Document:

Prepared by MERRILL CORPORATION

Exhibit 10.48

PROMISSORY NOTE SECURED BY DEED OF TRUST

	

  $2,200,000.00

  	

   

  	

  ____________, California

  
	

   

  	

   

  	

  August 13, 2001

  

              1.           FOR

VALUE RECEIVED, FRESH CHOICE, INC.,

a Delaware corporation, ("Borrower"),

promises to pay to the order of MID-PENINSULA

BANK, a California banking corporation ("Bank"), c/o Greater Bay Bancorp, 2860 West Bayshore

Boulevard, Palo Alto, CA 94303, or at such other place as Bank may from time to

time designate in writing, the principal sum of Two Million Two Hundred

Thousand and No/100ths Dollars ($2,200,000.00) (the "Maximum Loan Amount"), or so much of that sum as

may be advanced under this Promissory Note Secured by Deed of Trust ("Note"), plus interest as

specified in this Note from the date of disbursement.  This Note evidences a loan ("Loan")

from Bank to Borrower.

              2.           (a)

The principal sum outstanding from time to time shall bear interest at the Note

Rate, as defined below, and such interest shall be calculated at a daily rate

of 1/360ths of one (1) year's interest at the Note Rate times the number of

days that principal is outstanding.  The

"Note Rate" shall be

equal to five eighths of one percentage point (0.625%) per annum in excess of

the Prime Rate in effect from time to time. 

The "Prime Rate"

shall be equal to the Wall Street Journal Prime Rate as quoted daily in the

money and investing section of the Western Edition of the Wall Street Journal.

                            (b) The Note Rate shall be subject to

adjustment for any increase or decrease in the Prime Rate effective as of the

date of each such change.  Should the

Wall Street Journal Prime Rate no longer exist, the Prime Rate shall be deemed

to be the average prime interest rate for each calendar month (as of the first

day of each such calendar month) of the three largest (total assets) banking institutions

in the continental United States then determining such prime interest rate.

              3.           Principal

and interest shall be payable as follows:

                            (a)         Interest

only shall be payable on September 2, 2001.

                            (b)         Commencing

on the second day of October, 2001, and continuing on the second day of each

calendar month thereafter for eighty-two (82) additional months, monthly

installments of principal and interest shall be due and payable. Initially, the

amount of the monthly principal and interest installment shall be equal to the

amount which would be payable in order to fully amortize the outstanding

principal balance hereof as of September 2, 2001  based upon the Note Rate in effect as of September 2, 2001 and a

fifteen (15) year amortization period. Thereafter, the monthly principal and

interest installments shall, at the sole option of Bank,  be subject to adjustment in response to any

changes in the Note Rate to an amount which would be payable in order to fully

amortize the then outstanding principal balance hereof  based upon the revised Note Rate then in

effect and an amortization period of fifteen (15) years less the number of

months elapsed since  September 2, 2001,

such change in the monthly installment payments of principal and interest to

take effect on the first day of the first calendar month following such change

in the Note Rate.

                            (c)         All

unpaid principal and interest shall be due and payable in full on September 2,

2008 (the “Maturity Date”), or the

accelerated maturity date, whichever shall first occur.

              4.           Upon

the execution hereof, Borrower shall pay to Bank in addition to its obligation

to pay interest on the indebtedness evidenced hereby, a loan fee in the amount

of Sixteen Thousand Five Hundred and 00/100ths Dollars ($16,500.00).

              5.           The

principal sum of this Note and all accrued and unpaid interest thereon may be

prepaid in whole or in part, at any time without penalty or premium.

              6.           Borrower

recognizes that default by Borrower in making the payments herein and in the

Deed of Trust, as defined below, agreed to be paid when due will result in Bank

incurring additional expense in servicing the Loan, in loss to Bank of the use

of the money due and in frustration to Bank in meeting its loan

commitments.  Borrower agrees that, if

for any reason Borrower fails to pay when due any payment due under this Note,

any amount advanced by Bank under the Deed of Trust or the amount due on the

Maturity Date or the accelerated maturity date, as applicable, Bank shall be

entitled to damages for the detriment caused thereby, but that it is extremely

difficult and impractical to ascertain the extent of such damages.

                            Borrower therefore agrees that a reasonable

estimate of such damages to Bank is as follows:

                            6.1         In

the event Borrower fails to pay any installment payment of interest and

principal within ten (10) days after the same is due then Borrower shall pay to

Bank an amount equal to five percent (5%) of each such delinquent installment

payment of interest and principal ("Late

Charge").

                            6.2         In

the event Borrower fails to reimburse Bank for any amount advanced by or for

the account of Bank which is due hereunder or under the Deed of Trust within

ten (10) days after such advance is made by Bank to Borrower, then such

unreimbursed amount shall thereafter bear interest at the Default Rate, as

hereinafter defined, until paid ("Default

Interest").  The term "Default Rate" shall be defined

as an interest rate equal to three percent (3%) above the Note Rate in effect

from time to time, such interest to be compounded annually.

                            6.3         In

the event the payment of principal and accrued but unpaid interest due on the

Maturity Date or the accelerated maturity date, as applicable, is not made in

full when due, then said unpaid amounts shall thereafter bear interest at the

Default Rate, until paid, such interest to be compounded annually.

              7.           This Note is secured by a Deed of

Trust, Financing Statement, Security Agreement and Fixture Filing (with

Assignment of Rents and Leases) of even date herewith ("Deed of Trust"), granted in favor of

Bank as beneficiary, and by other collateral. 

This Note and the Deed of Trust are two of several loan documents

executed by Borrower of even date herewith in connection with the Loan

(collectively, the "Loan Documents").  Some or all of the Loan Documents contain

provisions for the acceleration of the maturity of this Note.

              8.           If

any of the payments required by the terms hereof shall not be paid within

ten (10) days of the date when the same becomes due, or if the payment due

on the Maturity Date is not paid when due, whether by acceleration or

otherwise, or upon the occurrence of an "Event

of Default" under and as defined in the Deed of Trust which

remains uncured or has not been waived upon the expiration of all applicable

cure periods, then, or at any time thereafter, the whole of the unpaid

principal and interest owing on this Note shall, at the option of Bank and

without notice, become immediately due and payable.  This option may be exercised at any time after any such event and

the acceptance of one or more installments or other payments from any person

thereafter shall not constitute a waiver of Bank’s option.  Bank’s failure to exercise said option in

connection with any particular event or series of events shall not be construed

as a waiver of the provisions hereof as regards any subsequent event.

              2.           All

amounts payable under this Note are payable in lawful money of the United

States.  Checks constitute payment only

when collected.  Each payment is to be

applied when received first to the payment of any Late Charge, as defined

herein, then due, next to any unreimbursed sums previously advanced by Bank

under the Deed of Trust, with interest thereon at the Default Rate, next to

accrued but unpaid interest and any balance shall be used to reduce the

principal balance of this Note.

              3.           (i) If

after default this Note be placed in the hands of an attorney or attorneys for

collection (ii) if after a default hereunder or after an Event of Default

under and as defined in the Deed of Trust or under any document referred to

therein, Bank finds it necessary or desirable to secure the services or advice

of one or more attorneys with regard to collection of this Note against

Borrower, any guarantor or any other party liable therefor or for the protection

of its rights under this Note, the Deed of Trust or other security for this

Note, or (iii) if Bank seeks to have the real property described in the

Deed of Trust abandoned by or reclaimed from any estate in bankruptcy, or

attempts to have any stay or injunction prohibiting the enforcement or

collection of this Note, prohibiting the foreclosure of the Deed of Trust or

prohibiting the enforcement of the Deed of Trust or any other agreement

evidencing or securing this Note lifted by any bankruptcy or other court, Bank

shall be entitled to reasonable attorneys’ fees and all related costs incurred

in connection with such proceedings (including, but not limited to, all such

attorneys’ fees and costs incurred in any appellate proceedings

and/or in the enforcement of any judgment or award rendered in any such

proceeding).

              4.           If

Bank shall be made a party to or shall intervene in any action or proceeding,

whether in court or before any governmental agency, affecting the real property

described in the Deed of Trust, or the title thereto or the interest of Bank

under the Deed of Trust, including without limitation any form of condemnation

or eminent domain proceeding, Bank shall be reimbursed by Borrower immediately

upon demand for all costs, charges, and attorneys’ fees incurred by Bank in any

such case, and the same shall be secured by the Deed of Trust as a further

charge and lien upon the real property described in the Deed of Trust.

              5.           The acceptance by Bank of any

payments under this Note after the date that such payment is due shall not

constitute a waiver of the rights to require prompt payment when due of future

or succeeding payments or to declare a default as herein provided for any

failure to so pay.  The acceptance by

Bank of the payment of a portion of any installment at any time that such

installment is in its entirety due and payable shall not cure such default and

shall not constitute a waiver of Bank’s rights to require full payment when due

of all future or succeeding installments.

              6.           This

Note is governed by the laws of the State of California.

              7.           Borrower

shall have no right to assign its rights hereunder or to transfer all or any

portion of or any interest in the real property described in the Deed of Trust,

except as may be permitted under the terms of the Deed of Trust.

              8.           If

Bank delays in exercising or fails to exercise any of its rights under this

Note, that delay or failure will not constitute a waiver of any of Bank’s

rights or of any breach, default, or failure of condition under this Note.  No waiver by Bank of any of its rights or of

any breach, default or failure of a condition under this Note shall be

effective unless it is stated in writing signed by Bank.  All of Bank’s remedies in connection with

this Note or under applicable law shall be cumulative, and Bank’s exercise of

any one or more of those remedies will not constitute an election of

remedies.  Time is expressly made of the

essence with respect to every provision hereof.

              9.           Borrower

understands that Bank may transfer this Note, or sell or grant participations

in some or all of Borrower’s indebtedness outstanding under this Note.  In connection with any such transaction,

Bank may disclose to each prospective and actual transferee, purchaser or

participant all documents and information relating to the Loan.

              16          Borrower

and all sureties, endorsers and guarantors of all or any portion of the

indebtedness evidenced by this Note waive demand, notice, diligence, protest,

presentment for payment, and notice of extension, dishonor, protest, demand and

nonpayment of this Note.

              17.         In

addition to a foreclosure action under the Deed of Trust, any action brought to

enforce this Note may be commenced and maintained, at Bank’s option, in any

state or federal district court in California, or in any other court having

personal jurisdiction over Borrower or any guarantor.  Borrower irrevocably consents to jurisdiction and venue in such

court for such purposes and agrees not to seek transfer or removal of any

action commenced in accordance with the terms of this section.  Borrower also waives the right to protest

the domestication or collection of any judgment obtained against Borrower with

respect to this Note or the loan evidenced hereby in any jurisdiction where

Borrower may now or hereafter maintain assets.

              18.         Concurrently herewith, Bank is making a

revolving line of credit loan to Borrower in the maximum principal amount of

$2,000,000.00.  Any Event of Default

under the promissory note, any extension or renewal thereof, or any other

document evidencing or securing the said revolving line of credit loan shall

constitute a default hereunder and an “Event of Default” under the Deed of

Trust.

 

	

   

  	

  BORROWER:  

  
	

   

  	

   

  
	

   

  	

  FRESH

  CHOICE, INC., a 

  
	

   

  	

  Delaware

  corporation  

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /S/ David E.

  Pertl  

  
	

   

  	

   

  	

   

  
	

   

  	

  Its:

  	

  Senior Vice

  President and CFOPrepared by MERRILL CORPORATION

Exhibit

10.49

 

	

  RECORDING

  REQUESTED BY

  AND WHEN RECORDED MAIL TO:

   

  Mid-Peninsula

  Bank

  c/o Greater Bay Bancorp

  Attention:  Loan Servicing

  2860 West Bayshore Road

  Palo Alto, California 94303

  	

   

  
	

   

  	

  SPACE ABOVE THIS LINE FOR RECORDER’S USE

  

 

 

FRESH

CHOICE, INC.,

a Delaware corporation,

as Trustor,

 

to

 

GREATER

BAY BANCORP,

a California corporation,

as Trustee,

 

for the benefit of

 

MID-PENINSULA

BANK,

a California banking

corporation,

as Beneficiary

 

 

COMMERCIAL DEED OF TRUST, FINANCING 

STATEMENT, SECURITY AGREEMENT AND FIXTURE FILING 

(WITH ASSIGNMENT OF RENTS AND LEASES)

 

Dated:  August 13, 2001

 

 

This instrument is a Commercial Deed of Trust,

Financing Statement, Security Agreement and Fixture Filing (with Assignment of

Rents and Leases) of both real and personal property, including fixtures.  This instrument contains provisions

accelerating the obligations hereby secured upon certain sales or further

encumbrances of the property hereby covered.

THIS COMMERCIAL

DEED OF TRUST, FINANCING STATEMENT, SECURITY AGREEMENT AND FIXTURE FILING (WITH

ASSIGNMENT OF RENTS AND LEASES) (“Deed of

Trust”) is made the 13th day of August, 2001, by FRESH CHOICE, INC., a Delaware corporation,

whose address is 485 Cochran Circle, Morgan Hill, CA 95037 (“Trustor”), to GREATER BAY BANCORP, a California corporation, whose address

is 2860 West Bayshore Road, Palo Alto, California 94303 (“Trustee”), for the benefit of MID-PENINSULA BANK, a California banking

corporation, whose address is c/o Greater Bay Bancorp, Attention:  Loan Servicing, 2860 West Bayshore

Road, Palo Alto, California 94303 (“Beneficiary”).

WITNESSETH:

WHEREAS, Trustor has

executed and delivered that certain Promissory Note Secured by Deed of Trust of

even date herewith payable to the order of Beneficiary in the original maximum

principal amount of Two Million Two Hundred Thousand and No/100ths Dollars

($2,200,000.00) having a maturity date of September 2, 2008 (which promissory

note, together with any and all extensions, substitutions, modifications,

replacements, rearrangements and/or renewals thereof, is hereinafter referred

to as the “Note”), with interest

thereon at the rate set forth in the Note and said principal amount and

interest thereon maturing and being payable in accordance with the terms and

conditions provided in the Note;

WHEREAS, the total

indebtedness and liabilities that are to be secured by this Deed of Trust shall

be as follows:

(i)            the aggregate principal amount of

$2,200,000.00 with interest thereon according to the terms of the Note;

(ii)           all other amounts payable by Trustor

under the Note or this Deed of Trust (the Note and this Deed of Trust,

hereinafter collectively referred to as the “Loan

Documents”), in each case as the same may be amended, modified or

supplemented from time to time, including all sums, amounts and expenses which

Trustee or Beneficiary may, pay or incur under or in connection with any of the

Loan Documents;

(iii)          the performance of all other

obligations and liabilities of Trustor under or in connection with the Loan

Documents; and

(iv)          any other indebtedness, obligation or

agreement of Trustor when evidenced or set forth in a document or instrument

reciting that it is secured by this Deed of Trust (all such amounts,

obligations and liabilities described in (i) through (iv) being hereinafter

collectively referred to as the “Obligations”); and

WHEREAS, it has been

agreed that the payment and performance of the Obligations shall be secured by

a security interest in  certain property

as hereinafter described.

NOW, THEREFORE, in

consideration of the premises and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, and in order to

secure the due and punctual payment in full by Trustor, whether at stated

maturity, by acceleration or otherwise, and performance of the Obligations,

Trustor does hereby irrevocably assign, give, grant, bargain, sell, warrant,

convey, mortgage, transfer, grant a security interest in, set over, deliver,

confirm and convey unto Trustee, in trust, with power of

sale and right of entry as hereinbelow provided, upon the terms and conditions

of this Deed of Trust, the following property described in Granting Clauses

First through Sixth below (hereinafter sometimes collectively referred to as

the "Mortgaged Property"):

Granting Clauses

All the present and

future estate, right, title and interest of Trustor in, to and under, or

derived from:

Granting Clause First

Land

All that certain lot,

piece or parcel of land owned or hereafter acquired by Trustor located in

the  Counties of Collin and Dallas, the

State of Texas, as more particularly described in Exhibit A

attached hereto, as the description of the same may be amended, modified or

supplemented from time to time, and all and singular the reversions or

remainders in and to said land and the tenements, hereditaments, transferable

entitlements and development rights, easements (in gross and/or appurtenant)

existing as of the date hereof or arising thereafter, agreements, rights-of-way

or use rights (including alley, drainage, horticultural, mineral, mining,

water, oil and gas rights and any other rights to produce or share in the

production of anything therefrom or attributable thereto), privileges,

royalties and appurtenances to said land, now or hereafter belonging or in

anywise appertaining thereto, including any such right, title, interest in, to

or under any agreement or right granting, conveying or creating, for the

benefit of said land, any easement, right or license in any way affecting said

land and/or other land and in, to or under any streets, ways, alleys, vaults,

gores or strips of land adjoining said land or any parcel thereof, or in or to

the air space over said land, all rights of ingress and egress with respect to

said land, and all claims or demands of Trustor, either at law or in equity, in

possession or expectancy, of, in or to the same (all of the foregoing

hereinafter collectively referred to as the “Land”).

