ex10-2







Exhibit 10.2



LOAN AGREEMENT



   THIS LOAN AGREEMENT (“Agreement”) is executed as of June 19, 2001, by
and between REGAN HOLDING CORP, a California corporation (“Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”).


R E C I T A L S


A. Borrower owns or will own certain real property described in
Exhibit A hereto and all improvements now or hereafter existing
thereon (collectively, the “Property”).


B. Borrower desires to borrow from Lender, and Lender agrees to loan
to Borrower, the amounts described below.


NOW, THEREFORE, Borrower and Lender agree as follows:


ARTICLE 1. DEFINITIONS


1.1 DEFINED TERMS. The following capitalized terms generally used
in this Agreement shall have the meanings defined or referenced below.
Certain other capitalized terms used only in specific sections of this
Agreement are defined in such sections.


“ADA” —  means the Americans with Disabilities Act, 42 U.S.C.
676712101, et. seq. as now or hereafter amended or modified.


“Agreement” —  shall have the meaning ascribed to such term in the
preamble hereto.


“Bankruptcy Code” — means the Bankruptcy Reform Act of 1978 (11 USC
67101-1330) as now or hereafter amended or recodified.


“Border Zone Property” — means any property designated as “border zone
property” under the provisions of California Health and Safety Code,
Sections 25220 et seq., or any regulation adopted in accordance
therewith.


“Borrower” — means REGAN HOLDING CORP, a California corporation.


“Business Day” — means a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of Lender are open to the public for
carrying on substantially all of Lender’s business functions. Unless
specifically referenced in this Agreement as a Business Day, all
references to “days” shall be to calendar days.


“Deed of Trust” —  means that certain Deed of Trust with Absolute
Assignment of Leases and Rents, Security Agreement and Fixture Filing
of even date herewith executed by REGAN HOLDING CORPORATION, a
California corporation, as Trustor, to American Securities Company, a
California corporation, as Trustee, for the benefit of Lender, as
Beneficiary, as hereafter amended, supplemented, replaced or modified.


“Default” — shall have the meaning ascribed to such term in that
certain Section entitled Default.


“Effective Date” — means the date the Deed of Trust is recorded in the
Office of the County Recorder of the county where the Property is
located.


“Extended Maturity Date” — means June 19, 2002.


“Guarantor” — Legacy Marketing Group, Inc.








 














“Hazardous Materials” — shall have the meaning ascribed to such term in
that certain Section entitled Hazardous Materials.


“Hazardous Materials Claims” — shall have the meaning ascribed to such
term in that certain Section entitled Hazardous Materials Claims.


“Hazardous Materials Laws” — shall have the meaning ascribed to such
term in that certain Section entitled Hazardous Materials Laws.


“Indemnitor” — not applicable.


“Lender” — means WELLS FARGO BANK, NATIONAL ASSOCIATION.


“Loan” — means the principal sum that Lender agrees to lend and Borrower
agrees to borrow pursuant to the terms and conditions of this Agreement:
Four Million Seven Hundred Fifty Thousand and 00/100ths Dollars
($4,750,000.00).


“Loan Documents” — means those documents, as hereafter amended,
supplemented, replaced or modified, properly executed and in recordable
form, if necessary, listed in Exhibit B as Loan Documents.


“Maturity Date” — means December 19, 2001.


“Non-Borrower Trustor” — not applicable.


“Note” — means that certain Promissory Note Secured by Deed of Trust of
even date herewith, in the original principal amount of the Loan,
executed by Borrower and payable to the order of Lender, as hereafter
amended, supplemented, replaced or modified.


“Option to Extend” — means Borrower’s option, subject to the terms and
conditions of that certain Section entitled Option to Extend, to extend
the term of the Loan from the Maturity Date to the Extended Maturity
Date.


“Original Maturity Date” — means the Maturity Date.


“Other Related Documents” — means those documents, as hereafter amended,
supplemented, replaced or modified from time to time, properly executed
and in recordable form, if necessary, listed in Exhibit B as Other
Related Documents.


“Participant” — shall have the meaning ascribed to such term in that
certain Section entitled Loan Sales and Participations; Disclosure of
Information.


“Prime Rate” — means a base rate of interest which Lender establishes
from time to time and which serves as the basis upon which the effective
rates of interest are calculated for those loans making reference
thereto. Any change in an effective rate due to a change in the Prime
Rate shall become effective on the day each such change is announced
within Lender.


“Property” — shall have the meaning ascribed to such term in Recital A.


“Subdivision Map” — shall have the meaning ascribed to such term in that
certain Section entitled Subdivision Maps.


“Title Policy” — means the ALTA Lender’s Policy of Title Insurance as
issued by Commonwealth Land Title Insurance Company.


      1.2 EXHIBITS INCORPORATED. Exhibits A and B, attached hereto, are
hereby incorporated into this Agreement.


ARTICLE 2. LOAN










 













2.1 LOAN. Subject to the terms of this Agreement, Lender agrees to
lend to Borrower and Borrower agrees to borrow from Lender the
principal sum of Four Million Seven Hundred Fifty Thousand and
00/100ths Dollars ($4,750,000.00); said sum to be evidenced by the
Note of even date herewith. The Note shall be secured, in part, by
the Deed of Trust, of even date herewith, encumbering certain real
property and improvements as legally defined therein. Amounts
disbursed to or on behalf of Borrower pursuant to the Note shall be
used for the acquisition of the Property.


2.2 LOAN FEE. Borrower shall pay to Lender, at or before Loan
closing, a loan fee in the amount of $50,000.00.


2.3 LOAN DOCUMENTS. Borrower shall deliver to Lender
concurrently with this Agreement each of the    documents, properly
executed and in recordable form, as applicable, described in Exhibit B
as Loan Documents, together with those documents described in Exhibit
B as Other Related Documents.


2.4 EFFECTIVE DATE. The date of the Loan Documents is for reference
purposes only. The Effective Date of delivery and transfer to Lender of
the security under the Loan Documents and of Borrower’s and Lender’s
obligations under the Loan Documents is the date the Deed of Trust is
recorded in the Office of the County Recorder of the county where the
Property is located.


2.5 MATURITY DATE. The Maturity Date of the Loan shall be December 19,
2001, at which time all sums due and owing under this Agreement and
the other Loan Documents shall be repaid in full. All payments due to
Lender under this Agreement, whether at the Maturity Date or
otherwise, shall be paid in immediately available funds.


2.6 CREDIT FOR PRINCIPAL PAYMENTS. Any payment made upon the
outstanding principal balance of the Loan shall be credited as of the
Business Day received, provided such payment is received by Lender no
later than 11:00 A.M. (Pacific Standard Time or Pacific Daylight Time,
as applicable) and constitutes immediately available funds. Any
principal payment received after said time or which does not
constitute immediately available funds shall be credited upon such
funds having become unconditionally and immediately available to
Lender.


