EXHIBIT 10.6
Prepared by, and after recording return
to:
Stoel Rives LLP
600 University Street, Suite 3600
Seattle, Washington 98101
Attention: Virginia M. Pedreira
Loan No. 700218 & 700218A
ATTENTION: COUNTY RECORDER—THIS INSTRUMENT COVERS GOODS THAT ARE OR WILL BECOME
FIXTURES ON THE DESCRIBED REAL PROPERTY AND SHOULD BE FILED FOR RECORD IN THE
REAL PROPERTY RECORDS WHERE DEEDS OF TRUST ON REAL ESTATE ARE RECORDED. THIS
INSTRUMENT SHOULD ALSO BE INDEXED AS A UNIFORM COMMERCIAL CODE FINANCING
STATEMENT COVERING GOODS THAT ARE OR WILL BECOME FIXTURES ON THE DESCRIBED REAL
PROPERTY. THE MAILING ADDRESSES, TELEPHONE NUMBERS, AND FAX NUMBERS OF THE
SECURED PARTY AND THE DEBTOR ARE WITHIN.
DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE
FILING
JOHN B. SANFILIPPO & SON, INC., a Delaware corporation
Borrower,
having an office at
1703 North Randall Road
Mail Code — 2NW-EX
Elgin, Illinois 60123
to
FIRST AMERICAN TITLE INSURANCE COMPANY,
Trustee
for the benefit of
TRANSAMERICA LIFE INSURANCE COMPANY,
an Iowa corporation
Lender,
having an office
c/o AEGON USA Realty Advisors, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-5443
Loan Amount: $45,000,000.00
Premises: Gustine Processing Facility, Merced County, Gustine, California

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Loan No. 700218 & 700218A
Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture
Filing
(Merced County, California)
This Deed of Trust, Security Agreement, Assignment of Leases and Rents and
Fixture Filing (this “Deed of Trust”) is made and given as of the 7th day of
February, 2008, by JOHN B. SANFILIPPO & SON, INC., a Delaware corporation, as
Trustor, whose address is 1703 North Randall Road, Mail Code - 2NW-EX, Elgin,
Illinois 60123 (the “Borrower”), to FIRST AMERICAN TITLE INSURANCE COMPANY, as
Trustee, whose address is 1 First American Way, Santa Ana, California 92707 (the
“Trustee”), for the benefit of TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa
corporation, as Beneficiary, having an office c/o AEGON USA Realty Advisors,
Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499-5443, and its
successors and assigns (the “Lender”). The definitions of capitalized terms used
in this Deed of Trust may be found either in Section 3 below, or through the
cross-references provided in that Section.

1.   RECITALS

  A.   Under the terms of a Second Revised Agricultural Mortgage Loan
Application/Commitment dated January 31, 2008 (the “Commitment”), AEGON USA
Realty Advisors, Inc. (“AEGON”), as agent for the Lender, agreed to fund a loan
in the original principal amount of Forty-five Million Dollars ($45,000,000)
(the “Loan”).     B.   The Commitment requires that the Loan be secured by all
of the Borrower’s existing and after-acquired interest in certain real property
and by certain tangible and intangible personal property.

2.   GRANTING CLAUSE       To secure the repayment of the Indebtedness, any
increases, modifications, renewals or extensions of the Indebtedness, and any
substitutions for the Indebtedness, as well as the performance of the Borrower’s
other Obligations, and for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrower grants, bargains, warrants,
conveys, alienates, releases, assigns, sets over and confirms to the Trustee, IN
TRUST WITH THE POWER OF SALE for the benefit of the Lender and to its successors
and assigns forever, all of the Borrower’s existing and after acquired interests
in the Real Property.   3.   DEFINED TERMS       The following defined terms are
used in this Deed of Trust. For ease of reference, terms relating primarily to
the Security Agreement are defined in Subsection 19.1.

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    an “Affiliate” of any person means any entity controlled by, or under common
control with, that person.       “Appurtenances” means all rights, estates,
titles, interests, privileges, easements, tenements, hereditaments, titles,
royalties, reversions, remainders and other interests, whether presently held by
the Borrower or acquired in the future, that may be conveyed as interests in the
Land under the laws of California. Appurtenances include the Easements and the
Assigned Rights.       “Assigned Rights” means all of the Borrower’s rights,
easements, privileges, tenements, hereditaments, contracts, claims, licenses or
other interests, whether presently existing or arising in the future, which, in
each case, pertain to the Real Property. The Assigned Rights include all of the
Borrower’s rights in and to:

  (i)   any greater estate in the Real Property;     (ii)   insurance policies
required to be carried hereunder with respect to the Real Property, including
the right to negotiate claims and to receive Insurance Proceeds and unearned
insurance premiums with respect to insurance policies regarding the Real
Property (except as expressly provided in Subsection 8.1);     (iii)  
Condemnation Proceeds;     (iv)   licenses and agreements permitting the use of
sources of groundwater or water utilities, septic leach fields, railroad
sidings, sewer lines, means of ingress and egress;     (v)   drainage over other
property;     (vi)   air space above the Land;     (vii)   mineral rights and
water rights;     (viii)   party walls;     (ix)   vaults and their usage;    
(x)   franchises;     (xi)   commercial tort claims that arise during the Loan
term in respect of damages to the Real Property or to its operations, in respect
of any impairment to the value of the Real Property, or in respect of the
collection of any Rents;     (xii)   construction contracts;     (xiii)   roof
and equipment guarantees and warranties;     (xiv)   building and development
licenses and permits;     (xv)   tax credits or other governmental entitlements,
credits or rights, whether or not vested with respect to the Real Property;    
(xvi)   licenses and applications (whether or not yet approved or issued) with
respect to the Property;     (xvii)   rights under management and service
contracts with respect to the Property;     (xviii)   leases of Fixtures; and  
  (xix)   agreements with architects, environmental consultants, property tax
consultants, engineers, and any other third party contractors whose services
benefit the Real Property.

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    “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, 11
U.S.C. Sections 101 et seq., and the regulations promulgated pursuant to those
statutes.       “Business Day” means any day when state and federal banks are
open for business in Cedar Rapids, Iowa.       “Condemnation Proceeds” means all
money or other property that has been, or is in the future, awarded or agreed to
be paid or given in connection with any taking by eminent domain of all or any
part of the Real Property (including a taking through the vacation of any street
dedication or through a change of grade of such a street), either permanent or
temporary, or in connection with any purchase in lieu of such a taking, or as a
part of any related settlement.       “Curable Nonmonetary Default” means any of
the acts, omissions, or circumstances specified in Subsection 9.3 below.      
“Default” means any of the acts, omissions, or circumstances specified in
Section 9 below.       “Default Rate” means the rate of interest specified as
the “Default Interest Rate” in the Notes.       “Development Agreements” means
all development, utility or similar agreements included in the Permitted
Encumbrances.       “Easements” means the Borrower’s existing and future
interests in and to the declarations, easements, covenants, and restrictions
appurtenant to the Land.       “Environmental Indemnity Agreement” means the
Environmental Indemnity Agreement by the Borrower for the benefit of Lender
dated as of even date herewith.       “Environmental Laws” means all present and
future laws, statutes, ordinances, rules, regulations, orders, guidelines,
rulings, decrees, notices and determinations of any Governmental Authority to
the extent that they pertain to: (A) the protection of health against
environmental hazards; (B) the protection of the environment, including air,
soils, wetlands, and surface and underground water, from contamination by any
substance that may have any adverse health effect on humans, livestock, fish,
wildlife, or plant life, or which may disturb an ecosystem; (C) underground
storage tank regulation or removal; (D) wildlife conservation; (E) protection or
regulation of natural resources; (F) the protection of wetlands; (G) management,
regulation and disposal of solid and hazardous wastes; (H) radioactive
materials; (I) biologically hazardous materials; (J) indoor air quality; or
(K) the manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, emission, discharge, disposal, abatement,
cleanup, removal, remediation or handling of any Hazardous Substances.
“Environmental Laws” include the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §9601 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. §6901 et seq., the Federal Water Pollution Control
Act, as amended by the Clean Water Act, 33 U.S.C. §1251 et seq., the Clean Air
Act, 42 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601
et seq., the relevant provisions of the California Health and Safety Code, the
California Water Code, all similar state statutes and local ordinances, and all

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    regulations promulgated under any of those statutes, and all administrative
and judicial actions respecting such legislation, all as amended from time to
time.       “ESA” means the written environmental site assessment of the Real
Property obtained under the terms of the Commitment.       “Fixtures” means all
materials, supplies, goods, equipment, apparatus and other items now or
hereafter attached to or installed on the Land and Improvements in a manner that
causes them to become fixtures under the laws of California, including all
built-in or attached furniture or appliances, machinery, elevators, escalators,
heating, ventilating and air conditioning system components, emergency
electrical generators and related fuel storage or delivery systems, septic
system components, built-in loading, storage and processing equipment, storm
windows, doors, built-in electrical equipment, plumbing, water conditioning,
lighting, cleaning, snow removal, lawn, landscaping, irrigation, security,
incinerating, fire-fighting, sprinkler or other fire safety equipment, wells,
irrigation and wastewater equipment, built-in bridge cranes or other installed
materials handling equipment, satellite dishes or other built-in
telecommunication equipment, built-in video conferencing equipment, sound
systems or other built-in audiovisual equipment, and cable television
distribution systems. Fixtures do not include (A) trade fixtures, office
furniture and office equipment; (B) racking systems; (C) machinery and equipment
not specifically described above as constituting a Fixture; or (D) rolling
stock. Without limiting the foregoing, Fixtures expressly include HVAC,
mechanical, security and similar systems of general utility for the operation of
the Improvements as leasable commercial real property and as a warehouse and
processing facility.       “Governmental Authority” means any political entity
with the legal authority to impose any requirement on the Property, including
the governments of the United States, the State of California, Merced County,
the City of Gustine, and any other entity with jurisdiction to decide, regulate,
or affect the ownership, construction, use, occupancy, possession, operation,
maintenance, alteration, repair, demolition or reconstruction of any portion or
element of the Real Property.       “Hazardous Substance” means any substance
the release of or the exposure to which is prohibited, limited or regulated by
any Environmental Law, or which poses a hazard to human health, including:
(A) any “oil,” as defined by the Federal Water Pollution Control Act and
regulations promulgated thereunder (including crude oil or any fraction of crude
oil), (B) any radioactive substance and (C) Stachybotrys chartarum or other
molds. However, the term “Hazardous Substance” includes neither (i) a substance
used in the ordinary course of the business conducted on the Real Property in
accordance with the covenants herein contained by the Borrower or by a tenant
under a permitted Lease, or used in the cleaning and maintenance of the Real
Property, if the quantity, storage and manner of its use are customary, prudent,
and do not violate applicable law, nor (ii) automotive motor oil in immaterial
quantities, if leaked from vehicles in the ordinary course of the operation of
the Real Property and cleaned up in accordance with reasonable property
management procedures and in a manner that violates no applicable law.      
“Impositions” means all real and personal property taxes levied against the
Property; general or special assessments; ground rent; water, gas, sewer, vault,
electric or other utility charges; common area charges; owners’ association dues
or fees; fees for any easement, license or agreement maintained for the benefit
of the Property; and any and all

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    other taxes, levies, user fees, claims, charges and assessments whatsoever
that at any time may be assessed, levied or imposed on the Property or upon its
ownership, use, occupancy or enjoyment, and any related costs, interest or
penalties. In addition, “Impositions” include all documentary, stamp or
intangible personal property taxes that may become due in connection with the
Indebtedness, including Indebtedness in respect of any future advance made by
the Lender to the Borrower, or that are imposed on any of the Loan Documents.  
    “Improvements” means, to the extent of the Borrower’s existing and future
interest, all buildings and improvements of any kind erected or placed on the
Land now or in the future, including the Fixtures, together with all appurtenant
rights, privileges, Easements, tenements, hereditaments, titles, reversions,
remainders and other interests.       “Indebtedness” means all sums that are
owed or become due pursuant to the terms of the Notes, this Deed of Trust, or
any of the other Loan Documents, including scheduled principal payments,
scheduled interest payments, default interest, late charges, prepayment
premiums, accelerated or matured principal balances, advances, collection costs
(including reasonable attorneys’ fees), reasonable attorneys’ fees and costs in
enforcing or protecting the Notes, the Deed of Trust, or any of the other Loan
Documents in any probate, bankruptcy or other proceeding, receivership costs,
fees and costs of the Trustee and all other financial obligations of the
Borrower incurred in connection with the Loan transaction pursuant to the Loan
Documents, provided, however, that this Deed of Trust shall not secure any Loan
Document or any particular person’s liabilities or obligations under any Loan
Document to the extent that such Loan Document expressly states that it or such
particular person’s liabilities or obligations are unsecured by this Deed of
Trust. Indebtedness shall also include any obligations under agreements executed
and delivered by Borrower which specifically provide that such obligations are
secured by this Deed of Trust.       “Insurance Premiums” means all premiums or
other charges required to maintain in force any and all insurance policies that
this Deed of Trust requires that the Borrower maintain.       “Insurance
Proceeds” means all Proceeds of all insurance now or hereafter carried by or
payable to the Borrower with respect to the Property, including with respect to
the interruption of Rents derived from the Property, all unearned insurance
premiums with respect to the Property and all related claims or demands.      
“Land” means that certain tract of land located in Gustine, Merced County,
California, which is described on the attached Exhibit A, together with the
Appurtenances.       “Leases” means all leases, subleases, licenses,
concessions, extensions, renewals and other agreements (whether written or oral,
and whether presently effective or made in the future) through which the
Borrower grants any possessory interest in and to, or any right to occupy or
use, all or any part of the Real Property, and any related guaranties.      
“Leasing Action” means all executions, modifications, terminations and
extensions of Leases, and all other actions taken by the Borrower in exercising
its rights as landlord under the Leases.       “Legal Requirements” means all
laws, statutes, rules, regulations, ordinances, judicial decisions,
administrative decisions, building permits, development permits, certificates of

