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Oj5-2y-1993 INSTRUCTION LOAN AGREEIV~T PagEl 5
<br />. Loan No 700007062 (Continued)
<br />LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not constitute or be interpreted as either (a) an approval or
<br />acceptance by Lender of the work done through the date of the Advance, or (b) a representation or indemnity by Lender to any party against s ny
<br />deficiency or defect in the work or against any breach of any contract. Inspections and approvals of the Plans and Specifications, the Improvemec is,
<br />the workmanship and materials used in the Improvements, and the exercise of any other right of inspection, approval, or inquiry granted to Lender in
<br />this Agreement are acknowledged to be solely for the protection of Lender's interests, and under no circumstances shall they be construed to imprt sse
<br />any responsibility or liability of any nature whatsoever on Lender to any party. Neither Borcower nor any contractor, subcontractor, materialm, cn,
<br />laborer, or any other person shall rely, or have any right to rely, upon Lender's determination of the appropriateness of any Advance. No disbursem~ mt
<br />or approval by Lender shall constitute a representation by Lender as to the nature of the Project, its construction, or its intended use for Borrower or `~or
<br />any other person, nor shall it constitute an indemnify by Lender to eorcower or to any other person against any deficiency or defects in the Project ~or
<br />against any breach of any contract.
<br />AFFIRMATIVE COVENANTS. Borcower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will:
<br />Lltlgatk-rt. Promptly inform lender in writing of (a) all material adverse changes in eorcower's flnancial condition, and (b) all litigation and claN ns
<br />and all threatened Iit~afion and claims affecting Borcower or any Guarantor which could materially affect the financial condition of Borrower or I ^se
<br />flnancial condition of any Guarantor.
<br />Financial Recodda. Maintain its books and records in accordance with generally acxepted accounting principles, applied on a consistent bas is,
<br />and permit Lender to examine and audit Borrower's books and records at all reasonable times.
<br />Addltlond Information. Furnish such additional information and statements, lists of assets and liabilities, aginns of receivables and payabll cs,
<br />inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borcower's financial condition and business operations sts
<br />Lender may request from time to time.
<br />Construction of the Protect. Commence construction of the Project no later than June 15, 1993, and cause the Improvements to be construct :.d
<br />and equipped in a diligent and orderly manner and in strict gccordance with the Plans and Specifications approved by Lender, the Consfrucli an
<br />Contract, and all applicable laws, ordinances, codes, regulations, and rights of adjoining or concurcent property owners.
<br />Loan Proceeds. Use the Loan Funds solely for payment of bills and expenses directly related to the Project.
<br />Workers' Compensation Coverage. Provide to Lender proof of the general contractor's compliance with all applicable workers' compensaii :.n
<br />laws and regulations with regard to all work performed on the Project.
<br />Detects. Upon demand of Lender, promptly correct any defect in the Improvements or any departure from the Plans and Specifications c .at
<br />approved by Lender before further work shall tie done upon the portion of the Improvements affected.
<br />Protect Claims and UUgatlon. Promptly inform Lender of (a) all material adverse changes in the financial condition of the general contractor, b)
<br />any litigation and claims, actual or threatened, affecting the Project or the general contractor, which could materially affect the success; `ul
<br />completion of the Project or the ability of the general contractor to complete the Project as agreed; and (c) any condition or event whi ::h
<br />constitutes a breach or default under any of the Related Documents or any contract related to the Project.
