Deed of Trust

STATE OF NORTH CAROLINA


COUNTY OF MECKLENBURG


Loan No. 76-0000912


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PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP
(Grantor)


to


CHARLES T. MARSHALL
(Trustee)


FOR THE BENEFIT OF
GENERAL ELECTRIC CAPITAL CORPORATION
(Beneficiary)


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DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING


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Dated as of August 2, 1999


Property Location: Pineville, North Carolina


DRAWN BY AND AFTER RECORDING, RETURN TO:


ANDREWS & KURTH L.L.P.
1717 Main Street, Suite 3700
Dallas, Texas 75201


Attention: Britton B. Green, Esq.


COLLATERAL IS OR INCLUDES FIXTURES


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DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING


This Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (this "Deed of Trust") is executed as of August 2, 1999, by PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP, a North Carolina general partnership ("Grantor"), whose address for notice hereunder is c/o Brackett Company, 135 S. Sharon Amity Road, Suite 210, Charlotte, North Carolina 28211, Attention: Diane B. Rivers, to CHARLES T. MARSHALL ("Trustee"), for the benefit of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("Beneficiary"), whose address for notice is c/o GE Capital Loan Services, Inc. 363 North Sam Houston Parkway East, Suite 1200, Houston, Texas 77060, Attention: Portfolio Manager/Access Program.


ARTICLE 1
DEFINITIONS


SECTION 1.1 DEFINITIONS. As used herein, the following terms shall have the following meanings:


"INDEBTEDNESS": The sum of all principal, interest and other amounts due under or secured by the Loan Documents.


"LOAN": The Loan made by the Grantor by the Beneficiary as evidenced and secured by the Loan Documents.


"LOAN DOCUMENTS": The (a) Loan Agreement of even date between Grantor and Beneficiary (the "LOAN AGREEMENT"), (b) Promissory Note of even date, executed by Grantor, payable to the order of Beneficiary, in the stated principal amount of $4,000,000.00, (c) this Deed of Trust, (d) all other documents now or hereafter executed by Grantor, or any other person or entity, to evidence, secure or guaranty the payment of all or any portion of the Indebtedness or the performance of all or any portion of the Obligations or otherwise executed in connection with the Note or this Deed of Trust and (e) all modifications, restatements, extensions, renewals and replacements of the foregoing; provided however, in no event shall the term "Loan Documents" include that certain Hazardous Materials Indemnity Agreement dated the date hereof in favor of Beneficiary.


"MORTGAGED PROPERTY": (a) the real property located in Mecklenburg County, North Carolina and more particularly described in EXHIBIT A, together with any greater estate therein as hereafter may be acquired by Grantor (the "LAND"), (b) all buildings, structures and other improvements, now or at any time situated, placed or constructed upon the Land (the "IMPROVEMENTS"), (c) all materials, supplies, equipment, apparatus and other items of personal property now owned or hereafter acquired by Grantor and now or hereafter attached to, installed in or used in connection with any of the Improvements or the Land, and water, gas, electrical, storm and sanitary sewer facilities and all other utilities whether or not situated in easements (the "FIXTURES"), (d) all right, title and interest of Grantor in and to all goods, accounts, general intangibles, instruments, documents, chattel paper and all other personal property of any kind or character, including such items of personal property as defined in the UCC, now owned or hereafter acquired by Grantor and now or hereafter affixed to, placed upon, used in connection with, arising from or otherwise related to the Land and Improvements or which may be used in or relating to the planning, development, financing or operation of the Mortgaged Property, including, without limitation, furniture, furnishings, equipment, machinery, money, insurance proceeds, accounts, contract rights, trademarks, goodwill, chattel paper, documents, trade names, licenses and/or franchise agreements, rights of Grantor under leases of Fixtures or other personal property or equipment, inventory, all refundable, returnable or reimbursable fees, deposits or other funds or evidences of credit or indebtedness deposited by or on behalf of Grantor with any governmental authorities, boards, corporations, providers of utility services, public or private, including specifically, but without limitation, all refundable, returnable or reimbursable tap fees, utility deposits, commitment fees and development costs (the "PERSONALTY"), (e) all reserves, escrows or impounds required under the Loan Agreement and all deposit accounts maintained by Grantor with respect to the Mortgaged Property, (f) all plans, specifications, shop drawings and other technical descriptions prepared for construction, repair or alteration of the


