Deed of Trust And Security Agreement

EXHIBIT 10.4


Recording Requested By and When Recorded Return to:


Ralph C. Navarro, Esq. WE CERTIFY THIS TO BE A TRUE AND Coudert Brothers CORRECT COPY OF THE ORIGINAL


Twentieth Floor RECORDED 10-5-99 Series # 15007425


1055 W. Seventh Street By: _______________________________ Los Angeles, CA 90017 First American Title Company


DEED OF TRUST AND SECURITY AGREEMENT


MICRO LINEAR CORPORATION, A DELAWARE CORPORATION,


BORROWER,


TO


FIRST AMERICAN TITLE GUARANTY COMPANY,


AS TRUSTEE,


FOR THE BENEFIT OF


SUN LIFE ASSURANCE COMPANY OF CANADA,


BENEFICIARY


DEED OF TRUST AND SECURITY AGREEMENT


Cover Sheet DATE: October 1, 1999


BORROWER Micro Linear Corporation, a Delaware Corporation


BORROWER'S NOTICE ADDRESS:


2092 Concourse Drive San Jose,
California 95131


TRUSTEE: First American Title Guaranty Company and all successors and assigns for the benefit of Lender (as determined below).


TRUSTEE'S NOTICE ADDRESS:


345 California Street, Suite 2400
San Francisco, California 94104


LENDER Sun Life Assurance Company of Canada, a Canadian corporation,
together with other holders from time to time of the Note (as
herein defined).


LENDER'S NOTICE ADDRESS: c/o Sun Life of Canada
One Sun Life Executive Park Wellesley Hills,
Massachusetts 02481 Attention:
Mortgage Investments Group


NOTE AMOUNT: $3,000,000


STATE: California


RECORD OWNER OF THE LAND (AS DEFINED HEREIN): Micro Linear Corporation, a
Delaware Corporation


Exhibit A hereto is incorporated herein by reference.


This document prepared by: Ralph C. Navarro


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Table of Contents


1. DEFINITION OF TERMS


2. GRANTING CLAUSES


3. REPRESENTATIONS AND WARRANTIES


3.1 Due Organization; Authority
3.2 Execution, Delivery and Effect of Loan Documents
3.3 Other Obligations
3.4 Construction and Completion of Improvements
3.5 Legal Actions
3.6 Financial Statements
3.7 Adverse Change to Property
3.8 Title to Property
3.9 Compliance with Laws and Private Covenants
3.10 Independence of the Property
3.11 Contamination


4. COVENANTS


4.1 Payments
(a) Secured Debt
(b) Property Taxes and Charges
(c) Escrow
(d) Taxes on Trustee or Lender
(e) Liabilities
(f) Right to Contest
(g) Expenses
4.2 Operation of the Property
(a) Maintenance; Alterations
(b) Liens
(c) Compliance with Laws and Private Covenants
(d) Use
(e) Inspection
(f) Notification of Contamination; Clean-Up
4.3 Insurance
4.4 Sales and Encumbrances
4.5 Financial Records and Statements
4.6 Indemnity
4.7 Notices
4.8 Estoppel Certificates
4.9 Legal Existence
4.10 Defense and Notice of Actions
4.11 Lost Note
4.12 Personalty
4.13 Further Assurances
4.14 Year 2000 Compliance


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5. CASUALTIES AND TAKINGS


5.1 Notice to Lender
5.2 Repair and Replacement
5.3 Insurance and Taking Proceeds
(a) Collection
(b) Assignment to Lender
5.4 Disbursement of Insurance Proceeds to Borrower


6. ASSIGNMENT OF RENTS, ISSUES AND PROFITS


6.1 Assignment of Rents
6.2 Performance of Leases


7. CONCERNING TRUSTEE


7.1 Trustee's Covenants
7.2 Resignation of Trustee
7.3 Substitution of Trustee
7.4 Reconveyance and Agreements
7.5 Release of Lien
7.6 Exculpation and Indemnification of Trustee


8. LEGAL PROCEEDINGS


9. DEFAULTS; REMEDIES OF LENDER


9.1 Events of Default
(a) Breach of Named Covenants
(b) Breach of Other Covenants
(c) Misrepresentations
(d) Bankruptcy
(e) Adverse Court Action
9.2 Remedies
(a) Acceleration
(b) Foreclosure
(c) Offset Rights
(d) Cure Rights
(e) Possession of Property
(f) Receiver
(g) Uniform Commercial Code Remedies
(h) Judicial Actions
(i) Subrogation Q) Sale
(k) Other
9.3 Holding Over
9.4 General Provisions
(a) Multiple Sales
(b) Cumulative Remedies
(c) Right to Purchase