<br />Payment of Cldms and Removd of Liens. (a) Cause all claims for labor done and materials and services furnished in connection with I •~e
<br />Improvements to be fully paid and discharged in a timely manner, (b) diligently file or procure the filing of a valid notice of completion of I ^~e
<br />Improvements, or such comparable document as may be permitted under applicable lien laws, (c) diligently file or procure the filing of a notices of
<br />cessation, or such comparable document as may be permitted under applicable lien laws, upon the happening of cessation of labor on I ^~e
<br />Improvements for a continuous period of thirty (30) days or more, and (d) take all reasonable steps necessary to remove all claims of liens agaic ~:st
<br />the Property, the Improvements or any part of the Property or Improvements, or any rights or interests appurtenant to the Property or
<br />Improvements. Upon Lender's request, Borcower shall make such demands or claims upon or against laborers, materialmen, subcontractors, ix
<br />other persons who have furnished or claim to have furnished Tabor, services, or materials in connection with the Improvements, which demand:, cx
<br />claims shall under the Taws of the State of California require diligent assertions of lien claims upon penalty of loss or waiver thereof. eorcow cx
<br />shall, within ten (10) days after the filing of any claim of lien that is disputed or contested by Borcower, record or cause the general contractor cx
<br />the construction of the Improvements to record in the Office of the ALAMEDA County Recorder, a surety bond pursuant to California law sufficia nt
<br />to release the claim of lien and, within five (5) days of Lender's demand, make suitable provision by deposit of funds with Lender in an amol nt
<br />satisfactory to Lender or by bond satisfactory to Lender for the possibility that the contest will be unsuccessful. If Borcowerr tails to remove any li an
<br />on the Property or ImprovemenL~ or provide a bond or deposit pursuant to this provision, Lender may pay such lien, or may contest the validity of
<br />the lien, and Borcower shall pay all costs and expenses of such contest, including Lender's reasonable attorneys' fees.
<br />Taxes and Claims. Pay and discharge when due all of Borcower's indebtedness, obligations, and claims that, if unpaid, might become a lien cx
<br />charge upon the Property or Improvements; provided, however, that Borcower shall not be required to pay and discharge any such indebtednesss,
<br />obligation, or claim so long as (a) its legality shall be contested in good faith by appropriate proceedings, (b) the indebtedness, obligation, cx
<br />claim does not become a lien or charge upon the Property or Improvements, and (c) eorcower shall have established on its books adequc Ise
<br />reserves with respect to the amount contested in accordance with generally accepted accounting practices. If the indebtedness, obligation, or
<br />claim does become a lien or charge upon the Property or Improvements, Borcower shall remove the lien or charge as provided in the prescedi sg
<br />paragraph.
<br />Performance. Perform and comply with all terms, conditions, and provisions set forth in this Agreement and in all other inshuments a. cd
<br />agreements between Borcower and Lender, and in all other loan agreements now or hereafter existing between Borcower and any other par ~~.
<br />Borcower shall notify Lender immediately in writing of any default in connection with any agreement.
<br />AddltkMal Assurances. Make, execute, and deliver to Lender such Security Agreements, instruments, documents, and other agreemec Its
<br />reasonably necessary to document and secure the Loan and to perfect Lender's Security Interests in the Property and Improvements.
<br />NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, eorcower shall not, without the pr or
<br />written consent of Lender:
<br />Indebtedness and Liens. (a) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by it its
<br />Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (b) sell, transfer, mortgage, assign, pledge, lea; ca,
<br />grant a security interest in, or encumber any of Borrower's assets, or (c) sell with recourse any of Borrower's accounts, except to Lender.
<br />Continuity of Operations. (a) Engage in any business activities substantially different than those in which Borcower is presently engaged, I a)
<br />cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change ownership, dissolve or transfer or sell Collates cal
<br />out of the ordinary course of business, or (c) pay any dividends on Borrower's stock (other than dividends payable in its stock and except as m a,y
<br />be statutorily required for Subchapter S corporations) or purchase or retire any of Borrower's outstanding shares or alter or amend Borcowes ~'s
<br />capital structure.
<br />Loans, Acqulsltlons turd Guaranties. (a) Loan, invest in or advance money or assets, (b) purchase, create or acquire any interest in any otl• Etr
<br />enterprise or entity, or (c) incur any obligation as surety or guarantor other than in the ordinary course of business.
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