Exhibit 10.2
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
LOCKE LORD BISSELL & LIDDELL LLP
300 South Grand Avenue, 26th Floor
Los Angeles, California 90071
Attn: Alfred M. Clark, III, Esq.
(Space Above For Recorder’s Use)

      DATE: August 20, 2010   TRUST DEED              

DEED OF TRUST, ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
MADE BY
MIRALOMA BORROWER CORPORATION, a Delaware corporation
c/o Pacific Sunwear of California, Inc.
3450 East Miraloma Avenue
Anaheim, CA 92806
HEREINAFTER REFERRED TO AS “BORROWER”
TO
FIRST AMERICAN TITLE INSURANCE COMPANY
5 First American Way
Santa Ana, CA 92707
HEREINAFTER REFERRED TO AS “TRUSTEE”
FOR THE BENEFIT OF
AMERICAN NATIONAL INSURANCE COMPANY
One Moody Plaza
Galveston, Texas 77550
Attention: Mortgage and Real Estate Investment Department
HEREINAFTER REFERRED TO AS “LENDER”
NOTE AMOUNT: SIXTEEN MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS
($16,800,000.00)
California hereinafter referred to as the “Governing Jurisdiction”
THIS DOCUMENT IS ALSO A FIXTURE FILING IN ACCORDANCE WITH
§9502(c) OF THE CALIFORNIA UNIFORM COMMERCIAL CODE.

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DEED OF TRUST, ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
          Borrower hereby irrevocably grants, transfers, and assigns to Trustee,
its successors and assigns, in trust, with power of sale and right of entry and
possession, all of Borrower’s estate, right, title and interest in, to and under
and grants to Lender a security interest in any and all of the following
described property which is (except where the context otherwise requires) herein
collectively called the “Property,” whether now owned or held or hereafter
acquired:
          (A) That certain real property more particularly described in Exhibit
“A” attached hereto and incorporated herein by this reference, together with all
of the easements, rights, privileges, franchises and appurtenances thereunto
belonging or in any wise appertaining (the “Premises”), and all of the estate,
right, title, interest, claim and demand whatsoever of Borrower therein or
thereto, either at law or in equity, in possession or in expectancy, now or
hereafter acquired;
          (B) All structures, buildings and improvements of every kind and
description now or at any time hereafter located on the Premises (the
“Improvements”), including all equipment, apparatus, machinery, fixtures,
fittings, and appliances and any additions to, substitutions for, changes in or
replacements of the whole or any part thereof, including such of the foregoing
as may be used in connection with the generating or distributing of air, water,
heat, electricity, light, fuel or refrigeration or for ventilating or sanitary
purposes or for the exclusion of vermin or insects, or for the removal of dust,
refuse or garbage, now or at any time hereafter affixed to, attached to, placed
upon or used in any way in connection with the use, enjoyment, occupancy or
operation of the Premises or the Improvements, or any portion thereof;
          (C) All articles of personal property (except inventory as defined in
Article 9 of the UCC) and any additions to, substitutions for, changes in or
replacements of the whole or any part thereof, including without limitation all
safes, built-in furniture and installations, shelving, partitions, doors and
door-stops, vaults, elevators, dumb-waiters, awnings, window shades, Venetian
blinds, light fixtures, fire hoses and brackets and boxes for the same, fire and
life safety systems, fire sprinkler systems, alarm systems, drapes and drapery
rods and brackets, screens, linoleum, carpets, plumbing, laundry tubs and trays,
iceboxes, refrigerators, heating, ventilating and air-conditioning equipment,
stoves, ovens, water heaters, incinerators, furniture and furnishings,
communication systems, all equipment for the generation or distribution of air,
water, heat, electricity, light, fuel or refrigeration or for sanitary or
drainage purposes or for the removal of dust, refuse or garbage, all
specifically designed installations and furnishings and all of said articles of
property, the specific enumerations herein not excluding the general, now or at
any time hereafter affixed to, attached to, placed upon or used in any way in
connection with the use, enjoyment, occupancy or operation of the Premises or
the Improvements, or any portion thereof, and owned by Borrower or in which
Borrower now has or hereafter acquires an interest, and all building materials
and equipment now or hereafter delivered to and intended to be installed or
placed in or about the Premises or the Improvements (all of the foregoing,
collectively, being the “Personal Property”);

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          (D) All right, title and interest of Borrower in and to all streets,
roads and public places, opened or proposed, all ways, waters, water courses,
water rights and powers, liberties, privileges, sewers, pipes, conduits, wires
and other facilities furnishing utility or other services to the Property, and
all easements and rights of way, public or private, tenements, hereditaments,
rights and appurtenances, now or hereafter used in connection with, belonging or
appertaining to, the Premises (all of the foregoing being, collectively, the
“Appurtenances”);
          (E) All of the rents, royalties, issues, profits, revenue, income and
other benefits of the Premises, or arising from the use or enjoyment of all or
any portion thereof or from any lease or agreement pertaining thereto including,
without limitation, any and all rents, royalties, issues, earnings, profits,
revenue, income and other benefits generated by Borrower, any lessee, operator
or concessionaire for the letting or other use of any room or space in the
Premises or the Improvements, and all right, title and interest of Borrower in
and to all leases, subleases, operating and/or concession agreements of, or
relating to the Property now or hereafter entered into and all right, title and
interest of Borrower thereunder, including, without limitation, cash or
securities deposited thereunder to secure performance by the lessees of their
obligations thereunder, whether said cash or securities are to be held until the
expiration of the terms of said leases or applied to one or more of the
installments of rent coming due immediately prior to the expiration of said
terms (all of the foregoing being, collectively, the “Rents and Profits”);
          (F) All governmental permits relating to construction on the Property
(to the extent assignable) (collectively, the “Intangible Property”);
          (G) All causes of action, claims, compensation and recoveries for any
condemnation or taking of the Property, or any portion thereof, or for any
conveyance in lieu thereof, whether direct or consequential, or for any damage
or injury to the Property, or any portion thereof, or for any loss or diminution
in value of the Property for any reason, whether direct or consequential (all of
the foregoing being, collectively, the “Claims”);
          (H) All architectural, structural, mechanical and engineering plans
and specifications prepared for construction of the Improvements and all
studies, data and drawings relating thereto, and also all contracts and
agreements of Borrower relating to the aforesaid plans and specifications or to
the construction of the Improvements (all of the foregoing being, collectively,
the “Plans”);
          (I) All deposits and advance payments, and refunds owing therefrom, of
any kind or nature paid by or on behalf of Borrower, or owing to Borrower, with
respect to the Property, and claims thereto, including, but not limited to,
refunds of secured real property taxes and personal property taxes and prepaid
insurance premiums, other than prepaid premiums paid under a general policy
which covers Borrower and some of its affiliates, (all of the foregoing being,
collectively, the “Deposits”);
          (J) All proceeds (including claims and demands therefor) of the
conversion, voluntary or involuntary, of any of the foregoing into cash or
liquidated claims, including, without limitation, proceeds of insurance and
condemnation awards (all of the foregoing being, collectively, the “Proceeds”).

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          Notwithstanding the foregoing, the Property shall not include any
trademarks or other intellectual property of Pacific Sunwear of California, Inc.
or any of its subsidiaries (other than the Intangible Property).
          FOR THE PURPOSE OF SECURING, in such order of priority as Lender may
elect:
          (1) Due, prompt and complete observance, performance and discharge of
each and every obligation, covenant and agreement contained in that certain
promissory note ( the “Note”) of even date herewith in the face amount as set
forth on page 1 hereof, executed by Borrower to the order of Lender and any and
all modifications, extensions or renewals thereof, whether hereafter evidenced
by the Note or otherwise;
          (2) Payment of all other sums, with interest thereon at the rate of
interest provided in the Note becoming due or payable under the provisions
hereof;
          (3) Payment of such additional sums and interest thereon which may
hereafter be loaned to Borrower, or its successors or assigns, by Lender, when
evidenced by a promissory note or notes reciting that they are secured by this
Deed of Trust; and
          (4) Due, prompt and complete observance, performance and discharge of
each and every obligation, covenant and agreement of Borrower contained herein
or in any other instrument heretofore or hereafter executed by Borrower related
to or arising out of the indebtedness represented by the Note.
ARTICLE I
COVENANTS OF BORROWER
          Borrower covenants, warrants and agrees to and with Lender and Trustee
as follows:
          1.01 Borrower will pay the principal and interest and all other sums
becoming due with respect to the Note at the time and place and in the manner
specified in the Note, according to the terms thereof.
          1.02 Borrower has, on the date this Deed of Trust is recorded, good
and marketable title to the Property subject to no lien, charge or encumbrance
except such as are listed as exceptions to title in the title policy or
policies, if any, insuring the lien of this Deed of Trust issued by a title
company or companies acceptable to Lender (the “Permitted Exceptions”; Borrower
owns or, upon acquisition thereof, will own the Personal Property free and clear
of liens and claims; and this Deed of Trust is and will remain a valid and
enforceable lien on the Property subject only to the exceptions referred to
above. Borrower has full power and lawful authority to grant, assign, transfer
and mortgage its interest in the Property in the manner and form hereby done or
intended. Borrower will preserve its interest in and title to the Property and
will forever warrant and defend the same to Trustee and will forever warrant and
defend the validity and priority of the lien hereof against the claims of all
persons and parties whomsoever, other than Permitted Exceptions. Borrower shall
promptly and completely observe, perform and