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    occupancy, or other requirements of any Governmental Authority.       “Loan
Agreement” means the Loan Agreement executed as of even date herewith between
Borrower and Lender.       “Loan Documents” means the Notes, the Loan Agreement,
this Deed of Trust, the other Mortgages described in the Loan Agreement and all
other documents evidencing the Loan, whether entered into at the closing of the
Loan or in the future, as amended in writing from time to time.       “Maximum
Permitted Rate” means the highest rate of interest permitted to be paid or
collected by applicable law with respect to the Loan.       “Notes” means
(i) the Promissory Note dated of even date herewith in the original principal
amount of Thirty-Six Million Dollars ($36,000,000) evidencing Tranche A of the
Indebtedness; and (ii) the Promissory Note dated of even date herewith in the
original principal amount of Nine Million Dollars ($9,000,000) evidencing
Tranche B of the Indebtedness, together with all extensions, renewals and
modifications thereof.       “Notice” means a notice given in accordance with
the provisions of Subsection 22.13.       “Obligations” means all of the
obligations required to be performed under the terms and conditions of any of
the Loan Documents by any Obligor, except for obligations that are expressly
stated to be unsecured under the terms of another Loan Document.       “Obligor”
means the Borrower, or any other Person that is liable under the Loan Documents
for the payment of any portion of the Indebtedness, or the performance of any
other obligation required to be performed under the terms and conditions of any
of the Loan Documents, under any circumstances.       “Participations” means
participation interests in the Loan Documents granted by the Lender.      
“Permitted Encumbrances” means (A) the lien of taxes and assessments not yet due
and payable; (B) the liens and security interests in favor of Lender created by
the Loan Documents; (C) Leases permitted under the terms of this Deed of Trust,
which shall include the Leases identified in the rent roll attached to the
Closing Certificate executed as one of the Loan Documents; and (D) those matters
listed as special exceptions in the Lender’s title insurance policy insuring the
priority of this Deed of Trust.       “Person” means any individual,
corporation, limited liability company, partnership, trust, unincorporated
association, government, governmental authority or other entity.      
“Property” means the Real Property and the Leases, Rents and Personal Property
(as defined in Subsection 19.1 below).       “Real Property” means the Land and
the Improvements.       “Rents” means all rents, income, receipts, issues and
profits and other benefits paid or payable for using, leasing, licensing,
possessing, operating from or in, residing in, selling, mining, extracting
minerals from, or otherwise enjoying the Real Property as commercial

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    real estate (but not any such income, receipts, issues, profits or other
benefits arising from the specific business operations of Borrower and/or its
subsidiaries), whether presently existing or arising in the future, to which the
Borrower may now or hereafter become entitled or may demand or claim from the
commencement of the Loan term through the time of the satisfaction of all of the
Obligations, including security deposits, amounts drawn under letters of credit
securing tenant obligations, minimum rents, additional rents, common area
maintenance charges, parking revenues, deficiency rents, termination payments,
space contraction payments, damages following default under a Lease, premiums
payable by tenants upon their exercise of cancellation privileges, proceeds from
lease guarantees, proceeds payable under any policy of insurance covering loss
of rents resulting from untenantability caused by destruction or damage to the
Real Property, all rights and claims of any kind which the Borrower has or may
in the future have against the tenants under the Leases, lease guarantors, or
any subtenants or other occupants of the Real Property, all proceeds of any sale
of the Real Property in violation of the Loan Documents, any future award
granted the Borrower in any court proceeding involving any such tenant in any
bankruptcy, insolvency, or reorganization proceedings in any state or federal
court, and any and all payments made by any such tenant in lieu of rent.      
“Restoration” means (A) in the case of a casualty resulting in damage to or the
destruction of the Improvements, the repair or rebuilding of the Improvements to
their original condition, or (B) in the case of the condemnation of a portion of
the Real Property, the completion of such work as may be necessary in order to
remedy the effects of the condemnation so that the value and income-generating
characteristics of the Real Property are restored.

4.   TITLE       The Borrower represents to and covenants with the Lender that,
at the point in time of the grant of the lien created by this Deed of Trust, the
Borrower is well seized of good and indefeasible title to the Real Property, in
fee simple absolute, subject to no lien or encumbrance except the Permitted
Encumbrances. The Borrower warrants this estate and title to the Lender and to
its successors and assigns forever, against all lawful claims and demands of all
persons. The Borrower shall maintain mortgagee title insurance issued by a
solvent carrier, covering the Real Property in an amount at least equal to the
amount of the Loan’s original principal balance. This Deed of Trust is and shall
remain a valid and enforceable first lien on the Real Property, and if the
validity or enforceability of this first lien is attacked by appropriate
proceedings, the Borrower shall diligently and continuously defend it through
appropriate proceedings. Should the Borrower fail to do so, the Lender may at
the Borrower’s expense take all necessary action, including the engagement and
compensation of legal counsel, the prosecution or defense of litigation, and the
compromise or discharge of claims. The Borrower shall defend, indemnify and hold
the Lender harmless in any suit or proceeding brought to challenge or attack the
validity, enforceability or priority of the lien granted by this Deed of Trust.
If a prior construction, mechanics’ or materialmen’s lien on the Real Property
arises by operation of statute during any construction or repair of the
Improvements, the Borrower shall either cause the lien to be discharged by
paying when due any amounts owed to such persons, or shall comply with
Section 11 of this Deed of Trust.

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5.   REPRESENTATIONS OF THE TRUSTOR       The Borrower represents to the Lender
as follows:

  5.1   Formation, Existence, Good Standing         The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has obtained all licenses and permits and filed all statements
of fictitious name and registrations necessary for the lawful operation of its
business in Delaware.     5.2   Qualification to Do Business         The
Borrower is qualified to do business as a foreign corporation under the laws of
California and has obtained all licenses and permits and filed all statements of
fictitious name and registrations necessary for the lawful operation of its
business in California.     5.3   Power and Authority         The Borrower has
full power and authority to carry on its business as presently conducted, to own
the Property, to execute and deliver the Loan Documents, and to perform its
Obligations.     5.4   Anti-Terrorism Regulations         No Borrower or
Borrower Affiliate is a “Specially Designated National” or a “Blocked Person” as
those terms are defined in the Office of Foreign Asset Control Regulations (31
CFR Section 500 et seq.).     5.5   Due Authorization         The Loan
transaction and the performance of all of the Borrower’s Obligations have been
duly authorized by all requisite corporate action, and each individual executing
any Loan Document on behalf of the Borrower has been duly authorized to do so.  
  5.6   No Default or Violations         The execution and performance of the
Borrower’s Obligations will not result in any breach of, or constitute a default
under, any contract, agreement, document or other instrument to which the
Borrower is a party or by which the Borrower may be bound or affected, and do
not and will not violate or contravene any law to which the Borrower is subject;
nor do any such other instruments impose or contemplate any obligations which
are or will be inconsistent with the Loan Documents.     5.7   No Further
Approvals or Actions Required         No approval by, authorization of, or
filing with any federal, state or municipal or other governmental commission,
board or agency or other governmental authority is necessary in connection with
the authorization, execution and delivery of the Loan Documents by the Borrower.
    5.8   Due Execution and Delivery

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      Each of the Loan Documents to which the Borrower is a party has been duly
executed and delivered on behalf of the Borrower.     5.9   Legal, Valid,
Binding and Enforceable         Each of the Loan Documents to which the Borrower
is a party constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.     5.10  
Accurate Financial Information         All financial information furnished by
the Borrower to the Lender in connection with the application for the Loan is
true, correct and complete in all material respects and does not omit to state
any fact or circumstance necessary to make the statements in them not misleading
in any material respect, and there has been no material adverse change in the
financial condition of the Borrower since the date of such financial
information.     5.11   Compliance with Legal Requirements         All
governmental approvals and licenses required for the conduct of the Borrower’s
business and for the maintenance and operation of the Real Property in
compliance with applicable law are in full force and effect, and the Real
Property is currently being operated in compliance with the Legal Requirements
in all material respects.     5.12   Contracts and Franchises         All
contracts and franchises necessary for the conduct of the Borrower’s business
and for the operation of the Real Property in accordance with good commercial
practice are in force.     5.13   No Condemnation Proceeding         As of the
date of this Deed of Trust, the Borrower has no knowledge of any present,
pending or threatened condemnation proceeding or award affecting the Real
Property.     5.14   No Casualty         As of the date of this Deed of Trust,
no damage to the Real Property by any fire or other casualty has occurred, other
than damage that has been completely repaired in accordance with good commercial
practice and in compliance with applicable law.     5.15   Independence of the
Real Property         The Real Property may be operated independently from other
land and improvements not included within or located on the Land, and it is not
necessary to own or control any property other than the Real Property in order
to meet the obligations of the landlord under any Lease, or in order to comply
with the Legal Requirements.     5.16   Complete Lots and Tax Parcels

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      The Land is comprised exclusively of tax parcels that are entirely
included within the Land, and, if the Land is subdivided, of subdivision lots
that are entirely included within the Land.     5.17   Ownership of Fixtures    
    The Borrower owns the Fixtures free of any encumbrances, including purchase
money security interests, rights of lessors, and rights of sellers under
conditional sales contracts or other financing arrangements.     5.18  
Commercial Property         The Real Property is commercial rather than
residential, and the Loan has not been made for personal, family or household
purposes.     5.19   Real Property is not Homestead Property         The Real
Property is NOT HOMESTEAD PROPERTY of the Borrower or of the spouse of any
person named as the Borrower.     5.20   Performance under Development
Agreements         To the best of Borrower’s knowledge, all of the obligations
of the owner of the Real Property due under the Development Agreements have been
fully, timely and completely performed to the extent required thereunder and
such performance has been accepted by the related governmental agency or utility
company, and Borrower has received no notice by any Governmental Authority that
any default exists under any of the Development Agreements.     5.21   Status of
Certain Title Matters         To Borrower’s knowledge, neither Borrower nor any
tenant under the Leases is in material default under the terms of any Easement.
    5.22   No Prohibited Transactions         The Borrower represents to the
Lender that either (a) the Borrower is not an “employee benefit plan” within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), that is subject to Title I of ERISA, a “plan” within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or
an entity that is deemed to hold “plan assets” within the meaning of 29 C.F.R.
§2510.3-101 of any such employee benefit plan or (b) the entering into of the
Loan Documents, the acceptance of the Loan by the Borrower and the existence of
the Loan will not result in a non-exempt prohibited transaction under §406 of
ERISA or Section 4975 of the Code. The Borrower further warrants and covenants
that the foregoing representation will remain true during the term of the Loan.

6.   COVENANTS

  6.1   Good Standing         The Borrower shall remain in good standing as a
corporation under the laws of Delaware and shall maintain in force any
statements of fictitious name and

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      registrations necessary to remain in good standing as a corporation under
the laws of the State of Delaware during the term of the Loan.     6.2  
Qualification to Do Business         The Borrower shall remain qualified to do
business as a foreign corporation under the laws of California and shall
maintain in force any statements of fictitious name and registrations necessary
to remain in good standing as a corporation under the laws of the State of
California during the term of the Loan. The Borrower shall also maintain in
force any licenses and permits, filings and statements of fictitious name and
registrations necessary for the lawful operation of its business in California.
    6.3   No Default or Violations         The Borrower shall not enter into any
contract, agreement, document or other instrument, if the performance of the
Borrower’s Obligations would result in any breach of, or constitute a default
under, any such contract, agreement, document or other instrument, or if the
contract, agreement, document or other instrument would impose any obligations
the performance of which would result in a Default under the Loan Documents.    
6.4   Payment and Performance         The Borrower shall pay the Indebtedness
and perform all of its other Obligations, as and when the Loan Documents require
such payment and performance.     6.5   Payment of Impositions         The
Borrower shall pay the Impositions on or before the last day on which they may
be paid without penalty or interest, and shall, within thirty (30) days, furnish
the Lender with a paid receipt or a cancelled check as evidence of payment. If
the Lender does not receive such evidence, the Lender may obtain it directly. If
it does so, the Lender will charge the Borrower an administrative fee of Two
Hundred Fifty Dollars ($250) for securing the evidence of payment. The payment
of this fee shall be a demand obligation of the Borrower. If the Borrower wishes
to contest the validity or amount of an Imposition, it may do so by complying
with Section 11. If any new Legal Requirement (other than a general tax on
income or on interest payments) taxes the Deed of Trust so that the yield on the
Indebtedness would be reduced, and the Borrower may lawfully pay the tax or
reimburse the Lender for its payment, the Borrower shall do so.     6.6  
Maintenance of the Real Property         The Borrower shall not commit or permit
any waste of the Real Property as a physical or economic asset, and agrees to
maintain (or cause to be maintained) in good repair the Improvements, including
structures, roofs, mechanical systems, parking lots or garages, and other
components of the Real Property that are necessary or desirable for the use of
the Real Property, or which the Borrower as landlord under any Lease is required
to maintain for the benefit of any tenant. In its performance of this
Obligation, the Borrower shall promptly and in a good and workmanlike manner
repair or restore, as required under Subsection 6.16, any elements of the
Improvements that are damaged or destroyed. The Borrower shall also replace
roofs, parking lots, mechanical systems, and other elements of

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      the Improvements requiring periodic replacement. The Borrower shall carry
out such replacements no less frequently than would a commercially reasonable
owner of properties of a similar use, value, age, nature and construction. The
Borrower shall not, without the prior written consent of the Lender, which shall
not be unreasonably withheld, demolish, reconfigure, or materially alter the
structural elements of the Improvements, unless such an action is the obligation
of the Borrower under a Lease approved by Lender or for which the Lender’s
approval is not required. The Lender agrees that any request for its consent to
such an action shall be deemed given if the Lender does not respond within
fifteen (15) Business Days to any written request for such a consent, if the
request is accompanied by all materials required to permit the Lender to analyze
the proposed action.     6.7   Use of the Real Property         The Borrower
agrees that the Real Property may only be used as a commercial property and
industrial processing facility and distribution warehouse, for ancillary uses
related thereto and for no other purpose.     6.8   Legal Requirements        
The Borrower shall maintain in full force and effect all governmental approvals
and material permits and licenses required for the conduct of the Borrower’s
business and for the maintenance and operation of the Real Property in
compliance with applicable law, and shall comply in all material respects with
all Legal Requirements relating to the Real Property at all times.     6.9  
Contracts and Franchises         The Borrower shall maintain in force all
material contracts and franchises necessary for the conduct of the Borrower’s
business and for the operation of the Real Property in accordance with good
commercial practice.     6.10   Covenants Regarding Certain Title Matters      
  The Borrower shall promptly pay, perform and observe all of its obligations
under the Easements included within the Appurtenances or under reciprocal
easement agreements, operating agreements, declarations, and restrictive
covenants included in the Permitted Encumbrances, shall not modify or consent to
the termination of any of them without the prior written consent of the Lender,
shall promptly furnish the Lender with copies of all notices of default under
them, and shall enforce all covenants and conditions under them and benefiting
the Real Property.     6.11   Independence of the Real Property         The
Borrower shall maintain the independence of the Real Property from other land
and improvements not included within or located on the Land. In fulfilling this
covenant, the Borrower shall neither take any action which would make it
necessary to own or control any property other than the Real Property in order
to meet the obligations of the landlord under any Lease, or in order to comply
with the Legal Requirements, nor take any action which would cause any land or
improvements other than the Land and the Improvements to rely upon the Land or
the Improvements for those purposes.