Granting Clause Second

Improvements

All buildings,

structures, facilities and other improvements now or hereafter located on the

Land, and all building material, and fixtures of every kind and nature now or

hereafter located on the Land or attached to, contained in or used in

connection with any such buildings, structures, facilities or other

improvements, and all appurtenances and additions thereto and betterments,

renewals, substitutions and replacements thereof, owned by Trustor or in which

Trustor has or shall acquire an interest (all of the foregoing hereinafter

collectively referred to as the “Improvements”).

Granting Clause Third

Certain Equipment 

To the extent that the

same are not Improvements, all machinery, apparatus, goods, inventory,

equipment, materials, building materials, fittings, chattels and tangible

personal property, and all appurtenances and additions thereto and betterments,

renewals, substitutions and replacements thereof owned by Trustor or in which

Trustor has or shall acquire an interest, and now or hereafter located on,

attached to, contained in or used in connection with the properties referred to

in Granting Clause First, Second, Fifth or Sixth, or placed on any part

thereof, though not attached thereto (all of the foregoing hereinafter

collectively referred to as the “Equipment”),

including without limitation all screens, awnings, shades, blinds, curtains,

draperies, carpets, rugs, furniture and furnishings, heating, lighting, air

conditioning, refrigerating, incinerating and/or compacting plants, systems and

equipment, hoists, stoves, ranges, vacuum and other cleaning systems, call

systems, sprinkler systems and other fire prevention and extinguishing

apparatus and materials, motors, machinery, pipes, ducts, conduits, dynamos,

engines, compressors, generators, boilers, stokers, furnaces, pumps, tanks,

appliances, equipment and fittings (the Land, the Improvements and the

Equipment hereinafter collectively referred to as the “Premises”); all contract rights of Trustor

in construction contracts, plans and specifications and architects agreements

arising out of the improvement of the Premises, all permits, licenses,

franchises, certificates and other rights and privileges obtained in connection

with the Premises; and all proceeds, substitutions and replacements of all of

the foregoing.  Trustor hereby grants to

Trustee and Beneficiary, a security interest in and to all of Trustor’s present

and future “equipment” (as defined in the Uniform Commercial Code of the State

of Texas), to the extent that such equipment that may be now owned or hereafter

acquired by Trustor and located on the Premises, and Trustee and Beneficiary

shall have, in addition to all rights and remedies provided herein and in the

Loan Documents, all of the rights and remedies of a “secured party” under said

Uniform Commercial Code.  This Deed of

Trust constitutes and shall be deemed to be a “security agreement” for all

purposes of said Uniform Commercial Code. 

It is agreed that all Equipment is part and parcel of the Land and the

Improvements and appropriated to the use thereof and, whether affixed to the

Land and/or the Improvements or not, shall, for purposes of this Deed of Trust

be deemed conclusively to be real estate and mortgaged or otherwise conveyed or

encumbered hereby. Notwithstanding any other provision of this Deed of Trust,

the security interests of Trustee and/or Beneficiary shall not extend to, and

the terms "Equipment," "Premises,"

"Improvements,"and "Mortgaged Property" shall not include

any of the following: (a) Trustor's interests in any property that is the subject

of a lease or lending agreement related to the financing of such property; or

(b) Trustor's  interests in any

dishwashing equipment, point-of-sale equipment or similar equipment and

machinery.

Granting Clause Fourth

Leasehold and Other Contractual Interests

All the leases,

subleases, lettings and licenses of and all other contracts, bonds and

agreements affecting the Premises and/or any other property or rights conveyed

or encumbered hereby, or any part thereof, now or hereafter entered into, and

all amendments, modifications, supplements, additions, extensions and renewals

thereof (all of the foregoing hereinafter collectively called the “Leases” regardless of how the same may

otherwise be denominated), and all right, title and interest of Trustor

thereunder, including cash and securities deposited thereunder and any rights

of first refusal with respect thereto (as down payments, security deposits, or

otherwise), the right to receive and collect the rents, security deposits,

income, proceeds, earnings, royalties, revenues, issues and profits payable

thereunder, including cash and securities deposited thereunder and any rights

of first refusal with respect thereto (as down payments, security deposits, or

otherwise), the right to receive and collect the rents, security deposits,

income, proceeds, earnings, royalties, revenues, issues and profits payable

thereunder including all revenues, moneys, funds, accounts receivables,

operating revenues, accounts and any other item or thing relating to the

payment of or right to receive such revenues, moneys, funds, accounts

receivables, operating revenues, accounts or other items or things arising out

of or generated in connection with the operation, use, occupancy, concession,

license, renting, leasing, letting or providing of the Premises, or any part

thereof (including, without limitation, termination payments, damages or other

payments in lieu thereof), and the right to enforce, whether at law or in

equity or by any other means, all provisions and options thereof or thereunder

(all of the foregoing hereinafter collectively called the “Rents” regardless of how the same may be

otherwise denominated), and the right to apply the same to the payment and

performance of the Obligations.

Granting Clause Fifth

Other and After Acquired Property

Any and all undisbursed

loan funds, any loan funds or other moneys held in escrow or other accounts at

the request or as a requirement of Beneficiary, any and all other property,

which may from time to time be subjected to the lien hereof by Trustor through

a supplement or amendment to this Deed of Trust, or by anyone on its behalf or

with its consent, or which may come into the possession of or be subject to the

control of Trustee or Beneficiary pursuant to this Deed of Trust, it being the

intention and agreement of Trustor that all such property shall thereupon be

subject to the lien and security interest of this Deed of Trust as if such

property were now owned by Trustor and conveyed or encumbered hereby or

pursuant hereto, and as if such property were specifically described in this

Deed of Trust and conveyed or encumbered hereby or pursuant hereto, and Trustee

and Beneficiary are hereby authorized to receive any and all such property as

security hereunder, subject to the provisions of this Deed of Trust.

Granting Clause Sixth

Proceeds and Awards

All unearned premiums,

accrued, accruing or to accrue under insurance policies now or hereafter

obtained by Trustor with respect to the property described in these Granting

Clauses, all proceeds (including funds, accounts, deposits, instruments,

general intangibles, notes or chattel paper) of the conversion, voluntary or

involuntary, of any of the property described in these Granting Clauses into

cash or other liquidated claims, including proceeds of hazard, title and other

insurance and proceeds received pursuant to any sales or rental agreements of

Trustor in respect of the property described in these Granting Clauses, and all

judgments, damages, awards, settlements and compensation (including interest

thereon) heretofore or hereafter made to the present and all subsequent owners

of the Premises and/or any other property or rights conveyed or encumbered

hereby for any injury to or decrease in the value thereof for any reason, or by

any governmental or other lawful authority for the taking by eminent domain,

condemnation or otherwise of all or any part thereof, including awards for any

change of grade of .

TO HAVE AND TO HOLD, all

and singular the Mortgaged Property, whether now owned or leased or hereafter

acquired and whether now or hereafter existing, together with all rights,

privileges and appurtenances thereunto belonging, unto Trustee and Beneficiary,

forever, for the uses and purposes herein set forth, subject however to the

provisions of Article 7 hereof.

AND Trustor

covenants with and represents and warrants to and agrees with Trustee and

Beneficiary as follows:

ARTICLE

1

REPRESENTATIONS AND WARRANTIES OF TRUSTOR

Trustor hereby represents

and warrants, in respect of itself and the Mortgaged Property set forth in the

Granting Clauses, as follows:

1.1           Warranty

of Title.  (i) Trustor has and

will continue to have good, marketable and insurable fee simple title to the

Land and Improvements free and clear of all liens, charges and encumbrances of

every kind and character, subject only to such exceptions as may be approved in

writing by Beneficiary (“Permitted

Exceptions”) and any of the following liens, charges and

encumbrances arising after the date of recordation of this Deed of Trust and,

with the sole exception of taxes, assessments and governmental charges in the

nature of taxes, junior and subordinate hereto:  (a) any lien for taxes, assessments or other governmental

charges which are not delinquent or which are being contested in good faith by

appropriate proceedings pursuant to Section 2.7.6 hereof,

(b) any mechanic’s or other involuntary lien which is being contested in

good faith by appropriate proceedings pursuant to the provisions of Section 2.6.1

hereof (collectively “Future Permitted

Exceptions”), and (c) any Leases, licenses or other occupancy

agreements relating to a portion of the Land and/or the Improvements either

approved by Beneficiary or not requiring the approval of Beneficiary in

accordance with the express terms hereof; (ii) Trustor has and will

continue to havefull power and

lawful authority to encumber and convey the Premises as provided herein;

(iii) Trustor owns and will own all Land and Improvements free and clear

of all liens, charges and encumbrances of every kind and character, subject

only to the Permitted Exceptions, Future Permitted Exceptions and the

exceptions described in Section 1.1(i)(c) above; (iv) this

Deed of Trust is and will continue to remain a valid and enforceable first

mortgage lien on and security interest in, the Land and Improvements subject to

Permitted Exceptions, Future Permitted Exceptions and the exceptions described

in Section 1.1(i)(c) above; and (v) Trustor hereby warrants and will

forever warrant and defend such title and the validity, enforceability and

priority of the lien and security interest hereof against the claims of all

persons and parties whomsoever other than thosoever other than those relating

to Permitted Exceptions, Future Permitted Exceptions and the exceptions

described in Section 1.1(i)(c ) above. 

Trustor’s obligations under this Section 1.1 shall terminate

only upon full payment in lawful currency of the United States of America of

all of the Obligations.

1.2           Operation

of the Premises.  (i) Trustor

has or will have at the appropriate times, and will maintain all necessary

certificates, licenses, authorizations, registrations, permits and/or approvals

reasonably necessary for the operation of all or any part of the Premises,

whether now or hereafter constructed upon the Land, and the conduct of

Trustor’s business at the Premises, including, where appropriate, one or more

Permanent Certificates of Occupancy and Board of Fire Underwriters Certificates

for those portions of the Improvements which have been completed as of the date

hereof, if any, and all required zoning ordinance, building code, subdivision,

land use, environmental and other similar permits or approvals, all of which,

to Trustor’s knowledge, are as of the date hereof in full force and effect and

not subject to any revocation, amendment, release, suspension or forfeiture,

(ii) promptly upon request by Trustee and/or Beneficiary, Trustor shall

deliver to Trustee and Beneficiary copies of all of the same, (iii) the

Premises and the present use and/or occupancy of the Premises comply with, and,

at all times in the future, shall comply with any of the applicable zoning

ordinances, building codes, subdivision laws, certificates of occupancy,

environmental laws and other similar applicable laws and regulations, and

(iv) Trustor has direct access adequate for all present and intended uses

of the Premises from public roads to the Land and the Improvements.  Trustor’s obligations under this Section 1.2

to maintain all necessary certificates, licenses, authorizations,

registrations, permits and/or approvals necessary for the operation of all or

any part of the Premises, and all required zoning ordinance, building code,

subdivision, land use, environmental and other similar permits or approvals

shall not be deemed to require Trustor to comply with future or purely prospective

zoning ordinance or building codes except to the extent that such ordinances or

codes, by their terms, require compliance by Trustor in order to maintain

normal and customary operation of the Premises.

1.3           Status

of the Premises.  (i) In the

event that the Premises are ever deemed to be located in an area identified by

the Secretary of Housing and Urban Development or a successor thereto, or other

appropriate authority (governmental or private), as an area having special

flood hazards pursuant to the terms of the National Flood Insurance Act of

1968, or the Flood Disaster Protection Act of 1973, as amended, or any

successor law, Trustor will obtain and maintain the insurance for the Premises

as specified in Section 2.3.1(c) hereof; (ii) the Premises are

or at the appropriate times will be served by all utilities reasonably required

for the use thereof as a restaurant; (iii) all streets necessary to serve

the Land and the Improvements for the use thereof as herein contemplated have

been or will be timely completed and are or will be timely serviceable and have

been or will be timely dedicated and accepted for maintenance by the

appropriate governmental entities; and (iv) the Premises are free from

damage caused by fire or other casualty.

ARTICLE

2

COVENANTS OF TRUSTOR

Trustor covenants and agrees, in respect of itself and

the Premises set forth in the Granting Clauses relating to it, as follows:

2.1           General

Covenants.

2.1.1        Payment

of Obligations.  Trustor shall

punctually pay when due and perform the Obligations.

2.1.2        Further

Assurances.  Trustor will, at

Trustor’s sole cost and expense and at the reasonable request of Trustee or

Beneficiary, (i) promptly correct any defect or error which may be

discovered in the contents of the Loan Documents which Trustor is a party to or

in the execution, acknowledgment or recordation thereof, (ii) promptly do,

execute, acknowledge and deliver, any and all such further acts, deeds,

conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates,

financing statements and continuations thereof, notices of assignment and of

security interest, transfers, certificates, assurances and other instruments as

Trustee and/or Beneficiary may reasonably require from time to time in order to

carry out more effectively the purposes of this Deed of Trust, to subject to

the lien and security interest hereby created any of Trustor’s properties,

rights or interests covered or now or hereafter intended to be covered hereby,

to perfect and maintain said lien and security interest, and to better assure,

convey, grant, assign, transfer and confirm unto Trustee and/or Beneficiary the

rights granted or now or hereafter intended to be granted to Trustee and/or

Beneficiary hereunder or under any other instrument executed in connection with

this Deed of Trust or which Trustor may be or become bound to convey, mortgage

or assign to Trustee and/or Beneficiary in order to carry out the intention or

facilitate the performance of the provisions of this Deed of Trust; provided however,

that nothing contained in this Section 2.1.2 shall be construed to

permit Beneficiary to unilaterally require a substantive change in the

substantive terms and conditions of the Loan Documents.

2.1.3        Recordation

and Re-Recordation of Deed of Trust. 

Trustor will, at the reasonable request of Trustee or Beneficiary,

promptly record and re-record, file and refile and register and re-register

this Deed of Trust, any financing or continuation statements and every other

instrument in addition or supplemental to any thereof that shall be required by

any present or future law in order to perfect and maintain the validity,

effectiveness and priority of this Deed of Trust and the lien and security

interest intended to be created hereby, or to subject after acquired property

of Trustor to such lien and security interest, in such manner and places and

within such times as may be reasonably necessary to accomplish such purposes

and to preserve and protect the rights and remedies of Trustee and Beneficiary.  Trustor will furnish to Trustee and

Beneficiary evidence reasonably satisfactory to Trustee and Beneficiary of

every such recording, filing or registration. 

Trustee or Beneficiary may file copies or reproductions of this instrument

as financing statements at any time and from time to time at Trustee’s or

Beneficiary’s option without further authorization from Trustor.

2.1.4        Defense

of Title and Litigation.  If the

lien, security interest, validity, enforceability or priority of this Deed of

Trust, or if title or any of the rights of Trustee and/or Beneficiary in or to

the Mortgaged Property, shall be endangered, or shall be attacked directly or

indirectly, or if any action or proceeding is instituted against Trustor or

Trustee and/or Beneficiary with respect thereto, Trustor will promptly notify

Trustee and Beneficiary thereof and will diligently endeavor to cure any defect

which may be developed or claimed, and will take all necessary and proper steps

for the defense of such action or proceeding, including the employment of

counsel, the prosecution or defense of litigation and, subject to Beneficiary’s

approval, the compromise, release or discharge of any and all adverse

claims.  Trustee and/or Beneficiary

(whether or not named as a party to such actions or proceedings) are hereby

authorized and empowered (but shall not be obligated) to take such additional

steps as they may deem necessary or proper for the defense of any such action

or proceeding or the protection of the lien, security interest, validity,

enforceability or priority of this Deed of Trust or of such title or rights,

including the employment of counsel, the prosecution or defense of litigation,

the compromise, release or discharge of such adverse claims, the purchase of

any tax title and the removal of such prior liens and security interests.  Trustor shall, on demand, reimburse Trustee

and Beneficiary for all reasonable expenses (including reasonable attorneys’

fees and disbursements) incurred by either of them in connection with the

foregoing matters, and the party incurring such expenses shall be subrogated to

all rights of the person receiving such payment.  All such costs and expenses of Trustee and/or Beneficiary, until

reimbursed by Trustor, shall be part of the Obligations and shall bear interest

from the date of advance at the Default Rate (as defined in the Note) and shall

be deemed to be secured by this Deed of Trust.

2.2           Operation

and Maintenance.

2.2.1        Repair

and Maintenance.  Trustor will

operate and maintain the Premises in good order, repair and operating

condition, will promptly make all necessary repairs, renewals, replacements,

additions and improvements thereto, interior and exterior, structural and

nonstructural, foreseen and unforeseen, or otherwise necessary to insure that

the same as part of the security under this Deed of Trust shall not in any way

be materially impaired or materially diminished, and will not cause or allow

any of the Land, the Improvements and/or the Equipment to be misused or wasted

or to deteriorate, reasonable wear and tear excepted.  No material part of the Improvements shall be removed, demolished

or structurally altered, nor shall any new building, structure, facility or

other material improvement be constructed on the Land without Beneficiary’s

consent which shall not be unreasonably withheld, conditioned or delayed.