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(d) Right to Terminate Proceedings
(e) No Waiver or Release
(f) Waivers and Agreements Regarding Remedies
(g) Waiver of Jury Trial
(h) Lender's Discretion
(i) Sales


10. POSSESSION AND DEFEASANCE


10.1 Possession
10.2 Defeasance


11. GENERAL


11.1 Lender's Right to Waive, Consent or Release
11.2 No Impairment
11.3 Amendments
11.4 No Usury
11.5 Notices
11.6 Successors and Assigns
11.7 Severability
11.8 Gender and Construction
11.9 Joint and Several Liability
11.10 Modifications
11.11 Governing Law
11.12 Captions
11.13 N/A
11.14 Sale, Assignment or Conversion of Secured Debt
11.15 Acknowledgment of Receipt
11.16 Time of the Essence
11.17 Exhibits


EXHIBIT A - Property Description


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1. DEFINITION OF TERMS. As used herein, the terms defined on the cover
sheet hereof shall have the meanings given on such sheet, and the
following terms shall have the following meanings:


1.1 Commitment: a certain commitment executed by Borrower and
Lender for the loan secured by this Deed of Trust.


1.2 Casualty: as defined in Paragraph 5.1.


1.3 Clean-Up: removal and/or remediation of Contamination in
accordance with Laws and good commercial practice.


1.4 Contamination: the presence of, use, generation, manufacture,
storage, treatment, disposal, discharge or release on, from or
to the Property of Hazardous Substances.


1.5 Contested Sum: as defined in clause (f) of Paragraph 4.1.


1.6 Deed of Trust: this Deed of Trust and Security Agreement and
all modifications or amendments thereto or extensions thereof.


1.7 Environmental Actions or Claims: any claim, action or
proceeding brought by a governmental authority in connection
with Contamination or any claim or action brought by a third
party relating to Contamination.


1.8 Event of Default: as defined in Paragraph 9.1.


1.9 N/A


1.10 Hazardous Substances: all substances and compounds prohibited
or regulated under any Laws; materials containing asbestos or
urea formaldehyde; gasoline and other petroleum products;
flammable explosives; radon and other natural gases;
radioactive materials; and polychlorinated biphenyls and
similar solvents.


1.11 Improvements: all buildings, structures and other improvements
now or hereafter existing, erected or placed on or under the
Land, or in any way used in connection with the use,
enjoyment, occupancy or operation of the Land or any portion
thereof; all fixtures of every kind and nature whatsoever now
or hereafter owned by Borrower and used or procured for use in
connection with the Realty.


1.12 In its sole unfettered discretion: as defined in Paragraph
11.8.


1.13 Insurance Premiums: as defined in Paragraph 4.3.


1.14 Insurance Proceeds: as defined in clause (a) of Paragraph 5.3.


1.15 Land: the land described in Exhibit A attached hereto,
together with all estate, title, interests, title reversion
rights, rents, increases, issues, profits, rights of way or
uses, additions, accretions, servitudes, gaps, gores,
liberties, privileges, water rights, water courses, alleys,
streets, passages, ways, vaults, adjoining strips of ground,
licenses,


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tenements, franchises, hereditaments, rights, appurtenances
and easements, now or hereafter owned by Borrower and
existing, belonging or appertaining to the Land, all claims or
demands whatsoever of Borrower therein or thereto, either at
law or in equity, in possession or in expectancy and all
estate, right, title and interest of Borrower in and to all
streets, roads and public places, opened or proposed, now or
hereafter used in connection with, existing, belonging or
appertaining to the Land.


1.16 Laws: any and all Federal, regional, state or local laws,
ordinances, rules, regulations, statutes, decisions, orders,
judgments, directives or decrees of any governmental or
regulatory authority, court or arbitrator whether now in force
or as amended or enacted in the future, including, without
limitation, the Americans with Disabilities Act of 1990, the
Water Pollution Control Act, the Toxic Substances Control Act,
the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 as amended by the Superfund Amendment
and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act of 1976, and all regulations thereunder.


1.17 Leases: all leases, license agreements and other occupancy or
use agreements (whether oral or written), now or hereafter
existing, which cover or relate to all or any portion of the
Property, together with all options therefor, amendments
thereto and renewals, modifications and guarantees thereof,
and all rents, royalties, issues, profits, revenues, income
and other benefits of the Property arising at any time
(including, without limitation, after the filing of any
petition under any present or future Federal or state
bankruptcy or similar law) from the use or enjoyment thereof,
including, without limitation, cash or securities deposited
thereunder to secure performance by the tenants of their
obligations thereunder, whether said cash or securities are to
be held until the expiration of the terms of the Leases or
applied to one or more of the installments of rent coming due,
additional, percentage, participation and other rentals, fees
and deposits.


