LOAN AGREEMENT
by and between
JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender
and
DATRON RESOURCES INC., as Borrower
TABLE OF CONTENTS
1. INCORPORATION OF RECITALS 6
2. CERTAIN DEFINED TERMS 6
2.1. Affiliated Party 6
2.2. Agreement 6
2.3. Application/Commitment 6
2.4. Appraisal 6
2.5. Assignment of Leases 6
2.6. Intentionally Omitted 6
2.7. Building Laws 6
2.8. Business Day 7
2.9. Closing Date 7
2.10. Deed of Trust 7
2.11. Default Rate 7
2.12. Dollar 7
2.13. Environmental Indemnity Agreement 7
2.14. ERISA 7
2.15. Escrow Agent 8
2.16. Event of Default 8
2.17. Funding 8
2.18. Governmental Approvals 8
2.19. Governmental Authority 8
2.20. Intentionally Omitted 8
2.21. Guaranty 8
2.22. Hazardous Materials 8
2.23. Hazardous Materials Claims 8
2.24. Improvements 8
2.25. Interest 8
2.26. Internal Revenue Code 9
2.27. Laws 9
2.28. Lien 9
2.29. Loan 9
2.30. Loan Amount 9
2.31. Loan Closing 9
2.32. Loan Documents 9
2.33. Loan Fee 9
2.35. Maturity Date 10
2.36. Note 10
2.37. Payment Date 10
2.38. Permitted Exceptions 10
2.39. Phase I Environmental Assessment 10
2.40. Project 10
2.41. Real Property 10
2.42. Regular Interest 10
2.43. Regular Interest Payment Date 10
2.44. Regular Interest Rate 11
2.45. Security Agreement 11
2.46. Subordination Agreement 11
2.47. Taxes 11
2.48. Tenants 11
2.49. Title Company 11
3. LOAN AMOUNT. 11
3.1. Loan Amount 11
3.2. Borrower's Use of Loan Amount 11
4. FUNDING. 12
4.1. Amount of Funding 12
4.2. Procedure for Funding 12
4.3. Conditions Precedent to Funding 12
5. REGULAR INTEREST; DEFAULT INTEREST. 15
5.1. Accrual; Payment 15
5.2. Limitations on Regular Interest Payment Date 16
5.3. Default Interest Rate 16
5.4. Computation 16
5.5. Reset of Regular Interest Rate 16
5.6. Survival of Note and Other Loan Documents 17
6. PAYMENT 17
6.1. Amortized Payments 17
6.2. Prepayment 18
6.2.1. Prepayment Not Allowed 18
6.2.2. Prepayment Allowed 18
6.2.2.1. Second (2nd) Through Fifth (5th) Loan
Years 18
6.2.2.2. Sixth (6th) Loan Year 18
6.2.2.3. Seventh (7th) Loan Year Through Date Ninety
(90) Days Prior to Maturity Date 18
6.2.2.4. Ninety (90) Day Period Immediately
Preceding Maturity Date 19
6.2.2.5. Partial Prepayment 19
6.2.3. Prepayment Premium Upon Acceleration 19
6.2.3.1. During the First (1st) Loan Year 19
6.2.3.2. After the First (1st) Loan Year 19
6.2.4. Waiver 20
6.3. Treatment of Payments 20
6.4. No Set-Off 20
6.5. Late Charges 21
7. MATURITY DATE 21
7.1. Maturity Date 21
7.2. Right to Accelerate Maturity Date 21
7.2.1. Lender's Option to Accelerate 21
7.2.2. Sale or Further Encumbrance 22
7.2.3. Change in Ownership 22
8. LOAN DOCUMENTS 22
9. LOAN FEE 23
10. REPRESENTATIONS AND WARRANTIES 24
10.1. Title 24
10.2. No Litigation 24
10.3. Due Authorization 24
10.4. Breach of Laws or Agreements 24
10.5. Leases 25
10.6. Condemnation 25
10.7. Consents and Taxes 25
10.8. Condition of Improvements 25
10.9. Information Correct 26
10.10. Material Adverse Change 26
10.11. Solvency 26
10.12. Zoning 26
10.13. Utilities 27
10.14. Brokerage Fees 27
10.15. Encroachments 27
10.16. Separate Parcel 27
10.17. ERISA 27
10.18. No Default 27
10.19. Trade Name; Principal Place of Business 27
10.20. FIRPTA 27
10.21. RICO 27
10.22. No Casualty 28
10.23. Hazardous Materials 28
11. BORROWER'S COVENANTS 28
11.1. Escrow Deposits 28
11.2. Payment of Taxes 29
11.3. Maintenance of Insurance 30
11.4. Mechanics' Liens 32
11.5. Maintenance, Repair and Restoration of
Improvements 33
11.6. Leases and Lease Reports 33
11.7. Compliance With Laws 33
11.8. Alterations 33
11.9. Personal Property 34
11.10. Prohibition Against Cash Distributions and
Application of Cash Flow 34
11.11. Inspection by Lender 34
11.12. Furnishing Information 34
11.13. Documents of Further Assurance 35
11.14. Furnishing Reports 35
11.15. Operation of Project and Zoning 35
11.16. Management, Agents' and Brokers' Contracts 36
11.17. Furnishing Notices 36
11.18. Corporate Existence 36
11.19. Articles of Incorporation 36
11.20. Publicity 36
11.21. No Additional Debt 36
11.22. Payments 37
12. SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES 37
13. EVENTS OF DEFAULT 37
13.1. Events of Default 37
13.2. Remedies Conferred Upon Lender 39
13.2.1. Lender's Remedies 39
13.2.2. Non-Waiver of Remedies 39
13.2.3. Rents and Profits 39
13.2.4. Remedies Cumulative 40
13.2.5. Indemnification 40
14. EXPENSES, CHARGES AND ATTORNEYS' FEES 40
14.1. Expenses 40
14.2. Attorneys' Fees and Expenses 41
15. CASUALTY AND CONDEMNATION 42
15.1. Lender's Election to Apply Insurance and
Condemnation Proceeds to Indebtedness 42
15.2. Borrower's Obligation to Rebuild and Use of
Proceeds Therefor 43
16. ENVIRONMENTAL COVENANTS AND INDEMNITY 44
16.1. Compliance With Laws 44
16.2. Prohibited Acts 44
16.3. Notification; Right to Audit 44
16.4. Hazardous Materials Liabilities 45
16.5. Remedial Work 46
16.6. Indemnification 46
16.7. Survival 47
17. GENERAL PROVISIONS 47
17.1. Captions 47
17.2. Merger 47
17.3. Notices 47
17.4. Modification; Waiver 48
17.5. Governing Law 48
17.6. Further Assurances 48
17.7. General Provisions Relating to Interest 48
17.8. Estoppel Certificates 50
17.9. Acquiescence Not to Constitute Waiver of
Lender's Requirements 50
17.10. Disclaimer by Lender 50
17.11. No Partnership 51
17.11.1. Creditor-Debtor Relationship 51
17.11.2. Indemnification 51
17.12. Right of Lender to Make Advances to Cure
Borrower's Defaults 52
17.13. Definitions Include Amendments 52
17.14. Time Is of the Essence 52
17.15. Execution in Counterparts 52
17.16. Waiver of Consequential Damages 52
17.17. Jurisdiction and Venue 53
17.18. Severability 53
17.19. Assignments 53
17.19.1. Lender's Right to Assign 53
17.19.2. Prohibition of Assignments by Borrower 53
17.19.3. Intentionally Omitted 54
17.19.4. Successors and Assigns 54
17.20. Pronouns 54
17.21. Resolution of Drafting Ambiguities 54
17.22. Conflicts 54
17.23. Attorneys' Fees; Legal Action 54
17.23.1. Attorneys' Fees 54
17.23.2. Legal Action 55
17.24. Exhibits 55
17.25. Intentionally Omitted 55
17.26. Recourse 55
17.27. WAIVER OF JURY TRIAL 56
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as
of the 7th day of August, 1998, by and between DATRON
RESOURCES INC., a California corporation ("Borrower"),
on the one hand, and JACKSON NATIONAL LIFE INSURANCE
COMPANY, a Michigan corporation, on the other hand
("Lender").
RECITALS
This Agreement is made with reference to the
following facts:
A. Borrower is a corporation which has its
principal place of business at 304 Enterprise Street,
Escondido, California 92029. Borrower's sole
shareholder is Datron/Transco Inc.
B. Borrower is the owner of that certain real
estate (the "Real Property") located in the City of Simi
Valley, County of Ventura, State of California,
consisting of approximately 8.90 acres which is improved
with one (1) industrial building containing 111,960 net
rentable square feet, consisting of approximately fifty
percent (50%) corporate office finish, commonly known as
the Datron Transco Building (the "Building"). The Real
Property is more particularly described in Exhibit "A"
attached hereto and made a part hereof.
C. Borrower desires to refinance the Real
Property and the Building, and to enable it to do so,
Borrower desires to borrow from Lender the sum of Three
Million Three Hundred Thousand and No/100 U.S. Dollars
(U.S. $3,300,000.00).
D. Lender is willing to lend the sum of Three
Million Three Hundred Thousand and No/100 U.S. Dollars
(U.S. $3,300,000.00) to Borrower upon the terms and
subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein and for other valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as
follows:
1. INCORPORATION OF RECITALS. The above Recitals are
incorporated herein by this reference.
2. CERTAIN DEFINED TERMS. The following terms as used
herein shall have the following meanings:
2.1. Affiliated Party shall mean any person or
entity who, directly or indirectly, whether by itself or
through one or more intermediaries, controls or is
controlled by, or is under common control with,
Borrower, including but not limited to any entity whose
principals are comprised of, identical to, or
substantially in common with Borrower, or the principals
of Borrower.
2.2. Agreement shall mean this Agreement, as
originally executed or as may be hereafter supplemented
or amended from time to time in writing.
2.3. Application/Commitment shall mean the written
application submitted to PPM Finance, Inc. for the Loan
(as defined below) dated April 22, 1998, as modified by
handwritten comments thereon and that certain Mortgage
Loan Application Amendment No. 1 - Revised, dated June
1, 1998, and the acceptance thereof as a commitment
dated July 1, 1998.
2.4. Appraisal shall mean an appraisal which: (i)
is prepared by an appraiser who (a) is a member of a
national appraisal organization that has adopted the
Uniform Standards of Professional Appraisal Practice
(USPAP) established by the Appraisal Standards Board of
the Appraisal Foundation, and (b) uses the assumptions
and limiting conditions established by Lender; and (ii)
conforms with Lender's appraisal guidelines and the
requirements of the Application/Commitment.
2.5. Assignment of Leases shall mean that certain
document entitled Assignment of Leases, Rents, Issues
and Profits of even (or approximately even) date
herewith executed by Borrower in favor of Lender, in the
form attached hereto as Exhibit "D."
2.6. Intentionally Omitted.
2.7. Building Laws shall mean all federal, state
and local laws, statutes, regulations, codes,
ordinances, orders, rules and requirements applicable to
the development, construction, use, operation,
management and maintenance of the Property (as defined
below), including any and all access, building, zoning,
planning, subdivision, fire, traffic, safety, health,
labor, discrimination, environmental, air quality,
wetlands, shoreline, flood plain laws, regulations and
ordinances, including, without limitation, all
applicable requirements of the Fair Housing Act of 1988
(as amended), the Americans with Disabilities Act of
1990, as amended and all orders or decrees of any court
adopted or enacted with respect thereto applicable to
the Project, as any of the same may from time to time be
amended, modified or supplemented.
2.8. Business Day shall mean any day on which (i)
dealings in U.S. Dollar deposits between banks may be
carried on in New York, New York, and (ii) Lender is
open for business at its principal place of business in
Chicago, Illinois.
2.9. Closing Date shall mean the date of the
Funding (as defined below) and recordation of the Deed
of Trust (as defined below). The Closing Date shall
occur no later than August 31, 1998 or such later date
as the parties may hereafter agree upon in writing. If
the Funding has not occurred on or before August 31,
1998, this Agreement may be declared null, void and of
no force or effect, at Lender's sole option.
2.10. Deed of Trust shall mean that certain
Deed of Trust, Assignment of Rents and Security
Agreement of even (or approximately even) date herewith,
encumbering the Project (as defined below), executed by
Borrower, as Trustor, for the benefit of Lender, as
Beneficiary, in the form attached hereto as Exhibit "C,"
granting Lender a first priority lien and security
interest in the Project to secure Borrower's payment of
the amounts due and performance of the obligations under
the Loan Documents (as defined below).
2.11. Default Rate shall mean a rate per annum
equal to the lesser of (i) eighteen percent (18%), or
(ii) the Highest Lawful Rate (as defined in Section
17.7, below).
2.12. Dollar, Dollars and $ shall mean dollars
in lawful currency of the United States of America.
2.13. Environmental Indemnity Agreement shall
mean the document entitled Environmental Indemnity
Agreement of even (or approximately even) date herewith
executed by Borrower, as "Indemnitor" thereunder, for
the benefit of Lender and others, as "Indemnified
Parties" thereunder, in the form attached hereto as
Exhibit "G."
2.14. ERISA shall mean the Employee Retirement
Income Security Act of 1974, as amended, and the
regulations promulgated thereunder from time to time.
2.15. Escrow Agent shall mean Chicago Title
Company, 700 South Flower Street, Los Angeles,
California, 90017 Attention: Laine Cheng.
2.16. Event of Default shall mean any one of
the "Events of Default" set forth in Section 13.1,
below.
2.17. Funding shall mean the advance of the
Loan Amount (as defined below) made by Lender to
Borrower pursuant to Section 4, below.
2.18. Governmental Approvals shall mean all
required consents, licenses and permits and all other
authorizations or approvals relating to the operation of
the Project (as defined below) by a Governmental
Authority (as defined below).
2.19. Governmental Authority shall mean any
federal, state, county or municipal government, or
political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality, or public body,
or any court, administrative tribunal, or public
utility.
2.20. Intentionally Omitted.
2.21. Guaranty shall have the meaning ascribed
to it in Section 4.3(c), below.
2.22. Hazardous Materials shall have the
meaning ascribed to it in Section 16.2, below.
2.23. Hazardous Materials Claims shall have the
meaning ascribed to it in Section 16.3, below.
2.24. Improvements shall mean with respect to
the Real Property (as defined below), all of Borrower's
ownership interest in (i) the Building, including all
present and future structures, buildings (including
roofs and exterior walls), improvements, appurtenances,
landscaping, pavement, and fencing, and (ii) fixtures of
any kind located on any portion of the Real Property,
including all apparatus, equipment, furniture, and
appliances located on, in or at the Building, including
without limitation, heating and air-conditioning
systems, life safety systems, window coverings, drapes
and rods, carpeting and floor coverings, as described in
Exhibit "B" attached to the Deed of Trust and
incorporated herein by this reference, it being intended
and agreed that all such items shall be conclusively
considered to be a part of the Real Property, whether or
not attached or affixed thereto.
2.25. Interest shall mean Regular Interest (as
defined below) or Default Interest (as defined in
Section 5.3, below), as applicable.
2.26. Internal Revenue Code shall mean the
Internal Revenue Code of 1986, as amended from time to
time, the regulations promulgated thereunder from time
to time, and any successor statute.
2.27. Laws shall mean collectively, all
federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including
judicial opinions or precedential authority in the
applicable jurisdiction, as any of the same may from
time to time be amended, modified or supplemented.
2.28. Lien shall mean any lien, mortgage,
pledge, security interest, lease, charge, option or
encumbrance of any kind, whether voluntary or
involuntary (including any conditional sale or other
title retention agreement, any lease in the nature
thereof, and any agreement to create or give any
security interest).
2.29. Loan shall mean the loan made by Lender
to Borrower pursuant to the terms of this Agreement, the
Note (as defined below) and the other Loan Documents (as
defined below).
2.30. Loan Amount shall mean the principal
amount of Three Million Three Hundred Thousand and
No/100 U.S. Dollars (U.S. $3,300,000.00).
2.31. Loan Closing shall mean the Closing Date.
2.32. Loan Documents shall mean and include
this Agreement, the Note (as defined below), the Deed of
Trust, the Security Agreement (as defined below), the
Assignment of Leases, the Guaranty, the UCC-1 Financing
Statement, the Environmental Indemnity Agreement, the
Subordination Agreement (defined below) and other
specific written agreements and instruments by and
between Borrower and Lender which evidence, secure or
directly relate to the Loan, as originally executed or
as any of the same may be hereafter supplemented or
amended from time to time in writing.