2.2.2        Replacement

of Equipment.  Trustor will keep the

Land and the Improvements reasonably equipped in accordance with reasonable

custom and practice for businesses such as Trustor's and will replace all worn

out or obsolete Equipment with fixtures or personal property comparable

theretoto the extent such replacement is consistent with reasonable custom and

practice for businesses such as Trustor's, and will not, without Beneficiary’s

consent, remove from the Land or the Improvements any fixtures or personalty

covered by this Deed of Trust except: (a) in the ordinary course of Trustor’s

business; and (b) where such removal could not reasonably be expected to have a

material adverse effect on the value of Beneficiary's security interest in the

Premises; or (c) such removal is consistent with reasonable custom and practice

for businesses such as Trustor's,unless the same is replaced by Trustor with an

article of equal suitability and value when replaced, owned by Trustor free and

clear of any lien or security interest (other than Permitted Exceptions, Future

Permitted Exceptions and the lien created by this Deed of Trust).

2.2.3        Compliance

With Laws.  Trustor will perform and

comply promptly with, and cause the Premises to be maintained, used and

operated in accordance with, any and all (i) present and future laws,

ordinances, rules, regulations, reports and requirements of every duly

constituted governmental or quasi-governmental authority or agency applicable

to Trustor or the Premises, including, without limitation, any subdivision

agreement, improvements agreement or development agreement relating to the

Premises, all laws and regulations under the Subdivision Map Act and the

Subdivided Lands Act, all applicable federal, state and local laws pertaining

to air and water quality, hazardous waste, waste disposal, air emissions and

other environmental matters, all zoning and other land use matters, and utility

availability and the rules, regulations and ordinances of all state and

municipal governments whose rules, regulations and ordinances are applicable to

the Premises, the United States Environmental Protection Agency and all

applicable federal, state and local agencies and bureaus, (ii) similarly

applicable orders, rules and regulations of any regulatory, licensing,

accrediting, insurance underwriting or rating organization or other body

exercising similar functions, (iii) similarly applicable duties or

obligations of any kind imposed under any Permitted Exception or Future

Permitted Exception or otherwise by law, covenant, condition, agreement or

easement, public or private, and (iv) policies of insurance at any time in

force with respect to the Premises; provided, however, Trustor shall have the

right in good faith, and upon advance written notice thereof to Beneficiary, to

contest or object to any such law, requirement or obligation by appropriate

administrative or judicial proceedings. 

In the event that failure to comply will result in a lien or charge on

the Premises that is not a Permitted Exception or a Permitted Future Exception,

Trustor shall provide Beneficiary with assurances satisfactory to Beneficiary

that such lien or charge will be satisfied prior to the foreclosure thereof.  If there is an adverse conclusion with

respect to any such contest represented by a final judgment, decree or

determination which may not be or is otherwise not appealed by Trustor, Trustor

shall thereafter comply with any such law, requirement or obligation.  If Trustor receives any notice that Trustor

or the Premises is in default under or is not in compliance with any of the

foregoing, or notice of any proceeding initiated under or with respect to any

of the foregoing, Trustor will promptly furnish a copy of such notice to

Beneficiary.

2.2.4        Zoning,

Title Matters.  Trustor will not,

without the consent of Beneficiary, (i) initiate or support any zoning

reclassification of the Land or the Improvements, seek any variance under

existing zoning ordinances applicable to the Land or the Improvements or use or

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

becoming a non–conforming use under applicable zoning ordinances,

(ii) modify, amend or supplement any of the Permitted Exceptions,

(iii) impose any restrictive covenants or encumbrances upon the Premises,

execute or file any subdivision or parcel map affecting the Land or the

Improvements or consent to the annexation of the Land or the Improvements to

any municipality or (iv) permit or suffer the Premises to be used by the

public or any person in such manner as might make possible a claim of adverse

usage or possession or of any implied dedication or easement.

2.2.5        Leasing.  Trustor shall not execute or enter into any

Lease of the Mortgaged Property or any portion thereof or any interest therein

without the advance written consent of Beneficiary as to the form and substance

thereof and the acceptability of the tenant, which consent may be withheld in

Beneficiary's sole discretion.  Trustor

shall on demand execute such further assignments to Beneficiary of all such

Leases and rents, issues, profits or moneys to be generated thereby as

Beneficiary may require and deliver to Beneficiary a fully executed original of

any or all such Leases.  All Leases

shall contain a non-disturbance and attornment provision acceptable to

Beneficiary in its sole discretion.

2.2.6        Management

Agreements.  Upon the occurrence and

during the continuance of an Event of Default hereunder, Beneficiary shall have

the right and option to terminate any management agreement, contract or

agents/managers responsible for the property management of the Mortgaged

Property if said property management is, in Beneficiary’s reasonable judgment,

unsatisfactory in any respect.

2.3           Insurance.

2.3.1        Casualty

Insurance.  As a material inducement

to Beneficiary to make the loan evidenced bythe

Note, Trustor will keep the Premises insured for the benefit of Trustee and

Beneficiary as follows notwithstanding any local, state or federal laws which may

detrimentally affect Trustor’s ability to obtain or may materially increase the

cost of such insurance coverage:

(a)           against

damage or loss by fire and such other hazards (including lightning, windstorm,

hail, explosion, riot, riot attending a strike, civil commotion, vandalism,

malicious mischief, aircraft, vehicle and smoke) as are covered by the broadest

form of extended coverage endorsement as is available from time to time, in an

amount not less than the full insurable value (as defined in Section 2.3.8)

of the property insured, with a deductible amount not to exceed an amount

satisfactory to Beneficiary;

(b)           rent

or business interruption or use and occupancy insurance on such basis and in

such amounts and with such deductibles as shall be satisfactory to Beneficiary;

(c)           against

damage or loss by flood if the Premises are located in an area identified by

the Secretary of Housing and Urban Development or any successor thereto or

other appropriate authority (governmental or private) as an area having special

flood hazards and in which flood insurance has been made available under the

National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of

1973, as amended, modified, supplemented or replaced from time to time, on such

basis and in such amounts as shall be required by Beneficiary;

(d)           against

damage or loss from  sprinkler system leakage; 

(e)           during

the period of any alteration, construction, or replacement of the Improvements,

or any substantial portion thereof, a standard builder’s risk policy with

extended coverage for an amount at least equal to the full insurable value of

the Improvements and the Equipment and worker’s compensation, in statutory

amounts; and

(f)            against

damage or loss by earthquake, in an amount and with a deductible, satisfactory

to Beneficiary, if such insurance is required by Beneficiary in the exercise of

its business judgment in light of the commercial real estate practices existing

at the time the insurance is issued and in the County where the Premises are located.

2.3.2        Liability

Insurance.  Trustor shall procure

and maintain worker’s compensation for Trustor’s employees and comprehensive

general liability insurance covering Trustor, Trustee and the Beneficiary

against claims for bodily injury or death or property damage occurring in, upon

or about or resulting from the Premises, or any street, drive, sidewalk, curb

or passageway adjacent thereto, in standard form and with such insurance

company or companies and in such amounts as may be acceptable to the Beneficiary,

which insurance shall include blanket contractual liability coverage which

insures contractual liability under the indemnification set forth in Section 4.3

of this Deed of Trust (but such coverage or the amount thereof shall in no way

limit such indemnification).

2.3.3        Other

Insurance.  Trustor, at

Beneficiary’s request, will procure and maintain such other insurance or such

additional amounts of insurance, covering Trustor or the Premises, as is

customary for businesses such as Trustor's.

2.3.4        Form

of Policy.  All insurance required

under this Section shall be paid timely in accordance with the terms thereof

and the policies therefor shall contain such provisions, endorsements and

expiration dates, as Beneficiary shall from time to time reasonably request,

and shall be in such form and amounts, and be issued by such insurance

companies doing business in the State of Texas as shall be reasonably approved

by Beneficiary.  Without limiting the

foregoing, all such policies shall contain a waiver of subrogation

endorsement.  All such policies shall

provide that the same shall not be canceled, amended or materially altered

(including by reduction in the scope or limits of coverage) without at least

thirty (30) days’ prior written notice to Beneficiary.  If a policy required under this Section

contains a coinsurance or average clause, such policy shall include a

Stipulated Value or Agreed Amount endorsement.

2.3.5        Duplicate

Originals or Certificates. 

Duplicate original policies evidencing the insurance required under this

Section and any additional insurance which shall be taken out on the Premises

by or on behalf of Trustor shall be deposited with and held by Beneficiary and,

in addition, Trustor will deliver to Beneficiary (i) receipts evidencing

payment of all premiums thereon and (ii) duplicate original renewal

policies or a binder thereof with evidence satisfactory to Beneficiary of

payment of all premiums thereon, at least thirty (30) days prior to the

expiration of each such policy.  In lieu

of the duplicate original policies provided herein to be delivered to

Beneficiary, Trustor may deliver an underlayer of any blanket policy, and

Trustor may also deliver original certificates from the issuing insurance

company or broker, evidencing that such policies are in full force and effect

and containing information which, in Beneficiary’s reasonable judgment, is

sufficient to allow Beneficiary to determine whether such policies comply with

the requirements of this Section. 

Beneficiary shall be expressly entitled to rely on any insurance

certificate and such certificate shall name Beneficiary as an additional

insured or loss payee.

2.3.6        No

Separate Insurance.  Trustor shall

not carry separate or additional insurance concurrent in form or contributing

in the event of loss with that required under this Section unless endorsed in

favor of Trustee and the Beneficiary in accordance with the requirements of

this Section and otherwise approved by Beneficiary in all respects.

2.3.7        Transfer

of Title.  In the event of

foreclosure of this Deed of Trust or other transfer of title or assignment of

the Premises in extinguishment, in whole or in part, of the Obligations, all

right, title and interest of Trustor in and to all policies of insurance

required under this Section or otherwise then in force with respect to the

Premises and all proceeds payable thereunder and unearned premiums thereon

shall immediately vest in the purchaser or other transferee of the Premises,

but only to the extent of any deficiency following such sale.

2.3.8        Replacement

Cost.  For purposes of this Section,

the term “full insurable value” shall mean the actual cost of replacing the

property in question, without allowance for depreciation, as determined from

time to time (but not more often than once every calendar year) by the

insurance company or companies holding such insurance or, upon request by

Beneficiary, by appraisal made by an appraiser, engineer, architect or

contractor proposed by Trustor and approved by said insurance company or companies

and Beneficiary.  The cost of such

appraisal shall be paid by Trustor.

2.3.9        Approval

Not Warranty.  No approval by

Beneficiary of any insurer shall be construed to be a representation,

certification or warranty of its solvency and no approval by Beneficiary as to

the amount, type and/or form of any insurance shall be construed to be a

representation, certification or warranty of its sufficiency.

2.4           Damage

and Destruction.

2.4.1        Trustor's

Obligations.  In the event of any

damage to or loss or destruction of the Premises, Trustor shall

(i) promptly notify Beneficiary of such event; (ii) take such steps

as shall be necessary to preserve any undamaged portion of the Premises; and

(iii) unless otherwise instructed by Beneficiary shall, regardless of

whether the insurance proceeds, if any, shall be sufficient for the purpose,

promptly (and in any event, prior to the date on which any tenant under any

Lease, as defined herein, shall be entitled to cancel or terminate said Lease

because of any such damage, loss or destruction) commence and diligently pursue

to completion the restoration, replacement and rebuilding of the Premises as

nearly as possible to their value, condition and character immediately prior to

such damage, loss or destruction and in accordance with plans and

specifications approved, and with other provisions for the preservation of the

security hereunder established, by Beneficiary, which approval shall not be

unreasonably withheld or delayed.

2.4.2        Beneficiary's

Rights; Application of Proceeds.  In

the event that any portion of the Premises is so damaged, destroyed or lost,

and any such damage, destruction or loss is covered, in whole or in part, by

insurance described in Section 2.3, then the following provisions

shall apply:

(a)           If

an Event of Default has occurred hereunder and is continuing,

(A) Beneficiary may, but shall not be obligated to, make proof of loss if

not made promptly by Trustor, and Beneficiary is hereby authorized and

empowered by Trustor to settle, adjust or compromise any claims for damage,

destruction or loss thereunder unless the proposed amount of proceeds from such

claims exceeds the then outstanding amount of the Obligations, and

(B) each insurance company concerned is hereby authorized and directed to

make payment therefor directly to Beneficiary, to be applied, at Beneficiary’s

option, to the Obligations then secured hereby, in such order as Beneficiary

may determine in its sole discretion. 

Unless otherwise required by law, such application to the Obligations by

Beneficiary of such payments shall not, by itself, cure or waive any Event of

Default hereunder or notice of default under this Deed of Trust or any other

Loan Document or invalidate any act done pursuant to such notice.

(b)           If

no Event of Default hereunder has occurred and is continuing, and if such

proceeds are reasonably expected to be $50,000 or less, Trustor shall be

entitled to receive all such proceeds and shall apply such proceeds to the

restoration, replacement, and rebuilding of that portion of the Premises so

damaged, destroyed or lost to as nearly the same condition, character and value

as may have existed prior to such damage, destruction or loss, with such

changes or alterations as may be required to conform to applicable law.

(c)           (i)            If

such proceeds are reasonably expected to exceed $50,000 and if an Event of

Default has not occurred hereunder and is not continuing, Beneficiary shall

apply all such insurance proceeds to the restoration, replacement and

rebuilding of the damaged portion of the Premises, and such restoration,

replacement and rebuilding shall be accomplished, upon satisfaction of each and

all of the following conditions: 

(i) except as provided in (ii) below, Beneficiary shall be

satisfied that by the expenditure of such insurance proceeds the Premises will

be fully restored within a reasonable period of time to its value immediately

preceding the loss or damage, free and clear of all liens and encumbrances,

except the lien of this Deed of Trust, the Permitted Exceptions and the Future Permitted

Exceptions and such other liens as are specifically approved by Beneficiary in

writing under this Deed of Trust; (ii) in the event such proceeds shall be

insufficient to restore or rebuild the Premises, Trustor shall deposit promptly

with Beneficiary funds which, together with the insurance proceeds, shall be

sufficient in Beneficiary’s judgment to restore and rebuild the Premises;

(iii) Trustor shall make reasonable efforts to obtain a waiver of the

right of subrogation from any insurer under such policies of insurance who, at

that time, claims that liability exists as to Trustor or the then owner or the

assured under such policies; (iv) the excess of such insurance proceeds

above the amount necessary to complete such restoration and compensate Trustor

for all other insured losses shall be applied on account of the Obligations

(first to interest and other charges due under the Note, then to expenses

reimbursable to Beneficiary and then to the principal amount due under the Note

in inverse order of maturity); (v) Beneficiary reviews and approves in

writing the plans and specifications for the restoration work and Beneficiary

receives written evidence satisfactory to Beneficiary that the same have been

approved by all governmental authorities having jurisdiction; (vi) Trustor

shall have furnished to Beneficiary, for Beneficiary’s approval, a detailed

budget and cost breakdown for said restoration work signed by Trustor and

describing the nature and type of expenses and amounts thereof estimated by

Trustor for said restoration work including, but not limited to, the cost of

material and supplies, architect and designer fees, general contractors’ fees,

and the anticipated monthly disbursement schedule, and Beneficiary shall have

given to Trustor written approval of such budget and cost breakdown (if Trustor

determines at any time that its actual expenses differ or will differ from its

estimated budget, it will so advise Beneficiary promptly); (vii) Trustor

has delivered to Beneficiary evidence satisfactory to Beneficiary that all

Leases existing at the time of the loss or damage will remain in full force and

effect subject only to abatement of rent in accordance with the terms of the

Leases until completion of such repair and restoration, and (viii) in

Beneficiary’s reasonable judgment, such restoration work can be completed at

least six (6) months prior to the maturity of the Note.

(ii)           In

the event any of the conditions in Section 2.4.2(c)(i) are not or

cannot be satisfied, then such insurance proceeds shall be disposed of as

provided in Section 2.4.2(a) above.

(iii)          Under

no circumstances shall Beneficiary become obligated to take any action to

restore the Premises; all proceeds released or applied by the Beneficiary to

the restoration of the Premises pursuant to the provisions of this Section

shall be released and/or applied on the cost of restoration (including within

the term “restoration” any repair, reconstruction or alteration) as such

restoration progresses and upon the delivery to Beneficiary of such title

insurance endorsements as Beneficiary may reasonably require, in amounts which

shall equal ninety percent (90%) of the amounts from time to time certified by

an architect approved by Beneficiary to have been incurred in such restoration

of any and all of the Premises (i.e., 90% of the total amount expended by the

contractor for the project under a contract approved by Beneficiary and billed

by the contractor to Trustor) and performed by a contractor reasonably

satisfactory to Beneficiary and who shall furnish such corporate surety bond,

if any, as may be reasonably required by Beneficiary, in accordance with the

plans and specifications therefor approved by Beneficiary and the remaining ten

percent (10%) upon completion of such restoration and delivery to Beneficiary

of evidence reasonably satisfactory to Beneficiary that no mechanics’ lien

exists with respect to the work of such restoration; that the restoration work

has been completed and fully paid for in accordance with plans and

specifications for said work approved by Beneficiary; and that all Leases

existing at the time the loss or damage occurred are in full force and effect

with all tenants in possession and paying full rental under the Leases; and

that all governmental approvals required for the Premises have been obtained

and the same are in form and substance satisfactory to Beneficiary.