1.18 Lease Assignment: a certain Assignment of Leases and Rents of
even date herewith from Borrower to Lender and all
replacements, substitutions, modifications or amendments
thereto or extensions thereof .


1.19 Loan Documents: this Deed of Trust, the Note, the Lease
Assignment, the Guaranty, and any and all other documents or
instruments related thereto or to the Secured Debt now or
hereafter given by or on behalf of Borrower and the
Guarantor(s) to or for the benefit of Lender.


1.20 Net Proceeds: as defined in Paragraph 5.3.


1.21 Note: a certain Promissory Note of even date herewith made by
Borrower in favor of Lender in the Note Amount and all
replacements, substitutions, modifications, renewals and
extensions thereof, which Note is payable in Monthly Payments,
until the Maturity Date (as each term is defined in the Note).


1.22 Parties in Interest: as defined in clause (d) of Paragraph
9.1.


1.23 Permitted Encumbrances: matters set forth or referred to in
Schedule B Part 1 of Lender's title insurance policy issued in
connection with the execution and recording of


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this Deed of Trust and the matters disclosed that certain
ALTA/ACSM survey dated September 24, 1999 prepared by Mission
Engineers, Inc. (Job No. 94571).


1.24 Personalty: all of Borrower's interest in personal property of
any kind or nature whatsoever, whether tangible or intangible,
which is used or will be used in the construction of the
Realty, all accounts, documents, instruments, chattel paper,
equipment, and general intangibles (as those terms are defined
in the Uniform Commercial Code of the State) relating to the
ownership or occupancy of the Property, all plans and
specifications, contracts and subcontracts for the
construction, reconstruction or repair of the Improvements,
all bonds, permits, licenses, guarantees, warranties, causes
of action, judgments, claims, profits, security deposits,
utility deposits, refunds of fees, Insurance Premiums,
deposits paid to any governmental authority, letters of
credit, insurance policies, Insurance Proceeds, Taking
Proceeds, and escrowed funds together with all present and
future attachments, accretions, accessions, replacements, and
additions thereto and products and proceeds thereof.
Notwithstanding anything to the contrary herein or in any
other Loan Document, the term "Personalty" shall not include
and in no event shall Lender have any lien, interest or other
right whatsoever in any item of process heating, ventilating,
cooling, plumbing, or electrical equipment, communications
equipment, production machinery or equipment, moveable
partitions, or any other equipment, machinery, inventory,
furniture or fixtures located within the Improvements which
may be removed from the Property without any material
permanent damage to the Property or the building systems
thereof. Upon request, Lender shall execute such documents as
Borrower shall reasonably request to evidence the foregoing
exception to any prospective purchaser or lender of Borrower
of such property.


1.25 Property. the Realty and Personalty or any portion thereof or
interest therein, except as the context otherwise requires.


1.26 Property Liabilities: as defined in clause (e) of Paragraph
4.1.


1.27 Property Taxes and Charges: all real estate taxes, personal
property taxes, betterments, assessments (general and
special), imports, levies, water, utility and sewage charges,
any and all income, franchise, withholding, profits and gross
receipts taxes, all other taxes and public charges, imposed
upon or assessed against Borrower or the Property or upon the
revenues, rents, issues, income and profits of use or
possession thereof, and any stamp or other taxes which may be
required to be paid with respect to any of the Loan Documents,
any of which might, if unpaid, result in a lien on the
Property, regardless to whom paid or assessed.


The term "real estate taxes" in the foregoing sentence shall
include any form of assessment, license fee, license tax,
business license fee or tax, commercial rental tax, levy,
charge, penalty, tax or similar imposition, imposed by any
authority having the direct power to tax, including any city,
county, state or Federal government, or any school,
architectural, lighting, drainage or other improvement or
special assessment district thereof, against any legal or
equitable interest in the Property, except general business
taxes, net income taxes and franchise taxes imposed on Lender
other than taxes or other amounts referred to in Paragraph
4.1(d).


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1.28 Realty: the Land and Improvements or any portion thereof or
interest therein, as the context requires.


1.29 Restoration: as defined in clause (a)(i) of Paragraph 5.4.


1.30 Secured Debt: to the extent not prohibited by Laws, all
principal, interest, late charges and other sums, charges,
premiums, prepayment and other indemnification amounts or
other amounts due or to become due under the Loan Documents,
together with any other sums expended or advanced by or on
behalf of Lender under the Loan Documents or otherwise with
respect to the care, maintenance or preservation of the
Property or the enforcement of the Loan Documents.


