitation, a general

partnership) it is organized under the laws of the state specified in the

introductory paragraph of this Deed of Trust. 

Grantor will not cause

or permit any change to be made in its name, identity, or corporate or

partnership structure, unless Grantor shall have notified Holder in writing of

such change at least 30 days prior to the effective date of such change, and

shall have first taken all action required by Holder for the purpose of further

perfecting or protecting the lien and security interest of Holder in the

Property.  Grantor's principal place of

business and chief executive office, and the place where Grantor keeps its

books and records, including recorded data of any kind or nature,

regardless of the medium of recording including, without limitation, software,

writings, plans, specifications and schematics concerning the Property, has for the preceding four

months (or, if less, the entire period of the existence of Grantor) been and

will continue to be (unless Grantor notifies Holder of any change in writing at

least 30 days prior to the date of such change) the address of Grantor set

forth at the end of this Deed of Trust. 

If Grantor is an individual, Grantor's principal residence

has for the preceding four months been and will continue to be (unless Grantor

notifies Holder of any change in writing at least 30 days prior to the date of

such change) the address of the principal residence of Grantor set forth at the

end of this Deed of Trust.  Grantor's

organizational identification number, if any, assigned by the state of

incorporation or organization is correctly set forth on the first page of this

Deed of Trust.  Grantor shall promptly

notify Holder (i) of any change of its organizational identification number, or

(ii) if Grantor does not now have an organization identification number and

later obtains one, of such organizational identification number.

(m)          Certain

Environmental Matters.  Grantor

shall comply with the terms and covenants and agreements with respect to

environmental matters of that certain loan agreement, dated of even date

herewith, by and between Lender and Grantor pertaining to the

Property (the “Environmental

Agreement”).

 

(n)           Further

Assurances.  Grantor will, promptly

on request of Holder, (i) correct any defect, error or omission which may be

discovered in the contents, execution or acknowledgment of this Deed of Trust

or any other Loan Document; (ii) execute, acknowledge, deliver, procure and

record and/or file such further documents (including, without limitation,

further deeds of trust, security agreements, financing statements, financing

statement amendments continuation statements, and assignments of rents or

leases) and do such further acts as may be necessary, desirable or proper to

carry out more effectively the purposes of this Deed of Trust and the other

Loan Documents, to more fully identify and subject to the liens and security

interests hereof any property intended to be covered hereby (including

specifically, but without limitation, any renewals, additions, substitutions,

replacements, or appurtenances to the Property) or as deemed advisable by

Holder to protect the lien or the security interest hereunder against the

rights or interests of third persons; and (iii) provide such certificates,

documents, reports, information, affidavits and other instruments and do such

further acts as may be necessary, desirable or proper in the reasonable

determination of Holder to enable Holder to comply with the requirements or

requests of any agency having jurisdiction over Holder or any examiners of such

agencies with respect to the indebtedness secured hereby, Grantor or the

Property.  Grantor shall pay all costs

connected with any of the foregoing, which shall be a demand obligation owing

by Grantor (which Grantor hereby promises to pay) to Holder pursuant to this

Deed of Trust.

(o)           Fees

and Expenses.  Without limitation of

any other provision of this Deed of Trust or of any other Loan Document and to

the extent not prohibited by applicable law, Grantor will pay, and will

reimburse to Holder and/or Trustee on demand to the extent paid by Holder

and/or Trustee: (i) all appraisal fees, filing, registration and recording

fees, recordation, transfer and other taxes, brokerage fees and commissions,

abstract fees, title search or examination fees, title policy and endorsement

premiums and fees, uniform commercial code search fees, judgment and tax lien

search fees, escrow fees, attorneys' fees, architect fees, engineer fees,

construction consultant fees, environmental inspection fees, survey fees, and

all other costs and expenses of every character incurred by Grantor or Holder

and/or Trustee in connection with the preparation of the Loan Documents, the

evaluation, closing and funding of the loan evidenced by the Loan Documents,

and any and all amendments and supplements to this Deed of Trust, the Note or

any other Loan Documents or any approval, consent, waiver, release or other

matter requested or required hereunder or thereunder, or otherwise attributable

or chargeable to Grantor as owner of the Property; and (ii) all costs and

expenses, including attorneys' fees and expenses, incurred or expended in

connection with the exercise of any right or remedy, or the defense of any

right or remedy or the enforcement of any obligation of Grantor, hereunder or

under any other Loan Document.

 

(p)           Indemnification.

 

(i)            Grantor

will indemnify and hold harmless Holder and Trustee from and against, and

reimburse them on demand for, any and all Indemnified Matters (hereinafter

defined).  For purposes of this

paragraph (p), the terms "Holder" and "Trustee"

shall include Trustee and Holder, respectively, and any persons owned or

controlled by, owning or controlling, or under common control or affiliated

with Holder or Trustee respectively and the directors, officers, partners,

employees, attorneys, agents and representatives of each of them.  WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL

APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO MATTERS WHICH IN WHOLE OR IN

PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE CAUSED BY OR ARISE OUT

OF, THE NEGLIGENCE (WHETHER SOLE, COMPARATIVE OR CONTRIBUTORY) OR STRICT

LIABILITY OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PERSON.  HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO

A PARTICULAR INDEMNIFIED PERSON TO THE EXTENT THAT THE SUBJECT OF THE

INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL

MISCONDUCT OF THAT INDEMNIFIED PERSON.  Any amount to be paid under this paragraph (p) by Grantor to

Holder and/or Trustee shall be a demand obligation owing by Grantor (which

Grantor hereby promises to pay) to Holder and/or Trustee pursuant to this Deed

of Trust.  Upon demand by Lender, Borrower shall diligently

defend any Indemnified Matter which affects the Property or is made or

commenced against Lender, whether alone or together with Borrower or any other

person, all at Borrower's own cost and expense and by counsel to be approved by

Lender in the exercise of its reasonable judgment.  In the alternative, at any time Lender may elect to conduct its

own defense through counsel selected by Lender and at the cost and expense of

Borrower. Nothing in

this paragraph, elsewhere in this Deed of Trust or in any other Loan Document

shall limit or impair any rights or remedies of Holder and/or Trustee

(including without limitation any rights of contribution or indemnification)

against Grantor or any other person under any other provision of this Deed of

Trust, any other Loan Document, any other agreement or any applicable Legal

Requirement.

(ii)           As used

herein, the term "Indemnified Matters" means any and all claims,

demands, liabilities (including strict liability), losses, damages (including

consequential damages), causes of action, judgments, penalties, fines, costs

and expenses (including without limitation, reasonable fees and expenses of

attorneys and other professional consultants and experts, and of the

investigation and defense of any claim, whether or not such claim is ultimately

defeated, and the settlement of any claim or judgment including all value paid

or given in settlement) of every kind, known or unknown, foreseeable or

unforeseeable, which may be imposed upon, asserted against or incurred or paid

by Holder and/or Trustee at any time and from time to time, whenever imposed,

asserted or incurred, because of, resulting from, in connection with, or arising

out of any transaction, act, omission, event or circumstance in any way

connected with the Property or with this Deed of Trust or any other Loan

Document, including but not limited to any bodily injury or death or property

damage occurring in or upon or in the vicinity of the Property through any

cause whatsoever at any time on or before the Release Date (hereinafter

defined) any act performed or omitted to be performed hereunder or under any

other Loan Document, any breach by Grantor of any representation, warranty,

covenant, agreement or condition contained in this Deed of Trust or in any

other Loan Document, any default as defined herein, any claim under or with

respect to any Lease (hereinafter defined) or arising under the Environmental Agreement. 

The term "Release Date" as used herein means the

earlier of the following two dates: (i) the date on which the indebtedness and

obligations secured hereby have been paid and performed in full and this Deed

of Trust has been released, or (ii) the date on which the lien of this Deed of

Trust is fully and finally foreclosed or a conveyance by deed in lieu of such

foreclosure is fully and finally effective, and possession of the Property has

been given to the purchaser or grantee free of occupancy and claims to

occupancy by Grantor and Grantor's heirs, devisees, representatives, successors

and assigns; provided, that if such payment, performance, release, foreclosure

or conveyance is challenged, in bankruptcy proceedings or otherwise, the

Release Date shall be deemed not to have occurred until such challenge is

rejected, dismissed or withdrawn with prejudice.  The indemnities in this paragraph (p) shall not terminate upon

the Release Date or upon the release, foreclosure or other termination of this

Deed of Trust but will survive the Release Date, foreclosure of this Deed of

Trust or conveyance in lieu of foreclosure, the repayment of the Secured

Indebtedness, the discharge and release of this Deed of Trust and the other

Loan Documents, any bankruptcy or other debtor relief proceeding, and any other

event whatsoever.

(q)           Taxes

on Note or Deed of Trust.  Grantor

will promptly pay all income, franchise and other taxes owing by Grantor and

any stamp, documentary, recordation and transfer taxes or other taxes (unless such

payment by Grantor is prohibited by law) which may be required to be paid with

respect to the Note, this Deed of Trust or any other instrument evidencing or

securing any of the Secured Indebtedness. 

In the event of the enactment after this date of any law of any

governmental entity applicable to Holder, the Note, the Property or this Deed

of Trust deducting from the value of property for the purpose of taxation any

lien or security interest thereon, or imposing upon Holder the payment of the

whole or any part of the taxes or assessments or charges or liens herein

required to be paid by Grantor, or changing in any way the laws relating to the

taxation of deeds of trust or mortgages or security agreements or debts secured

by deeds of trust or mortgages or security agreements or the interest of the

mortgagee or secured party in the property covered thereby, or the manner of

collection of such taxes, so as to affect this Deed of Trust or the Secured

Indebtedness or Holder, then, and in any such event, Grantor, upon demand by

Holder, shall pay such taxes, assessments, charges or liens, or reimburse

Holder therefor; provided, however, that if in the opinion of counsel for

Holder (i) it might be unlawful to require Grantor to make such payment or (ii)

the making of such payment might result in the imposition of interest beyond

the maximum amount permitted by law, then and in such event, Holder may elect,

by notice in writing given to Grantor, to declare all of the Secured

Indebtedness to be and become due and payable sixty (60) days from the giving

of such notice.