(iv)          If

within a reasonable period of time after the occurrence of any loss or damage

to the Premises, Trustor shall not have submitted to Beneficiary and received

Beneficiary’s approval of plans and specifications for the repair, restoration

or rebuilding of such loss or damage or shall not have obtained approval of

such plans and specifications from all governmental authorities whose approval

is required, or if, after such plans and specifications are approved by

Beneficiary and by all such governmental authorities, Trustor shall fail to

commence promptly such repair, restoration or rebuilding, or if thereafter

Trustor fails to carry out diligently such repair, restoration or rebuilding or

is delinquent in the payment to mechanics, materialmen or others of the costs

incurred in connection with such work, or if any other condition of this

Section is not satisfied within a reasonable period of time after the occurrence

of any such loss or damage, then Beneficiary may, in addition to all other

rights herein set forth, at Beneficiary’s option, (A) declare that an

Event of Default has occurred and/or dispose of such proceeds as provided in Section 2.4.2(a)

above, and/or (B) Beneficiary, or any lawfully appointed receiver of the

Premises may at their respective options, perform or cause to be performed such

repair, restoration or rebuilding, and may take such other steps as they deem

advisable to carry out such repair, restoration or rebuilding, and may enter

upon the Premises for any of the foregoing purposes, and Trustor hereby waives,

for itself and all others holding under it, any claim against Beneficiary and

such receiver (other than a claim based upon the alleged gross negligence or

intentional misconduct of Beneficiary or any such receiver) arising out of

anything done by them or any of them pursuant to this Section and Beneficiary

may in its discretion apply any insurance or condemnation proceeds held by it to

reimburse itself and/or such receiver for all amounts expended or incurred by

it in connection with the performance of such work, including attorneys’ fees,

and any excess costs shall be paid by Trustor to Beneficiary and Trustor’s

obligation to pay such excess costs shall be secured by the lien of this Deed

of Trust and shall bear interest at the Default Rate set forth in the Note,

until paid.

(d)           Nothing

herein, and no authority given to Trustor to repair, rebuild or restore the

Premises or any portion thereof, shall be deemed to constitute Trustor the

agent of Beneficiary for any purpose, or to create, either expressly or by

implication, any liens or claims or rights on behalf of laborers, mechanics,

materialmen or other lien holders which could in any way be superior to the

lien or claim of Beneficiary, or which could be construed as creating any third

party rights of any kind or nature to the insurance funds.  At reasonable times during the work of

restoration, and upon reasonable notice, Beneficiary, either personally or by

duly authorized agents, shall have the right to enter upon the Premises for

inspection of the work.  Trustor

expressly assumes all risk of loss, including a decrease in the use, enjoyment

or value, of the Premises from any casualty whatsoever, whether or not

insurable or insured against.

2.4.3        Effect

of the Indebtedness.  Any reduction

in the Obligations resulting from the application to the Obligations of

insurance proceeds pursuant to this Section 2.4 shall be deemed to

take effect only on the date of receipt by Beneficiary of such proceeds and the

application of such proceeds to the Obligations; provided that if prior to the

receipt by Beneficiary of such proceeds, the Mortgaged Property shall have been

sold on foreclosure of this Deed of Trust, or shall have been transferred by

deed in lieu of foreclosure of this Deed of Trust, notwithstanding any

limitation on Trustor’s liability contained herein or in the Note or the other

Loan Documents, Beneficiary shall have the right to receive the same to the

extent of any deficiency following such sale or conveyance, together with

attorneys’ fees and disbursements incurred by Trustee and Beneficiary in

connection with the collection thereof.

2.5           Condemnation.

2.5.1        Trustor's

Obligations:  Proceedings.  Trustor, promptly upon obtaining knowledge

of any pending or threatened institution of any proceedings for the

condemnation of the Premises, or any part thereof or interest therein, or of

any right of eminent domain, or of any other proceedings arising out of injury

or damage to or decrease in the value of the Premises (including a change in

grade of any street), or any part thereof or interest therein (collectively

referred to herein as “Condemnation”),

will notify Beneficiary of the threat or pendency thereof and the following

provisions shall apply:

2.5.2        Beneficiary's

Rights to Proceeds.  If the amount

of all compensation, awards, proceeds and other payments or relief in

connection with such Condemnation, including, without limitation, proceeds of

sale in lieu of Condemnation, made or granted to Trustor (collectively the “Proceeds”) is reasonably expected to be in

excess of $50,000, all Proceeds and all judgments, decrees and awards for

injury or damage to the Premises are hereby assigned to Beneficiary and shall

be paid to Beneficiary to be held and disbursed as hereinafter set forth.  Trustor agrees to execute and deliver such

further assignments thereof as Beneficiary may request and authorizes Beneficiary

to collect and receive the same, to give receipts and acquittances therefor,

and to appeal from any such judgment, decree or award unless the proposed or

actual amount of such Proceeds exceeds the then outstanding amount of the

Obligations.

2.5.3        Application

of Proceeds; Total Taking.  In the

event of a Condemnation of all or substantially all of the Premises or, without

regard to the portion of the Premises subject to Condemnation, if an Event of

Default shall have occurred hereunder and be continuing:

(a)           Beneficiary

shall be entitled to all Proceeds of such Condemnation made or granted to

Trustor and shall be entitled, at Beneficiary’s option, to commence, appear in

and prosecute in its own name any action or proceedings.  All such Proceeds shall be deemed assigned

to Beneficiary to the extent of any sums then secured by this Deed of Trust,

and Trustor agrees to execute such further assignments of the Proceeds as

Beneficiary or Trustee may require.

(b)           Beneficiary

shall apply all such Proceeds, after deducting therefrom all costs and expenses

(regardless of the particular nature thereof and whether incurred with or

without suit), including reasonable attorneys’ fees, incurred by it in

connection with the collection of such Proceeds, to the Obligations secured by

this Deed of Trust, in such order as Beneficiary may determine in its sole

discretion.  Unless otherwise required

by applicable law, such application or release shall not, by itself, cure or

waive any Event of Default hereunder or notice of default under this Deed of

Trust or any other Loan Document or invalidate any act done pursuant to such

notice.

2.5.4        Application

of Proceeds; Partial Taking.  If an

Event of Default shall not have occurred hereunder and be continuing and in the

event of a Condemnation of less than all or substantially all of the Land

and/or Improvements, the following provisions shall apply:

(a)           In

the event that such Proceeds are in an amount less than $50,000, Trustor shall

be entitled to receive all such Proceeds and to apply such Proceeds to the

payment of the costs and expenses of repairing and restoring the Premises.

(b)           In

the event that such Proceeds are in the amount of $50,000 or more, the Proceeds

shall be paid to and shall be disbursed by Beneficiary in the same manner, for

the same purposes and subject to the same requirements as are applicable to

insurance proceeds pursuant to the provisions of Section 2.4.2(a)-(d)

above.

2.5.5        Right

to Participate.  If:  (l) an Event of Default shall have

occurred and be continuing hereunder; or (2) all or substantially all of

the Premises have been taken by Condemnation and the Proceeds thereof are

reasonably estimated to be equal to or less than the amount then due to

Beneficiary by Trustor, Beneficiary shall have the right to settle, adjust or

compromise any claim in connection with a Condemnation of the Land and/or

Improvements.  In the event of a

Condemnation of less than all or substantially all of the Land and/or

Improvements and if an Event of Default shall not have occurred hereunder and

be continuing then:  (A) Trustor

may settle, adjust or compromise any claim which is reasonably expected to be

in an amount less than $50,000; and (B) with respect to any claim which is

reasonably expected to be in the amount of $50,000 or more, Beneficiary and

Trustor shall each consult and cooperate with the other and each shall be

entitled to participate in all meetings and negotiations with respect to the

settlement of such claim.  Trustor at

its expense shall deliver to Beneficiary copies of all papers served in

connection with such Condemnation.  Any

adjustment or settlement by Trustor of any claim which is in an amount in

excess of $50,000 shall be subject to the approval of Beneficiary.

2.5.6        Effect

on the Indebtedness. 

Notwithstanding any Condemnation, taking or other proceeding referred to

in this Section causing injury to or decrease in value of the Premises

(including a change in grade of any street), or any interest therein, Trustor

shall continue to pay and perform the Obligations as provided herein.  Any reduction in the Obligations resulting

from the application to the Obligations of any proceeds, judgments, decrees or

awards pursuant to Section 2.5.3 or 2.5.4 shall be deemed to

take effect only on the date of receipt by Beneficiary of such proceeds,

judgments, decrees or awards and their application against the Obligations, and

the amount of all installment payments of the Obligations which thereafter

become due shall be reduced and recalculated pro rata; provided that if prior

to the receipt by Beneficiary of such proceeds, judgments, decrees or awards

the Mortgaged Property shall have been sold on foreclosure of this Deed of

Trust, or shall have been transferred by deed in lieu of foreclosure of this

Deed of Trust, Beneficiary shall have the right to receive the same to the

extent of any deficiency following such sale, with legal interest thereon

together with attorneys’ fees and disbursements incurred by Trustee and

Beneficiary in connection with the collection thereof.

2.6           Liens

and Liabilities.

2.6.1        Discharge

of Liens.  Trustor will pay, bond or

otherwise discharge, from time to time when the same shall become due, all

claims and demands of mechanics, materialmen, laborers and others which, if

unpaid, might result in, or permit the creation of, a lien on the Land and/or

the Improvements, or on the revenues, rents, issues, income or profits arising

therefrom and, in general, Trustor shall do, or cause to be done, at Trustor’s

sole cost and expense, everything necessary to fully preserve the lien and

priority of this Deed of Trust; provided, however, that Trustor shall not be

obligated to pay, bond or discharge such claim or demand if payment is not yet

due under the contract which is the foundation of such claim or demand; and

provided further that so long as an Event of Default shall not have occurred

and be continuing hereunder, Trustor shall have the right to contest or object

to the amount or validity of any such claim and demand by appropriate

administrative or judicial proceedings, in which event, the following provisions

shall apply:

(a)           Trustor

shall give Beneficiary written notice of Trustor’s intent to so contest or

object to such claim or demand.

(b)           Trustor

shall thereafter diligently proceed to cause such claim or demand to be removed

and discharged.

(c)           Trustor,

if requested by Beneficiary, shall deposit with Beneficiary a bond or other

assurance reasonably satisfactory to Beneficiary in such amounts as Beneficiary

shall reasonably require, but not more than 150% of the amount of the claim(s)

or demand(s) plus costs, expenses, including reasonable attorneys’ fees, and

interest.

2.6.2        Creation

of Liens.  Except as otherwise set

forth herein, Trustor will not, without Beneficiary’s consent, 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 (except

for Impositions (as hereinafter defined) which are not yet due and payable),

security interest, encumbrance or charge, or conditional sale or other title

retention document, against or covering the Land and/or the Improvements, prior

to, on a parity with or subordinate to the lien of this Deed of Trust.  If any of the foregoing becomes attached to

the Land and/or the Improvements without such consent, Trustor will promptly

cause the same to be discharged and released.

2.6.3        No

Consent.  Nothing in the Loan

Documents shall be deemed or construed in any way as constituting the consent

or request by Trustee or Beneficiary, express or implied, to any contractor,

subcontractor, laborer, mechanic or materialman for the performance of any

labor or the furnishing of any material for any improvement, construction,

alteration or repair of the Land and/or the Improvements.  Trustor further agrees that neither Trustee

nor Beneficiary stands in any fiduciary relationship to Trustor.

2.7           Taxes

and Other Charges.

2.7.1        Taxes

on the Premises.  Trustor will pay

prior to delinquency, all taxes, assessments, water and sewer rents, rates,

charges and assessments, levies, permits, inspection and license fees and other

governmental and quasi-governmental charges, general and special, ordinary and

extraordinary, foreseen and unforeseen, heretofore or hereafter assessed,

levied or otherwise imposed against or upon, or which may become a lien upon,

the Premises, the revenues, rents, issues, income and profits of the Premises

or arising in respect of the occupancy, use or possession thereof (collectively,

“Impositions”).  Trustor will also pay any penalty, interest

or cost for non-payment of Impositions which may become due and payable, and

such penalties, interest or cost shall be included within the term Impositions.

2.7.2        Receipts.  Unless Trustor is making monthly deposits

pursuant to Section 2.8 or unless Beneficiary otherwise directs,

Trustor will furnish to Trustee and Beneficiary upon Trustee’s or Beneficiary’s

request, proof of payment at the time same is made, and thereafter, upon

receipt, validated receipts showing payment in full of all Impositions.

2.7.3        Income

and Other Taxes Imposed on Trustor. 

Trustor will promptly pay all income, franchise and other taxes owing by

Trustor the nonpayment of which would result in a lien against the Premises or

otherwise diminish or impair the security of this Deed of Trust, and any stamp

taxes which may be required to be paid in connection with this Deed of Trust,

together with any interest or penalties thereon.

2.7.4        Recording

Fees and Other Taxes Imposed on Trustee or Beneficiary.  Trustor will pay any and all taxes, charges,

filing, registration and recording fees (other than income, franchise, license,

withholding and doing business taxes), imposed upon Trustee or Beneficiary by

reason of or in connection with the execution, delivery and/or recording of the

Loan Documents or the ownership of this Deed of Trust or any instrument

supplemental hereto, any security instrument with respect to any Equipment or

any instrument of further assurance, and shall pay all corporate stamp taxes

required to be paid in connection with the Obligations.

2.7.5        Reimbursement

for Certain Taxes and Costs.  In the

event of the enactment of or change in (including a change in interpretation

of) any applicable law (1) deducting or allowing Trustor to deduct from

the value of the Premises for the purpose of taxation any lien or security

interest thereon, or (2) subjecting Trustee and/or Beneficiary to any tax

measured by or based on in whole or in part the indebtedness secured hereby, and

the result is to increase the taxes imposed upon Trustee and/or Beneficiary or

to reduce the amount of any payments receivable hereunder, then, and in anysuch event, Trustor shall, on demand, pay

to Trustee and Beneficiary additional amounts to compensate for such increased

costs or reduced amounts, provided that Trustor shall have the right to prepay

the Obligations, or any portion thereof, in accordance with the provisions of

the Note, and, provided, further, that if any such payment or reimbursement shall

be unlawful or would constitute usury or render the Obligations wholly or

partially usurious under applicable law, then Beneficiary may, at its option,

declare the Obligations immediately due and payable or require Trustor to pay

or reimburse Trustee and Beneficiary for payment of the lawful and non-usurious

portion thereof.

2.7.6        Right

to Contest Taxes.  Notwithstanding

anything set forth herein, so long as an Event of Default shall not have

occurred hereunder and be continuing, Trustor shall have the right to contest

or object to the amount or validity of any Imposition by appropriate legal

proceedings so long as (i) Trustor notifies Beneficiary of Trustor’s

intent to contest such Imposition; (ii) Trustor shall provide Beneficiary

with evidence reasonably satisfactory to Beneficiary that such proceedings

shall operate to prevent the sale of the Mortgaged Property or any portion

thereof; (iii) Trustor shall have furnished Beneficiary with a bond or

other assurances reasonably satisfactory to Beneficiary sufficient to satisfy

such Imposition; and (iv) upon any final determination of such contest

which is not appealable or is not being appealed by Trustor, Trustor shall pay

the amount of such Imposition then due.

2.8           Tax

and Insurance Deposits.

2.8.1        Amount

of Deposits.  Upon the occurrence of

an Event of Default hereunder, and during the continuance thereof, in order to

more fully protect the security herein described, Beneficiary may at any time

require that Trustor thereafter deposit and Trustor shall thereafter deposit

each month with Beneficiary or any loan servicer or financial institution

pursuant to Section 2.8.5 (the “Depository”),

an amount equal to one-twelfth (1/12) of the estimated annual

(i) Impositions; (ii) premiums for insurance required under Section 2.3;

and (iii) other charges imposed upon the Land and/or the

Improvements.  In addition, if required

by Beneficiary, Trustor shall also deposit with the Beneficiary or Depository,

as Beneficiary may direct, a sum of money which, together with the aforesaid

monthly installments, will be sufficient to make each of said payments of

insurance premiums at least thirty (30) days before such payments are due.  If the amount of any such payments is not

ascertainable at the time any such deposit is required to be made, the deposit

shall be made on the basis of Beneficiary’s reasonable estimate thereof, and,

when such amount becomes fixed for the then current year, Trustor shall

promptly deposit any deficiency with Beneficiary or the Depository, as Beneficiary

shall direct.