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  6.12   Complete Lots and Tax Parcels         The Borrower shall take no action
that would result in the inclusion of any portion of the Land in a tax parcel or
subdivision lot that is not entirely included within the Land.     6.13   Real
Property is not Homestead Property         The Real Property shall NOT BECOME
HOMESTEAD PROPERTY of the Borrower or of the spouse of any person named as the
Borrower.     6.14   Performance under Development Agreements         The
Borrower shall fully, timely and completely perform all of the obligations of
the owner of the Real Property due under the Development Agreements and shall
cause no default under any of the Development Agreements.     6.15   Status of
Certain Title Matters         The Borrower shall not take or fail to take any
action with respect to the Easements included within the Appurtenances or the
reciprocal easement agreements, operating agreements, declarations, and
restrictive covenants included in the Permitted Encumbrances if, as the result
of such an action or failure, the subject Easement or other title matter would
(a) be rendered invalid or without force or effect, (b) be amended or
supplemented without the consent of the Lender, (c) be placed in default or
alleged default, (d) result in any lien against the Real Property, or (e) give
rise to any assessment against the Real Property, unless immediately paid in
full.     6.16   Restoration upon Casualty or Condemnation         If a casualty
or condemnation occurs, the Borrower shall promptly commence the Restoration of
the Real Property, to the extent that the Lender has made Insurance Proceeds or
Condemnation Proceeds available to the Borrower for such Restoration.     6.17  
Performance of Landlord Obligations         The Borrower shall perform, in all
material respects, its obligations as landlord under the Leases. The Borrower
shall not, without the Lender’s written consent, which consent shall not be
unreasonably withheld, or except as otherwise provided in Section 13 below,
extend, modify, terminate, or enter into any Lease of the Real Property.    
6.18   Financial Reports and Operating Statements

  (a)   Maintenance of Books and Records         During the term of the Loan,
the Borrower shall maintain complete and accurate accounting and operational
records, including copies of all Leases and other material written contracts
relating to the Real Property, copies of all tax statements, and evidence to
support the payment of all material property-related expenses.     (b)  
Delivery of Financial and Property-Related Information         Within one
hundred twenty (120) days after the end of each of its fiscal

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      years, or, if a Default exists, on demand by the Lender, and within sixty
(60) days after the end of each fiscal quarter, the Borrower shall deliver to
the Lender (A) copies of the financial statements of the Borrower and its
Affiliates, including balance sheets and earnings statements, and (B) a complete
and accurate operating statement for the Real Property, all in form satisfactory
to the Lender. The annual financial statements shall include a complete rent
roll certified by the Borrower to be true and correct and must include each
tenant’s name, premises, square footage, rent, lease expiration date, renewal
options and related rental rates, delinquencies and vacancies and the existence
of any unsatisfied landlord obligations, e.g. in respect of free rent periods,
unfinished tenant improvements or other leasing costs. If the Borrower fails to
deliver the items required in this Subsection, then subject to the Notice and
cure period set forth in Subsection 6.18(c) below, the Lender may engage an
accounting firm to prepare the required items. The Borrower shall cooperate
fully with any investigative audit required to permit the accounting firm to
produce these items, and the fees and expenses incurred in connection with their
preparation shall be paid on demand by the Borrower.     (c)   Effect of Failure
to Deliver Financial and Property Reports         If no Default exists and the
Borrower fails to provide the financial and property reports required under this
Section within one hundred twenty (120) days of the close of any fiscal year,
the Lender will provide a Notice of this failure and a thirty (30)-day
opportunity to cure before a Default shall exist.     (d)   Certification of
Information         The annual financial and operating statements provided under
this Subsection shall be certified by an independent certified public accountant
as having been prepared in accordance with generally accepted accounting
principles, consistently applied, or, in the case of financial statements
prepared on a cash or income tax basis, or of operating statements, as not
materially misleading based on an audit conducted in accordance with generally
accepted auditing standards. The quarterly financial and operating statements
provided under this Subsection need not be audited. The Borrower shall, however
certify that such statements are true and correct.

  6.19   Estoppel Statements         Upon request by the Lender, the Borrower
shall, within ten (10) Business Days of Notice of the request, furnish to the
Lender or to whom it may direct, a written statement acknowledging the amount of
the Indebtedness and disclosing whether any offsets or defenses exist against
the Indebtedness.     6.20   Prohibition on Certain Distributions         If a
Default exists or would occur as a result, the Borrower shall not pay any
dividend or make any partnership, trust or other distribution, and shall not
make any payment or transfer any property in order to purchase, redeem or retire
any interest in its beneficial interests or ownership.

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  6.21   Use of Loan Proceeds         The Loan proceeds shall be used solely for
business and commercial purposes.     6.22   Prohibition on Cutoff Notices      
  The Borrower shall not issue any Notice to the Lender to the effect that liens
on the Real Property after the date of the Notice will enjoy priority over the
lien of this Deed of Trust.     6.23   Prohibited Person Compliance        
Borrower warrants, represents and covenants that neither Borrower nor any
Obligor nor any of their respective Affiliates is or will be an entity or person
(i) that is listed in the Annex to, or is otherwise subject to the provisions
of, Executive Order 13224 issued on September 24, 2001 (“EO13224”), (ii) whose
name appears on the United States Treasury Department’s Office of Foreign Assets
Control (“OFAC”) most current list of “Specifically Designated National and
Blocked Persons” (which list may be published from time to time in various
mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO 13224, or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in subparts [i] — [iv] above are herein referred to as a
“Prohibited Person”). Borrower covenants and agrees that neither Borrower, nor
any Obligor nor any of their respective Affiliates will (i) knowingly conduct
any business, nor engage in any transaction or dealing, with any Prohibited
Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services to or for the benefit of a Prohibited
Person, or (ii) engage in or conspire to engage in any transaction that evades
or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in EO13224. Borrower further covenants and
agrees to deliver (from time to time) to Lender any such certification or other
evidence as may be requested by Lender in its sole and absolute discretion,
confirming that (i) neither Borrower nor any Obligor is a Prohibited Person and
(ii) neither Borrower nor any Obligor has knowingly engaged in any business,
transaction or dealings with a Prohibited Person, including, but not limited to,
the making or receiving of any contribution of funds, goods, or services, to or
for the benefit of a Prohibited Person.

7.   INSURANCE REQUIREMENTS       At all times until the Indebtedness is paid in
full, the Borrower shall maintain insurance coverage and administer insurance
claims in compliance with this Section.

  7.1   Required Coverages

  (a)   Open Perils/Special Form/Special Perils Property         The Borrower
shall maintain “Open Perils,” “Special Form,” or “Special Perils” property
insurance coverage in an amount not less than one hundred percent (100%) of the
replacement cost of all insurable elements of the Real Property and of all
tangible Personal Property, with

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      coinsurance waived, or if a coinsurance clause is in effect, with an
agreed amount endorsement acceptable to the Lender. Coverage shall extend to the
Real Property and to all tangible Personal Property.     (b)   Broad Form Boiler
and Machinery         If any boiler or other machinery is located on or about
the Real Property, the Borrower shall maintain broad form boiler and machinery
coverage, including a form of business income coverage.     (c)   Flood        
If the Real Property is located in a special flood hazard area (that is, an area
within the 100-year floodplain) according to the most current flood insurance
rate map issued by the Federal Emergency Management Agency and if flood
insurance is available, the Borrower shall maintain flood insurance coverage on
all insurable elements of Real Property and of all tangible Personal Property.  
  (d)   Comprehensive/General Liability         The Borrower shall maintain
commercial general liability coverage (which may be in the form of
umbrella/excess liability insurance) with a One Million Dollar ($1,000,000)
combined single limit per occurrence and a minimum aggregate limit of Two
Million Dollars ($2,000,000). Lender reserves the right to require increased
coverage with respect to these amounts.     (e)   Worker’s Compensation        
The Borrower shall maintain worker’s compensation if applicable.     (f)  
Elective Coverages         The Lender may require additional coverages
appropriate to the property type and site location. Additional coverages may
include liquor liability, earthquake, windstorm, mine subsidence, sinkhole,
supplemental liability, or coverages of other property-specific risks, as
determined by Lender.

  7.2   Primary Coverage         Each coverage required under this Section shall
be primary rather than contributing or secondary to the coverage Borrower may
carry for other properties or risks, provided, however, that blanket coverage
shall be acceptable if (a) the policy includes limits by property location and
(b) the Lender determines, in the exercise of its discretion, that the amount of
such coverage is sufficient in light of the other risks and properties insured
under the blanket policy.     7.3   How the Lender Shall Be Named         On all
property insurance policies and coverages required under this Section (including
coverage against loss of business income), the Lender must be named as “first
mortgagee” under a standard mortgage clause. On all liability policies and
coverages, the Lender must be named as an “additional insured.” The Lender shall
be referred to verbatim as follows: Transamerica Life Insurance Company, and its
successors, assigns, and affiliates; as their interest may appear; c/o AEGON USA
Realty Advisors, Inc.; Mortgage Loan Dept.; 4333 Edgewood Rd.,

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      NE; Cedar Rapids, Iowa 52499-5443.”     7.4   Rating         Each
insurance carrier providing insurance required under this Section must have,
independently of its parent’s or any reinsurer’s rating, a General Policyholder
Rating of A, and a Financial Rating of X or better, as reported in the most
current issue of Best’s Insurance Guide, or as reported by Best on its internet
web site.     7.5   Deductible         The maximum deductible on each required
coverage or policy is One Hundred Thousand Dollars ($100,000).     7.6  
Notices, Changes and Renewals         All policies required under this Section
must require the insurance carrier to give the Lender a minimum of thirty
(30) days’ notice in the event of modification, cancellation or termination or
non renewal and shall provide that no act or omission by the insured shall
invalidate or diminish the insurance provided to Lender. The Borrower shall
report to the Lender immediately any facts known to the Borrower that may
adversely affect the appropriateness or enforceability of any insurance
contract, including, without limitation, changes in the ownership or occupancy
of the Real Property, any hazard to the Real Property and any matters that may
give rise to any claim. Prior to expiration of any policy required under this
Section, the Borrower shall provide either (a) an original or certified copy of
the renewed policy, or (b) a “binder,” an Acord 28 (real property), Acord 27
(personal property) or Acord 25 (liability) certificate, or another document
satisfactory to the Lender conferring on the Lender the rights and privileges of
mortgagee. If the Borrower meets the foregoing requirement under clause (b), the
Borrower shall supply an original or certified copy of the original policy
within ninety (90) days. All binders, certificates, documents, and original or
certified copies of policies must name the Borrower as a named insured or as an
additional insured, must include the complete and accurate property address and
must bear the original signature of the issuing insurance agent.     7.7  
Unearned Premiums         If this Deed of Trust is foreclosed, the Lender may at
its discretion cancel any of the insurance policies required under this Section
and apply any unearned premiums to the Indebtedness.     7.8   Forced Placement
of Insurance         If the Borrower fails to comply with the requirements of
this Section, the Lender may, at its discretion, procure any required insurance.
Any premiums paid for such insurance, or the allocable portion of any premium
paid by the Lender under a blanket policy for such insurance, shall be a demand
obligation under this Deed of Trust, and any unearned premiums under such
insurance shall comprise Insurance Proceeds and therefore a portion of the
Property.

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8.   INSURANCE AND CONDEMNATION PROCEEDS

  8.1   Adjustment and Compromise of Claims and Awards         The Borrower may
settle any insurance claim or condemnation proceeding if the effect of the
casualty or the condemnation may be remedied for Two Hundred Fifty Thousand
Dollars ($250,000) or less. If a greater sum is required, the Borrower may not
settle any such claim or proceeding without the advance written consent of the
Lender. If a Default exists, the Borrower may not settle any insurance claim or
condemnation proceeding without the advance written consent of the Lender.    
8.2   Direct Payment to the Lender of Proceeds         If the Insurance Proceeds
received in connection with a casualty or the Condemnation Proceeds received in
respect of a condemnation exceed Two Hundred Fifty Thousand Dollars ($250,000),
or if there is a Default, then such proceeds shall be paid directly to the
Lender. The Lender shall have the right to endorse instruments which evidence
proceeds that it is entitled to receive directly.     8.3   Availability to the
Borrower of Proceeds         The Borrower shall have the right to use the
Insurance Proceeds or the Condemnation Proceeds to carry out the Restoration of
the Real Property, if the amount received is less than Five Million Dollars
($5,000,000), subject to the conditions set forth in Subsections 8.4, 8.5, and
8.6 of this Section.         If the amount received in respect of a casualty or
condemnation equals or exceeds Five Million Dollars ($5,000,000), and if the
Loan-to-Value ratio of the Property on completion will be sixty-five percent
(65%) or less, as determined by the Lender in its discretion based on its
estimate of the market value of the Real Property, the Lender shall receive such
Insurance Proceeds or Condemnation Proceeds directly and hold them in a fund for
Restoration subject to the conditions set forth in Subsections 8.4, 8.5, and 8.6
of this Section. If the Lender’s estimate of the market value of the Real
Property implies a Loan-to-Value ratio of over sixty-five percent (65%), and the
Borrower disagrees with the Lender’s estimate, the Borrower may require that the
Lender engage an independent appraiser (the “Fee Appraiser”) to prepare and
submit to AEGON a full narrative appraisal report estimating the market value of
the Real Property. The Fee Appraiser shall be certified in California and shall
be a member of a national appraisal organization that has adopted the Uniform
Standards of Professional Appraisal Practice (USPAP) established by the
Appraisal Standards Board of the Appraisal Foundation. The Fee Appraiser will be
required to use the procedure for the appraisal of the Real Property at the time
of the origination of the Loan, including the required assumptions and limiting
conditions. For purposes of this Section, the independent appraiser’s value
conclusion shall be binding on both the Lender and the Borrower. The Borrower
shall have the right to make a prepayment of the Loan, without premium,
sufficient to achieve this Loan-to-Value ratio. The independent fee appraisal
shall be at the Borrower’s expense.         Unless the Borrower has the right to
use the Insurance Proceeds or the

