exhibit102.htm


    
      

      

    


    Exhibit
10.2

     

    Prepared
By/Return To:

     

    Robinson
& Cole LLP

    695 East
Main Street

    Stamford,
Connecticut 06904

    Attn:  Steven
L. Elbaum, Esq.

    


    


    
      
        
          

        

      

      SPACE
ABOVE THIS LINE RESERVED FOR RECORDER’S USE

    

    


     

     

    DEED OF
TRUST, ASSIGNMENT OF RENTS,

    SECURITY
AGREEMENT AND

    FIXTURE
FILING

     

    by

     

    SONOMAWEST
HOLDINGS, INC.,

    a
Delaware corporation,

    as
Grantor,

     

    to

     

    TRSTE,
INC.,

    a
Virginia corporation,

    as
Trustee

     

    in favor
of

     

    WACHOVIA
BANK, NATIONAL ASSOCIATION,

    a
national banking association,

    as
Beneficiary

     

    This
document serves as a Fixture Filing under the California Uniform Commercial
Code.

     

    Grantor's
Organizational Identification Number is 94-1069729

     

    



    
      
         


      

      
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    Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing

     

    This Deed
of Trust, Assignment of Rents, Security Agreement and Fixture Filing is made as
of May 21, 2008, by SONOMAWEST HOLDINGS, INC., a Delaware corporation (herein
referred to as "Grantor"), whose
address is 2064 Highway 116 North, Sebastopol, California  95472, to
TRSTE, INC., a Virginia corporation ("Initial Trustee"),
whose address is 301 South Tryon Street, Charlotte, North Carolina 28288, for
the benefit of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association ("Beneficiary"), whose
address is 5 Research Drive, Shelton, Connecticut 06484.

     

     

    Recitals

     

    Grantor
has requested that Beneficiary make the Loan (as hereinafter defined) to
Grantor.  As a condition precedent to making the Loan, Beneficiary has
required that Grantor execute and deliver this Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing to Trustee for the benefit of
Beneficiary.

     

     

    Grants and
Agreements

     

    Now,
therefore, in order to induce Beneficiary to make the Loan to Grantor, Grantor
agrees as follows:

     

     

    Article
I

     

    Definitions

     

    As used
in this Deed of Trust, the terms defined in the Preamble hereto shall have the
respective meanings specified therein, and the following additional terms shall
have the meanings specified:

     

    "Accessories" means
all fixtures, equipment, systems, machinery, furniture, furnishings, appliances,
inventory, goods, building and construction materials, supplies and other
articles of personal property, of every kind and character, tangible and
intangible (including software embedded therein), now owned or hereafter
acquired by Grantor, which are now or hereafter attached to or situated in, on
or about the Land or Improvements, or used in or necessary to the complete and
proper planning, development, use, occupancy or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use or installation in
or on the Land or Improvements, and all Additions to the foregoing, all of which
are hereby declared to be permanent accessions to the Land.

    
      



      
        
           


        

        
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    "Accelerating
Transfer" means any Transfer of all or any part of the Property or the
legal or beneficial interest therein in violation of Section 5.2 of
this Deed of Trust.

     

    "Accounts" means all
accounts of Grantor, within the meaning of the Uniform Commercial Code of the
State, derived from or arising out of the use, occupancy or enjoyment of the
Property or for services rendered therein or thereon.

     

    "Additions" means any
and all alterations, additions, accessions and improvements to property,
substitutions therefor, and renewals and replacements thereof.

     

    "Beneficiary" means
Beneficiary and its successors and assigns.

     

    "Claim" means any
liability, suit, action, claim, demand, loss, expense, penalty, fine, judgment
or other cost of any kind or nature whatsoever, including fees, costs and
expenses of attorneys, consultants, contractors and experts.

     

    "Condemnation" means
any taking of title to, use of, or any other interest in the Property under the
exercise of the power of condemnation or eminent domain, whether temporarily or
permanently, by any Governmental Authority or by any other Person acting under
or for the benefit of a Governmental Authority.

     

    "Condemnation Awards"
means any and all judgments, awards of damages (including severance and
consequential damages), payments, proceeds, settlements, amounts paid for a
taking in lieu of Condemnation, or other compensation heretofore or hereafter
made, including interest thereon, and the right to receive the same, as a result
of, or in connection with, any Condemnation or threatened
Condemnation.

     

    "Contract of Sale"
means any contract for the sale of all or any part of the Property or any
interest therein, whether now in existence or hereafter executed.

     

    "Deed of Trust" means
this Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing,
as the same may from time to time be extended, amended, restated, supplemented
or otherwise modified.

     

    "Default" means an
event or circumstance which, with the giving of Notice or lapse of time, or
both, would constitute an Event of Default under the provisions of this Deed of
Trust.

     

    "Design and Development
Documents" means, collectively, (a) all contracts for services to be
rendered, work to be performed or materials to be supplied in the development of
the Land or the construction or repair of Improvements; (b) all plans,
drawings and specifications for the development of the Land or the construction
or repair of Improvements; (c) all permits, licenses, variances and other
rights or approvals issued by or obtained from any Governmental Authority or
other Person in connection with the development of the Land or the construction
or repair of Improvements; and (d) all amendments of or supplements to any
of the foregoing.

     

    "Encumbrance" means
any Lien, easement, right of way, roadway (public or private), condition,
covenant or restriction (including any condition, covenant or restriction
imposed in connection with any condominium development or cooperative housing
development), Lease (excepting Leases in the ordinary course of business as
provided in Section
4.8(c), below) or other matter of any nature that would materially and
negatively affect title to the Property.

    
      



      
        
           


        

        
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    "Environmental
Agreement" means the Environmental Indemnity Agreement of even date
herewith by Grantor in favor of Beneficiary pertaining to the Property, as the
same may from time to time be extended, amended, restated, supplemented or
otherwise modified.  The Environmental Agreement is one of the Loan
Documents, but this Deed of Trust does not secure the obligations of Grantor
under the Environmental Agreement.

     

    "Event of Default"
means an event or circumstance specified in Article VI and
the continuance of such event or circumstance beyond the applicable grace and/or
cure periods therefor, if any, set forth in Article VI.

     

    "Expenses" means all
fees, charges, costs and expenses of any nature whatsoever incurred at any time
and from time to time (whether before or after an Event of Default) by
Beneficiary or Trustee in making, funding, administering or modifying the Loan,
in negotiating or entering into any "workout" of the Loan, or in exercising or
enforcing any rights, powers and remedies provided in this Deed of Trust or any
of the other Loan Documents, including attorneys' fees, court costs, receiver's
fees, management fees and costs incurred in the repair, maintenance and
operation of, or taking possession of, or selling, the Property.

     

    "Governmental
Authority" means any governmental or quasi-governmental entity, including
any court, department, commission, board, bureau, agency, administration,
service, district or other instrumentality of any governmental
entity.

     

    "Improvements" means
all buildings, structures and other improvements now or hereafter existing,
erected or placed on the Land, together with any off-site improvements owned by
Grantor in any way used or to be used in connection with the use, enjoyment,
occupancy or operation of the Land.

     

    "Insurance Proceeds"
means the insurance claims under and the proceeds of any and all policies of
insurance covering the Property or any part thereof, including all returned and
unearned premiums with respect to any insurance relating to such Property, in
each case whether now or hereafter existing or arising.

     

    "Land" means the real
property described in Exhibit A attached hereto and made a part
hereof.

     

    "Laws" means all
federal, state and local laws, statutes, rules, ordinances, regulations, codes,
licenses, authorizations, decisions, injunctions, interpretations, orders or
decrees of any court or other Governmental Authority having jurisdiction as may
be in effect from time to time.