2.33. Loan Fee shall mean a sum equal to the
good faith deposit in the amount of Thirty-Three
Thousand and No/100 U.S. Dollars (U.S. $33,000.00), the
commitment fee in the amount of Thirty-Three Thousand
and No/100 U.S. Dollars (U.S. $33,000.00), and the rate
lock deposit in the amount of Thirty-Three Thousand and
No/100 U.S. Dollars (U.S. $33,000.00), all payable as
provided in Section 9, below.
2.34. Loan Year shall mean any twelve (12)
month period commencing on September 1st in one calendar
year and ending on August 31st in the succeeding
calendar year. Notwithstanding the foregoing, the first
Loan Year shall mean the period commencing on the date
of Funding and ending on August 31, 1999, and the last
Loan Year shall mean the period commencing on September
1, 2007 and ending on the Maturity Date. By way of
example, the second Loan Year shall mean the period
commencing on September 1, 1999 and ending on August 31,
2000, the third Loan Year shall mean the period
commencing on September 1, 2000 and ending on August 31,
2001, and so on.
2.35. Maturity Date shall be as defined in
Section 7.1, below.
2.36. Note shall mean that certain document
entitled Promissory Note Secured By Deed of Trust to be
executed by Borrower payable to the order of Lender in
the face amount of Three Million Three Hundred Thousand
and No/100 U.S. Dollars (U.S. $3,300,000.00) in the form
attached hereto as Exhibit "B."
2.37. Payment Date shall mean (i) the date on
which any payment of principal, Regular Interest (as
defined below) or Default Interest (as defined herein)
is due, or (ii) the Maturity Date, as the context
requires.
2.38. Permitted Exceptions shall mean those
Liens and other matters with respect to the Real
Property which are described on Exhibit "K" attached
hereto and made a part hereof and any such other title
exceptions or objections, if any, as Lender may approve
in advance in writing.
2.39. Phase I Environmental Assessment shall
mean that certain Phase I Environmental Assessment of
the Real Property dated as of July 15, 1998, prepared by
Versar, Inc.
2.40. Project shall mean all of the Real
Property and Improvements, including but not limited to
the Building, all rights, privileges, easements,
hereditaments and appurtenances, thereunto relating or
appertaining, and all personal property, fixtures and
equipment required or used (or to be used) for the
operation thereof owned by Borrower in which Lender is
granted a Lien and/or security interest under any of the
Loan Documents.
2.41. Real Property shall mean that certain
parcel of real property more particularly described in
Exhibit "A" attached hereto and made a part hereof, as
well as all entitlements, rights and easements
appurtenant thereto.
2.42. Regular Interest shall mean interest on
the unpaid principal balance of the Loan at the Regular
Interest Rate (as defined below), as determined pursuant
to this Agreement.
2.43. Regular Interest Payment Date shall mean
the first (1st) day of each and every calendar month
during the term hereof; provided, however, that if any
such date is not a Business Day, the Regular Interest
Payment Date shall be the first (1st) Business Day which
precedes the first (1st) day of the calendar month.
Regular Interest shall be payable on each Regular
Interest Payment Date; provided, however, that if the
Closing Date falls on any date which is not the first
(1st) day of a calendar month, then the first payment of
Regular Interest (which shall be a prorated amount based
on the number of days from and including the date of
Funding to and excluding the first (1st) Regular
Interest Payment Date occurring after the date of
Funding) shall not be made on the first Regular Interest
Payment Date, but shall be due and payable concurrently
with the Funding of the Loan. The second payment of
Regular Interest shall then be due, according to
schedule, on the second Regular Interest Payment Date
occurring after the date of the Funding.
Notwithstanding anything in this Agreement to the
contrary, no Regular Interest Payment Date may extend
beyond the Maturity Date.
2.44. Regular Interest Rate shall mean interest
at an annual rate of six and seventy-six one-hundredths
percent (6.76%), as such rate shall be reset in
accordance with Section 5.5, below.
2.45. Security Agreement shall mean the
document entitled Security Agreement of even (or
approximately even) date herewith executed by Borrower
in favor of Lender, in the form attached hereto as
Exhibit "E."
2.46. Subordination Agreement shall mean that
certain Subordination and Attornment Agreement, of even
date (or approximately even) herewith, by and among
Borrower, Lender and Tenant (defined below)
substantially in the form attached hereto as Exhibit
"H."
2.47. Taxes shall mean taxes, levies, imposts,
duties, withholdings or other charges of whatever nature
levied, imposed, collected, withheld or assessed by any
Government Authority or any political subdivision or
taxing authority thereof, other than any such charges on
or measured by the net income, net worth or
shareholders' capital of Lender.
2.48. Tenants shall mean the lessees of the
Building, or any assignee or successor-in-interest
thereto.
2.49. Title Company shall mean Chicago Title
Company, whose address is set forth in Section 2.15,
above.
3. LOAN AMOUNT.
3.1. Loan Amount. Subject to the terms and
conditions of this Agreement, Lender agrees to lend to
Borrower and Borrower agrees to borrow from Lender the
Loan Amount for the purpose of refinancing the Project
which must be substantially in accordance with the
sources and uses statement attached to the
Application/Commitment. To further evidence the Loan
and/or to secure its payment, Borrower shall execute and
deliver to Lender the Loan Documents as required by this
Agreement.
3.2. Borrower's Use of Loan Amount. Borrower shall
use the Loan Amount solely and exclusively for the
purpose stated in Section 3.1, above and other uses
directly related to maintaining, managing, owning and
improving the Real Property and/or Improvements,
including expenses incurred in connection with obtaining
the Loan. Borrower shall not use any portion of the
Loan Amount for any purpose not specifically permitted
pursuant to this Section 3.2 without the prior written
consent of Lender, which consent may be withheld in
Lender's sole and absolute discretion.
4. FUNDING.
4.1. Amount of Funding. Unless otherwise
specifically provided in writing by Lender and Borrower,
the Loan shall be funded to Borrower in one funding in
an amount equal to the Loan Amount.
4.2. Procedure for Funding. So long as (i) no
Event of Default has occurred and/or is continuing
hereunder, and (ii) all conditions precedent specified
in Section 4.3, below, have been satisfied by Borrower
or waived in writing by Lender by no later than one (1)
day prior to the Closing Date, Lender shall wire
transfer the Loan Amount to the Title Company and shall
deliver Lender's closing instructions to the Title
Company and/or the Escrow Agent. The Loan Amount shall
be held in escrow by the Title Company until the Loan
Documents have been fully executed by Borrower and have
been delivered to Lender, or are held by the Title
Company for delivery to Lender, and all other
instructions contained in Lender's closing instructions
to the Title Company have been satisfied.
4.3. Conditions Precedent to Funding. The
obligation of Lender to make the Loan is subject to
Borrower having satisfied or Lender having waived in
writing (each as determined by Lender in its sole and
absolute discretion) each of the following conditions
precedent at or prior to the Closing Date:
(a) Borrower has delivered, or the Title
Company is prepared to deliver to Lender the Note, the
Deed of Trust and all other Loan Documents each in form
and substance satisfactory to Lender and each duly
executed and delivered by Borrower.
(b) Title Company is prepared to issue to
Lender with respect to the Real Property an ALTA
Extended-Coverage Lender's Policy of Title Insurance (at
Borrower's sole expense), which policy shall have a
liability amount not less than the Loan Amount and shall
be subject only to the Permitted Exceptions (the "Title
Policy"). The Title Policy shall (a) be issued in ALTA
(1970) form, or another form accepted and approved by
Lender, and (b) include: (i) coverage satisfactory to
Lender, including, but not limited to, coverage insuring
the priority of the Lien of the Deed of Trust over
mechanic's, materialmen's or laborers' liens,
notwithstanding the commencement of any work or
improvement visible on the Real Property; (ii)
endorsements required by Lender; and (iii) coverage
and/or direct access reinsurance otherwise required by
and satisfactory to Lender.
(c) Borrower has delivered, has caused to be
delivered, or the Title Company is prepared to deliver
to Lender a guaranty (the "Guaranty"), executed by an
authorized signatory of Datron Systems Incorporated (the
"Guarantor"), as Guarantor for the benefit of Lender
with respect to Borrower's obligations hereunder, in the
form attached hereto as Exhibit "K."
(d) Borrower shall have delivered to Lender
an Urban ALTA/ACSM Land Title Survey of the Real
Property and the Improvements (at Borrower's sole
expense) prepared by a professional land surveyor
entirely satisfactory to Lender (the "Survey"), which
Survey shall be certified to Lender and the Title
Company. In addition, the record legal description of
the Real Property must appear on the Survey, and any
record easements or servitudes and covenants affecting
the Real Property must be plotted thereon. The Survey
must (i) be dated no more than sixty (60) days earlier
than the Closing Date, (ii) provide evidence
satisfactory to Lender that all streets providing access
to the Project are dedicated for public use and
maintained by the appropriate governmental authority,
(iii) provide evidence that all utilities, including
electricity, gas, water and sewage, reach the property
by means of valid easements and (iv) be in a form
satisfactory to Lender.
(e) Lender shall have received (i) a
certified copy of the Articles of Incorporation of
Borrower, (ii) a copy of the by-laws of Borrower, (iii)
a Certificate of Status for Borrower (evidencing that
Borrower is in good standing in California) issued by
the Secretary of State of California dated as of a date
not earlier than thirty (30) calendar days prior to the
Closing Date, and (iv) a list of all officers, directors
and shareholders of Borrower with an indication of
shares held by each.
(f) Lender shall have received a certified
resolution of Borrower's Board of Directors authorizing
(i) the borrowing made by Borrower pursuant to this
Agreement, and (ii) the execution and delivery of the
Loan Documents by the person(s) signing this Agreement
and the other Loan Documents on behalf of Borrower.
(g) Lender shall have received an opinion of
counsel for Borrower and an opinion of counsel for
Guarantor both in form and substance acceptable to
Lender covering, without limitation, those items set
forth in the Application/Commitment.
(h) Borrower shall have delivered to Lender,
at Borrower's sole expense, a UCC lien search on
Borrower, Datron Systems Incorporated, and the Building,
respectively, for the State of California (Secretary of
State's Office) and the County of Ventura which: (i) is
prepared by a search company acceptable to Lender; (ii)
is dated as of a date not earlier than thirty (30) days
prior to the Closing Date; and (iii) reflects no UCC
financing liens on the Project other than those
previously approved in writing by Lender's counsel.
(i) Lender shall have received all financial
information from Borrower required under the
Application/Commitment, or otherwise, and all such
information shall be satisfactory to Lender.
(j) Lender shall have been provided with
certificates evidencing all the insurance policies on
the Project required by Lender pursuant to the Deed of
Trust, which policies shall include a standard "Lender's
Loss Payable Endorsement" satisfactory to Lender naming
Lender as an additional insured and mortgagee. The
originals of said certificates shall be provided to
Lender no later than thirty (30) days after the Closing
Date.
(k) Lender shall have received and approved
the Appraisal, which Appraisal shall be subject to, and
must satisfy, all of Lender's requirements, as set forth
in the Application/Commitment, or otherwise.
(l) Borrower shall have delivered to Lender
and Lender shall have approved, the Phase I
Environmental Assessment, which Phase I Environmental
Assessment shall be subject to, and must satisfy, all of
the requirements set forth in the
Application/Commitment. Borrower shall have also
delivered to Lender a fully-executed Environmental
Indemnity Agreement, in form and content identical to
that attached hereto as Exhibit "G."
(m) Borrower shall have caused an engineering
inspection of the Real Property and the Improvements to
be completed, and delivered to Lender a summary of the
findings of such inspection in form and content
satisfactory to Lender. Such inspection shall be
subject to, and must satisfy, all of the requirements
set forth in the Application/Commitment.
(n) Borrower shall have caused a seismic
inspection of the Real Property and the Improvements to
be completed, and delivered to Lender a summary of the
findings of such an inspection in form and content
satisfactory to Lender. Such inspection shall be
subject to, and must satisfy, all of the requirements
set forth in the Application/Commitment.
(o) Borrower shall have delivered to Lender
true and complete copies of all leases, subleases,
option agreements, management agreements and other
rental or occupancy agreements relating to the Property
and all amendments or modifications thereto. Borrower
also shall have provided or delivered to Lender: (i) a
copy of Borrower's proposed form lease, which form lease
shall have been approved by Lender; (ii) a copy of the
most current financial statement for each lessee, along
with financial statements for the prior (3) three years
(if available) for each lessee; (iii) an estoppel
certificate and Subordination Agreement from each
lessee; and (iv) at least five (5) Business Days prior
to Loan Closing, a certified Rent Roll (as defined
below) of the Project for the ten (10) days prior to
Closing, evidencing that (a) the tenancies generate
monthly rental income of at least Fifty-Five Thousand
and No/100 Dollars ($55,000.00) (excluding parking); (b)
the current occupancy rate is no less than one hundred
percent (100%); and (c) the annualized net operating
income for the Project is at least Five Hundred Forty
Thousand and No/100 Dollars ($540,000.00).
(p) Borrower shall have delivered to Lender
true and complete copies of: (i) paid tax receipts for
the two (2) years prior to the year in which the Funding
occurs covering Taxes, (ii) a copy of the current tax
bill covering Taxes (iii) the most recent rendition of
personal property filed with the taxing authority; (iv)
an inventory of all tangible personal property and
equipment owned by Borrower; (v) a valid Certificate of
Occupancy for each element of the Improvements; (vi) all
Governmental Approvals; (vii) letters from all utility
companies serving the Project that utilities are being
provided to the Property; (viii) evidence satisfactory
to Lender that the Improvements comply with all
applicable zoning laws; and (ix) all other documents
reasonably requested and required by Lender.
(q) Borrower shall have provided Lender with
evidence that the annual debt service on the Loan
(calculated by multiplying the monthly payment of
principal and interest by twelve (12)) does not exceed
Three Hundred Nineteen Thousand Fifteen and No/100
Dollars ($319,015.00).
(r) No Event of Default (and no event which
with the giving of notice, lapse of time or both would
constitute an Event of Default) shall have occurred and
be continuing on the Closing Date. All the
representations and warranties made by Borrower in this
Agreement and in the Deed of Trust shall have been true
and correct when made and shall be true and correct in
all material respects as if made on the Closing Date.
All the covenants of Borrower contained herein, in the
Deed of Trust or in any one or more of the other Loan
Documents shall have been fully satisfied by Borrower or
waived in writing by Lender on or prior to the Closing
Date.
(s) Lender shall have received such other
approvals, opinions and documents as it may reasonably
request.
5. REGULAR INTEREST; DEFAULT INTEREST.
5.1. Accrual; Payment. Regular Interest on the
outstanding principal of the Loan shall accrue from the
date of the Funding at the applicable Regular Interest
Rate. Payments of Regular Interest shall be made by
Borrower on each and every Regular Interest Payment Date
during the term of the Loan; provided, however, that if
the Closing is on a day other than the first day of a
calendar month, the first payment of Regular Interest
shall be made in advance on the Closing Date, as
described in Section 6.1, below.
5.2. Limitations on Regular Interest Payment Date.
5.2.1. Each Regular Interest Payment Date
for the Loan which would otherwise fall on a day which
is not a Business Day shall be on the first (1st)
Business Day which precedes the first (1st) day of the
calendar month.
5.2.2. No Regular Interest Payment Date may
extend beyond the Maturity Date.
5.3. Default Interest Rate. After the occurrence
of an Event of Default and until such Event of Default
has been cured, any and all amounts payable under this
Agreement, the Note, the Deed of Trust or the other Loan
Documents shall bear interest at the Default Interest
Rate ("Default Interest").
5.4. Computation. All computations of Regular
Interest and Default Interest shall be made on the basis
of a thirty (30) day month, a three hundred sixty (360)
day year and a twenty (20) year amortization. Regular
Interest or Default Interest, as the case may be, shall
be computed by multiplying the Regular Interest Rate or
Default Interest Rate, as applicable, by a fraction, the
numerator of which shall be equal to the number of days
that have elapsed during the period for which such
computation is made (including the first day of such
period but excluding the last day of such period) and
the denominator of which shall be three hundred sixty
(360), unless such computation shall result in a Regular
Interest Rate or Default Interest Rate higher than the
Highest Lawful Rate (as defined below in Section 17.7),
in which event the Regular Interest Rate or Default
Interest Rate, as applicable, shall be the Highest
Lawful Rate. Regular Interest and Default Interest
shall not be compounded.
