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<br />200511357
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<br />environmental condition of the real property security as required by California Code of Civil Procedure
<br />Section 726.5 or any other applicable laws; and (ii) each representation and warranty and covenant in
<br />this Section (together with any indemnity applicable to a breach of any such representation and
<br />warranty) with respect to the environmental condition of the property is intended by Lender and
<br />Borrower to be an "environmental provision" for purposes of California Code of Civil Procedure
<br />Section 736 or any other applicable law.
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<br />6.3 COMPLIANCE WITH LAWS. Borrower shall comply with all federal, state and local laws, rules and
<br />regulations applicable to the Property, including, without limitation, all zoning and building requirements and
<br />all requirements of the Americans With Disabilities Act of 1990 (42 U.S.C. Section 12101 ~ ~.), as
<br />amended from time to time. Borrower shall possess and maintain or cause Borrower to possess and maintain
<br />in full force and effect at all times (a) all certificates of occupancy and other licenses, permits and
<br />authorizations required by applicable law for the existing use of the Property and (b) all permits, franchises
<br />and licenses and all rights to all trademarks, trade names, patents and fictitious names, if any, required by
<br />applicable law for Borrower to conduct the business(es) in which Borrower is now engaged.
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<br />6.4 LITIGA TION. Borrower shall promptly notify Lender in writing of any litigation pending or threatened
<br />against Borrower claiming damages in excess of $50,000 and of all pending or threatened litigation against
<br />Borrower if the aggregate damage claims against Borrower exceed $100,000.
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<br />6.5 MERGER. CONSOLIDATION. TRANSFER OF ASSETS. Borrower shall not: (a) merge or consolidate
<br />with any other entity or permit Borrower to merge or consolidate with any other entity; (b) make any
<br />substantial change in the nature of Borrower's business or structure; (c) acquire all or substantially all of the
<br />assets of any other entity; or (d) sell, lease, assign, transfer or otherwise dispose of a material part of
<br />Borrower's assets except in the ordinary course of Borrower's business.
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<br />6.6 ACCOUNTING RECORDS. Borrower shall maintain adequate books and records in accordance with the
<br />same accounting standard used by Borrower to prepare the financial statements delivered to and approved by
<br />Lender in connection with the making of the Loan or other accounting standards approved by Lender.
<br />Borrower shall permit any representative of Lender, at any reasonable time and from time to time, to inspect,
<br />audit and examine such books and records and make copies of same.
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<br />6.7 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Lender the full amount of all
<br />costs and expenses, including, without limitation, reasonable attorneys' fees and expenses of Lender's in
<br />house or outside counsel, incurred by Lender in connection with: (a) appraisals and inspections of the
<br />Property or Collateral required by Lender as a result of (i) a Transfer or proposed Transfer (as defined below),
<br />or (ii) a Default; (b) appraisals and inspections of the Property or Collateral required by applicable law,
<br />including, without limitation, federal or state regulatory reporting requirements; and (c) any acts performed
<br />by Lender at Borrower's request or wholly or partially for the benefit of Borrower (including, without
<br />limitation, the preparation or review of amendments, assumptions, waivers, releases, reconveyances, estoppel
<br />certificates or statements of amounts owing under any Secured Obligation). In connection with appraisals
<br />and inspections, Borrower specifically (but not by way of limitation) acknowledges that: (aa) a formal
<br />written appraisal of the Property by a state certified or licensed appraiser may be required by federal
<br />regulatory reporting requirements on an annual or more frequent basis; and (bb) Lender may require
<br />inspection of the Property by an independent supervising architect, a cost engineering specialist, or both.
<br />Borrower shall pay all indebtedness arising under this Section immediately upon demand by Lender together
<br />with interest thereon following notice of such indebtedness at the rate of interest then applicable to the
<br />principal balance of the Note as specified therein.
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<br />6.8 LIENS, ENCUMBRANCES AND CHARGES. Borrower shall immediately discharge by bonding or
<br />otherwise any lien, charge or other encumbrance which attaches to the Property in violation of Section 6. I 5.
<br />Subject to Borrower's right to contest such matters under this Security Instrument or as expressly permitted in
<br />the Loan Documents, Borrower shall pay when due all obligations secured by or reducible to liens and
<br />encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Property or
<br />any interest therein, whether senior or subordinate hereto, including, without limitation, all claims for work or
<br />labor performed, or materials or supplies furnished, in connection with any work of demolition, alteration,
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<br />1244250.5
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