     

    "Leases" means all
leases, license agreements and other occupancy or use agreements (whether oral
or written), now or hereafter existing, which cover or relate to the Property or
any part thereof, together with all options therefor, amendments thereto and
renewals, modifications and guaranties thereof, including any cash or security
deposited under the Leases to secure performance by the tenants of their
obligations under the Leases, whether such cash or security is to be held until
the expiration of the terms of the Leases or applied to one or more of the
installments of rent coming due thereunder.

     

    

      
        
           


        

        
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    "Letter of Credit"
means any letter of credit issued by Beneficiary for the account of Grantor or
its nominee in connection with the Property, together with any and all
extensions, renewals or modifications thereof, substitutions therefor or
replacements thereof.

     

    "Lien" means any
mortgage, deed of trust, pledge, security interest, assignment, judgment, lien
or charge of any kind, including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code of any
jurisdiction.

     

    "Loan" means the loan
from Beneficiary to Grantor, the repayment obligations in connection with which
are evidenced by the Note.

     

    "Loan Documents" means
this Deed of Trust, the Note, the Environmental Indemnity Agreement, any
application or reimbursement agreement executed in connection with any Letter of
Credit, and any and all other documents (other than any Swap Contracts) which
Grantor or any other party or parties have executed and delivered, or may
hereafter execute and deliver, to evidence, secure or guarantee the Obligations,
or any part thereof, as the same may from time to time be extended, amended,
restated, supplemented or otherwise modified.

     

    "Note" means the
Promissory Note of even date herewith in the original principal amount of Two
Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) made by Grantor
to the order of Beneficiary, as the same may from time to time be extended,
amended, restated, supplemented or otherwise modified.

     

    "Notice" means a
notice, request, consent, demand or other communication given in accordance with
the provisions of Section 9.8 of
this Deed of Trust.

     

    "Obligations" means
all present and future debts, obligations and liabilities of Grantor to
Beneficiary and/or Trustee arising pursuant to, and/or on account of, the
provisions of this Deed of Trust, the Note or any of the other Loan Documents,
including the obligations: (a) to pay all principal, interest, late
charges, prepayment premiums (if any) and other amounts due at any time under
the Note; (b) to pay all Expenses, indemnification payments, fees and other
amounts due at any time under this Deed of Trust or any of the other Loan
Documents, together with interest thereon as herein or therein provided;
(c) to pay and perform all obligations of Grantor under any Swap Contract;
(d) to perform, observe and comply with all of the other terms, covenants
and conditions, expressed or implied, which Grantor is required to perform,
observe or comply with pursuant to this Deed of Trust or any of the other Loan
Documents; and (e) to pay and perform all future advances and other
obligations that Grantor or any successor in ownership of all or part of the
Property may agree to pay and/or perform (whether as principal, surety or
guarantor) for the benefit of Beneficiary, when a writing evidences the parties'
agreement that the advance or obligation be secured by this Deed of Trust; excluding, however, the debts,
obligations and liabilities of Grantor under the Environmental
Agreement.  This Deed of Trust does not secure the Environmental
Agreement or any other Loan Document that is expressly stated to be
unsecured.

     

    
      



      
        
           


        

        
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    "Permitted
Encumbrances" means (a) any matters set forth in any policy of title
insurance issued to Beneficiary and insuring Beneficiary's interest in the
Property which are acceptable to Beneficiary as of the date hereof, (b) the
Liens and interests of this Deed of Trust, and (c) any other Encumbrance
that Beneficiary shall expressly approve in writing in its sole and absolute
discretion.  Notwithstanding the foregoing, “Permitted Encumbrances”
shall also mean and include the following documents, to the extent recorded
against the Property in substantially the same form as submitted to Beneficiary
as of the date hereof: (x) Easement Agreement from Grantor to the County of
Sonoma, California (the “County”), granting the County access to the Property
for certain monitoring purposes; (y) Declaration Relating to Financial
Assurances, relating to certain financial assurances made by Grantor at the
request of the Regional Water Quality Control Board; and (z) Declaration
Relating to Operation and Mandatory Closure of Facilities, relating certain
operation obligations undertaken by Grantor at the request of the Regional Water
Quality Control Board (the foregoing, collectively, the “County Documents”),
which County Documents have been submitted by Grantor to the County for approval
and recordation.

     

    "Person" means an
individual, a corporation, a partnership, a joint venture, a limited liability
company, a trust, an unincorporated association, any Governmental Authority or
any other entity.

     

    "Personalty" means all
personal property of any kind or nature whatsoever, whether tangible or
intangible and whether now owned or hereafter acquired, in which Grantor now has
or hereafter acquires an interest and which is used in the construction of, or
is placed upon, or is derived from or used in connection with the maintenance,
use, occupancy or enjoyment of, the Property, including (a) the
Accessories; (b) the Accounts; (c) all franchise, license, management
or other agreements with respect to the operation of the Real Property or the
business conducted therein (provided all of such agreements shall be subordinate
to this Deed of Trust, and Beneficiary shall have no responsibility for the
performance of Grantor's obligations thereunder) and all general intangibles
(including payment intangibles, trademarks, trade names, goodwill, software and
symbols but excluding all of Grantor's rights to the payment of money to Grantor
under any Swap Contracts) related to the Real Property or the operation thereof;
(d) all sewer and water taps, appurtenant water stock or water rights,
allocations and agreements for utilities, bonds, letters of credit, permits,
certificates, licenses, guaranties, warranties, causes of action, judgments,
Claims, profits, security deposits, utility deposits, and all rebates or refunds
of fees, Taxes, assessments, charges or deposits paid to any Governmental
Authority related to the Real Property or the operation thereof; (e) all
insurance policies held by Grantor with respect to the Property or Grantor's
operation thereof; and (f) all money, instruments and documents (whether
tangible or electronic) arising from or by virtue of any transactions related to
the Property, and all deposits and deposit accounts of Grantor with Beneficiary
related to the Property, including any such deposit account from which Grantor
may from time to time authorize Beneficiary to debit and/or credit payments due
with respect to the Loan; together with all Additions to and Proceeds of all of
the foregoing.  For purposes of clarification, "Personalty", and the
security interests granted hereunder, do not include any of Grantor's rights to
the payment of money from Beneficiary (or its Affiliates) under any Swap
Contracts.

     

    "Proceeds," when used
with respect to any of the Property, means all proceeds of such Property,
including all Insurance Proceeds and all other proceeds within the meaning of
that term as defined in the Uniform Commercial Code of the State.

     

    
      



      
        
           


        

        
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    "Property" means the
Real Property and the Personalty and all other rights, interests and benefits of
every kind and character which Grantor now has or hereafter acquires in, to or
for the benefit of the Real Property and/or the Personalty and all other
property and rights used or useful in connection therewith, including all
Leases, all Rents, all Condemnation Awards, all Proceeds, and all of Grantor's
right, title and interest in and to all Design and Development Documents, all
Contracts of Sale and all Refinancing Commitments.

     

    "Property Assessments"
means all Taxes, payments in lieu of taxes, water rents, sewer rents,
assessments, condominium and owner's association assessments and charges,
maintenance charges and other governmental or municipal or public or private
dues, charges and levies and any Liens (including federal tax liens) which are
or may be levied, imposed or assessed upon the Property or any part thereof, or
upon any Leases or any Rents, whether levied directly or indirectly or as excise
taxes, as income taxes, or otherwise.