5.5. Reset of Regular Interest Rate. Commencing on
the first (1st) day of the sixth (6th) Loan Year (to
wit, September 1, 2003) (the "Reset Date"), Lender shall
reset the Regular Interest Rate to a new variable rate
(the "Reset Rate"), as set forth below in this Section
5.5. Lender, sometime during the period commencing on
January 1, 2003 and ending on March 31, 2003, shall
provide Borrower with written notice (the "Reset
Notice") specifying the applicable interest rate spread
(the "Spread") over the ninety (90) day LIBOR Index, as
listed in the "Money Rates" column in the "Money and
Investing" section of the Wall Street Journal, as
published on the Business Day prior to the applicable
Adjustment Date (defined below), or if such Index is
then no longer published daily therein, then as
available through Bloomberg, L.P. or a similar service
designated by Lender in Lender's sole and absolute
discretion (the "Index"). The Spread shall be
determined by Lender in Lender's sole and absolute
discretion. The Reset Rate shall be adjusted as of the
last Business Day of each calendar quarter (with each
such date herein being referred to as an "Adjustment
Date"). Following each Adjustment Date, the monthly
payment, as set forth in Section 6, below, shall be
adjusted accordingly, with the principal amortization
schedule remaining unchanged. As Regular Interest is
paid in arrears, the monthly payment will not be
adjusted until the first (1st) calendar day of the month
following each Adjustment Date. Lender, during the
first (1st) two (2) weeks of June, 2003, shall calculate
and notify Borrower of the initial Reset Rate which
shall apply as of first (1st) day of the sixth (6th)
Loan Year (to wit, September 1, 2003). If Borrower
elects to accept the Reset Rate, it shall provide
written notice to Lender of its acceptance no later than
June 30, 2003. If Borrower fails to provide such notice
to Lender or elects not to accept the Reset Rate, the
Loan shall be due and payable, without any Prepayment
Premium (as defined in Section 6.2, below), on or before
September 1, 2003. If Borrower elects to accept the
Reset Rate, the Reset Rate, as adjusted pursuant to this
Section 5.5 and subject to Section 17.7, below, shall
become the Regular Interest Rate for the remainder of
the Loan commencing on the Reset Date.
5.6. Survival of Note and Other Loan Documents. It
is the intention of Lender and Borrower that this
Agreement and the Note shall remain in full force and
effect and shall continue to be secured by the Loan
Documents (except for the Environmental Indemnity
Agreement, which shall be unsecured) until all
obligations of Borrower to Lender under this Agreement,
including, but not limited to this Section 5, have been
fully satisfied. Notwithstanding any other provision of
any of the Loan Documents, the Loan Documents and any
other security for this Agreement and/or the Note shall
continue in full force and effect, and Borrower shall
have no right to a release of any security for this
Agreement and/or the Note until all of Borrower's
obligations under the Note, this Agreement (including
but not limited to, this Section 5) and the other Loan
Documents (other than the Environmental Indemnity
Agreement) have been paid and performed in full. Once
all of Borrower's obligations under the Note, this
Agreement (including but not limited to this Section 5)
and the other Loan Documents (other than the
Environmental Indemnity Agreement) have been paid and
performed in full, Lender shall release all security for
this Agreement, including but not limited to having the
Trustee (as that term is defined in the Deed of Trust)
reconvey the Project to Borrower.
6. PAYMENT.
6.1. Amortized Payments. Borrower shall make
monthly payments of principal and Regular Interest, in
arrears, on each and every Regular Interest Payment Date
during the term of the Loan without set-off, deduction,
demand or notice of any kind or nature whatsoever;
provided, however, that if the Closing Date falls on any
date which is not the first (1st) day of a calendar
month, then the first (1st) payment of Regular Interest
(which shall be a pro-rated amount of Regular Interest
only based on the number of days from and including the
date of Funding to the first (1st) Regular Interest
Payment Date following the date of Funding), shall be
made on the date of Funding (and, at Lender's sole
option, deducted from the Loan Amount), and the first
amortized payment of principal and Regular Interest
shall be due on the second Regular Interest Payment Date
following the date of Funding. Borrower's monthly
payments of principal and Regular Interest shall be
calculated on the basis of a three hundred sixty (360)
day year and a twenty (20) year amortization, as
described in Section 5.4, above, and, as applicable,
shall adjust as the Regular Interest Rate adjusts, as
set forth in Section 5.5, above. On the Maturity Date,
the entire outstanding principal balance of the Loan,
together with any and all accrued and unpaid Regular
Interest, and all other amounts, of any kind or nature
whatsoever, owing by Borrower to Lender under the Loan
Documents shall be fully due and payable to Lender.
6.2. Prepayment.
6.2.1. Prepayment Not Allowed. This Loan
may not be prepaid during the first (1st) Loan Year.
6.2.2. Prepayment Allowed.
6.2.2.1. Second (2nd) Through Fifth
(5th) Loan Years. During the period commencing on the
first (1st) day of the second Loan Year and ending on
the last day of the fifth (5th) Loan year, Borrower may
prepay the Loan in whole or in part upon payment to
Lender of a prepayment premium equal to the greater of
(i) one percent (1%) of the prepaid amount, or (ii) an
amount calculated at the time of prepayment using a
formula designed to compensate Lender for the loss of
its performing Loan ("Yield Protection Payment"). This
Yield Protection Payment will be calculated by (a)
assuming reinvestment of the prepaid amount in U.S.
Treasury securities with maturities as close as
practicable to the Maturity Date, (b) assuming
conversion of the Note to a bond-equivalent, interest-
only note without changing its interest rate, and (c)
determining the present value of the difference between
the two assumed interest-payment streams, using the
yield of the assumed reinvestment as the discount rate.
Borrower agrees that Lender shall not be obligated to
actually reinvest the amount prepaid in any Treasury
obligations as a condition precedent to receiving the
Prepayment Premium hereunder.
6.2.2.2. Sixth (6th) Loan Year. During
the sixth (6th) Loan Year, Borrower may prepay the Loan
in whole or in part upon payment to Lender of a
prepayment premium equal to two percent (2%) of the
prepaid amount.
6.2.2.3. Seventh (7th) Loan Year Through
Date Ninety (90) Days Prior to Maturity Date. During
the period commencing on the first (1st) day of the
seventh (7th) Loan Year and ending on the date which is
ninety (90) days prior to the Maturity Date, Borrower
may prepay the Loan in whole or in part upon payment to
Lender of a prepayment premium equal to one percent (1%)
of the prepaid amount.
6.2.2.4. Ninety (90) Day Period
Immediately Preceding Maturity Date. During the ninety
(90) day period immediately preceding the Maturity Date,
Borrower may prepay the Loan in full without any
prepayment premium.
6.2.2.5. Partial Prepayment.
Notwithstanding the foregoing, during each of the first
five (5) Loan Years, Borrower may prepay up to ten
percent (10%) of the then outstanding balance of the
Loan (on a non-cumulative basis) upon payment of a
prepayment premium equal to one percent (1%) of prepaid
amount in each such year. Thereafter, during each of
the remaining Loan Years, Borrower may prepay up to ten
percent (10%) of the then outstanding balance of the
Loan (on a non-cumulative basis) without any prepayment
premium.
Any prepayment premium required to be
paid by Borrower pursuant to this Section 6.2.2 shall
hereinafter be referred to as a "Prepayment Premium."
No Prepayment Premium will be charged on amounts
attributable to insurance or condemnation proceeds
applied to reduce the principal balance of the Loan.
6.2.3. Prepayment Premium Upon
Acceleration.
6.2.3.1. During the First (1st) Loan
Year. Following an Event of Default during the first
(1st) Loan Year, including but not limited to any
transfer or conveyance of any right, title or interest
in the Real Property and/or Improvements encumbered by
the Deed of Trust, which gives Lender the right to
accelerate the maturity of the Note pursuant to the
terms of the Deed of Trust, if Lender elects to
accelerate the maturity of the Note, Borrower agrees to
pay, as an additional amount to be secured by the Deed
of Trust, the greater of (i) the Prepayment Premium, and
(ii) ten percent (10%) of the principal amount due on
the date of the Event of Default (the later being the
"Acceleration Prepayment Premium").
6.2.3.2. After the First (1st) Loan Year.
Following an Event of Default after expiration of the
first (1st) Loan Year, including but not limited to any
transfer or conveyance of any right, title or interest
in the Real Property and/or Improvements encumbered by
the Deed of Trust, which gives Lender the right to
accelerate the maturity of the Note pursuant to the
terms of the Deed of Trust, if Lender elects to
accelerate the maturity of the Note, Borrower agrees to
pay, as an additional amount to be secured by the Deed
of Trust, the Prepayment Premium which would be
applicable had Borrower elected to prepay the Loan on
the date of the Event of Default, as set forth in
Section 6.2.2, above.
6.2.4. Waiver. By initialing this
subsection below, Borrower expressly waives any right
under California Civil Code 2954.10 or otherwise to
prepay the Loan, in whole or in part, without paying the
applicable Prepayment Premium or Acceleration Prepayment
Premium, as hereinabove set forth. Borrower
acknowledges that prepayment or acceleration of the Loan
may result in Lender incurring additional costs
(including lost opportunity costs), expenses or
liabilities. Borrower therefore agrees that the
Prepayment Premium or, as applicable, the Acceleration
Prepayment Premium represents a reasonable estimate of
the prepayment costs, expenses or liabilities Lender may
suffer on a prepayment or acceleration. Borrower agrees
that Lender's willingness to offer the Regular Interest
Rate to Borrower is sufficient and independent
consideration, given individual weight by Lender, for
this waiver. Borrower understands that Lender would not
offer the Regular Interest Rate to Borrower absent this
waiver.
6.3. Treatment of Payments. All payments of
principal, interest, Late Charge (as defined below),
Prepayment Premium and Acceleration Prepayment Premium,
if any, due under this Agreement or the Note shall be
paid to Lender by wire transfer of immediately available
funds to such bank or place, or in such other manner, as
Lender may from time to time designate. If such payment
is received by Lender (or Lender's designee) at or
before 2:00 p.m., such payment will be credited to
Borrower's account as of the date on which received. If
such payment is received by Lender (or Lender's
designee) after 2:00 p.m., such payment will be credited
to Borrower's account on the business day next following
the date on which received. Each installment payment
under this Agreement shall be applied in the following
order of priority: (i) first, to any costs or expenses
for which Borrower is liable hereunder or under the
other Loan Documents, including any unpaid Late Charge;
(ii) second, to fees dues to Lender, if any; (iii)
third, to accrued and unpaid Default Interest, if any;
(iv) fourth, to accrued and unpaid Regular Interest; and
(v) to unpaid principal.
6.4. No Set-Off. Each payment of principal,
Interest or other amount payable by Borrower under this
Agreement, the Note or any other Loan Document shall, to
the extent permitted by applicable law, be made without
set-off or counterclaim and free and clear of, and
exempt from, and without deduction or withholding for or
on account of, any present or future Taxes levied,
imposed, collected, withheld or assessed by any
Governmental Authority or any political subdivision or
taxing authority thereof. Borrower shall indemnify
Lender against any such Taxes (other than Taxes on the
overall net income of Lender imposed by any taxing
authority) which may be assessed against Lender or
claimed or demanded from Lender in respect of any amount
payable by Borrower hereunder (including, without
limitation, all amounts paid pursuant to this Section
6.4 or in respect of the Funding), and against any
costs, charges, expenses or liability arising out of or
in respect of any such assessment, claim or demand.
6.5. Late Charges. If any installment payable
hereunder shall not be received by Lender within ten
(10) calendar days of the date such installment is due,
irrespective of whether such failure constitutes an
Event of Default under Section 13.1, below, then Lender
shall have the option, subject to the provisions of
Section 17.7, below, to charge Borrower a late payment
charge ("Late Charge") of five percent (5%) of the
amount of each installment overdue. The parties hereby
recognize that the Late Charge is a reasonable
approximation of the additional administrative costs,
collection costs and other direct and indirect costs
which may be sustained by Lender as a result of the
failure of Borrower timely to pay amounts due hereunder.
This Section 6.5 and the amount for which it provides,
shall not limit Lender's right under this Agreement, the
Note, the Deed of Trust or otherwise, to compel prompt
performance thereunder. Borrower's failure to collect
such Late Charge shall not constitute a waiver of
Lender's right to require payment of such Late Charge
for past or future defaults. The Late Charge shall be
in addition to all other rights and remedies available
to Lender upon the occurrence of a default under the
Loan Documents. BORROWER ACKNOWLEDGES AND AGREES THAT
IT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO FIX
THE ACTUAL DAMAGES RESULTING FROM BORROWER'S FAILURE TO
PAY AMOUNTS WHEN DUE AND THEREFORE, SUBJECT TO THE
PROVISIONS OF SECTION 17.7, HEREOF, SHALL PAY SUCH LATE
CHARGE NOT AS A PENALTY, BUT FOR THE PURPOSE OF
DEFRAYING THE EXPENSES INCIDENT TO SERVICING THE LOAN
AND HANDLING AMOUNTS PAST DUE. FURTHER, BORROWER AGREES
THAT A CHARGE OF FIVE PERCENT (5%) OF EACH DELINQUENT
PAYMENT HEREUNDER IS A REASONABLE ESTIMATE OF THE
DAMAGES TO LENDER. THE LATE CHARGES SHALL BE PAYABLE BY
BORROWER WITHOUT PREJUDICE TO THE RIGHTS OF LENDER TO
COLLECT ANY OTHER AMOUNTS TO BE PAID UNDER THIS NOTE OR
THE DEED OF TRUST (INCLUDING, WITHOUT LIMITATION,
LENDER'S RIGHT TO COLLECT DEFAULT INTEREST).
7. MATURITY DATE.
7.1. Maturity Date. Assuming no acceleration by
Lender and no prepayment in full of the Loan, the
Maturity Date of the Note is September 1, 2008. On the
applicable Maturity Date, Borrower shall pay to Lender
the entire outstanding principal, accrued and unpaid
Interest and any and all other outstanding charges, fees
or amounts owing to Lender by Borrower hereunder, under
the Note and any other sums due under any of the other
Loan Documents.
7.2. Right to Accelerate Maturity Date.
7.2.1. Lender's Option to Accelerate.
Lender shall have the right and option to accelerate the
Maturity Date if Borrower commits an Event of Default
under this Agreement, or otherwise defaults (after
applicable cure periods) in the payment or performance
of any of Borrower's obligations under any of the Loan
Documents.
7.2.2. Sale or Further Encumbrance.
Subject to Section 7.2.3, below, if, during the term of
the Loan, Borrower sells, conveys, assigns or otherwise
transfers (hereinafter collectively referred to as a
"Sale") or further pledges, mortgages or otherwise
encumbers (hereinafter collectively referred to as an
"Encumbrance") all or any part of the Real Property
and/or Improvements, whether any such Sale or
Encumbrance occurs directly or indirectly, voluntarily
or involuntarily, or by operation of law, without the
prior written consent of Lender (which may be withheld
in Lender's sole and absolute discretion), an Event of
Default shall be deemed to have occurred and Lender may,
at its sole option, elect to accelerate all sums due
under the Loan. Borrower shall pay Lender's out-of-
pocket expenses incurred in connection with the review
of any transfer for which Borrower requests consent
pursuant to this Section 7.2.2.
7.2.3. Change in Ownership. If, during the
term of the Loan, Borrower, or any partner, member or
shareholder of Borrower sells, conveys, transfers or
otherwise vests any direct or indirect interest in
Borrower, without the prior consent of Lender, (which
Lender may withhold at its sole discretion), an Event of
Default shall be deemed to have occurred and Lender may,
at its sole option, elect to accelerate all sums due
under the Loan. Borrower shall remain at all times
during the term of the Loan a wholly-owned subsidiary of
Datron/Transco, Inc. ("DTI"), Datron Systems
Incorporated ("DSI") or any other wholly-owned
subsidiary of either DTI or DSI.