 

(r)            Statement

Concerning Note or Deed of Trust. 

Grantor shall at any time and from time to time furnish within seven (7)

days of request by Holder a written statement in such form as may be required by

Holder stating that (i) the Note, this Deed of Trust and the other Loan

Documents are valid and binding obligations of Grantor, enforceable against

Grantor in accordance with their terms; (ii) the unpaid principal balance of

the Note; (iii) the date to which interest on the Note is paid; (iv) the Note,

this Deed of Trust and the other Loan Documents have not been released,

subordinated or modified; and (v) there are no offsets or defenses against the

enforcement of the Note, this Deed of Trust or any other Loan Document.  If any of the foregoing statements in

clauses (i), (iv) and (v) are untrue, Grantor shall, alternatively, specify the

reasons therefor.

Section 2.2.  Performance

by Holder on Grantor's Behalf. 

Grantor agrees that, if Grantor fails to perform any act or to take any

action which under any Loan Document Grantor is required to perform or take, or

to pay any money which under any Loan Document Grantor is required to pay, and

whether or not the failure then constitutes a default hereunder or thereunder,

and whether or not there has occurred any default or defaults hereunder or the

Secured Indebtedness has been accelerated, Holder, in Grantor's name or its own

name, may, but shall not be obligated to, perform or cause to be performed such

act or take such action or pay such money, and any expenses so incurred by

Holder and any money so paid by Holder shall be a demand obligation owing by

Grantor to Holder (which obligation Grantor hereby promises to pay), shall be a

part of the indebtedness secured hereby, and Holder, upon making such payment,

shall be subrogated to all of the rights of the person, entity or body politic

receiving such payment.  Holder and its

designees shall have the right to enter upon the Property at any time and from

time to time for any such purposes.  No

such payment or performance by Holder shall waive or cure any default or waive

any right, remedy or recourse of Holder. 

Any such payment may be made by Holder in reliance on any statement,

invoice or claim without inquiry into the validity or accuracy thereof.  Each amount due and owing by Grantor to

Holder pursuant to this Deed of Trust shall bear interest, from the date such

amount becomes due until paid, at the rate per annum provided in the Note for

interest on past due principal owed on the Note but never in excess of the

maximum nonusurious amount permitted by applicable law, which interest shall be

payable to Holder on demand; and all such amounts, together with such interest

thereon, shall automatically and without notice be a part of the indebtedness

secured hereby.  The amount and nature

of any expense by Holder hereunder and the time when paid shall be fully

established by the certificate of Holder or any of Holder's officers or agents.

 

Section 2.3.  Absence

of Obligations of Holder with Respect to Property.  Notwithstanding anything in this Deed of

Trust to the contrary, including, without limitation, the definition of

"Property" and/or the provisions of Article 3 hereof, (i) to the

extent permitted by applicable law, the Property is composed of Grantor's

rights, title and interests therein but not Grantor's obligations, duties or

liabilities pertaining thereto, (ii) Holder neither assumes nor shall have any

obligations, duties or liabilities in connection with any portion of the items

described in the definition of "Property" herein, either prior to or

after obtaining title to such Property, whether by foreclosure sale, the

granting of a deed in lieu of foreclosure or otherwise, and (iii) Holder may,

at any time prior to or after the acquisition of title to any portion of the

Property as above described, advise any party in writing as to the extent of

Holder's interest therein and/or expressly disaffirm in writing any rights,

interests, obligations, duties and/or liabilities with respect to such Property

or matters related thereto.  Without

limiting the generality of the foregoing, it is understood and agreed that

Holder shall have no obligations, duties or liabilities prior to or after

acquisition of title to any portion of the Property, as lessee under any lease

or purchaser or seller under any contract or option unless Holder elects

otherwise by written notification.

 

Section

2.4.  Authorization to File Financing

Statements; Power of Attorney. 

Grantor hereby authorizes Holder at any time and from time to time to

file any initial financing statements, amendments thereto and continuation

statements with or without signature of Grantor as authorized by applicable

law, as applicable to the Collateral. 

For purposes of such filings, Grantor agrees to furnish any information

requested by Holder promptly upon request by Holder.  Grantor also ratifies its authorization for Holder to have filed

any like initial financing statements, amendments thereto or continuation

statements if filed prior to the date of this Deed of Trust.  Grantor hereby irrevocably constitutes and

appoints Holder and any officer or agent of Holder, with full power of

substitution, as its true and lawful attorneys-in-fact with full irrevocable

power and authority in the place and stead of Grantor or in Grantor's own name

to execute in Grantor's name any such documents and to otherwise carry out the

purposes of this Section 2.4, to the extent that Grantor's authorization above

is not sufficient.  To the extent

permitted by law, Grantor hereby ratifies all acts said attorneys-in-fact shall

lawfully do, have done in the past or cause to be done in the future by virtue

hereof.  This power of attorney is a

power coupled with an interest and shall be irrevocable.

ARTICLE 3

 

Assignment of Rents and Leases

 

Section

3.1.  Assignment.  As additional security for the indebtedness

secured hereby, Grantor hereby assigns to Holder all Rents (hereinafter

defined) and all of Grantor's rights in and under all Leases (hereinafter

defined).  Upon the occurrence of a

Default hereunder, Holder shall have the right, power and privilege (but shall

be under no duty) to demand possession of the Rents, which demand shall to the

fullest extent permitted by applicable law be sufficient action by Holder to

entitle Holder to immediate and direct payment of the Rents (including delivery

to Holder of Rents collected for the period in which the demand occurs and for

any subsequent period), for application as provided in this Deed of Trust, all

without the necessity of any further action by Holder, including, without

limitation, any action to obtain possession of the Land, Improvements or any

other portion of the Property or any action for the appointment of a receiver.  Grantor hereby authorizes and directs the

tenants under the Leases to pay Rents to Holder upon written demand by Holder,

without further consent of Grantor, without any obligation of such tenants to

determine whether a Default has in fact occurred and regardless of whether Holder

has taken possession of any portion of the Property, and the tenants may rely

upon any written statement delivered by Holder to the tenants.  Any such payments to Holder shall constitute

payments to Grantor under the Leases, and Grantor hereby irrevocably appoints

Holder as its attorney-in-fact to do all things, after a Default, which Grantor

might otherwise do with respect to the Property and the Leases thereon,

including, without limitation, (i) collecting Rents with or without suit and

applying the same, less expenses of collection, to any of the obligations

secured hereunder or to expenses of operating and maintaining the Property

(including reasonable reserves for anticipated expenses), at the option of the

Holder, all in such manner as may be determined by Holder, or at the option of

Holder, holding the same as security for the payment of the Secured

Obligations, (ii) leasing, in the name of Grantor, the whole or any part of the

Property which may become vacant, and (iii) employing agents therefor and

paying such agents reasonable compensation for their services.  The curing of such Default, unless other

Defaults also then exist, shall entitle Grantor to recover its aforesaid

license to do any such things which Grantor might otherwise do with respect to

the Property and the Leases thereon and to again collect such Rents.  The powers and rights granted in this

paragraph shall be in addition to the other remedies herein provided for upon

the occurrence of a Default and may be exercised independently of or

concurrently with any of said remedies. 

Nothing in the foregoing shall be construed to impose any obligation

upon Holder to exercise any power or right granted in this paragraph or to

assume any liability under any Lease of any part of the Property and no

liability shall attach to Holder for failure or inability to collect any Rents

under any such Lease.  The assignment

contained in this Section shall become null and void upon the release of this

Deed of Trust.  As used herein: (i)

"Lease" means each existing or future lease, sublease (to the

extent of Grantor's rights thereunder) or other agreement under the terms of

which any person has or acquires any right to occupy or use the Property, or

any part thereof, or interest therein, and each existing or future guaranty of

payment or performance thereunder, and all extensions, renewals, modifications

and replacements of each such lease, sublease, agreement or guaranty; and (ii)

"Rents" means all of the rents, revenue, income, profits and

proceeds derived and to be derived from the Property or arising from the use or

enjoyment of any portion thereof or from any Lease, including but not limited

to the proceeds from any negotiated lease termination or buyout of such Lease,

liquidated damages following default under any such Lease, all proceeds payable

under any policy of insurance covering loss of rents resulting from

untenantability caused by damage to any part of the Property, all of Grantor's

rights to recover monetary amounts from any tenant in bankruptcy including,

without limitation, rights of recovery for use and occupancy and damage claims

arising out of Lease defaults, including rejections, under any applicable

Debtor Relief Law (hereinafter defined), together with any sums of money that

may now or at any time hereafter be or become due and payable to Grantor by

virtue of any and all royalties, overriding royalties, bonuses, delay rentals

and any other amount of any kind or character arising under any and all present

and all future oil, gas, mineral and mining leases covering the Property or any

part thereof, and all proceeds and other amounts paid or owing to Grantor under

or pursuant to any and all contracts and bonds relating to the construction or

renovation of the Property.