2.7 FULL REPAYMENT AND RECONVEYANCE. Upon receipt of all sums owing
and outstanding under the Loan Documents, Lender shall issue a full
reconveyance of the Property from the lien of the Deed of Trust;
provided, however, that all of the following conditions shall be
satisfied at the time of, and with respect to, such reconveyance: (a)
Lender shall have received all escrow, closing and recording costs,
the costs of preparing and delivering such reconveyance and any sums
then due and payable under the Loan Documents; and (b) Lender shall
have received a written release satisfactory to Lender of any set
aside letter, letter of credit or other form of undertaking which
Lender has issued to any surety, governmental agency or any other
party in connection with the Loan and/or the Property. Lender’s
obligation to make further disbursements under the Loan shall
terminate as to any portion of the Loan undisbursed as of the date of
issuance of such release or reconveyance, and any commitment of Lender
to lend any undisbursed portion of the Loan shall be canceled.


2.8 OPTION TO EXTEND. Borrower shall have the option to extend the
term of the Loan from the Maturity Date (for purposes of this Section,
“Original Maturity Date”), to the Extended Maturity Date, upon
satisfaction of each of the following conditions precedent:


            
         
(a) Borrower shall provide Lender with written notice of
Borrower’s request to exercise the Option to Extend not more than
ninety (90) days but not less than thirty (30) days prior to the
Original Maturity Date;


            
         
(b) As of the date of Borrower’s delivery of notice of request to
exercise the Option to Extend, and as of the Original Maturity Date,
no Default shall have occurred and be continuing, and no event or
condition which, with the giving of notice or the passage of time or
both, would constitute a Default shall have occurred and be
continuing, and Borrower shall so certify in writing;



		
	 	      (c) Borrower shall execute or cause the execution of
all documents reasonably required by Lender to exercise
the Option to Extend and shall deliver to Lender, at
Borrower’s sole cost and expense, such title insurance
endorsements reasonably required by Lender;






 












		
	 	      (d) There shall have occurred no material adverse
change, as determined by Lender in its sole discretion,
in the financial condition of Borrower, any Guarantor,
any Indemnitor or any Non-Borrower Trustor from that
which existed as of the later of: (A) the Effective
Date; or (B) the date upon which the financial condition
of such party was first represented to Lender;
	 
	 	      (e) On the Original Maturity Date, Borrower shall pay
to Lender an extension fee in the amount of one-half of
one percent (0.5%) of the total commitment amount of the
Loan (whether disbursed or undisbursed), as determined on
the Original Maturity Date.



Except as modified by this Option to Extend, the terms and conditions
of this Agreement and the other Loan Documents as modified and
approved by Lender shall remain unmodified and in full force and
effect.


ARTICLE 3. DISBURSEMENT



		
	 	3.1 CONDITIONS PRECEDENT. Lender’s obligation to make any
disbursements or take any other action under the Loan Documents
shall be subject at all times to satisfaction of each of the
following conditions precedent:
	 
	 	(a) Lender shall have received satisafactory evidence that Borrower
has invested cash in the Property of not less than $5,750,000.00.
	 
	 	(b) There exists no Default, as defined in this Agreement, or
Default as defined in any of the other Loan Documents or in the
Other Related Documents, or event, omission or failure of condition
which would constitute a Default after notice or lapse of time, or
both; and
	 
	 	(c) Lender shall have received all Loan Documents, other documents,
instruments, policies, and forms of evidence or other materials
requested by Lender under the terms of this Agreement or any of the
other Loan Documents; and




      (d) The Deed of Trust is a valid lien upon the Property and is
prior and superior to all other liens and encumbrances
thereon except those approved by Lender in writing.


         3.2 ACCOUNT, PLEDGE AND ASSIGNMENT, AND DISBURSEMENT
AUTHORIZATION. The proceeds of the Loan, when qualified for
disbursement, shall be disbursed to or for the benefit or account of
Borrower under the terms of this Agreement; provided, however, that
any direct disbursements from the Loan which are made by means of wire
transfer, shall be subject to the provisions of any funds transfer
agreement which is identified in Exhibit B hereto. Disbursements
hereunder may be made by Lender upon the written request of
______________________ until such time as written notice of Borrower’s
revocation of such authority is received by Lender at the address
herein.


ARTICLE 4. INSURANCE


Borrower shall, while any obligation of Borrower or any Guarantor
under any Loan Document remains outstanding, maintain at Borrower’s
sole expense, with licensed insurers approved by Lender, the following
policies of insurance in form and substance satisfactory to Lender:



		
	 	      4.1 TITLE INSURANCE. A Title Policy, together with any
endorsements which Lender may require, insuring Lender, in
the principal amount of the Loan, of the validity and the
priority of the lien of the Deed of Trust upon the Property,
subject only to matters approved by Lender in writing.
During the term of the Loan, Borrower shall deliver to
Lender, within five (5) days of Lender’s written request,
such other endorsements to the Title Policy as Lender may
require.








 













		
	 	      4.2 PROPERTY INSURANCE. A Builders Risk Completed Value
Hazard Insurance policy, including, without limitation, such
endorsements as Lender may require, insuring Lender against
damage to the Property in an amount acceptable to Lender.
Lender shall be named on the policy under a Lender’s Loss
Payable Endorsement (form #438BFU or equivalent).
	 
	 	      4.3 FLOOD HAZARD INSURANCE. A policy of flood insurance,
as required by applicable governmental regulations, or as
deemed necessary by Lender.
	 
	 	      4.4 LIABILITY INSURANCE. A policy of comprehensive
general liability insurance with limits as required by
Lender, insuring against liability for injury and/or death to
any person and/or damage to any property occurring on the
Property and/or from any cause whatsoever.
	 
	 	      4.5 GENERAL. Borrower shall provide to Lender the
originals of all required insurance policies, or other
evidence of insurance acceptable to Lender. All insurance
policies shall provide that the insurance shall not be
cancelable or materially changed without ten (10) days prior
written notice to Lender. Lender shall be named under a
Lender’s Loss Payable Endorsement (form #438BFU or
equivalent) on all insurance policies which Borrower actually
maintains with respect to the Property. Borrower shall
provide to Lender evidence of any other hazard insurance
Lender may deem necessary at any time during the Loan.



ARTICLE 5. REPRESENTATIONS AND WARRANTIES


As a material inducement to Lender’s entry into this Agreement,
Borrower represents and warrants to Lender as of the Effective Date
and continuing thereafter that:



		
	 	      5.1 AUTHORITY/ENFORCEABILITY. Borrower is in compliance
with all laws and regulations applicable to its organization,
existence and transaction of business and has all necessary
rights and powers to own, improve and operate the Property as
contemplated by the Loan Documents.
	 
	 	      5.2 BINDING OBLIGATIONS. Borrower is authorized to
execute, deliver and perform its obligations under the Loan
Documents, and such obligations shall be valid and binding
obligations of Borrower.
	 
	 	      5.3 FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has
delivered to Lender all formation and organizational
documents of Borrower, of the partners, joint venturers or
members of Borrower, if any, and of all guarantors of the
Loan, if any, and all such formation and organizational
documents remain in full force and effect and have not been
amended or modified since they were delivered to Lender.
Borrower shall immediately provide Lender with copies of any
amendments or modifications of the formation or
organizational documents.
	 