Notwithstanding the foregoing, the ownership interest in
Borrower may be sold to any person or entity in
connection with a transaction whereby such person or
entity acquires all or a substantial part of DTI or DSI
("Pre-approved Transfer"); provided, that, in the event
of a Pre-approved Transfer, Borrower shall provide
Lender, within fifteen (15) days of such Pre-approved
Transfer, copies of any and all documents evidencing the
Pre-approved Transfer. Borrower shall pay Lender's out-
of-pocket expenses incurred in connection with the
review of any sale, conveyance, transfer or other
vesting pursuant to this Section 7.2.3.
8. LOAN DOCUMENTS. To evidence and/or secure the
payment to Lender of all sums due or to become due under
this Agreement and the Note, Borrower shall execute and
deliver or cause to be executed and delivered to Lender,
among other things, the following documents and
instruments:
(a) the Note, substantially in the form attached
hereto as Exhibit "B;"
(b) the Deed of Trust, substantially in the form
attached hereto as Exhibit "C;"
(c) the Assignment of Leases, substantially
in the form attached hereto as Exhibit "D;"
(d) the Security Agreement, substantially in
the form attached hereto as Exhibit "E;"
(e) UCC Financing Statements, each in the
form attached hereto as Exhibit "F;"
(f) an Environmental Indemnity Agreement,
substantially in the form attached hereto as Exhibit "G;"
(g) the Subordination Agreement,
substantially in the form attached hereto as
Exhibit "H;"
(h) A Borrower's affidavit containing certain
warranties and representations by Borrower;
(i) an Estoppel Certificate, substantially in
the form attached hereto as Exhibit "I" from
each Tenant;
(j) A Guaranty, substantially in the form attached
hereto as Exhibit "K;"
(k) A certificate regarding personal property
containing certain warranties and
representations by Borrower regarding the
personal property included in the Project; and
(l) Such other papers and documents as may be
required by this Agreement, the
Application/Commitment or as Lender may
reasonably require.
The Loan Documents shall create in favor of Lender a
perfected first-lien encumbrance or security interest in
the Project and any other collateral covered thereby.
9. LOAN FEE. As consideration to Lender for its
commitment to make the Loan, Borrower has heretofore
paid to Lender a Loan Fee in the amount of Ninety-Nine
Thousand and No/100 U.S. DOLLARS (U.S. $99,000.00) (as
described more fully in Section 2.33 above). On the
Closing Date, Lender shall refund the entire Loan Fee to
Borrower, less all of Lender's out-of-pocket expenses
and costs expended in connection with the Loan
("Costs"), which Costs shall include, but not be limited
to, fees and expenses for Lender's outside counsel,
title insurance charges and premiums, survey costs,
transfer or recording taxes and fees; provided, however,
Lender may, in its sole discretion, withhold a
reasonable portion of the Loan Fee to be refunded so
that Lender may pay all invoices in respect of Costs
received after the Closing Date.
10. REPRESENTATIONS AND WARRANTIES. To induce Lender
to execute this Agreement and perform the obligations of
Lender hereunder, Borrower hereby represents and
warrants for the benefit of Lender as of the date hereof
as follows:
10.1. Title. Borrower has all power, authority
and legal right and all necessary Governmental Approvals
to own the Project and to create a Lien on and security
interest in the Project pursuant to the Loan Documents
to be executed and delivered by Borrower, and to execute
and deliver to Lender this Agreement, the Note, the
other Loan Documents and any other documents or
instruments contemplated herein or therein to be
executed and delivered by Borrower, and to observe and
perform the provisions hereof and thereof. To the best
of Borrower's knowledge after due investigation, each of
the Tenants have all power, authority and legal right
and all Governmental Approvals required to operate the
Building in compliance with applicable law.
10.2. No Litigation. Except for claims fully
covered by insurance, where the insurance company is
defending such claims and such defense is not being
provided under a reservation of rights, and except as
disclosed in writing to Lender prior to the date hereof,
there is no pending litigation or unsatisfied judgment
entered of record against the Borrower or the Project.
No litigation or proceedings are pending, or to
Borrower's knowledge are threatened, against any
Affiliated Party which might affect: (i) the validity
or priority of the lien of the Deed of Trust; (ii) the
ability of Borrower or Guarantor hereof to perform their
respective obligations pursuant to and as contemplated
by the terms and provisions of this Agreement and the
other Loan Documents; or (iii) materially the operations
or financial condition of the Project, Borrower, or any
Affiliated Party.
10.3. Due Authorization. Borrower is a
corporation duly organized under the laws of California
and validly existing under the laws of the State of
California. The execution and delivery of the Loan
Documents and all other documents executed or delivered
by or on behalf of Borrower and pertaining to the Loan
have been duly authorized or approved by Borrower and,
when executed and delivered by Borrower or when caused
to be executed and delivered on behalf of Borrower, will
constitute the legal, valid and binding obligations of
the obligor thereon, enforceable in accordance with
their respective terms except as limited by bankruptcy,
insolvency, or other laws of general application
relating to the enforcement of creditor's rights, and
the payment or performance thereof will be subject to no
offsets, claims or defenses of any kind or nature
whatsoever.
10.4. Breach of Laws or Agreements. Neither
the execution, delivery or performance of this
Agreement, the Note, the other Loan Documents, or any
other documents or instruments contemplated herein or
therein to be executed and delivered by Borrower, the
consummation of the transactions contemplated hereby or
thereby, nor compliance with the provisions hereof and
thereof, will conflict with or result in a breach of (i)
any of the provisions of any applicable license, permit,
statute, ordinance, law, judgment, order, writ,
injunction, decree, rule or regulation of any court,
administrative agency or other governmental authority,
(ii) any determination or award of any arbitrator, (iii)
any agreement or instrument to which Borrower or any
Guarantor is a party or by which it or any of the
Project is bound, (iv) any of the provisions of
Borrower's bylaws or other governing documents or
resolutions, or shareholders' agreements, or constitute
a default under any thereof, or (v) result in the
creation or imposition of any lien, charge or
encumbrance upon the Project, except as permitted by the
Loan Documents and the other documents and instruments
contemplated herein and therein to be executed and
delivered by Borrower.
10.5. Leases. Borrower and its agents have not
entered into any leases or other arrangements for the
occupancy of all or any portion of the Project other
than leases shown on the most recent rent roll furnished
to Lender (the "Rent Roll"). All leases disclosed on
the Rent Roll are in full force and effect and to
Borrower's knowledge, there are no existing defaults
thereunder other than as disclosed in writing to Lender.
10.6. Condemnation. (i) No condemnation of any
portion of the Project, (ii) no condemnation or
relocation of any roadways abutting the Project, and
(iii) no denial of access to the Project from any point
of access to the Project, has commenced or, to
Borrower's knowledge, is contemplated by any
Governmental Authority.
10.7. Consents and Taxes. No consent, approval
or other authorization of or by any court,
administrative agency or other Governmental Authority is
required in connection with the execution, delivery,
performance, or consummation of the transactions
contemplated by this Agreement, or the Loan Documents to
be executed and delivered by Borrower. Borrower has
filed all tax returns required to be filed by it and is
not in default in the payment of any Taxes levied or
assessed against it, any of its assets or any of the
Project.
10.8. Condition of Improvements. To the best
of Borrower's knowledge after diligent investigation and
inquiry, the foundations and structure of the
Improvements are structurally sound, and the various
mechanical systems have adequate capacities for the
purposes for which the Improvements are to be used and
are in good working condition. To the best of
Borrower's knowledge after diligent investigation and
inquiry, the Improvements were built in substantial
compliance with applicable plans and specifications
furnished to the Lender's engineering consultant, and
the Improvements are in full compliance with all
applicable Building Laws, including without limitation
the Americans With Disabilities Act of 1990 and all laws
relating to sprinklers. The Building has a clear height
of twenty-six (26) feet and contains three (3) grade
level doors and one (1) dock high door. To the best of
Borrower's knowledge after diligent investigation and
inquiry, certificates of occupancy with respect to the
Improvements, and any other certificates which may be
required to evidence compliance with building codes and
permits and approval for full occupancy of the
Improvements and all installations therein have been
issued by all appropriate authorities. Borrower has no
knowledge of required capital expenditures or deferred
maintenance other than those that would be normally
expected for a building of similar age and type. No
notice of violation of any Building Law has been
received. No construction or other work has commenced
nor shall any construction or other work be commenced on
the Real Property and/or Improvements prior to the
Closing Date which has resulted or could result in
mechanics', materialmen's or laborers' lien claims on
the Project prior to the lien of the Deed of Trust.
10.9. Information Correct. All financial
statements furnished to Lender by Borrower, Guarantor or
any Affiliated Party fairly present the financial
condition of such persons or entities and were prepared
in accordance with generally accepted accounting
principles consistently applied. All other information
previously furnished by Borrower, Guarantor or any
Affiliated Party to Lender in connection with the Loan
is true, complete and correct in all respects except as
otherwise disclosed to Lender in writing and does not
fail to state any material fact necessary to make the
statements made not misleading. Neither Borrower nor
Guarantor has misstated or failed to disclose to Lender
any material fact relating to: (i) the condition, use
or operation of the Project; (ii) the status or any
material condition of any tenant or lease at the Project
known to it; (iii) Borrower; (iv) Guarantor; or (v) the
litigation disclosure provided by Borrower and
Guarantor, except as disclosed in writing to Lender
prior to the date hereof.
10.10. Material Adverse Change. No material
adverse change in the operations or financial condition
of Borrower, Guarantor or any Affiliated Party has
occurred since the respective effective dates of
its/their financial statements previously submitted to
Lender, and no material adverse change in the condition
(physical or otherwise) of the Project has occurred
since the date of the Application/Commitment.
10.11. Solvency. Neither Borrower nor Guarantor
is (i) currently insolvent on a balance sheet basis, or
(ii) currently unable to pay its debts as they come due;
and no bankruptcy or receivership proceedings are
contemplated or pending as to any of them.
10.12. Zoning. The use of the Project (including
contemplated accessory uses) does not violate (i) any
Law (including subdivision, zoning, building,
environmental protection and wetlands protection Laws),
or (ii) any restrictions of record, or any agreement
affecting the Project or any part thereof. Without
limiting the generality of the foregoing, Borrower has
complied with all Governmental Approvals. The Project
includes parking for three hundred twelve (312)
vehicles, which parking complies with all applicable
zoning ordinances and tenant lease requirements.
10.13. Utilities. The Project has adequate water,
gas and electrical supply, storm and sanitary sewerage
facilities, other required public utilities, fire and
police protection, and means of appropriate access
between the Project and public highways.
10.14. Brokerage Fees. No brokerage fees or
commissions are payable by or to any person in
connection with this Agreement or the Loan to be
disbursed hereunder other than fees payable to Sunrise
Mortgage and Investment Company, which fees shall be
paid by Borrower.
10.15. Encroachments. No building or other
Improvement on the Real Property encroaches upon any
building line, setback line, side yard line, or any
recorded or visible easement (or other easement of which
Borrower has knowledge with respect to the Real
Property), except as shown on the Survey.
10.16. Separate Parcel. The Project is taxed
separately without regard to any other property and for
all purposes the Project may be mortgaged, conveyed, and
otherwise dealt with as an independent parcel.
10.17. ERISA. The assets of Borrower are not
"plan assets" of any employee benefit plan covered by
ERISA or 4975 of the Internal Revenue Code. The
transactions contemplated by this Agreement by or with
Borrower are not in violation of state statutes
regulating investments of and fiduciary obligations with
respect to "governmental plans," as defined in 3(32)
of ERISA.
10.18. No Default. No Event of Default has
occurred and is continuing.
10.19. Trade Name; Principal Place of Business.
Borrower uses no trade name other than its actual name
set forth herein. The principal place of business of
Borrower is as stated in Section 17.3, below.
10.20. FIRPTA. Borrower is not a "foreign person"
within the meaning of 1445 or 7701 of the Internal
Revenue Code.
10.21. RICO. Borrower has not been charged with
nor, to its knowledge, is it under investigation for,
possible violations of the Racketeer Influenced and
Corrupt Organizations Act, the Continuing Criminal
Enterprise Act, the Controlled Substance Act of 1978, or
similar laws providing for the possible forfeiture of
any of its respective assets or properties.
10.22. No Casualty. No part of the Project have
been damaged by fire or other casualty except as
disclosed in writing to Lender.
10.23. Hazardous Materials. Borrower represents
(i) that to the best of its knowledge following inquiry
as a duly diligent property owner, (a) the Project has
been and is free from contamination by Hazardous
Materials and petroleum products (including, without
limitation, asbestos in any form, urea formaldehyde,
polychlorinated biphenyls, underground storage tanks,
atmospheric radon at levels over four (4) picocuries per
cubic liter and any other substances exposure to which
is prohibited, limited or regulated by any federal,
state, county, regional or local authorities or which
pose a hazard to public health), and (b) no release of
any such Hazardous Materials or petroleum product has
occurred on or about the Project, (ii) that the Project
currently complies, and will comply based on its
anticipated use, with all legal requirements relating to
the environment and the Hazardous Materials Laws, (iii)
that, in connection with the ownership, operation, and
use of the Project, all necessary notices have been
filed and all required permits, licenses and other
authorizations have been obtained, including, without
limitation, those relating to the generation, treatment,
storage, disposal or use of the Hazardous Materials and
petroleum products, and (iv) that to the best of
Borrower's knowledge following inquiry as duly diligent
property owner, there is no present, past or threatened
investigation, inquiry or proceeding relating to the
environmental condition of, or to the events, on or
about the Project.
11. BORROWER'S COVENANTS. In addition to the other
covenants and undertakings herein contained, Borrower
hereby covenants and agrees with Lender from and after
the date hereof and during the term of this Agreement,
as follows:
11.1. Escrow Deposits.
11.1.1. Unless specifically waived by a
separate written agreement, Borrower shall deposit
monthly with Lender a sum equal to one twelfth (1/12) of
the amount estimated by Lender to be required to pay on
an annual basis, at least thirty (30) days prior to
their respective due dates, for Taxes, assessments,
ground rent and insurance premiums for the Project (the
"Escrow Account"). Lender shall not pay interest on or
segregate the Escrow Account unless required to do so
under applicable law. If applicable law requires Lender
to segregate the Escrow Account, Borrower shall execute
such documents as Lender, in its sole discretion, deems
necessary to perfect its security interest in the Escrow
Account. On the Closing Date, Borrower shall make an
initial deposit with Lender of a sum equal to one-
twelfth (1/12) of the estimated annual property taxes
and assessments, a sum equal to one-twelfth (1/12) of
the annual ground rent, if applicable, and a sum equal
to one-twelfth (1/12) of the estimated annual insurance
premiums, multiplied by the number of months elapsed in
the respective billing periods.
11.1.2. The Escrow Account is hereby pledged
as additional security for the Loan, shall be held to be
irrevocably applied for the purposes for which made
hereunder and shall not be subject to the direction or
control of Borrower; provided, however, that neither
Lender nor any depository holding such funds shall be
liable for any failure to apply to the payment of taxes,
assessments, ground rent or insurance premiums any
amount so deposited unless (i) Borrower shall have
requested Lender or said depository in writing to make
application of such funds to the payment of the
particular taxes, assessments, ground rent or insurance
premiums as the case may be, accompanied by the bills
therefor, (ii) there shall exist no Event of Default
hereunder or under any of the Loan Documents, (iii)
there are sufficient funds in the Escrow Account to pay
the particular taxes, assessments, ground rent or
insurance premiums and (iv) following payment of such
taxes, assessments, ground rent or insurance premiums,
the Escrow Account will be "in balance" in the
reasonable opinion of Lender.
11.1.3. Notwithstanding the foregoing,
Lender hereby waives the deposit and escrow requirements
set forth above in this Section 11.1.1, unless: (i) an
Event of Default exists under any of the Loan Documents;
(ii) Borrower fails to comply with all of Lender's
insurance requirements, as set forth in Section 11.3.1,
below; (iii) Borrower fails to pay the required monthly
payment of principal and interest as and when due more
than three (3) times in any twelve (12) month period; or
(iv) Borrower fails to provide evidence to Lender of
Borrower's payment, at least ten (10) days prior to
their respective due dates, of any such Taxes,
assessments, ground rent and insurance premiums for the
Project. Without limiting the foregoing, Borrower shall
be liable for the payment of all insurance premiums,
taxes, assessments, ground rent or any other lienable
impositions as required under the Loan Documents,
including, without limitation, any such Taxes,
assessments, ground rent, insurance premiums or any
other lienable impositions which Lender pays prior to
taking title to the Project (or any portion thereof) or
which remain unpaid after Lender takes title to the
Project (or any portion thereof), and Lender shall not
be required to establish that it incurred any loss or
damage prior to seeking recourse in connection
therewith.