Section 3.2.  Covenants,

Representations and Warranties Concerning Leases and Rents.  Grantor covenants, represents and warrants

that: (a) Grantor has good title to, and is the owner of the entire landlord's

interest in, the Leases and Rents hereby assigned and authority to assign them;

(b) all Leases are valid and enforceable, and in full force and effect, and are

unmodified except as stated therein; (c) 

neither Grantor nor any tenant in the Property is in default under its

Lease (and no event has occurred which with the passage of time or notice or

both would result in a default under its Lease) or is the subject of any

bankruptcy, insolvency or similar proceeding; (d) unless otherwise stated in a

Permitted Encumbrance, no Rents or Leases 

have been or will be assigned, mortgaged, pledged or otherwise

encumbered and no other person has or will acquire any right, title or interest

in such Rents or Leases; (e) no Rents have been waived, released, discounted,

set off or compromised; (f) except as stated in the Leases, Grantor has not received

any funds or deposits from any tenant for which credit has not already been

made on account of accrued Rents; (g) Grantor shall perform all of its

obligations under the Leases and enforce the tenants' obligations under the

Leases to the extent enforcement is prudent under the circumstances; (h)

Grantor will not without the prior written consent of Holder, enter into any

Lease after the date hereof, or waive, release, discount, set off, compromise,

reduce or defer any Rent, receive or collect Rents more than one (1) month in

advance, grant any rent–free period to any tenant, reduce any Lease term or

waive, release or otherwise modify any other material obligation under any

Lease, renew or extend any Lease except in accordance with a right of the

tenant thereto in such Lease, approve or consent to an assignment of a Lease or

a subletting of any part of the premises covered by a Lease, or settle or

compromise any claim against a tenant under a Lease in bankruptcy or otherwise;

(i) Grantor will not, without the prior written consent of Holder, terminate or

consent to the cancellation or surrender of any Lease having an unexpired term

of one (1) year or more; (j) Grantor will not execute any Lease except in

accordance with the Loan Documents and for actual occupancy by the tenant

thereunder; (k) Grantor shall give prompt notice to Holder, as soon as Grantor

first obtains notice, of any claim, or the commencement of any action, by any

tenant or subtenant under or with respect to a Lease regarding any claimed damage,

default, diminution of or offset against Rent, cancellation of the Lease, or

constructive eviction, excluding, however, notices of default under residential

Leases, and Grantor shall defend, at Grantor's expense, any proceeding

pertaining to any Lease, including, if Holder so requests, any such proceeding

to which Holder is a party; (l) Grantor shall as often as requested by Holder,

within ten (10) days of each request, deliver to Holder a complete rent roll of

the Property in such detail as Holder may require and financial statements of

the tenants, subtenants and guarantors under the Leases to the extent available

to Grantor, and deliver to such of the tenants and others obligated under the

Leases specified by Holder written notice of the assignment in Section 3.1

hereof in form and content satisfactory to Holder; (m) promptly upon request by

Holder, Grantor shall deliver to Holder executed originals of all Leases and

copies of all records relating thereto; (n) there shall be no merger of the

leasehold estates created by the Leases, with the fee estate of the Land

without the prior written consent of Holder; and (o) Holder may at any time and

from time to time by specific written instrument intended for the purpose,

unilaterally subordinate the lien of this Deed of Trust to any Lease, without

joinder or consent of, or notice to, Grantor, any tenant or any other person,

and notice is hereby given to each tenant under a Lease of such right to

subordinate.  No such subordination

shall constitute a subordination to any lien or other encumbrance, whenever

arising, or improve the right of any junior lienholder; and nothing herein

shall be construed as subordinating this Deed of Trust to any Lease.

Section 3.3.  Estoppel

Certificates.  All Leases shall

require the tenant to execute and deliver to Holder an estoppel certificate in

form and substance acceptable to Holder within ten (10) days after notice from

the Holder.

 

Section 3.4.  No

Liability of Holder.  Holder's

acceptance of this assignment shall not be deemed to constitute Holder a

"mortgagee in possession," nor obligate Holder to appear in or defend

any proceeding relating to any Lease or to the Property, or to take any action

hereunder, expend any money, incur any expenses, or perform any obligation or

liability under any Lease, or assume any obligation for any deposit delivered

to Grantor by any tenant and not as such delivered to and accepted by

Holder.  Holder shall not be liable for

any injury or damage to person or property in or about the Property, or for

Holder's failure to collect or to exercise diligence in collecting Rents, but

shall be accountable only for Rents that it shall actually receive.  Neither the assignment of Leases and Rents

nor enforcement of Holder's rights regarding Leases and Rents (including

collection of Rents) nor possession of the Property by Holder nor Holder's

consent to or approval of any Lease (nor all of the same), shall render Holder

liable on any obligation under or with respect to any Lease or constitute

affirmation of, or any subordination to, any Lease, occupancy, use or option.

 

If

Holder seeks or obtains any judicial relief regarding Rents or Leases, the same

shall in no way prevent the concurrent or subsequent employment of any other

appropriate rights or remedies nor shall same constitute an election of

judicial relief for any foreclosure or any other purpose.  Holder neither has nor assumes any

obligations as lessor or landlord with respect to any Lease.  The rights of Holder under this Article 3

shall be cumulative of all other rights of Holder under the Loan Documents or

otherwise.

ARTICLE 4

 

Default

 

Section 4.1.  Events

of Default.  The occurrence of any

one of the following shall be a default under this Deed of Trust ("default"

or "Default"):

 

(a)           Failure

to Pay Indebtedness.  Any of the

Secured Indebtedness is not paid when due, regardless of how such amount may

have become due.

 

(b)           Nonperformance

of Covenants.  Any covenant,

agreement or condition herein or in any other Loan Document (other than

covenants otherwise addressed in another paragraph of this Section, such as

covenants to pay the Secured Indebtedness) is not fully and timely performed,

observed or kept, and such failure is not cured within the applicable notice

and cure period (if any) provided for herein or in such other Loan Document.

 

(c)           Default

under other Loan Documents.  The

occurrence of a Default under any other Loan Document.

 

(d)           Representations.  Any statement, representation or warranty in

any of the Loan Documents, or in any financial statement or any other writing

heretofore or hereafter delivered to Holder in connection with the Secured

Indebtedness is false, misleading or erroneous in any material respect on the

date hereof or on the date as of which such statement, representation or

warranty is made.

 

(e)           Bankruptcy

or Insolvency.  The owner of the

Property or any person liable, directly or indirectly, for any of the Secured

Indebtedness (or any general partner or joint venturer of such owner or other

person):

 

(i)  (A)  Executes an assignment for the benefit of

creditors, or takes any action in furtherance thereof; or (B) admits in writing

its inability to pay, or fails to pay, its debts generally as they become due;

or (C) as a debtor, files a petition, case, proceeding or other action pursuant

to, or voluntarily seeks the benefit or benefits of, Title 11 of the United

States Code as now or hereafter in effect or any other federal, state or local

law, domestic or foreign, as now or hereafter in effect relating to bankruptcy,

insolvency, liquidation, receivership, reorganization, arrangement,

composition, extension or adjustment of debts, or similar laws affecting the

rights of creditors (Title 11 of the United States Code and such other laws

being herein called "Debtor Relief Laws"), or takes any action

in furtherance thereof; or (D) seeks the appointment of a receiver, trustee,

custodian or liquidator of the Property or any part thereof or of any

significant portion of its other property; or

(ii)  Suffers the

filing of a petition, case, proceeding or other action against it as a debtor

under any Debtor Relief Law or seeking appointment of a receiver, trustee,

custodian or liquidator of the Property or any part thereof or of any

significant portion of its other property, and (A) admits, acquiesces in or

fails to contest diligently the material allegations thereof, or (B) the

petition, case, proceeding or other action results in entry of any order for

relief or order granting relief sought against it, or (C) in a proceeding under

Debtor Relief Laws, the case is converted from one chapter to another, or (D)

fails to have the petition, case, proceeding or other action permanently

dismissed or discharged on or before the earlier of trial thereon or sixty (60)

days next following the date of its filing; or

 

(iii)  Conceals,

removes, or permits to be concealed or removed, any part of its property, with

intent to hinder, delay or defraud its creditors or any of them, or makes or

suffers a transfer of any of its property which may be fraudulent under any

bankruptcy, fraudulent conveyance or similar law; or makes any transfer of its

property to or for the benefit of a creditor at a time when other creditors

similarly situated have not been paid; or suffers or permits, while insolvent,

any creditor to obtain a lien (other than as described in subparagraph (iv)

below) upon any of its property through legal proceedings which are not vacated

and such lien discharged prior to enforcement thereof and in any event within

sixty (60) days from the date thereof; or

 

(iv)  Fails to have

discharged within a period of ten (10) days any attachment, sequestration, or

similar writ levied upon any of its property; or

 

(v)  Fails to pay

immediately any final money judgment against it.

 

(f)            Transfer

of the Property.  Any sale, lease,

conveyance, assignment, pledge, encumbrance, or transfer of all or any part of

the Property or any interest therein, voluntarily or involuntarily, whether by

operation of law or otherwise, except: (i) sales or transfers of items of the Accessories

which have become obsolete or worn beyond practical use and which have been

replaced by adequate substitutes, owned by Grantor, having a value equal to or

greater than the replaced items when new; and (ii) the grant, in the ordinary

course of business, of a leasehold interest in a part of the Improvements to a

tenant for occupancy, not containing a right or option to purchase and not in

contravention of any provision of this Deed of Trust or of any other Loan

Document.  Holder may, in its sole discretion,

waive a default under this paragraph, but it shall have no obligation to do so,

and any waiver may be conditioned upon such one or more of the following (if

any) which Holder may require: the grantee's integrity, reputation, character,

creditworthiness and management ability being satisfactory to Holder in its

sole judgment and grantee executing, prior to such sale or transfer, a written

assumption agreement containing such terms as Holder may require, a principal

paydown on the Note, an increase in the rate of interest payable under the

Note, a transfer fee, a modification of the term of the Note, and any other

modification of the Loan Documents which Holder may require.  NOTICE - THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR

THE TERMS THEREOF BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE

PROPERTY CONVEYED.

(g)           Transfer

of Assets.  Any sale, lease,

conveyance, assignment, pledge, encumbrance, or transfer of all or any part of

the other assets of Grantor, excluding the Property, voluntarily or

involuntarily, whether by operation of law or otherwise, except: (i) sales or

transfers in the ordinary course of Grantor's business; and (ii) sales or

transfers for which Grantor receives consideration substantially equivalent to

the fair market value of the transferred asset.