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      Condemnation Proceeds under the foregoing paragraphs, the Lender may, in
its sole and absolute discretion, either apply them to the Loan balance or
disburse them for the purposes of repair and reconstruction, or to remedy the
effects of the condemnation. No prepayment premium will be charged on Insurance
Proceeds or Condemnation Proceeds applied to reduce the principal balance of the
Loan.     8.4   Conditions to Availability of proceeds         The Lender shall
have no obligation to release Insurance Proceeds or Condemnation Proceeds to the
Borrower, and may hold such amounts as additional security for the Loan, if
(a) a Default exists, (b) a payment Default has occurred during the preceding
twelve (12) months, or (c) if the Insurance Proceeds or Condemnation Proceeds
received by the Lender and any other funds deposited by the Borrower with the
Lender are insufficient, as determined by the Lender in its reasonable
discretion, to complete the Restoration. If a Default exists, the Lender may at
its sole and absolute discretion apply such Insurance Proceeds and Condemnation
Proceeds to the full or partial cure of the Default.     8.5   Permitted
Mezzanine Financing for Rebuilding or Remediation of the Effect of Taking by
Eminent Domain         If the Lender reasonably determines that the Insurance
Proceeds or Condemnation Proceeds received in respect of a casualty or
condemnation, as the case may be, would be insufficient to permit the Borrower
to restore the Improvements to their condition before the casualty, or to remedy
the effect on the Real Property of the condemnation, then the Borrower shall use
its commercially reasonable efforts to secure such additional funds as are
necessary to effect the Restoration. The Borrower’s obligation to use its
commercially reasonable efforts shall be limited to securing such funds on a
non-recourse basis. Interests in the Borrower may be pledged as security to the
extent necessary in connection with any such financing.     8.6   Draw
Requirements         The Borrower’s right to receive Insurance Proceeds and
Condemnation Proceeds held by the Lender under this Section shall be conditioned
on the Lender’s approval of plans and specifications for the Restoration, which
approval shall not be unreasonably withheld. Each draw shall be in the minimum
amount of Fifty Thousand Dollars ($50,000). Draw requests shall be accompanied
by customary evidence of construction completion, and by endorsements to the
Lender’s mortgagee title insurance coverage insuring the absence of
construction, mechanics’ or materialmen’s liens. Draws based on partial
completion of the Restoration shall be subject to a ten percent (10%) holdback.
All transactional expenses shall be paid by the Borrower.

9. DEFAULT     9.1   Payment Defaults         A “Default” shall exist without
Notice upon the occurrence of any of the following events:

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  (a)   Scheduled Payments         The Borrower’s failure to pay, or to cause to
be paid, (i) any regular monthly payment of principal and interest under the
Notes, on or before the tenth (10th) day of the month in which it is due or (ii)
any other scheduled payment under the Notes, this Deed of Trust or any other
Loan Document within ten (10) days of its due date.     (b)   Payment at
Maturity         The Borrower’s failure to pay, or to cause to be paid, the
Indebtedness when the Loan matures by acceleration under Section14, because of a
transfer or encumbrance under Section 12, or by lapse of time.     (c)   Demand
Obligations         The Borrower’s failure to pay, or to cause to be paid,
within five (5) Business Days of the Lender’s demand, any other amount required
under the Notes, this Deed of Trust or any of the other Loan Documents.

  9.2   Incurable Nonmonetary Default         A Default shall exist upon any of
the following:

  (a)   Material Untruth or Misrepresentation         The Lender’s discovery
that any representation made by the Borrower in any Loan Document was materially
and adversely untrue or misleading when made, if the misrepresentation either
was intentional or is not capable of being cured as described in Subsection
9.3(a) below.     (b)   Due on Sale or Encumbrance         The occurrence of any
sale, conveyance, transfer or vesting that would result in the Loan becoming
immediately due and payable at the Lender’s option under Section 12.     (c)  
Voluntary Bankruptcy Filing         The filing by the Borrower of a petition in
bankruptcy or for relief from creditors under any present or future law that
affords general protection from creditors.     (d)   Insolvency         The
failure of the Borrower generally to pay its debts as they become due, its
admission in writing to an inability so to pay its debts, the making by the
Borrower of a general assignment for the benefit of creditors, or a judicial
determination that the Borrower is insolvent.     (e)   Receivership         The
appointment of a receiver or trustee to take possession of any of the assets of
the Borrower.     (f)   Levy or Attachment         The taking or seizure of any
material portion of the Property under levy of execution or attachment.     (g)
  Lien         The filing against the Real Property of any lien or claim of lien
for the performance of work or the supply of materials, or the filing of any

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      federal, state or local tax lien against the Borrower, or against the Real
Property, unless the Borrower promptly complies with Section 11 of this Deed of
Trust.

  (h)   Defaults under other Loan Documents         The existence of any default
or Default under the Loan Agreement or any other Loan Document, provided any
required Notice of such default has been given and any applicable cure period
has expired.     (i)   Dissolution or Liquidation         The Borrower shall
initiate or suffer the commencement of a proceeding for its dissolution or
liquidation, and such proceeding shall not be dismissed within sixty (60) days,
or the Borrower shall cease to exist as a legal entity.

  9.3   Curable Non-Monetary Default         A Default shall exist, following
the cure periods specified below, under the following circumstances:

  (a)   Unintentional Misrepresentations that are Capable of Being Cured        
A “Default” shall exist, with Notice, if the Lender discovers that the Borrower
has unintentionally made any material and adverse misrepresentation that is
capable of being cured, unless the Borrower promptly commences and diligently
pursues a cure of the misrepresentation approved by the Lender, and completes
the cure within one hundred twenty (120) days of its receipt of Notice. Any such
cure shall place the Lender in the risk position that would have existed had the
false representation been true when made. The Lender shall afford the Borrower
an additional one hundred twenty (120) day period in cases where construction or
repair is needed to cure the potential Default, and the cure cannot be completed
within the first one hundred twenty (120) day cure period. During the cure
period, the Borrower has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved.     (b)   Involuntary Bankruptcy or Similar Filing      
  The Borrower becomes the subject of any petition or action seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief, or that may result in a composition of its debts,
provide for the marshaling of the Borrower’s assets for the satisfaction of its
debts, or result in the judicially ordered sale of the Borrower’s assets for the
purpose of satisfying its obligations to creditors, unless dismissed within
sixty (60) days of the filing of the petition or other action.     (c)   Entry
of a Material Judgment         Any judgment is entered against the Borrower or
any other Obligor involving an aggregate amount of One Million Five Hundred
Thousand and 00/100 Dollars ($1,500,000.00) or more (unless another Default then
exists, in which event there shall be no dollar limitation), and the

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      judgment may materially and adversely affect the value, use or operation
of the Real Property, unless the judgment is satisfied within thirty (30) days
or the Borrower’s insurer accepts full coverage and liability in writing within
such thirty (30) day period.

  (d)   Other Defaults         The Borrower fails to observe any promise or
covenant made in this Deed of Trust, unless the failure results in a Default
described elsewhere in this Section 9, provided the Lender delivers written
Notice to the Borrower of the existence of such an act, omission or
circumstance, and that such an act, omission or circumstance shall constitute a
Default under the Loan Documents unless the Borrower promptly initiates an
effort to cure the potential Default, pursues the cure diligently and
continuously, and succeeds in effecting the cure within one hundred twenty
(120) days of receipt of Notice. The Lender shall afford the Borrower an
additional one hundred twenty (120) day period in cases where construction or
repair is needed to cure the potential Default, and the cure cannot be completed
within the first one hundred twenty (120) day cure period. During the cure
period, the Borrower has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved. All notice and cure periods provided in this Deed of
Trust shall run concurrently with any notice or cure periods provided by law and
in any of the other Loan Documents.

10.   RIGHT TO CURE       The Lender shall have the right to cure any Default.
The expenses of doing so shall be part of the Indebtedness, and the Borrower
shall pay them to the Lender on demand.   11.   CONTEST RIGHTS       The
Borrower may secure the right to contest Impositions and construction,
mechanics’ or materialmen’s liens, through appropriate proceedings conducted in
good faith, by either (A) depositing with the Lender an amount equal to one
hundred twenty five percent (125%) of the amount of the Imposition or the lien,
or (B) obtaining and maintaining in effect a bond equal to the amount required
by California Civil Code Section 3143 or any successor statute to release the
lien of record or the amount required by the court in order to obtain a court
order staying the foreclosure of the lien pending resolution of the dispute, and
releasing the lien of record. After such a deposit is made or bond issued, the
Borrower shall promptly commence the contest of the lien and continuously pursue
that contest in good faith and with reasonable diligence. If the contest of the
related Imposition or lien is unsuccessful, any deposits or bond proceeds shall
be used to pay the Imposition or to satisfy the obligation from which the lien
has arisen. Any surplus shall be refunded to the Borrower.

12.   DUE ON TRANSFER OR ENCUMBRANCE       Upon the sale or transfer of any
portion of the Property or any other conveyance, transfer

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  or vesting of any direct or indirect interest in the Property, including
(i) any encumbrance (other than a Permitted Encumbrance) of the Real Property
(unless the Borrower contests the encumbrance in compliance with Section 11);
and (ii) the granting of any security interest in the Property (other than
Permitted Encumbrances), the Indebtedness shall, at the Lender’s option, become
immediately due and payable without Notice to the Borrower.   13.   ABSOLUTE
ASSIGNMENT OF LEASES AND RENTS

  13.1   ASSIGNMENT OF RENTS AND PROCEEDS AND LEASES         In connection with
the Loan, Borrower hereby absolutely, presently and irrevocably assigns, grants,
transfers, and conveys to Lender, its successors and assigns, all of Borrower’s
right, title, and interest in, to, and under all Leases, now or hereafter
affecting all or any part of the Property or Borrower’s use thereof, including
without limitation the right to take all Leasing Actions, together with all of
Borrower’s right, title, and interest in and to all Rents, and the right,
without taking possession of the Real Property, to collect the same as they
become due and to apply such Rents and Proceeds to the Secured Obligations. It
is the intent of Borrower and Lender to establish a present transfer and
assignment of all of the Leases and the Rents to Lender.     13.2   DISCLAIMER  
      Neither the assignments set forth in Section 13.1 above nor Lender’s
exercise of its rights thereunder shall be deemed or construed to constitute the
Lender a mortgagee in possession of the Real Property, nor shall the Lender be
deemed to have assumed, by accepting this Assignment, the landlord’s obligations
to any tenant. In particular, acceptance by Lender of this Assignment shall not
obligate the Lender (a) to appear in or to defend any action or proceeding
relating to the Leases or to the Real Property, (b) to perform any obligation as
landlord under the Leases, (c) to pay any amount or to assume any future
financial obligation of the landlord, including any obligation to pay to any
tenant a security or other deposit not actually received by Lender or (d) to
indemnify any tenant for any injury or damage to person or property sustained by
any person or persons, firm or corporation in or about the Real Property.    
13.3   REPRESENTATIONS, WARRANTIES AND COVENANTS         Borrower hereby
represents, warrants, and covenants as follows.

  (a)   Borrower is the sole holder of the landlord’s interest under the Leases,
is entitled to receive the Rents and Proceeds from the Leases and from the
Property, and has the full right to sell, assign, transfer, and set over the
same and to grant to and confer upon Lender the rights, interests, powers, and
authorities herein granted and conferred.     (b)   If the Borrower receives any
written notice from any tenant asserting a material default by the landlord
under a Lease, or advising the Borrower

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      that a condition exists which may become a material default with the
passage of time, the Borrower shall send a copy or memorandum of the notice to
the Lender.     (c)   The Borrower agrees upon written request of the Lender
following the revocation of the licenses granted in Section 13.4, to notify the
tenants under the Leases of this Assignment, to direct them in writing to send
the Lender, simultaneously, copies of all notices of default that they serve on
the Borrower, and to direct them, at the Lender’s request, to pay all future
Rent directly to the Lender. The Rents and copies of such notices shall be sent
to the Lender at such address as is specified by the Lender to tenants from time
to time.     (d)   The Borrower shall not create or permit any lien, charge, or
encumbrance of the Leases or of the Rents, and shall not pledge, transfer, or
otherwise assign the Leases or the Rents unless at the Lender’s request, or
unless otherwise agreed to by the Lender in writing.     (e)   Borrower has made
no pledge or assignment of the Leases or Rents prior to the date hereof, other
than collateral assignments to other lenders that will be released concurrently
with the delivery and recordation of this Deed of Trust, and Borrower shall not,
after the date hereof, make or permit any such pledge or assignment.     (f)  
Borrower shall provide Lender with a fully-executed copy of each Lease,
amendment, modification or alteration thereto.

  13.4   LICENSE         The Lender grants to the Borrower a conditional
license, subject to the Lender’s rights under Section 13.5 below, to collect the
Rents, other than those Rents paid more than one (1) month in advance. The
Borrower may use the Rents so collected for any lawful purpose which is
consistent with the Borrower’s ongoing performance of its obligations under the
Loan Documents, provided (a) no Default then exists and (b) the Borrower does
not intend to cause, and has no reason to expect the occurrence of, any Default
in respect of the Obligations due to be performed in the following calendar
month.         Any Rents excluded from the scope of this license shall be trust
funds for the benefit of the Lender. The Lender may require that such Rents be
deposited in a reserve fund to serve as additional security for the Loan, or to
be used to benefit the Real Property, under such terms and conditions as the
Lender may determine in the exercise of its sole and absolute discretion.      
  The Lender further grants to the Borrower a conditional license subject to the
Lender’s rights under Section 13.5 to take all Leasing Actions in the ordinary
course of business. The license does not extend to any Leasing Action that
permits (i) less than reasonable market rent during its original term or any
extension period, (ii) that permits prepayment of rent more than one (1) year in
advance, or such shorter period as is actually provided for rentals under the
Lease, or (iii) that modifies a

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      Lease in any manner that increases the liability or obligations of any
successor to Borrower’s interest in such Lease or affects the notice and cure
rights available thereunder. Furthermore, any Leases to Affiliates of Borrower,
or other Leases specifically identified by Lender, must be unconditionally
subordinated to this Deed of Trust.