11.2. Payment of Taxes. Borrower agrees to pay
prior to the date when delinquent all general, special
and supplemental Taxes, including, without limitation,
all non-governmental levies and assessments such as
maintenance charges, owner association dues and charges,
and assessments, fees, levies and charges resulting from
covenants, conditions and restrictions affecting the
Project, which are assessed against or imposed upon the
Project, or become due and payable with respect to the
Project, or which create or are secured by a lien upon
the Project (all of such Taxes, assessments, fees,
levies and charges are hereinafter collectively referred
to as "Impositions"). For the purposes of this Section
11.2, "Impositions" shall specifically exclude (i) any
such Taxes or withholdings imposed on interest income
under 871 or 881 of the Internal Revenue Code or any
corresponding provisions of succeeding laws or similar
state laws, and (ii) any amounts required to be withheld
under 1441 or 1442 of the Internal Revenue Code to
collect any Taxes described in this Section 11.2.
Borrower shall, promptly upon receipt, furnish to Lender
all official receipts evidencing payment of any such
Impositions (which shall be either originals, duplicate
originals or copies duly certified or authenticated).
Lender may, but is not required to, pay at any time and
from time to time any amount in respect of such
Impositions in which event Borrower shall, in each
instance, reimburse Lender on demand therefor and pay to
Lender the additional amounts specified above.
Borrower shall have the right before any
delinquency occurs to contest in good faith the amount
or validity of any Imposition by appropriate legal
proceedings; provided, any such contest by Borrower
shall not in any way release, modify or extend
Borrower's obligation to pay an Imposition at the time
and in the manner provided in this Section 11.2, unless
Borrower gives prior written notice to Lender of
Borrower's intent to contest the Imposition, and, at
Lender's sole option, (i) Borrower demonstrates to
Lender's reasonable satisfaction that the contest
proceedings shall conclusively operate to prevent the
sale of the Project or to stay payment of the Imposition
prior to final determination of the proceedings, or
(ii) Borrower furnishes a good and sufficient bond or
other security for payment as requested by and
reasonably satisfactory to Lender and which security is
permitted by law to accomplish a stay of payment of the
Imposition. At the conclusion of such proceedings,
Borrower shall pay the Imposition as determined in such
proceedings. If Borrower fails to commence such contest
or, having commenced to contest the same, and having
deposited such security required by Lender for its full
amount, shall thereafter fail to prosecute such contest
in good faith or with due diligence, or, upon adverse
conclusion of any such contest, shall fail to pay such
Imposition, Lender may at its election (but shall not be
required to), pay and discharge any such Imposition and
any interest or penalty thereon, and any amounts so
expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if
the total amount of disbursements would exceed the face
amount of the Note) and shall bear interest from the
date expended at the Default Rate and be payable with
such interest upon demand. Lender in making any payment
hereby authorized relating to Impositions, may do so
according to any bill, statement or estimate procured
from the appropriate public office without inquiry into
the accuracy of such bill, statement or estimate or into
the validity of any Imposition, sale, forfeiture, tax
lien or title or claim thereof.
11.3. Maintenance of Insurance.
11.3.1. Borrower and/or Tenants shall at all
times during the term of this Loan fully comply with all
of Lender's insurance requirements as set forth on that
certain PPM Finance, Inc.'s Property and Liability
Insurance Requirements for Jackson National Life
Insurance Company (the "Insurance Requirements
Exhibit"), a copy of which is attached hereto as Exhibit
"L," including, without limitation, providing and
keeping in force the following types of insurance (as
required under the Insurance Requirements Exhibit): (i)
property coverage; (ii) personal property contents;
(iii) builder's risk; (iv) business income; (v)
comprehensive or commercial general liability; (vi)
boiler and machinery; (vii) flood insurance; (viii)
ordinance or law coverage; (ix) earthquake coverage; (x)
dram shop or liquor liability coverage; and (xi) such
other policies as Lender may reasonably require from
time to time. Without limiting the foregoing, Borrower
shall keep in force the earthquake coverage required
hereunder until such time that Borrower completes, and
Lender receives satisfactory evidence that Borrower
completed, all the retrofit work set forth in that
certain report prepared by Seismic Design Consultants,
Inc., bearing Job Number 29-10-98-56, dated July 15,
1998, including, without limitation, Section 7.3
thereof.
11.3.2. Borrower hereby presently and
absolutely assigns, transfers and sets over to Lender
all of its right, title and interest in and to any and
all insurance proceeds from all insurance policies
required hereunder or otherwise obtained by Borrower in
any way in connection with the Project or its operation,
whether required hereunder or not. Borrower shall
furnish Lender with evidence of insurance, as more
particularly described in the Insurance Requirements
Exhibit, and, upon Lender's written request, Borrower
shall promptly furnish Lender with an original of all
policies of insurance required by this Agreement. At
least ten (10) days prior to the expiration of each
insurance policy, Borrower shall furnish Lender with
evidence satisfactory to Lender of (i) the payment of
the premium or issuance of a binder with respect to each
insurance policy, and (ii) arrangements for the
reissuance of the policy continuing insurance in force
as required by this Agreement. In addition, Borrower
shall notify Lender in writing as soon as reasonably
practicable of any vacancy, change of title, tenant
occupancy or use, physical damage, additional
improvements or other factors affecting any insurance
contract. Notwithstanding the foregoing, upon the
occurrence of an Event of Default, Lender shall have the
right (but not the obligation) to place and maintain
insurance required to be placed and maintained by
Borrower hereunder, and use funds on deposit in the
Escrow Account for the payment of insurance to pay for
same. Any additional amounts expended therefor shall
constitute additional disbursements of Loan proceeds
(even if the total amount of disbursements would exceed
the face amount of the Note), and shall bear interest
from the date expended at the Default Rate and be
payable together with such interest upon demand.
11.3.3. Upon foreclosure of the Deed of
Trust or other transfer of title or assignment of the
Project in extinguishment, in whole or in part, of the
amounts due under the Loan, all right, title and
interest of Borrower in and to all policies of insurance
required by this Agreement shall inure to the benefit of
and pass to the successor in interest to Borrower, or
the purchaser or grantee of the Project. If prior to
any such transfer of title, any claim under any casualty
insurance policy has not been paid and distributed in
accordance with the terms of this Agreement, but such
claim is paid after any such transfer of title, then, to
the extent the amounts due hereunder were not fully
discharged in conjunction with such transfer of title,
the subject insurance proceeds shall belong to and be
paid to Lender. Borrower hereby assigns, transfers and
sets over to Lender all of its right, title, and
interest in and to any such insurance proceeds. The
balance of any such insurance proceeds, if any, shall
belong to Borrower.
11.4. Mechanics' Liens.
11.4.1. Borrower will not suffer or permit
any mechanics' lien claims to be filed or otherwise
asserted against the Project and will promptly discharge
the same if any claims for lien or any proceedings for
the enforcement thereof are filed or commenced;
provided, however, that Borrower shall have the right to
contest in good faith and with due diligence the
validity of any such lien or claim upon furnishing to
the Title Company such security or indemnity as it may
require to induce the Title Company to insure Lender's
first-lien priority against all such claims, liens or
proceedings; and provided further that Lender will not
be required to make any further disbursements of the
Loan proceeds (if any are required) unless (i) any
mechanics' lien claims shown by any title insurance
commitments or interim binders or certifications have
been released or insured against by the Title Company,
or (ii) Borrower shall have provided Lender with such
other security with respect to such claim as may be
acceptable to Lender, in its sole discretion.
11.4.2. If Borrower shall fail promptly to
discharge any mechanics' lien claim filed or otherwise
asserted or to contest any such claims and give security
or indemnity in the manner provided in Section 11.4.1
hereof, or, having commenced to contest the same and
having given such security or indemnity, shall
thereafter fail to prosecute such contest in good faith
or with due diligence, or fail to maintain such
indemnity or security so required by the Title Company
for its full amount, or, upon adverse conclusion of any
such contest, shall fail to cause any judgment or decree
to be satisfied and lien to be promptly released, then,
and in any such event, Lender may, at its election (but
shall not be required to), (i) procure the release and
discharge of any such claim and any judgment or decree
thereon, without inquiring into or investigating the
amount, validity or enforceability of such lien or claim
and (ii) effect any settlement or compromise of the
same, or may furnish such security or indemnity to the
Title Company. Any amounts expended by Lender in doing
so, including premiums paid or security furnished in
connection with the issuance of any surety company
bonds, shall be deemed to constitute disbursements of
the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note)
and shall bear interest from the date expended at the
Default Rate and be payable together with such interest
upon demand.
11.5. Maintenance, Repair and Restoration of
Improvements. Borrower shall (i) promptly repair,
restore or rebuild any Improvements which may become
damaged or be destroyed; and (ii) keep the Improvements
in good condition and repair, without waste.
11.6. Leases and Lease Reports. (i) Except in
the ordinary course of business and in the exercise of
sound business judgment, and at market rents, a schedule
of which has been approved by Lender and in accordance
with the standard form of lease approved by Lender,
Borrower shall not enter into, modify, amend, waive any
material provision of, terminate or cancel any leases of
all or any portion of the Project without the prior
written consent of Lender and all lessees shall be
required at Lender's election to execute estoppel
certificates and subordination, non-disturbance and
attornment agreements in form and substance satisfactory
to Lender; and (ii) within fifteen (15) days following
the end of each calendar month, Borrower shall deliver
to Lender a report showing the status of the leasing of
the Project certified by Borrower. Such report shall
include information on the amount of space covered by
any letters of intent, leases out for execution, and
fully executed leases; the rental under each lease
agreement or proposed lease agreement; the term of each
lease agreement; and a summary of any terms which vary
from the standard form of lease previously approved by
Lender. Any new lease, modification, amendment, waiver
of any material provision, termination or cancellation
of any lease of space in the Project without the prior
written consent of Lender shall be deemed by Lender, in
its sole discretion, as an Event of Default. Lender
reserves the right to charge an administrative fee for
any such modification, amendment, waiver, termination or
cancellation of any lease(s) done with or without
Lender's consent.
11.7. Compliance With Laws. Borrower shall
promptly comply with all applicable Laws of any
Governmental Authority having jurisdiction over Borrower
or the Project, and shall take all actions necessary to
bring the Project into compliance with all applicable
Laws, including without limitation all Building Laws
(whether now existing or hereafter enacted).
11.8. Alterations. Without the prior written
consent of Lender, Borrower shall not make any material
alterations to the Project (other than completion of
tenant work required pursuant to leases entered into in
accordance with the terms of this Agreement).
11.9. Personal Property. (i) All of Borrower's
personal property, fixtures, furnishings, furniture,
attachments and equipment located on or used in
connection with the Project, shall always be located at
the Project and shall also be kept free and clear of all
chattel mortgages, conditional vendor's liens and all
other liens, encumbrances and security interests of any
kind whatever, (ii) Borrower will be the absolute owner
of said personal property, fixtures, attachments and
equipment, and (iii) Borrower shall, from time to time,
furnish Lender with evidence of such ownership
satisfactory to Lender, including searches of applicable
public records.
11.10. Prohibition Against Cash Distributions and
Application of Cash Flow. Borrower shall first apply
all cash flow from the Project to pay Project expenses,
including amounts due to Lender pursuant to the Loan
Documents. No cash flow from the Project shall be
distributed to any partners, principals, members or
shareholders of Borrower or applied to the payment of
any obligations, debts or expenses not related to the
Project if an Event of Default has occurred or if there
is a reasonable likelihood that such money will be
necessary for the operation of the Project or the
payment of principal and interest due in connection with
the Loan within ninety (90) days following any
contemplated cash flow distribution.
11.11. Inspection by Lender. Borrower shall allow
Lender and Lender's representatives and agents full
access to the Project upon reasonable prior notice and
at reasonable times and shall provide to Lender such
documents relating to the Project as may be requested by
Lender or its representatives and agents. Lender may
disclose the existence and contents of such documents to
anyone it desires.
11.12. Furnishing Information. Borrower shall
deliver or cause to be delivered to Lender annual
financial statements for Borrower and annual financial
statements for Guarantor, and such other financial
information as Lender may reasonably require, as soon as
available and in all events no later than one hundred
twenty (120) days after the close of each fiscal year.
The annual statements shall be certified as true and
correct by an authorized financial officer of Borrower
or Guarantor hereof, as the case may be. If an Event of
Default has occurred or Lender reasonably believes that
previously provided financial statements are inaccurate,
Borrower and Guarantor shall promptly provide Lender
with such additional financial reports and/or
information as Lender may request in Lender's sole and
absolute discretion, and Lender may require that any
such financial statements be prepared in accordance with
generally accepted accounting principals and certified
by an independent certified public accountant. Borrower
shall also furnish a current operating statement for the
Project (including a rent roll if there are any leases
of the Project or any part thereof), at the time it
delivers its financial statements. Additionally,
Borrower and Guarantor hereof shall: (i) promptly
supply Lender with such information concerning its/their
respective affairs and property relating to the
development and operation of the Project as Lender may
hereafter request from time to time; (ii) at any time
during regular business hours permit Lender or any of
its agents or representatives to have access to and
examine all of its books and records regarding the
development and operation of the Project; (iii) permit
Lender to copy and make abstracts from any and all of
such books and records; (iv) immediately notify Lender
if Borrower receives any actual notice, action or lien
notice or otherwise becomes aware that the Project
violates or is alleged to violate any Building Law, or
of a condition or situation on the Project which will
constitute violation of a Building Law (whether now
existing or hereafter enacted), which notice to Lender
shall describe with particularity the Building Law
violation and Borrower's plan to promptly correct the
violation; and (v) if Borrower is a corporation and/or
has made filings with the government securities
commission or any national securities exchange, promptly
furnish to Lender copies of all (a) filings by it with
the government securities commission or any national
securities exchange, (b) mailings by it to its
shareholders, (c) reports furnished by it to rating
agencies and relating to its outstanding commercial
paper, (d) information generally supplied by it in
writing to security analysts, and (e) furnish other
information concerning Borrower and Guarantor as is
reasonably requested from time to time by Lender.
Notwithstanding any of the foregoing, Lender may, at any
time during the term of the Loan, require Borrower to
provide Lender with quarterly financial statements.
11.13. Documents of Further Assurance. Borrower
shall, from time to time, upon Lender's request,
execute, deliver, record and furnish such documents as
Lender may reasonably deem necessary or desirable to
(i) perfect and maintain perfected as valid liens upon
the Project, the liens granted by Borrower to Lender
under the Deed of Trust and the Assignment of Leases and
other security interests under the other Loan Documents
as contemplated by this Agreement, (ii) correct any
errors of a typographical nature or inconsistencies
which may be contained in any of the Loan Documents, and
(iii) consummate fully the transaction contemplated
under this Agreement.
11.14. Furnishing Reports. Borrower shall provide
Lender, promptly after receipt, with copies of all
inspections, reports, test results and other information
received by Borrower from time to time from its
employees, agents, representatives, architects and
engineers, which in any way relate to the Project, or
any part thereof.
11.15. Operation of Project and Zoning. As long
as any portion of the Loan remains outstanding, the
Project shall be operated in a first class manner as an
industrial and office facility. Borrower shall fully
and faithfully perform all of its covenants, agreements
and obligations under each of the leases of the Project.
Borrower shall not initiate or acquiesce in a zoning
variation or reclassification without Lender's written
consent.
11.16. Management, Agents' and Brokers' Contracts.
Other than in the ordinary course of business, Borrower
shall not enter into, modify, amend, waive any material
provision of, terminate or cancel any management
contracts for the Project or agreements with agents or
brokers, without the prior written approval of Lender.
If in the ordinary course of business Borrower shall
enter into, modify, amend, waive any provision of,
terminate or cancel any contracts or agreements (other
than management contracts) with agents or brokers,
Borrower shall notify Lender within ten (10) days after
such action.
11.17. Furnishing Notices. As soon as Borrower
becomes aware of the same, Borrower shall promptly
notify Lender in writing of any occurrence, event, or
condition (including, but not limited to, any pending or
threatened suit or proceeding against Borrower, or any
of its Affiliated Parties, or the Project, by or before
any court, administrative agency or other governmental
authority or any arbitrator which is not fully covered
by insurance), the enactment of any statute, ordinance
or law, or the giving of any notice or other
communication by any party pursuant to any of the
Permitted Exceptions which, individually or in the
aggregate, has resulted or might result in (i) an Event
of Default hereunder or under any one or more of the
other Loan Documents, (ii) the breach of any of the
representations and warranties of Borrower set forth in
this Agreement or in any of the other Loan Documents or
any other documents or instruments contemplated herein
or therein to be executed and delivered by Borrower, or
(iii) a default in any obligation of Borrower to any
third party.