     

    "Real Property" means
the Land and Improvements, together with (a) all estates, title interests,
title reversion rights, remainders, increases, issues, profits, rights-of-way or
uses, additions, accretions, servitudes, strips, gaps, gores, liberties,
privileges, water rights, water courses, alleys, passages, ways, vaults,
licenses, tenements, franchises, hereditaments, appurtenances, easements, rights
of ingress or egress, parking rights, timber, crops, mineral interests and other
rights, now or hereafter owned by Grantor and belonging or appertaining to the
Land or Improvements; (b) all Claims whatsoever of Grantor with respect to
the Land or Improvements, either in law or in equity, in possession or in
expectancy; (c) all estate, right, title and interest of Grantor in and to
all streets, roads and public places, opened or proposed, now or hereafter
adjoining or appertaining to the Land or Improvements; and (d) all options
to purchase the Land or Improvements, or any portion thereof or interest
therein, and any greater estate in the Land or Improvements, and all Additions
to and Proceeds of the foregoing.

     

    "Refinancing
Commitment" means any commitment from or other agreement with any Person
providing for the financing of the Property, some or all of the proceeds of
which are intended to be used for the repayment of all or a portion of the
Loan.

     

    "Rents" means all of
the rents, royalties, issues, profits, revenues, earnings, income and other
benefits of the Property, or arising from the use or enjoyment of the Property,
including all such amounts paid under or arising from any of the Leases and all
fees, charges, accounts or other payments for the use or occupancy of rooms or
other public facilities within the Real Property.

     

    "State" means the
state in which the Land is located.

     

    "Swap Contract" means
any agreement, whether or not in writing, relating to any transaction that is a
rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or bill option,
interest rate option, forward foreign exchange transaction, interest cap, collar
or floor transaction, currency swap, cross-currency rate swap, swap option,
currency option or any other similar transaction (including any option to enter
into the foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., or any other master
agreement, entered into between Beneficiary (or its affiliate) and Grantor (or
its affiliate) in connection with the Loan, together with any related schedules
and confirmations, as amended, supplemented, superseded or replaced from time to
time, relating to or governing any or all of the foregoing.

     

    
      



      
        
           


        

        
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    "Taxes" means all
taxes and assessments, whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, which at any time may be assessed, levied, confirmed or
imposed by any Governmental Authority or any community facilities or other
private district on Grantor or on any of its properties or assets or any part
thereof or in respect of any of its franchises, businesses, income or
profits.

     

    "Transfer" means any
direct sale, assignment, conveyance or transfer, including any Contract of Sale
and any other contract or agreement to sell, assign, convey or transfer, whether
made voluntarily or by operation of Law or otherwise, and whether made with or
without consideration.

     

    "Trustee" means the
Initial Trustee or its successor in trust who may be acting under and pursuant
to this Deed of Trust from time to time.

     

     

    Article
II

     

    Granting Clauses; Condition
of Grant

     

    Section
2.1 Conveyances and Security
Interests.

     

    In order
to secure the prompt payment and performance of the Obligations, Grantor
(a) irrevocably and unconditionally grants, conveys, transfers and assigns
to Trustee, in trust, for the benefit of Beneficiary, with power of sale and
right of entry and possession, all estate, right, title and interest that
Grantor now has or may later acquire in and to the Real Property;
(b) grants to Beneficiary a security interest in the Personalty;
(c) assigns to Beneficiary, and grants to Beneficiary a security interest
in, all Condemnation Awards and all Insurance Proceeds; and (d) assigns to
Beneficiary , and grants to Beneficiary a security interest in, all of Grantor's
right, title and interest in, but not any of Grantor's obligations or
liabilities under, all Design and Development Documents, all Contracts of Sale
and all Refinancing Commitments.  All Persons who may have or acquire
an interest in all or any part of the Property will be deemed to have notice of,
and will be bound by, the terms of the Obligations and each other agreement or
instrument made or entered into in connection with each of the
Obligations.  Such terms include any provisions in the Note or any
Swap Contract which provide that the interest rate on one or more of the
Obligations may vary from time to time.  Unless Lender otherwise
agrees in writing, Grantor's obligations under any Swap Contract shall continue
to be secured by this Deed of Trust notwithstanding that Lender has sold,
participated, syndicated or otherwise transferred or released some or all of its
interest in the Loan to another person.

     

    
      



      
        
           


        

        
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    Section
2.2 Absolute Assignment of
Leases and Rents.

     

    In
consideration of the making of the Loan by Beneficiary to Grantor and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor absolutely and unconditionally assigns the Leases and
Rents to Beneficiary.  This assignment is, and is intended to be, an
unconditional, absolute and present assignment from Grantor to Beneficiary of
all of Grantor's right, title and interest in and to the Leases and the Rents
and not an assignment in the nature of a pledge of the Leases and Rents or the
mere grant of a security interest therein.  So long as no Event of
Default shall exist, however, Grantor shall have a license (which license shall
terminate automatically and without notice upon the occurrence of an Event of
Default) to collect, but not prior to accrual, all Rents.  Grantor
agrees to collect and hold all Rents in trust for Beneficiary and to use the
Rents for the payment of the cost of operating and maintaining the Property and
for the payment of the other Obligations before using the Rents for any other
purpose.

     

    Section
2.3 Security Agreement, Fixture
Filing and Financing Statement.

     

    This Deed
of Trust creates a security interest in the Personalty, and, to the extent the
Personalty is not real property, this Deed of Trust constitutes a security
agreement from Grantor to Beneficiary under the Uniform Commercial Code of the
State.  In addition to all of its other rights under this Deed of
Trust and otherwise, Beneficiary shall have all of the rights of a secured party
under the Uniform Commercial Code of the State, as in effect from time to time,
or under the Uniform Commercial Code in force from time to time in any other
state to the extent the same is applicable Law.  This Deed of Trust
shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Property and is to be filed for
record in the real estate records of each county where any part of the Property
(including such fixtures) is situated.  This Deed of Trust shall also
be effective as a financing statement with respect to any other Property as to
which a security interest may be perfected by the filing of a financing
statement and may be filed as such in any appropriate filing or recording
office.  The respective mailing addresses of Grantor and Beneficiary
are set forth in the opening paragraph of this Deed of Trust.  A
carbon, photographic or other reproduction of this Deed of Trust or any other
financing statement relating to this Deed of Trust shall be sufficient as a
financing statement for any of the purposes referred to in this
Section.  Grantor hereby irrevocably authorizes Beneficiary at any
time and from time to time to file any initial financing statements, amendments
thereto and continuation statements as authorized by applicable Law, reasonably
required by Beneficiary to establish or maintain the validity, perfection and
priority of the security interests granted in this Deed of Trust.  The
foregoing authorization includes Grantor's irrevocable authorization for
Beneficiary at any time and from time to time to file any initial financing
statements and amendments thereto that indicate the Personalty (a) as "all
assets" of Grantor or words of similar effect, regardless of whether any
particular asset comprised in the Personalty falls within the scope of the
Uniform Commercial Code of the State or the jurisdiction where the initial
financing statement or amendment is filed, or (b) as being of an equal or
lesser scope or with greater detail.

     

    
      



      
        
           


        

        
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    Section
2.4 Reconveyance of Deed of
Trust and Termination of Assignments and Financing
Statements.

     

    If and
when Grantor has paid and performed all of the Obligations, and no further
advances are to be made and all Swap Contracts, if any, have been terminated,
Trustee, upon request by Beneficiary, will provide a reconveyance of the
Property from the lien of this Deed of Trust and termination statements for
filed financing statements, if any, to Grantor.  Grantor shall be
responsible for the recordation of such reconveyance and the payment of any
recording and filing costs.  Upon the recording of such reconveyance
and the filing of such termination statements, the absolute assignments set
forth in Section 2.2
shall automatically terminate and become null and void.  No partial
reconveyance shall be sought, requested or required if any Event of Default has
occurred which has not been cured.