  13.5   Revocation of License         Upon Default, the Lender may by Notice to
the Borrower or Assignor immediately terminate the Borrower’s licenses under
Section 13.4, regardless of whether the Real Property or any other collateral
adequately secures the Loan’s eventual repayment. Upon the termination of the
Borrower’s license, the Borrower shall immediately deliver to the Lender all
Rents then in the Borrower’s possession, and all Rents then due or accruing
thereafter shall be payable by tenants directly to the Lender. This Assignment
shall constitute a direction to and full authority to any tenant of the Real
Property, upon the Lender’s written request, to pay all Rents to the Lender,
without requiring the Lender to prove to the tenant the existence of Default.
The Borrower agrees to deliver immediately to the Lender any Rents received by
the Borrower after the revocation of the Borrower’s license under Section 4, and
at the Lender’s written request, shall execute such further assignments to the
Lender of any Lease as the Lender may in its sole judgment request. This
Assignment is given in connection with the Loan and in support of the
performance of the Obligations, and nothing herein contained shall be construed
as (a) constituting the Lender a “mortgagee-in-possession” of the Real Property,
or (b) an assumption by the Lender of the Borrower’s obligations as landlord
under the Leases.         Upon the cure of all Defaults, the Lender may by
Notice to the Borrower, reinstate the licenses of the Borrower under
Section 13.4 of this Deed of Trust.

14.   ACCELERATION       If a Default exists, the Lender may, at its option,
declare the unpaid principal balance of the Notes to be immediately due and
payable, together with all accrued interest on the Indebtedness, all costs of
collection (including reasonable attorneys’ fees and expenses) and all other
charges due and payable by the Borrower under the Notes or any other Loan
Document.       If the subject Default is nonmonetary in nature other than a
Default arising under Section 9.2(b), the Lender shall exercise its option to
accelerate only by giving Notice of acceleration to the Borrower. The Lender
shall not give any such Notice of acceleration until (a) the Borrower has been
given any required Notice of the prospective Default and (b) any applicable cure
period has expired.       Except as expressly described in this Section, no
notice of acceleration shall be required in order for the Lender to exercise its
option to accelerate the Indebtedness in the event of Default.

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15.   RIGHTS OF ENTRY AND TO OPERATE

  15.1   Entry on Real Property         If a Default exists, the Lender may, to
the extent permitted by applicable law, enter upon the Real Property and take
exclusive possession of the Real Property and of all books, records and
accounts, all without Notice and without being guilty of trespass, but subject
to the rights of tenants in possession under the Leases. If the Borrower remains
in possession of all or any part of the Property after Default and without the
Lender’s prior written consent, the Lender may, without Notice to the Borrower,
invoke any and all legal remedies to dispossess the Borrower.     15.2  
Operation of Real Property         If a Default exists, the Lender may hold,
lease, manage, operate or otherwise use or permit the use of the Real Property,
either itself or by other persons, firms or entities, in such manner, for such
time and upon such other terms as the Lender may deem to be prudent under the
circumstances (making such repairs, alterations, additions and improvements
thereto and taking any and all other action with reference thereto, from time to
time, as the Lender deems prudent), and apply all Rents and other amounts
collected by the Lender to the Obligations.

16.   RECEIVERSHIP       Following Default, the Lender may apply to a court of
competent jurisdiction for the appointment of a receiver of the Property, ex
parte without Notice to the Borrower, whether or not the value of the Property
exceeds the Indebtedness, whether or not waste or deterioration of the Real
Property has occurred, and whether or not other arguments based on equity would
justify the appointment. The Borrower irrevocably, with knowledge and for
valuable consideration, consents to such an appointment. Any such receiver shall
have all the rights and powers customarily given to receivers in California,
including the rights and powers granted to the Lender by this Deed of Trust, the
power to maintain, lease and operate the Real Property on terms approved by the
court, and the power to collect the Rents and apply them to the Indebtedness or
otherwise as the court may direct. Once appointed, a receiver may at the
Lender’s option remain in place until the Indebtedness has been paid in full.

17.   FORECLOSURE; POWER OF SALE

  17.1   Availability of Remedies         Upon Default, the Lender may
immediately proceed to foreclose the lien of this Deed of Trust, against all or
part of the Property, or to sell the Property, by judicial or nonjudicial
foreclosure in accordance with the laws of California and may pursue any other
remedy available to commercial mortgage lenders under the laws of California.  
  17.2   Power-Of-Sale Foreclosure         Upon Default, either concurrently
with, or independently of, exercise of the Lender’s right to foreclose
judicially, the Lender may elect to cause all or any part of the Property to be
sold at a private foreclosure sale as follows:

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  (a)   Classification of Property         The Lender may proceed as if all of
the Property were Real Property, or may elect to treat any of the Property which
consists of a right in action or which is property that in the opinion of the
Lender can be severed from the Land or Improvements without causing structural
damage as though the same were Personal Property, and dispose of it as Property
subject to the UCC (as defined in Subsection 22.1), treating the remainder of
the Property as Real Property.     (b)   Timing of Foreclosure Sale         The
Lender may cause any such sale or other disposition to be conducted immediately
following the expiration of any cure period specified in this Deed of Trust as a
precondition to the existence of a Default, or immediately upon the expiration
of any redemption or reinstatement period required by law, or the Lender may
delay any such sale or other disposition for such period of time as the Lender
deems to be in its best interest. Should the Lender desire that more than one
such sale or other disposition be conducted, the Lender may, at its option,
cause it to be conducted simultaneously or successively, on the same day or at
such different days or times and in such order as the Lender may deem to be in
its best interests.

  17.3   Property Subject to the UCC         Should the Lender elect to cause
any of the Property which is subject to the UCC to be disposed of, the Lender
may at its discretion dispose of any part of such Property in any order or
manner permitted by the UCC, or in accordance with any other remedy provided by
applicable law, regardless of whether such Property is located on or about the
Real Property. Any such disposition may be conducted by an employee or agent of
the Lender or Trustee. The Borrower and the Lender shall be eligible to purchase
any part or all of such property at any such disposition, which may be either
public or private as the Lender may elect. The Lender shall also have the rights
and remedies of a secured party under the UCC, or otherwise available at law or
in equity.         Under the power of sale granted by this Section, the Lender
may, in its discretion and without regard to the adequacy of its security, elect
to proceed against any or all of the Real Property, Personal Property and
Fixtures in any manner permitted under Section 9604 of the UCC; and if the
Lender elects to proceed in the manner permitted under Section 9604(a)(1)(B) of
the UCC, the power of sale shall be exercisable with respect to all or any of
the Real Property, Personal Property and Fixtures covered hereby, as designated
by the Lender, and the Trustee is hereby authorized and empowered to conduct any
such sale of any Real Property, Personal Property and Fixtures in accordance
with the procedures applicable to Real Property.         Where the Property
consists of Real Property and Personal Property, any reinstatement of the
obligation secured by this Deed of Trust following Default and an election by
the Lender to accelerate the maturity of said obligation, which reinstatement is
made by the Borrower or any other person or entity permitted to exercise the
right of reinstatement under Section 2924c of the California Civil Code or any
successor statute, shall, in accordance with the terms of California

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      Commercial Code Section 9604(a)(3)(c), not prohibit the Lender from
conducting a sale or other disposition of any Personal Property or Fixtures or
from otherwise proceeding against or continuing to proceed against any Personal
Property or Fixtures in any manner permitted by the UCC; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale, disposition or
other proceeding held, conducted or instituted with respect to any Personal
Property or Fixtures prior to such reinstatement or pending at the time of such
reinstatement. Any sums paid to the Lender in effecting any reinstatement
pursuant to Section 2924c of the California Civil Code shall be applied to the
Obligations and to the Lender’s and Trustee’s reasonable costs and expenses in
the manner required by Section 2924c.

      Expenses of retaking, holding, preparing for sale, selling or the like
shall be borne by the Borrower and shall include the Lender’s and Trustee’s
reasonable attorneys’ fees, costs and expenses, and shall not be limited to
amounts provided as recoverable by statute. The Borrower, upon demand of the
Lender, shall promptly assemble such Property and make it available to the
Lender at the Real Property, a place which the Lender and the Borrower deem to
be reasonable. The Lender shall give the Borrower at least five (5) days’ prior
written Notice of the time and place of any public sale or other disposition of
such Property or of the time of or after which any private sale or other
intended disposition is to be made, and if such Notice is sent to the Borrower,
the Borrower acknowledges that it will constitute reasonable notice to the
Borrower.     17.4   Borrower’s Request under Cal. Gov. Code §27321.5 (b)      
  The Borrower hereby requests that a copy of any notice of default and a copy
of any notice of sale hereunder be sent to the address specified for the
delivery of Notice in this Deed of Trust. If more than one address for the
delivery of Notice is so specified, the Borrower requests that notice of the
exercise of the power of sale be sent to the first such address.     17.5   Real
Property         Should the Lender elect to sell all or part of the Real
Property, the Lender or Trustee shall give such notice of default and election
to sell as may then be required by applicable law. Thereafter, upon the
expiration of such time and the giving of such notice, and without the necessity
of any demand on the Borrower, Trustee, at the time and place specified in the
notice of sale, shall sell the Property or any portion thereof specified by the
Lender, at public auction to the highest bidder for cash in lawful money of the
United States, payable at time of sale. Trustee may, and upon request of the
Lender shall, from time to time, postpone any such sale by public announcement
at the time and place noticed or fixed by the previous postponement. If the
Property consists of several lots or parcels, the Lender may designate the order
in which such lots or parcels shall be offered for sale or sold. The Borrower
expressly waives its right to direct the order of sale.     17.6   Trustee’s
Instrument of Conveyance         Upon the completion of any sale made by Trustee
or the Lender under this Section, Trustee or the Lender, as applicable, or any
officer of any court empowered to do so shall execute and deliver to the
accepted purchaser good and

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      sufficient instruments conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold, but without
any covenant or warranty whatsoever, express or implied, whereupon such
purchaser shall be let into immediate possession. With respect to any sale made
under or by virtue of this Section, Trustee is hereby irrevocably appointed the
true and lawful attorney of the Borrower in its name and stead, with full power
of substitution, to make all necessary conveyances, assignments, transfers and
deliveries of the Property or any part thereof so sold and the rights so sold,
and for that purpose Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, the Borrower hereby ratifying and confirming all that its said
attorney or any substitute or substitutes shall lawfully do by virtue thereof.
Nevertheless, the Borrower, if so requested by Trustee or the Lender, shall
ratify and confirm any such sale by executing and delivering to Trustee or to
such purchaser all such instruments as may be advisable, in the judgment of
Trustee or the Lender, for the purpose as may be designated in such request. Any
sale made under or by virtue of this Section shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of the Borrower in and to the properties and rights so sold, and
shall be a perpetual bar, both at law and in equity against the Borrower and any
and all persons claiming or who may claim the same, or any part thereof, from,
through or under the Borrower.

      The recitals in any such deed or instrument of conveyance of any matters
or facts, including those of default and notice of sale, demand that such sale
should be made, postponement of sale, terms of sale, sale, purchase, payment of
purchase money and other facts affecting the regularity or validity of such sale
or disposition, shall be conclusive proof of the truth of such facts; and any
such deed or instrument of conveyance shall be conclusive against all persons as
to such facts.     17.7   Rights of Purchaser         The acknowledgment of the
receipt of the purchase money contained in any deed or instrument of conveyance
shall be sufficient to discharge the grantee from all obligations to see to the
proper application of the consideration given. The purchaser at any such sale
may disaffirm any easement granted or rental or lease contract made in violation
of any provision of this Deed of Trust, and may take immediate possession of the
Property free from, and despite the terms of, such grant of easement and rental
or lease contract.     17.8   Conduct of Sales         If the Property consists
of several lots, parcels or items of property, the Lender may, in its
discretion: (i) designate the order in which such lots, parcels or items shall
be offered for sale or sold, or (ii) elect to sell such lots, parcels or items
through a single sale, or through two or more successive sales, or in any other
manner the Lender deems in its best interest. Should the Lender desire that more
than one sale or other disposition of the Property be conducted, the Lender may,
at its option, cause the sales to be conducted simultaneously, or successively,
on the same day, or at such different days or times and in such order as the
Lender may deem to be in its best interests, and no such sale shall terminate or
otherwise affect the lien of this Deed of Trust on any unsold part of the
Property until the

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      Indebtedness has been fully paid. In the event the Lender elects to
dispose of the Property through more than one sale the Borrower agrees to pay
the costs and expenses of each such sale and of any judicial proceedings where
in the same may be made, including reasonable compensation to Trustee and the
Lender, their agents and counsel, and to pay all expenses, liabilities and
advances made or incurred by Trustee with such sale or sales, together with
interest on all such advances made by Trustee at the Default Rate. Any person,
including the Borrower, Trustee or the Lender, may purchase at any sale, and the
Lender shall have the right to purchase at any sale by crediting upon the bid
price the amount of all or any part of the Indebtedness, as specified below. The
Lender, upon any such purchase, shall acquire good title to the properties so
purchased, free of the lien of this Deed of Trust and free of all rights of
redemption in the Borrower and free of all liens and encumbrances subordinate to
this Deed of Trust. Upon any sale, Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the property so sold, but
without any covenant or warranty whatsoever, express or implied, whereupon such
purchaser or purchasers shall be let into immediate possession; and the recitals
in any such deed or deeds of fact, such as default, the giving of notice of
default and notice of sale, and other facts affecting the regularity or validity
of such sale or disposition, shall be conclusive proof of the truth of such
facts and any such deed or deeds shall be conclusive against all persons as to
such facts.