2.8.2        Use

of Deposits.  Funds so deposited

shall, until so applied, constitute additional security for the Obligations

(provided that such funds shall only be used to pay Impositions and premiums

for insurance required under Section 2.3), shall be held by

Beneficiary or the Depository free of trust and without interest (except to the

extent required by applicable law), may be commingled with other funds of

Beneficiary or the Depository, and shall be applied in payment of the aforesaid

amounts prior to their becoming delinquent, but only to the extent that

Beneficiary or the Depository shall have such funds on hand, provided that

Beneficiary or the Depository shall have no obligation to use said funds to pay

(i) any installment or Impositions prior to the last day on which payment

thereof may be made without penalty or interest or to pay any insurance premium

prior to the due date thereof, or (ii) any of the aforesaid amounts unless

Trustor shall have furnished Beneficiary (and the Depository, if applicable),

the bills or invoices therefor in sufficient time to pay the same before any

penalty or interest attaches and before said policies of insurance lapse, as

the case may be.

2.8.3        Transfer

of Deed of Trust.  Upon an

assignment or other transfer of this Deed of Trust, Beneficiary or Depository

shall notify Trustor and shall pay over the balance of such deposits in its

possession to the assignee or other successor, and Beneficiary or the

Depository shall thereupon be completely released from all liability with

respect to such deposits and Trustor or the owner of the Premises shall look

solely to the assignee or transferee with respect thereto.  This provision shall apply to every transfer

of such deposits to a new assignee or transferee.

2.8.4        Transfer

of the Premises.  Subject to Article 5

hereof, transfer of record title to the Premises or any portion thereof shall

automatically transfer to the new owner the beneficial interest in any deposits

under this Section.  Upon full payment

and satisfaction of this Deed of Trust or, at Beneficiary’s option, at any

prior time, the balance of amounts deposited in the Beneficiary’s or the

Depository’s possession shall be paid over to the record owner of the Premises,

and no other party shall have any right or claim thereto in any event.

2.8.5        Depository.  At Beneficiary’s request, Trustor agrees

that in lieu of Beneficiary’s holding such deposits, Trustor shall, at

Trustor’s expense, make the aforesaid deposits with such mortgage banker, bank

or financial institution doing business in Texas as Beneficiary may from time

to time designate.

2.9           Inspection.  Subject to compliance by Beneficiary and/or

Trustee with any provisions of the Leases or of applicable law establishing the

security of certain work areas on the Premises, Trustor will allow Trustee and

Beneficiary and their authorized representatives to enter upon and inspect the

Premises at all reasonable times and upon reasonable notice to provide

assurance that Trustor is in compliance with Section 2.2 hereof,

and will assist Trustee, Beneficiary and such representatives in effecting said

inspection.

2.10         Estoppel

Certificates.  Trustor, within ten

(10) days after Beneficiary’s request, shall furnish to Beneficiary a written

statement, duly acknowledged, certifying to Beneficiary and/or any proposed

assignee of Beneficiary’s interest in this Deed of Trust, and/or any other

party designated by Beneficiary, as to (a) the amount of the Obligations

then owing under this Deed of Trust, (b) the terms of payment and maturity

date of the Obligations, (c) the date to which interest has been paid

under the Note, (d) whether any offsets or defenses exist against the

Obligations and, if any are alleged to exist, a detailed description thereof,

(e) a certified current rent roll of the Property, (f) the date to

which the Rent, additional rent and other charges under the Leases have been

paid, (g) whether or not any of the tenants under the Leases are in

default under the Leases, and, if any of the tenants are in default, setting

forth the specific nature of all such default, and (h) as to any other

matters reasonably requested by Beneficiary and reasonably related to the

Leases, the Obligations, the Mortgaged Property or this Deed of Trust.

ARTICLE 3

ASSIGNMENT OF RENTS AND OTHER SUMS UNDER THE LEASES

3.1           Deleted

Intentionally.

ARTICLE

4

ADDITIONAL ADVANCES; EXPENSES; INDEMNITY

4.1           Additional

Advances and Disbursements.  Trustor

agrees that if an Event of Default occurs hereunder and is continuing with

respect to any obligations hereunder to pay any amount or to perform any

action, including, without limitation, its obligation under Section 2.7

to pay Impositions and under Section 2.3 to procure, maintain and

pay premiums on the insurance policies referred to therein, then Trustee and/or

Beneficiary shall have the right, but not the obligation, in Trustor’s name or

in its or their own name, and without notice to Trustor, to advance all or any

part of such amounts or to perform any or all such actions, and, for such

purpose, Trustor expressly grants to Trustee and Beneficiary, in addition and

without prejudice to any other rights and remedies hereunder, the right to

enter upon and take possession of the Premises in accordance with applicable

law to such extent and as often as either of them may deem necessary or

desirable to prevent or remedy any such default.  Except as otherwise provided by law, no such advance or

performance shall be deemed to have cured such default by Trustor or any Event

of Default with respect thereto.  All

sums advanced and all expenses incurred by Trustee and/or Beneficiary in

connection with such advances or actions, and all other sums advanced or

expenses incurred by Beneficiary hereunder or under applicable law (whether

required or optional and whether indemnified hereunder or not) shall be part of

the Obligations, shall bear interest at the Default Rate from the date of

disbursement until paid (as defined in the Note) and shall be secured by this

Deed of Trust.  Trustee and/or

Beneficiary, upon making any such advance, shall be subrogated to all of the

rights of the person receiving such advance.

4.2           Other

Expenses.

4.2.1        Trustor

will pay or, on demand, reimburse Trustee and Beneficiary for the payment of,

all recording and filing fees, abstract fees, title insurance premiums and

fees, Uniform Commercial Code search fees, escrow fees, reasonable attorneys’

fees and disbursements and all other reasonable costs and expenses incurred by

Trustor, Trustee and/or Beneficiary in connection with the granting,

administration, enforcement and closing (including the preparation of the Loan

Documents) of the transactions contemplated hereunder or under the other Loan

Documents, or otherwise attributable or chargeable to Trustor as owner of the

Mortgaged Property.  Notwithstanding

anything to the contrary contained herein in this Section 4.2.1,

the provisions of this Section 4.2 shall not be deemed or construed

to authorize Beneficiary to undertake, exercise or perform any action in the

administration of the transactions contemplated hereunder not otherwise

(i) authorized by the terms of this Deed of Trust or the Loan Documents or

(ii) permitted under applicable law to be undertaken, exercised or

performed by a trust deed beneficiary to protect the security afforded by a

deed of trust upon real property.

4.2.2        Trustor

will pay or, on demand, reimburse Trustee and Beneficiary for the payment of

any costs or expenses (including attorneys’ fees and disbursements) incurred or

expended in connection with or incidental to (i) any default or Event of

Default by Trustor hereunder or under the Loan Documents or (ii) the

exercise or enforcement by or on behalf of Trustee and/or Beneficiary of any of

their rights or remedies or Trustor’s obligations under this Deed of Trust or

under the other Loan Documents, including the enforcement, compromise or

settlement of this Deed of Trust or the Obligations or the defense or assertion

of the rights and claims of Trustee and Beneficiary hereunder in respect

thereof, by litigation or otherwise. 

All of the foregoing costs and expenses must be paid to Beneficiary as

part of any reinstatement tendered under this Deed of Trust.

4.3           Indemnity.

4.3.1        Trustor

agrees to indemnify and hold harmless Trustee and Beneficiary from and against

any and all losses, liabilities, suits, obligations, fines, damages, judgments,

penalties, claims, charges, costs and expenses (including attorneys’ fees and

disbursements) which may be imposed on, incurred or paid by or asserted against

Trustee and/or Beneficiary by reason or on account of, or in connection with,

(i) any willful misconduct of Trustor or any default or Event of Default

by Trustor hereunder or under the other Loan Documents, (ii) Trustee’s

and/or Beneficiary’s good faith and commercially reasonable exercise of any of

their rights and remedies, or the performance of any of their duties, hereunder

or under the other Loan Documents to which Trustor is a party, (iii) the

construction, reconstruction or alteration of the Premises, (iv) any negligence

of Trustor, or any negligence or willful misconduct of any lessee of the

Premises, or any of their respective agents, contractors, subcontractors,

servants, employees, licensees or invitees, or (v) any accident, injury,

death or damage to any person or property occurring in, on or about the

Premises or any street, drive, sidewalk, curb or passageway adjacent thereto,

except for the willful misconduct or gross negligence of the indemnified

person.  Any amount payable to Trustee

or Beneficiary under this Section 4.3 shall be due and payable

within ten (10) days after demand therefor and receipt by Trustor of a

statement from Trustee, Beneficiary and/or counsel for Beneficiary setting

forth in reasonable detail the amount claimed and the basis therefor, and such

amounts shall bear interest at the Default Rate (as defined in the Note) from

and after the date such amounts are paid by Beneficiary or Trustee until paid

in full by Trustor.

4.3.2        Trustor’s

obligations under this Section shall not be affected by the absence or

unavailability of insurance covering the same or by the failure or refusal by

any insurance carrier to perform any obligation on its part under any such

policy of covering insurance.  If any

claim, action or proceeding is made or brought against Trustee and/or

Beneficiary which is subject to the indemnity set forth in this Section,

Trustor shall resist or defend against the same, if necessary in the name of

Trustee and/or Beneficiary, by attorneys for Trustor’s insurance carrier (if

the same is covered by insurance) or otherwise by attorneys approved by

Beneficiary.  Notwithstanding the

foregoing, Trustee and Beneficiary, in their discretion, may engage their own

attorneys to resist or defend, or assist therein, and Trustor shall pay, or, on

demand, shall reimburse Trustee and Beneficiary for the payment of, the

reasonable fees and disbursements of said attorneys.

4.3.3        Trustor

shall indemnify and save and hold harmless Beneficiary and its successors and

assigns for, from and against all claims, liabilities, proceedings, suits,

losses, damages (including punitive damages), judgments and environmental

response and clean-up costs, fines, penalties and expenses (including

reasonable counsel fees, costs and expenses incurred in investigating and

defending against the assertion of any such liabilities, regardless of their

merit), which may be asserted against, sustained, suffered or incurred by

Beneficiary or its successors and assigns because of the existence of any toxic

or hazardous material, substance, waste, pollutant or contaminant or arising

from any other violation of any governmental law, regulation or requirement now

or hereafter in effect relating to human health or the safety or protection of

the environment.  This indemnity shall

include claims asserted by any federal, state or local governmental agency or

any private party and shall continue in effect following any release and

reconveyance of this Deed of Trust or foreclosure or other realization upon the

security by Beneficiary or its successors and assigns, or any conveyance in

lieu of such foreclosure or other realization.

ARTICLE 5

SALE OR TRANSFER OF THE PREMISES

5.1           Continuous

Ownership:  Due on Sale Clause.

5.1.1        Trustor

acknowledges that the continuous ownership of the Premises by Trustor is a

material inducement to Beneficiary’s agreement to enter into the transactions

hereinabove described and Beneficiary’s agreement in connection with the

Obligations.  Trustor agrees that,

except as otherwise provided herein or in the other Loan Documents, Trustor

will not, whether voluntarily or involuntarily, (w) sell, grant, convey,

assign, further encumber, otherwise transfer by operation of law or otherwise

(collectively, “Transfer”),

(x) permit to be the subject of a Transfer, (y) enter into an agreement

to Transfer, or (z) grant an option which or take any action which

pursuant to the terms of any agreement to which Trustor is a party may result

in a Transfer of, the Land or the Improvements, or any legal, beneficial or

equitable interest therein.

Any person or legal representative of Trustor to whom

Trustor’s interest in the Premises passes by operation of law, or otherwise,

shall be bound by the provisions of this Deed of Trust.

5.1.2        The

provisions of this Section shall apply to each and every such Transfer of all

or any portion of the Premises or any legal or equitable interest therein,

regardless of whether or not Beneficiary has consented to, or waived by its

action or inaction its rights hereunder with respect to any previous Transfer

of all or any portion of the Premises or any legal or equitable interest

therein.

5.1.3        In

the event that Trustor shall Transfer the Premises or any legal, beneficial or

equitable interest therein, or cause or permit to occur any of the other

transactions described in Section 5.1.1, without Beneficiary’s

prior written consent, Beneficiary may elect to declare the Obligations,

together with any other sums secured hereby, immediately due and payable.  Beneficiary may withhold its consent to any

proposed Transfer for any reason, including the failure of the prospective

transferee of the Premises to reach an agreement in writing with Beneficiary

increasing the interest payable on the Obligations to such rate as Beneficiary

shall request.

ARTICLE

6

DEFAULTS AND REMEDIES

6.1           Events

of Default.  The term “Event of Default”, as used in this Deed of

Trust, shall mean the occurrence of any of the following events (after any

applicable notice to Trustor and the expiration of any applicable period of

grace specifically set forth herein or in any written agreement between Trustor

and Beneficiary):

6.1.1        Trustor

shall fail to make any payment (whether of principal, interest, expenses, fees

or otherwise) required to be made to Beneficiary under the Note, this Deed of

Trust, or any of the other Loan Documents when due, whether by acceleration or

otherwise; or

6.1.2        Any

representation, warranty or statement made by Trustor (or any of its

representatives) in this Deed of Trust or in any other Loan Document or in any

certificate or other document delivered under any of the Loan Documents or in

any application or commitment for the loan evidenced by the Note shall have

been incorrect in any material respect when made; or

6.1.3        Any

one or more of the following occurs with respect to Trustor, any guarantor of

the Obligations or any other person liable for any of the Obligations:

(a)           A

general assignment by any such person for the benefit of creditors; or

(b)           The

filing of a voluntary petition in bankruptcy, insolvency, reorganization, or

liquidation, or any other petition under any section or chapter of the

Bankruptcy Code or any similar law, whether state, federal, or otherwise, for

the relief of debtors; or

(c)           The

filing of any involuntary petition or any other petition against any such

person under any section or chapter of the Bankruptcy Code, or any similar law,

whether state, federal, or otherwise, relating to insolvency, reorganization,

or liquidation, or for the relief of debtors, by the creditors of such person,

said petition remaining undischarged for a period of ninety (90) days; or

(d)           The

appointment by any court of a receiver or similar official to take possession

of the Premises (or any portion thereof) or any property or any asset or assets

of any such person, said receivership remaining undischarged for a period of

ninety (90) days; or

(e)           The

application by any such person or the consent or acquiescence by any such

person to an application for the appointment of a custodian, receiver,

conservator, trustee, or similar official for such person or for a substantial

part of the property or business of any of them; or

(f)            Attachment,

execution or judicial seizure (whether by enforcement of money judgment, by

writ or warrant of attachment, or by any other process) of the Premises or of all

or any part of the assets of any such person, such attachment, execution or

other seizure remaining undismissed or undischarged for a period of ninety (90)

days after the levy thereof, or, in any event, later than five (5) days prior

to the date of any proposed sale thereunder; or

(g)           The

admission in writing by any such person of its inability to pay its debts or

perform its obligations as they become due; or

(h)           The

calling of a meeting of the creditors representing a significant portion of the

liabilities of any such person, for the purpose of effecting a moratorium,

extension or composition of debt or any of the foregoing; or

6.1.4        Trustor

shall fail to pay any indebtedness in excess of $50,000.00 (other than the

Obligations) or interest thereon when due (whether by scheduled maturity,

required prepayment, acceleration, demand or otherwise)and such failure shall

continue after the applicable grace period, if any specified in the agreement

or instrument relating to such indebtedness that results in acceleration of

such indebtedness; or any other event of default shall occur under any

agreement, instrument or other document relating to any such indebtedness if

the effect of such default is to be accelerated, or permit the acceleration of,

the maturity of such indebtedness provided however that the waiver or cure of

such event of default under such other agreement shall and be deemed to cure

any Event of Default resulting therefrom; or

6.1.5        Any

judgment or order for the payment of money in excess of $50,000.00 shall be

rendered against Trustor and either (i) enforcement, collection, execution

or levy proceedings shall have been commenced on such judgment, or

(ii) there shall be any period of thirty (30) consecutive days during

which a stay of enforcement of such judgment or order, by reason of supersedes,

bond or otherwise, shall not be in effect; or

6.1.6        Any

of the Loan Documents shall, as a result of any action taken by Trustor, cease

to create a valid and perfected first priority lien upon any of the security

purported to be covered thereby; or

6.1.7        The

occurrence of a default in the performance or observation of any other

provisions of this Deed of Trust or of any of the other Loan Documents; or

6.1.8        Trustor

abandons the Premises or ceases to do business or terminates its business for

any reason whatsoever; or

6.1.9        Trustor

shall fail at any time to obtain, provide, maintain, keep in force or deliver

to Trustee or Beneficiary the insurance policies required by Section 2.3

hereof and such failure shall continue for five (5) days after written

notice; or

6.1.10      Any

claim of priority as to this Deed of Trust or any other document or instrument

securing the Obligations by title, lien or otherwise shall be upheld by any

court of competent jurisdiction or shall be consented to by Trustor, unless

Beneficiary shall have received full payment for the entire loss resulting from

such claim; or

6.1.11      The

filing of formal charges against Trustor under any federal or state law for the

violation of which law the forfeiture of any property of Trustor is a potential

penalty.

