Document:

exv10w6

 

EXHIBIT 10.6

Prepared by, and after recording return

to:

Stoel Rives LLP

600 University Street, Suite 3600

Seattle, Washington 98101

Attention: Virginia M. Pedreira

Loan No. 700218 & 700218A

ATTENTION: COUNTY RECORDER—THIS INSTRUMENT COVERS GOODS THAT ARE OR WILL BECOME FIXTURES ON
THE DESCRIBED REAL PROPERTY AND SHOULD BE FILED FOR RECORD IN THE REAL PROPERTY RECORDS WHERE DEEDS
OF TRUST ON REAL ESTATE ARE RECORDED. THIS INSTRUMENT SHOULD ALSO BE INDEXED AS A UNIFORM
COMMERCIAL CODE FINANCING STATEMENT COVERING GOODS THAT ARE OR WILL BECOME FIXTURES ON THE
DESCRIBED REAL PROPERTY. THE MAILING ADDRESSES, TELEPHONE NUMBERS, AND FAX NUMBERS OF THE SECURED
PARTY AND THE DEBTOR ARE WITHIN.

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

JOHN B. SANFILIPPO & SON, INC., a Delaware corporation

Borrower,

having an office at

1703 North Randall Road

Mail Code — 2NW-EX

Elgin, Illinois 60123

to

FIRST AMERICAN TITLE INSURANCE COMPANY,

Trustee

for the benefit of

TRANSAMERICA LIFE INSURANCE COMPANY,

an Iowa corporation

Lender,

having an office

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

Cedar Rapids, Iowa 52499-5443

Loan Amount: $45,000,000.00

Premises: Gustine Processing Facility, Merced County, Gustine, California

- 1 -

 

Loan No. 700218 & 700218A

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

(Merced County, California)

This Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing (this
“Deed of Trust”) is made and given as of the 7th day of February, 2008, by JOHN B. SANFILIPPO &
SON, INC., a Delaware corporation, as Trustor, whose address is 1703 North Randall Road, Mail Code
- 2NW-EX, Elgin, Illinois 60123 (the “Borrower”), to FIRST AMERICAN TITLE INSURANCE COMPANY, as
Trustee, whose address is 1 First American Way, Santa Ana, California 92707 (the “Trustee”), for
the benefit of TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation, as Beneficiary, having an
office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-5443, and its successors and assigns (the “Lender”). The definitions of capitalized terms
used in this Deed of Trust may be found either in Section 3 below, or through the
cross-references provided in that Section.

	1.	 	RECITALS

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

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

- 2 -

 

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

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

- 3 -

 

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

- 4 -

 

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

- 5 -

 

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

- 6 -

 

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

- 7 -

 

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

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

- 8 -

 

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

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

- 9 -

 

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

- 10 -

 

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

	6.	 	COVENANTS

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

- 11 -

 

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

- 12 -

 

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

- 13 -

 

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

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

- 14 -

 

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

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

- 15 -

 

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

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

	 	7.1	 	Required Coverages

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

- 16 -

 

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

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

- 17 -

 

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

- 18 -

 

	8.	 	INSURANCE AND CONDEMNATION PROCEEDS

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

- 19 -

 

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

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

- 20 -

 

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

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

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

-21-

 

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

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

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

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

-22-

 

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

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

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

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

-23-

 

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

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

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

-24-

 

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

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

-25-

 

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

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

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

-26-

 

	15.	 	RIGHTS OF ENTRY AND TO OPERATE

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

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

	17.	 	FORECLOSURE; POWER OF SALE

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

-27-

 

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

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

-28-

 

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

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

-29-

 

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

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

-30-

 

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

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

-31-

 

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

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

-32-

 

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

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

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

     The foregoing waivers shall apply to and bind any party assuming the Obligations of the
Borrower under this Deed of Trust.

19. SECURITY AGREEMENT AND FIXTURE FILING

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

-33-

 

“Account Collateral” means all Accounts that arise from the leasing,
licensing or use by third parties of the Property, from the commencement of the
Loan term through the satisfaction of all of the Obligations.

“Chattel Paper” shall have the definition assigned in the UCC.

“Chattel Paper Collateral” means all Chattel Paper arising from the sale or
other disposition of all or part of the Property.

“Control Agreement” means a Deposit Account or Securities Account control
agreement by and among the Borrower, the Lender and the relevant depository or
securities intermediary providing the Lender with “control” of such Deposit Account
or Securities Account within the meaning of Articles 8 and 9 of the UCC.

“Deposit Account” shall have the definition assigned in the UCC.

“Deposit Account Collateral” means that certain demand account number
0692-37808 established with Cole Taylor Bank in Rosemont, Illinois (the “Proceeds
Account”) and any replacement or successor accounts and all other Deposit Accounts
and/or Securities Accounts over which Lender has obtained a Control Agreement into
which Rents, Insurance Proceeds, Condemnation Proceeds or Proceeds of the Property
are deposited or held at any time from the commencement of the Loan term through
the satisfaction of all of the Obligations and shall include all funds in such
Deposit Accounts.