     

     

    Article
III

     

    Representations and
Warranties

     

    Grantor
makes the following representations and warranties to Beneficiary:

     

    Section
3.1 Title to Real
Property.

     

    Grantor
(a) owns fee simple title to the Real Property, (b) owns all of the
beneficial and equitable interest in and to the Real Property, and (c) is
lawfully seized and possessed of the Real Property.  Grantor has the
right and authority to convey a security interest in the Real Property and does
hereby convey a security interest in the Real Property.  The Real
Property is subject to no Encumbrances other than the Permitted
Encumbrances.

     

    Section
3.2 Title to Other
Property.

     

    Grantor
has good title to the Personalty, and the Personalty is not subject to any
Encumbrance other than the Permitted Encumbrances.  None of the
Leases, Rents, Design and Development Documents, Contracts of Sale or
Refinancing Commitments are subject to any Encumbrance other than the Permitted
Encumbrances.

     

    Section
3.3 Property
Assessments.

     

    The Real
Property is assessed for purposes of Property Assessments as separate and
distinct parcels from any other property, such that the Real Property shall
never become subject to the Lien of any Property Assessments levied or assessed
against any property other than the Real Property.

     

    Section
3.4 Independence of the Real
Property.

     

    No
buildings or other improvements on property not covered by this Deed of Trust
rely on the Real Property or any interest therein to fulfill any requirement of
any Governmental Authority for the existence of such property, building or
improvements; and none of the Real Property relies, or will rely, on any
property not covered by this Deed of Trust or any interest therein to fulfill
any requirement of any Governmental Authority.  The Real Property has
been properly subdivided from all other property in accordance with the
requirements of any applicable Governmental Authorities.

     

    Section
3.5 Existing
Improvements.

     

    To
Grantor’s knowledge, the existing Improvements, if any, were constructed, and
are being used and maintained, in accordance with all applicable Laws, including
zoning Laws.

    
      



      
        
           


        

        
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    Section
3.6 Leases and
Tenants.

     

    The
Leases are valid and are in full force and effect, and Grantor is not in
material default under any of the terms thereof.  Except as expressly
permitted, Grantor has not accepted any Rents in advance of the time the same
became due under the Leases and has not forgiven, compromised or discounted any
of the Rents.  Grantor has title to and the right to assign the Leases
and Rents to Beneficiary, and no other assignment of the Leases or Rents has
been granted.  To the best of Grantor's knowledge and belief, no
tenant or tenants occupying, individually or in the aggregate, more than five
percent (5%) of the net rentable area of the Improvements are in default under
their Lease(s) or are the subject of any bankruptcy, insolvency or similar
proceeding.

     

     

    Article
IV

     

    Affirmative
Covenants

     

    Section
4.1 Obligations.

     

    Grantor
agrees to promptly pay and perform all of the Obligations, time being of the
essence in each case.

     

    Section
4.2 Property Assessments;
Documentary Taxes.

     

    Grantor
(a) will promptly pay in full and discharge all Property Assessments, and
(b) will furnish to Beneficiary, upon demand, the receipted bills for such
Property Assessments prior to the day upon which the same shall become
delinquent.  Property Assessments shall be considered delinquent as of
the first day any interest or penalty commences to accrue
thereon.  Grantor will promptly pay all stamp, documentary,
recordation, transfer and intangible taxes and all other taxes that may from
time to time be required to be paid with respect to the Loan, the Note, this
Deed of Trust or any of the other Loan Documents.

     

    Section
4.3 Permitted
Contests.

     

    Grantor
shall not be required to pay any of the Property Assessments, or to comply with
any Law, so long as Grantor shall in good faith, and at its cost and expense,
contest the amount or validity thereof, or take other appropriate action with
respect thereto, in good faith and in an appropriate manner or by appropriate
proceedings; provided that (a) such proceedings operate to prevent the
collection of, or other realization upon, such Property Assessments or
enforcement of the Law so contested, (b) there will be no sale, forfeiture
or loss of the Property during the contest, (c) neither Beneficiary nor
Trustee is subjected to any Claim as a result of such contest, and
(d) Grantor provides assurances satisfactory to Beneficiary (including
posting of a bond or the establishment of an appropriate reserve account with
Beneficiary) of its ability to pay such Property Assessments or comply with such
Law in the event Grantor is unsuccessful in its contest.  Each such
contest shall be promptly prosecuted to final conclusion or settlement, and
Grantor shall indemnify and save Beneficiary and Trustee harmless against all
Claims in connection therewith.  Promptly after the settlement or
conclusion of such contest or action, Grantor shall comply with such Law and/or
pay and discharge the amounts which shall be levied, assessed or imposed or
determined to be payable, together with all penalties, fines, interests, costs
and expenses in connection therewith.

    
      



      
        
           


        

        
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    Section
4.4 Compliance with
Laws.

     

    Grantor
will comply with and not violate, and shall use commercially reasonable efforts
to cause to be complied with and not violated by parties other than Grantor, all
present and future Laws applicable to the Property and its use and
operation.

     

    Section
4.5 Maintenance and Repair of
the Property.

     

    Grantor,
at Grantor's sole expense, will (a) keep and maintain Improvements and
Accessories in good condition, working order and repair, ordinary wear and tear
excepted, and (b) make all necessary or appropriate repairs and Additions
to Improvements and Accessories, so that each part of the Improvements and all
of the Accessories shall at all times be in good condition and fit and proper
for the respective purposes for which they were originally intended, erected, or
installed.

     

    Section
4.6 Additions to
Security.

     

    All
right, title and interest of Grantor in and to all Improvements and Additions
hereafter constructed or placed on the Property and in and to any Accessories
hereafter acquired shall, without any further deed of trust, conveyance,
assignment or other act by Grantor, become subject to the Lien of this Deed of
Trust as fully and completely, and with the same effect, as though now owned by
Grantor and specifically described in the granting clauses
hereof.  Grantor agrees, however, to execute and deliver to Trustee
and/or Beneficiary such further documents as may be required by the terms of the
Loan Documents.

     

    Section
4.7 Subrogation.

     

    To the
extent permitted by Law, Beneficiary shall be subrogated, notwithstanding its
release of record, to any Lien now or hereafter existing on the Property to the
extent that such Lien is paid or discharged by Beneficiary whether or not from
the proceeds of the Loan.  This Section shall not be deemed or
construed, however, to obligate Beneficiary to pay or discharge any
Lien.

     

    Section
4.8 Leases.

     

    (a) Except as
expressly permitted, Grantor shall not enter into any Lease with respect to all
or any portion of the Property without the prior written consent of Beneficiary,
unless such Lease is in the ordinary course of business.

     

    (b) Neither
Trustee nor Beneficiary shall be obligated to perform or discharge any
obligation of Grantor under any Lease.  The assignment of Leases
provided for in this Deed of Trust in no manner places on Beneficiary or Trustee
any responsibility for (i) the control, care, management or repair of the
Property, (ii) the carrying out of any of the terms and conditions of the
Leases, (iii) any waste committed on the Property, or (iv) any
dangerous or defective condition on the Property (whether known or
unknown).

    
      



      
        
           


        

        
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    (c) No
approval of any Lease by Beneficiary shall be for any purpose other than to
protect Beneficiary's security and to preserve Beneficiary's rights under the
Loan Documents, and no such approval shall result in a waiver of a Default or
Event of Default.

     

    Section
4.9 Debt
Service Coverage Ratio.