  17.9   State Law Controls         Nothing in this Deed of Trust dealing with
foreclosure procedures or specifying particular actions to be taken by the
Lender or by Trustee or any similar officer in connection with a foreclosure
sale shall be deemed to contradict or add to the requirements and procedures now
or hereafter specified by California law, and any such inconsistency shall be
resolved in favor of California law applicable at the time of foreclosure.    
17.10   Covenant of Faithful Performance; Waiver of Statutory Fees        
Trustee covenants faithfully to perform and fulfill the trusts created by this
Deed of Trust, but shall be liable only for gross negligence or intentional
misconduct. To the extent permissible by law, Trustee waives any statutory fee
and agrees to accept instead reasonable compensation for any services rendered.
    17.11   The Lender’s Bid at Foreclosure Sale         Upon any sale made
under this Section, whether made under the power of sale or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale, the
Lender may bid for and acquire all or part of the Property and, in lieu of
paying cash, may make settlement for the purchase price by crediting upon the
Indebtedness the net sales price after deducting the expenses of sale and the
costs of the action and any other sums which Trustee or the Lender is authorized
to deduct under this Deed of Trust. If it does so, this Deed of Trust, the Notes
and other documents evidencing the Indebtedness shall be presented to the person
or persons conducting the sale so that the amount so used or applied may be
credited to the Indebtedness.     17.12   Judicial Foreclosure

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      Upon Default, the Lender may immediately proceed to foreclose the lien of
this Deed of Trust against all or part of the Real Property by foreclosure sale,
by prosecuting an action for judicial foreclosure (together with such other
causes of action as the Lender may then elect to prosecute) in any court of
competent jurisdiction.     17.13   Right of Inspection         The Borrower
shall permit the Lender, and any prospective bidders in connection with a
pending judicial or non-judicial foreclosure sale, and their respective agents,
employees and consultants, to enter the Real Property at any reasonable time for
the purpose of inspecting the same, and for the purpose of site investigation
(“Site Investigation”), including investigation of the structural integrity of
the Improvements, and the costs of such Site Investigation conducted by the
Lender shall be due and payable on demand by the Borrower, and shall bear
interest at the Default Rate until paid. Such Site Investigation shall not make
the Lender a mortgagee in possession of the Real Property.     17.14  
Application of Proceeds of Sale         The proceeds of any sale of the Real
Property or any part thereof or any interest therein, whether pursuant to
foreclosure or power of sale or otherwise hereunder, together with any other
monies at any time held by Trustee pursuant to this Deed of Trust shall be
applied to pay:

  (a)   First:         All advances and expenditures made by the Lender pursuant
to the terms of the Loan Documents, including all costs and expenses of
enforcing this Deed of Trust, all costs and expenses of the sale of the Real
Property or any part thereof or any interest therein, and all costs and expenses
of entering upon, taking possession of, removing, holding, constructing
improvements on, and operating and managing the Real Property or any part
thereof (whether incurred by the Lender, Trustee, a receiver or an appointee,
agent or employee of any of the foregoing), and all costs and expenses of
repairs, renewals, replacements, additions, betterments and improvements to the
Real Property, and all reasonable attorneys’ fees and disbursements incurred in
connection with any of the foregoing, as the case may be, together with
compensation of Trustee as provided in this Deed of Trust (whether in connection
with bankruptcy, judicial foreclosure, receivership or other court proceedings,
or in connection with negotiations with the Borrower, or otherwise);     (b)  
Second:         Any taxes, levies, assessments or other charges, together with
costs and interest, which have, or in the reasonable opinion of Trustee may
have, priority over the lien of this Deed of Trust, including the pro rata
portion thereof applicable to the taxable period during which any payment is
made pursuant to this Section;     (c)   Third:         All amounts of principal
and interest due and payable on the Notes (whether at maturity, on a date fixed
for any payment thereof, upon

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      acceleration or otherwise), including any late charges accrued thereon (to
the extent permitted under applicable law), premiums payable upon acceleration,
and any other part of the Indebtedness; and in case such proceeds shall be
insufficient to pay in full the amount so due and unpaid upon the Notes, then,
first, to the payment of all amounts of interest due and payable on the Notes
without preference or priority of any installment of interest over any other
installment of interest; second, to the payment of any portion of the
Indebtedness (other than the principal due and payable on the Notes) which is
due and payable; and third, to the payment of all amounts of principal due and
payable on the Notes;

  (d)   Fourth:         Any other amounts due under any of the Loan Documents;  
  (e)   Fifth:         The amount of any liens of record inferior to this Deed
of Trust, together with lawful interest, and lawful claims of third parties
against the proceeds of any sale; and     (f)   Sixth:         The amount of any
surplus then remaining from such proceeds to the Borrower, unless otherwise
required by law or directed by a court of competent jurisdiction.

18.   WAIVERS       To the maximum extent permitted by applicable law, the
Borrower irrevocably and unconditionally WAIVES and RELEASES any present or
future rights (a) of reinstatement or redemption now or hereafter available to
the Lender following a Default, (b) that may exempt the Property from any civil
process, (c) to appraisal or valuation of the Property, (d) to extension of time
for payment, (e) that may subject the Lender’s exercise of its remedies to the
administration of any decedent’s estate or to any partition or liquidation
action, (f) to any homestead and exemption rights provided by the Constitution
and laws of the United States and of California, (g) to notice of acceleration
or notice of intent to accelerate (other than as expressly stated herein)
following a Default, and (h) that in any way would delay or defeat the right of
the Lender to cause the sale of the Real Property for the purpose of satisfying
the Indebtedness following a Default. The Borrower agrees that the price paid at
a lawful foreclosure sale, whether by the Lender or by a third party, and
whether paid through cancellation of all or a portion of the Indebtedness or in
cash, shall conclusively establish the value of the Real Property.

     The foregoing waivers shall apply to and bind any party assuming the
Obligations of the Borrower under this Deed of Trust.
19. SECURITY AGREEMENT AND FIXTURE FILING

  19.1   Definitions         “Account” shall have the definition assigned in the
UCC.

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“Account Collateral” means all Accounts that arise from the leasing, licensing
or use by third parties of the Property, from the commencement of the Loan term
through the satisfaction of all of the Obligations.
“Chattel Paper” shall have the definition assigned in the UCC.
“Chattel Paper Collateral” means all Chattel Paper arising from the sale or
other disposition of all or part of the Property.
“Control Agreement” means a Deposit Account or Securities Account control
agreement by and among the Borrower, the Lender and the relevant depository or
securities intermediary providing the Lender with “control” of such Deposit
Account or Securities Account within the meaning of Articles 8 and 9 of the UCC.
“Deposit Account” shall have the definition assigned in the UCC.
“Deposit Account Collateral” means that certain demand account number 0692-37808
established with Cole Taylor Bank in Rosemont, Illinois (the “Proceeds Account”)
and any replacement or successor accounts and all other Deposit Accounts and/or
Securities Accounts over which Lender has obtained a Control Agreement into
which Rents, Insurance Proceeds, Condemnation Proceeds or Proceeds of the
Property are deposited or held at any time from the commencement of the Loan
term through the satisfaction of all of the Obligations and shall include all
funds in such Deposit Accounts.
“Document” shall have the definition assigned in the UCC.
“Document Collateral” means all Documents that evidence title to all or any part
of the Goods Collateral.
“Equipment” shall have the definition assigned in the UCC.
“Equipment Collateral” means all Equipment that relates to the Real Property
arising from the sale or other disposition of all or part of the Property.
“Excluded Collateral” means (A) trade fixtures, office furniture and office
equipment; (B) racking systems; (C) machinery and equipment which does not
constitute a Fixture or Equipment Collateral; or (D) rolling stock.
“Financing Statements” shall have the definition assigned in the UCC.
“General Intangibles” shall have the definition assigned in the UCC.
“General Intangible Collateral” means all General Intangibles that have arisen
or that arise in the future in connection with the Borrower’s ownership,
operation or leasing of the Real Property as commercial real estate (but not any
General Intangibles arising from the specific business operations of Borrower
and/or its subsidiaries), at any time from the commencement of the Loan term
through the satisfaction of all of the Obligations.

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      “Goods” shall have the definition assigned in the UCC. “Goods” include all
detached Fixtures, items of Personal Property that may become Fixtures, property
management files, accounting books and records, reports of consultants relating
to the Real Property as commercial real estate, site plans, test borings,
environmental or geotechnical surveys, samples and test results, blueprints,
construction and shop drawings, and plans and specifications.         “Goods
Collateral” means all Goods that relate to the Real Property as commercial real
estate and are used in the operation of the Real Property as commercial real
estate.         “Instrument” shall have the definition assigned in the UCC.    
    “Instrument Collateral” means all Instruments received as Rents or
identifiable Proceeds of Property or purchased by the Borrower with Rents or
identifiable Proceeds.         “Investment Property” shall have the definition
assigned in the UCC.         “Investment Property Collateral” means all the
Investment Property purchased using Rents or identifiable Proceeds of Property,
or received in respect of Account Collateral.         “Money Collateral” means
all money received in respect of Rents.         “Personal Property” means
Account Collateral, Chattel Paper Collateral, Commercial Tort Claim Collateral,
Deposit Account Collateral, Document Collateral, Equipment Collateral, General
Intangibles Collateral, Goods Collateral, Instrument Collateral, Investment
Property Collateral, and Money Collateral but shall not include the Excluded
Collateral.         “Proceeds” mean all proceeds (as defined in the UCC) of any
Property.         “UCC” means the Uniform Commercial Code as adopted in
California.     19.2   Creation of Security Interest         This Deed of Trust
shall be self-operative and shall constitute a security agreement pursuant to
the provisions of the UCC with respect to the Personal Property. The Borrower,
as debtor, hereby grants the Lender, as secured party, for the purpose of
securing the Indebtedness, a security interest in the Account Collateral,
Chattel Paper Collateral, Commercial Tort Claim Collateral, Deposit Account
Collateral, Document Collateral, Equipment Collateral, General Intangible
Collateral, Goods Collateral, Instrument Collateral, Investment Property
Collateral, and Money Collateral, in the accessions, additions, replacements,
substitutions and Proceeds of any of the foregoing items of collateral. Upon
Default, the Lender shall have the rights and remedies of a secured party under
the UCC as well as all other rights and remedies available at law or in equity,
and, at the Lender’s option, the Lender may also invoke the remedies provided
elsewhere in this Deed of Trust as to such Property. The Borrower and the Lender
agree that the rights granted to the Lender as secured

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      party under this Section 19 are in addition to rather than a limitation on
any of the Lender’s other rights under this Deed of Trust with respect to the
Property.     19.3   Filing Authorization         The Borrower irrevocably
authorizes the Lender to file, in the appropriate locations for filings of UCC
financing statements in any jurisdictions as the Lender in good faith deems
appropriate, such financing statements and amendments as the Lender may require
in order to perfect or continue this security interest, or in order to prevent
any filed financing statement from becoming misleading or from losing its
perfected status.     19.4   Additional Searches and Documentation        
Borrower shall provide to Lender upon request, certified copies of any searches
of UCC records deemed necessary or appropriate by Lender to confirm the first
priority status of its security interest in the Personal Property, together with
copies of all documents or records evidencing security interests disclosed by
such searches.     19.5   Costs         The Borrower shall pay all filing fees
and costs and all reasonable costs and expenses of any record searches (or their
continuations) as the Lender may require.     19.6   Representations, Warranties
and Covenants of the Borrower

  (a)   Ownership of the Personal Property         All of the Personal Property
is owned by the Borrower, and except for the Collateral Use Agreement executed
among Borrower, Lender and Wells Fargo Foothill, LLC, in its capacity as agent
for the Revolving Credit Lenders referenced therein, is not the subject matter
of any lease, control agreement or other instrument, agreement or transaction
whereby any ownership, security or beneficial interest in the Personal Property
is held by any person or entity other than the Borrower, subject only to (1) the
Lender’s security interest, (2) the rights of tenants occupying the Property
pursuant to Leases approved by the Lender, and (3) the Permitted Encumbrances.  
  (b)   No Other Identity         Except as set forth on Schedule 19.6, the
Borrower represents and warrants that the Borrower has not used or operated
under any other name or identity for at least five (5) years. The Borrower
covenants and agrees that Borrower will furnish Lender with notice of any change
in its name, form of organization, or state of organization within thirty
(30) days prior to the effective date of any such change.     (c)   Location of
Equipment         All Equipment Collateral is located upon the Land.     (d)  
Removal of Goods         The Borrower will not remove or permit to be removed
any detached Fixtures or Goods that may become Fixtures from the Land, unless
the

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      same is replaced immediately with unencumbered assets (1) of a quality and
value equal or superior to that which it replaces and (2) which is located on
the Land. All such replacements, renewals, and additions shall become and be
immediately subject to the security interest of this Deed of Trust.

  (e)   Proceeds         The Borrower shall not, without the Lender’s prior
written consent, dispose of any Personal Property in any other manner, except in
compliance with Subsection 19.6(d) above.

  19.7   Fixture Filing         This Deed of Trust constitutes a financing
statement filed as a fixture filing in the Official Records of the County
Recorder of Merced County, California with respect to any and all fixtures
comprising Property. The “debtor” is John B. Sanfilippo & Son, Inc., a
corporation organized under Delaware law, the “secured party” is Transamerica
Life Insurance Company, the collateral is as described in Subsection 19.1 above
and the granting clause of this Deed of Trust, and the addresses of the debtor
and secured party are the addresses stated in Subsection 21.13 of this Deed of
Trust for Notices to such parties. The organizational identification number of
the debtor is 0878236. The owner of record of the Real Property is John B.
Sanfilippo & Son, Inc.     19.8   Deposit Account

  (a)   Borrower shall deposit all Rents, Insurance Proceeds and Condemnation
Proceeds, as well as the Proceeds of any of the other Property described herein,
in the Proceeds Account, all of which shall be subject to the terms of this
Agreement.     (b)   Borrower shall maintain the Proceeds Account in effect at
all times during the term of the Loan.     (c)   Borrower shall take all steps
necessary to create in Lender a perfected security interest in the Proceeds
Account, and shall afford Lender control of the Proceeds Account within the
meaning of Section 9104 of the UCC (and any successor or replacement statutes)
within ten (10) business days following the recordation of this instrument in
the real estate records of the County in which the Real Property is located.    
(d)   If the depository bank at which the Proceeds Account is located becomes
insolvent, ceases doing business or is otherwise incapable in Lender’s
reasonable discretion of holding and administering the Proceeds Account for its
intended purposes, the Proceeds Account shall be moved to a replacement
depository bank reasonably acceptable to Lender, and Lender’s security interest
therein shall be perfected by control agreement with the replacement depository
bank.     (e)   Upon the occurrence of a Default, Lender shall be entitled to
provide the depository bank with notice of exclusive control of the Proceeds
Account and Lender shall have the unilateral right to provide instructions as to
the

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      use, disposition and application of the funds or other financial assets in
the Proceeds Account.