Page 1 Improvements, and all amendments and modifications thereof (the "PLANS"), (g) all leases, subleases, licenses, concessions occupancy agreements, rental contracts, or other agreements (written or oral) now or hereafter existing relating to the use or occupancy of all or any part of the Mortgaged Property, together with all guarantees, letters of credit and other credit support, modifications, extensions and renewals thereof (whether before or after the filing by or against Grantor of any petition of relief under 11 U.S.C. Section 101 et seq., as same may be amended from time to time (the "BANKRUPTCY CODE")) and all related security and other deposits (the "LEASES") and all of Grantor's claims and rights (the "BANKRUPTCY CLAIMS") to the payment of damages arising from any rejection by a lessee of any Lease under the Bankruptcy Code, (h) all of the rents, revenues, issues, income, proceeds, profits, and all other payments of any kind under the Leases for using, leasing, licensing, possessing, operating from, residing in, selling or otherwise enjoying the Mortgaged Property whether paid or accruing before or after the filing by or against Grantor of any petition for relief under the Bankruptcy Code (the "RENTS"), (i) all other agreements, such as construction contracts, architects' agreements, engineers' contracts, utility contracts, maintenance agreements, franchise agreements, service contracts, permits, licenses, certificates and entitlements in any way relating to the development, construction, use, occupancy, operation, maintenance, enjoyment, acquisition or ownership of the Mortgaged Property (the "PROPERTY AGREEMENTS"), (j) all rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to the foregoing, and all right, title and interest, if any, of Grantor in and to any streets, ways, alleys, strips or gores of land adjoining the Land or any part thereof, (k) all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof, (l) all insurance policies, unearned premiums therefor and proceeds from such policies covering any of the above property now or thereafter acquired by Grantor, (m) all mineral, water, oil and gas rights now or hereafter acquired and relating to all or any part of the Mortgaged Property, (n) all tradenames, trademarks, service marks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used or used in connection with the operation of the Mortgaged Property; and (o) all of Grantor's right, title and interest in and to any awards, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to the Land, Improvements, Fixtures or Personalty. As used in this Deed of Trust, the term "MORTGAGE PROPERTY" shall mean all or, where the context permits or requires, any portion of the above or any interest therein.


"OBLIGATIONS": All of the agreements, covenants, conditions, warranties, representations and other obligations (other than to repay the Indebtedness) made or undertaken by Grantor or any other person or entity to Beneficiary or others as set forth in the Loan Documents.


"PERMITTED ENCUMBRANCES": The outstanding liens, easements, restrictions, security interests and other exceptions to title set forth in the policy of title insurance insuring the lien of this Deed of Trust, together with the liens and security interests in favor of Beneficiary created by the Loan Documents, none of which, individually or in the aggregate, materially interfere with the benefits of the security intended to be provided by this Deed of Trust, materially and adversely affect the value of the Mortgaged Property, impair the use or operations of the Mortgaged Property or impair Grantor's ability to pay its obligations in a timely manner.


"STATE": The State of North Carolina.


"UCC": The Uniform Commercial Code of the State or, if the creation, perfection and enforcement of any security interest herein granted is governed by the laws of a state other than the State, then, as to the matter in question, the Uniform Commercial Code in effect in that state.


SECTION 1.2 OTHER TERMS. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Loan Agreement.