11.18. Corporate Existence. Borrower shall
maintain its existence as a corporation in good standing
under the laws of the State of California.
11.19. Articles of Incorporation. Without the
prior written consent of Lender, Borrower shall not
permit or suffer any amendment or modification of its
articles of incorporation, and shall not permit or
suffer the admission of any new shareholders, except as
permitted pursuant to Section 7.2.3.
11.20. Publicity. During the term of the Loan,
Lender may issue or publish releases or announcements
stating that the financing for the Project is being
provided by Lender to Borrower, and Borrower hereby
consents thereto. In addition, Lender may, without the
need of additional consents, answer any questions from
third parties about Lender's credit experience with
Borrower and/or Guarantor.
11.21. No Additional Debt. Other than customary
trade payables paid within sixty (60) days after they
are incurred, Borrower shall not refinance, incur any
liability or indebtedness secured by the Project or any
part thereof, or mortgage, hypothecate, assign, pledge,
grant security interests in or otherwise encumber or
allow any Lien to be placed of record against all or any
part of the Project (except in favor of Jackson National
Life Insurance Company or its successors or Affiliated
Parties, whether or not Jackson National Life Insurance
Company is, at that time, the holder of the indebtedness
evidenced by the Note, the Deed of Trust and the other
Loan Documents), without the prior express written
consent of Lender which consent may be given or withheld
in Lender's sole discretion.
11.22. Payments. Borrower shall pay all sums due
pursuant to this Agreement, the Note, the Deed of Trust
and the other Loan Documents to be executed and
delivered by Borrower, as and when the same shall be due
and payable and shall perform all of its obligations
hereunder and thereunder in accordance with the terms
hereof and thereof.
12. SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES. All covenants, agreements, representations
and warranties made by Borrower herein, in the Deed of
Trust, in the Note, and all other Loan Documents, and in
any certificates delivered by Borrower to Lender
hereunder, and other instruments described in or
delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Loan
Closing and shall continue in effect so long as this
Agreement or any other Loan Document (other than the
Environmental Indemnity Agreement) or any of the
instruments described herein or therein are outstanding.
All covenants, agreements, representations and
warranties in this Agreement and in any other Loan
Document shall bind the party making the same and its
successors and assigns and shall inure to the benefit of
and be enforceable by each party to whom made and by
their respective successors and assigns.
13. EVENTS OF DEFAULT.
13.1. Events of Default. The occurrence of any
one or more of the following events shall constitute an
event of default under this Agreement, the Note, the
Deed of Trust and all of the other Loan Documents (each
of which is hereafter referred to as an "Event of
Default"):
(a) If Borrower fails to make when due any
payment of any installment of Regular Interest or
Default Interest, or any required payment, repayment or
prepayment of the principal of the Loan, or fails to
make when due any other payment, of any kind or nature
whatsoever (including, but not limited to payment of the
balloon payment due and owing on the Maturity Date) owed
by Borrower under the Note, this Agreement or any of the
other Loan Documents, whether owed to Lender or to a
third party;
(b) If Borrower defaults in the performance
of any of its non-monetary covenants, agreements and
obligations under this Agreement and fails to cure such
default within thirty (30) days after written notice
thereof from Lender; provided, however, that if such
default is reasonably susceptible of cure, but cannot be
cured within such thirty (30) day period, then so long
as Borrower promptly commences cure and thereafter
diligently pursues such cure to completion, the cure
period shall be extended for an additional thirty (30)
days, within which Borrower may complete such cure;
(c) If at any time or times hereafter any
representation or warranty (including the
representations and warranties of Borrower set forth in
any Loan Document), statement, report or certificate
furnished to Lender in connection with the Loan is not
true and correct in any material respect;
(d) If any petition is filed by or against
Borrower or any Affiliated Party under the Federal
Bankruptcy Code or any similar state or federal Law,
whether now or hereafter existing (and, in the case of
involuntary proceedings, failure to cause the same to be
vacated, stayed or set aside within thirty (30) days
after filing);
(e) If any assignment, pledge, encumbrance,
transfer, hypothecation or other disposition is made in
violation of Sections 7.2.2 or 7.2.3 of this Agreement;
(f) If Borrower or Guarantor shall fail to
pay any debt owed by it or is in default under any
agreement with Lender or any other party (other than a
failure or default for which the maximum liability for
Borrower or Guarantor does not exceed twenty-five
percent (25%) of their respective assets) and such
failure or default continues after any applicable grace
period specified in the instrument or agreement relating
thereto;
(g) any Governmental Approval necessary in
connection with the execution or performance of any of
this Agreement, the Note, the Deed of Trust or the other
Loan Documents, or in connection with the operation of
the Building, or any other documents required to be
delivered by Borrower hereunder or under any other Loan
Document is modified, revoked or withdrawn in a way
materially prejudicial to the rights of Lender
hereunder.
(h) Borrower suspends its business operation
with respect to the Building other than as a result of a
casualty or eminent domain; or Borrower transfers or
disposes all of or substantially all of its assets other
than in the ordinary course of its business as
contemplated by this Agreement;
(i) by virtue of the enactment of any
federal, state or local law, ordinance or regulation, or
as a result of a determination of any court of competent
jurisdiction, arbitrator in a binding arbitration or
judicial referee, the Deed of Trust or the other Loan
Documents cease to constitute the legal, valid and
binding obligations of Borrower enforceable in
accordance with their terms;
(j) the Deed of Trust or the recordation
thereof ceases to be in full force and effect and to
create a Lien in favor of Lender with the first-lien
priority required by this Agreement; or
(k) it becomes unlawful for Borrower to
perform any of its material obligations under this
Agreement, the Note, the Deed of Trust or the other Loan
Documents.
13.2. Remedies Conferred Upon Lender.
13.2.1. Lender's Remedies. Upon the
occurrence of any Event of Default, Lender shall, have
the right (but not the obligation) to pursue any one or
more of the following remedies concurrently or
successively, it being the intent hereof that all such
remedies shall be cumulative and that no such remedy
shall be to the exclusion of any other: (i) declare the
Note to be immediately due and payable; (ii) use and
apply any monies deposited by Borrower with Lender,
including amounts in the Escrow Account, regardless of
the purpose for which the same was deposited, to cure
any such default or to apply on account of any
indebtedness under this Agreement which is due and owing
to Lender; and (iii) exercise or pursue any other right
or remedy permitted under this Agreement or any of the
Loan Documents or conferred upon or available to Lender
at law, in equity or otherwise.
13.2.2. Non-Waiver of Remedies. No waiver
of any breach or Event of Default hereunder shall
constitute or be construed as a waiver by Lender of any
subsequent breach or Event of Default or of any breach
or default of any other provision of this Agreement.
13.2.3. Rents and Profits. Upon the
occurrence of an Event of Default, Lender may, but shall
not be limited to, enforce Borrower's assignment for
security purposes to Lender of the Leases and the Rents
and Profits, as set forth herein, in the Assignment of
Leases, or otherwise under the Loan Documents, by
taking, without limitation, one or more of the following
actions: (a) obtaining the appointment of a receiver;
(b) obtaining possession of the Leases and/or Rents and
Profits; (c) delivery to any one or more of the tenants
of a written demand for turnover of the Rents and
Profits in accordance with 2938 of the California
Civil Code; or (iv) delivery to Borrower of a written
demand for the Leases and/or the Rents and Profits in
accordance with 2938 of the California Civil Code
(collectively, the "Enforcement Actions"). On and after
the date Lender takes one or more of the Enforcement
Actions (the "Enforcement Date"), Lender shall be
entitled to enforce any rights it may have under the
Leases and/or collect and receive all Rents and Profits
that has accrued but remains unpaid and uncollected by
Borrower or its agent, and all Rents and Profits that
accrue on or after the Enforcement Date.
Notwithstanding whether Lender has taken one or more of
the Enforcement Actions, Borrower shall, upon the
occurrence of an Event of Default, immediately turnover
to Lender all Leases and all Rents and Profits then in
its possession, or thereafter collected or received by
Borrower or its agent. Lender may, in its sole
discretion, unless otherwise required by law, apply all
or any portion of the Rents and Profits to: (i)
reasonable costs, as described below, of protecting and
preserving the Project; (ii) the outstanding balance
under the Loan Documents, and/or (iii) otherwise, in
accordance with any of the Loan Documents. Neither the
taking of an Enforcement Action by Lender, nor the
collection, distribution or application of the Rents and
Profits by Lender shall do any of the following: (1)
make Lender a mortgagee in possession of the Project;
(2) constitute an action, render the Loan or any of the
Loan Documents unenforceable, violate 726 of the
California Code of Civil Procedure or, other than with
respect to marshalling requirements, otherwise limit any
rights available to Lender with respect to its security;
or (3) be deemed to create any bar to a deficiency
judgment pursuant to applicable law, notwithstanding
that the Enforcement Action may reduce the outstanding
balance under the Loan and the Loan Documents.
Notwithstanding the foregoing, the remedies set forth
herein shall be in addition to any and all other
remedies which Lender may have under 2938 of the
California Civil Code or other applicable law.
For purposes of this Agreement,
reasonable costs shall include only the following: (i)
expenditures for repairs and maintenance of the Project,
but only to the extent that such expenditures are
necessary to comply with applicable laws or cure an
emergency or life-threatening situation; (ii)
expenditures for taxes, but only to the extent that such
expenditures are necessary to prevent an imminent tax
sale of the Project, or any portion thereof; (iii) and
such other expenditures as Lender, in its sole and
absolute discretion, deems necessary.
13.2.4. Remedies Cumulative. The remedies
provided in this Agreement shall be in addition to, and
not in substitution for, the rights and remedies which
would otherwise be vested in Lender for the recovery of
damages, or otherwise, upon a breach of any of the
representations, warranties, covenants, undertakings or
agreements of Borrower hereunder.
13.2.5. Indemnification. Without prejudice
to any other provisions of this Agreement, Borrower
shall indemnify Lender against any and all liabilities,
damages, claims, causes of action, losses and/or
expenses, which Lender may sustain or incur as a
consequence of the occurrence of an Event of Default,
including without limitation, reasonable attorneys'
fees.
14. EXPENSES, CHARGES AND ATTORNEYS' FEES.
14.1. Expenses. Borrower agrees to pay all
expenses of the Loan on the Closing Date and on demand
at such subsequent times as Lender may determine,
including all recording charges, title insurance
charges, costs of surveys, costs for certified copies of
instruments, escrow charges, fees, expenses and charges
of architectural/engineering consultants of Lender,
reasonable fees and expenses of Lender's attorneys, all
administrative fees and expenses in connection with any
modification of any of the terms of the Loan, and all
costs and expenses incurred by Lender in connection with
the determination of whether Borrower has performed the
obligations undertaken by Borrower under this Agreement
or has satisfied any conditions precedent to the
obligations of Lender under this Agreement. All such
expenses, charges, costs and fees shall be Borrower's
obligation regardless of whether the Loan is disbursed
in whole or in part, unless such failure to disburse is
due to Lender's wrongful failure to disburse hereunder.
Any and all advances or payments made by Lender under
this Agreement from time to time, or for fees of
architectural and engineering consultants and attorneys'
fees and expenses, if any, and all other Loan expenses
shall, as and when advanced or incurred by Lender,
constitute additional indebtedness evidenced by the Note
and secured by the Deed of Trust and the other Loan
Documents to the same extent and effect as if the terms
and provisions of this Agreement were set forth therein,
whether or not the aggregate of such indebtedness shall
exceed the aggregate face amount of the Note. Without
limiting the foregoing, Borrower shall indemnify Lender
against any and all liabilities, damages, claims, causes
of action, losses and/or expenses, which Lender may
sustain or incur as a consequence of Borrower's failure
to pay such expenses.
14.2. Attorneys' Fees and Expenses. If at any
time hereafter prior to repayment of the Loan in full,
Lender employs counsel for advice or other
representation (whether or not any suit has been or
shall be filed and whether or not other legal
proceedings have been or shall be instituted and, if
such suit is filed or legal proceedings instituted,
through all administrative, trial and appellate levels)
with respect to the Loan, the Project or any part
thereof, this Agreement or any of the Loan Documents,
including, but not limited to any proposed or actual
restructuring of the Loan, or to protect, collect,
lease, sell, take possession of, or liquidate any of the
Project, or to attempt to enforce any security interest
or lien on any of the Project, or to enforce any rights
of Lender or any of Borrower's obligations hereunder or
those of any other person, firm or corporation which may
be obligated to Lender by virtue of this Agreement or
any other agreement, instrument or document heretofore
or hereafter delivered to Lender by or for the benefit
of Borrower, or to analyze and respond to any request
for consent or approval made by Borrower, then, in any
such event, all of the reasonable attorneys' fees and
expenses arising from such services, and all expenses,
costs and charges relating thereto, shall bear interest
from the date expended at the Default Rate and shall be
paid by Borrower on demand and if Borrower fails to pay
such fees, costs and expenses, payment thereof by Lender
shall be deemed to constitute disbursement of the Loan
proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note)
and shall constitute additional indebtedness of Borrower
to Lender, payable on demand and secured by the Deed of
Trust and other Loan Documents. Notwithstanding the
foregoing, Lender's reasonable attorneys' fees and
expenses arising from Lender's analysis and response to
any request for consent or approval made by Borrower
shall not bear interest until ten (10) days after Lender
notifies Borrower in writing that such attorneys' fees
and expenses are due, and thereafter, any unpaid portion
of such attorneys' fees and expenses shall bear interest
at the Default Rate.
15. CASUALTY AND CONDEMNATION.
15.1. Lender's Election to Apply Insurance and
Condemnation Proceeds to Indebtedness. Upon any loss or
damage to any portion of the Improvements due to fire or
other casualty, or any taking of any portion of the
Project by condemnation or under power of eminent
domain, Lender shall have the right, but not the
obligation, to settle insurance claims and condemnation
claims or awards for more than One Hundred Thousand
Dollars ($100,000.00) and if Lender elects not to settle
such claim or award, then Borrower shall settle such
claim or award and such settlement shall be subject to
Lender's prior written approval. Borrower shall have
the right to settle claims or awards for less than such
amount, provided that Lender shall have the right to
settle any claim or award that Borrower has not settled
on or before one hundred twenty (120) days after the
date of such loss or prior to the date of such taking.
If (i) no Event of Default exists; (ii) no Event of
Default which constitutes a payment default has occurred
during the preceding twelve months; (iii) the proceeds
received by Lender, together with any additional funds
deposited with Lender by Borrower are sufficient, in
Lender's sole and absolute discretion, either to restore
the Project to its condition before the casualty or to
remedy the condemnation; (iv) local building and zoning
laws allow the Improvements to be rebuilt to that which
existed prior to the casualty or condemnation; (v) the
Loan-to-value ratio of the Improvements on completion of
the restoration will be sixty percent (60%) or less, as
determined by an Appraisal (unless the amount of
proceeds is less than three percent (3%) of the Loan
Amount); (vi) a loss of no more than five percent (5%)
of the commercial tenant rental income will result
through commercial tenants exercising rights to
terminate their leases as a result of the casualty or
condemnation; and (vii) Borrower complies with all
conditions set forth in Section 15.2, below, then
Borrower shall be entitled to use the insurance or
condemnation proceeds to rebuild the Improvements or to
remedy the effect of the condemnation, as the case may
be. The Appraisal required pursuant to the foregoing
provision shall be at Borrower's expense and Borrower is
required to provide proof of such payment to Lender and
Lender's Mortgage Correspondent. In all other cases,
Lender shall have the right (but not the obligation) to
collect, retain and apply to the indebtedness of
Borrower under this Agreement and the other Loan
Documents all insurance and condemnation proceeds (after
deduction of all expenses of collection and settlement,
including attorneys' and adjusters' fees and expenses),
and if such proceeds are insufficient to pay such amount
in full, to declare the balance remaining unpaid on the
Note and Deed of Trust to be due and payable forthwith
and to avail itself of any of the remedies afforded
thereby as in the case of any Event of Default. Any
proceeds remaining after application to the indebtedness
of Borrower under this Agreement and the other Loan
Documents shall be paid by Lender to Borrower or the
party then entitled thereto.