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discharge each and every obligation, covenant and agreement affecting the
Property whether the same is prior and superior or subject and subordinate
hereto, including, if the security hereunder is or will be a condominium,
community apartment, stock co-operative or part of a planned development, each
and every provision under any Declaration of Covenants, Conditions and
Restrictions pertaining to the condominium, community apartment, stock
co-operative or planned development project.
          1.03 (a) Borrower will, at its own cost and without expense to Trustee
or Lender, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignments, transfers
and assurances as Trustee or Lender shall from time to time require for the
better assuring, conveying, assigning, transferring and confirming unto Trustee
and Lender the property and rights hereby conveyed or assigned or intended now
or hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Trustee or Lender, or for carrying out the intention or
facilitating the performance of the terms of this Deed of Trust, or filing,
registering or recording this Deed of Trust and, on demand, Borrower will
execute and deliver, and hereby authorizes Trustee or Lender to execute in the
name of Borrower to the extent Borrower may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments to
evidence more effectively the lien hereof upon the Personal Property, the
Appurtenances, the Rents and Profits, the Intangible Property, the Claims, the
Plans, the Proceeds and the Deposits.
               (b) Borrower forthwith upon the recordation of this Deed of
Trust, and thereafter from time to time, will cause this Deed of Trust and any
security instruments creating a lien or evidencing the lien hereof upon the
Personal Property, the Appurtenances, the Rents and Profits, the Intangible
Property, the Claims, the Plans, the Proceeds and the Deposits, and each
instrument of further assurance, to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien hereof upon, the title
of Trustee to and the security interest of Lender in the Property.
               (c) Borrower will pay all filing, registration and recording
fees, and all expenses incident to the execution and acknowledgment of this Deed
of Trust, and any deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Personal Property, the Appurtenances, the Rents
and Profits, the Intangible Property, the Claims, the Plans, the Proceeds and
the Deposits and any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts, assessments
and charges arising out of or in connection with the execution and delivery of
the Note, this Deed of Trust, any deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Personal Property or any instrument
of further assurance (other than income taxes of Lender).
          1.04 Borrower will keep the Property insured against loss or damage
with fire and extended coverage property damage insurance on an all-risks basis,
and insurance against any other risks or hazards that, in the opinion of Lender,
should be insured against to the amount of the full insurable value thereof on a
replacement cost basis, excluding land value, with a replacement cost
endorsement without deduction for depreciation, and in such form and with such
other coverages and endorsements as may be approved or required by Lender from
time to time. Borrower shall also carry and maintain business interruption
insurance, without a

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coinsurance provision, in an amount sufficient to cover principal and interest
payments under the Note for a period of not less than twelve (12) months and
property tax and insurance expenses for a period of not less than twelve
(12) months, and in such form and with such other endorsements as may be
approved or required by Lender. In addition, in the event the Department of
Housing and Urban Development designates the Property to be in a Special Flood
Hazard Area, Borrower hereby undertakes that it will acquire flood insurance in
an amount satisfactory to and with loss payable to Lender. Borrower will also
carry comprehensive public liability insurance, in such form, amounts (initial
minimum $1,000,000) and with such reasonable companies as Lender may from time
to time require, with Lender included thereon as a named insured under a
standard mortgagee endorsement of the character above described. Notwithstanding
anything to the contrary contained in this Deed of Trust, following the
recordation of this Deed of Trust, Lender reserves the right to require
additional coverages (or changes to current coverages that are commercially
reasonable) or endorsements in the future (such as earthquake, tornado,
hurricane or terrorism coverages), provided that such coverages or endorsements
are commercially reasonable for the area in which the Property is located and
available to Borrower on a cost-effective and commercially reasonable basis. All
insurance policies shall be issued by companies acceptable to Lender and have a
“Best’s Key Rating Guide” financial size rating of Class “A-/X” or higher. Said
insurance policies shall be endorsed with a standard non-contributory mortgage
clause, shall contain no coinsurance provisions and may only be canceled or
modified upon not less than thirty (30) days’ prior written notice to Lender.
Loss under said insurance shall be payable to Lender and shall be applied in the
same manner as provided in Section 1.05(b) hereof. The original policy or
policies evidencing all insurance referred to in this paragraph, together with
receipts for the payment of premiums thereon, shall be delivered to and held by
Lender. In the event that Lender approves the use of a “blanket” policy, a
certified copy of such blanket policy, together with an original certificate
approved by Lender indicating Lender to be the insured mortgagee under such
policy with coverages in the approved amounts shall be delivered to Lender.
Lender shall not, by the fact of approving, disapproving, accepting, preventing,
obtaining or failing to obtain any insurance, incur any liability for the form
or legal sufficiency of insurance contracts, solvency of insurance companies or
payment of lawsuits.
          1.05 (a) Borrower, upon obtaining knowledge of the institution of any
proceedings for the condemnation of the Premises and Improvements or any portion
thereof or knowledge of any casualty damage to the Property or damage of any
other kind, will immediately notify Lender. Lender may participate in any
proceedings and join Borrower in adjusting any loss covered by insurance. All
compensation, awards, proceeds, damages, claims, rights of action and payments
to which Borrower may become entitled shall be paid over to Lender. Subject to
the provisions of Section 1.05(b) hereof, Lender shall have the sole and
absolute discretion, notwithstanding the fact that the security given hereby may
not be impaired by a partial condemnation, to apply any part or all of the
amount collected in connection with any condemnation proceeding: (i) upon any
indebtedness secured hereby and in such order as Lender may determine, or
(ii) without reducing the indebtedness secured hereby, to the reimbursement of
Lender for expenses incurred by it in the restoration of the Property. Such
application shall not cure or waive any default or notice of default hereunder
or invalidate any act done pursuant to such notice. Lender shall be under no
obligation to question the amount of any compensation, awards, proceeds,
damages, claims, rights of action or payments, and may accept the same in the
amount in which the same shall be paid.

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          (b) Lender shall make available to Borrower any such proceeds for the
rebuilding or restoration of the Property so damaged or condemned, provided
Lender determines, in its reasonable discretion, that its security under this
Deed of Trust has not been impaired, and provided Borrower shall have fulfilled
all of the following conditions: (i) no default or Event of Default shall have
occurred and be continuing under the Note, this Deed of Trust or any instrument
heretofore or hereafter executed by Borrower having reference to or arising out
of the Note; (ii) Borrower shall not be in default under any of the terms,
covenants and conditions of any of the leases, subleases, licenses or other
occupancy agreements affecting the Property which have been approved by Lender;
(iii) Borrower shall have in force business interruption insurance covering
principal and interest payments under the Note for a period of not less than
twelve (12) months and property tax and insurance expenses for a period of not
less than twelve (12) months; (iv) Lender, acting reasonably, shall be satisfied
that the insurance or award proceeds shall be sufficient to fully restore and
rebuild the Property free and clear of all liens except the lien of this Deed of
Trust and Permitted Exceptions or, in the event that available proceeds are, in
Lender’s reasonable opinion, insufficient to restore and rebuild the Property,
Borrower has deposited with Lender funds that, together with the available
insurance or award proceeds are sufficient in Lender’s reasonable judgment to
restore and rebuild the Property and Borrower at all times thereafter maintains
sufficient funds on deposit to complete rebuilding, as certified by a licensed
architect approved by Lender, acting reasonably; (v) construction and completion
of the restoration and rebuilding of the Property shall be completed in
accordance with plans and specifications and drawings submitted to and approved
by Lender, which plans, specifications and drawings shall not be modified in any
material respect without Lender’s prior written consent which shall not be
unreasonably withheld; (vi) Lender shall have timely approved all prime
contractors and principal subcontractors, and the general contract and principal
subcontracts Borrower proposes to enter into with respect to the restoration and
rebuilding; (vii) any and all monies that are made available for restoration and
rebuilding hereunder shall be disbursed through Lender, Trustee or a title
insurance or trust company satisfactory to Lender, in accordance with standard
construction lending practice, including, if requested by Lender, monthly lien
waivers and title insurance date-downs, or in any other manner approved by
Lender in Lender’s sole discretion, with funds being disbursed not more often
than once per month; (viii) Borrower shall provide builder’s risk insurance
meeting Lender’s requirements, naming Lender as an additional insured; (ix) if
the proceeds derive from insurance, the insurer must not have asserted, and must
not subsequently assert, any defense or right of offset against Borrower or any
tenant of the Property under the terms of the applicable policy or policies; and
(x) Lender, acting reasonably, shall be satisfied that the quality of the
materials and workmanship of the repair or reconstruction of the Property will
be at least equal to the quality of the materials and workmanship of the repair
or reconstruction of the Property prior to such damage or condemnation. The
excess of said proceeds above the amount necessary to complete such restoration
or rebuilding, if any, shall be disbursed to Lender to be applied against the
principal balance of the Note as a partial prepayment thereof to Borrower.
Lender’s security hereunder shall be deemed impaired if the value of the
Property after restoration and rebuilding is less than the value of the Property
prior to such restoration or rebuilding, as determined in Lender’s reasonable
discretion.
          1.06 (a) Borrower, from time to time prior to when the same shall
become delinquent, will pay and discharge all taxes of every kind and nature,
including real and personal property taxes and income, franchise, withholding,
profits and gross receipts taxes, all general