1.31 Taking: as defined in Paragraph 5.1.


1.32 Taking Proceeds: as defined in clause (a) of Paragraph 5.3.


1.33 Trustee: as defined on the cover sheet hereof.


2. GRANTING CLAUSES. For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower has executed and
delivered the Loan Documents and hereby irrevocably and absolutely
grants, transfers, assigns, mortgages, bargains, sells and conveys to
Trustee for the benefit of Lender with all POWERS OF SALE AND STATUTORY
RIGHTS AND COVENANTS in the State, all of Borrower's estate, right,
title and interest in, to and under the Realty, and grants to Lender a
first and prior security interest in the Personalty and any and all of
the following, whether now owned or held or hereafter acquired or owned
by Borrower:


(a) all Leases;


(b) all profits and sales proceeds including, without limitation,
earnest money and other deposits, now or hereafter becoming
due by virtue of any contract or contracts for the sale of
Borrower's interest in the Property; and


(c) all proceeds (including claims thereto or demands therefore)
of the conversion, voluntary or involuntary, permitted or
otherwise, of any of the foregoing into cash or liquidated
claims.


FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS OF BORROWER TO
LENDER, in such order of priority as Lender may elect:


(1) payment of the Secured Debt;


(2) payment of such additional sums with interest thereon which
(i) may hereafter be loaned to Borrower by Lender where
evidenced by another note or notes, reciting it is so secured,
payable to Lender or order or any successor in ownership; or
(ii) advanced under the Loan Documents, even if the sum of the
amounts outstanding at any time exceeds the Note Amount; and


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(3) due, prompt and complete observance, performance, fulfillment
and discharge of each and every obligation, covenant,
condition, warranty, agreement and representation contained in
the Loan Documents.


This Deed of Trust is also intended to be a security agreement under
the Uniform Commercial Code as in force from time to time in the State.


3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Lender that the following are true, correct and complete as of the
date of this Deed of Trust.


3.1 Due Organization; Authority. Borrower is duly organized and
validly existing and in good standing under the laws of the
State and has power adequate to carry on its business as
presently conducted, to own the Property, to make and enter
into the Loan Documents and to carry out the transactions
contemplated therein.


3.2 Execution, Delivery and Effect of Loan Documents. The Loan
Documents have each been duly authorized, executed and
delivered by Borrower, and each is a legal, valid and binding
obligation of Borrower, enforceable in accordance with its
terms, except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and subject to the
exercise of judicial discretion in accordance with general
principles of equity and statutes and judicial decisions
limiting the enforceability of indemnities, due on sale or
similar provisions of the Loan Documents..


3.3 Other Obligations. Borrower is not in violation of any
material term or provision of any document governing its
organization or existence or in default under any material
instruments or obligations relating to Borrower's business,
Borrower's assets or the Property. No party has asserted any
material claim or default relating to the Property or any
other claim which is reasonably likely to have a material
adverse effect on the business, properties or financial
position of the Borrower and its subsidiaries, taken as a
whole (a "Material Adverse Effect"). The execution and
performance of the Loan Documents and the consummation of the
transactions contemplated thereby will not materially violate
or contravene or constitute a material default under any
charter, certificate, by laws, partnership agreement, trust
declaration, contract, agreement, document or other instrument
to which Borrower is a party or by which Borrower may be bound
or affected, do not and will not violate or contravene any
Laws to which Borrower is subject, in either case, in a manner
which is reasonably likely to have a Material Adverse Effect;
nor do any such instruments impose or contemplate any
obligations which are or will be materially inconsistent with
the Loan Documents. Borrower has filed all Federal, state,
county and municipal income tax returns required to have been
filed by Borrower and has paid all taxes which have become due
pursuant to such returns or pursuant to any assessments
received by Borrower except when the failure to file or the
nonpayment is immaterial. Borrower does not know of any basis
for additional assessment with regard to any such material
tax. No approval by, authorization of, or filing with any
Federal, state or municipal or other governmental authority is
necessary in connection with the authorization, execution and
delivery of the Loan Documents.


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3.4 Construction and Completion of Improvements. The presently
existing Improvements have been completed and installed in a
good and workmanlike manner, in compliance in all material
respects with Laws and any plans and specifications previously
delivered to, and approved in writing by, Lender. The
Improvements do not contain any urea formaldehyde or asbestos.
The Improvements are served by electric, gas, sewer, water,
telephone and other utilities required for the present and
contemplated uses and operation thereof. Any and all streets,
utility lines and off-site improvements, which provide access
to the Property or are necessary for its present and
contemplated uses, have been compl ...