6.2           Remedies.  Upon the occurrence and during the

continuance of any one or more Events of Default, Trustee and/or Beneficiary

may (but shall not be obligated), in addition to any rights or remedies

available to them hereunder or under the other Loan Documents, take such action

personally or by their agents or attorneys, with or without entry, and without

notice, demand, presentment or protest (each and all of which are hereby waived

to the extent permitted by law) as they deem necessary or advisable to protect

and enforce Beneficiary’s rights and remedies against Trustor and in and to the

Mortgaged Property, including the following actions, each of which may be

pursued concurrently or otherwise, at such time and in such order as Trustee

and/or Beneficiary may determine, in their sole discretion, without impairing

or otherwise affecting its or their other rights or remedies:

(a)           Beneficiary may declare the

Obligations, including the then unpaid principal balance on the Note, the

accrued but unpaid interest thereon, court costs and attorney's fees hereunder

immediately due and payable, without notice, presentment, protest, demand or

action of any nature whatsoever (each of which hereby is expressly waived by

Trustor), whereupon the same shall become immediately due and payable.  Additionally, Beneficiary shall not be

required to make any further advances on the Note or other Loan Documents upon

the occurrence of an Event of Default or an event which, with the giving of

notice or passing of time, would constitute an Event of Default.

 

(b)           Beneficiary may enter upon the

Mortgaged Property and take exclusive possession thereof and of all books,

records and accounts relating thereto without notice and without being guilty

of trespass, and hold, lease, manage, operate or otherwise use or permit the

use of the Mortgaged Property, either itself or by other persons, firms or

entities, in such manner, for such time and upon such other terms as

Beneficiary may deem to be prudent and reasonable under the circumstances

(making such repairs, alterations, additions and improvements thereto and

taking any and all other action with reference thereto, from time to time, as

Beneficiary shall deem necessary or desirable), and apply all rents and other

amounts collected by Beneficiary in connection therewith in accordance with the

provisions of subsection (h) of this Section 6.2.  Trustor hereby irrevocably appoints

Beneficiary as the agent and attorney–in–fact of Trustor, with full

power of substitution, and in the name of Trustor, if Beneficiary elects to do

so, to (i) endorse the name of Trustor on any checks or drafts representing

proceeds of the insurance policies, or other checks or instruments payable to

Trustor with respect to the Mortgaged Property, (ii) prosecute or defend any

action or proceeding incident to the Mortgaged Property, and (iii) take any

action with respect to the Mortgaged Property that Beneficiary may at any time

and from time to time deem necessary or appropriate.  Beneficiary shall have no 

obligation to undertake any of the foregoing actions, and if Beneficiary

should do so, it shall have no liability to Trustor for the sufficiency or

adequacy of any such actions taken by Beneficiary.

 

(c)           (i)            Beneficiary

may, by and through Trustee, or otherwise, sell or offer for sale the Mortgaged

Property in such portions, order and parcels as Beneficiary may determine, with

or without having first taken possession of same, to the highest bidder for

cash at public auction in accordance with the requirements of Section 51.002 of

the Texas Property Code.  In instances

where the Mortgaged Property is located in the State of Texas, such sale shall

be made at the courthouse of the county in which the Mortgaged Property (or any

of that portion thereof to be sold) is located, whether the parts or parcels

thereof, if any, in different counties are contiguous or not (and without the

necessity of having any personal property present at such sale) in the area

designated by the county commissioners for foreclosure sales (or, if no area

has been designated, at the location at the courthouse designated by

Beneficiary by or through Trustee in the written notice hereinafter described)

on the first Tuesday of a month between the hours of 10:00 a.m. and 4:00 p.m.

after advertising the time, place and terms of sale and that portion of the

Mortgaged Property to be sold by posting or causing to be posted written or

printed notice thereof at least twenty-one (21) days before the date of the sale

both at the courthouse door of each county in which the Mortgaged Property is

located and with the county clerk of each county in which the Mortgaged

Property is located, which notice shall be posted at the courthouse door and

filed with the county clerk by the Trustee, or by any person acting for

him.  The written notice shall include

the earliest time at which the sale will be held.  Beneficiary shall serve, or shall cause to be served at least

twenty-one (21) days before the date of sale, written or printed notice of the

proposed sale by certified mail on each debtor obligated to pay the

Indebtedness according to the records of Beneficiary by the deposit of such

notice in the United States mail, postage prepaid and addressed to each debtor

at such debtor's last known address as shown by the records of

Beneficiary.  The affidavit of a person

knowledgeable of the facts to the effect that service was completed is prima

facie evidence of service.

 

(ii)           Beneficiary, may, at its option,

accomplish all or any of the aforesaid in such manner as permitted or required

by Section 51.002 of the Texas Property Code relating to the sale of real

property or by Chapter 9 of the Texas Business and Commerce Code relating to

the sale of personalty after default by a debtor  (as said section and chapter now exist or may be hereinafter

amended or succeeded), or by any other present or subsequent articles or

enactments relating to same.  At any such

sale:

 

A.            whether made under the power herein

contained, the aforesaid Section 51.002, the Texas Business and Commerce Code,

any other legal requirement or by virtue of any judicial proceedings or any

other legal right, remedy or recourse, it shall not be necessary for

Trustee  to have been physically

present, or to have constructive possession of, the Mortgaged Property (Trustor

shall deliver to Trustee any portion of the Mortgaged Property not actually or

constructively possessed by Trustee immediately upon demand by Trustee), and

the title to and right of possession of any such property shall pass to the

purchaser thereof as completely as if the same had been actually present and

delivered to purchaser at such sale;

 

B.            each instrument of conveyance executed by Trustee shall

contain a general warranty of title, binding upon Trustor;

C.            each and every recital contained in

any instrument of conveyance made by Trustee shall conclusively establish the

truth and accuracy of the matters recited therein, including, without

limitation, nonpayment of the Obligations, advertisement and conduct of such

sale in the manner provided herein and otherwise by law and appointment of any

successor Trustee hereunder;

 

D.            any and all prerequisites to the

validity thereof shall be conclusively presumed to have been performed;

 

E.             the receipt by Trustee or of such

other party or officer making the sale of the full amount of the purchase money

shall be sufficient to discharge the purchaser or purchasers from any further

obligation for the payment thereof, and no such purchaser or purchasers, or his

or their assigns or personal representatives, shall thereafter be obligated to

see to the application of such purchase money or be in any way answerable for

any loss, misapplication or nonapplication thereof;

 

F.             to the fullest extent permitted by

law, Trustor shall be completely and irrevocably divested of all of its right,

title, interest, claim and demand whatsoever, either  at law or in equity, in and to the property sold, and such sale

shall be a perpetual bar, both at law and in equity, against Trustor and against

all other persons claiming or to claim the property sold or any part thereof

by, through or under Trustor; and

 

G.            to the extent and under such circumstances as are

permitted by law, Beneficiary may be a purchaser at any such sale. After sale

of the Mortgaged Property, or any portion thereof, Trustor will be divested of

any and all interest and claim thereto, including any interest or claim to all

insurance policies, bonds, loan commitments and other intangible property

covered hereby.  Additionally, Trustor

will be considered a tenant at sufferance of the purchaser of the Mortgaged

Property, and said purchaser shall be entitled to immediate possession thereof,

and if Trustor shall fail to vacate the Mortgaged Property immediately, the

purchaser may and shall have the right, without further notice to Trustor, to

go into any justice court in any precinct or county in which the Mortgaged

Property is located and file an action in forcible entry and detainer, which

action shall lie against Trustor or its assigns or legal representatives, as a

tenant at sufferance. This remedy is cumulative of any and all remedies the

purchaser may have hereunder or otherwise.

 

(d)           Upon, or at any time after,

commencement of foreclosure of the lien and security interest provided for

herein or any legal proceedings hereunder, Beneficiary may make application to

a court of competent jurisdiction, as a matter of strict right and without

notice to Trustor or regard to the adequacy of the Mortgaged Property for the

repayment of the Obligations, for appointment of a receiver of the Mortgaged

Property, and Trustor does hereby irrevocably consent to such appointment.  Any such receiver shall have all the usual

powers and duties of receivers in similar cases, including the full power to

rent, maintain and otherwise operate the Mortgaged Property upon such terms as

may be approved by the court, and shall apply such Rents in accordance with the

provisions of subsection (h) of this Section 6.2.

 

(ii)           Beneficiary may exercise any and all

other rights, remedies and recourses granted under the Loan Documents or now or

hereafter existing in equity, at law, by virtue of statute or otherwise.

 

                                (e)           Trustee and Beneficiary shall have

all rights, remedies and recourses granted in the Loan Documents and available

at law or equity (including specifically those granted by the Texas Business

and Commerce Code in effect and applicable to the Property or any portion

thereof) and the same (i) shall be cumulative and concurrent; (ii) may be

pursued separately, successively or concurrently against Trustor, any guarantor

of the Obligations or others obligated under the Note, or against the Mortgaged

Property, or against any one or more of them at the sole discretion of

Beneficiary; (iii) may be exercised as often as occasion therefor shall arise,

it being agreed by Trustor that the exercise or failure to exercise any of the

same shall in no event be construed as a waiver or release thereof or of any

other right, remedy or recourse; and (iv) are intended to be, and shall be,

nonexclusive.

 

                                (f)            To the fullest extent permitted by

law, Trustor hereby irrevocably and unconditionally waives and releases (i) all

benefits that might accrue to Trustor by any present or future laws exempting

the Property from attachment, levy or sale on execution or providing for any

appraisement, valuation, stay of execution, exemption from civil process,

redemption or extension of time for payment; (ii) all notices of any Event of

Default (except as may be specifically provided for under the terms hereof),

presentment, demand, notice of intent to accelerate, notice of acceleration and

any other notice of Beneficiary's or Trustee's election to exercise or the

actual exercise of any right, remedy or recourse provided for under the Loan

Documents; (iii) any right to appraisal or marshalling of assets or a sale in

inverse order of alienation; (iv) the exemption of homestead; and (v) the

administration of estates of decedents, or other matter to defeat, reduce or

affect the right of Beneficiary under the terms of this Instrument to sell the

Mortgaged Property for the collection of the Obligations secured hereby

(without any prior or different resort for collection) or the right of

Beneficiary, under the terms of this Instrument, to receive the payment of the

Indebtedness out of the proceeds of sale of the Property in preference to every

other person and claimant whatever (only reasonable expenses of such sale being

first deducted).  Trustor expressly waives

and relinquishes any right or remedy which it may have or be able to assert by

reason of the provisions of Chapter 34 of the Texas Business and Commerce Code

pertaining to the rights and remedies of sureties.

 

                                (g)           Trustor, any guarantor of the

Obligations, and any other party liable on the Obligations shall be liable for

any deficiency remaining in the Obligations subsequent to any sale referenced

in this Section 6.2.

 

                                (h)           Beneficiary shall have the right to

become the purchaser at any sale of the Property hereunder and shall have the right

to be credited on the amount of its bid therefor all of the Obligations due and

owing as of the date of such sale.

 

6.3           Expenses.  If any action is commenced to foreclose this

Deed of Trust, or to enforce any other remedy of Trustee and/or Beneficiary

under any of the Loan Documents, or to otherwise protect Beneficiary’s

interests in the Premises, whether such action is judicial or pursuant to the

power of sale contained herein or otherwise, there shall be added to the

Obligations secured by this Deed of Trust all costs and expenses, including

attorneys’ fees, appraisal fees and environmental audit or assessment fees,

plus interest thereon at the Default Rate (as defined in the Note) from

expenditure until paid, in the commencement and prosecution of such action,

whether or not such action results in a foreclosure sale, foreclosure or other

judicial decree or judgment.

6.4           Rights

Pertaining to Sales.  Subject to the

provisions or other requirements of law, the following provisions shall apply

to any sale or sales of the Mortgaged Property under or by virtue of this Article 6,

whether made under the power of sale herein granted or by virtue of judicial

proceedings or of a judgment or decree of foreclosure and sale:

6.4.1        Trustee,

at the request of Beneficiary, may conduct any number of sales from time to

time.  The power of sale set forth in Section 6.2.4

hereof shall not be exhausted by any one or more such sales as to any part of

the Mortgaged Property which shall not have been sold, nor by any sale which is

not completed or is defective in Trustee’s or Beneficiary’s opinion, until the

Obligations shall have been paid in full.

6.4.2        Any

sale may be postponed or adjourned by public announcement at the time and place

appointed for such sale or for such postponed or adjourned sale without further

notice.

6.4.3        After

each sale, Trustee, or an officer of any court empowered to do so, shall

execute and deliver to the purchaser or purchasers at such sale a good and

sufficient instrument or instruments granting, conveying, assigning and

transferring all right, title and interest of Trustor in and to the property

and rights sold and shall receive the proceeds of said sale or sales and apply

the same as herein provided.  Trustee is

hereby appointed the true and lawful attorney-in-fact of Trustor, which

appointment is irrevocable and shall be deemed to be coupled with an interest,

in Trustor’s name and stead, to make all necessary conveyances, assignments,

transfers and deliveries of the property and rights so sold, and for that

purpose Trustee may execute all necessary instruments of conveyance,

assignment, transfer and delivery, and may substitute one or more persons with

like power, Trustor hereby ratifying and confirming all that said attorney or

such substitute or substitutes shall lawfully do by virtue thereof.  Nevertheless, Trustor, if requested by

Trustee or Beneficiary, shall ratify and confirm any such sale or sales by

executing and delivering to Trustee or such purchaser or purchasers all such

instruments as may be advisable, in Trustee’s or Beneficiary’s judgment, for

the purposes as may be designated in such request.

6.4.4        Any

and all statements of fact or other recitals made in any of the instruments

referred to in Section 6.4.3 given by Trustee and/or Beneficiary as

to nonpayment of the Obligations, or as to the occurrence of any Event of

Default, or as to Beneficiary having declared all or any of the Obligations to

be due and payable, or as to the request to sell, or as to notice of time,

place and terms of sale and of the property or rights to be sold having been

duly given, or as to the refusal, failure or inability to act of 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 Trustor, Beneficiary, or by such Trustee,

shall be taken as conclusive and binding against all persons as to evidence of

the truth of the facts so stated and recited. 

Trustee and/or Beneficiary may appoint or delegate any one or more

persons as agent to perform any act or acts necessary or incident to any sale

so held, including the posting of notices and the conduct of sale, but in the

name and behalf of Trustee or Beneficiary, as applicable.

6.4.5        The

receipt of Trustee for the purchase money paid at any such sale, or the receipt

of any other person authorized to receive the same, shall be sufficient

discharge therefor to any purchaser of any property or rights sold as

aforesaid, and no such purchaser, or its representatives, grantees or assigns,

after paying such purchase price and receiving such receipt, shall be bound to

see to the application of such purchase price of any part thereof upon or for

any trust or purpose of this Deed of Trust or, in any manner whatsoever, be

answerable for any loss, misapplication or non-application of any such purchase

money, or part thereof, or be bound to inquire as to the authorization,

necessity, expediency or regularity of any such sale.

6.4.6        Any

such sale or sales shall operate to divest all of the estate, right, title,

interest, claim and demand whatsoever, whether at law or in equity, of Trustor

in and to the properties and rights so sold, and shall be a perpetual bar both

at law and in equity against Trustor and any and all persons claiming or who

may claim the same, or any part thereof or any interest therein, by, through or

under Trustor to the fullest extent permitted by applicable law.

6.4.7        Upon

any such sale or sales, Beneficiary may bid for and acquire the Mortgaged

Property and, in lieu of paying cash therefor, may make settlement for the

purchase price by crediting against the Obligations the amount of the bid made

therefor, after deducting therefrom the expenses of the sale, the cost of any

enforcement proceeding hereunder and any other sums which Trustee or

Beneficiary is authorized to deduct under the terms hereof, to the extent

necessary to satisfy such bid.

6.4.8        In

the event that Trustor, or any person claiming by, through or under Trustor,

shall transfer or refuse or fail to surrender possession of the Mortgaged

Property after any sale thereof, then Trustor, or such person shall be deemed a

tenant at sufferance of the purchaser at such sale, subject to eviction by

means of forcible entry and detainer proceedings, or subject to any other right

or remedy available hereunder or under applicable law.

6.4.9        Upon

any such sale, it shall not be necessary for Trustee, Beneficiary or any public

officer acting under execution or order of court to have present or

constructively in its possession any of the Mortgaged Property.

6.4.10      In

the event of any sale referred to in this Section, the entire Obligations, if

not previously due and payable, immediately thereupon shall, notwithstanding

anything to the contrary herein or in the other Loan Documents, become due and

payable.