     

    Borrower
shall not permit the ratio of its operating cash flow to total debt service to
be less than 1.25 to 1.0 as of the end of each Fiscal Year.  Such
ratio shall consist of (i) net operating income of the Borrower (based on the
rents and additional rents payable under the Leases for the prior four fiscal
quarters of the Borrower as of such date, subtracting for capital expenditures,
tenant improvements and brokerage commissions) to (ii) debt service (including
principal and interest payments in respect of the Loan) for the prior four
fiscal quarters of the Borrower as of such date.

     

    Section
4.10 Demand
Deposit Account.

     

    The
Grantor shall maintain its primary demand deposit account with the Beneficiary
and maintain an average balance in that account of Five Hundred Thousand and
00/100 ($500,000.00) Dollars until the Loan is fully satisfied and
released.

     

     

    Article
V

     

    Negative
Covenants

     

    Section
5.1 Encumbrances.

     

    Grantor
will not permit any of the Property to become subject to any Encumbrance other
than the Permitted Encumbrances.  Within thirty (30) days after
the filing of any mechanic's lien or other Lien or Encumbrance against the
Property, Grantor will promptly discharge the same by payment or filing a bond
or otherwise as permitted by Law.  So long as Beneficiary's security
has been protected by the filing of a bond or otherwise in a manner satisfactory
to Beneficiary in its sole and absolute discretion, Grantor shall have the right
to contest in good faith any Claim, Lien or Encumbrance, provided that Grantor
does so diligently and without prejudice to Beneficiary or delay in completing
construction of the Improvements.  Grantor shall give Beneficiary
Notice of any default under any Lien and Notice of any foreclosure or threat of
foreclosure with respect to any of the Property.

     

    Section
5.2 Transfer of the
Property.

     

    Grantor
will not Transfer all or any part of the Property or any legal or beneficial
interest therein (except for certain Transfers of the Accessories expressly
permitted in this Deed of Trust).

    
      



      
        
           


        

        
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    Section
5.3 Removal, Demolition or
Alteration of Accessories and Improvements.

     

    Except to
the extent permitted by the following sentence, no material Improvements or
Accessories shall be removed, demolished or materially altered without the prior
written consent of Beneficiary, which consent shall not be unreasonably
withheld, conditioned or delayed.  Grantor may remove and dispose of,
free from the Lien of this Deed of Trust, such Accessories as from time to time
become worn out or obsolete.

     

    Section
5.4 Additional
Improvements.

     

    Grantor
will not construct any material Improvements other than those presently on the
Land without the prior written consent of Beneficiary, which consent shall not
be unreasonably withheld, conditioned or delayed.  Grantor will
complete and pay for, within a reasonable time, any Improvements which Grantor
is permitted to construct on the Land.  Grantor will construct and
erect any permitted Improvements (a) strictly in accordance with all
applicable Laws and any private restrictive covenants, (b) entirely on lots
or parcels of the Land, (c) so as not to encroach upon any easement or
right-of-way or upon the land of others, and (d) wholly within any building
restriction and setback lines applicable to the Land.

     

    Section
5.5 Restrictive Covenants,
Zoning, etc.

     

    Without
the prior written consent of Beneficiary, which consent shall not be
unreasonably withheld, conditioned or delayed, Grantor will not initiate, join
in, or consent to any change in, any restrictive covenant, easement, zoning
ordinance, or other public or private restrictions limiting or defining the uses
which may be made of the Property.  To the extent the failure to
perform or do any of the following would create a materially adverse impact on
the Property, Grantor (a) will promptly perform and observe, and cause to
be performed and observed, all of the terms and conditions of all agreements
affecting the Property, and (b) will do or cause to be done all things
necessary to preserve intact and unimpaired any and all easements, appurtenances
and other interests and rights in favor of, or constituting any portion of, the
Property.

     

     

    Article
VI

     

    Events of
Default

     

    The
occurrence or happening, from time to time, of any one or more of the following
shall constitute an Event of Default under this Deed of Trust:

     

    Section
6.1 Payment
Obligations.

     

    Grantor
fails to pay any of the Obligations when due, whether on the scheduled due date
or upon acceleration, maturity or otherwise.

     

    Section
6.2 Transfers.

     

    Grantor
Transfers all or any part of the Property or any legal or beneficial interest
therein (except for Transfers of the Accessories expressly permitted under this
Deed of Trust).

    
      



      
        
           


        

        
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    Section
6.3 Other
Obligations.

     

    Grantor
fails to promptly perform or comply with any of the Obligations set forth in
this Deed of Trust (other than those expressly described in other Sections of
this Article VI), and
such failure continues uncured for a period of thirty (30) days after
Notice from Beneficiary to Grantor.

     

    Section
6.4 Event of Default Under Other
Loan Documents.

     

    An Event
of Default (as defined therein) occurs under the Note or Grantor fails to
promptly pay, perform, observe or comply with any obligation or agreement
contained in any of the other Loan Documents (within any applicable grace or
cure period).

     

    Section
6.5 Default Under Other Lien
Documents.

     

    A default
by Grantor occurs under any other mortgage, deed of trust or security agreement
covering the Property, including any Permitted Encumbrances.

     

    Section
6.6 Change in Zoning or Public
Restriction.

     

    Any
change in any zoning ordinance or regulation or any other public restriction is
enacted, adopted or implemented that limits or defines the uses which may be
made of the Property such that the present or intended use of the Property, as
specified in the Loan Documents, would be in violation of such zoning ordinance
or regulation or public restriction, as changed.

     

    Section
6.7 [Intentionally
Omitted]

     

    Section
6.8 Execution;
Attachment.

     

    Any
execution or attachment is levied against any of the Property, and such
execution or attachment is not set aside, discharged or stayed within
thirty (30) days after the same is levied.

     

     

    Article
VII

     

    Rights and
Remedies

     

    Upon the
happening of any Event of Default, Beneficiary, or Trustee at the direction of
Beneficiary, shall have the right, in addition to any other rights or remedies
available to Beneficiary under any of the Loan Documents or applicable Law, to
exercise any one or more of the following rights, powers or
remedies:

    
      



      
        
           


        

        
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    Section
7.1 Acceleration.

     

    Beneficiary
may accelerate all Obligations under the Loan Documents (except as provided
below) whereupon such Obligations shall become immediately due and payable,
without notice of default, notice of acceleration or intention to accelerate,
presentment or demand for payment, protest, notice of protest, notice of
nonpayment or dishonor, or notices or demands of any kind or character (all of
which are hereby waived by Grantor); provided that the foregoing provisions of
this Section 7.1 shall not be applicable to the Swap Contracts, if any, and
any acceleration of the obligations thereunder or exercise of other remedies
thereunder shall be governed by the terms of the Swap Contracts, if
any.

     

    Section
7.2 Foreclosure; Power of
Sale.