	 	      5.4 NO VIOLATION. Borrower’s execution, delivery, and
performance under the Loan Documents do not: (a) require any
consent or approval not heretofore obtained under any
partnership agreement, operating agreement, articles of
incorporation, bylaws or other document; (b) violate any
governmental requirement applicable to the Property or any
other statute, law, regulation or ordinance or any order or
ruling of any court or governmental entity; (c) conflict
with, or constitute a






 












		
	 	breach or default or permit the acceleration of obligations
under any agreement, contract, lease, or other document by
which the Borrower is or the Property is bound or regulated;
or (d) violate any statute, law, regulation or ordinance, or
any order of any court or governmental entity.
	 
	 	      5.5 COMPLIANCE WITH LAWS. Borrower has, and at all times
shall have obtained, all permits, licenses, exemptions, and
approvals necessary to occupy, operate and market the
Property, and shall maintain compliance with all governmental
requirements applicable to the Property and all other
applicable statutes, laws, regulations and ordinances
necessary for the transaction of its business. The Property
is a legal parcel lawfully created in full compliance with
all subdivision laws and ordinances.
	 
	 	      5.6 LITIGATION. Except as disclosed to Lender in
writing, there are no claims, actions, suits, or proceedings
pending, or to Borrower’s knowledge, threatened against
Borrower or affecting the Property.
	 
	 	      5.7 FINANCIAL CONDITION. All financial statements and
information heretofore and hereafter delivered to Lender by
Borrower, including, without limitation, information relating
to the financial condition of Borrower, the Property, the
partners, joint venturers or members of Borrower, and/or any
Guarantors, fairly and accurately represent the financial
condition of the subject thereof and have been prepared
(except as noted therein) in accordance with generally
accepted accounting principles consistently applied.
Borrower acknowledges and agrees that Lender may request and
obtain additional information from third parties regarding
any of the above, including, without limitation, credit
reports.
	 
	 	      5.8 NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the financial condition of
Borrower and/or Guarantor since the dates of the latest
financial statements furnished to Lender and, except as
otherwise disclosed to Lender in writing, Borrower has not
entered into any material transaction which is not disclosed
in such financial statements.
	 
	 	      5.9 ACCURACY. All reports, documents, instruments,
information and forms of evidence delivered to Lender
concerning the Loan or security for the Loan or required by
the Loan Documents are accurate, correct and sufficiently
complete to give Lender true and accurate knowledge of their
subject matter, and do not contain any misrepresentation or
omission.
	 
	 	      5.10 AMERICANS WITH DISABILITIES ACT COMPLIANCE.
Borrower represents and warrants to Lender that the Property
shall be hereafter maintained in full and strict compliance
with the requirements and regulations of the Americans With
Disabilities Act, of July 26, 1990, Pub. L. No. 101-336, 104
Stat. 327, 42 U.S.C. 6712101, et seq., as hereafter amended.
At Lender’s written request from time to time, Borrower
shall provide Lender with written evidence of such compliance
satisfactory to Lender. Borrower shall be solely responsible
for all such ADA costs of compliance and reporting.
	 
	 	      5.11 BUSINESS LOAN. The Loan is a business loan
transaction in the stated amount solely for the purpose of
carrying on the business of Borrower and none of the proceeds
of the Loan will be used for the personal, family or
agricultural purposes of the Borrower.











 











ARTICLE 6. HAZARDOUS MATERIALS



		
	 	      6.1 SPECIAL REPRESENTATIONS AND WARRANTIES. Without in
any way limiting the other representations and warranties set
forth in this Agreement, and after reasonable investigation
and inquiry, Borrower hereby specially represents and
warrants to the best of Borrower’s knowledge as of the date
of this Agreement as follows:




		
	 	      (a) Hazardous Materials. The Property is not and has
not been a site for the use, generation, manufacture,
storage, treatment, release, threatened release,
discharge, disposal, transportation or presence of any
oil, flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, hazardous wastes,
toxic or contaminated substances or similar materials,
including, without limitation, any substances which are
“hazardous substances,” “hazardous wastes,” “hazardous
materials,” “toxic substances,” “wastes,” “regulated
substances,” “industrial solid wastes,” or “pollutants”
under the Hazardous Materials Laws, as described below,
and/or other applicable environmental laws, ordinances
and regulations (collectively, the “Hazardous
Materials”). “Hazardous Materials” shall not include
commercially reasonable amounts of such materials used in
the ordinary course of operation of the Property which
are used and stored in accordance with all applicable
environmental laws, ordinances and regulations.
	 
	 	      (b) Hazardous Materials Laws. The Property is in
compliance with all laws, ordinances and regulations
relating to Hazardous Materials (“Hazardous Materials
Laws”), including, without limitation: the Clean Air
Act, as amended, 42 U.S.C. Section 7401 et seq.; the
Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251 et seq.; the Resource Conservation
and Recovery Act of 1976, as amended, 42 U.S.C. Section
6901 et seq; the Comprehensive Environment Response,
Compensation and Liability Act of 1980, as amended
(including the Superfund Amendments and Reauthorization
Act of 1986, “CERCLA”), 42 U.S.C. Section 9601 et seq.;
the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 2601 et seq; the Occupational Safety and Health
Act, as amended, 29 U.S.C. Section 651, the Emergency
Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq; the Mine Safety and Health
Act of 1977, as amended, 30 U.S.C. Section 801 et seq.;
the Safe Drinking Water Act, as amended, 42 U.S.C.
Section 300f et seq.; and all comparable state and local
laws, laws of other jurisdictions or orders and
regulations.
	 
	 	      (c) Hazardous Materials Claims. There are no claims
or actions (“Hazardous Materials Claims”) pending or
threatened against Borrower or the Property by any
governmental entity or agency or by any other person or
entity relating to Hazardous Materials or pursuant to the
Hazardous Materials Laws.
	 
	 	      (d) Border Zone Property. The Property has not been
designated as Border Zone Property under the provisions
of California Health and Safety Code, Sections 25220 et
seq and there has been no occurrence or condition on any
real property adjoining or in the vicinity of the
Property that could cause the Property or any part
thereof to be designated as Border Zone Property.




		
	 	      6.2 HAZARDOUS MATERIALS COVENANTS. Borrower agrees as
follows:




		
	 	      (a) No Hazardous Activities. Borrower shall not
cause or permit the Property to be used as a site for the
use, generation, manufacture, storage, treatment,
release, discharge, disposal, transportation or presence
of any Hazardous Materials.








 












		
	 	      (b) Compliance. Borrower shall comply and cause the
Property to comply with all Hazardous Materials Laws.
	 
	 	      (c) Notices. Borrower shall immediately notify
Lender in writing of: (i) the discovery of any Hazardous
Materials on, under or about the Property; (ii) any
knowledge by Borrower that the Property does not comply
with any Hazardous Materials Laws; (iii) any Hazardous
Materials Claims; and (iv) the discovery of any
occurrence or condition on any real property adjoining or
in the vicinity of the Property that could cause the
Property or any part thereof to be designated as Border
Zone Property.
	 
	 	      (d) Remedial Action. In response to the presence of
any Hazardous Materials on, under or about the Property,
Borrower shall immediately take, at Borrower’s sole
expense, all remedial action required by any Hazardous
Materials Laws or any judgment, consent decree,
settlement or compromise in respect to any Hazardous
Materials Claims.