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and special assessments, including assessments on appurtenant water stock,
levies, permits, inspection and license fees, imposed upon or assessed against
the Property or any part thereof or and all water and sewer rents and charges
and all other public charges, whether of a like or different nature, imposed
upon or assessed against Borrower or the Property or any part thereof or upon
the revenues, rents, issues, income and profits of the Property, or arising in
respect of the occupancy, use or possession of the Property. Borrower will, upon
the request of Lender, deliver to Lender receipts evidencing the payment of all
such taxes, assessments, levies, fees, rents and other public charges.
          (b) Borrower will pay to Lender, together with each payment of an
installment of principal and/or interest under the Note, a pro rata portion of
the taxes, assessments and insurance premiums next to become due, as estimated
by the Lender. The determination of the amounts so payable and of the fractional
parts thereof to be deposited with Lender, so that the aggregate of such
deposits shall be sufficient for this purpose, shall be made by Lender in its
reasonable discretion. Said amounts shall be held by Lender without interest and
applied to the payment of the obligations in respect of which said amounts were
deposited, in such order or priority as Lender shall determine, on or before the
respective dates on which the same or any of them would become delinquent. If
one (1) month prior to the due date of any of the aforementioned obligations the
amount then on deposit therefor shall be insufficient for the payment of such
obligation in full, Borrower, within ten (10) days after demand, shall deposit
the amount of the deficiency with Lender. Nothing herein contained shall be
deemed to affect any right or remedy of Lender under any other provision of this
Deed of Trust or under any statute or rule of law to pay any such amount and to
add the amount so paid together with interest at the Default Rate to the
indebtedness hereby secured. Lender is hereby granted a security interest in the
amounts held by it pursuant to this Section 1.06(b) for the purpose of securing
payment of impositions and the amounts owing by Borrower and which Lender may
pay under this Section 1.06(b) and the sale of the Property, or any interest
therein, voluntarily, involuntarily or by operation of law, shall not release
said interest or Lender’s right to apply said amounts as herein provided.
Notwithstanding anything to the contrary contained herein, so long as the
insurance on the Improvements is part of a blanket insurance policy maintained
by Pacific Sunwear of California, Inc. (“Pac Sun”), or its affiliate, then
provided that the Borrower demonstrates to Lender’s reasonable satisfaction the
term of such policy, the amount of such annual insurance premium, the insured
value of the Improvements insured by such blanket policy and the amount of the
total insured value of all improvements insured by such blanket policy, the
amount of the insurance premium to be paid by Borrower during the term of such
blanket policy hereunder shall be the “Annual Insurance Percentage”. The “Annual
Insurance Percentage” for any such period shall be one hundred three per cent
(103%) of the sum of the annual premium (or other periodic premium) for such
blanket insurance policy multiplied by the positive fraction that has as its
numerator such insured value of the Improvements insured by such blanket policy
and as the denominator such amount of the total insured value of all
improvements insured by such blanket policy. Borrower shall pay such amount in
installments equal 1/12th each on a monthly basis on the due date for the
monthly installment payments under the Note. Within fifteen (15) days after
delivery of an invoice for the insurance premium to Lender, then Lender shall
disburse to Borrower the lesser of (i) the amount deposited by Borrower for
insurance premiums, less previous disbursements for insurance premiums, or
(ii) the Annual Insurance Percentage of the amount of the invoice.

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               (c) Borrower will pay, from time to time when the same shall
become due, all lawful claims and demands of mechanics, materialmen, laborers
and others which, if unpaid, might result in or permit the creation of a lien on
the Property or any part thereof, or on the revenues, rents, issues, income and
profits arising therefrom, and in general will do or cause to be done everything
necessary so that the lien hereof shall be fully preserved subject to Permitted
Exceptions, at the sole cost of Borrower, without expense to Trustee or Lender.
          1.07 All right, title and interest of Borrower in and to all
extensions, improvements, betterments, renewals, substitutes and replacements of
and all additions and appurtenances to the Property, hereafter acquired by, or
released to, Borrower or constructed, assembled or placed by Borrower on the
Premises, and all conversions of the security constituted thereby, immediately
upon such acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, without any further deed
of trust, mortgage, conveyance, assignment or other act by Borrower, shall
become subject to the lien of this Deed of Trust as fully and completely, and
with the same effect, as though now owned by Borrower and specifically described
in the granting clause hereof, but at any and all times Borrower will execute
and deliver to Trustee any and all such further assurances, deeds of trust,
conveyances or assignments thereof as Trustee or Lender may reasonably require
for the purpose of expressly and specifically subjecting the same to the lien of
this Deed of Trust.
          1.08 This Deed of Trust shall be self-operative and constitute a
Security Agreement with respect to the Personal Property, the Appurtenances, the
Rents and Profits, the Intangible Property, the Claims, the Plans, the Deposits
and the Proceeds; provided, however, during an Event of Default Borrower hereby
agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Lender the attorney-in-fact of Borrower, to execute, deliver and, if
appropriate, to file with the appropriate filing officer or office such security
agreements, financing statements or other instruments as Lender may request or
require in order to impose or perfect the lien or security interest hereof more
specifically thereon.
          1.09 (a) The Rents and Profits are hereby absolutely and
unconditionally assigned, transferred, conveyed and set over to Lender to be
applied by Lender in payment of the principal and interest and all other sums
payable on the Note, and of all other sums payable under this Deed of Trust.
Prior to the happening of any Event of Default as set forth in Article II
hereof, Borrower shall be entitled to collect and receive all Rents and Profits
(including security deposits). Nothing contained in this Section 1.09(a) or
elsewhere in this Deed of Trust shall be construed to make Lender a mortgagee in
possession unless and until Lender actually takes possession of the Property
either in person or through an agent or receiver.
               (b) Borrower will not (i) execute an assignment of any of its
right, title or interest in the Rents and Profits, other than to Lender, or
(ii) except where the lessee is in default thereunder, terminate or consent to
the cancellation or surrender of any lease of the Property or of any part
thereof, now existing or hereafter to be made, or (iii) modify any lease of the
Property or any part thereof so as to shorten the unexpired term thereof or so
as to decrease the amount of the rent payable thereunder, or (iv) accept
prepayments of any installments of rent to become due under any of said leases
in excess of one (1) month’s rental or prepayments in the

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nature of security for the performance of the lessee’s obligations thereunder in
excess of an amount equal to one (1) month’s rental.
               (c) Borrower will at all times, promptly and faithfully perform,
or cause to be performed, all of the covenants, conditions and agreements
contained in the leases of the Property now or hereafter existing on the part of
the lessor, wherein Borrower is the lessor, to be kept and performed. Further,
Borrower will not, without the prior written consent of Lender, enter into any
lease or other rental or occupancy agreement; provided, however that Lender will
not unreasonably withhold its consent to a proposed lease or renewal where the
tenant is an independent third party and the terms thereof can reasonably be
demonstrated to have been negotiated at arm’s length at then prevailing market
values unless the tenant executes a subordination and attornment agreement in a
form reasonably acceptable to Lender.
               (d) Borrower shall furnish to Lender, within thirty (30) days
after a request by Lender to do so, a written statement containing the names of
all lessees of the Property with respect to leases where Borrower is the lessor,
the terms of their respective leases, the spaces occupied and the rentals
payable thereunder and a copy of each such lease.
               (e) Borrower shall not enter into any new Lease affecting all or
any party of the Property unless and until Borrower has provided to Lender, not
later than twenty (20) days prior to the execution thereof, a copy of such
proposed new Lease and has obtained Lender’s prior written approval of such new
Lease.
          1.10 To the extent not provided by applicable law, each lease of the
Property or any part thereof shall provide that, in the event of the enforcement
by Trustee or Lender of the remedies provided for by law or by this Deed of
Trust, the lessee thereunder will, if requested by Lender or by any person
succeeding to the interest of Borrower as the result of said enforcement,
automatically become the lessee of any such successor in interest, without any
change in the terms or other provisions of the respective lease; provided,
however, that said successor in interest shall not be bound by (i) any payment
of rent or additional rent for more than one (1) month in advance, except
prepayments in the nature of security for the performance by said lessee of its
obligations under said lease not in excess of an amount equal to one (1) month’s
rental, or (ii) any amendment or modification in the lease made without the
consent of Lender or any successor in interest. Each lease shall also provide
that, upon request by said successor in interest, the lessee shall execute and
deliver an instrument or instruments confirming its attornment.
          1.11 Without the prior written consent of Lender being first had and
obtained, Borrower will not execute or deliver any pledge, security agreement,
mortgage or deed of trust covering all or any portion of the Property
(“Subordinate Mortgage”). If Lender consents to any other or further Subordinate
Mortgage or in the event the foregoing prohibition is determined by a court of
competent jurisdiction to be unenforceable under the provisions of any
applicable law, Borrower will not execute or deliver any Subordinate Mortgage
unless it shall contain, among other provisions, express covenants to the effect
that:
               (a) the Subordinate Mortgage is in all respects subject and
subordinate to this Deed of Trust;

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               (b) if any action or proceeding shall be brought to foreclose the
Subordinate Mortgage (regardless of whether the same is a judicial proceeding or
pursuant to a power of sale contained therein), no tenant of any portion of the
Property will be named as a party defendant, nor will any action be taken with
respect to the Property which would terminate any occupancy or tenancy of the
Property, or any portion thereof, without the consent of Lender;
               (c) The Rents and Profits, if collected through a receiver or by
the holder of the Subordinate Mortgage, shall be applied first to the
obligations secured by this Deed of Trust, including principal and interest due
and owing on or to become due and owing on the Note, and then to the payment of
maintenance expenses, operating charges, taxes, assessments and disbursements
incurred in connection with the ownership and maintenance of the Property;
               (d) if any action or proceeding shall be brought to foreclose the
Subordinate Mortgage, prompt notice of the commencement thereof will be given to
Lender.
          1.12 (a) Borrower will not commit any waste on the Premises or make
any change in the use of the Property that will in any way increase any ordinary
fire or other hazard arising out of construction of the Improvements or
operation of the Property, nor will Borrower make any application to any
federal, state or local governmental authority (“Governmental Authority”) for a
change in zoning or a change in any other law, ordinance, statute, rule, order,
decree, directive or regulation (“Laws”) affecting the Property except changes
which benefit the Premises, nor will Borrower consent to any such change without
the written consent of Lender. Borrower will at all times comply in all material
respects with all Laws of any Governmental Authority having or exercising
jurisdiction over construction of the Improvements or otherwise affecting the
Property or any portion thereof, including, but not limited to, compliance in
full with any legislation and regulations relating to the handicapped and
regulations of the Environmental Protection Agency, and maintain and keep the
Improvements in good operating order and condition and will promptly make, from
time to time, all repairs, renewals, replacements, additions and improvements
which are necessary to comply in all material respects with such Laws. After
completion of the Improvements, they shall not be removed, demolished or
substantially altered, nor shall any additions to the Improvements be made other
than the erection or removal of non load-bearing demising walls, without the
prior written consent of Lender, which shall not be unreasonably withheld nor
shall any of the Personal Property be removed except where appropriate
replacements free of superior title, liens and claims are immediately made
having a value at least equal to the value of the Personal Property so removed;
provided that Borrower may in good faith and the ordinary course of it business
make changes to the Improvements that do not adversely affect the structural
integrity provided such changes, when taken in the aggregate with all related
changes, cost no more than $100,000.
               (b) Upon the occurrence of an Event of Default, or in the event
Lender, in its reasonable discretion, determines that the Property is not being
properly maintained and Borrower fails to cure within 30 days, Borrower will pay
to Lender, together with each payment of an installment of principal and/or
interest under the Note, a maintenance reserve deposit in such amount as Lender
reasonably concludes is appropriate for the purpose of funding needed capital
improvements to the Property. Said amounts shall be held by Lender,