20.   ENVIRONMENTAL MATTERS

  20.1   Representations         The Borrower represents as follows:

  (a)   No Hazardous Substances         To the best of the Borrower’s knowledge,
and except as disclosed in the ESA, no release of any Hazardous Substance has
occurred on or about the Real Property in a quantity or at a concentration level
that (i) violates any Environmental Law, or (ii) requires reporting to any
regulatory authority or may result in any obligation to remediate under any
Environmental Law.     (b)   Absence of Mold Contamination         To the best
of Borrower’s knowledge, there are no mold issues present in the Improvements
that result in a violation of Environmental Laws. Borrower has received no
mold-related tenant complaint or notice of any legal proceeding relating to mold
affecting the Improvements.     (c)   Compliance with Environmental Laws        
The Real Property and its current use and presently anticipated uses comply with
all Environmental Laws, including those requiring permits, licenses,
authorizations, and other consents and approvals.     (d)   No Actions or
Proceedings         To the best of Borrower’s knowledge, no governmental
authority or agency has commenced any action, proceeding or investigation based
on any suspected or actual violation of any Environmental Law on or about the
Real Property. To the best of the Borrower’s knowledge, no such authority or
agency has threatened to commence any such action, proceeding, or investigation.

  20.2   Environmental Covenants         The Borrower covenants as follows:

  (a)   Compliance with Environmental Laws         The Borrower shall, and the
Borrower shall cause all employees, agents, contractors, and tenants of the
Borrower to, keep and maintain the Real Property in compliance with all
Environmental Laws.     (b)   Notices, Actions and Claims         The Borrower
shall immediately advise the Lender in writing of (i) any written notices from
any governmental or quasi-governmental agency or authority of violation or
potential violation of any Environmental Law received by the Borrower, (ii) any
and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened pursuant to any Environmental Law
about which Borrower

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      has received written notice, (iii) all claims made or threatened by any
third party against the Borrower or the Real Property relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Substances, and (iv) discovery by the Borrower of any occurrence or
condition on any real property adjoining or in the vicinity of the Real Property
that creates a foreseeable risk of contamination of the Real Property by or with
Hazardous Substances.

  20.3   The Lender’s Right to Control Claims         The Lender shall have the
right (but not the obligation) to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection with any
Hazardous Substances and to have its related and reasonable attorneys’ and
consultants’ fees paid by the Borrower upon demand.     20.4   Indemnification  
      The Borrower shall be solely responsible for, and shall indemnify, defend,
and hold harmless the Lender, the Trustee, and their respective directors,
officers, employees, agents, successors and assigns, from and against, any
claim, judgment, loss, damage, demand, cost, expense or liability of whatever
kind or nature, known or unknown, contingent or otherwise, directly or
indirectly arising out of or attributable to the use, generation, storage,
release, threatened release, discharge, disposal, or presence (whether prior to
or after the date of this Deed of Trust) of Hazardous Substances on, in, under
or about the Real Property (whether by the Borrower, a predecessor in title, any
tenant, or any employees, agents, contractor or subcontractors of any of the
foregoing or any third persons at any time occupying or present on the Real
Property), including: (i) personal injury; (ii) death; (iii) damage to property;
(iv) all consequential damages; (v) the cost of any required or necessary
repair, cleanup or detoxification of the Real Property, including the soil and
ground water thereof, and the preparation and implementation of any closure,
remedial or other required plans; (vi) damage to any natural resources; and
(vii) all reasonable costs and expenses incurred by the Lender or the Trustee in
connection with clauses (i) through (vi), including reasonable attorneys’ and
consultants’ fees; provided, however, that (a) this secured indemnification
obligation shall be deemed to be limited to those items that are recoverable by
a beneficiary under Section 736 of the California Code of Civil Procedure, and
(b) nothing contained in this Section shall be deemed to preclude the Borrower
from seeking indemnification from, or otherwise proceeding against, any third
party including any tenant or predecessor in title to the Real Property, and
further provided that this indemnification will not extend to matters caused by
the Lender’s gross negligence or willful misconduct, or arising from a release
of Hazardous Substances which occurs after the Lender has taken possession of
the Real Property, so long as the Borrower has not caused the release through
any act or omission. The covenants, agreements, and indemnities set forth in
this Section shall be binding upon the Borrower and its successors and assigns,
and shall survive repayment of the Indebtedness, foreclosure of the Real
Property, and the Borrower’s granting of a deed to the Real Property in lieu of
foreclosure. Payment shall not be a condition precedent to this indemnity. Said
indemnities shall be limited to the actual damages incurred by the Lender,
including all advances or payments paid or agreed to be paid by the Lender
pursuant to its rights to require environmental assessments, join or participate
in

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      any proceedings, cure the Borrower’s default or enforce its remedies,
(a) prior to and after any judicial foreclosure of this Deed of Trust or deed
delivered and accepted in lieu thereof, or (b) prior to any nonjudicial
foreclosure of this Deed of Trust or deed delivered and accepted in lieu
thereof. The obligations of the Borrower under this Section shall be mutually
exclusive of any liabilities arising after a nonjudicial foreclosure of this
Deed of Trust or the delivery and acceptance of a deed in lieu of such
nonjudicial foreclosure, which are evidenced by the Environmental Indemnity
Agreement. Any costs or expenses incurred by the Lender or the Trustee for which
the Borrower is responsible or for which the Borrower has indemnified the Lender
shall be paid to the Lender on demand, with interest at the Default Rate from
the date incurred by the Lender until paid in full, and shall be secured by this
Deed of Trust. Without the prior written consent of the Lender, which consent
shall not be unreasonably withheld, the Borrower shall not enter into any
settlement agreement, consent decree, or other compromise in respect to any
claims relating to Hazardous Substances. The Lender agrees that it shall not
unreasonably delay its consideration of any written request for its consent to
any such settlement agreement, consent decree, or other compromise once all
information, reports, studies, audits, and other documentation have been
submitted to the Lender.

  20.5   Environmental Audits         If a Default exists, or the Lender has a
reasonable basis to believe that a release of Hazardous Substances may have
occurred, the Lender may require that the Borrower retain, or the Lender may
retain directly, at the sole cost and expense of the Borrower, a licensed
geologist, industrial hygienist or an environmental consultant acceptable to the
Lender to conduct an environmental assessment or audit of the Real Property. In
the event that the Lender makes a reasonable determination of the need for an
environmental assessment or audit, the Lender shall inform the Borrower in
writing that such a determination has been made and, if requested to do so by
the Borrower, give the Borrower a written explanation of that determination
before the assessment or audit is conducted. The Borrower shall afford any
person conducting an environmental assessment or audit access to the Real
Property and all materials reasonably requested; provided that such person shall
not unreasonably interfere with the use and operation of the Real Property.
Except as set forth below, the Borrower shall pay on demand the cost and
expenses of any environmental consultant engaged by the Lender under this
Subsection. The Borrower shall, at the Lender’s request and at the Borrower’s
sole cost and expense, take such investigative and remedial measures determined
by the geologist, hygienist or consultant to be necessary to address any
condition discovered by the assessment or audit so that (i) the Real Property
shall be in compliance with all Environmental Laws, (ii) the condition of the
Real Property shall not constitute any identifiable risk to human health or to
the environment, and (iii) the value of the Real Property shall not be affected
by the presence of Hazardous Substances. Notwithstanding the foregoing, the
Borrower shall not be required to pay for the costs of such audit or assessment
if it reasonably disagrees with the Lender’s determination that there is a
reasonable basis that a release of a Hazardous Substance has occurred, the
Lender proceeds with such audit or assessment and the audit or assessment does
not reveal any material violation of Environmental Laws that were not identified
on the ESA.

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21.   CONCERNING THE TRUSTEE

  21.1   No Liability         If the Trustee or anyone acting by virtue of the
Trustee’s powers enters the Real Property, the Trustee will not be personally
liable for debts contracted or for liability or damages incurred in the
management or operation of the Real Property. The Trustee will have the right to
rely on any instrument, document or signature authorizing or supporting any
action taken or proposed to be taken by the Trustee or believed by the Trustee
in good faith to be genuine. The Trustee will be entitled to reimbursement for
expenses actually incurred by the Trustee in the performance of the Trustee’s
duties and to reasonable compensation for services rendered. The Borrower shall,
from time to time, pay compensation due the Trustee under this Deed of Trust and
reimburse the Trustee for and save and hold the Trustee harmless from and
against any and all loss, cost, liability, damage and expense whatsoever
incurred by the Trustee in the performance of the Trustee’s duties.     21.2  
Retention of Money         All money received by the Trustee must, until used or
applied, be held in trust for the purposes for which it was received, but need
not be segregated in any manner from any other money (except to the extent
required by law) and the Trustee will have no liability for interest on any
money received.     21.3   Successor Trustees         The Trustee may resign by
giving notice of such resignation in writing to the Lender. If the Trustee’s
legal existence shall cease or if the Trustee resigns or becomes disqualified
from acting in the execution of this Trust or fails or refuses to exercise the
same when requested by the Lender so to do or if for any reason and without
cause the Lender prefers to appoint a substitute trustee to act instead of the
original Trustee, or any prior successor or substitute trustee, the Lender will
have full power to appoint a substitute trustee and, if preferred, several
substitute trustees in succession who shall succeed to all the estates, rights,
powers and duties of the Trustee.     21.4   Succession Instruments         Any
new Trustee appointed will, without any further act, deed or conveyance, become
vested with all the estates, properties, rights, powers and trusts of the
Trustee’s predecessor. Upon the written request of the Lender or of any
successor trustee, the former Trustee shall execute and deliver an instrument
transferring to such successor Trustee all the estates, properties, rights,
powers and trusts of the former Trustee, and shall duly assign, transfer and
deliver any of the property and money held by the former Trustee to the
successor Trustee so appointed in the former Trustee’s place.     21.5  
Performance of Duties by Agents         The Trustee may authorize one or more
parties to act on the Trustee’s behalf to perform the Trustee’s ministerial
functions, including, without limitation, the transmittal and posting of any
notices.

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22.   MISCELLANEOUS

  22.1   Successors and Assigns         All of the terms of the Loan Documents
shall apply to, be binding upon and inure to the benefit of the successors and
assigns of the Obligors, or to the holder of the Notes, as the case may be.    
22.2   Survival of Obligations         Each and all of the Obligations shall
continue in full force and effect until the latest of (a) the date the
Indebtedness has been paid in full and the Obligations have been performed and
satisfied in full, (b) the last date permitted by law for bringing any claim or
action with respect to which the Lender may seek payment or indemnification in
connection with the Loan Documents, and (c) the date on which any claim or
action for which the Lender seeks payment or indemnification is fully and
finally resolved and, if applicable, any compromise thereof of judgment or award
thereon is paid in full.     22.3   Further Assurances         The Borrower,
upon the request of the Lender or the Trustee, shall complete, execute,
acknowledge, deliver and record or file such further instruments and do such
further acts as may be reasonably necessary to carry out more effectively the
purposes of this Deed of Trust, to subject any property intended to be covered
by this Deed of Trust to the liens and security interests it creates, to place
third parties on notice of those liens and security interests, or to correct any
defects which may be found in any Loan Document.     22.4   Right of Inspection
        The Lender shall have the right from time to time, upon reasonable
advance notice to the Borrower, to enter onto the Real Property during regular
business hours for the purpose of inspecting and reporting on its physical
condition, tenancy and operations; provided the Lender shall not unreasonably
interfere with the use and operation of the Real Property.     22.5   Expense
Indemnification         The Borrower shall pay all filing and recording fees,
documentary stamps, intangible taxes, and all expenses incident to the execution
and acknowledgment of this Deed of Trust, the Notes or any of the other Loan
Documents, any supplements, amendments, renewals or extensions of any of them,
or any instrument entered into under Subsection 22.3. The Borrower shall pay or
reimburse the Lender, upon demand, for all costs and expenses, including
appraisal and reappraisal costs of the Property and reasonable attorneys’ and
legal assistants’ fees, which the Lender may incur in connection with
enforcement proceedings under the Notes, this Deed of Trust, or any of the other
Loan Documents (including all fees and costs incurred in enforcing or protecting
the Notes, this Deed of Trust, or any of the other Loan Documents in any
bankruptcy proceeding), and reasonable attorneys’ and legal assistants’ fees
incurred by the Lender in any other suit, action, legal proceeding or dispute of
any kind in which the Lender is made a party or appears as party plaintiff or
defendant, affecting the Indebtedness, the Notes, this Deed of Trust, any of the

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      other Loan Documents, or the Property, or required to protect or sustain
the lien of this Deed of Trust. The Borrower shall be obligated to pay (or to
reimburse the Lender) for such fees, costs and expenses and shall indemnify and
hold the Lender and the Trustee harmless from and against any and all loss,
cost, expense, liability, damage and claims and causes of action, including
reasonable attorneys’ fees, incurred or accruing by reason of the Borrower’s
failure to promptly repay any such fees, costs and expenses. If any suit or
action is brought to enforce or interpret any of the terms of this Deed of Trust
(including any effort to modify or vacate any automatic stay or injunction, any
trial, any appeal, any petition for review or any bankruptcy proceeding), the
Lender shall be entitled to recover all expenses reasonably incurred in
preparation for or during the suit or action or in connection with any appeal of
the related decision, whether or not taxable as costs. Such expenses include
reasonable attorneys’ fees, witness fees (expert or otherwise), deposition
costs, copying charges and other expenses. Whether or not any court action is
involved, all reasonable expenses, including the costs of searching records,
obtaining title reports, appraisals, environmental assessments, surveying costs,
title insurance premiums, trustee fees, and other reasonable attorneys’ fees,
incurred by the Lender that are necessary at any time in the Lender’s opinion
for the protection of its interest or enforcement of its rights shall become a
part of the Indebtedness payable on demand and shall bear interest from the date
of expenditure until repaid at the interest rate as provided in the Notes. The
Borrower shall also pay all such costs and fees, including those of the Lender’s
attorneys, witnesses and appraisers, that are incurred after a trustee’s sale or
foreclosure in connection with an action for a deficiency judgment against
Borrower and the same shall not be secured by this Deed of Trust.