 

(h)           Transfer

of Ownership of Grantor.  The sale,

pledge, encumbrance, assignment or transfer, voluntarily or involuntarily,

whether by operation of law or otherwise, of any interest in Grantor (if

Grantor is not a natural person but is a corporation, partnership, limited

liability company, trust or other legal entity), without the prior written

consent of Holder (including, without limitation, if Grantor is a partnership

or joint venture, the withdrawal from or admission into it of any general

partner or joint venturer).

 

(i)            Grant

of Easement, Etc.  Without the prior

written consent of Holder, Grantor grants any easement or dedication, files any

plat, condominium declaration, or restriction, or otherwise encumbers the Property,

or seeks or permits any zoning reclassification or variance, unless such action

is expressly permitted by the Loan Documents or does not affect the Property.

 

(j)            Abandonment.  The owner of the Property abandons any of

the Property.

 

(k)           Default Under Other Lien. 

A default or event of default occurs under any lien, security interest

or assignment covering the Property or any part thereof (whether or not Holder

has consented, and without hereby implying Holder's consent, to any such lien,

security interest or assignment not created hereunder), or the holder of any

such lien, security interest or assignment declares a default or institutes

foreclosure or other proceedings for the enforcement of its remedies

thereunder.

 

(l)            Destruction.  The Property is so demolished, destroyed or

damaged that, in the reasonable opinion of Holder, it cannot be restored or

rebuilt with available funds to a profitable condition within a reasonable

period of time and in any event, prior to the final maturity date of the Note.

(m)          Condemnation.  (i) Any governmental authority shall

require, or commence any proceeding for, the demolition of any building or

structure comprising a part of the Premises, or (ii) there is commenced any

proceeding to condemn or otherwise take pursuant to the power of eminent

domain, or a contract for sale or a conveyance in lieu of such a taking is

executed which provides for the transfer of, a material portion of the

Premises, including but not limited to the taking (or transfer in lieu thereof)

of any portion which would result in the blockage or substantial impairment of

access or utility service to the Improvements or which would cause the Premises

to fail to comply with any Legal Requirement.

 

(n)           Liquidation,

Etc.  The liquidation, termination,

dissolution, merger, consolidation or failure to maintain good standing in the

State of Texas and/or the state of incorporation or organization, if different

(or in the case of an individual, the death or legal incapacity) of the

Grantor, any owner of the Property or any person obligated to pay any part of

the Secured Indebtedness.

 

(o)           Material,

Adverse Change.  In Holder's

reasonable opinion, the prospect of payment of all or any part of the Secured

Indebtedness has been impaired because of a material, adverse change in the

financial condition, results of operations, business or properties of the

Grantor, any owner of the Property or any person liable, directly or

indirectly, for any of the Secured Indebtedness, or of any general partner or

joint venturer thereof (if such owner or other person is a partnership or joint

venture).

 

(p)           Enforceability;

Priority.  Any Loan Document shall

for any reason without Holder's specific written consent cease to be in full

force and effect, or shall be declared null and void or unenforceable in whole

or in part, or the validity or enforceability thereof, in whole or in part,

shall be challenged or denied by any party thereto other than Holder; or the

liens, mortgages or security interests of Holder in any of the Property become

unenforceable in whole or in part, or cease to be of the priority herein

required, or the validity or enforceability thereof, in whole or in part, shall

be challenged or denied by Grantor or any person obligated to pay any part of

the Secured Indebtedness.

 

(q)           Other

Indebtedness.  A default or event of

default occurs under any document executed and delivered in connection with any

other indebtedness (to Lender or any other person or entity) of Grantor, the

owner of the Property, any person obligated to pay any part of the Secured

Indebtedness, or any person or entity which guarantees such other indebtedness.

 

Section 4.2.  Notice

and Cure.  If any provision of this

Deed of Trust or any other Loan Document provides for Holder to give to Grantor

any notice regarding a default or incipient default, then if Holder shall fail

to give such notice to Grantor as provided, the sole and exclusive remedy of

Grantor for such failure shall be to seek appropriate equitable relief to

enforce the agreement to give such notice and to have any acceleration of the

maturity of the Note and the Secured Indebtedness postponed or revoked and

foreclosure proceedings in connection therewith delayed or terminated pending

or upon the curing of such default in the manner and during the period of time

permitted by such agreement, if any, and Grantor shall have no right to damages

or any other type of relief not herein specifically set out against Holder, all

of which damages or other relief are hereby waived by Grantor.  Nothing herein or in any other Loan Document

shall operate or be construed to add on or make cumulative any cure or grace

periods specified in any of the Loan Documents.

ARTICLE 5

 

Remedies

 

Section 5.1.  Certain

Remedies.  If a Default shall occur,

Holder may (but shall have no obligation to) exercise any one or more of the

following remedies, without notice (unless notice is required by applicable

statute):

 

(a)           Acceleration.  Holder may at any time and from time to time

declare any or all of the Secured Indebtedness immediately due and payable and

such Secured Indebtedness shall thereupon be immediately due and payable,

without presentment, demand, protest, notice of protest, notice of acceleration

or of intention to accelerate or any other notice or declaration of any kind,

all of which are hereby expressly waived by Grantor.  Without limitation of the foregoing, upon the occurrence of a

default described in clauses (A), (C) or (D) of subparagraph (i) of paragraph

(e) of Section 4.1, hereof, all of the Secured Indebtedness shall thereupon be

immediately due and payable, without presentment, demand, protest, notice of

protest, declaration or notice of acceleration or intention to accelerate, or

any other notice, declaration or act of any kind, all of which are hereby

expressly waived by Grantor.

 

(b)           Enforcement

of Assignment of Rents.  In addition

to the rights of Holder under Article 3 hereof, prior or subsequent to taking

possession of any portion of the Property or taking any action with respect to

such possession, Holder may: (1) collect and/or sue for the Rents in Holder's

own name, give receipts and releases therefor, and after deducting all expenses

of collection, including attorneys' fees and expenses, apply the net proceeds

thereof to the Secured Indebtedness in such manner and order as Holder may

elect and/or to the operation and management of the Property, including the

payment of management, brokerage and attorney's fees and expenses; and  (2) require Grantor to transfer all security

deposits and records thereof to Holder together with original counterparts of

the Leases.

(c)           Foreclosure.  Upon the occurrence of a default, Trustee, or his successor or

substitute, is authorized and empowered and it shall be his special duty at the

request of Holder to sell the Property or any part thereof situated in the

State of Texas, at the courthouse of any county (whether or not the counties in

which the Property is located are contiguous, if the Property is located in

more than one county) in the State of Texas in which any part of the Property

is situated, at public venue to the highest bidder for cash between the hours

of ten o'clock a.m. and four o'clock 

p.m. on the first Tuesday in any month or at such other place, time and

date as provided by the statutes of the State of Texas then in force governing

sales of real estate under powers of sale conferred by deed of trust, after

having given notice of such sale in accordance with such statutes.  Any sale made by Trustee hereunder may be as

an entirety or in such parcels as Holder may request.  To the extent permitted by applicable law, any sale may be

adjourned by announcement at the time and place appointed for such sale without

further notice except as may be required by law.  The sale by Trustee of less than the whole of the Property shall

not exhaust the power of sale herein granted, and Trustee is specifically

empowered to make successive sale or sales under such power until the whole of

the Property shall be sold; and, if the proceeds of such sale of less than the

whole of the Property shall be less than the aggregate of the Secured

Indebtedness and the expense of executing this trust as provided herein, this Deed

of Trust and the lien hereof

shall remain in full force and effect as to the unsold portion of the Property

just as though no sale had been made; provided, however, that Grantor shall

never have any right to require the sale of less than the whole of the Property

but Holder shall have the right, at its sole election, to request Trustee to

sell less than the whole of the Property. 

Trustee may, after any request or direction by Holder, sell not only the

real property but also the Collateral and other interests which are a part of

the Property, or any part thereof, as a unit and as a part of a single sale, or

may sell any part of the Property separately from the remainder of the

Property.  It shall not be necessary for

Trustee to have taken possession of any part of the Property or to have present

or to exhibit at any sale any of the Collateral.  After each sale, Trustee shall make to the purchaser or

purchasers at such sale good and sufficient conveyances in the name of Grantor,

conveying the property so sold to the purchaser or purchasers with general

warranty of title of

Grantor, subject to the Permitted Encumbrances (and to such leases and other

matters, if any, as Trustee may elect upon request of Holder), and shall

receive the proceeds of said sale or sales and apply the same as herein

provided.  Payment of the purchase price

to the Trustee shall satisfy the obligation of purchaser at such sale therefor,

and such purchaser shall not be responsible for the application thereof.  The power of sale granted herein shall not

be exhausted by any sale held hereunder by Trustee or his substitute or

successor, and such power of sale may be exercised from time to time and as

many times as Holder may deem necessary until all of the Property has been duly

sold and all Secured Indebtedness has been fully paid.  In the event any sale hereunder is not

completed or is defective in the opinion of Holder, such sale shall not exhaust

the power of sale hereunder and Holder shall have the right to cause a

subsequent sale or sales to be made hereunder. 

Any and all statements of fact or other recitals made in any deed or

deeds or other conveyances given by Trustee or any successor or substitute

appointed hereunder as to nonpayment of the Secured Indebtedness or as to the

occurrence of any default, or as to Holder's having declared all of said

indebtedness to be due and payable, or as to the request to sell, or as to

notice of time, place and terms of sale and the properties to be sold having

been duly given, or as to the refusal, failure or inability to act of Trustee

or any substitute or successor trustee, or as to the appointment of any

substitute or successor trustee, or as to any other act or thing having been

duly done by Holder or by such Trustee, substitute or successor, shall be taken

as prima facie evidence of the truth of the facts so stated and recited.  The Trustee or his successor or substitute

may appoint or delegate any one or more persons as agent to perform any act or

acts necessary or incident to any sale held by Trustee, including the posting

of notices and the conduct of sale, but in the name and on behalf of Trustee,

his successor or substitute.  If Trustee

or his successor or substitute shall have given notice of sale hereunder, any

successor or substitute Trustee thereafter appointed may complete the sale and

the conveyance of the property pursuant thereto as if such notice had been

given by the successor or substitute Trustee conducting the sale.