     

    Trustee,
if and as directed by Beneficiary, shall have all of the rights and may exercise
all of the powers set forth in applicable Law of the State, including those
powers set forth in Sections 2924 et seq. and Section 2938 of the
California Civil Code or any successor provision of Law.  Trustee may
sell the Property in its entirety or in parcels, and by one or by several sales,
as deemed appropriate by Trustee in its sole and absolute
discretion.  If Trustee chooses to have more than one foreclosure
sale, Trustee may cause the foreclosure sales to be held simultaneously or
successively, on the same day, or on such different days and at such different
times as Trustee may elect.  Trustee shall receive and apply the
proceeds from the sale of the Property, or any portion thereof, in accordance
with Section 2924k of the California Civil Code or any successor provision
of Law.  Before any foreclosure sale, Beneficiary or Trustee shall
give such notice of default and election to sell as may be required by
Law.  After the lapse of such time as may then be required by Law
following the recordation of such notice of default, and notice of sale having
been given as then required by Law, Trustee shall sell the property being sold
at a public auction to be held at the time and place specified in the notice of
sale.  Neither Trustee nor Beneficiary shall have any obligation to
make demand on Grantor before any foreclosure sale.  From time to time
in accordance with then-applicable Law, Trustee may, and in any event at
Beneficiary's request shall, postpone any foreclosure sale by public
announcement at the time and place noticed for that sale.  At any
foreclosure sale, Trustee shall sell to the highest bidder at public auction for
cash in lawful money of the United States (or cash equivalents acceptable to
Trustee to the extent permitted by applicable Law), payable at the time of
sale.  Trustee shall execute and deliver to the purchaser(s) a deed or
deeds conveying the property being sold without any covenant or warranty
whatsoever, expressed or implied.  The recitals in any such deed of
any matters of fact, including any facts bearing upon the regularity or validity
of any foreclosure sale, shall be conclusive proof of their
truthfulness.  Any such deed shall be conclusive against all Persons
as to the facts recited therein.  Any Person, including Trustee or
Beneficiary, may purchase at such sale, and any bid by Beneficiary may be, in
whole or in part, in the form of cancellation of all or any part of the
Obligations.

     

    Section
7.3 Judicial
Action.

     

    Beneficiary
and Trustee, if and as directed by Beneficiary, shall have the right to bring an
action in any court of competent jurisdiction for foreclosure of this Deed of
Trust and a deficiency judgment as provided by Law, or for specific enforcement
of any of the covenants or agreements of this Deed of Trust.

    
      



      
        
           


        

        
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    Section
7.4 Collection of
Rents.

     

    Upon the
occurrence of an Event of Default, the license granted to Grantor to collect the
Rents shall be automatically and immediately revoked, without further notice to
or demand upon Grantor.  Beneficiary may, but shall not be obligated
to, exercise any or all of the rights and remedies provided in Section 2938
of the California Civil Code and perform any or all obligations of the landlord
under any or all of the Leases, and Beneficiary may, but shall not be obligated
to, exercise and enforce any or all of Grantor's rights under the
Leases.  Without limiting the generality of the foregoing, Beneficiary
may notify the tenants under the Leases that all Rents are to be paid to
Beneficiary, and following such notice all Rents shall be paid directly to
Beneficiary and not to Grantor or any other Person other than as directed by
Beneficiary, it being understood that a demand by Beneficiary on any tenant
under the Leases for the payment of Rent shall be sufficient to warrant payment
by such tenant of Rent to Beneficiary without the necessity of further consent
by Grantor.  Grantor hereby irrevocably authorizes and directs the
tenants under the Leases to pay all Rents to Beneficiary instead of to Grantor,
upon receipt of written notice from Beneficiary, without the necessity of any
inquiry of Grantor and without the necessity of determining the existence or
non-existence of an Event of Default.  Grantor hereby appoints
Beneficiary as Grantor's attorney-in-fact with full power of substitution, which
appointment shall take effect upon the occurrence of an Event of Default and is
coupled with an interest and is irrevocable prior to the full and final payment
and performance of the Obligations, in Grantor's name or in Beneficiary's name:
(a) to endorse all checks and other instruments received in payment of
Rents and to deposit the same in any account selected by Beneficiary;
(b) to give receipts and releases in relation thereto; (c) to
institute, prosecute and/or settle actions for the recovery of Rents;
(d) to modify the terms of any Leases including terms relating to the Rents
payable thereunder; (e) to cancel any Leases; (f) to enter into new
Leases; and (g) to do all other acts and things with respect to the Leases
and Rents which Beneficiary may deem necessary or desirable to protect the
security for the Obligations.  Any Rents received shall be applied
first to pay all Expenses and next in reduction of the other
Obligations.  Grantor shall pay, on demand, to Beneficiary, the amount
of any deficiency between (i) the Rents received by Beneficiary, and
(ii) all Expenses incurred together with interest thereon as provided in
the Loan Documents.

     

    Section
7.5 Taking Possession or Control
of the Property.

     

    As a
matter of right without regard to the adequacy of the security, and to the
extent permitted by Law without notice to Grantor, Beneficiary shall be
entitled, upon application to a court of competent jurisdiction, to the
immediate appointment of a receiver for all or any part of the Property and the
Rents, whether such receivership may be incidental to a proposed sale of the
Property or otherwise, and Grantor hereby consents to the appointment of such a
receiver and agrees that such receiver shall have all of the rights and powers
granted to Beneficiary pursuant to Section 7.4.  In
addition, to the extent permitted by Law, and with or without the appointment of
a receiver, or an application therefor, Beneficiary may (a) enter upon, and
take possession of (and Grantor shall surrender actual possession of), the
Property or any part thereof, without notice to Grantor and without bringing any
legal action or proceeding, or, if necessary by force, legal proceedings,
ejectment or otherwise, and (b) remove and exclude Grantor and its agents
and employees therefrom.

    
      



      
        
           


        

        
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    Section
7.6 Management of the
Property.

     

    Upon
obtaining possession of the Property or upon the appointment of a receiver as
described in Section 7.5,
Beneficiary, Trustee or the receiver, as the case may be, may, at its sole
option, (a) make all necessary or proper repairs and Additions to or upon
the Property, (b) operate, maintain, control, make secure and preserve the
Property, and (c) complete the construction of any unfinished Improvements
on the Property and, in connection therewith, continue any and all outstanding
contracts for the erection and completion of such Improvements and make and
enter into any further contracts which may be necessary, either in their or its
own name or in the name of Grantor (the costs of completing such Improvements
shall be Expenses secured by this Deed of Trust and shall accrue interest as
provided in the Loan Documents).  Beneficiary, Trustee or such
receiver shall be under no liability for, or by reason of, any such taking of
possession, entry, holding, removal, maintaining, operation or management,
except for gross negligence or willful misconduct.  The exercise of
the remedies provided in this Section shall not cure or waive any Event of
Default, and the enforcement of such remedies, once commenced, shall continue
for so long as Beneficiary shall elect, notwithstanding the fact that the
exercise of such remedies may have, for a time, cured the original Event of
Default.

     

    Section
7.7 Uniform Commercial
Code.

     

    Beneficiary
may proceed under the Uniform Commercial Code as to all or any part of the
Personalty, and in conjunction therewith may exercise all of the rights,
remedies and powers of a secured creditor under the Uniform Commercial
Code.  Upon the occurrence of any Event of Default, Grantor shall
assemble all of the Accessories and make the same available within the
Improvements.  Any notification required by the Uniform Commercial
Code shall be deemed reasonably and properly given if sent in accordance with
the Notice provisions of this Deed of Trust at least ten (10) days before
any sale or other disposition of the Personalty.  Disposition of the
Personalty shall be deemed commercially reasonable if made pursuant to a public
sale advertised at least twice in a newspaper of general circulation in the
community where the Property is located.  It shall be deemed
commercially reasonable for the Trustee to dispose of the Personalty without
giving any warranties as to the Personalty and specifically disclaiming all
disposition warranties.  Alternatively, Beneficiary may choose to
dispose of some or all of the Property, in any combination consisting of both
Personalty and Real Property, in one sale to be held in accordance with the Law
and procedures applicable to real property, as permitted by Article 9 of
the Uniform Commercial Code.  Grantor agrees that such a sale of
Personalty together with Real Property constitutes a commercially reasonable
sale of the Personalty.

     

    Section
7.8 Application of
Proceeds.