		
	 	      6.3 INSPECTION BY LENDER. Upon reasonable prior notice
to Borrower, Lender, its employees and agents, may from time
to time (whether before or after the commencement of a
nonjudicial or judicial foreclosure proceeding) enter and
inspect the Property for the purpose of determining the
existence, location, nature and magnitude of any past or
present release or threatened release of any Hazardous
Materials into, onto, beneath or from the Property.
	 
	 	      6.4 HAZARDOUS MATERIALS INDEMNITY BORROWER HEREBY AGREES
TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND
AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS,
ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES)
WHICH LENDER MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF
THE USE, GENERATION, MANUFACTURE, STORAGE, DISPOSAL,
THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS
MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY. BORROWER
SHALL IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING
UNDER THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE
THE INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST
APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER’S
DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
LENDER SHALL SURVIVE THE CANCELLATION OF THE NOTE AND THE
RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE DEED OF
TRUST.
	 
	 	      6.5 LEGAL EFFECT OF SECTION. Borrower and Lender agree
that: (a) this Article is intended as Lender’s written
request for information (and Borrower’s response) concerning
the environmental condition of the real property security as
required by California Code of Civil Procedure 6726.5; and
(b) each provision in this Article (together with any
indemnity applicable to a breach of any such provision) with
respect to the environmental condition of the real property
security is intended by Lender and Borrower to be an
“environmental provision” for purposes of California Code of
Civil Procedure 6736, and as such it is expressly understood
that Borrower’s duty to indemnify Lender hereunder shall
survive: (i) any judicial or non-judicial foreclosure under
the Deed of Trust, or transfer of the Property in lieu
thereof; (ii) the release and reconveyance or cancellation
of the Deed of Trust; and (iii) the satisfaction of all of
Borrower’s obligations under the Loan Documents.









 











ARTICLE 7. COVENANTS OF BORROWER



		
	 	      7.1 EXPENSES. Borrower shall immediately pay Lender upon
demand all costs and expenses incurred by Lender in
connection with: (a) the preparation of this Agreement, all
other Loan Documents and Other Related Documents contemplated
hereby; (b) the administration of this Agreement, the other
Loan Documents and Other Related Documents for the term of
the Loan; and (c) the enforcement or satisfaction by Lender
of any of Borrower’s obligations under this Agreement, the
other Loan Documents or the Other Related Documents. For all
purposes of this Agreement, Lender’s costs and expenses shall
include, without limitation, all appraisal fees, cost
engineering and inspection fees, legal fees and expenses,
accounting fees, environmental consultant fees, auditor fees,
and the cost to Lender of any title insurance premiums, title
surveys, reconveyance and notary fees. Borrower recognizes
and agrees that formal written appraisals of the Property by
a licensed independent appraiser may be required by Lender’s
internal procedures and/or federal regulatory reporting
requirements on an annual and/or specialized basis and that
Lender may, at its option, require inspection of the Property
by an independent supervising architect and/or cost
engineering specialist at least semi-annually. If any of the
services described above are provided by an employee of
Lender, Lender’s costs and expenses for such services shall
be calculated in accordance with Lender’s standard charge for
such services.
	 
	 	      7.2 ERISA COMPLIANCE. Borrower shall at all times comply
with the provisions of ERISA with respect to any retirement
or other employee benefit plan to which it is a party as
employer, and as soon as possible after Borrower knows, or
has reason to know, that any Reportable Event (as defined in
ERISA) with respect to any such plan of Borrower has
occurred, it shall furnish to Lender a written statement
setting forth details as to such Reportable Event and the
action, if any, which Borrower proposes to take with respect
thereto, together with a copy of the notice of such
Reportable Event furnished to the Pension Benefit Guaranty
Corporation.
	 
	 	      7.3 SUBDIVISION MAPS. Prior to recording any final map,
plat, parcel map, lot line adjustment or other subdivision
map of any kind covering any portion of the Property
(collectively, “Subdivision Map”), Borrower shall submit such
Subdivision Map to Lender for Lender’s review and approval,
which approval shall not be unreasonably withheld. Within
ten (10) Business Days after Lender’s receipt of such
Subdivision Map, Lender shall provide Borrower written notice
if Lender disapproves of said Subdivision Map. Lender shall
be deemed to have approved the Subdivision Map if such notice
is not provided to Borrower. Within five (5) Business Days
after Lender’s request, Borrower shall execute, acknowledge
and deliver to Lender such amendments to the Loan Documents
as Lender may reasonably require to reflect the change in the
legal description of the Property resulting from the
recordation of any Subdivision Map. In connection with and
promptly after the recordation of any amendment or other
modification to the Deed of Trust recorded in connection with
such amendments, Borrower shall deliver to Lender, at
Borrower’s sole expense, a title endorsement to the Title
Policy in form and substance satisfactory to Lender insuring
the continued first priority lien of the Deed of Trust.
Subject to the execution and delivery by Borrower of any
documents required under this Section, Lender shall, if
required by applicable law, sign any Subdivision Map
approved, or deemed to be approved, by Lender pursuant to
this Section.
	 
	 	      7.4 FURTHER ASSURANCES. Upon Lender’s request and at
Borrower’s sole cost and expense, Borrower shall execute,
acknowledge and deliver any other instruments and perform any
other acts necessary, desirable or proper, as determined by
Lender, to carry out the purposes of this Agreement and the
other Loan Documents or to perfect and preserve any liens
created by the Loan Documents.








 











		
	 	      7.5 ASSIGNMENT. Without the prior written consent of
Lender, Borrower shall not assign Borrower’s interest under
any of the Loan Documents, or in any monies due or to become
due thereunder, and any assignment without such consent shall
be void.



ARTICLE 8. REPORTING COVENANTS



		
	 	      8.1 FINANCIAL INFORMATION. Borrower shall deliver to
Lender, as soon as available, but in no event later than one
hundred twenty (120) days after Borrower’s fiscal year end, a
current financial statement (including, without limitation,
an income and expense statement and balance sheet) signed by
together with any other financial information requested by
Lender for the following persons and entities:
	 
	 	Borrower



Within thirty (30) days of Lender’s request, Borrower shall also
deliver to Lender (i) quarterly consolidated financial statements for
Borrower; (ii) monthly operating statements for the Borrower,
comparing actual results to the previously submitted budget for the
month and the year to date; (iii) any financial information regarding
any persons or entities in any way obligated on the Loan as Lender may
specify. If audited financial information is prepared, Borrower shall
deliver to Lender copies of that information within fifteen (15) days
of its final preparation. Except as otherwise agreed to by Lender,
all such financial information shall be prepared in accordance with
generally accepted accounting principles consistently applied.



		
	 	      8.2 BOOKS AND RECORDS. Borrower shall maintain complete
books of account and other records for the Property and for
disbursement and use of the proceeds of the Loan, and the
same shall be available for inspection and copying by Lender
upon reasonable prior notice.
	 
	 	      8.3 REPORTS. Within ten (10) days of Lender’s request,
Borrower shall deliver to Lender monthly inventory reports,
marketing and sales schedules and reports, marketing and
sales information and/or leasing information, with respect to
all real property projects of Borrower and all general
partners, venturers and members of Borrower, all in form and
substance acceptable to Lender.