ARTICLE 2
GRANT


SECTION 2.1 GRANT. To secure the full and timely payment of the Indebtedness and the full and timely performance of the Obligations, Grantor hereby has bargained, sold, given, granted, and conveyed and does by these presents bargain, sell, give, grant and convey to Trustee, his heirs, successors and assigns (and with respect to any portions of the Mortgaged Property that constitute personal property, to Beneficiary) the Mortgaged Property subject, however, to the Permitted Encumbrances; TO HAVE AND TO HOLD the Mortgaged Property, with all privileges and appurtenances thereto belonging, to Trustee, his heirs, successors and assigns, forever upon the trusts, terms and conditions and for the uses hereinafter set forth.


ARTICLE 3
WARRANTIES, REPRESENTATIONS AND COVENANTS


Grantor warrants, represents and covenants to Beneficiary as follows:


SECTION 3.1 TITLE TO MORTGAGED PROPERTY AND LIEN OF THIS INSTRUMENT. Grantor owns the Mortgaged Property free and clear of any liens, claims or interests, except the Permitted Encumbrances. This Deed of Trust creates valid, enforceable first priority liens and security interests against the Mortgaged Property. Grantor warrants that Grantor has good, marketable and insurable title to the Mortgaged Property and has the full power, authority and right to execute, deliver and perform its obligations under this Deed of Trust. Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee and Beneficiary and their respective successors, substitutes and assigns.


SECTION 3.2 FIRST LIEN STATUS. Grantor shall preserve and protect the first lien and security interest status of this Deed of Trust and the other Loan Documents. If any lien or security interest other than the Permitted Encumbrances is asserted against the Mortgaged Property, Grantor shall promptly, and at its expense, (a) give Beneficiary a detailed written notice of such lien or security interest (including origin, amount and other terms), and (b) pay the underlying claim in full or take such other action so as to cause it to be released or, in Beneficiary's discretion, provide a bond or other security satisfactory to Beneficiary for the payment of such claim.


SECTION 3.3 PAYMENT AND PERFORMANCE. Grantor shall pay the Indebtedness when due under the Loan Documents and shall perform the Obligations in full when they are required to be performed.


SECTION 3.4 REPLACEMENT OF FIXTURES AND PERSONALTY. Grantor shall not, without the prior written consent of Beneficiary, permit any of the Fixtures or Personalty to be removed at any time from the Land or Improvements, unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is obsolete and is replaced by an article of equal or better suitability and value, owned by Grantor subject to the liens and security interests of this Deed of Trust and the other Loan Documents, and free and clear of any other lien or security interest except such as may be first approved in writing by Beneficiary.


SECTION 3.5 MAINTENANCE OF RIGHTS OF WAY, EASEMENTS AND LICENSES. Grantor shall maintain all rights of way, easements, grants, privileges, licenses, certificates, permits, entitlements and franchises necessary for the use of the Mortgaged Property and will not, without the prior consent of Beneficiary, consent to any public restriction (including any zoning ordinance) or private restriction as to the use of the Mortgaged Property. Grantor shall comply with all restrictive covenants affecting the Mortgaged Property, and all zoning ordinances and other public or private restrictions as to the use of the Mortgaged Property.


SECTION 3.6 INSPECTION. Grantor shall permit Beneficiary and its agents, representatives and employees, upon reasonable prior notice to Grantor, to inspect the Mortgaged Property and conduct such environmental and 4 engineering studies as Beneficiary may require, provided that such inspections and studies shall not materially interfere with the use and operation of the Mortgaged Property.


SECTION 3.7 OTHER COVENANTS. All of the covenants in the Loan Agreement are incorporated herein by reference and, together with covenants in this Article 3, shall be covenants running with the land. The covenants set forth in the Loan Agreement include, among other provisions: (a) the obligation to pay when due all taxes on the Mortgaged Property or assessed against Beneficiary with respect to the Loan, (b) the right of Beneficiary to inspect the Mortgaged Property, (c) the obligation to keep the Mortgaged Property insured as Beneficiary may require, (d) the obligation to comply with all legal requirements (including environmental laws), maintain the Mortgaged Property in good condition, and promptly repair any damage or casualty, and (e) except as otherwise permitted under the Loan Agreement, the obligation of Grantor to obtain Beneficiary's consent prior to entering into, modifying or taking other actions with respect to Leases.