     

    Unless
otherwise provided by applicable Law, all proceeds from the sale of the Property
or any part thereof pursuant to the rights and remedies set forth in this Article VII and
any other proceeds received by Beneficiary from the exercise of any of its other
rights and remedies hereunder or under the other Loan Documents shall be applied
first to pay all Expenses and next in reduction of the other Obligations, in
such manner and order as Beneficiary may elect.

     

    Section
7.9 Other
Remedies.

     

    Beneficiary
shall have the right from time to time to protect, exercise and enforce any
legal or equitable remedy against Grantor provided under the Loan Documents, any
Swap Contracts with Beneficiary (or its affiliate) or by applicable
Laws.

    
      



      
        
           


        

        
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    Article
VIII

     

    Trustee

     

    Section
8.1 Liability of
Trustee.

     

    Trustee
shall have no liability or responsibility for, and make no warranties in
connection with, the validity or enforceability of any of the Loan Documents or
the description, value or status of title to the Property.  Trustee
shall be protected in acting upon any notice, request, consent, demand,
statement, note or other paper or document believed by Trustee to be genuine and
to have been signed by the party or parties purporting to sign the
same.  Trustee shall not be liable for any error of judgment, nor for
any act done or step taken or omitted, nor for any mistakes of law or fact, nor
for anything which Trustee may do or refrain from doing in good faith, nor
generally shall Trustee have any accountability hereunder except for willful
misconduct or gross negligence.  The powers and duties of Trustee
hereunder may be exercised through such attorneys, agents or servants as Trustee
may appoint, and Trustee shall have no liability or responsibility for any act,
failure to act, negligence or willful conduct of such attorney, agent or
servant, so long as the selection was made with reasonable care.  In
addition, Trustee may consult with legal counsel selected by Trustee, and
Trustee shall have no liability or responsibility by reason of any act or
failure to act in accordance with the opinions of such
counsel.  Trustee may act hereunder and may sell or otherwise dispose
of the Property or any part thereof as herein provided, although Trustee has
been, may now be or may hereafter be, an attorney, officer, agent or employee of
Beneficiary, in respect of any matter or business
whatsoever.  Trustee, however, shall have no obligation to sell all or
any part of the Property following an Event of Default or to take any other
action authorized to be taken by Trustee hereunder except upon the demand of
Beneficiary.

     

    Section
8.2 Indemnification of
Trustee.

     

    Grantor
agrees to indemnify Trustee and to hold Trustee harmless from and against any
and all Claims and Expenses directly or indirectly arising out of or resulting
from any transaction, act, omission, event or circumstance in any way connected
with the Property or the Loan, including but not limited to any Claim arising
out of or resulting from any assertion or allegation that Trustee is liable for
any act or omission of Grantor or any other Person in connection with the
ownership, development, financing, operation or sale of the Property; provided, however, that Grantor
shall not be obligated to indemnify Trustee with respect to any Claim arising
solely from the gross negligence or willful misconduct of
Trustee.  The agreements and indemnifications contained in this
Section shall apply to Claims arising both before and after the repayment of the
Loan and shall survive the repayment of the Loan, any foreclosure or deed,
conveyance or assignment in lieu thereof and any other action by Trustee to
enforce the rights and remedies of Beneficiary or Trustee hereunder or under the
other Loan Documents.

    
      



      
        
           


        

        
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    Section
8.3 Substitution of Trustee;
Multiple Trustees.

     

    Beneficiary
shall have, and is hereby granted with warranty of further assurances, the
irrevocable power to appoint a new or replacement or substitute
Trustee.  Such power may be exercised at any time without notice,
without cause and without specifying any reason therefor, by filing for record
in the office where this Deed of Trust is recorded a Substitution of
Trustee.  The power of appointment of a successor Trustee may be
exercised as often as and whenever Beneficiary may choose, and the exercise of
the power of appointment, no matter how often, shall not be an exhaustion
thereof.  Upon the recordation of such Substitution of Trustee, the
Trustee so appointed shall thereupon, without any further act or deed of
conveyance, become fully vested with identically the same title and estate in
and to the Property and with all the rights, powers, trusts and duties of its
predecessor in the trust hereunder with like effect as if originally named as
Trustee hereunder.  Whenever in this Deed of Trust reference is made
to Trustee, it shall be construed to mean each Person appointed as Trustee for
the time being, whether original or successor in trust.  All title,
estate, rights, powers, trusts and duties granted to Trustee shall be in each
Person appointed as Trustee so that any action hereunder by any Person appointed
as Trustee shall for all purposes be deemed to be, and as effective as, the
action of all Trustees.

     

     

    Article
IX

     

    Miscellaneous

     

    Section
9.1 Rights, Powers and Remedies
Cumulative.

     

    Each
right, power and remedy of Beneficiary or Trustee as provided for in this Deed
of Trust, or in any of the other Loan Documents or now or hereafter existing by
Law, shall be cumulative and concurrent and shall be in addition to every other
right, power or remedy provided for in this Deed of Trust, or in any of the
other Loan Documents or now or hereafter existing by Law, and the exercise or
beginning of the exercise by Beneficiary or Trustee of any one or more of such
rights, powers or remedies shall not preclude the simultaneous or later exercise
by Beneficiary or Trustee of any or all such other rights, powers or
remedies.

     

    Section
9.2 No Waiver by Beneficiary or
Trustee.

     

    No course
of dealing or conduct by or among Beneficiary, Trustee and Grantor shall be
effective to amend, modify or change any provisions of this Deed of Trust or the
other Loan Documents.  No failure or delay by Beneficiary or Trustee
to insist upon the strict performance of any term, covenant or agreement of this
Deed of Trust or of any of the other Loan Documents, or to exercise any right,
power or remedy consequent upon a breach thereof, shall constitute a waiver of
any such term, covenant or agreement or of any such breach, or preclude
Beneficiary or Trustee from exercising any such right, power or remedy at any
later time or times.  By accepting payment after the due date of any
of the Obligations, neither Beneficiary nor Trustee shall be deemed to waive the
right either to require prompt payment when due of all other Obligations, or to
declare an Event of Default for failure to make prompt payment of any such other
Obligations.  Neither Grantor nor any other Person now or hereafter
obligated for the payment of the whole or any part of the Obligations shall be
relieved of such liability by reason of (a) the failure of Beneficiary to
comply with any request of Grantor or of any other Person to take action to
foreclose this Deed of Trust or otherwise enforce any of the provisions of this
Deed of Trust, or (b) any agreement or stipulation between any subsequent
owner or owners of the Property and Beneficiary, or (c) Beneficiary's
extending the time of payment or modifying the terms of this Deed of Trust or
any of the other Loan Documents without first having obtained the consent of
Grantor or such other Person.  Regardless of consideration, and
without the necessity for any notice to or consent by the holder of any
subordinate Lien on the Property, Beneficiary may release any Person at any time
liable for any of the Obligations or any part of the security for the
Obligations and may extend the time of payment or otherwise modify the terms of
this Deed of Trust or any of the other Loan Documents without in any way
impairing or affecting the Lien of this Deed of Trust or the priority of this
Deed of Trust over any subordinate Lien.  The holder of any
subordinate Lien shall have no right to terminate any Lease regardless of
whether or not such Lease is subordinate to this Deed of
Trust.  Beneficiary may resort to the security or collateral described
in this Deed of Trust or any of the other Loan Documents in such order and
manner as Beneficiary may elect in its sole discretion.

    
      



      
        
           


        

        
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    Section
9.3 Waivers and Agreements
Regarding Remedies.