15.2. Borrower's Obligation to Rebuild and Use
of Proceeds Therefor. If Lender does not elect to or is
not entitled to apply fire or casualty insurance
proceeds to the indebtedness, as provided under Section
15.1, above, Lender shall have the right (but not the
obligation) to settle, collect and retain such proceeds,
and after deduction of all expenses of collection and
settlement, including attorneys' and adjusters' fees and
expenses, to release the same to Borrower periodically,
provided that Borrower shall: (i) expeditiously repair
and restore all damage to the portion of the
Improvements in question resulting from such fire or
other casualty, including completion of the construction
if such fire or other casualty shall have occurred prior
to completion, so that the Improvements will be
completed in accordance with the plans and
specifications approved by Lender; and (ii) if the
proceeds of fire or casualty insurance (and the
undisbursed available Loan proceeds for construction)
are, in Lender's sole judgment, insufficient to complete
the repair and restoration of the buildings, structures
and other improvements constituting the Project, then
Borrower shall promptly deposit with Lender the amount
of such deficiency.
Any request by Borrower for a disbursement by
Lender of fire or casualty insurance proceeds and funds
deposited by Borrower pursuant to this Section 15.2 and
the disbursement thereof shall be conditioned upon
Borrower's compliance with and satisfaction of the same
conditions precedent as would be applicable in
connection with construction loans made by institutional
lenders for projects similar to the Project, including
approval of plans and specifications submittal of
evidence of completion, updated title insurance, lien
waivers, and other customary safeguards. Borrower's
failure to comply with this Section 15.2 shall
constitute an Event of Default.
16. ENVIRONMENTAL COVENANTS AND INDEMNITY.
16.1. Compliance With Laws. Borrower shall
keep and maintain the Project in compliance with, and
shall not cause or permit the Project to be in violation
of any federal, state or local laws, ordinances or
regulations, now or hereafter in effect, relating to
environmental conditions, industrial hygiene, human
health or safety or Hazardous Materials (as defined
below) on, under or at the Project, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. 6901, et seq., ("RCRA"), the
Clean Air Act, 42 U.S.C. 7401, et seq., the Toxic
Substances Control Act, 15 U.S.C. 2601 through 2629,
the Safe Drinking Water Act, 42 U.S.C. 300f through
300j, and any similar State and local laws and
ordinances, including but not limited to Hazardous Waste
Control Act, California Health and Safety Code 25100,
et seq.; Hazardous Substance Account Act, California
Health and Safety Code 25300, et seq.; Hazardous
Substance Cleanup Bond Act of 1984, California Health
and Safety Code 25385, et seq., and related statutes
including 25356.1-25356.4 of the California Health
and Safety Code; Porter-Cologne Water Quality Control
Act, California Water Code 13000, et seq.; Safe
Drinking Water and Toxic Enforcement Act of 1986
("Proposition 65"), California Health and Safety Code
25249.5, et seq.; California Health and Safety Code
25220, et seq., 25280, et seq., 25359.7; California
Civil Code 3483; and California Code of Civil
Procedure 736; and in the regulations now or hereafter
adopted and publications now or hereafter promulgated
pursuant thereto, or any other federal, state or local
governmental law, ordinance, rule or regulation related
thereto (collectively, the "Hazardous Materials Laws").
16.2. Prohibited Acts. Borrower shall not use,
generate, manufacture, treat, handle, refine, produce,
process, store, discharge, release, dispose of or allow
to exist on, under or at the Project any flammable
explosives, radioactive materials, asbestos, organic
compounds known as polychlorinated biphenyls, chemicals
known to cause cancer or reproductive toxicity,
pollutants, contaminants, hazardous wastes, toxic
substances or related materials, including, without
limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous
wastes," "hazardous materials," or "toxic substances"
under the Hazardous Materials Laws (collectively
"Hazardous Materials"), except in compliance with all
applicable law. Furthermore, Borrower shall not allow
to exist on, under or at the Project, any underground
storage tanks or underground deposits unless they exist
in compliance with applicable Hazardous Materials Laws.
16.3. Notification; Right to Audit. Borrower
shall immediately advise Lender in writing of (i) any
actual, suspected or threatened release of any Hazardous
Materials on all or any part of the Project, or on
property immediately adjacent to the Project, (ii) any
and all enforcement, clean up, removal, mitigation or
other governmental or regulatory actions instituted,
contemplated or threatened pursuant to any Hazardous
Materials Laws affecting the Project, (iii) all claims
made or threatened by any third party against Borrower
or the Project relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from
any Hazardous Materials (the matters set forth in
clauses (ii) and (iii), above, are hereinafter referred
to as "Hazardous Materials Claims"), and (iv) Borrower's
discovery of any occurrence or condition on the Project
or any real property adjoining or in the vicinity of the
Project which could subject Borrower or the Project to
any restrictions on ownership, occupancy,
transferability or use of the Project under any
Hazardous Materials Laws. Without limiting the
foregoing, Lender, at Lender's sole expense, shall have
the right to perform, or cause to be performed,
environmental audits at such times during the Term of
the Loan as Lender reasonably believes that such an
audit may disclose the presence or release of any
Hazardous Materials or petroleum products or if an
environmental audit deems further testing necessary;
provided, however, that the cost of such audit(s) shall
be paid by Borrower if the environmental consultant (the
"Consultant") who performed the audit(s) initiates or
institutes an Operations and Maintenance Plan to be
strictly adhered to by Borrower, Borrower's Project
manager or other person or entity employed by Borrower
to operate and maintain the Project. Borrower shall
have the right to approve the Consultant retained by
Lender, which approval shall not be unreasonably
withheld or delayed; provided, however, that if the
Consultant retained by Lender is the same consultant who
prepared the Phase I Environmental Assessment, as set
forth in Section 2.39, above, Borrower shall not have
any such approval right.
16.4. Hazardous Materials Liabilities. Lender
shall have the right to join and participate in, as a
party if it so elects, any settlements, remedial
actions, legal proceedings or actions initiated in
connection with any Hazardous Materials Claims and to
have its reasonable attorneys' fees in connection
therewith paid by Borrower. Borrower shall be solely
responsible for, and shall indemnify, hold harmless and
defend (using counsel of Lender's choosing) Lender, its
directors, officers, employees, agents, successors and
assigns (hereinafter collectively called the
"Indemnitees") from and against, any loss, damage, cost,
expense or liability directly or indirectly arising out
of or attributable to the use, transportation,
generation, manufacture, treatment, handling, refining,
production, processing, storage, release, threatened
release, discharge, disposal, or presence of Hazardous
Materials on, under or at the Project (the losses,
damages, costs, expenses or liabilities against which
Borrower is obligated to indemnify and hold harmless the
Indemnitees under the provision of this Section are
hereinbelow collectively called "Hazardous Materials
Liabilities"), which Hazardous Materials Liabilities
include, without limitation: (i) all foreseeable and
unforeseeable consequential damages; (ii) the costs of
any required or necessary repair, cleanup or
detoxification of the Project, and the preparation and
implementation of any closure, remedial or other
required plans; and (iii) all reasonable costs and
expenses incurred by Lender in connection with clauses
(i) and (ii), including, without limitation, reasonable
attorneys' fees. At the Closing, Borrower will execute
a separate Environmental Indemnity Agreement in the form
attached as Exhibit "G."
16.5. Remedial Work. All monitoring and
investigation of site conditions, cleanup, containment,
removal, restoration or other remedial work for the
Project which is required by the Hazardous Materials
Laws or requested by Lender pursuant to this Section
16.5 is hereinafter referred to as the "Remedial Work."
All Remedial Work shall be conducted: (i) in a diligent
and timely manner by licensed contractors acting under
the supervision of a consulting environmental engineer
acceptable to Lender; (ii) pursuant to a detailed
written plan approved by any public or private agencies
or persons with the legal or contractual right to such
approval; (iii) with such insurance coverage pertaining
to liabilities arising out of the Remedial Work as is
customarily maintained with respect to such activities;
and (iv) only following receipt of any required permits,
licenses, or approvals. The selection of the Remedial
Work contractors and consulting environmental engineer,
the contracts entered into with such parties, all
disclosures to or agreements with any public or private
agencies or parties relating to the Remedial Work and
the written plan for the Remedial Work shall be subject
to Lender's prior written approval. In addition,
Borrower shall submit to Lender, promptly upon receipt
or preparation, copies of any and all reports, studies,
analyses, correspondence, governmental comments or
approvals prepared or received by Borrower in connection
with any Remedial Work. All costs and expenses of such
Remedial Work shall be paid by Borrower, including,
without limitation, the cost of the Remedial Work
contractors and the consulting and environmental
engineers, taxes and penalties assessed in connection
with the Remedial Work and Lender's reasonable fees and
costs incurred in connection with monitoring and
reviewing the Remedial Work. If Borrower shall fail to
commence or cause to be commenced in a timely manner or
fail diligently to prosecute the completion of such
Remedial Work, Lender may, but shall not be required to,
cause such Remedial Work to be performed, and all costs
incurred by Lender in connection therewith, together
with interest thereon at the Default Rate, shall be
reimbursed by Borrower upon demand and shall be secured
by the Deed of Trust.
16.6. Indemnification. BORROWER WILL INDEMNIFY
AND HOLD HARMLESS LENDER, ITS OFFICERS, DIRECTORS,
PARTNERS, EMPLOYEES, AGENTS, REPRESENTATIVES AND
ATTORNEYS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, CLAIMS, ACTIONS, SUITS,
COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) OF WHATEVER KIND OR NATURE ("CLAIMS") WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AT ANY TIME AGAINST
LENDER AND IN ANY WAY RELATING TO OR ARISING OUT OF OR
IN CONNECTION WITH THE ENVIRONMENTAL CONDITION OF THE
PROJECT AS A RESULT OF THE CONSTRUCTION OR MAINTENANCE
OF THE IMPROVEMENTS THEREON AND/OR THE USE, OCCUPATION
OR OPERATION OF THE PROJECT, OR OTHERWISE.
16.7. Survival. The obligations of Borrower
set forth in this Section 16 shall survive repayment of
the Loan, any judicial or non-judicial foreclosure of
the Deed of Trust and any deed in lieu of foreclosure.
17. GENERAL PROVISIONS.
17.1. Captions. The captions and headings of
various Articles and Sections of this Agreement and
Exhibits pertaining hereto are for convenience only and
are not to be considered as defining or limiting in any
way, the scope or intent of the provisions hereof.
17.2. Merger. This Agreement, the Note, the
Deed of Trust, and all the other Loan Documents referred
to herein, constitute the entire agreement of the
parties with respect to the Project and the Loan, and
all prior discussions, negotiations and document drafts
are merged herein and therein. This Agreement may not
be changed orally, but only by a written instrument
signed by each party hereto. Neither Lender nor any
employee of Lender has made or is authorized to make any
representation or agreement upon which Borrower may rely
unless such matter is made for the benefit of Borrower
and is in writing signed by an authorized officer of
Lender. Borrower agrees that it has not and will not
rely on any custom or practice of Lender, or on any
course of dealing with Lender, in connection with the
Loan unless such matters are set forth in this Agreement
or the Loan Documents or in an instrument made for the
benefit of Borrower and in a writing signed by an
authorized officer of Lender.
17.3. Notices. All notices, demands, requests
or other communications which any party hereto may be
required or may desire to give hereunder shall be in
writing, addressed as follows and shall be deemed to
have been properly given if hand delivered, if sent by
reputable overnight courier or if mailed by United
States registered or certified mail, postage prepaid,
return receipt requested:
If to Borrower: Datron Resources Inc.
304 Enterprise Street
Escondido, California 92029
Attention: Treasurer
If to Lender: Jackson National Life Insurance Company
c/o PPM Finance, Inc.
225 West Wacker Drive, Suite 1200
Chicago, Illinois 60606
Attention: Manager of Commercial Mortgage
Servicing
or at such other address as the party to be served with
notice may have furnished in writing to the party
seeking or desiring to serve notice as a place for the
service of notice. Unless otherwise expressly
stipulated in this Agreement, notices shall be deemed to
have been given or made, (i) in the case of notice by
mail on the earlier of the date reflected on the return
receipt or three (3) calendar days after deposit in the
U.S. mails, and (ii) in the case of delivery by courier,
by the courier's delivery receipt.
17.4. Modification; Waiver. No modification,
waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed
by the party against which the enforcement of such
modification, waiver, amendment, discharge or change is
sought. Lender reserves the right to charge an
administrative fee for any such modification, waiver,
amendment, discharge or change of this Agreement.
17.5. Governing Law. THIS AGREEMENT, THE NOTE,
THE DEED OF TRUST AND ALL OF THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE INTERNAL
LAWS OF THE STATE OF CALIFORNIA WITHOUT RESORT TO CHOICE
OF LAW PRINCIPLES.
17.6. Further Assurances. Borrower agrees to
execute and deliver such other instruments as may be
requested by Lender from time to time to effect and
confirm the transactions described herein and
contemplated hereby.
17.7. General Provisions Relating to Interest.
IT IS THE INTENTION OF THE PARTIES HERETO TO CONFORM
STRICTLY TO APPLICABLE USURY LAWS REGARDING THE USE,
FORBEARANCE OR DETENTION OF THE INDEBTEDNESS EVIDENCED
BY THIS AGREEMENT, THE NOTE, THE DEED OF TRUST AND THE
OTHER LOAN DOCUMENTS, WHETHER SUCH LAWS ARE NOW OR
HEREAFTER IN EFFECT, INCLUDING THE LAWS OF THE UNITED
STATES OF AMERICA, THE LAWS OF THE STATE OF CALIFORNIA
OR ANY OTHER JURISDICTION WHOSE LAWS ARE APPLICABLE, AND
INCLUDING ANY SUBSEQUENT REVISIONS TO OR JUDICIAL
INTERPRETATIONS OF THOSE LAWS, IN EACH CASE TO THE
EXTENT THEY ARE APPLICABLE TO THIS AGREEMENT, THE NOTE,
THE DEED OF TRUST AND THE OTHER LOAN DOCUMENTS (THE
"APPLICABLE USURY LAWS"); PROVIDED, HOWEVER, IF SUCH
LAWS SHALL HEREAFTER PERMIT HIGHER RATES OF INTEREST,
THEN THE APPLICABLE USURY LAWS SHALL BE THE LAWS
ALLOWING THE HIGHER RATES OF INTEREST. BORROWER
ACKNOWLEDGES THAT LENDER IS LICENSED AS A COMMERCIAL
FINANCE LENDER UNDER CALIFORNIA FINANCIAL CODE 22000,
ET SEQ., AND AS SUCH, IS COMPLETELY EXEMPT FROM
CALIFORNIA USURY LAWS. NOTWITHSTANDING ANYTHING SET
FORTH IN THIS AGREEMENT, THE INTEREST APPLICABLE TO THE
NOTE IS AS SPECIFICALLY SET FORTH THEREIN, AND THE
INTEREST APPLICABLE TO THE NOTE SHALL NOT BE AGGREGATED,
BLENDED OR OTHERWISE CONSIDERED AS ONE INTEREST RATE
APPLICABLE TO THE LOAN. NONETHELESS, THE FOLLOWING
SHALL APPLY:
If, despite Lender's exempt status, it is
nonetheless determined that any acceleration of the
maturity of the Note or any payment by Borrower or any
other person or entity results in Borrower or such other
person or entity being deemed to have paid any interest
(including fees and any other additional amounts) in
excess of the Maximum Amount (as defined below), or if
any transaction contemplated hereby would otherwise be
usurious under any Applicable Usury Laws, then, in that
event, notwithstanding anything to the contrary in this
Agreement or any other Loan Document or any other
agreement or instrument, it is agreed as follows: (i)
the provisions of this Section 17.7 shall govern and
control; (ii) the aggregate of all interest under the
Applicable Usury Laws that is contracted for, charged,
taken, reserved or received under this Agreement, or
under any of the other aforesaid agreements or
instruments or otherwise shall under no circumstances
exceed the Maximum Amount, and any excess shall either
be refunded to Borrower or applied in reduction of
principal, if permitted by California law, in the sole
discretion of Lender; (iii) neither Borrower nor any
other person or entity shall be obligated to pay the
amount of such interest to the extent that it is in
excess of the Maximum Amount; (iv) any Interest
contracted for, charged, reserved, taken or received in
excess of the Maximum Amount shall be deemed an
accidental or bona fide error and cancelled
automatically to the extent of such excess; (v) the
effective rate of Interest on the Loan shall be ipso
facto reduced to the Highest Lawful Rate (defined
below); and (vi) the provisions of this Agreement, the
Note, the Deed of Trust and the other Loan Documents
immediately shall be deemed reformed, without the
necessity of the execution of any new document or
instrument, so as to comply with all Applicable Usury
Laws; provided, however, that to the fullest extent
permitted by Applicable Usury Laws, any subsequent
reductions in the applicable rate of Interest shall not
reduce the Interest to accrue pursuant to this
Agreement, the Note, the Deed of Trust and the other
Loan Documents below the Highest Lawful Rate until the
aggregate amount of Interest actually accrued pursuant
to this Agreement, the Note, the Deed of Trust and the
other Loan Documents, together with such additional
interest, equals the amount of Interest which would have
accrued if the Highest Lawful Rate had at all times been
in effect and such additional interest, if any, had been
paid in full. All sums paid, or agreed to be paid, to
Lender for the use, forbearance or detention of the
indebtedness of Borrower to Lender evidenced by this
Agreement, the Note, the Deed of Trust and the other
Loan Documents shall, to the fullest extent permitted by
the Applicable Usury Laws, be amortized, pro rated,
allocated and spread throughout the full term of the
indebtedness evidenced by this Agreement, the Note, the
Deed of Trust and the other Loan Documents so that the
actual rate of Interest does not exceed the Highest
Lawful Rate in effect at any particular time during the
full term thereof. As used herein, the term "Maximum
Amount" means the maximum non-usurious amount of
interest which may be lawfully contracted for, charged
or received by Lender in connection with the
indebtedness evidenced by this Agreement, the Note, the
Deed of Trust and other Loan Documents under all
Applicable Usury Laws. For purposes of this Agreement,
the term "Highest Lawful Rate" means the maximum rate of
interest, if any, that may be charged under all
Applicable Usury Laws on the principal balance of the
Loan from time to time outstanding.