(d)           Uniform

Commercial Code.  Without limitation

of Holder's rights of enforcement with respect to the Collateral or any part

thereof in accordance with the procedures for foreclosure of real estate,

Holder may exercise its rights of enforcement with respect to the Collateral or

any part thereof under the Texas Business and Commerce Code, as in effect from

time to time (or under the Uniform Commercial Code in force in any other state

to the extent the same is applicable law) and in conjunction with, in addition

to or in substitution for those rights and remedies: (1)  Holder may enter upon Grantor's premises to

take possession of, assemble and collect the Collateral or, to the extent and

for those items of the Collateral permitted under applicable law, to render it

unusable; (2) Holder may require Grantor to assemble the Collateral and make it

available at a place Holder designates which is mutually convenient to allow Holder

to take possession or dispose of the Collateral; (3) written notice mailed to

Grantor as provided herein at least five (5) days prior to the date of public

sale of the Collateral or prior to the date after which private sale of the

Collateral will be made shall constitute reasonable notice; provided

that, if Holder fails to comply with this clause (3) in any respect, its

liability for such failure shall be limited to the liability (if any) imposed

on it as a matter of law under the Texas Business and Commercial Code, as in

effect from time to time (or under the Uniform Commercial Code, in force from

time to time, in any other state to the extent the same is applicable law); (4) any sale made pursuant to the

provisions of this paragraph shall be deemed to have been a public sale

conducted in a commercially reasonable manner if held contemporaneously with

and upon the same notice as required for the sale of the Property under power

of sale as provided in paragraph (c) above in this Section 5.1; (5) in the

event of a foreclosure sale, whether made by Trustee under the terms hereof, or

under judgment of a court, the Collateral and the other Property may, at the

option of Holder, be sold as a whole; (6) it shall not be necessary that Holder

take possession of the Collateral or any part thereof prior to the time that

any sale pursuant to the provisions of this Section is conducted and it shall

not be necessary that the Collateral or any part thereof be present at the

location of such sale; (7) with respect to application of proceeds from

disposition of the Collateral under Section 5.2 hereof, the costs and expenses

incident to disposition shall include the reasonable expenses of retaking,

holding, preparing for sale or lease, selling, leasing and the like and the

reasonable attorneys' fees and legal expenses (including, without limitation,

the allocated costs for in-house legal services) incurred by Holder; (8) any

and all statements of fact or other recitals made in any bill of sale or

assignment or other instrument evidencing any foreclosure sale hereunder as to

nonpayment of the Secured Indebtedness or as to the occurrence of any default,

or as to Holder having declared all of such indebtedness to be due and payable,

or as to notice of time, place and terms of sale and of the properties to be

sold having been duly given, or as to any other act or thing having been duly

done by Holder, shall be taken as prima facie evidence of the truth of the

facts so stated and recited; (9) Holder may appoint or delegate any one or more

persons as agent to perform any act or acts necessary or incident to any sale

held by Holder, including the sending of notices and the conduct of the sale,

but in the name and on behalf of Holder; (10) Holder may comply

with any applicable state or federal law or regulatory requirements in

connection with a disposition of the Collateral, and such compliance will not

be considered to affect adversely the commercial reasonableness of any sale of

the Collateral; (11) Holder may sell the Collateral without giving any

warranties as to the Collateral, and specifically disclaim any warranties of

title, merchantability, fitness for a specific purpose or the like, and this

procedure will not be considered to affect adversely the commercial

reasonableness of any sale of the Collateral; (12) Grantor acknowledges that a

private sale of the Collateral may result in less proceeds than a public sale;

and (13) Grantor acknowledges that the Collateral may be sold at a loss to

Grantor, and that, in such event, Holder shall have no liability or

responsibility to Grantor for such loss.

(e)           Lawsuits.  Holder may proceed by a suit or suits in

equity or at law, whether for collection of the indebtedness secured hereby,

the specific performance of any covenant or agreement herein contained or in

aid of the execution of any power herein granted, or for any foreclosure

hereunder or for the sale of the Property under the judgment or decree of any

court or courts of competent jurisdiction.

 

(f)  Entry on

Property.  Holder is authorized,

prior or subsequent to the institution of any foreclosure proceedings, to the

fullest extent permitted by applicable law, to enter upon the Property, or any

part thereof, and to take possession of the Property and all books and records,

and all recorded data of any kind or nature, regardless of the medium of

recording including, without limitation, all software, writings, plans,

specifications and schematics

relating thereto, and to exercise without interference from Grantor any and all

rights which Grantor has with respect to the management, possession, operation,

protection or preservation of the Property. 

Holder shall not be deemed to have taken possession of the Property or

any part thereof except upon the exercise of its right to do so, and then only

to the extent evidenced by its demand and overt act specifically for such

purpose.  All costs, expenses and

liabilities of every character incurred by Holder in managing, operating,

maintaining, protecting or preserving the Property shall constitute a demand

obligation of Grantor (which obligation Grantor hereby promises to pay) to

Holder pursuant to this Deed of Trust. 

If necessary to obtain the possession provided for above, Holder may

invoke any and all legal remedies to dispossess Grantor.  In connection with any action taken by

Holder pursuant to this Section, Holder shall not be liable for any loss

sustained by Grantor resulting from any failure to let the Property or any part

thereof, or from any act or omission of Holder in managing the Property unless

such loss is caused by the willful misconduct and bad faith of Holder, nor

shall Holder be obligated to perform or discharge any obligation, duty or

liability of Grantor arising under any lease or other agreement relating to the

Property or arising under any Permitted Encumbrance or otherwise arising.  Grantor hereby assents to, ratifies and

confirms any and all actions of Holder with respect to the Property taken under

this Section.

(g)           Receiver.  Holder shall as a matter of right be entitled

to the appointment of a receiver or receivers for all or any part of the

Property, whether such receivership be incident to a proposed sale (or sales)

of such property or otherwise, and without regard to the value of the Property

or the solvency of any person or persons liable for the payment of the

indebtedness secured hereby, and Grantor does hereby irrevocably consent to the

appointment of such receiver or receivers, waives notice of such appointment,

of any request therefor or hearing in connection therewith, and any and all

defenses to such appointment, agrees not to oppose any application therefor by

Holder, and agrees that such appointment shall in no manner impair, prejudice

or otherwise affect the rights of Holder to application of Rents as provided in

this Deed of Trust.  Nothing herein is

to be construed to deprive Holder of any other right, remedy or privilege it

may have under the law to have a receiver appointed.  Any money advanced by Holder in connection with any such

receivership shall be a demand obligation (which obligation Grantor hereby

promises to pay) owing by Grantor to Holder pursuant to this Deed of Trust.

 

(h)           Termination

of Commitment to Lend.  Holder may

terminate any commitment or obligation to lend or disburse funds under any Loan

Document or enter into any other credit arrangement to or for the benefit of

Grantor.

 

(i)            Other

Rights and Remedies.  Holder may

exercise any and all other rights and remedies which Holder may have under the

Loan Documents, or at law or in equity or otherwise.

 

Section 5.2.  Proceeds

of Foreclosure.  The proceeds of any

sale held by Trustee or Holder or any receiver or public officer in foreclosure

of the liens and security interests evidenced hereby shall be applied in

accordance with the requirements of applicable laws and to the extent

consistent therewith, FIRST, to the payment of all necessary costs and

expenses incident to such foreclosure sale, including but not limited to all

attorneys' fees and legal expenses, advertising costs, auctioneer's fees, costs

of title rundowns and lien searches, inspection fees, appraisal costs, fees for

professional services, environmental assessment and remediation fees, all court

costs and charges of every character, and a reasonable fee (not exceeding five

percent (5%) of the gross proceeds of such sale) to Trustee acting under the

provisions of paragraph (c) of Section 5.1 hereof if foreclosed by power of

sale as provided in said paragraph, and to the payment of the other Secured

Indebtedness, including specifically without limitation the principal, accrued

interest and attorneys' fees due and unpaid on the Note and the amounts due and

unpaid and owed to Holder under this Deed of Trust, the order and manner of

application to the items in this clause FIRST to be in Holder's sole

discretion; and SECOND, the remainder, if any there shall be, shall be

paid to Grantor, or to Grantor's heirs, devisees, representatives, successors

or assigns, or such other persons (including the holder or beneficiary of any

inferior lien) as may be entitled thereto by law; provided, however, that if

Holder is uncertain which person or persons are so entitled, Holder may

interplead such remainder in any court of competent jurisdiction, and the

amount of any attorneys' fees, court costs and expenses incurred in such action

shall be a part of the Secured Indebtedness and shall be reimbursable (without

limitation) from such remainder.

Section 5.3.  Holder

as Purchaser.  Holder shall have the

right to become the purchaser at any sale held by Trustee or substitute or

successor or by any receiver or public officer or at any public sale, and

Holder shall have the right to credit upon the amount of Holder's successful

bid, to the extent necessary to satisfy such bid, all or any part of the

Secured Indebtedness in such manner and order as Holder may elect.