     

    To the
fullest extent Grantor may do so, Grantor hereby:

     

    (a) agrees
that it will not at any time plead, claim or take advantage of any Laws now or
hereafter in force providing for any appraisement, valuation, stay, extension or
redemption, and waives and releases all rights of redemption, valuation,
appraisement, stay of execution, extension and notice of election to accelerate
the Obligations;

     

    (b) waives
all rights to a marshalling of the assets of Grantor, including the Property, or
to a sale in the inverse order of alienation in the event of a foreclosure of
the Property, and agrees not to assert any right under any Law pertaining to the
marshalling of assets, the sale in inverse order of alienation, the exemption of
homestead, the administration of estates of decedents, or other matters
whatsoever to defeat, reduce or affect the right of Beneficiary under the terms
of this Deed of Trust to a sale of the Property without any prior or different
resort for collection, or the right of Beneficiary to the payment of the
Obligations out of the proceeds of sale of the Property in preference to every
other claimant whatsoever;

     

    (c) waives
any right to bring or utilize any defense, counterclaim or setoff, other than
one which denies the existence or sufficiency of the facts upon which any
foreclosure action is grounded.  If any defense, counterclaim or
setoff, other than one permitted by the preceding clause, is timely raised in a
foreclosure action, such defense, counterclaim or setoff shall be
dismissed.  If such defense, counterclaim or setoff is based on a
Claim which could be tried in an action for money damages, such Claim may be
brought in a separate action which shall not thereafter be consolidated with the
foreclosure action.  The bringing of such separate action for money
damages shall not be deemed to afford any grounds for staying the foreclosure
action; and

     

    (d) waives
and relinquishes any and all rights and remedies which Grantor may have or be
able to assert by reason of the provisions of any Laws pertaining to the rights
and remedies of sureties.

     

    Section
9.4 Successors and
Assigns.

     

    All of
the grants, covenants, terms, provisions and conditions of this Deed of Trust
shall run with the Land and shall apply to and bind the successors and assigns
of Grantor (including any permitted subsequent owner of the Property), and inure
to the benefit of Beneficiary, its successors and assigns and to the successors
in trust of Trustee.

    
      



      
        
           


        

        
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    Section
9.5 No Warranty by Beneficiary
or Trustee.

     

    By
inspecting the Property or by accepting or approving anything required to be
observed, performed or fulfilled by Grantor or to be given to Beneficiary or
Trustee pursuant to this Deed of Trust or any of the other Loan Documents,
Beneficiary and Trustee shall not be deemed to have warranted or represented the
condition, sufficiency, legality, effectiveness or legal effect of the same, and
such acceptance or approval shall not constitute any warranty or representation
with respect thereto by Beneficiary or Trustee.

     

    Section
9.6 Amendments.

     

    This Deed
of Trust may not be modified or amended except by an agreement in writing,
signed by the party against whom enforcement of the change is
sought.

     

    Section
9.7 Severability.

     

    In the
event any one or more of the provisions of this Deed of Trust or any of the
other Loan Documents shall for any reason be held to be invalid, illegal or
unenforceable, in whole or in part or in any other respect, or in the event any
one or more of the provisions of the Loan Documents operates or would
prospectively operate to invalidate this Deed of Trust or any of the other Loan
Documents, then and in either of those events, at the option of Beneficiary,
such provision or provisions only shall be deemed null and void and shall not
affect the validity of the remaining Obligations, and the remaining provisions
of the Loan Documents shall remain operative and in full force and effect and
shall in no way be affected, prejudiced or disturbed thereby.

     

    Section
9.8 Notices.

     

    All
Notices required or which any party desires to give hereunder or under any other
Loan Document shall be in writing and, unless otherwise specifically provided in
such other Loan Document, shall be deemed sufficiently given or furnished if
delivered by personal delivery, by nationally recognized overnight courier
service or by certified United States mail, postage prepaid, addressed to the
party to whom directed at the applicable address specified in the Preamble to
this Deed of Trust (unless changed by similar notice in writing given by the
particular party whose address is to be changed) or by facsimile.  Any
Notice shall be deemed to have been given either at the time of personal
delivery or, in the case of courier or mail, as of the date of first attempted
delivery at the address and in the manner provided herein, or, in the case of
facsimile, upon receipt; provided that service of a Notice required by any
applicable statute shall be considered complete when the requirements of that
statute are met.  Notwithstanding the foregoing, no notice of change
of address shall be effective except upon actual receipt.  This
Section shall not be construed in any way to affect or impair any waiver of
notice or demand provided in this Deed of Trust or in any other Loan Document or
to require giving of notice or demand to or upon any Person in any situation or
for any reason.

    
      



      
        
           


        

        
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    Section
9.9 Joint and Several
Liability.

     

    If
Grantor consists of two (2) or more Persons, the term "Grantor" shall also
refer to all Persons signing this Deed of Trust as Grantor, and to each of them,
and all of them are jointly and severally bound, obligated and liable
hereunder.  Trustee or Beneficiary may release, compromise, modify or
settle with any of Grantor, in whole or in part, without impairing, lessening or
affecting the obligations and liabilities of the others of Grantor hereunder or
under the Note.  Any of the acts mentioned aforesaid may be done
without the approval or consent of, or notice to, any of Grantor.

     

    Section
9.10 Rules of
Construction.

     

    The words
"hereof," "herein," "hereunder," "hereto," and other words of similar import
refer to this Deed of Trust in its entirety.  The terms "agree" and
"agreements" mean and include "covenant" and "covenants." The words "include"
and "including" shall be interpreted as if followed by the words "without
limitation." The headings of this Deed of Trust are for convenience of reference
only and shall not be considered a part hereof and are not in any way intended
to define, limit or enlarge the terms hereof.  All references
(a) made in the neuter, masculine or feminine gender shall be deemed to
have been made in all such genders, (b) made in the singular or plural
number shall be deemed to have been made, respectively, in the plural or
singular number as well, (c) to the Loan Documents are to the same as
extended, amended, restated, supplemented or otherwise modified from time to
time unless expressly indicated otherwise, (d) to the Land, Improvements,
Personalty, Real Property or Property shall mean all or any portion of each of
the foregoing, respectively, and (e) to Articles or Sections are to the
respective Articles or Sections contained in this Deed of Trust unless expressly
indicated otherwise.  Any term used or defined in the Uniform
Commercial Code of the State, as in effect from time to time, which is not
defined in this Deed of Trust shall have the meaning ascribed to that term in
the Uniform Commercial Code of the State.  If a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term shall have
the meaning specified in Article 9.

     

    Section
9.11 Governing
Law.

     

    This Deed
of Trust shall be construed, governed and enforced in accordance with the Laws
in effect from time to time in the State (without regard to its conflicts of law
principles).

     

    Section
9.12 Entire
Agreement.

     

    The Loan
Documents constitute the entire understanding and agreement between Grantor and
Beneficiary with respect to the transactions arising in connection with the
Loan, and supersede all prior written or oral understandings and agreements
between Grantor and Beneficiary with respect to the matters addressed in the
Loan Documents.  In particular, and without limitation, the terms of
any commitment by Beneficiary to make the Loan are merged into the Loan
Documents.  Except as incorporated in writing into the Loan Documents,
there are no representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the matters addressed in the Loan
Documents.

     

    


     

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    IN
WITNESS WHEREOF, Grantor has caused this Deed of Trust to be executed as of the
day and year first written above.

    


    GRANTOR:

    


    SONOMAWEST
HOLDINGS, INC.,

    a
Delaware corporation

    


    


    By:           /s/ Walker R.
Stapleton                                                                

    Name:     Walker
R. Stapleton

    Title:        Chief
Executive Officer

     

     

     

     

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