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without interest, and shall form a maintenance reserve for the Property (the
“Maintenance Reserve”). Upon the written request of Borrower, Lender shall,
provided no Event of Default is occurring, allow disbursements from funds held
from time to time in the Maintenance Reserve as payments against invoices for
capital improvements to the Property made after the date this Deed of Trust is
recorded (“capital improvement” meaning, generally, an item that is capitalized
for financial accounting purposes rather than being considered an annual expense
item). Nothing herein contained shall be deemed to affect any right or remedy of
Lender under any other provision of this Deed of Trust or under any statute or
rule of law to pay any such amount and to add the amount so paid together with
interest at the Default Rate to the indebtedness hereby secured. Lender is
hereby granted a security interest in the amounts held by it in the Maintenance
Reserve pursuant to this Section 1.12(b) for the purpose of securing payment of
impositions and the amounts owing by Borrower and which Lender may pay under
this Section 1.12(b) and the sale of the Property, or any interest therein,
voluntarily, involuntarily or by operation of law, shall not release said
interest or Lender’s right to apply said amounts as herein provided.
          1.13 Borrower, if a corporation, partnership (limited or general),
limited liability company, or other form of entity that is not a natural person,
will, so long as it is the owner of the Property, do all things necessary to
preserve and keep in full force and effect its existence under the laws of the
state of its organization and will comply in all material respects with all Laws
of any Governmental Authority or court applicable to Borrower or the Property or
any part thereof.
          1.14 (a) Borrower will keep adequate records and books of account on
an accrual basis and will permit Trustee and Lender, or their agents,
accountants and attorneys, upon five (5) days prior written notice, to visit and
inspect the Property and examine Borrower’s records and books of account, and
make copies thereof, and to discuss Borrower’s affairs, finances and accounts
relating to the Property with the officers, agents or principals of Borrower at
such times during normal business hours as may be specified by Trustee or Lender
in the written notice.
               (b) Borrower will deliver to Lender, within ninety (90) days
after the close of each fiscal year, annual audited financial statements of
Borrower, including operations for the Property (balance sheet, statements of
income and expense, cash flow and utilization of cash) which annual financial
statements shall set forth, in comparative form, the annual statement of
operations of the Property (balance sheet, income and expenses, cash flow and
utilization of cash) for the previous year, including rental from tenants and
calculation of tenant expense contributions. During the continuance of an Event
of Default Borrower will further deliver to Lender with reasonable promptness
such other information with respect to the Property as Lender may reasonably
request from time to time, including, without limitation, a schedule of gross
receipts collected from each tenant obligated to pay additional rent based on a
percentage of gross receipts. All statements submitted shall be prepared in
accordance with generally accepted accounting principles, or another format
approved by Lender, which approval if granted may be revoked following an Event
of Default. All financial statements submitted by Borrower with respect to the
Property shall be accompanied by the certificate of Borrower dated within five
(5) days of the delivery of such statements to Lender, stating that such annual
statements are true and correct in all material respects. Upon the occurrence of
an Event of Default, and for so

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long thereafter as any sums are owing under the Note, Lender shall have the
right to require that the foregoing financial statements be delivered monthly or
quarterly on an unaudited basis and the further right to require that such
annual statements be audited and certified by a certified public accountant, at
the expense of Borrower. Borrower agrees to pay to Lender an administrative
charge of $200 for each month, or portion thereof, that any required operating
statements are late, in order to compensate Lender for the increased
administrative expense and effort occasioned by tardy financial information.
               (c) Borrower, within three (3) business days upon request in
person or within five (5) business days upon request by mail, will furnish a
written statement duly acknowledged of the amount due on the Note, whether for
principal or interest, and whether any offsets or defenses exist against the
indebtedness secured hereby.
               (d) Any change in the property manager that is managing the
Property for Borrower as of the date this Deed of Trust is recorded requires the
prior consent of Lender, and Borrower agrees to provide any information
reasonably requested by Lender as to the reasons for a proposed change in
management, the expected benefits to flow therefrom, and the credentials of the
proposed new manager.
          1.15 Borrower shall pay all reasonable costs, fees and expenses of
Trustee, its agents and counsel in connection with the performance of its duties
hereunder; Borrower shall pay all taxes (except federal and state income taxes)
and any other governmental charges or impositions imposed by any Governmental
Authority on Trustee or Lender by reason of their interests in the Note or this
Deed of Trust.
          1.16 Lender shall be subrogated, notwithstanding their release of
record, to any mechanic’s or vendor’s lien or liens, superior titles, mortgages,
deeds of trust, liens, encumbrances, rights, equities and charges of all kinds
heretofore or hereafter existing on the Property to the extent that the same are
paid or discharged from the proceeds of the loan evidenced by the Note.
          1.17 Borrower will, if the Note is mutilated, destroyed, lost or
stolen, deliver to Lender, in substitution therefor, a new promissory note
containing the same terms and conditions as the Note with a notation thereon of
the unpaid principal and accrued but unpaid interest. Borrower shall be
furnished with satisfactory evidence of the mutilation, destruction, loss or
theft of the Note, and also such security or indemnity as may be reasonably
requested by Borrower; provided, however, that if the original Lender named
herein is the then Lender under this Deed of Trust, an unqualified indemnity
from the original Lender named herein shall be deemed to be satisfactory
security or indemnification.
          1.18 If the Note provides any charge for prepayment, Borrower agrees
to pay said charge even if and notwithstanding the fact that Borrower shall have
defaulted in payments due under the Note or in the performance of any agreement
hereunder and Lender, by reason thereof, shall have declared all sums secured
hereby immediately due and payable.
          1.19 Without affecting the liability of Borrower or of any other
person who is or shall become bound by the terms of this Deed of Trust or who is
or shall become liable for the

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performance of any obligation secured hereby, Lender may, in such manner upon
such terms and at such times as it deems best and without notice or demand,
release any party now or hereafter liable for the performance of any such
obligation, extend the time for such performance, accept additional security
therefor, and alter, substitute or release any property securing such
performance. No exercise or non-exercise by Lender of any of its rights under
this Deed of Trust, no dealing by Lender with any person, firm or corporation
and no change, impairment, loss or suspension of any right or remedy of Lender
shall in any way affect any of the obligations of Borrower hereunder or any
security furnished by Borrower, or give Borrower any recourse against Lender.
          1.20 Borrower covenants that: (a) to the best of Borrower’s knowledge,
after due and diligent inquiry (which shall mean Borrower has conducted an
inquiry or investigation of matters actually known to Borrower as the owner of
the Property, as well as the procuring by Borrower of the investigation and
report required by Lender in connection with the making of the loan evidenced by
the Note) no substances, including, without limitation, asbestos or any
substance containing asbestos and deemed hazardous under any Environmental Law
(defined below), the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, chemicals known to cause
cancer or reproductive toxicity, pollutants, effluents, contaminants, emissions
or related materials and any items included, within the definition of hazardous
or toxic waste, materials or substances (“Hazardous Substances”) under any law
relating to environmental conditions and industrial hygiene, including, without
limitation, the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42
U.S.C. §6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§9601-9657, the Hazardous Materials
Transportation Act, 49 U.S.C. §6901 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. §1251 et seq., the Clean Air Act, 42 U.S.C. §741 et seq., the
Clean Water Act, 33 U.S.C. §7401 et seq., the Toxic Substances Control Act, 15
U.S.C. §§2601-2629, the Safe Drinking Water Act, 42 U.S.C. §§300f-300j, as any
of the foregoing have heretofor or will hereafter be amended, and all similar
federal, state and local environmental statutes, ordinances and the regulations,
orders and decrees now or hereafter promulgated thereunder (collectively,
“Environmental Laws”), shall be installed, used, generated, manufactured,
treated, handled, refined, produced, processed, stored or disposed of, by
Borrower in, on or under the Property in violation of Environmental Laws;
(b) that no activity shall be undertaken on the Property which would cause
(i) the Property to become a hazardous waste treatment, storage or disposal
facility as such terminology is defined and classified under any Environmental
Law, (ii) a release or threatened release of Hazardous Substances from the
Property in violation of any Environmental Law, or (iii) the discharge of
Hazardous Substances into any watercourse, body of surface or subsurface water
or wetland, or the discharge into the atmosphere of any Hazardous Substances
which would require a permit under any Environmental Law and for which no such
permit has been issued; (c) that no activity shall be undertaken or permitted to
be undertaken, by the Borrower on the Property which would result in a violation
under any Environmental Law, and (d) to obtain and deliver to Lender, within a
reasonable time following completion of the actions as have been required to be
taken by the appropriate governmental agency, certifications of engineers or
other professionals reasonably acceptable to Lender, in form and substance
reasonably satisfactory to Lender, certifying that all necessary and required
actions to clean up, remove, contain, prevent and eliminate all releases or
threats of release of Hazardous Substances on or about the Property to the
levels required by the appropriate governmental agencies have been taken, and
that upon completion of such action, the