ARTICLE 9. DEFAULTS AND REMEDIES



		
	 	      9.1 DEFAULT. The occurrence of any one or more of the
following shall constitute an event of default (“Default”)
under this Agreement and the other Loan Documents:




		
	 	      (a) Monetary. Borrower’s failure to pay when due any
sums payable under the Note or any of the other Loan
Documents; or
	 
	 	      (b) Performance of Obligations. Borrower’s failure
to perform any obligation in addition to those set forth
in Paragraph (a) of this Section under any of the Loan
FDocuments; provided, however, that if a cure period is
provided for the remedy of such failure, Borrower’s
failure to perform will not constitute a Default until
such date as the specified cure period expires; or
	 
	 	      (c) Use. The prohibition, enjoining or interruption
of Borrower’s right to occupy, use or lease the Property
for a continuous period of more than thirty (30) days; or








 












		
	 	      (d) Condemnation; Attachment. (i) The condemnation,
seizure or appropriation of, or occurrence of an
uninsured casualty with respect to any material portion
of the Property; or (ii) the sequestration or attachment
of, or any levy or execution upon any of the Property,
any other collateral provided by Borrower under any of
the Loan Documents, or any substantial portion of the
other assets of Borrower, which sequestration,
attachment, levy or execution is not released, expunged
or dismissed prior to the earlier of thirty (30) days or
the sale of the assets affected thereby; or
	 
	 	      (e) Representations and Warranties (i) The failure
of any representation or warranty of Borrower in any of
the Loan Documents and the continuation of such failure
for more than ten (10) days after written notice to
Borrower from Lender requesting that Borrower cure such
failure; or (ii) any material adverse change in the
financial condition of Borrower, any Guarantor, or any
Indemnitor from the financial condition represented to
Lender as of the later of: (A) the Effective Date; or
(B) the date upon which the financial condition of such
party was first represented to Lender; or
	 
	 	      (f) Voluntary Bankruptcy; Insolvency; Dissolution.
(i) The filing of a petition by Borrower for relief under
the Bankruptcy Code, or under any other present or future
state or federal law regarding bankruptcy, reorganization
or other debtor relief law; (ii) the filing of any
pleading or an answer by Borrower in any involuntary
proceeding under the Bankruptcy Code or other debtor
relief law which admits the jurisdiction of the court or
the petition’s material allegations regarding Borrower’s
insolvency; (iii) a general assignment by Borrower for
the benefit of creditors; or (iv) Borrower applying for,
or the appointment of, a receiver, trustee, custodian or
liquidator of Borrower or any of its property; or
	 
	 	      (g) Involuntary Bankruptcy. The failure of Borrower
to effect a full dismissal of any involuntary petition
under the Bankruptcy Code or under any other debtor
relief law that is filed against Borrower or in any way
restrains or limits Borrower or Lender regarding the Loan
or the Property, prior to the earlier of the entry of any
court order granting relief sought in such involuntary
petition, or thirty (30) days after the date of filing of
such involuntary petition; or
	 
	 	      (h) Partners; Guarantors. The occurrence of any of
the events specified in Paragraph (f) or Paragraph (g) of
this Section as to any person or entity other than
Borrower, including, without limitation, any Guarantor,
Indemnitor or Non-Borrower Trustor, which is in any
manner obligated to Lender under the Loan Documents; or
	 
	 	      (i) Change In Management or Control The occurrence
of any material management or organizational change in
Borrower or in the partners, venturers or members of
Borrower, including, without limitation, any partnership,
joint venture or member dispute which Lender determines,
in its sole and absolute discretion, shall have a
material adverse effect on the Loan, on the Property, or
on the ability of Borrower or its partners, venturers or
members to perform their obligations under the Loan
Documents; or
	 
	 	      (j) Loss of Priority. The failure at any time of the
Deed of Trust to be a valid first lien upon the Property
or any portion thereof, other than as a result of any
release or reconveyance of








 














		
	 	the Deed of Trust with respect to all or any portion of
the Property pursuant to the terms and conditions of this
Agreement; or
	 
	 	      (k) Hazardous Materials. The discovery of any
significant Hazardous Materials in, on or about the
Property subsequent to the Effective Date. Any such
Hazardous Materials shall be “significant” for this
purpose if said Hazardous Materials, in Lender’s sole
discretion, have a materially adverse impact on the value
of the Property; or




      (l) Transfer of Assets. The sale, assignment, pledge,
hypothecation, mortgage or transfer of all or a substantial portion of
assets of Borrower and/or Guarantor other than in the ordinary course
of business of said entities; or



		
	 	      9.2 ACCELERATION UPON DEFAULT; REMEDIES. Upon the
occurrence of any Default specified in this Article, Lender
may, at its sole option, declare all sums owing to Lender
under the Note, this Agreement and the other Loan Documents
immediately due and payable. Upon such acceleration, Lender
may, in addition to all other remedies permitted under this
Agreement and the other Loan Documents and at law or equity,
apply any sums in the Account to the sums owing under the
Loan Documents and any and all obligations of Lender to fund
further disbursements under the Loan shall terminate.
	 
	 	      9.3 DISBURSEMENTS TO THIRD PARTIES Upon the occurrence
of a Default occasioned by Borrower’s failure to pay money to
a third party as required by this Agreement, Lender may but
shall not be obligated to make such payment from the Loan
proceeds or other funds of Lender. If such payment is made
from proceeds of the Loan, Borrower shall immediately
deposit with Lender, upon written demand, an amount equal to
such payment. If such payment is made from funds of Lender,
Borrower shall immediately repay such funds upon written
demand of Lender. In either case, the Default with respect
to which any such payment has been made by Lender shall not
be deemed cured until such deposit or repayment (as the case
may be) has been made by Borrower to Lender.
	 
	 	      9.4 REPAYMENT OF FUNDS ADVANCED. Any funds expended by
Lender in the exercise of its rights or remedies under this
Agreement and the other Loan Documents shall be payable to
Lender upon demand, together with interest at the rate
applicable to the principal balance of the Note from the date
the funds were expended.
	 
	 	      9.5 RIGHTS CUMULATIVE, NO WAIVER. All Lender’s rights
and remedies provided in this Agreement and the other Loan
Documents, together with those granted by law or at equity,
are cumulative and may be exercised by Lender at any time.
Lender’s exercise of any right or remedy shall not constitute
a cure of any Default unless all sums then due and payable to
Lender under the Loan Documents are repaid and Borrower has
cured all other Defaults. No waiver shall be implied from
any failure of Lender to take, or any delay by Lender in
taking, action concerning any Default or failure of condition
under the Loan Documents, or from any previous waiver of any
similar or unrelated Default or failure of condition. Any
waiver or approval under any of the Loan Documents must be in
writing and shall be limited to its specific terms.



