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200511354 f. Le~al Effect of Section. Borrower and Lender agree that: (i) this Hazardous Materials Section is intended as Lender's written request for information (and Borrower's response) concerning the environmental condition of the real property security as required by California Code of Civil Procedure Section 726.5 or any other applicable laws; and (ii) each representation and warranty and covenant in this Section (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by Lender and Borrower to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736 or any other applicable law. 6.3 COMPLIANCE WITH LAWS. Borrower shall comply with all federal, state and local laws, rules and regulations applicable to the Property, including, without limitation, all zoning and building requirements and all requirements of the Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 ~ ~.), as amended from time to time. Borrower shall possess and maintain or cause Borrower to possess and maintain in full force and effect at all times (a) all certificates of occupancy and other licenses, permits and authorizations required by applicable Jaw for the existing use of the Property and (b) all permits, franchises and licenses and all rights to all trademarks, trade names, patents and fictitious names, if any, required by applicable law for Borrower to conduct the business(es) in which Borrower is now engaged. 6.4 LITIGA TION. Borrower shall promptly notify Lender in writing of any litigation pending or threatened against Borrower claiming damages in excess of $50,000 and of all pending or threatened litigation against Borrower if the aggregate damage claims against Borrower exceed $100,000. 6.5 MERGER. CONSOLIDATION. TRANSFER OF ASSETS. Borrower shall not: (a) merge or consolidate with any other entity or permit Borrower to merge or consolidate with any other entity; (b) make any substantial change in the nature of Borrower's business or structure; (c) acquire all or substantially all of the assets of any other entity; or (d) sell, lease, assign, transfer or otherwise dispose of a material part of Borrower's assets except in the ordinary course of Borrower's business. 6.6 ACCOUNTING RECORDS. Borrower shall maintain adequate books and records in accordance with the same accounting standard used by Borrower to prepare the financial statements delivered to and approved by Lender in connection with the making of the Loan or other accounting standards approved by Lender. Borrower shall permit any representative of Lender, at any reasonable time and from time to time, to inspect, audit and examine such books and records and make copies of same. 6.7 COSTS. EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Lender the full amount of all costs and expenses, including, without limitation, reasonable attorneys' fees and expenses of Lender's in house or outside counsel, incurred by Lender in connection with: (a) appraisals and inspections of the Property or Collateral required by Lender as a result of (i) a Transfer or proposed Transfer (as defined below), or (ii) a Default; (b) appraisals and inspections of the Property or Collateral required by applicable law, including, without limitation, federal or state regulatory reporting requirements; and (c) any acts performed by Lender at Borrower's request or wholly or partially for the benefit of Borrower (including, without limitation, the preparation or review of amendments, assumptions, waivers, releases, reconveyances, estoppel certificates or statements of amounts owing under any Secured Obligation). In connection with appraisals and inspections, Borrower specifically (but not by way of limitation) acknowledges that: (aa) a formal written appraisal of the Property by a state certified or licensed appraiser may be required by federal regulatory reporting requirements on an annual or more frequent basis; and (bb) Lender may require inspection of the Property by an independent supervising architect, a cost engineering specialist, or both. Borrower shall pay all indebtedness arising under this Section immediately upon demand by Lender together with interest thereon following notice of such indebtedness at the rate of interest then applicable to the principal balance of the Note as specified therein. 6.8 LIENS. ENCUMBRANCES AND CHARGES. Borrower shall immediately discharge by bonding or otherwise any lien, charge or other encumbrance which attaches to the Property in violation of Section 6.15. Subject to Borrower's right to contest such matters under this Security Instrument or as expressly permitted in the Loan Documents, Borrower shall pay when due all obligations secured by or reducible to liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Property or Master 51 REG NE (rev. 08/2005) 1245359.6 14