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Property is, to the knowledge of such professional, then in compliance with
applicable Environmental Laws as then in effect and applicable to such actions.
Notwithstanding the foregoing, Borrower and tenants of Borrower may use and
store commercially reasonable quantities of Hazardous Substances on the Property
to the extent that such use and storage is necessary for the proper operation of
the Property or in the ordinary course of the businesses conducted on the
Property by such tenants, provided that the use and storage of such Hazardous
Substances is in accordance with Environmental Laws and that no release or
threatened release which would violate Environmental Laws occurs.
          1.21 Upon no less than three (3) business days notice to the Borrower,
Lender shall have the right to enter and inspect the Property during normal
business hours, or to cause a licensed environmental engineer to enter and
inspect the Property, which inspection shall be conducted to determine the
existence, location, nature and magnitude of any past or present release or
threatened release of any Hazardous Substances (as that term is defined in
Section 1.20 hereof) into, onto, beneath or from the Property on either of the
following: (1) upon reasonable belief of the existence of a past or present
release or threatened release of any Hazardous Substance into, onto, beneath or
from the Property not previously disclosed in writing to the Lender in
conjunction with the making, renewal or modification of the Note, or (2) after
the commencement of non-judicial or judicial foreclosure proceedings against the
Property. Lender shall cause any physical damage to the Property due to the
inspection to be promptly repaired and restore the Property to substantially the
same condition as it existed prior to such damage. In the case of an emergency,
no prior notice for the exercise of the foregoing rights by Lender shall be
required. If Lender, or the licensed environmental engineer selected by Lender,
is refused the right of entry and inspection by the Borrower, or by a tenant of
the Property, or the Lender, or such licensed governmental engineer, is
otherwise unable to enter and inspect the Property without a breach of the
peace, then Lender may, upon petition, obtain a court order from a court of
competent jurisdiction to exercise the Lender’s rights hereunder. In this
regard, Borrower hereby consents to the appointment of a receiver by the court
empowered by law to appoint a receiver for the Property, in an action brought by
Lender to enforce its rights hereunder.
          1.22 Except as hereinafter provided, Borrower shall not be personally
liable for the payment of principal or interest that may become due and payable
under the Note and the other Loan Documents. Lender agrees not to seek, take or
obtain against Borrower a deficiency judgment for amounts remaining unpaid under
the Note and the other Loan Documents after all the security for the Note
(including, without limitation, hazard insurance proceeds and condemnation
awards with respect to the Property) has been applied to payment of all amounts
due Lender under the Note and the other Loan Documents. Notwithstanding the
foregoing limitation of liability, Borrower shall be fully liable (i) for fraud
or misrepresentation made in connection with this Note or any instrument
governing, securing or pertaining to the payment of the Note or the apparent
purpose of which is to deprive Lender of the security for the Note; (ii) for
failure to pay taxes, assessments, charges for labor or materials or any other
charges which can create liens on any portion of the Property; (iii) for the
misapplication of (a) proceeds of insurance covering any portion of the
Property, or (b) proceeds of the sale or condemnation of any portion of the
Property, or (c) rentals and security deposits received by or on behalf of
Borrower subsequent to the date on which Lender gives written notice of the
posting of foreclosure notices or the exercise of Lender’s assignment of rents;
(iv) for failure to maintain, repair or restore the Premises and the
Improvements in accordance with any instrument

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governing, securing, or pertaining to the payment of this Note; (v) for any act
or omission knowingly or intentionally committed or permitted by Borrower which
results in the waste, damage or destruction to the Premises and the
Improvements, but only to the extent such events are not covered by insurance
proceeds which are received by Lender; (vi) for the return to Lender of all
unearned advanced rentals and security deposits paid by tenants of the Premises
and the Improvements or any guarantors of the leases of such tenants which are
not rightfully refunded to or which are forfeited by such tenants or guarantors;
(vii) for the return of, or reimbursement for, all personal property included
within the Property taken from the Premises by or on behalf of Borrower;
(viii) for any liability of Borrower pursuant to the provision contained in this
Deed of Trust pertaining to hazardous or toxic materials or substances; (ix) for
any liability of Borrower pursuant to the Certificate and Indemnity Regarding
Hazardous Substances executed by Borrower and delivered to Lender in connection
with the indebtedness evidenced by this Note; (x) for any delay, after an Event
of Default which is not cured in deeding over the Property to the Lender, or
cooperate in a consensual foreclosure within 90 days of Lender’s request;
(xi) for failure to maintain or alter the Property in compliance with the
Americans with Disabilities Act, as it may be amended from time to time; and
(xii) for all court costs and reasonable attorneys’ fees incurred in connection
with the enforcement of one or more of the above subparagraphs (i) through (xi),
inclusive. The foregoing shall not affect Lender’s right to proceed against any
Guarantor under any guaranty agreement executed by Guarantor in connection with
the Loan.
          Nothing in the foregoing shall be deemed to release, affect or impair
the indebtedness evidenced by the Note or the security therefor, or Lender’s
rights to enforce its remedies under the Loan Documents, including any remedy
for injunctive or other equitable relief.
          1.23 As of the date of this Deed of Trust, Borrower is and until the
obligations of Borrower under the Note and the Loan Documents have been fully
paid and performed and this Deed of Trust has been reconveyed, Borrower shall
remain, in full compliance with all applicable laws and regulations of the
United States of America that prohibit, regulate or restrict financial
transactions, including but not limited to, conducting any activity or failing
to conduct any activity, if such action or inaction constitutes a money
laundering crime, including any money laundering crime prohibited under the
Money Laundering Control Act (18 U.S.C. §§ 1956, 1957), or the Bank Secrecy Act
(31 U.S.C. §§ 5311 et seq.), and any amendments or successors thereto and any
applicable regulations promulgated thereunder. Borrower represents and warrants
to Lender, its successors and assigns, that, as of the date hereof: (a)(i)
neither Borrower nor any member nor any general partner of such member of
Borrower, nor any officer, director, employee or shareholder of Borrower, is or
will become a “Person” described by Section 1 of The Anti-Terrorism Executive
Order 13,224 of September 23, 2001 blocking property and prohibiting
transactions with Persons who commit, threaten to commit, or support terrorism,
66 Fed. Reg. 49,049 (2001), or described in any rule or regulation implementing
the same and, (ii) to the best knowledge and belief of the Borrower, neither
Borrower nor any general partner or member of Borrower, nor any officer,
director, or shareholder of Borrower, engages or will engage in any dealings or
transactions, or be otherwise associated with, any such Persons; and
(b) Borrower and all general partners and members and any general partner of
such members of Borrower, and all officers, directors, employees and
shareholders of Borrower, are

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in compliance, and will remain in compliance, with the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (“USA Patriot Act”). Borrower acknowledges that it
understands and has been advised by legal counsel on the requirements of the
applicable laws referred to above including, without limitation, the Money
Laundering Control Act (18 U.S.C. §§ 1956, 1957), the Bank Secrecy Act (31
U.S.C. §§ 5311 et seq.) and the USA Patriot Act. Borrower shall notify Lender
immediately upon receipt of any information indicating a breach of this
Section 1.23, of if Borrower or any general partner or member of Borrower, or
any officer, director, employee or shareholder of Borrower or the constituent
owner of Borrower is custodially detained on charges relating to money
laundering, whereupon Lender shall be entitled to take all actions necessary so
that Lender is in compliance with all anti-money laundering regulations. Any and
all loss, damage, liability, penalty, fine or expense, including reasonable
attorneys’ fees and reasonable investigatory expenses, incurred by Lender in
connection with any default by Borrower under this Section 1.23 shall be
included in the indebtedness secured hereby, and shall immediately become due
and payable by Borrower to Lender.
ARTICLE II
EVENTS OF DEFAULT
          The following shall constitute events of default (“Events of Default”)
hereunder:
          2.01 The failure to make any payment of interest on the Note, or to
make any payment of an installment of principal, on or before the day the same
shall become due and payable, or the failure to make any other payments required
under the Note on or before the day the same shall become due and payable,
whether at maturity or by acceleration or as part of any prepayment or
otherwise, in each case, as is provided in the Note and in this Deed of Trust,
or the failure to make the payment of any insurance premium or tax required by
Sections 1.04 and 1.06(a) to be paid, or the failure to make the deposits
required by Section 1.06(b) or Section 1.12 (b), on or before the day the same
shall become due and payable.
          2.02 A default by Borrower in the due, prompt and complete observance
and performance of any obligation, covenant and agreement contained in
Sections 1.03, 1.04, 1.05 or 1.06(c), and the failure to cure said default
within ten (10) business days after written notice to Borrower of the occurrence
thereof.
          2.03 A default by Borrower in the due, prompt and complete observance
and performance of any obligation, covenant and agreement contained in the Note
or in this Deed of Trust but not specified in Sections 2.01 or 2.02, and the
failure to cure said default within thirty (30) days after written notice to
Borrower of the occurrence thereof, or if not susceptible of cure during such
thirty (30) day period, the failure of Borrower to commence during such thirty
(30) day period and to diligently prosecute the cure of same.
          2.04 The appointment pursuant to an order of a court of competent
jurisdiction of a trustee, receiver or liquidator of Borrower or of the Property
or any part thereof.

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          2.05 The filing by Borrower of a petition in bankruptcy or a petition
for an arrangement or a reorganization pursuant to the Federal Bankruptcy Act or
any similar law, federal or state, or the adjudication of Borrower as a bankrupt
or as insolvent by a decree of a court of competent jurisdiction, and the same
is not discharged within 120 days after the date of filing, or the making of an
assignment for the benefit of creditors, or the admission by Borrower in writing
of its inability to pay its debts generally as they become due, or the giving of
consent by Borrower to the appointment of a receiver or receivers of all or any
part of its property.
          2.06 The filing by any of the creditors of Borrower of a petition in
bankruptcy against Borrower or a petition for reorganization of Borrower
pursuant to the Federal Bankruptcy Act or any similar law, federal or state, and
the same is not discharged within ninety (90) days after the date of filing
thereof.
          2.07 The occurrence of any of the events enumerated in Sections 2.04
through 2.06 with regard to any guarantor of the Note, or the property of any
such guarantor, or the revocation, limitation or termination of the obligations
of any guarantor of the Note, except in accordance with the express written
terms of the instrument of guaranty; or, if Borrower is a trust or trustee of a
trust, the occurrence of any of the events enumerated in Sections 2.04 through
2.06 with regard to such trustee or any owner, or general partner of any owner,
of more than ten percent (10%) of the beneficial interests of such trust.
          2.08 The sale, conveyance, transfer, disposition or further
encumbering of the Property, or any part thereof or any interest therein, either
voluntarily, involuntarily, or otherwise, or agreement so to do (collectively, a
“Transfer”), without the prior written consent of Lender, which consent shall be
granted, withheld or conditioned in the sole and entire discretion of Lender. In
the event of any request for approval of a Transfer, along with any such
request, Borrower shall pay to Lender a transfer fee equal to one percent (1%)
of the then outstanding principal balance of the Note (“Transfer Fee”). Lender
shall have the right to approve, decline or consent to any such requested
Transfer in its sole and entire discretion. Any permitted transferee shall
assume all payment and performance obligations under the Note, this Deed of
Trust and the other Loan Documents pursuant to an assumption agreement prepared
in recordable form by Lender’s legal counsel. Borrower shall pay Lender’s
reasonable out-of-pocket expenses in connection with approving and documenting
such Transfer, including the fees and costs of Lender’s local legal counsel,
premiums for title insurance policies or endorsements, and recordation fees,
whether or not the Transfer is completed.
          2.09 Except as provided in Section 2.08, in the event Borrower is a
corporation or trust, the Transfer of more than five percent (5%) of the issued
and outstanding capital stock of Borrower or of the beneficial interest of such
trust without the prior written consent of Lender; or, in the event Borrower is
a limited or general partnership or a joint venture, a change of any general
partner or any joint venturer, either voluntarily, or otherwise, or the Transfer
of any such general partnership or joint venture interests without the prior
written consent of Lender; or, in the event Borrower is a limited liability
company, a change of Manager (meaning either an actual change of the Manager or
a change in ownership or control of the Manager), voluntarily or otherwise, or
the Transfer of more than five percent (5%) of the membership interests in
Borrower without the prior written consent of Lender; or, any change in
Borrower’s form of legal entity, or the form of any legal entity which is the
general partner or Manager of Borrower.