SECTION 3.8 CONDEMNATION AWARDS AND INSURANCE PROCEEDS.


(a) CONDEMNATION AWARDS. Grantor assigns all awards and compensation for any condemnation or other taking, or any purchase in lieu thereof, to Beneficiary and authorizes Beneficiary to collect and receive such awards and compensation and to give proper receipts and acquittances therefor, subject to the terms of the Loan Agreement.


(b) INSURANCE PROCEEDS. Grantor assigns to Beneficiary all proceeds of any insurance policies insuring against loss or damage to the Mortgaged Property. Grantor authorizes Beneficiary to collect and receive such proceeds and to give proper receipts and acquittances therefore, subject to the terms of the Loan Agreement, and further authorizes and directs the issuer of each of such insurance policies to make payment for all such losses directly to Beneficiary, instead of to Grantor and Beneficiary jointly.


SECTION 3.9 TRANSFER OR ENCUMBRANCE OF MORTGAGED PROPERTY.


(a) Without the prior written consent of Beneficiary,


(i) neither Grantor nor any other Person having an ownership or
beneficial interest in Grantor shall (A) directly or
indirectly sell, transfer, convey, mortgage, pledge, or
assign any interest in the Mortgaged Property or any part
thereof (including any partnership or other ownership
interest in Grantor); (B) further encumber, alienate, grant
a Lien or grant any other interest in the Mortgaged
Property or any part thereof (including any partnership or
other ownership interest in Grantor), whether voluntarily
or involuntarily; or (C) enter into any easement or other
agreement granting rights in or restricting the use or
development of the Mortgage Property;


(ii) no new general partner, member, or limited partner having
the ability to control the affairs of Grantor shall be
admitted to or created in Grantor (nor shall any existing
general partner or member or controlling limited partner
withdraw from Grantor), and no change in Grantor's
organizational documents relating to control over Grantor
and/or the Mortgaged Property shall be effected; and


(iii) no transfer shall be permitted which would cause Diane B.
Rivers to own less than fifty-one percent (51%) of the
beneficial interest in Grantor and the Mortgaged Property
and not to have the power to direct the affairs of Grantor.


(b) As used in this Section 3.9, "transfer" shall include (i) an installment sales agreement wherein Grantor agrees to sell the Mortgaged Property or any part thereof for a price to be paid in installments; (ii) an agreement by Grantor leasing all or a substantial part of the Mortgaged Property for other than actual occupancy by space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Grantor's right, title and interest in and to any Leases or any Rents; (iii) the sale, transfer, conveyance, mortgage, pledge, or assignment of the legal or beneficial ownership of any partnership interest in any general partner in Grantor that is a partnership; and (iv) the sale, transfer, conveyance, mortgage, pledge, or assignment of the legal or beneficial ownership of any voting stock in any general partner in Grantor that is a corporation; notwithstanding the foregoing, "transfer" shall not include (A) the leasing of individual units within the Project so long as Grantor complies with the provisions of the Loan Documents relating to such leasing activity; or (B) the transfers of limited partner or membership interests in Grantor so long as the results of such transfers do not result in the transfer of more than 49% of the ownership or beneficial interest in the Grantor and the provisions of Sections 3.9(a)(ii) and 3.9(a)(iii) are satisfied.


(c) Beneficiary shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Indebtedness immediately due and payable upon Grantor's sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property without Beneficiary's consent. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property regardless of whether voluntary or not, or whether or not Beneficiary has consented to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property.


(d) Beneficiary's consent to one sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to be a waiver of Beneficiary's right to require such consent to any future occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Mortgaged Property made in contravention of this paragraph shall be null and void and of no force and effect.


(e) Grantor agrees to bear and shall pay or reimburse Beneficiary on demand for all reasonable expenses (including, without limitation, reasonable attorneys' fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Beneficiary in connection with the review, approval and documentation of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer.


(f) ...