ARTICLE 10. MISCELLANEOUS PROVISIONS



		
	 	      10.1 INDEMNITY. BORROWER HEREBY AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST
ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS,
JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES







 












		
	 	(INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES)
WHICH LENDER MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE
OF: (A) THE PURPOSE TO WHICH BORROWER APPLIES THE LOAN
PROCEEDS; (B) THE FAILURE OF BORROWER TO PERFORM ANY
OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS; (C) ANY FAILURE AT ANY TIME OF ANY
OF BORROWER’S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND
CORRECT; OR (D) ANY ACT OR OMISSION BY BORROWER, CONSTITUENT
PARTNER OR MEMBER OF BORROWER, ANY CONTRACTOR, SUBCONTRACTOR
OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER PERSON OR
ENTITY WITH RESPECT TO ANY OF THE PROPERTY. BORROWER SHALL
IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER
THIS INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE
INDEBTEDNESS ARISES UNTIL PAID AT THE RATE OF INTEREST
APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER’S
DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS
LENDER SHALL SURVIVE CANCELLATION OF THE NOTE AND THE
RELEASE, RECONVEYANCE OR PARTIAL RECONVEYANCE OF THE DEED OF
TRUST.
	 
	 	      10.2 FORM OF DOCUMENTS. The form and substance of all
documents, instruments, and forms of evidence to be delivered
to Lender under the terms of this Agreement and any of the
other Loan Documents shall be subject to Lender’s approval
and shall not be modified, superseded or terminated in any
respect without Lender’s prior written approval.
	 
	 	      10.3 NO THIRD PARTIES BENEFITED. No person other than
Lender and Borrower and their permitted successors and
assigns shall have any right of action under any of the Loan
Documents.
	 
	 	      10.4 NOTICES. All notices, demands, or other
communications under this Agreement and the other Loan
Documents shall be in writing and shall be delivered to the
appropriate party at the address set forth on the signature
page of this Agreement (subject to change from time to time
by written notice to all other parties to this Agreement).
All notices, demands or other communications shall be
considered as properly given if delivered personally or sent
by first class United States Postal Service mail, postage
prepaid, except that notice of Default may be sent by
certified mail, return receipt requested, or by Overnight
Express Mail or by overnight commercial courier service,
charges prepaid. Notices so sent shall be effective three (3)
days after mailing, if mailed by first class mail, and
otherwise upon receipt; provided, however, that non-receipt
of any communication as the result of any change of address
of which the sending party was not notified or as the result
of a refusal to accept delivery shall be deemed receipt of
such communication.
	 
	 	      10.5 ATTORNEY-IN-FACT. Borrower hereby irrevocably
appoints and authorizes Lender, as Borrower’s
attorney-in-fact, which agency is coupled with an interest,
to execute and/or record in Lender’s or Borrower’s name any
notices, instruments or documents that Lender deems
appropriate to protect Lender’s interest under any of the
Loan Documents.
	 
	 	      10.6 ACTIONS. Borrower agrees that Lender, in exercising
the rights, duties or liabilities of Lender or Borrower under
the Loan Documents, may commence, appear in or defend any
action or proceeding purporting to affect the Property or the
Loan Documents and Borrower shall immediately reimburse
Lender upon demand for all such expenses so incurred or paid
by Lender, including, without limitation, attorneys’ fees and
expenses and court costs.
	 
	 	      10.7 RIGHT OF CONTEST. Borrower may contest in good
faith any claim, demand, levy or assessment by any person
other than Lender which would constitute a Default if: (a)
Borrower pursues the contest diligently, in a manner which
Lender determines is not prejudicial to Lender, and






 













		
	 	does not impair the rights of Lender under any of the Loan
Documents; and (b) Borrower deposits with Lender any funds
or other forms of assurance which Lender in good faith
determines from time to time appropriate to protect Lender
from the consequences of the contest being unsuccessful.
Borrower’s compliance with this Section shall operate to
prevent such claim, demand, levy or assessment from becoming
a Default.
	 
	 	      10.8 RELATIONSHIP OF PARTIES. The relationship of
Borrower and Lender under the Loan Documents is, and shall at
all times remain, solely that of borrower and lender, and
Lender neither undertakes nor assumes any responsibility or
duty to Borrower or to any third party with respect to the
Property, except as expressly provided in this Agreement and
the other Loan Documents.
	 
	 	      10.9 DELAY OUTSIDE LENDER’S CONTROL Lender shall not be
liable in any way to Borrower or any third party for Lender’s
failure to perform or delay in performing under the Loan
Documents (and Lender may suspend or terminate all or any
portion of Lender’s obligations under the Loan Documents) if
such failure to perform or delay in performing results
directly or indirectly from, or is based upon, the action,
inaction, or purported action, of any governmental or local
authority, or because of war, rebellion, insurrection,
strike, lock-out, boycott or blockade (whether presently in
effect, announced or in the sole judgment of Lender deemed
probable), or from any Act of God or other cause or event
beyond Lender’s control.
	 
	 	      10.10 ATTORNEYS’ FEES AND EXPENSES; ENFORCEMENT. If any
attorney is engaged by Lender to enforce or defend any
provision of this Agreement, any of the other Loan Documents
or Other Related Documents, or as a consequence of any
Default under the Loan Documents, with or without the filing
of any legal action or proceeding, and including, without
limitation, any fees and expenses incurred in any bankruptcy
proceeding of the Borrower, then Borrower shall immediately
pay to Lender, upon demand, the amount of all attorneys’ fees
and expenses and all costs incurred by Lender in connection
therewith, together with interest thereon from the date of
such demand until paid at the rate of interest applicable to
the principal balance of the Note as specified therein.
	 
	 	      10.11 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise
expressly provided for in this Agreement, all amounts payable
by Borrower to Lender shall be payable only in United States
currency, immediately available funds.
	 
	 	      10.12 LENDER’S CONSENT. Wherever in this Agreement there
is a requirement for Lender’s consent and/or a document to be
provided or an action taken “to the satisfaction of Lender”,
it is understood by such phrase that Lender shall exercise
its consent, right or judgment in a reasonable manner given
the specific facts and circumstance applicable at the time.
	 
	 	      10.13 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF
INFORMATION. Borrower agrees that Lender may elect, at any
time, to sell, assign or grant participations in all or any
portion of its rights and obligations under the Loan
Documents, and that any such sale, assignment or
participation may be to one or more financial institutions,
private investors, and/or other entities, at Lender’s sole
discretion (“Participant”). Borrower further agrees that
Lender may disseminate to any such actual or potential
purchaser(s), assignee(s) or participant(s) all documents and
information (including, without limitation, all financial
information) which has been or is hereafter provided to or
known to Lender with respect to: (a) the Property and its
operation; (b) any party connected with the Loan (including,
without limitation, the Borrower, any partner of Borrower,
any constituent partner or member of Borrower, any Guarantor,
any Indemnitor and any Non-Borrower Trustor); and/or (c) any
lending relationship other than the Loan which Lender may
have with any party connected with the Loan. In the event of
any such sale, assignment or participation, Lender and the
parties to such






 











		
	 	transaction shall share in the rights and obligations of
Lender as set forth in the Loan Documents only as and to the
extent they agree among themselves. In connection with any
such sale, assignment or participation, Borrower further
agrees that the Loan Documents shall be sufficient evidence
of the obligations of Borrower to each purchaser, assignee,
or participant, and upon written request by Lender, Borrower
shall enter into such amendments or modifications to the Loan
Documents as may be reasonably required in order to evidence
any such sale, assignment or participation. The indemnity
obligations of Borrower under the Loan Documents shall also
apply with respect to any purchaser, assignee or participant.
	 