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No Transfer or series of Transfers may be utilized to frustrate Lender’s rights
in situations where the substantive effect of such Transfer or series of
Transfers amounts to a disposition of the Property, or control thereof, for a
valuable consideration to parties other than Borrower. Nothing contained herein
shall limit in any manner, and all of the following shall be permitted without
Lender’s consent, (i) a sale or transfer of all or substantially all of the
assets of Pac Sun that includes the Borrower or (ii) a merger or consolidation
or other acquisition of Pac Sun; provided the transferee of such assets or
surviving company in such merger or consolidation or other acquisition has a net
worth equal to or greater than three hundred million dollars ($300,000,000.00)
and further provided that Borrower demonstrates such valuation to Lender’s
reasonable satisfaction within fifteen days prior to the occurrence of any such
merger, consolidation or other acquisition.
ARTICLE III
REMEDIES
          Upon the occurrence of any Event of Default, Trustee and Lender shall
have the following rights and remedies:
          3.01 Lender may declare the entire principal of the Note then
outstanding (if not then due and payable), and accrued but unpaid interest
thereon to be due and payable immediately, and, notwithstanding the stated
maturity in the Note or any other term or provision of the Note or this Deed of
Trust to the contrary, the outstanding principal amount of the Note and the
accrued but unpaid interest thereon shall become and be immediately due and
payable.
          3.02 Whether or not Lender exercises the option provided in
Section 3.01 above, Lender in person or by agent may, without any obligation so
to do and without notice or demand upon Borrower and without releasing Borrower
from any obligation hereunder: (i) make any payment or do any act which Borrower
has failed to make or do; (ii) enter upon, take possession of, manage and
operate the Property or any part thereof; (iii) make or enforce, or, if the same
be subject to modification or cancellation, modify or cancel any leases of the
Property or any part thereof upon such terms or conditions as Lender deems
proper; (iv) obtain and evict tenants, and fix or modify rents, make repairs and
alterations and do any acts which Lender deems proper to protect the security
hereof; and (v) with or without taking possession, in its own name or in the
name of Borrower, sue for or otherwise collect and receive rents, royalties,
issues, profits, revenue, income and other benefits, including those past due
and unpaid, and apply the same less costs and expenses of operation and
collection, including reasonable attorneys’ fees, upon any indebtedness secured
hereby, and in such order as Lender may determine. Upon request of Lender,
Borrower shall assemble and make available to Lender at the Premises any of the
Property which has been removed therefrom. The entering upon and taking
possession of the Property, the collection of any rents, royalties, issues,
profits, revenue, income or other benefits and the application thereof as
aforesaid shall not cure or waive any default theretofore or thereafter
occurring or affect any notice of default hereunder or invalidate any act done
pursuant to any such notice; and, notwithstanding continuance in possession of
the Property, or any part thereof, by Lender, Trustee or a receiver, and the
collection, receipt and application of rents, royalties, issues, profits,
revenue, income or other benefits, Lender shall be entitled to exercise

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every right provided for in this Deed of Trust or by law upon or after the
occurrence of a default, including the right to exercise the power of sale. Any
of the actions referred to in this Section 3.02 may be taken by Lender, either
in person or by agent, with or without bringing any action or proceeding, or by
receiver appointed by a court, and any such action may also be taken
irrespective of whether any notice of default or election to sell has been given
hereunder and without regard to the adequacy of the security for the
indebtedness hereby secured. Further, Lender, at the expense of Borrower, either
by purchase, repair or construction, may from time to time maintain and restore
the Property or any part thereof and complete construction of the Improvements
uncompleted as of the date thereof and in the course of such completion may make
such changes in the contemplated Improvements as Lender may reasonably deem
desirable and may insure the same.
          3.03 Lender shall be entitled to the full extent provided by law, to
the appointment by a court having jurisdiction of a receiver to take possession
of and protect the Property or any part thereof, and operate the same and
collect the Rents and Profits.
          3.04 Lender may bring an action in any court of competent jurisdiction
to foreclose this Deed of Trust or to enforce any of the covenants and
agreements hereof.
          3.05 Lender may elect to cause the Property or any part thereof to be
sold as follows:
               (a) Lender may proceed as if all of the Property were real
property in accordance with subparagraph (d) below, or Lender may elect to treat
any of the Property which consists of a right in action or which is property
that can be severed from the Premises or the Improvements without causing
structural damage thereto as if the same were personal property, and dispose of
the same in accordance with subparagraph (c) below, separate and apart from the
sale of real property, the remainder of the Property being treated as real
property.
               (b) Lender may cause any such sale or other disposition to be
conducted immediately following the expiration of any grace period herein
provided (or immediately upon the expiration of any redemption or reinstatement
period required by law) or Lender may delay any such sale or other disposition
for such period of time as Lender deems to be in its best interest. Should
Lender desire that more than one (1) such sale or other disposition be
conducted, Lender may, at its option, cause the same to be conducted
simultaneously, or successively, on the same day, or at such different days or
times and in such order as Lender may deem to be in its best interests.
               (c) Should Lender elect to cause any of the Property to be
disposed of as personal property as permitted by subparagraph (a) above, it may
dispose of any part thereof in any manner now or hereafter permitted by the
Uniform Commercial Code of the Governing Jurisdiction or in accordance with any
other remedy provided by law. Any such disposition may be conducted by an
employee or agent of Lender or Trustee. Both Borrower and Lender shall be
eligible to purchase any part or all of such property at any such disposition.
Any such disposition may be either public or private as Lender may elect.
Subject to the provisions of the Uniform Commercial Code of the Governing
Jurisdiction, Lender shall have all of the rights and remedies of a Secured
Party under the Uniform Commercial Code of the Governing Jurisdiction. Expenses
of retaking, holding, preparing for sale, selling or the like shall include
Lender’s

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reasonable attorneys’ fees and legal expenses, and upon such Event of Default,
Borrower, upon demand of Lender, shall assemble such personal property and make
it available to Lender at the Premises, a place which is hereby deemed
reasonably convenient to Lender and Borrower. Lender shall give 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 at or after which any
private sale or any other intended disposition is to be made, and if such notice
is sent to Borrower, in the manner provided for the mailing of notices herein,
it shall constitute reasonable notice to Borrower.
               (d) Should Lender elect to sell the Property or any part thereof
that is real property or that Lender has elected to treat as real property, upon
such election, Lender or Trustee shall give such notice of default and election
to sell as may then be required by law. Thereafter, upon the expiration of such
time and the giving of such notice of sale as may then be required by law, and
without the necessity of any demand on Borrower, Trustee, at the time and place
specified in the notice of sale, shall sell the Property, or any portion thereof
specified by Lender, at public auction to the highest bidder for cash in lawful
money of the United States, subject, however, to the provisions of Section 3.07.
Trustee may, and upon request of Lender shall, from time to time postpone the
sale by public announcement thereof at the time and place noticed therefor. If
the Property consists of several lots or parcels, Lender may direct that the
same be sold as a unit or be sold separately and, if to be sold separately,
Lender may designate the order in which such lots or parcels shall be offered
for sale or sold. Any person, including Borrower, Trustee or Lender, may
purchase at the sale. 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.
               (e) In the event of a sale or other disposition of the Property,
or any part thereof, and the execution of a deed or other conveyance pursuant
thereto, the recitals therein of facts, such as default, the giving of notice 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 conveyance
shall be conclusive against all persons as to such facts recited therein.
               (f) The acknowledgment of the receipt of the purchase money,
contained in any deed or conveyance executed as aforesaid, shall be sufficient
discharge to the grantee of all obligations to see to the proper application of
the consideration therefor as hereinafter provided. The purchaser at any
trustee’s or foreclosure sale hereunder 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.
               (g) Upon the completion of any sale or sales made by Trustee or
Lender, as the case may be, under or by virtue of this Article III, Trustee or
any officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. Trustee is

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hereby irrevocably appointed the true and lawful attorney-in-fact of Borrower in
its name and stead to make all necessary conveyances, assignments, transfers and
deliveries of the Property or any part thereof 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,
Borrower hereby ratifying and confirming all that its said attorney or any
substitute or substitutes shall lawfully do by virtue hereof. Nevertheless,
Borrower, if so requested by Trustee or Lender, shall ratify and confirm any
such sale or sales by executing and delivering to Trustee or to such purchaser
or purchasers all such instruments as may be advisable in the judgment of
Trustee or Lender, for the purpose as may be designated in such request. Any
such sale or sales under or by virtue of this Article III made under the power
of sale herein granted shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Borrower
in and to the properties and rights so sold, and shall be a perpetual bar, both
at law and in equity, against Borrower and any and all persons claiming or who
may claim the same, or any part thereof, from, through or under Borrower.
Borrower reserves any equity of redemption to which Borrower is entitled by
California law following a sale of the Property by virtue of this Article III
pursuant to judicial proceedings or of a judgment or decree of foreclosure.
               (h) Borrower hereby expressly waives any right that it may have
to direct the order in which any of the Property shall be sold in the event of
any sale or sales pursuant hereto.
          3.06 The purchase money, proceeds or avails of any sale made under or
by virtue of this Article III, together with all other sums that may then be
held by Trustee or of this Article III, or otherwise, shall be applied as
follows:
          FIRST: To the payment of the costs and expenses of the sale, including
reasonable compensation to Trustee and Lender, their agents and counsel, and of
any judicial proceedings wherein the same may be made and to the payment of all
expenses, liabilities and advances made or incurred by Trustee under this Deed
of Trust, together with interest at the Default Rate on all advances made by
Trustee and all taxes or assessments, except for any taxes, assessments or other
charges subject to which the Property shall have been sold, and further
including all costs of publishing, recording, mailing and posting notice, the
cost of any search and/or other evidence of title procured in connection
therewith and the cost of any revenue stamps on any deed of conveyance.
          SECOND: To the payment of any and all sums expended under the terms
hereof not then repaid, with accrued interest at the rate provided in the Note
and all other sums required to be paid by Borrower pursuant to any provisions of
this Deed of Trust or of the Note, including all expenses, liabilities and
advances made or incurred by Lender under this Deed of Trust or in connection
with the enforcement hereof, together with interest at the rate provided in the
Note on all advances.
          THIRD: To the payment of the principal and interest then due, owing
and unpaid upon the Note, with interest on the unpaid principal at the rate
provided in the Note from the due date of any such payment of principal until
the same is paid.