 

Section 5.4.  Foreclosure

as to Matured Debt.  Upon the

occurrence of a default, Holder shall have the right to proceed with

foreclosure (judicial or nonjudicial) of the liens and security interests

hereunder without declaring the entire Secured Indebtedness due, and in such

event any such foreclosure sale may be made subject to the unmatured part of

the Secured Indebtedness; and any such sale shall not in any manner affect the

unmatured part of the Secured Indebtedness, but as to such unmatured part this

Deed of Trust shall remain in full force and effect just as though no sale had

been made.  The proceeds of such sale

shall be applied as provided in Section 5.2 hereof except that the amount paid

under clause FIRST thereof shall be only the matured portion of the Secured

Indebtedness and any proceeds of such sale in excess of those provided for in

clause FIRST (modified as provided above) shall be applied to the prepayment

(without penalty) of any other Secured Indebtedness in such manner and order

and to such extent as Holder deems advisable, and the remainder, if any, shall

be applied as provided in clause SECOND of Section 5.2 hereof.  Several sales may be made hereunder without

exhausting the right of sale for any unmatured part of the Secured

Indebtedness.

 

Section 5.5.  Remedies

Cumulative.  All rights and remedies

provided for herein and in any other Loan Document are cumulative of each other

and of any and all other rights and remedies existing at law or in equity, and

Trustee and Holder shall, in addition to the rights and remedies provided

herein or in any other Loan Document, be entitled to avail themselves of all

such other rights and remedies as may now or hereafter exist at law or in equity

for the collection of the Secured Indebtedness and the enforcement of the

covenants herein and the foreclosure of the liens and security interests

evidenced hereby, and the resort to any right or remedy provided for hereunder

or under any such other Loan Document or provided for by law or in equity shall

not prevent the concurrent or subsequent employment of any other appropriate

right or rights or remedy or remedies.

 

Section 5.6.  Discretion

as to Security.  Holder may resort

to any security given by this Deed of Trust or to any other security now

existing or hereafter given to secure the payment of the Secured Indebtedness,

in whole or in part, and in such portions and in such order as may seem best to

Holder in its sole and uncontrolled discretion, and any such action shall not

in anywise be considered as a waiver of any of the rights, benefits, liens or

security interests evidenced by this Deed of Trust.

Section 5.7.  Grantor's

Waiver of Certain Rights.  To the

full extent Grantor may do so, Grantor agrees that Grantor will not at any time

insist upon, plead, claim or take the benefit or advantage of any law now or

hereafter in force providing for any appraisement, valuation, stay, extension

or redemption, homestead, moratorium, reinstatement, marshaling or forbearance,

and Grantor, for Grantor, Grantor's heirs, devisees, representatives,

successors and assigns, and for any and all persons ever claiming any interest

in the Property, to the extent permitted by applicable law, hereby waives and

releases all rights of redemption, valuation, appraisement, stay of execution,

notice of intention to mature or declare due the whole of the Secured

Indebtedness, notice of election to mature or declare due the whole of the

Secured Indebtedness and all rights to a marshaling of assets of Grantor,

including the Property, or to a sale in inverse order of alienation in the

event of foreclosure of the liens and/or security interests hereby

created.  Grantor shall not have or

assert any right under any statute or rule of law pertaining to the marshaling

of assets, sale in inverse order of alienation, the exemption of homestead, the

administration of estates of decedents, or other matters whatsoever to defeat,

reduce or affect the right of Holder under the terms of this Deed of Trust to a

sale of the Property for the collection of the Secured Indebtedness without any

prior or different resort for collection, or the right of Holder under the

terms of this Deed of Trust to the payment of the Secured Indebtedness out of

the proceeds of sale of the Property in preference to every other claimant

whatsoever.  Grantor waives any right or

remedy which Grantor may have or be able to assert pursuant to any provision of

Texas law pertaining to the rights and remedies of sureties.  If any law referred to in this Section and

now in force, of which Grantor or Grantor's heirs, devisees, representatives,

successors or assigns or any other persons claiming any interest in the

Property might take advantage despite this Section, shall hereafter be repealed

or cease to be in force, such law shall not thereafter be deemed to preclude

the application of this Section.

 

Section 5.8.  Delivery

of Possession After Foreclosure.  In

the event there is a foreclosure sale hereunder and at the time of such sale,

Grantor or Grantor's heirs, devisees, representatives, or successors as owners

of the Property are occupying or using the Property, or any part thereof, each

and all shall immediately become the tenant of the purchaser at such sale,

which tenancy shall be a tenancy from day to day, terminable at the will of

purchaser, at a reasonable rental per day based upon the value of the property

occupied, such rental to be due daily to the purchaser; and to the extent

permitted by applicable law, the purchaser at such sale shall, notwithstanding

any language herein apparently to the contrary, have the sole option to demand

immediate possession following the sale or to permit the occupants to remain as

tenants at will.  After such

foreclosure, any Leases to tenants or subtenants that are subject to this Deed

of Trust (either by their date, their express terms, or by agreement of the

tenant or subtenant) shall, at the sole option of Holder or any purchaser at

such sale, either (i) continue in full force and effect, and the tenant(s) or

subtenant(s) thereunder will, upon request, attorn to and acknowledge in

writing to the purchaser or purchasers at such sale or sales as landlord

thereunder, or (ii) upon notice to such effect from Holder, the Trustees or any

purchaser or purchasers, terminate within thirty (30) days from the date of

sale.  In the event the tenant fails to

surrender possession of the Property upon demand, the purchaser shall be

entitled to institute and maintain a summary action for possession of the Property

(such as an action for forcible detainer) in any court having jurisdiction.

ARTICLE 6

 

Miscellaneous

 

Section 6.1.  Scope

of Deed of Trust.  This Deed of

Trust is a deed of trust and mortgage of both real and personal property, a

security agreement, an assignment of rents and leases, a financing statement

and a collateral assignment, and also covers proceeds and fixtures.

 

Section 6.2.  Effective

as a Financing Statement.  This Deed

of Trust shall be effective as a financing statement filed as a fixture filing

with respect to all fixtures included within the Property and is to be filed

for record in the real estate records of each county where any part of the

Property (including said fixtures) is situated.  This Deed of Trust shall also be effective as a financing

statement covering as-extracted collateral (including oil and gas), accounts

and general intangibles under the Texas Business and Commercial Code, as, in

effect from time to time, and the Uniform Commercial Code, as in effect from

time to time, in any other state where the Property is situated which will be

financed at the wellhead or minehead of the wells or mines located on the

Property and is to be filed for record in the real estate records of each

county where any part of the Property is situated.  This Deed of Trust shall also be effective as a financing

statement covering any other Property and may be filed in any other appropriate

filing or recording office.  The mailing

address of Grantor and the Holder are set forth at the end of this Deed of

Trust.  A carbon, photographic or other

reproduction of this Deed of Trust or of any financing statement relating to

this Deed of Trust shall be sufficient as a financing statement for any of the

purposes referred to in this Section.

 

Section 6.3.  Notice

to Account Debtors.  In addition to

the rights granted elsewhere in this Deed of Trust, Holder may at any time

notify the account debtors or obligors of any accounts, chattel paper, general

intangibles, negotiable instruments or other evidences of indebtedness included

in the Collateral to pay Holder directly.

 

Section 6.4.  Waiver

by Holder.  Holder may at any time

and from time to time by a specific writing intended for the purpose: (a) waive

compliance by Grantor with any covenant herein made by Grantor to the extent

and in the manner specified in such writing; (b) consent to Grantor's doing any

act which hereunder Grantor is prohibited from doing, or to Grantor's failing

to do any act which hereunder Grantor is required to do, to the extent and in

the manner specified in such writing; (c) release any part of the Property or

any interest therein from the lien and security interest of this Deed of Trust,

without the joinder of Trustee; or (d) release any party liable, either

directly or indirectly, for the Secured Indebtedness or for any covenant herein

or in any other Loan Document, without impairing or releasing the liability of

any other party.  No such act shall in

any way affect the rights or powers of Holder or Trustee hereunder except to

the extent specifically agreed to by Holder in such writing.

Section 6.5.  No

Impairment of Security.  The lien,

security interest and other security rights of Holder hereunder or under any

other Loan Document shall not be impaired by any indulgence, moratorium or

release granted by Holder including, but not limited to, any renewal, extension

or modification which Holder may grant with respect to any Secured

Indebtedness, or any surrender, compromise, release, renewal, extension,

exchange or substitution which Holder may grant in respect of the Property, or

any part thereof or any interest therein, or any release or indulgence granted

to any endorser, guarantor or surety of any Secured Indebtedness.  The taking of additional security by Holder

shall not release or impair the lien, security interest or other security

rights of Holder hereunder or affect the liability of Grantor or of any

endorser, guarantor or surety, or improve the right of any junior lienholder in

the Property (without implying hereby Holder's consent to any junior lien).

 

Section 6.6.  Acts

Not Constituting Waiver by Holder. 

Holder may waive any default without waiving any other prior or

subsequent default.  Holder may remedy

any default without waiving the default remedied.  Neither failure by Holder to exercise, nor delay by Holder in

exercising, nor discontinuance of the exercise of any right, power or remedy

(including but not limited to the right to accelerate the maturity of the

Secured Indebtedness or any part thereof) upon or after any default shall be

construed as a waiver of such default or as a waiver of the right to exercise

any such right, power or remedy at a later date.  No single or partial exercise by Holder of any right, power or

remedy hereunder shall exhaust the same or shall preclude any other or further

exercise thereof, and every such right, power or remedy hereunder may be

exercised at any time and from time to time. 

No modification or waiver of any provision hereof nor consent to any

departure by Grantor therefrom shall in any event be effective unless the same

shall be in writing and signed by Holder and then such waiver or consent shall

be effective only in the specific instance, for the purpose for which given and

to the extent therein specified.  No

notice to nor demand on Grantor in any case shall of itself entitle Grantor to

any other or further notice or demand in similar or other circumstances.  Remittances in payment of any part of the

Secured Indebtedness other than in the required amount in immediately available

U.S. funds shall not, regardless of any receipt or credit issued therefor,

constitute payment until the required amount is actually received by Holder in

immediately available U.S. funds 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 Holder of any payment in an amount less than the

amount then due on any Secured Indebtedness shall be deemed an acceptance on

account only and shall not in any way excuse the existence of a default

hereunder notwithstanding any notation on or accompanying such partial payment

to the contrary.