6.4.11      In

the event a foreclosure hereunder shall be commenced by Trustee at the request

of Beneficiary, Trustee or Beneficiary may at any time before the sale of the

Mortgaged Property abandon the sale, and may institute suit for the collection

of the Obligations and for the foreclosure of this Deed of Trust, or in the

event that Trustee or Beneficiary should institute a suit for collection of the

Obligations, and for the foreclosure of this Deed of Trust, Beneficiary may at

any time before the entry of final judgment in said suit dismiss the same and

sell or require Trustee to sell the Mortgaged Property in accordance with the

provisions of this Deed of Trust.

6.5           Application

of Proceeds.  The purchase money,

proceeds or avails of any sale referred to in Section 6.4, together

with any other sums which may be held by Trustee or Beneficiary hereunder,

whether under the provisions of this Article 6 or otherwise, shall,

except as herein expressly provided to the contrary, be applied as follows:

First:  To the payment of the costs and expenses of

any such sale, including compensation to Trustee and/or Beneficiary, their

agents and counsel, and of any judicial proceeding wherein the same may be

made, and of all expenses, liabilities and advances made or incurred by Trustee

and/or Beneficiary hereunder, together with interest thereon as provided

herein, and all taxes, assessments and other charges, except any taxes,

assessments or other charges subject to which the Mortgaged Property shall have

been sold.

Second:  To the payment in full of the Obligations

(including principal, interest, premium and fees) in such order as Beneficiary

may elect.

Third:  To the payment of any other sums secured

hereunder or required to be paid by Trustor pursuant to any provision of the

Loan Documents.

Fourth:  To the payment of the surplus, if any, to

whomsoever may be lawfully entitled to receive the same.

6.6           Additional

Provisions as to Remedies.

6.6.1        No

right or remedy herein conferred upon or reserved to Trustee or Beneficiary is

intended to be exclusive of any other right or remedy, and each and every such

right or remedy shall be cumulative and continuing, shall be in addition to

every other right or remedy given hereunder, or under the other Loan Documents

or now or hereafter existing at law or in equity, and may be exercised from

time to time and as often as may be deemed expedient by Trustee or Beneficiary.

6.6.2        No

delay or omission by Trustee or Beneficiary to exercise any right or remedy

hereunder upon any default or Event of Default shall impair such exercise, or

be construed to be a waiver of any such default or Event of Default or an

acquiescence therein.

6.6.3        The

failure, refusal or waiver by Trustee or Beneficiary of its right to assert any

right or remedy hereunder upon any default or Event of Default or other

occurrence shall not be construed as waiving such right or remedy upon any

other or subsequent default or Event of Default or other occurrence.

6.6.4        Neither

Trustee nor Beneficiary shall have any obligation to pursue any rights or

remedies they may have under any other agreement prior to pursuing their rights

or remedies hereunder or under the other Loan Documents.

6.6.5        No

recovery of any judgment by Trustee or Beneficiary and no levy of an execution upon

the Mortgaged Property or any other property of Trustor shall affect, in any

manner or to any extent, the lien of this Deed of Trust upon the Mortgaged

Property, or any liens, rights, powers or remedies of Trustee or Beneficiary

hereunder, and such liens, rights, powers and remedies shall continue

unimpaired as before.

6.6.6        Beneficiary

may resort or cause Trustee to resort to any security given by this Deed of

Trust or any other security now given or hereafter existing to secure the

Obligations, in whole or in part, in such portions and in such order as

Beneficiary may deem advisable, and no such action shall be construed as a

waiver of any of the liens, rights or benefits granted hereunder.

6.6.7        Acceptance

of any payment after the occurrence of any default or Event of Default shall

not be deemed a waiver or a cure of such default or Event of Default, and

acceptance of any payment less than any amount then due shall be deemed an

acceptance on account only.

6.6.8        In

the event that Trustee or Beneficiary shall have proceeded to enforce any right

or remedy hereunder by foreclosure, sale, entry or otherwise, and such

proceeding shall be discontinued, abandoned or determined adversely for any

reason, then Trustor, Trustee and Beneficiary shall be restored to their former

positions and rights hereunder with respect to the Mortgaged Property, subject

to the lien hereof.

6.6.9        In

every instance when a receiver is appointed with respect to all or any portion

of the Mortgaged Property pursuant to Section 6.2.10 above or

otherwise, at Beneficiary’s discretion, the receiver shall be authorized, among

other such duties and powers as may be ordered or granted by the court, to take

possession of the Mortgaged Property; to manage, control and protect the

Mortgaged Property; to collect the rents, issues, profits, revenues, earnings

and income arising therefrom, and to apply the same toward the payment of

expenses, including management and operating expenses, taxes, assessments,

utilities, mortgage payments and insurance premiums of or in connection with

the Mortgaged Property; to maintain the Mortgaged Property in a reasonable

state of repair so that there will be no excessive depreciation or devaluation

thereof arising from lack of prudent management; to enter into such lease

agreements or rental agreements with new tenants for the Mortgaged Property as

such receiver deems reasonable and prudent; to amend, extend or renew existing

Leases upon such terms as such receiver deems reasonable and prudent; to, if

necessary, retain a property management firm to assist in such duties upon such

terms as such receiver deems reasonable and appropriate; to perform appraisals

and/or environmental audits of the Mortgaged Property; and to take such other

action as is necessary in order to provide services to the tenants under any

existing or future Leases or as is necessary to accomplish any of the

foregoing.

6.7           Deleted

Intentionally. 

6.8           Waiver

of Rights and Defenses.  To the full

extent Trustor may do so, Trustor agrees with Beneficiary as follows:

6.8.1        Trustor

will not at any time, insist on, plead, claim or take the benefit or advantage

of any statute or rule of law now or hereafter in force providing for any

appraisement, valuation, stay, extension, moratorium or redemption, or of any

statute of limitations, and Trustor, for itself and its heirs, devisees,

representatives, successors and assigns, and for any and all persons ever

claiming an interest in the Mortgaged Property (other than Beneficiary) hereby,

to the extent permitted by applicable law, waives and releases all rights of

redemption, valuation, appraisement, notice of intention to mature or declare

due the whole of the Obligations, and all rights to a marshaling of the assets

of Trustor, including the Mortgaged Property, or to a sale in inverse order of

alienation, in the event of foreclosure of the liens and security interests

created hereunder.

6.8.2        Trustor

shall not have or assert any right under any statute or rule of law pertaining

to any of the matters set forth in Section 6.8.1, to the

administration of estates of decedents or to any other matters whatsoever to

defeat, reduce or affect any of the rights or remedies of Trustee and

Beneficiary hereunder, including the rights of Trustee and/or Beneficiary

hereunder to a sale of the Mortgaged Property for the collection of the

Obligations without any prior or different resort for collection, or to the

payment of the Obligations out of the proceeds of sale of the Mortgaged

Property in preference to any other person.

6.8.3        If

any statute or rule of law referred to in this Section and now in force, of

which Trustor or any of its representatives, successors or assigns and such

other persons claiming any interest in the Mortgaged Property might take

advantage despite this Section, shall hereafter be repealed of cease to be in

force, such statute or rule of law shall not thereafter be deemed to preclude

the application of this Section.

6.8.4        Trustor

shall not be relieved of its obligation to pay the Obligations at the time and

in the manner provided herein and in the other Loan Documents, nor shall the

lien or priority of this Deed of Trust or any other Loan Documents be impaired

by any of the following actions, non-actions or indulgences by Trustee or

Beneficiary:

(a)           any

failure or refusal by Trustee or Beneficiary to comply with any request by

Trustor (X) to consent to any action by Trustor or (Y) to take any

action to foreclose this Deed of Trust or otherwise enforce any of the

provisions hereof or of the other Loan Documents;

(b)           any

release, regardless of consideration, of the whole or any part of the Mortgaged

Property or any other security for the Obligations, or any person liable for

payment of the Obligations;

(c)           any

waiver by Beneficiary of compliance by Trustor with any provision of this Deed

of Trust or the other Loan Documents, or consent by Beneficiary to the

performance by Trustor of any action which would otherwise be prohibited

thereunder, or to the failure by Trustor to take any action which would

otherwise be required hereunder or thereunder; and

(d)           any

agreement or stipulation between Trustee or Beneficiary and Trustor, or, with

or without Trustor’s consent, between Trustee or Beneficiary and any subsequent

owner or owners of the Mortgaged Property or any other security for these

Obligations, renewing, extending or modifying the time of payment or the terms

of this Deed of Trust or any of the other Loan Documents (including a

modification of any interest rate), and in any such event Trustor shall

continue to be obligated to pay the Obligations at the time and in the manner

provided herein and in the other Loan Documents, as so renewed, extended or

modified, unless expressly released and discharged by Beneficiary.

6.8.5        Regardless

of consideration, and without the necessity for any notice to or consent by the

holder of any subordinate lien, encumbrance, right, title or interest in or to

the Mortgaged Property, Beneficiary may release any person at any time liable

for the payment of the Obligations or any portion thereof or any part of the

security held for the Obligations and with the prior written consent and

agreement of Trustor may extend the time of payment or otherwise modify the

terms of this Deed of Trust or of any of the Loan Documents, including a

modification of the interest rate payable on the principal balance of the Note,

without in any manner impairing or affecting this Deed of Trust, as so extended

and modified, as security for the Obligations over any such subordinate lien,

encumbrance, right, title or interest. 

Beneficiary may resort for the payment of the Obligations to any other

security held by Beneficiary (or any trustee for the benefit of Beneficiary) in

such order and manner as Beneficiary in its discretion, may elect.  Beneficiary may take or cause to be taken

action to recover the Obligations, or any portion thereof, or to enforce any

provision hereof or of the other Loan Documents without prejudice to the right

of Beneficiary thereafter to foreclose or cause to be foreclosed this Deed of

Trust.  Beneficiary shall not be limited

exclusively to the right and remedies herein stated but shall be entitled to

every additional right and remedy now or hereafter afforded by law or equity.  The rights of Trustee and Beneficiary under

this Deed of Trust shall be separate, distinct and cumulative and none shall be

given effect to the exclusion of the others. 

No act of Trustee and/or Beneficiary shall be construed as an election

to proceed under any one provision herein to the exclusion of any other

provision.

6.9           Exercise

by Trustee.  Notwithstanding

anything herein to the contrary, Trustee (a) shall not exercise, or waive

the exercise of, any of its rights or remedies under this Article (other than

its right to reimbursement) except upon the request of Beneficiary, and

(b) shall exercise, or waive the exercise of, any or all of such rights or

remedies upon the request of Beneficiary and at the direction of Beneficiary as

to the manner of such exercise or waiver, provided that Trustee shall have the

right to decline to follow any of such request or direction if Trustee shall be

advised by counsel that the action or proceeding, or manner thereof, so

directed may not lawfully be taken or waived.

ARTICLE

7

DEFEASANCE

7.1           Defeasance.  If all of the Obligations shall be paid as

the same become due and payable, then and in that event only all rights

hereunder (except for the rights and obligations set forth in Section 4.3

hereof) shall terminate and the Mortgaged Property shall become wholly released

and cleared of the liens, security interests, conveyances and assignments

evidenced hereby, upon receipt by Beneficiary of payment of all Obligations

secured hereby.  In such event Trustee

shall at the request of the Trustor, promptly deliver to Trustor, in recordable

form, all such documents as shall be necessary to release the Mortgaged

Property from the liens, security interests, conveyances and assignments

created or evidenced hereby. 

Notwithstanding anything in the preceding sentence to the contrary,

Trustee shall so release the Mortgaged Property only upon the direction of

Beneficiary.

ARTICLE

8

ADDITIONAL PROVISIONS

8.1           Provisions

as to Payments, Advances.

8.1.1        To

the extent that any part of the Obligations is used to pay indebtedness secured

by any outstanding lien, security interest, charge or encumbrance against the

Mortgaged Property that is superior to this Deed of Trust, or to pay in whole

or in part the purchase price therefor, Trustee and Beneficiary shall be

subrogated to any and all rights, security interests and liens held by any

owner or holder of the same, whether or not the same are released.  Trustor agrees that, in consideration of

such payment by Trustee or Beneficiary, effective upon such payment Trustor shall

and hereby does waive and release all demands, defenses and causes of action

for offsets and payments with respect to the same.

8.1.2        Any

payment made under this Deed of Trust by any person at any time liable for the

payment of the Obligations, or by any subsequent owner of the Mortgaged Property

or by any person or entity that might be prejudiced in the event of a failure

to make such payment, or by any partner, stockholder, officer or director

thereof, shall be deemed, as between Trustee or Beneficiary and all such

persons, to have been made on behalf of all such persons.

8.2           Usury

Savings Clause.  All agreements in

this Deed of Trust and in the other Loan Documents are expressly limited so

that in no contingency or event whatsoever, whether by reason of advancement or

acceleration of maturity of the Obligations, or otherwise, shall the amount

paid or agreed to be paid hereunder for the use, forbearance or detention of

money exceed the highest lawful rate permitted under applicable usury laws, if

any.  If, from any circumstance

whatsoever, fulfillment of any provision of the Loan Documents, at the time

performance of such provision shall be due, shall involve transcending the

limit of validity prescribed by law which a court of competent jurisdiction may

deem applicable hereto, then, ipso facto, the obligation to be

fulfilled shall be reduced to the limit of such validity and if, from any

circumstance whatsoever, Beneficiary shall ever receive as interest an amount

which would exceed the highest lawful rate, the receipt of such excess shall be

deemed a mistake and shall be canceled automatically or, if theretofore paid,

such excess shall be credited against the principal amount of the Obligations

to which the same may lawfully be credited, and any portion of such excess not

capable of being so credited shall be rebated to Trustor.

8.3           Separability.  If all or any portion of any provision of

this Deed of Trust or the other Loan Documents shall be held to be invalid,

illegal or unenforceable in any respect, then such invalidity, illegality or

unenforceability shall not affect any other provision hereof or thereof, and

such provision shall be limited and construed in such jurisdiction as if such

invalid, illegal or unenforceable provision or portion thereof were not

contained herein or therein.

8.4           Notices.  Any notice, demand, consent, approval,

direction, agreement or other communication (any “Notice”) required or permitted hereunder or under the other

Loan Documents shall be in writing and shall be validly given and effectively

served if mailed by United States mail, first class or certified mail, return

receipt requested, postage prepaid, addressed as set forth above to the person

entitled to receive the same.

Any Notice shall be

deemed to have been validly given and effectively served hereunder two (2) days

after so mailed.  Any person shall have

the right to specify, from time to time, as its address or addresses for

purposes of this Deed of Trust, any other address or addresses upon giving

three (3) days’ notice thereof to each other person then entitled to

receive notices or other instruments hereunder.

8.5           Right

to Deal.  In the event that

ownership of the Mortgaged Property becomes vested in a person other than

Trustor, Trustee and Beneficiary may, without notice to Trustor, deal with such

successor or successors in interest with reference to this Deed of Trust or the

Obligations in the same manner as with Trustor, without in any way vitiating or

discharging Trustor’s liability hereunder or for the payment of the Obligations

or being deemed a consent to such vesting.

8.6           No

Merger.

8.6.1        If

both the lessor’s and the lessee’s interest under any Lease shall at any time

become vested in any one person, this Deed of Trust and the lien and security

interest created hereby shall not be destroyed or terminated by the application

of the doctrine of merger and, in such event, Trustee and Beneficiary shall

continue to have and enjoy all of the rights and privileges of Trustee and

Beneficiary hereunder as to each separate estate.

8.6.2        Upon

the foreclosure of the lien created hereby on the Mortgaged Property, as herein

provided, any Leases then existing shall not be destroyed or terminated by

application of the doctrine of merger or as a matter of law or as a result of

such foreclosure unless Beneficiary or any purchaser at a foreclosure sale

shall so elect by notice to the lessee in question.

8.7           Applicable

Law.  THIS DEED OF TRUST SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE

WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ITS LAWS

RELATING TO CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE

OF TEXAS MANDATORILY GOVERN THE MANNER OR PROCEDURE FOR THE CREATION,

PERFECTION AND ENFORCEMENT OF THE LIEN CREATED BY THIS DEED OF TRUST PROVIDED

THAT ANY REMEDIES HEREIN PROVIDED WHICH DEED OF TRUST SHALL BE VALID UNDER THE

LAWS OF THE STATE OF TEXAS WHERE PROCEEDINGS FOR THE ENFORCEMENT HEREOF SHALL

BE TAKEN SHALL NOT BE AFFECTED BY ANY INVALIDITY UNDER THE LAWS OF THE STATE OF

CALIFORNIA.

 

8.8           Appointment

of Trustee and Beneficiary.  In the

event Trustor is obligated to execute any document or instrument referred to in

Section 2.1.2 or 2.1.3 hereof and fails or refuses to do so

within 10 days after written demand by Beneficiary, Trustor hereby appoints

each of Trustee and Beneficiary, severally its attorney-in-fact, which

appointment is irrevocable and shall be deemed to be coupled with an interest,

with respect to the execution, acknowledgment, delivery and filing or recording

for and in the name of Trustor of any of the documents or instruments referred

to in Section 2.1.2 or 2.1.3.

8.9           Discretion

of Trustee and Beneficiary. 