	 	Anything in this Agreement to the contrary notwithstanding,
and without the need to comply with any of the formal or
procedural requirements of this Agreement, including this
Section, any lender may at any time and from time to time
pledge and assign all or any portion of its rights under all
or any of the Loan Documents to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such
lender from its obligations thereunder.
	 
	 	      10.14 LENDER’S AGENTS. Lender may designate an agent or
independent contractor to exercise any of Lender’s rights
under this Agreement and any of the other Loan Documents.
Any reference to Lender in any of the Loan Documents shall
include Lender’s agents, employees or independent
contractors. Borrower shall pay the costs of such agent or
independent contractor either directly to such person or to
Lender in reimbursement of such costs, as applicable.
	 
	 	      10.15 TAX SERVICE. Lender is authorized to secure, at
Borrower’s expense, a tax service contract with a third party
vendor which shall provide tax information on the Property
satisfactory to Lender.
	 
	 	      10.16 WAIVER OF RIGHT TO TRIAL BY JURY EACH PARTY TO
THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR
(b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT
OTHERWISE HAVE TO TRIAL BY JURY.
	 
	 	      10.17 SEVERABILITY. If any provision or obligation under
this Agreement and the other Loan Documents shall be
determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity,
legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the invalid,
illegal, or unenforceable provision had never been a part of
the Loan Documents, provided, however, that if the rate of
interest or any other amount payable under the Note or this
Agreement or any other Loan Document, or the right of
collectibility therefore, are declared to be or become
invalid, illegal or unenforceable, Lender’s obligations to
make advances under the Loan Documents shall not be
enforceable by Borrower.
	 
	 	      10.18 HEIRS, SUCCESSORS AND ASSIGNS Except as otherwise
expressly provided under the






 












		
	 	terms and conditions of this Agreement, the terms of the Loan
Documents shall bind and inure to the benefit of the heirs,
successors and assigns of the parties.
	 
	 	      10.19 TIME. Time is of the essence of each and every
term of this Agreement.
	 
	 	      10.20 HEADINGS. All article, section or other headings
appearing in this Agreement and any of the other Loan
Documents are for convenience of reference only and shall be
disregarded in construing this Agreement and any of the other
Loan Documents.
	 
	 	      10.21 GOVERNING LAW. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of
the State of California, except to the extent preempted by
federal laws. Borrower and all persons and entities in any
manner obligated to Lender under the Loan Documents consent
to the jurisdiction of any federal or state court within the
State of California having proper venue and also consent to
service of process by any means authorized by California or
federal law.
	 
	 	      10.22 INTEGRATION; INTERPRETATION. The Loan Documents
contain or expressly incorporate by reference the entire
agreement of the parties with respect to the matters
contemplated therein and supersede all prior negotiations or
agreements, written or oral. The Loan Documents shall not be
modified except by written instrument executed by all
parties. Any reference to the Loan Documents includes any
amendments, renewals or extensions now or hereafter approved
by Lender in writing.
	 
	 	      10.23 JOINT AND SEVERAL LIABILITY. The liability of all
persons and entities obligated in any manner under this
Agreement and any of the Loan Documents shall be joint and
several.
	 
	 	      10.24 COUNTERPARTS. To facilitate execution, this
document may be executed in as many counterparts as may be
convenient or required. It shall not be necessary that the
signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear
on each counterpart. All counterparts shall collectively
constitute a single document. It shall not be necessary in
making proof of this document to produce or account for more
than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto.
Any signature page to any counterpart may be detached from
such counterpart without impairing the legal effect of the
signatures thereon and thereafter attached to another
counterpart identical thereto except having attached to it
additional signature pages.



IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
as of the date appearing on the first page of this Agreement.




	“LENDER”	 







	      WELLS FARGO BANK, NATIONAL ASSOCIATION	 







	      By: /s/ Jonathan Lefferts      
                  

	 





	            Jonathan Lefferts, Vice President	 










 













	      Lender’s Address:

      Real Estate Group (AU #02034)

      555 Montgomery Street, 16th Floor	 







	      San Francisco, CA 94111	 







	    Attn: Jennifer Anton	 







	“BORROWER”	 







	      REGAN HOLDING CORP, a California corporation	 







	      By: /s/ H. Lynn Stafford      
                  
	 







	      Title: Chief Information Officer      
                  
	 







	      Borrower’s Address:

      2090 Marina Avenue

      Petaluma, CA 94954-6714	 







	      Attn: Steven Taylor	 















 








DESCRIPTION OF PROPERTY



Exhibit A to LOAN AGREEMENT between REGAN HOLDING CORP, a California

corporation, as “Borrower”, and WELLS FARGO BANK, NATIONAL

ASSOCIATION, as “Lender”, dated as of June 19, 2001.




All the certain real property located in the County of Sonoma, State

of California, described as follows:




PARCEL ONE:




PARCELS 1and 2 as shown and designated upon City of Petaluma Parcel

Map No. 171, filed December 30, 1980 in Book 316 of Maps, Page 22,

Sonoma County Records.




EXCEPTING THEREFROM that portion contained in Deed to the City of

Petaluma, a Municipal Corporation, recorded February 1, 1990 under

Instrument No. 90-11544, and re-recorded March 27, 1990 as Document

No. 90-30132, and re-recorded April 18, 1990 as Document No. 90-38789,

Sonoma County Records.




ALSO EXCEPTING THEREFROM that portion contained in Deed to John M.

Headley, et al, recorded February 1, 1990 as Instrument No. 90-11545,

and re-recorded March 27, 1990 as Document No. 90-30135.




ALSO EXCEPTING THEREFROM that portion contained in the Deed of Trust

to the City of Petaluma recorded June 7, 1996 as Document No.

96-50841, Sonoma County Records.




PARCEL TWO:




AN EASEMENT for public utilities, 10 feet wide, lying Easterly of and

adjacent to, the Westerly line of the above-described Parcel, being

more particularly described as follows:




BEGINNING at Point “X” as set forth in Parcel 1 of Corporation Grant

Deed recorded February 1, 1990 in Document No. 90-11545. Thence along

said line common to Teitler and U-Haul Company South 54 degrees 08

minutes 19 seconds East, 10.00 feet; thence leaving said line and

parallel with the above-described Right-of-Way line South 35 degrees

51 minutes 41 seconds West, 143.47 feet to the point of curvature;

thence on a tangent curve to the right, radius 133 feet, through a

central angle of 27 degrees 28 minutes 28 seconds, an arc length of

63.78 feet to a point on the existing Easterly Right-of-Way line of

Marina Avenue; thence along said line North 35 degrees 51 minutes 41

seconds East, 26.65 feet; thence on a non-tangent curve to the right

whose center bears North 37 degrees 44 minutes 44 seconds West, radius

123 feet, through a central angle of 16 degrees, 23 minutes 35

seconds, an arc length of 35.19 feet to a point of tangency; thence

North 35 degrees 51 minutes 41 seconds East, 143.47 feet to the point

of beginning.




EXCEPTING therefrom all that portion lying within parcel one above.