Section 6.7.  Grantor's

Successors.  If the ownership of the

Property or any part thereof becomes vested in a person other than Grantor,

Holder may, without notice to Grantor, deal with such successor or successors

in interest with reference to this Deed of Trust and to the Secured

Indebtedness in the same manner as with Grantor, without in any way vitiating

or discharging Grantor's liability hereunder or for the payment of the

indebtedness or performance of the obligations secured hereby.  No transfer of the Property, no forbearance

on the part of Holder, and no extension of the time for the payment of the

Secured Indebtedness given by Holder shall operate to release, discharge,

modify, change or affect, in whole or in part, the liability of Grantor

hereunder for the payment of the indebtedness or performance of the obligations

secured hereby or the liability of any other person hereunder for the payment

of the indebtedness secured hereby. 

Each Grantor agrees that it shall be bound by any modification of this

Deed of Trust or any of the other Loan Documents made by Holder and any

subsequent owner of the Property, with or without notice to such Grantor, and

no such modifications shall impair the obligations of such Grantor under this

Deed of Trust or any other Loan Document. 

Nothing in this Section or elsewhere in this Deed of Trust shall be

construed to imply Holder's consent to any transfer of the Property.

 

Section 6.8.  Place

of Payment; Forum; Waiver of Jury Trial. 

All Secured Indebtedness which may be owing hereunder at any time by

Grantor shall be payable at the place designated in the Note (or if no such

designation is made, at the address of Holder indicated at the end of this Deed

of Trust).  Grantor hereby irrevocably

submits generally and unconditionally for itself and in respect of its property

to the non–exclusive

jurisdiction of any Texas state court, or any United States federal court,

sitting in the county in which the Secured Indebtedness is payable, and to the

non–exclusive

jurisdiction of any state or United States federal court sitting in the state

in which any of the Property is located, over any suit, action or proceeding

arising out of or relating to this Deed of Trust or the Secured

Indebtedness.  Grantor hereby

irrevocably waives, to the fullest extent permitted by law, any objection that Grantor

may now or hereafter have to the laying of venue in any such court and any

claim that any such court is an inconvenient forum.  Grantor hereby agrees and consents that, in addition to any

methods of service of process provided for under applicable law, all service of

process in any such suit, action or proceeding in any Texas state court, or any United States

federal court, sitting in the state in which the Secured Indebtedness is

payable may be made by certified or registered mail, return receipt requested,

directed to Grantor at its address stated at the end of this Deed of Trust, or

at a subsequent address of Grantor of which Holder received actual notice from

Grantor in accordance with this Deed of Trust, and service so made shall be

complete five (5) days after the same shall have been so mailed.  Nothing herein shall affect the right of

Lender to serve process in any manner permitted by law or limit the right of

Lender to bring proceedings against Grantor in any other court or jurisdiction.  TO THE FULLEST EXTENT PERMITTED BY LAW, GRANTOR

WAIVES THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION, SUIT OR OTHER

PROCEEDING ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR ANY OTHER LOAN

DOCUMENT.

Section 6.9.  Subrogation

to Existing Liens; Vendor's Lien. 

To the extent that proceeds of the Note are used to pay indebtedness

secured by any outstanding lien, security interest, charge or prior encumbrance

against the Property, such proceeds have been advanced by Holder at Grantor's

request, and Holder shall be subrogated to any and all rights, security

interests and liens owned by any owner or holder of such outstanding liens,

security interests, charges or encumbrances, however remote, irrespective of

whether said liens, security interests, charges or encumbrances are released,

and all of the same are recognized as valid and subsisting and are renewed and

continued and merged herein to secure the Secured Indebtedness, but the terms

and provisions of this Deed of Trust shall govern and control the manner and

terms of enforcement of the liens, security interests, charges and encumbrances

to which Holder is subrogated hereunder. 

It is expressly understood that, in consideration of the payment of such

indebtedness by Holder, Grantor hereby waives and releases all demands and

causes of action for offsets and payments in connection with the said

indebtedness.  If all or any portion of

the proceeds of the loan evidenced by the Note or of any other secured

indebtedness has been advanced for the purpose of paying the purchase price for

all or a part of the Property, no vendor's lien is waived; and Holder shall

have, and is hereby granted, a vendor's lien on the Property as cumulative

additional security for the secured indebtedness.  Holder may foreclose under this Deed of Trust or under the vendor's

lien without waiving the other or may foreclose under both.

 

Section 6.10.  Application

of Payments to Certain Indebtedness. 

If any part of the Secured Indebtedness cannot be lawfully secured by

this Deed of Trust or if any part of the Property cannot be lawfully subject to

the lien and security interest hereof to the full extent of such indebtedness,

then all payments made shall be applied on said indebtedness first in discharge

of that portion thereof which is not secured by this Deed of Trust.

 

Section 6.11.  Nature

of Loan; Compliance with Usury Laws. 

The loan evidenced by the Note is being made solely for the purpose of

carrying on or acquiring a business or commercial enterprise.  It is the intent of Grantor and Holder and

all other parties to the Loan Documents to conform to and contract in strict

compliance with applicable usury law from time to time in effect.  All agreements between Holder and Grantor

(or any other party liable with respect to any indebtedness under the Loan

Documents) are hereby limited by the provisions of this Section which shall

override and control all such agreements, whether now existing or hereafter

arising.  In no way, nor in any event or

contingency (including but not limited to prepayment, default, demand for payment,

or acceleration of the maturity of any obligation), shall the interest taken,

reserved, contracted for, charged, chargeable, or received under this Deed of

Trust, the Note or any other Loan Document or otherwise, exceed the maximum

nonusurious amount permitted by applicable law (the "Maximum Amount").  If, from any possible construction of any

document, interest would otherwise be payable in excess of the Maximum Amount,

any such construction shall be subject to the provisions of this Section and

such document shall ipso facto be automatically reformed and the interest

payable shall be automatically reduced to the Maximum Amount, without the

necessity of execution of any amendment or new document.  If Holder shall ever receive anything of

value which is characterized as interest under applicable law and which would

apart from this provision be in excess of the Maximum Amount, an amount equal

to the amount which would have been excessive interest shall, without penalty,

be applied to the reduction of the principal amount owing on the Secured

Indebtedness in the inverse order of its maturity and not to the payment of

interest, or refunded to Grantor or the other payor thereof if and to the

extent such amount which would have been excessive exceeds such unpaid

principal.  The right to accelerate

maturity of the Note or any other Secured Indebtedness does not include the

right to accelerate any interest which has not otherwise accrued on the date of

such acceleration, and Holder does not intend to charge or receive any unearned

interest in the event of acceleration. 

All interest paid or agreed to be paid to Holder shall, to the extent

permitted by applicable law, be amortized, prorated, allocated and spread

throughout the full stated term (including any renewal or extension) of such

indebtedness so that the amount of interest on account of such indebtedness

does not exceed the Maximum Amount.  As

used in this Section, the term "applicable law" shall mean the

laws of the State of Texas or the federal laws of the United States applicable

to this transaction, whichever laws allow the greater interest, as such laws

now exist or may be changed or amended or come into effect in the future.

Section 6.12.  Substitute

Trustee.  The Trustee may resign by

an instrument in writing addressed to Holder, or Trustee may be removed at any

time with or without cause by an instrument in writing executed by Holder.  In case of the death, resignation, removal,

or disqualification of Trustee, or if for any reason Holder shall deem it desirable

to appoint a substitute or successor trustee to act instead of the herein named

trustee or any substitute or successor trustee, then Holder shall have the

right and is hereby authorized and empowered to appoint a successor trustee(s),

or a substitute trustee(s), without other formality than appointment and

designation in writing executed by Holder and the authority hereby conferred

shall extend to the appointment of other successor and substitute trustees

successively until the Secured Indebtedness has been paid in full, or until the

Property is fully and finally sold hereunder. 

If Holder is a corporation or association and such appointment is

executed on its behalf by an officer of such corporation or association, such

appointment shall be conclusively presumed to be executed with authority and

shall be valid and sufficient without proof of any action by the board of

directors or any superior officer of the corporation or association.  Upon the making of any such appointment and

designation, all of the estate and title of Trustee in the Property shall vest

in the named successor or substitute Trustee(s) and he shall thereupon succeed

to, and shall hold, possess and execute, all the rights, powers, privileges,

immunities and duties herein conferred upon Trustee.  All references herein to "Trustee" shall be

deemed to refer to Trustee (including any successor(s) or substitute(s)

appointed and designated as herein provided) from time to time acting

hereunder.

 

Section 6.13.  No

Liability of Trustee.  The Trustee

shall not be liable for any error of judgment or act done by Trustee in good

faith, or be otherwise responsible or accountable under any circumstances

whatsoever (including Trustee's negligence), except for Trustee's gross

negligence or willful misconduct.  The

Trustee shall have the right to rely on any instrument, document or signature

authorizing or supporting any action taken or proposed to be taken by him

hereunder, believed by him in good faith to be genuine.  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 law), and Trustee shall be under no

liability for interest on any moneys received by him hereunder.  Grantor hereby ratifies and confirms any and

all acts which the herein named Trustee or his successor or successors,

substitute or substitutes, in this trust, shall do lawfully by virtue

hereof.  Grantor will reimburse Trustee

for, and save him harmless against, any and all liability and expenses which

may be incurred by him in the performance of his duties.  The foregoing indemnity shall not terminate

upon discharge of the Secured Indebtedness or foreclosure, or release or other

termination, of this Deed of Trust.