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          FOURTH: The remainder, if any, to the person or persons legally
entitled thereto.
          3.07 Upon any sale or sales made under or by virtue of this
Article III, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Lender may bid for and acquire the Property or any part thereof and, in
lieu of paying cash therefor, may make settlement for the purchase price by
crediting upon the indebtedness or other sums secured by this Deed of Trust the
net sales price after deducting therefrom the expenses of sale and the costs of
the judicial proceedings, if any, and any other sums which Trustee or Lender is
authorized to deduct under this Deed of Trust, and, in such event, this Deed of
Trust, the Note and documents evidencing expenditures secured hereby shall be
presented to the person or persons conducting the sale in order that the amount
so used or applied may be credited upon said indebtedness as having been paid.
          3.08 (a) Upon the occurrence of any Event of Default and upon written
demand by Lender, Borrower will pay to Lender the entire principal of the Note
then outstanding, and all accrued but unpaid interest thereon, and, after the
happening of said Event of Default, will also pay to Lender interest at the rate
provided in the Note on the then unpaid principal of the Note, and the sums
required to be paid by Borrower pursuant to any provision of this Deed of Trust,
and in addition thereto such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to Trustee
and Lender hereunder. Subject to Section 1.22 of this Deed of Trust and any
other contractual limitations on recourse or personal liability of Borrower
contained in the Note or this Deed of Trust, in the event Borrower shall fail
forthwith to pay such amount, upon such demand, Lender shall be entitled and
empowered to institute such action or proceedings at law or in equity as may be
advised by its counsel for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against Borrower and, collect out of
the property of Borrower wherever situated, as well as out of the Property, in
any manner provided by law, moneys adjudged or decreed to be payable.
               (b) Lender shall be entitled to recover a deficiency judgment as
aforesaid during the pendency of any proceedings for judicial enforcement of the
provisions of this Deed of Trust, and the right of Lender to recover such
deficiency judgment shall not be affected by any entry or sale hereunder, or by
the exercise of any other right, power or remedy for the enforcement of the
provisions of this Deed of Trust, or the foreclosure of the lien hereof, and in
the event of a sale of the Property, and of the application of the proceeds of
sale, as in this Deed of Trust provided, to the payment of the debt hereby
secured, Lender shall be entitled to seek a deficiency judgment, in the manner
provided by California law, for all amounts then remaining due and unpaid upon,
the Note, and for all other charges, payments and costs due under this Deed of
Trust. In case of proceedings against Borrower in insolvency or bankruptcy or
any proceedings for the reorganization of Borrower or involving the liquidation
of its assets, Lender shall be entitled, to prove the whole amount of principal
and interest due upon the Note to the full amount thereof, and all other
payments, charges and costs due under this Deed of Trust, without deducting
therefrom any proceeds obtained from the sale of the whole or any part of the
Property; provided, however, that in no case shall Lender receive a greater
amount than such principal and interest and such other payments, charges and
costs from the aggregate

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amount of the proceeds of the sale of the Property and distribution from the
estate of Borrower. Lender’s entitlement to seek a deficiency judgment against
Borrower or to receive distribution of assets from the bankrupt estate of
Borrower in excess of the assets which comprise the Property and the proceeds
thereof is subject to any contractual limitations on recourse or personal
liability of Borrower contained in the Note or this Deed of Trust, including,
without limitation, Section 1.22 of this Deed of Trust.
               (c) No recovery of any judgment by Lender and no levy of an
execution under any judgment upon the Property or upon any other property of
Borrower shall affect, in any manner or to any extent, the lien of this Deed of
Trust upon the Property or any part thereof, or any liens, rights, powers or
remedies of Trustee or Lender hereunder, but such liens, rights, powers and
remedies of Trustee and Lender shall continue unimpaired as before.
               (d) Any moneys thus collected by Lender under this Section 3.08
shall be applied by Lender in accordance with the provisions of Section 3.06.
          3.09 Upon the commencement of any action, suit or other legal
proceedings by Lender to obtain judgment for the principal of, or interest on
the Note and other sums required to be paid by Borrower pursuant to any
provision of the Note or this Deed of Trust, or of any other nature in aid of
the enforcement of the Note or of this Deed of Trust, Borrower, to the fullest
extent permitted by law, will and does hereby agree that service of process
shall be deemed to have been effected upon the delivery of process to Borrower
in the manner provided for delivery of notice as set forth in Section 5.03
hereof (other than the manner provided in Section 5.03 (i)), and Borrower will,
and does hereby enter its voluntary appearance in such action, suit or
proceedings. After the happening of any Event of Default, or upon the
commencement of any proceedings to foreclose this Deed of Trust or to enforce
the specific performance hereof or in aid thereof or upon the commencement of
any other judicial proceedings to enforce any right of Trustee or Lender,
Trustee or Lender shall be entitled forthwith, as a matter of right, if either
shall so elect, without the giving of notice to any other party and without
regard to the adequacy of the security of the Property, either before or after
declaring the unpaid principal of the Note to be due and payable, to apply for
the appointment of such a receiver or receivers.
          3.10 Notwithstanding the appointment of any receiver, liquidator or
trustee of Borrower, or of any of its property, or of the Property or any part
thereof, Trustee and Lender shall be entitled to retain possession and control
of all property now or hereafter held under this Deed of Trust, including, but
not limited to, the Rents and Profits.
          3.11 No remedy herein conferred upon or reserved to Trustee or Lender
is intended to be exclusive of any other remedy herein or by law provided, but
each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. No
delay or omission of Trustee or Lender in exercising any right or power accruing
upon any Event of Default shall impair any right or power or shall be construed
to be a waiver of any Event of Default or any acquiescence therein; and every
power and remedy given by this Deed of Trust to Trustee or Lender may be
exercised from time to time as often as may be deemed expedient by Trustee or
Lender. If there exists additional security for the performance of the
obligations secured hereby, the holder of the Note, at its sole option, and
without limiting or affecting any of the rights or remedies hereunder, may

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exercise any of the rights and remedies to which it may be entitled hereunder
either concurrently with whatever rights it may have in connection with such
other security or in such order as it may determine. Nothing in this Deed of
Trust or in the Note shall affect the obligation of Borrower to pay the
principal of, and interest on the Note, or any payment required under the Note
or this Deed of Trust, in the manner and at the time and place therein
respectively expressed.
          3.12 To the fullest extent permitted by applicable law, Borrower will
not at any time insist upon, or plead, or in any manner whatever claim or take
any benefit or advantage of any stay or extension or moratorium law or law
pertaining to the marshaling of assets, the administration of estates of
decedents, any exemption from execution or sale of the Property or any part
thereof, including exemption of homestead, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance of
this Deed of Trust, nor claim, take or insist upon any benefit or advantage of
any law now or hereafter in force providing for the valuation or appraisal of
the Property, or any part thereof, prior to any sale or sales thereof which may
be made pursuant to any provision herein, or pursuant to the decree, judgment or
order of any court of competent jurisdiction; nor after any such sale or sales
claim or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof, and Borrower hereby expressly
waives all benefit or advantage of any such law or laws, and covenants not to
hinder, delay or impede the execution of any power herein granted or delegated
to Trustee or Lender, but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted. Borrower, for itself and
all who claim under it, hereby waives, to the extent that it lawfully may, all
right to have the Property marshaled upon any sale or foreclosure hereunder.
          3.13 Upon the occurrence of any Event of Default and pending the
exercise by Trustee or Lender or their agents or attorneys of their right to
exclude Borrower from all or any part of the Property, Borrower agrees to vacate
and surrender possession of the Property to Trustee or Lender, as the case may
be, or to a receiver, if any, and in default thereof may be evicted by any
summary action or proceeding for the recovery of possession of leased premises
for non-payment of rent, however designated.
          3.14 In the event ownership of the Property or any portion thereof
becomes vested in a person other than the Borrower herein named, Lender may,
without notice to the Borrower herein named, whether or not Lender has given
written consent to such change in ownership, deal with such successor or
successors in interest with reference to this Deed of Trust and the indebtedness
secured hereby, and in the same manner as with the Borrower herein named,
without in any way vitiating or discharging Borrower’s liability hereunder or
for the indebtedness hereby secured.
          3.15 In the event that there be a Trustee’s sale hereunder and if at
the time of such sale Borrower, or its heir, executor, administrator or assign,
be occupying the Premises and Improvements or any part thereof so sold, each and
all shall immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day to day, terminable at the will of either
tenant or landlord, at a reasonable rental per day based upon the value of the
Premises and Improvements, such rental to be due daily to the purchaser. An
action of unlawful detainer shall lie if the tenant holds over after a demand in
writing for possession of said