Whenever Trustee’s or Beneficiary’s judgment, consent or approval is

required hereunder for any matter, such judgment, or the decision as to whether

or not to consent to or approve the same shall be in the reasonable discretion

of Trustee or Beneficiary, as the case may be. 

Whenever Trustee or Beneficiary shall have an option or election under

this Deed of Trust, the decision whether or not to exercise such option or

election shall be in the sole and absolute discretion of Trustee or

Beneficiary, as the case may be.

8.10         Provisions

as to Covenants and Agreements.  All

of Trustor’s covenants and agreements hereunder shall run with the land and

time is of the essence with respect thereto.

8.11         Matters

to be in Writing.  This Deed of

Trust cannot be altered, amended, modified, terminated or discharged except in

a writing signed by the party against whom enforcement of such alteration,

amendment, modification, termination or discharge is sought.  No waiver, release or other forbearance by

Trustee or Beneficiary will be effective against Trustee or Beneficiary unless

it is in a writing signed by Beneficiary, and then only to the extent expressly

stated.

8.12         Construction

of Provisions.  The following rules

of construction shall be applicable for all purposes of this Deed of Trust and

all documents or instruments supplemental hereto, unless the context otherwise

requires:

8.12.1      All

references herein to numbered Articles or Sections or to lettered Exhibits are

references to the Articles and Sections hereof and the Exhibits annexed to this

Deed of Trust, unless expressly otherwise designated in context.

8.12.2      The

terms “include,” “including” and similar terms shall be

construed as if followed by the phrase “without being limited to.”

8.12.3      The

term “knowledge” or “to best of knowledge” when and if used in

connection with a representation or warranty made by Trustor means that Trustor

and/or the representatives of Trustor have interviewed such persons,

representatives, and responsible employees of Trustor, and such prior owners

and users of the Mortgaged Property as such representatives have determined are

likely to have knowledge of the matters set forth herein.

8.12.4      The

terms “Mortgaged Property” and “Premises” shall be construed as if

followed by the phrase “or any part thereof.”

8.12.5      The

term “Obligations” shall be

construed as if followed by the phrase “or any other sums secured hereby, or

any part thereof.”

8.12.6      Words

of masculine, feminine or neuter gender shall mean and include the correlative

words of the other genders, and words importing the singular number shall mean

and include the plural number, and vice versa.

8.12.7      The

term “person” shall include natural

persons, firms, partnerships, limited liability companies, corporations and any

other public and private legal entities.

8.12.8      The

term “provisions,” when used with

respect hereto or to any other document or instrument, shall be construed as if

preceded by the phrase “terms, covenants, agreements, requirements, conditions

and/or.”

8.12.9      All

Article, Section and Exhibits captions herein are used for convenience and

reference only and in no way define, limit or describe the scope or intent of,

or in any way affect, this Deed of Trust.

8.12.10 

The cover page of and all recitals set forth in, and all Exhibits to,

this Deed of Trust are hereby incorporated in this Deed of Trust.

8.12.11 

All obligations of Trustor hereunder shall be performed and satisfied by

or on behalf of Trustor at Trustor’s sole cost and expense.

8.12.12 

The term “Lease” shall mean

“tenancy, subtenancy, lease or sublease,” the term “lessor” shall mean

“landlord, sublandlord, owner, lessor and sublessor” and the terms “lessee” or

“tenant” shall mean “tenant, subtenant, lessee and sublessee.”

8.13         Successors

and Assigns.  The provisions hereof

shall be binding upon Trustor and the heirs, devisees, representatives,

successors and assigns of Trustor, including successors in interest of Trustor

in and to all or any part of the Mortgaged Property, and shall inure to the

benefit of Trustee, Beneficiary and their respective heirs, successors,

substitutes and assigns.  All references

in this Deed of Trust to Trustor, Trustee or Beneficiary shall be construed as

including all of such other persons with respect to the person referred

to.  Where two or more persons have

executed this Deed of Trust, the obligations of such persons shall be joint and

several except to the extent the context clearly indicates otherwise.

8.14         Request

for Notice.  All

notices, requests, consents, demands and other communications required or which

any party desires to give hereunder shall be in writing and shall be deemed

sufficiently given or furnished if delivered by personal delivery, by courier,

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 telegram, telex, or 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 telegram, telex

or 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.

 

8.15         Fixture

Filing.  Portions of the Mortgaged

Property are goods which are or are to become fixtures relating to the Land

and/or the Premises, and Trustor covenants and agrees that the filing of this

Deed of Trust in the real estate records of the county where the Premises are

located shall also operate from the time of filing as a fixture filing in

accordance with Texas Uniform Commercial Code.

8.16         Variable

Rate.  The Note contains a provision

permitting Beneficiary to adjust the rate of interest on the indebtedness

evidenced thereby.

ARTICLE

9

PROVISIONS AS TO TRUSTEE

9.1           Trustee's

Appointment.  Trustee accepts this

trust when this Deed of Trust, duly executed and acknowledged, is made a public

record as provided by law.  Trustee may

resign by an instrument in writing addressed to Beneficiary, or Trustee may be

removed at any time with or without cause by an instrument in writing executed

by Beneficiary and duly recorded.  In

case of the death, resignation, removal or disqualification of Trustee or if

for any reason Beneficiary shall deem it desirable to appoint a substitute or

successor trustee to act instead of Trustee herein named or any substitute or

successor Trustee, then Beneficiary shall have the right and is hereby

authorized and empowered to appoint a successor Trustee, or a substitute

Trustee, without other formality than appointment and designation in writing

executed and acknowledged by Beneficiary and the recordation of such writing in

the office where this Deed of Trust is recorded, and the authority hereby

conferred shall extend to the appointment of other successor and substitute

Trustees successively until the Obligations are paid in full or until the

Mortgaged Property is sold hereunder. 

Such appointment and designation by Beneficiary shall be full evidence

of the right and authority to make the same and of all facts therein

recited.  If such appointment is

executed on behalf of Beneficiary by an officer of Beneficiary, such

appointments shall be conclusively presumed to be executed with authority and

shall be valid and sufficient without proof of any action by the Trustee or any

superior officer of Beneficiary.  Upon

the making of such appointment and designation, all of the estate and title of

Trustee in the Mortgaged Property shall vest in the named successor or

substitute Trustee and it shall thereupon succeed to and shall hold, possess

and execute all the rights, powers, privileges, immunities and duties herein

conferred upon Trustee; but, nevertheless, upon the written request of

Beneficiary or of the successor or substitute Trustee, Trustee ceasing to act

shall execute and deliver an instrument transferring to such successor or

substitute Trustee all of the estate and title in the Mortgaged Property of

Trustee so ceasing to act, together with all the rights, powers, privileges,

immunities and duties herein conferred upon Trustee, and shall duly assign,

transfer and deliver any of the properties and moneys held by said Trustee

hereunder to said successor or substitute Trustee.  All references herein to Trustee shall be deemed to refer to

Trustee (including any successor or substitute, appointed and designated, as

herein provided) from time to time acting hereunder.  Trustor hereby ratifies and confirms any and all acts which

Trustee herein named or its successor or successors, substitute or substitutes,

in this Deed of Trust, shall do lawfully by virtue hereof.

ARTICLE

10

SPECIAL PROVISIONS

10.1         Non-Monetary

Defaults.  Notwithstanding anything

to the contrary contained herein, an Event of Default (as defined in Section 6.1

above) shall not be deemed to have occurred if any curable default in performance

or breach of any covenant or obligation which cannot be cured by the payment of

money occurs under the Note, this Deed of Trust, or any other Loan Document

executed by Trustor evidencing or securing the indebtedness evidenced by the

Note (“non-monetary default”) and

said non-monetary default is cured by Trustor within thirty (30) days

after written notice from Beneficiary to Trustor that such non-monetary default

exists (or, in the event that such non-monetary default is not reasonably

capable of cure within such thirty (30) day period, Trustor commences to cure

same within such thirty (30) day period and/or thereafter diligently prosecutes

such cure to completion in all events within ninety (90) days).

10.2         Records,

Reports and Audits.

10.2.1      Maintenance

of Records.  Trustor shall maintain

its books and records in accordance with generally accepted accounting

principles, applied on a consistent basis, and permit Beneficiary to examine

and audit Trustor's books and records at all reasonable times upon advance

written notice; provided however, such examinations and audits shall not

unreasonably interfere with Trustor’s operations, shall be at Beneficiary’s

sole expense, and shall occur no more frequently than twice per year, unless an

Event of Default has occurred and is continuing.

                                10.2.2      Reports; Audits.  Trustor shall furnish Beneficiary with, as

soon as available, but in no event later than one hundred (100) days after the

end of each fiscal year, Trustor's balance sheet and income statement for the

year ended, audited by a certified public accountant, and containing an

unqualified opinion of the accountant. All financial reports required to be

provided under this Deed of Trust shall be prepared in accordance with

generally accepted accounting principles, applied on a consistent basis, and

certified by Trustor as being true and correct.  In addition, Trustor agrees to provide Beneficiary with copies of

all filings submitted to the Securities and Exchange Commission within ten (10)

days of filing.

 

                10.3         Minimum Ratio.  Trustor shall maintain a ratio, as of the

end of each fiscal year of Trustor, of (x) the sum of Trustor's annual earning

before interest, taxes, depreciation and amortization expenses (but excluding

any non-cash income) less dividends and distributions paid to shareholders of

Trustor, to (y) the amount of current portion of long-term obligations  plus the amount of the interest expense for

the preceding fiscal year, of 2.00 to 1.00. 

Except as provided above, all computations made to determine compliance

with the requirements contained in this paragraph shall be based on Trustor's

most recent annual financial statements, and shall be made in accordance with

generally accepted accounting principles, applied on a consistent basis, and

certified by Borrower as being true and correct.

 

            10.4         Use

Of Property.  The Mortgaged Property

is not currently used for agricultural, farming, timber or grazing

purposes.  Trustor warrants that this

Deed of Trust is and will at all times constitute a commercial trust deed, as

defined under appropriate state law.

 

 

                10.5         Cross Default.  Concurrently herewith, Beneficiary and

Trustor are negotiating certain documents pertaining to a revolving line of

credit loan which Beneficiary intends to make to Borrower in the maximum amount

of $2,000,000.00 within the next thirty (30) days (“Revolving Loan”).  Any event of default by Trustor under any of

the documents evidencing or securing the Revolving Loan, if and when entered

into, shall constitute an Event of Default hereunder.

 

                10.6         Tangible Net Worth.  Trustor shall maintain at all times a

“Tangible Net Worth” in excess of $20,000,000.00. The words "Tangible Net

Worth" mean Trustor's Total Shareholders’ Equity, less all intangible

assets (i.e. goodwill, trademarks, patents, copyrights, organizational

expenses, and similar intangible items, but including leaseholds and leasehold

improvements) plus Subordinated Debt. The words “Total Shareholders’ Equity”

mean the total shareholders’ equity as set forth in Trustor’s financial

statements as approved by Beneficiary. The words “Subordinated Debt” mean

indebtedness and other liabilities of Trustor, which have been subordinated by

written agreement to indebtedness owed by Trustor pursuant to a subordination

agreement in form and substance acceptable to Beneficiary.

10.7         Location

of Trustor.  For the purposes of

enabling Beneficiary to properly file a UCC-1 financing statement in order to

perfect its security interest in the personal property constituting a portion

of the Mortgaged Property, Trustor hereby represents to Beneficiary that its

state of location (“Location”) is, as of the date hereof, Delaware. Trustor

agrees to notify Beneficiary in writing of its intent to change its Location,

including a change in Location resulting from a reincorporation or

reregistration in another State, or a merger with an entity whose Location is

in another State, at least thirty (30) days prior to any such change in its

Location.  Trustor further agrees to

execute any and all documents required by Beneficiary to continue the

perfection of Beneficiary’s security interest in the personal property

constituting a portion of the Mortgaged Property or to perfect a new security

interest therein and hereby specifically authorizes Beneficiary to file or cause

to filed an appropriate financing statement in the state of the new Location.

 

10.8         Counterparts.        This Deed of Trust is being executed in

two counterparts in order to facilitate recordation in the Official Records of

Collin and Dallas Counties.  Said counterparts,

when taken together, shall constitute one instrument.

IN WITNESS WHEREOF, the

undersigned has executed this Deed of Trust the day first set forth above.

	

   

  	

  TRUSTOR:

  FRESH CHOICE, INC., a

  Delaware corporation

   

  By: /S/ David E. Pertl

   

  Its: Senior Vice President and CFO

   

  

 

 

EXHIBIT A

DESCRIPTION OF REAL

PROPERTY

 

PARCEL ONE

 

BEING A TRACT OF LAND LOCATED IN THE THOMAS L. CHENWORTH SURVEY,

ABSTRACT NO. 273, TOWN OF ADDISON, DALLAS COUNTY, TEXAS, AND FURTHER BEING ALL

OF LOT 1, BLOCK 1, OF THE AMENDED FINAL PLAT OF BELT LINE CENTRE, AN ADDITION

TO THE TOWN OF ADDISON, TEXAS, RECORDED IN VOLUME 92193, PAGE 1795, MAP RECORDS

OF DALLAS COUNTY, TEXAS, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

BEGINNING AT A POINT ON THE SOUTHERLY LINE OF BELT LINE ROAD (A 100

FOOT RIGHT-OF-WAY) SAID POINT BEING AT THE NORTHEAST CORNER OF SAID LOT 1 OF

THE AMENDED FINAL PLAT OF BELT LINE CENTRE, AND THE NORTHEAST CORNER OF SAMS

CLUB ADDITION, AN ADDITION TO THE TOWN OF ADDISON, TEXAS, RECORDED IN VOLUME

92109, PAGE 3987, MAP RECORDS, DALLAS COUNTY, TEXAS, A 3/8 INCH IRON PIN FOUND

9.3 FEET SOUTH OF THE STREET BACK OF CURB AT CORNER;

 

THENCE SOUTH 00 DEGREES 01 MINUTE 18 SECONDS WEST, ALONG THE EASTERLY

LINE OF SAID LOT 1 AND THE WESTERLY LINE OF SAMS CLUB ADDITION, A DISTANCE OF

389.44 FEET TO A PK NAIL SET AT CORNER;

 

THENCE NORTH 89 DEGREES 58 MINUTES 42 SECONDS WEST, ALONG THE SOUTHERLY

LINE OF SAID LOT 1 AND THE NORTHERLY LINE OF LOT 2 OF SAID AMENDED FINAL PLAT

OF BELT LINE CENTRE, A DISTANCE OF 89.72 FEET TO A PK NAIL SET AT CORNER;

 

THENCE ALONG A COMMON LINE BETWEEN SAID LOTS 1 AND 2 AND AROUND A

TANGENT CURVE TO THE RIGHT HAVING A CENTRAL ANGLE OF 90 DEGREES 33 MINUTES 42

SECONDS, A RADIUS OF 85.00 FEET AND A CHORD BEARING OF NORTH 44 DEGREES 41

MINUTES 51 SECONDS WEST, AN ARC DISTANCE OF 134.35 FEET TO A PK NAIL SET AT

CORNER;

 

THENCE NORTH 00 DEGREES 35 MINUTES 00 SECONDS EAST, ALONG THE WESTERLY

LINE OF SAID LOT 1 AND THE EASTERLY LINE OF LOT 2, A DISTANCE OF 305.30 FEET TO

A  POINT ON THE SAID BELT LINE ROAD

SOUTHERLY LINE, AN "X" IN CONCRETE CUT AT CORNER;

 

THENCE SOUTH 89 DEGREES 25 MINUTES 00 SECONDS EAST, ALONG THE SAID BELT

LINE ROAD SOUTHERLY LINE, A DISTANCE OF 171.73 FEET TO THE PLACE OF BEGINNING

AND CONTAINING 66,184 SQUARE FEET OR 1.5194 ACRES OF LAND.

 

PARCEL TWO

 

TRACT I:

 

BEING LOT 5, BLOCK A OF CREEKWALK VILLAGE, AN ADDITION TO THE CITY OF

PLANO, COLLIN COUNTY, TEXAS, ACCORDING TO THE REVISED MAP THEREOF RECORDED IN

VOLUME I, PAGE 345, MAP RECORDS OF COLLIN COUNTY, TEXAS.

 

TRACT II:

 

TOGETHER WITH THE NON-EXCLUSIVE EASEMENTS FOR ROADWAYS, WALKWAYS,

INGRESS, EGRESS AND PARKING PURPOSES OVER AND ACROSS THE COMMON AREA, AS

CREATED BY THAT CERTAIN DECLARATION OF EASEMENTS AND COVENANTS, CONDITIONS AND

RESTRICTIONS BY AND BETWEEN SPRINGCREEK DEVELOPMENT, INC., AND FRESH CHOICE,

INC., FILED 05/04/94, RECORDED UNDER CC#94-0043373, LAND RECORDS OF COLLIN

COUNTY, TEXAS.

 

[Two Notary Acknowledgments Here]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00030-of-00352.parquet"}]]