  22.6   General Indemnification         The Borrower shall indemnify, defend
and hold the Lender harmless against: (i) any and all claims for brokerage,
leasing, finder’s or similar fees which may be made relating to the Real
Property or the Indebtedness and (ii) any and all liability, obligations,
losses, damages, penalties, claims, actions, suits costs and expenses (including
the Lender’s reasonable attorneys’ fees, together with reasonable appellate
counsel fees, if any) of whatever kind or nature which may be asserted against,
imposed on or incurred by the Lender in connection with the Indebtedness, this
Deed of Trust, the Real Property or any part thereof, or the operation,
maintenance and/or use thereof, or the exercise by the Lender of any rights or
remedies granted to it under this Deed of Trust or pursuant to applicable law;
provided, however, that nothing herein shall be construed to obligate the
Borrower to indemnify, defend and hold harmless the Lender from and against any
of the foregoing which is imposed on or incurred by the Lender by reason of the
Lender’s willful misconduct or gross negligence.     22.7   Recording and Filing
        The Borrower shall cause this Deed of Trust and all amendments,
supplements, and substitutions to be recorded, filed, re-recorded and re-filed
in such manner and in such places as the Lender may reasonably request. The
Borrower will pay all recording filing, re-recording and re-filing taxes, fees
and other charges.

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  22.8   No Waiver         No deliberate or unintentional failure by the Lender
to require strict performance by the Borrower of any Obligation shall be deemed
a waiver, and the Lender shall have the right at any time to require strict
performance by the Borrower of any Obligation.     22.9   Covenants Running with
the Land         All Obligations are intended by the parties to be and shall be
construed as covenants running with the Land.     22.10   Severability        
The Loan Documents are intended to be performed in accordance with, and only to
the extent permitted by, all applicable Legal Requirements. Any provision of the
Loan Documents that is prohibited or unenforceable in any jurisdiction shall
nevertheless be construed and given effect to the extent possible. The
invalidity or unenforceability of any provision in a particular jurisdiction
shall neither invalidate nor render unenforceable any other provision of the
Loan Documents in that jurisdiction, and shall not affect the validity or
enforceability of that provision in any other jurisdiction. If a provision is
held to be invalid or unenforceable as to a particular person or under a
particular circumstance, it shall nevertheless be presumed valid and enforceable
as to others, or under other circumstances.     22.11   Usury         The
parties intend that no provision of the Notes or the Loan Documents be
interpreted, construed, applied, or enforced so as to permit or require the
payment or collection of interest in excess of the Maximum Permitted Rate. In
this regard, the Borrower and the Lender each stipulate and agree that it is
their common and overriding intent to contract in strict compliance with
applicable usury laws. Accordingly, none of the terms of this Deed of Trust, the
Notes or any of the other Loan Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Maximum Permitted Rate, and the
Borrower shall never be liable for interest in excess of the Maximum Permitted
Rate. Therefore, (a) in the event that the Indebtedness and Obligations are
prepaid or the maturity of the Indebtedness and Obligations is accelerated by
reason of an election by the Lender, unearned interest shall be canceled and, if
theretofore paid, shall either be refunded to the Borrower or credited on the
Indebtedness, as the Lender may elect; (b) the aggregate of all interest and
other charges constituting interest under applicable laws and contracted for,
chargeable or receivable under the Notes and the other Loan Documents or
otherwise in connection with the transaction contemplated thereby shall never
exceed the maximum amount of interest, nor produce a rate in excess of the
Maximum Permitted Rate; and (c) if any excess interest is provided for or
received, it shall be deemed a mistake, and the same shall, at the option of the
Lender, either be refunded to the Borrower or credited on the unpaid principal
amount (if any), and the Indebtedness shall be automatically reformed so as to
permit only the collection of the interest at the Maximum Permitted Rate.
Furthermore, if any provision of the Notes or any of the other Loan Documents is
interpreted, construed, applied, or enforced, in such a manner as to provide for
interest in excess of the Maximum Permitted Rate,

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      then the parties intend that such provision automatically shall be deemed
reformed retroactively so as to require payment only of interest at the Maximum
Permitted Rate. If, for any reason whatsoever, interest paid or received during
the full term of the applicable Indebtedness produces a rate which exceeds the
Maximum Permitted Rate, then the amount of such excess shall be deemed credited
retroactively in reduction of the then outstanding principal amount of the
Indebtedness, together with interest at such Maximum Permitted Rate. The Lender
shall credit against the principal of such Indebtedness (or, if such
Indebtedness shall have been paid in full, shall refund to the payor of such
interest) such portion of said interest as shall be necessary to cause the
interest paid to produce a rate equal to the Maximum Permitted Rate. All sums
paid or agreed to be paid to the Lender for the use, forbearance or detention of
money shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the applicable
Indebtedness, so that the interest rate is uniform throughout the full term of
such Indebtedness. In connection with all calculations to determine the Maximum
Permitted Rate, the parties intend that all charges be excluded to the extent
they are properly excludable under applicable usury laws, as they from time to
time are determined to apply to this transaction. The provisions of this Section
shall control all agreements, whether now or hereafter existing and whether
written or oral, between the Borrower and the Lender.

  22.12   Entire Agreement         The Loan Documents contain the entire
agreements between the parties relating to the financing of the Real Property,
and all prior agreements which are not contained in the Loan Documents, other
than the unsecured Environmental Indemnity Agreement, are terminated. The Loan
Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties. The Loan Documents may be amended, revised, waived, discharged,
released or terminated only by a written instrument or instruments executed by
the party against whom enforcement of the amendment, revision, waiver,
discharge, release or termination is asserted. Any alleged amendment, revision,
waiver, discharge, release or termination that is not so documented shall be
null and void.     22.13   Notices         In order for any demand, consent,
approval or other communication to be effective under the terms of this Deed of
Trust, “Notice” must be provided under the terms of this Subsection. All Notices
must be in writing. Notices may be (a) delivered by hand, (b) transmitted by
facsimile (with a duplicate copy sent by first class mail, postage prepaid),
(c) sent by certified or registered mail, postage prepaid, return receipt
requested, or (d) sent by reputable overnight courier service, delivery charges
prepaid. Notices shall be addressed as set forth below:

If to the Lender:
Transamerica Life Insurance Company
c/o AEGON USA Realty Advisors, Inc.
4333 Edgewood Road, N.E.

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Cedar Rapids, Iowa 52499-5443
Attn: Mortgage Loan Department
Reference: Loan No. D700218
Fax Number: (319) 369-2277
If to the Borrower:
John B. Sanfilippo & Son, Inc.
1703 North Randall Road
Mail Code — 2NW-EX
Elgin, Illinois 60123
Attn: Michael J. Valentine
Fax Number: (866) 610-1294
If to the Trustee:
First American Title Insurance Company
1 First American Way
Santa Ana, California 92707
Fax Number: (714) 800-4751

      Notices delivered by hand or by overnight courier shall be deemed given
when actually received or when refused by their intended recipient. Notices sent
by facsimile will be deemed delivered when a legible copy has been received
(provided receipt has been verified by telephone confirmation or one of the
other permitted means of giving Notices under this Subsection). Mailed Notices
shall be deemed given on the date of the first attempted delivery (whether or
not actually received). Either the Lender or the Borrower may change its address
for Notice by giving at least fifteen (15) Business Days’ prior Notice of such
change to the other party.     22.14   Counterparts         This Deed of Trust
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute but one instrument.    
22.15   Choice of Law         This Deed of Trust shall be interpreted,
construed, applied, and enforced according to, and will be governed by, the laws
of California, without regard to any choice of law principle which, but for this
provision, would require the application of the law of another jurisdiction and
regardless of where executed or delivered, where payable or paid, where any
cause of action accrues in connection with this transaction, where any action or
other proceeding involving the Loan is instituted, or whether the laws of
California otherwise would apply the laws of another jurisdiction.     22.16  
Forum Selection         The Borrower and Lender (by acceptance hereof) agree
that the sole and exclusive forum for the determination of any action relating
to the validity and

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      enforceability of the Notes, this Deed of Trust and the other Loan
Documents, and any other instruments securing the Notes shall be either in an
appropriate court of the State of California or the applicable United States
District Court, except as otherwise set forth in the Loan Documents and except
for actions relating to the enforcement of the Deed of Trust which shall be
venued as required under applicable law.

  22.17   Sole Benefit         This Deed of Trust and the other Loan Documents
have been executed for the sole benefit of the Borrower and the Lender and the
successors and assigns of the Lender. No other party shall have rights
thereunder or be entitled to assume that the parties thereto will insist upon
strict performance of their mutual obligations hereunder, any of which may be
waived from time to time. The Borrower shall have no right to assign any of its
rights under the Loan Documents to any party whatsoever.     22.18   Release of
Claims         The Borrower hereby RELEASES, DISCHARGES and ACQUITS forever the
Lender and the Trustee and their officers, directors, trustees, agents,
employees and counsel (in each case, past, present or future) from any and all
Claims existing as of the date hereof (or the date of actual execution hereof by
the Borrower, if later). As used herein, the term “Claim” shall mean any and all
liabilities, claims, defenses, demands, actions, causes of action, judgments,
deficiencies, interest, liens, costs or expenses (including court costs,
penalties, attorneys’ fees and disbursements, and amounts paid in settlement) of
any kind and character whatsoever, including claims for usury, breach of
contract, breach of commitment, negligent misrepresentation or failure to act in
good faith, in each case whether now known or unknown, suspected or unsuspected,
asserted or unasserted or primary or contingent, and whether arising out of
written documents, unwritten undertakings, course of conduct, tort, violations
of laws or regulations or otherwise.     22.19   No Partnership         Nothing
contained in the Loan Documents is intended to create any partnership, joint
venture or association between the Borrower and the Lender, or in any way make
the Lender a co-principal with the Borrower with reference to the Property.    
22.20   Payoff Procedures         If the Borrower pays or causes to be paid to
the Lender all of the Indebtedness, then the Trustee’s interest in the Real
Property shall cease, and upon receipt by the Lender of such payment, the Lender
shall either (a) release this Deed of Trust or (b) assign the Loan Documents and
endorse the Notes (in either case without recourse or warranty of any kind) to a
takeout lender, upon payment (in the latter case) of an administrative fee of
Seven Hundred Fifty Dollars ($750).     22.21   Future Advances         Under
this Deed of Trust, “Indebtedness” is defined to include certain advances made
by the Lender in the future. Such advances include any additional disbursements
to the Borrower (unless in connection with another, independent

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      mortgage financing) and any obligations under agreements which
specifically provide that such obligations are secured by this Deed of Trust. In
addition, Indebtedness is defined to include any amounts advanced to pay
Impositions, to cure Defaults, or to pay the costs of collection and
receivership. Accordingly, all such advances and obligations shall be equally
secured with, and shall have the same priority as, the Indebtedness, and shall
be subject to all of the terms and provisions of this Deed of Trust. The
Borrower shall pay any taxes that may be due in connection with any such future
advance.

  22.22   Interpretation

  (a)   Headings and General Application         The section, subsection,
paragraph and subparagraph headings of this Deed of Trust are provided for
convenience of reference only and shall in no way affect, modify or define, or
be used in construing, the text of the sections, subsections, paragraphs or
subparagraphs. If the text requires, words used in the singular shall be read as
including the plural, and pronouns of any gender shall include all genders.    
(b)   Result of Negotiations         This Deed of Trust results from
negotiations between the Borrower and the Lender and from their mutual efforts.
Therefore, it shall be so construed, and not as though it had been prepared
solely by the Lender.     (c)   Reference to Particulars         The scope of a
general statement made in this Deed of Trust or in any other Loan Document shall
not be construed as having been reduced through the inclusion of references to
particular items that would be included within the statement’s scope. Therefore,
unless the relevant provision of a Loan Document contains specific language to
the contrary, the term “include” shall mean “include, but shall not be limited
to” and the term “including” shall mean “including, without limitation.”

  22.23   Joint and Several Liability         If there is more than one
individual or entity executing this Deed of Trust as the Borrower, liability of
such individuals and entities under this Deed of Trust shall be joint and
several.     22.24   Time of Essence         Time is of the essence of each and
every covenant, condition and provision of this Deed of Trust to be performed by
the Borrower.     22.25   Jury Waiver         THE BORROWER AND BY ITS ACCEPTANCE
HEREOF, THE LENDER, HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (I) UNDER THIS DEED OF TRUST OR ANY
OTHER LOAN DOCUMENT OR (II) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT, AND THE BORROWER
AND BY ITS ACCEPTANCE HEREOF, THE LENDER, AGREE THAT ANY SUCH ACTION OR

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      PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

  22.26   Renewal, Extension, Modification and Waiver         The Lender may
enter into a modification of any Loan Document or of the Environmental Indemnity
Agreement without the consent of any person not a party to the document being
modified. The Lender may waive any covenant or condition of any Loan Document or
of the Environmental Indemnity Agreement, in whole or in part, at the request of
any person then having an interest in the Property or in any way liable for any
part of the Indebtedness. The Lender may take, release, or resort to any
security for the Notes and the Obligations and may release any party primarily
or secondarily liable on any Loan Document or on the Environmental Indemnity
Agreement, all without affecting any liability not expressly released in writing
by the Lender.     22.27   Cumulative Remedies         Every right and remedy
provided in this Deed of Trust shall be cumulative of every other right or
remedy of the Lender, whether conferred by law or by grant or contract, and may
be enforced concurrently with any such right or remedy. The acceptance of the
performance of any obligation to cure any Default shall not be construed as a
waiver of any rights with respect to any other past, present or future Default.
No waiver in a particular instance of the requirement that any Obligation be
performed shall be construed as a waiver with respect to any other Obligation or
instance.     22.28   No Obligation to Marshal Assets         No holder of any
deed of trust, security interest or other encumbrance affecting all or any
portion of the Real Property, which encumbrance is inferior to the lien and
security interest of this Deed of Trust, shall have any right to require the
Lender to marshal assets.     22.29   Transfer of Ownership         The Lender
may, without notice to the Borrower, deal with any person in whom ownership of
any part of the Real Property has vested, without in any way vitiating or
discharging the Borrower from liability for any of the Obligations.

IN WITNESS WHEREOF, the Borrower has caused this Deed of Trust to be duly
executed as of the date first above written.

            BORROWER:

JOHN B. SANFILIPPO & SON, INC.,
a Delaware corporation
      By:   /s/ Michael J. Valentine         Michael J. Valentine        Its
Chief Financial Officer and Group President     

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