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Premises and Improvements; and this agreement and the Trustee’s deed shall
constitute a lease and agreement under which any such tenant’s possession arose
and continued.
ARTICLE IV
CONCERNING TRUSTEE
          4.01 Trustee, by its acceptance hereof, covenants faithfully to
perform and fulfill the trusts herein created, being liable, however, only for
willful negligence or misconduct, and hereby waives any statutory fee and agrees
to accept reasonable compensation, in lieu thereof, for any services rendered by
it in accordance with the terms hereof.
          4.02 Trustee may resign at any time upon giving thirty (30) days’
notice in writing to Borrower and to Lender.
          4.03 In the event of Trustee’s death, removal, resignation, refusal to
act or inability to act, or in the sole discretion of Lender for any reason
whatsoever, Lender may, at any time or from time to time without notice and
without specifying any reason therefor and without applying to any court, select
and appoint a successor trustee, and all powers, rights, duties and authority of
Trustee, as aforesaid, shall thereupon become vested in such successor without
conveyance from the predecessor trustee. Such substitute trustee shall not be
required to give bond for the faithful performance of its duties unless required
by Lender. Such substitute trustee shall be appointed by written instrument duly
recorded in the county where the Premises are located, which appointment may be
executed by any authorized agent of Lender and if Lender is a business trust or
corporation and such appointment be executed on its behalf by any officer of
such business trust or corporation, such appointment shall be conclusively
presumed to have been executed with authority and shall be valid and sufficient
without proof of any action by the Board of Trustees or Board of Directors or
any superior officer of the business trust or corporation. Borrower hereby
ratifies and confirms any and all acts which the herein named Trustee, or its
successor or successors in this trust, shall do lawfully by virtue hereof.
Borrower hereby agrees, on behalf of itself and of its heirs, executors,
administrators and assigns, that the recitals contained in any deed or deeds
executed in due form by Trustee or any substitute trustee, or its successor or
successors in this trust, acting under the provisions of this Deed of Trust,
shall be prima facie evidence of the facts recited, and that it shall not be
necessary to prove in any court, otherwise than by such recitals, the existence
of the facts essential to authorize the execution and delivery of such deed or
deeds and the passing of title thereby.
          4.04 At any time and from time to time, without liability therefor and
without notice, upon written request of Lender, Trustee shall (i) consent in
writing to the making of any map or plat of the Property, (ii) join in granting
any easement thereon, (iii) join in any extension agreement or any agreement
subordinating the lien or charge hereof, or (iv) upon presentation of this Deed
of Trust and the Note or notes secured hereby for endorsement, and without
affecting the personal liability of any person for the payment of the
indebtedness secured hereby or the effect of this Deed of Trust upon the
remainder of the Property, reconvey any part of the Property.

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          4.05 Upon written request of Lender stating that all sums secured
hereby have been paid and upon surrender to Trustee of this Deed of Trust and
the Note or notes secured hereby for cancellation and retention and upon payment
of its fees, Trustee shall reconvey, without warranty, the Property then held
hereunder to Borrower. The recitals in such reconveyance of any matters or facts
shall be conclusive proof of the truth thereof.”
ARTICLE V
MISCELLANEOUS
          5.01 In the event any one or more of the provisions contained in this
Deed of Trust or in the Note or in any instrument heretofore or hereafter
executed by Borrower having reference to or arising out of the indebtedness
represented by the Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Deed of Trust, but this Deed of
Trust shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein or therein.
          5.02 Borrower agrees to pay Lender or its authorized loan servicing
agent for each and any Lender Statement furnished at Borrower’s request the
lesser of the maximum fee allowed by the law of the Governing Jurisdiction or
$25.00. Such fee shall be computed as of the time said statement is furnished.
          5.03 All notices given under this Agreement shall be in writing, and
sent to the other party at its address set forth below or at such other address
as such party may designate by notice to the other party and shall be deemed
given (i) three (3) Business Days (as defined below) after mailing, by certified
or registered U.S. Mail, return receipt requested, postage prepaid, (ii) one
(1) Business Day after delivery, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolater Courier, U.P.S. Next Day Air), or
(iii) when received, if delivered by hand, as evidenced by a signed receipt:

     
If to Borrower:
  c/o Pacific Sunwear of California, Inc.
 
  3450 East Miraloma Avenue
 
  Anaheim, CA 92806
 
  Attention: Craig Gosselin, SVP and General Counsel
 
   
If to Lender:
  AMERICAN NATIONAL INSURANCE COMPANY
 
  One Moody Plaza
 
  Galveston, Texas 77550
 
  Attention: Mortgage and Real Estate Investment Department

A “Business Day” is any day on which commercial banks are not authorized or
required by law to close in the Governing Jurisdiction. Borrower and Lender
reserve the right to change the addresses herein stated for purposes of notice
from time to time by serving written notice to the other as provided herein.
          5.04 Borrower hereby requests that a copy of any Notice of Default and
Notice of Sale as may be required by law be mailed to it at its address herein
contained.

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          5.05 The granting of consent by Lender to any transaction as required
by the terms hereunder shall not be deemed a waiver of the right to require
consent to future or successive transactions.
          5.06 All of the grants, obligations, covenants, agreements, terms,
provisions and conditions herein shall run with the land and shall apply to,
bind and inure to the benefit of the successors and assigns of Borrower and the
successors in trust of Trustee, and the endorsees, transferees, successors and
assigns of Lender.
          5.07 This Deed of Trust may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same deed.
          5.08 This Deed of Trust is to be construed and enforced according to
the laws of the Governing Jurisdiction except that, with respect to any portion
of the Property located outside of the Governing Jurisdiction, the laws of the
state in which such portion of the Property is located shall be applicable
thereto but only to the extent required for Lender to exercise its rights and
remedies in order to realize upon its interests in the Property.
[Signature Page Follows]

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     IN WITNESS WHEREOF, this Deed of Trust, Assignment of Rents and Security
Agreement has been executed and delivered as of the day and year first above
written.

          BORROWER

MIRALOMA BORROWER CORPORATION,
   a Delaware corporation

    By:    /s/ Craig E. Gosselin       Name:    Craig E. Gosselin       Title:  
 President      

NOTARIZED SIGNATURES REQUIRED

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LOCAL FORM OF ACKNOWLEDGMENTS

         
STATE OF CALIFORNIA
)      
 
)      
COUNTY OF _________________________
)      

     On _______________, 2010, before me, ____________________________________,
Notary Public, personally appeared ___________________________, who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
     I swear under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
     WITNESS my hand and official seal.

         
Signature 
    [SEAL]

           
 
STATE OF CALIFORNIA
)      
 
)      
COUNTY OF _________________________
)      

     On                                 , 2010, before me,
                              
                                                              , Notary Public,
personally appeared
                                                            , who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
     I swear under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.
     WITNESS my hand and official seal.

         
Signature 
    [SEAL]

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EXHIBIT “A”
LEGAL DESCRIPTION
Real property in the City of Anaheim, County of Orange, State of California,
described as follows:
PARCEL A:
PARCEL I:
PARCEL 1 OF PARCEL MAP NO. 2008-117, RECORDED IN BOOK 364, PAGES 44 THROUGH 48
INCLUSIVE OF PARCEL MAPS, OF OFFICIAL RECORDS OF THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
PARCEL II:
INTENTIONALLY DELETED
PARCEL III
NON-EXCLUSIVE EASEMENTS FOR UTILITY SERVICES, SURFACE DRAINAGE, ACCESS, INGRESS
AND EGRESS AND THOSE OTHER PURPOSES AS MORE PARTICULARLY DESCRIBED AND SET FORTH
IN THE DOCUMENT ENTITLED “EASEMENTS AND COVENANTS AGREEMENT” RECORDED NOVEMBER
21, 2008 AS INSTRUMENT NO. 2008000545184 OF OFFICIAL RECORDS.
PARCEL B:
PARCEL 1:
PARCEL 2 OF LOT LINE ADJUSTMENT NO. LLA-0000667 RECORDED NOVEMBER 21, 2008 AS
INSTRUMENT NO. 2008000543923 OF OFFICIAL RECORDS OF SAID COUNTY.
PARCEL 2:
NON-EXCLUSIVE EASEMENT FOR UNDERGROUND WATER LINE MORE PARTICULARLY SET FORTH IN
THE DOCUMENT ENTITLED “EASEMENT AGREEMENT” RECORDED NOVEMBER 13, 1997 AS
INSTRUMENT NO. 19970579282 OF OFFICIAL RECORDS.
PARCEL 3:
NON-EXCLUSIVE EASEMENTS FOR ABOVE-GROUND PEDESTRIAN INGRESS AND EGRESS AND
UNDERGROUND PEDESTRIAN TUNNEL MORE PARTICULARLY SET FORTH IN THE DOCUMENT
ENTITLED “RECIPROCAL EASEMENT AGREEMENT”

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RECORDED NOVEMBER 13, 1997 AS INSTRUMENT NO. 19970579285 OF OFFICIAL RECORDS.
PARCEL 4:
NON-EXCLUSIVE EASEMENTS FOR UTILITY SERVICES, SURFACE DRAINAGE, ACCESS, INGRESS
AND EGRESS AND THOSE OTHER PURPOSES AS MORE PARTICULARLY DESCRIBED AND SET FORTH
IN THE DOCUMENT ENTITLED “EASEMENTS AND COVENANTS AGREEMENT” RECORDED NOVEMBER
21, 2008 AS INSTRUMENT NO. 2008000545184 OF OFFICIAL RECORDS.
PARCEL 5:
NON-EXCLUSIVE EASEMENTS FOR RIGHT OF WAY WITH THE RIGHT OF INGRESS AND EGRESS
FOR THE PURPOSE OF INSTALLING, MAINTAINING, REPAIRING AND USEING COMMON PARKING
AREAS, PARKING STALLS AND DRIVEWAYS AND THOSE OTHER PURPOSES AS MORE
PARTICULARLY DESCRIBED AND SET FORTH IN THE DOCUMENT ENTITLED “DECLARATION OF
USE RESTRICTIONS” RECORDED JUNE 26, 2003 AS INSTRUMENT NO. 203000750065 OF
OFFICIAL RECORDS.
APN: 345-201-24 and 345-201-26

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