17.8. Estoppel Certificates. Within ten (10)
calendar days after written request by Lender, Borrower
shall execute and deliver to Lender, in such form as
Lender shall reasonably request, a Certificate
confirming (i) that, as of the date of such Certificate,
this Agreement, the Note, the Deed of Trust and each
other Loan Document are in full force and effect and are
enforceable against Borrower in accordance with their
terms, (ii) the amount of principal outstanding pursuant
to the Note as of the date of such Certificate, and
(iii) as of the date of such Certificate, there is no
uncured Event of Default under this Agreement or any
other Loan Document.
17.9. Acquiescence Not to Constitute Waiver of
Lender's Requirements. Each and every covenant and
condition for the benefit of Lender contained in this
Agreement may be waived by Lender.
17.10. Disclaimer by Lender.
17.10.1. This Agreement is made for the sole
benefit of Borrower and Lender (and Lender's successors
and assigns and participants, if any), and no other
person shall have any benefits, rights or remedies under
or by reason of this Agreement, or by reason of any
actions taken by Lender pursuant to this Agreement.
Lender shall not be liable for any debts or claims
accruing in favor of any third parties against Borrower
or others or against the Project. Borrower is not and
shall not be an agent of Lender for any purposes.
Except as may be expressly set forth in the Loan
Documents, Lender is not and shall not be an agent of
Borrower for any purposes.
17.10.2. Any review, investigation or
inspection conducted by Lender, any architectural or
engineering consultants retained by Lender, any agent or
representative of Lender retained to verify
independently Borrower's satisfaction of any conditions
precedent to the disbursement of the Loan, Borrower's
performance of any of the covenants, agreements and
obligations of Borrower under this Agreement, or the
truth of any representations and warranties made by
Borrower hereunder (regardless of whether or not the
party conducting such review, investigation or
inspection should have discovered that any of such
conditions precedent were not satisfied or that any such
covenants, agreements or obligations were not performed
or that any such representations or warranties were not
true), shall not affect or constitute a waiver by Lender
of (i) any of Borrower's representations and warranties
under this Agreement or Lender's reliance thereon, or
(ii) Lender's reliance upon any certifications required
under this Agreement or any other facts, information or
reports furnished Lender by Borrower hereunder.
17.10.3. By accepting or approving anything
required to be observed, performed, fulfilled or given
to Lender pursuant to the Loan Documents, including any
certificate, statement of profit and loss or other
financial statement, survey, appraisal, lease or
insurance policy, Lender shall not be deemed to have
warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any
term provision or condition thereof, and such acceptance
or approval thereof shall not constitute a warranty or
representation to anyone with respect thereto by Lender.
17.11. No Partnership.
17.11.1. Creditor-Debtor Relationship.
Lender and Borrower intend that the relationship between
them pursuant to this Agreement and each of the other
Loan Documents shall be solely that of creditor and
debtor. Nothing contained in this Agreement or in any
other of the Loan Documents or any other document or
instrument made in connection with the Loan, shall be
deemed or construed to create, or to constitute, a
partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by and between Lender and
Borrower. Lender in no way shall be responsible or
liable for the debts, losses, obligations, or duties of
Borrower with respect to the Project or otherwise. All
obligations to pay real property or other Taxes,
assessments, insurance premiums and all other fees and
charges arising from the ownership, operation or
occupancy of the Project and to perform any agreements
and contracts relating to the Project shall be the sole
responsibility of Borrower. Borrower, at all times
consistent with the terms and provisions of this
Agreement and each of the other Loan Documents and any
other document or instrument evidencing, securing or
otherwise relating to the Loan, shall be free to
determine and follow its own policies and practices in
the conduct of its business on the Project.
17.11.2. Indemnification. Borrower shall
indemnify, defend and hold Lender, and its officers,
directors, employees, shareholders, advisers, and agents
(collectively, "Indemnified Parties") harmless from and
against all claims, injury, damage, loss, costs
(including attorneys' fees and costs) and liability of
any and every kind incurred by Indemnified Parties by
reason of (i) the operation or maintenance of the
Project or any construction on the Real Project or
Improvements; (ii) the payment of any brokerage
commissions or fees of any kind with respect to the
Application/Commitment or the Loan, and for any
reasonable legal fees or expenses incurred by Lender in
connection with any claims for such commissions or fees;
(iii) any other action or inaction by, or matter which
is the responsibility of, Borrower; and (iv) the breach
of any representation or warranty or failure to fulfill
any of Borrower's obligations under this Agreement or
any other Loan Document. The foregoing indemnity shall
include the cost of all alterations, repairs and
replacements to the Project (including without
limitation architectural, engineering, legal and
accounting costs), all fines, fees and penalties, and
all legal and other expenses (including reasonable
attorneys' fees), incurred in connection with the
Project being in violation of the Building Laws and for
the cost of collection of the sums due under this
indemnity, whether or not Borrower is in possession of
the Project. If Lender shall become the owner of or
acquire an interest in or rights to the Project by
foreclosure (whether such foreclosure is judicial or non-
judicial foreclosure) or deed in lieu of foreclosure of
the deed of trust securing payment of the Loan, or by
other means, the foregoing indemnification obligation
shall survive such foreclosure or deed in lieu of
foreclosure or other acquisition of the Property, unless
Lender's own negligent acts or omissions cause what
would otherwise be considered an indemnification
obligation by Borrower or Guarantor.
17.12. Right of Lender to Make Advances to Cure
Borrower's Defaults. If Borrower shall fail to perform
in a timely fashion any of Borrower's covenants,
agreements or obligations contained in this Agreement or
the Loan Documents, Lender may (but shall not be
required to) perform any of such covenants, agreements
and obligations. Any funds advanced by Lender in the
exercise of its judgment that the same are needed to
protect its security for the Loan are deemed to be
obligatory advances hereunder and any amounts expended
(whether by disbursement of undisbursed Loan proceeds or
otherwise) by Lender in so doing, shall constitute
additional indebtedness evidenced and secured by the
Note, the Deed of Trust and the other Loan Documents,
shall bear interest from the date expended at the
Default Rate and be payable together with such interest
upon demand.
17.13. Definitions Include Amendments.
Definitions contained in this Agreement which identify
documents, including the Loan Documents, shall be deemed
to include all amendments and supplements to such
documents from the date hereof, and all future
amendments and supplements thereto entered into from
time to time to satisfy the requirements of this
Agreement or otherwise with the prior written consent of
the Lender. Reference to this Agreement contained in
any of the foregoing documents shall be deemed to
include all amendments and supplements to this
Agreement.
17.14. Time Is of the Essence. Time is hereby
declared to be of the essence of this Agreement and of
every part hereof.
17.15. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an
original and all of which taken together shall
constitute one and the same agreement.
17.16. Waiver of Consequential Damages. In no
event shall Lender be liable to Borrower for
consequential damages, whatever the nature of a breach
by Lender of its obligations under this Loan Agreement,
or any of the Loan Documents, and Borrower for itself
and all Affiliated Parties hereby waives all claims for
consequential damages.
17.17. Jurisdiction and Venue. Any action or
proceeding relating to or arising out of this Agreement,
the Project, the other Loan Documents or the Loan
("Proceedings") shall be filed, if a State action, in
the Superior Court of the State of California for the
County of Ventura, or if a Federal action, in the United
States District Court for the Central District of
California; and Borrower waives any objection which it
may have at any time to the laying of venue of any
proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an
inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such
court does not have jurisdiction over such party.
17.18. Severability. The parties hereto intend
and believe that each provision in this Agreement
comports with all applicable Laws. However, if any
provision or provisions, or if any portion of any
provision or provisions, in this Agreement is found by a
court of law to be in violation of any applicable Law,
and if such court declares such portion, provision, or
provisions of this Agreement to be illegal, invalid,
unlawful, void or unenforceable as written, then it is
the intent of all parties hereto that such portion,
provision, or provisions shall be given force to the
fullest possible extent that they are legal, valid and
enforceable, and that the remainder of this Agreement
shall be construed as if such illegal, invalid,
unlawful, void, or unenforceable portion, provision, or
provisions were not contained herein, and that the
rights, obligations, and interests of Borrower and
Lender under the remainder of this Agreement shall
continue in full force and effect.
17.19. Assignments.
17.19.1. Lender's Right to Assign. Lender
shall have the right to assign, transfer, sell,
negotiate, pledge or otherwise hypothecate this
Agreement and any of its rights and security hereunder,
including the Note, Deed of Trust, and any other Loan
Documents. Borrower hereby agrees that all of the
rights and remedies of Lender in connection with the
interest so assigned shall be enforceable against
Borrower by such assignee with the same force and effect
and to the same extent as the same would have been
enforceable by Lender but for such assignment. Borrower
agrees that Lender shall have the right to sell
participations in the Loan or to include the Note in a
securitized pool of indebtedness without the consent of
Borrower.
17.19.2. Prohibition of Assignments by
Borrower. Borrower shall not assign or attempt to
assign its rights under this Agreement. Borrower will
not suffer or permit any of its interest or rights in
the Project to be assigned, sold, pledged, encumbered,
transferred, hypothecated or otherwise disposed of until
the provisions of this Agreement have been fully
complied with and the Loan and all other sums evidenced
by the Note and/or secured by the Deed of Trust and
other Loan Documents, have been repaid in full.
17.19.3. Intentionally Omitted.
17.19.4. Successors and Assigns. Subject to
the foregoing restrictions on transfer and assignment
contained in this Section 17.19, this Agreement shall
inure to the benefit of and shall be binding on the
parties hereto and their respective successors and
assigns.
17.20. Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural forms thereof, as
its context shall require.
17.21. Resolution of Drafting Ambiguities.
Borrower acknowledges that it was represented by counsel
in connection with the preparation, execution and
delivery of this Agreement, the Note, the Deed of Trust
and the other Loan Documents to be executed and deliv
ered by Borrower and that Borrower's counsel reviewed
and participated in the revision of all of the Loan
Documents and that any rule of construction under any
applicable law to the effect that ambiguities are to be
resolved against the drafting party shall not be
employed in the interpretation of any of this Agreement
or any of the other Loan Documents. Accordingly, the
parties hereby waive the provisions of California Civil
Code 1654.
17.22. Conflicts. Borrower and Lender hereby
acknowledge and agree that concurrently with entering
into this Agreement, they have also entered into the
other Loan Documents which set forth rights, obligations
and remedies of the parties in connection with the Loan,
some of which are also addressed in this Agreement.
Borrower and Lender hereby further agree that to the
extent that the provisions of any of the other Loan
Documents constitute an addition to or an enhancement of
(without conflicting or being inconsistent with) the
provisions of this Agreement, then the provisions of
said other Loan Documents and the provisions of this
Agreement shall all be and remain in full force and
effect, enforceable by Lender in accordance with their
respective terms; provided, however, that if and to the
extent that there is any direct conflict or
inconsistency between the provisions of the other Loan
Documents and the provisions of this Agreement, the
provisions set forth in the other Loan Documents shall
govern and control.
17.23. Attorneys' Fees; Legal Action.
17.23.1. Attorneys' Fees. Borrower shall
reimburse Lender for all reasonable attorneys' fees and
expenses incurred by Lender in connection with the
enforcement of Lender's rights under this Agreement,
including, without limitation, reasonable attorneys'
fees and disbursements for out-of-court workouts and
settlements or for enforcement of rights under any state
or federal statute, including, without limitation,
attorneys' fees incurred in bankruptcy and insolvency
proceedings. Borrower specifically acknowledges that,
due to the complexity of the Loan, the real estate
development sophistication of Borrower and the
difficulties contemplated in enforcement of Lender's
remedies, Lender shall be entitled to retain attorneys
of Lender's choice, including attorneys in the employ of
Lender, to protect its interests properly and completely
upon an Event of Default.
17.23.2. Legal Action. Lender shall have the
right, at Borrower's expense, to commence, to appear in,
or to defend any action or proceeding purporting to
affect the rights or duties of the parties to this
Agreement, the Note, the Deed of Trust or any of the
Loan Documents and in connection therewith shall have
the right to pay, at Borrower's expense, all necessary
expenses, including reasonable attorney's fees, if
Borrower fails upon reasonable notice to so commence,
appear in or defend any such action or proceeding with
counsel of Lender's choice, except in a suit by Borrower
against Lender.
17.24. Exhibits. All Exhibits attached to this
Agreement are incorporated herein by this reference as
though set forth in full herein.
17.25. Intentionally Omitted.
17.26. Recourse. The Loan is a full recourse loan
to Borrower. Notwithstanding anything to the contrary
in the Note, this Agreement and each other Loan
Document, the liability of Borrower for the payment of
principal and Interest, and the observance and
performance of all of the terms, covenants, conditions
and provisions of the Note, this Agreement and the other
Loan Documents is not limited or restricted to the
Project, and full recourse may be had for the payment of
such indebtedness, or the observance or performance of
any of the terms, covenants, conditions or provisions of
the Note, this Agreement or any of the other Loan
Documents against any property, assets or funds of
Borrower other than the Project.
Lender may seek payment from Guarantor without
first reducing its claim against Borrower to judgment.
Guarantor shall be obligated as though it had itself
executed this Agreement, the Note and the other Loan
Documents. Accordingly, Lender may enforce the terms,
covenants, conditions and provisions of the Note, this
Agreement and the other Loan Documents against Guarantor
notwithstanding Borrower's filing of a petition in
bankruptcy and obtaining a discharge. Furthermore,
Guarantor shall provide to Lender the same financial
information that Borrower is required to provide
hereunder.
Nothing contained herein shall be construed to
prevent Lender from exercising any remedy allowed by Law
or by the terms of this Agreement or any other Loan
Document.
17.27. WAIVER OF JURY TRIAL. BORROWER AND LENDER
EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT RELATING
THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH
IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
IN WITNESS WHEREOF, Borrower and Lender have
executed this Agreement as of the day and year first set
forth above.
BORROWER:
DATRON RESOURCES INC.
a California corporation
By: /s/ WILLIAM L. STEPHAN
Its: Treasurer
LENDER:
JACKSON NATIONAL LIFE INSURANCE
COMPANY,
a Michigan corporation
By: PPM Finance, Inc.,
a Delaware corporation,
Its: Authorized Agent
By: /s/ JAMES B. KEARNS
Its: Senior Regional Director