Section 6.14.  Releases.  If all of the Secured Indebtedness be paid

as the same becomes due and payable and all of the covenants, warranties,

undertakings and agreements made in this Deed of Trust are kept and performed,

and all obligations, if any, of Holder for further advances have been

terminated, then, and in that event only, all rights under this Deed of Trust

shall terminate (except to the extent expressly provided herein with respect to

indemnifications, representations and warranties and other rights which are to

continue following the release hereof) and the Property shall become wholly

clear of the liens, security interests, conveyances and assignments evidenced

hereby, and such liens and security interests shall be released by Holder in

due form at Grantor's cost.  Without

limitation, all provisions herein for indemnity of Holder or Trustee shall

survive discharge of the Secured Indebtedness and any foreclosure, release or

termination of this Deed of Trust.

 

Section 6.15.  Notices.  All notices, requests, consents, demands and

other communications required or which any party desires to give hereunder or

under any other Loan Document shall be in writing and, unless otherwise

specifically provided in such other Loan Document, shall be deemed sufficiently

given or furnished if delivered by personal delivery, by nationally recognized

overnight courier service, or by registered or certified United States mail,

postage prepaid, addressed to the party to whom directed at the addresses

specified in this Deed of Trust (unless changed by similar notice in writing

given by the particular party whose address is to be changed) or by

facsimile.  Any such notice or

communication shall be deemed to have been given either at the time of personal

delivery or, in the case of courier or mail, as of the date of first attempted

delivery at the address and in the manner provided herein, or, in the case of

facsimile, upon receipt; provided that, service of a notice required by Texas

Property Code Section 51.002, as amended, shall be considered complete when the

requirements of that statute are met. 

Notwithstanding the foregoing, no notice of change of address shall be effective

except upon receipt.  This Section shall

not be construed in any way to affect or impair any waiver of notice or demand

provided in any Loan Document or to require giving of notice or demand to or

upon any person in any situation or for any reason.

 

Section 6.16.  Invalidity

of Certain Provisions.  A

determination that any provision of this Deed of Trust is unenforceable or

invalid shall not affect the enforceability or validity of any other provision

and the determination that the application of any provision of this Deed of

Trust to any person or circumstance is illegal or unenforceable shall not

affect the enforceability or validity of such provision as it may apply to

other persons or circumstances.

Section 6.17.  Gender;

Titles; Construction.  Within this

Deed of Trust, words of any gender shall be held and construed to include any

other gender, and words in the singular number shall be held and construed to

include the plural, unless the context otherwise requires.  Titles appearing at the beginning of any

subdivisions hereof are for convenience only, do not constitute any part of

such subdivisions, and shall be disregarded in construing the language

contained in such subdivisions.  The use

of the words "herein," "hereof," "hereunder"

and other similar compounds of the word "here" shall refer to

this entire Deed of Trust and not to any particular Article, Section, paragraph

or provision.  The term "person"

and words importing persons as used in this Deed of Trust shall include firms,

associations, partnerships (including limited partnerships), joint ventures,

trusts, corporations, limited liability companies and other legal entities,

including public or governmental bodies, agencies or instrumentalities, as well

as natural persons.

 

Section 6.18.  Reporting

Compliance.  Grantor agrees to

comply with any and all reporting requirements applicable to the transaction

evidenced by the Note and secured by this Deed of Trust which are set forth in

any law, statute, ordinance, rule, regulation, order or determination of any

governmental authority, including but not limited to The International

Investment Survey Act of 1976, The Agricultural Foreign Investment Disclosure

Act of 1978, The Foreign Investment in Real Property Tax Act of 1980 and the

Tax Reform Act of 1984 and further agrees upon request of Holder to furnish

Holder with evidence of such compliance.

 

Section 6.19.  Holder's

Consent.  Except where otherwise

expressly provided herein, in any instance hereunder where the approval,

consent or the exercise of judgment of Holder is required or requested, (a) the

granting or denial of such approval or consent and the exercise of such

judgment shall be within the sole discretion of Holder, and Holder shall not,

for any reason or to any extent, be required to grant such approval or consent

or exercise such judgment in any particular manner, regardless of the

reasonableness of either the request or Holder's judgment, and (b) no approval

or consent of Holder shall be deemed to have been given except by a specific

writing intended for the purpose and executed by an authorized representative

of Holder.

 

Section 6.20.  Grantor.  Unless the context clearly indicates

otherwise, as used in this Deed of Trust, "Grantor" means the

grantors named in Section 1.1 hereof or any of them.  The obligations of Grantor hereunder shall be joint and

several.  If any Grantor, or any

signatory who signs on behalf of any Grantor, is a corporation, partnership or

other legal entity, Grantor and any such signatory, and the person or persons

signing for it, represent and warrant to Holder that this instrument is

executed, acknowledged and delivered by Grantor's duly authorized

representatives.  If Grantor is an

individual, no power of attorney granted by Grantor herein shall terminate on

Grantor's disability.

Section 6.21.  Execution;

Recording.  This Deed of Trust has

been executed in several counterparts, all of which are identical, and all of

which counterparts together shall constitute one and the same instrument.  The date or dates reflected in the

acknowledgments hereto indicate the date or dates of actual execution of this

Deed of Trust, but such execution is as of the date shown on the first page

hereof, and for purposes of identification and reference the date of this Deed

of Trust shall be deemed to be the date reflected on the first page

hereof.  Grantor will cause this Deed of

Trust and all amendments and supplements thereto and substitutions therefor and

all financing statements and continuation statements relating thereto to be

recorded, filed, re–recorded and refiled in such manner and in such places

as Trustee or Holder shall reasonably request and will pay all such recording,

filing, re–recording

and refiling taxes, fees and other charges.

 

Section 6.22.  Successors

and Assigns.  The terms, provisions,

covenants and conditions hereof shall be binding upon Grantor, and the heirs,

devisees, representatives, successors and assigns of Grantor, and shall inure

to the benefit of Trustee and Holder and shall constitute covenants running

with the Land.  All references in this

Deed of Trust to Grantor shall be deemed to include all such heirs, devisees,

representatives, successors and assigns of Grantor.

 

Section 6.23.  Modification

or Termination.  The Loan Documents

may only be modified or terminated by a written instrument or instruments

intended for that purpose and executed by the party against which enforcement

of the modification or termination is asserted.  Any alleged modification or termination which is not so

documented shall not be effective as to any party.

 

Section 6.24.  No

Partnership, Etc..  The relationship

between Holder and Grantor is solely that of lender and borrower.  Holder has no fiduciary or other special

relationship with Grantor.  Nothing

contained in the Loan Documents is intended to create any partnership, joint

venture, association or special relationship between Grantor and Holder or in

any way make Holder a co–principal with Grantor with reference to the Property.

All agreed contractual duties between or among Holder, Grantor and Trustee are

set forth herein and in the other Loan Documents and any additional implied

covenants or duties are hereby disclaimed. 

Any inferences to the contrary of any of the foregoing are hereby

expressly negated.

 

Section 6.25.  Applicable

Law.  THIS DEED OF TRUST, AND ITS

VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED,

INTERPRETED AND ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE

STATE OF TEXAS  (WITHOUT REGARD TO ANY

CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED STATES FEDERAL LAW,

EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE

EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE

STATE OF TEXAS ARE GOVERNED BY THE LAWS OF SUCH OTHER JURISDICTION.

Section

6.26.  Construction Mortgage. 

This Mortgage constitutes a "construction mortgage" as defined

in Section 9.313 of the Texas Business and Commerce Code to the extent that it

secures an obligation incurred for the construction of the Improvements,

including the acquisition cost of the Land.

 

Section 6.27.  Entire

Agreement.  The Loan Documents

constitute the entire understanding and agreement between Grantor and Holder

with respect to the transactions arising in connection with the Secured

Indebtedness and supersede all prior written or oral understandings and

agreements between Grantor and Holder with respect to the matters addressed in

the Loan Documents.  Grantor hereby

acknowledges that, except as incorporated in writing in the Loan Documents,

there are not, and were not, and no persons are or were authorized by Holder to

make, any representations, understandings, stipulations, agreements or

promises, oral or written, with respect to the matters addressed in the Loan

Documents.

 

THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT

BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,

CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

IN WITNESS WHEREOF, Grantor has executed this instrument

under seal as of the date first written on page 1 hereof.

 

	

   

  	

   

  	

  GRANTOR:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  American

  Medical Technologies, Inc. f/k/a American Dental Technologies, by merger with

  Texas Airsonics, Inc., a Delaware corporation

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  The

  address and federal tax

  	

   

  	

   

  
	

  identification

  number of Grantor are:

  	

   

  	

   

  
	

                  38-2905258

  	

   

  	

   

  
	

  Address: 5555 Bear Lane

  	

   

  	

   

  
	

  Corpus Christi, TX  78405

  	

  By:

  	

                  /s/ Ben J. Gallant

  
	

   

  	

   

  	

  Name:

  	

          Ben J. Gallant

  
	

   

  	

   

  	

  Title:

  	

          Chief Executive Officer

  
							

 

 

	

  State

  of Texas

  	

  §

  
	

   

  	

  §

  
	

  County of           Nueces              

  	

  §

  

 

This

instrument was acknowledged before me on 

    November 9    , 2001, by ____Ben J.

Gallant_________, ___CEO_________ of American Medical Technologies, Inc. f/k/a

American Dental Technologies, by merger with Texas Airsonics, Inc., a Delaware

corporation.

 

	

   

  	

   

  	

              /s/ Angie L. Cuevas

  
	

   

  	

  Printed

  Name:

  	

  Angie L. Cuevas

  
	

   

  	

  Notary Public, State of

  	

           Texas

  
					

 

EXHIBIT A

 

LAND

 

Lot One (1), Block Two

(2), INDUSTRIAL TECHNOLOGY PARK UNIT 1, City of Corpus Christi, Nueces County,

Texas, according to map or plat thereof recorded in Volume 46, Pages 105-107,

of the Map Records of Nueces County, Texas.

EXHIBIT B

 

PERMITTED ENCUMBRANCES

 

That

certain Mortgage in favor of Valuebank, Texas in an amount of no more than

$750,000.00.

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