 






PARCEL THREE:



FOR THE PLACE OF COMMENCEMENT BEGIN at the Northwesterly corner of the

tract of land described in the Deed from Brandon Heirs to A.W. Baker,

dated May 14, 1912 and recorded in Book 73 of Official Records of

Sonoma County, Page 388, said Northwesterly corner being on the

Southerly line of the Lakeville Highway, thence Easterly along the

Southerly line of said Highway, 318.36 feet to a point; thence

Southwesterly and parallel with the Northwesterly line of said tract

of land so conveyed to A.W. Baker, 239.12 feet to the actual place of

commencement; thence Northwesterly at right angles, 100 feet to a

point; thence Northeasterly at right angles, 60 feet to a point on the

Southwesterly line of the land described in the Deed from A.W. Baker,

et al, to Stanley McCutchan, dated October 13, 1927 and recorded June

26, 1928 in Book 205 of Official Records of Sonoma County, Page 149;

thence Southeasterly at right angles and along the Southwesterly line

of said land conveyed to McCutchan, 100 feet to a point; thence

Southwesterly at right angles 60 feet to the place of commencement.




EXCEPTING THEREFROM that portion lying within the City of Petaluma,

Sonoma County, California, being a portion of the Lands of John M.

Headley and Delores A. Headley, husband and wife, co-trustees under a

declaration of trust dated April 2, 1981 and amended June 14, 1982, as

conveyed by Deed recorded under Document No. 90-11543 of Official

Records, Sonoma County Records, and being more particularly described

as follows:




BEGINNING at the most Westerly corner of said lands, also being a

point on the Easterly Right-Of-Way line of Marina Avenue; thence along

said Right-Of-Way line North 35 degrees 51 minutes 41 seconds East,

8.56 feet to a point hereinafter referred to as Point “A”; thence

leaving said Right-Of-Way line in a Southerly direction, on a curve

concave Westerly, with a radius of 155 feet, through a central angle

of 3 degrees 14 minutes 35 seconds, an arc length of 8.77 feet to a

point on the Southwesterly line of said lands; thence along said line

North 54 degrees 08 minutes 19 seconds West, 1.94 feet to the point of

beginning.




PARCEL FOUR:




BEING A PORTION of the land deeded to Henry Reynaud by A.W. Baker in

that certain Deed of November 10, 1926, Second Tract, recorded in

Liber 154 of Official Records, Page 185, Sonoma County Records.

Starting at a point on the Southerly side of Lakeville Highway, said

point being where the boundary lines of the land of George McClintaock

and the lands of Joseph and Mary Pereira intersect the Southerly side

line of the Lakeville Highway; thence from said point Easterly and

along the Southerly side of the Lakeville Highway, 185.71 feet to a

point; thence Westerly and parallel with the Easterly boundary line of

the lands of Pereira 151.98 feet to the point of beginning; thence at

right angles 100 feet to a point (this being in an Easterly

direction); thence at an angle and in a Southerly direction and

parallel with the boundary line of Pereira 40 feet to a point; thence

at an angle and in a Westerly direction, 100 feet to a point; thence

at an angle and in a Northerly direction and parallel with the

boundary line (Easterly) of the lands of Pereira, 40 feet to the point

of beginning. The land to be deeded being bounded on one side by

Hobbie and the side, by Vail.




PARCEL FIVE:




COMMENCING at the common corner of the lands of S.M. Bell and A. W.

Baker as described in

 










Deed dated September 25, 1929 and recorded September 30, 1929 in Liber

237 of Official Records, at Page 429, Sonoma County Records; thence

along the Southerly line of Lakeville Highway, North 84? 07’ East

318.36 feet; thence South 35? 54” West 319.12 feet to the point of

beginning; and thence from said point of beginning at right angles

Northwesterly, 100 feet to the Easterly line of Petroleum Avenue;

thence South 35? 54’ West, 80 feet along the Easterly line of

Petroleum Avenue to a point; thence at right angles Southeasterly 100

feet to a point; thence North 35? 54’ East, 80 feet to the point of

beginning.




PARCEL SIX:




BEING a portion of that tract of land deeded to A. W. Baker by the

Brandon heirs on May 14, 1924 as recorded in Book 73 of Official

Records, page 388, Sonoma County Records; beginning at a point on the

Southerly side of the Lakeville Highway, said point being the

Northwesterly corner of said tract of land, and is a point common with

the lands of S. M. Bell, and running thence from said corner in an

Easterly direction along the Southerly side line of the Lakeville

Highway, 172.65 feet, more or less, to a point; thence running in a

Southerly direction and parallel with the Westerly side line of said

tract of land, 191.98 feet, more or less, to the point of

commencement.




BEGINNING at said point of commencement and running in an Easterly

direction and at right angles with the said Westerly line, 100 feet;

thence at right angles in a Southerly direction and parallel with the

Westerly side line of said tract, 40 feet, more or less; thence at

right angles running Westerly to a point 100 feet; and thence at right

angles and running in a Northerly direction and parallel with the

Westerly side line of said tract, 40 feet to the point of

commencement.




A.P. No. 005-050-036




 









DOCUMENTS



Exhibit B to LOAN AGREEMENT between REGAN HOLDING CORP, a California

corporation, as “Borrower”, and WELLS FARGO BANK, NATIONAL

ASSOCIATION, as “Lender”, dated as of June 19, 2001 (“Agreement”).




		
	 	1.       Loan Documents. The documents listed below, numbered 1.1
through 1., inclusive, and amendments, modifications and
supplements thereto which have received the prior written consent
of Lender, together with any documents executed in the future that
are approved by Lender and that recite that they are “Loan
Documents” for purposes of this Agreement are collectively
referred to herein as the Loan Documents.




		
	 	      1.1This Agreement.



            1.2The Promissory Note Secured by Deed of Trust of even date
herewith in the original principal amount of the Loan made by Borrower
payable to the order of Lender.



		
	 	      1.3The Deed of Trust with Absolute Assignment of Leases
and Rents, Security Agreement and Fixture Filing of even date
herewith executed by REGAN HOLDING CORP, a California
corporation, as Trustor, to American Securities Company, a
California corporation, as Trustee, for the benefit of
Lender, as Beneficiary.




		
	 	      1.4Uniform Commercial Code —National Financing
Statement —Form UCC-1, dated June 19, 2001, executed by
REGAN HOLDING CORPORATION, a California corporation as Debtor
and Lender as Secured Party.




		
	 	      1.5Corporate Borrowing Resolution of even date herewith
certified by the Secretary of REGAN HOLDING CORP.




		
	 	      1.6Corporate Resolution Authorizing Execution of
Guaranty and Endorsement and Hypothecation of Property of
even date herewith certified by the Secretary of
LEGACYMASTERS MARKETING GROUP INC..




		
	 	2.       Other Related Documents (Which Are Not Loan Documents):




		
	 	      2.1Repayment Guaranty of even date herewith executed by
LEGACY MARKETING GROUP INC., a California corporation, as
Guarantor in favor of Lender.




		
	 	      2.2Funds Transfer Agreement for Disbursement of Loan
Proceeds dated June 19, 2001, executed by and between
Borrower and Wells Fargo Bank, National



 










      Association.



		
	 	      2.3Agreement For Disbursement Prior To Recording And
Amendment To Note of even date herewith executed by and
between Borrower and Lender.