“Document” shall have the definition assigned in the UCC.

“Document Collateral” means all Documents that evidence title to all or any
part of the Goods Collateral.

“Equipment” shall have the definition assigned in the UCC.

“Equipment Collateral” means all Equipment that relates to the Real
Property arising from the sale or other disposition of all or part of the Property.

“Excluded Collateral” means (A) trade fixtures, office furniture and office
equipment; (B) racking systems; (C) machinery and equipment which does not
constitute a Fixture or Equipment Collateral; or (D) rolling stock.

“Financing Statements” shall have the definition assigned in the UCC.

“General Intangibles” shall have the definition assigned in the UCC.

“General Intangible Collateral” means all General Intangibles that have
arisen or that arise in the future in connection with the Borrower’s ownership,
operation or leasing of the Real Property as commercial real estate (but not any
General Intangibles arising from the specific business operations of Borrower
and/or its subsidiaries), at any time from the commencement of the Loan term
through the satisfaction of all of the Obligations.

-34-

 

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

-35-

 

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

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

-36-

 

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

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

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

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

-37-

 

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

	20.	 	ENVIRONMENTAL MATTERS

	 	20.1	 	Representations
	 
	 	 	 	The Borrower represents as follows:

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

	 	20.2	 	Environmental Covenants
	 
	 	 	 	The Borrower covenants as follows:

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

-38-

 

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

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

-39-

 

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

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

-40-

 

	21.	 	CONCERNING THE TRUSTEE

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

-41-

 

	22.	 	MISCELLANEOUS

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

-42-

 

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

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

-43-

 

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

-44-

 

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

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

If to the Lender:

Transamerica Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

-45-

 

Cedar Rapids, Iowa 52499-5443

Attn: Mortgage Loan Department

Reference: Loan No. D700218

Fax Number: (319) 369-2277

If to the Borrower:

John B. Sanfilippo & Son, Inc.

1703 North Randall Road

Mail Code — 2NW-EX

Elgin, Illinois 60123

Attn: Michael J. Valentine

Fax Number: (866) 610-1294

If to the Trustee:

First American Title Insurance Company

1 First American Way

Santa Ana, California 92707

Fax Number: (714) 800-4751

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

-46-

 

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

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

-47-

 

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

	 	22.22	 	Interpretation

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

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

-48-

 

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

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

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

	 	 	 	 	 
	 	BORROWER:

JOHN B. SANFILIPPO & SON, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Michael J. Valentine
 	 
	 	 	Michael J. Valentine 	 
	 	 	Its Chief Financial Officer and Group President 	 
	 

-49-exv10w7

 

EXHIBIT 10.7

Prepared by, and after recording return to:

Stoel Rives LLP

600 University Street, Suite 3600

Seattle, Washington 98101

Attention: Virginia M. Pedreira

Loan No. 700218 & 700218A

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

JOHN B. SANFILIPPO & SON, INC.,

a Delaware corporation,

Borrower,

having an office at 1703 North Randall Road, Mail Code — 2NW-EX, Elgin, Illinois 60123

to

FIRST AMERICAN TITLE INSURANCE COMPANY,

Trustee,

for the benefit of

TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation,

Lender,

having an office

c/o AEGON USA Realty Advisors, Inc.,

4333 Edgewood Road, N.E.,

Cedar Rapids, Iowa 52499-5443

Loan Amount: $45,000,000.00;

Premises: Garysburg Processing Facility, Garysburg, North Carolina

[COLLATERAL IS OR INCLUDES FIXTURES]

-1-

 

Loan No. 700218 & 700218A

Deed of Trust, Security Agreement, Assignment of Leases

and Rents and Fixture Filing

(Northampton County, North Carolina)

This Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing
(this “Deed of Trust”) is made and given as of the 7th day of February, 2008, by JOHN B. SANFILIPPO
& SON, INC., a Delaware corporation, as Grantor, whose address is 1703 North Randall Road, Mail
Code — 2NW-EX, Elgin, Illinois 60123 (the “Borrower”), to FIRST AMERICAN TITLE INSURANCE COMPANY,
as Trustee, whose address is 1932 Fleming Road, Greensboro, North Carolina 27410 (the “Trustee”),
for the benefit of TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation, as Beneficiary, having
an office c/o AEGON USA Realty Advisors, Inc., 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-5443, and its successors and assigns (the “Lender”). The definitions of capitalized terms
used in this Deed of Trust may be found either in Section 3 below, or through the
cross-references provided in that Section.

	1.	 	RECITALS

	 	A.	 	Under the terms of a Second Revised Agricultural Mortgage Loan
Application/Commitment dated January 31, 2008 (the “Commitment”), AEGON USA Realty
Advisors, Inc. (“AEGON”), as agent for the Lender, agreed to fund a loan in the
original principal amount of Forty-five Million Dollars ($45,000,000) (the “Loan”).
	 
	 	B.	 	The Commitment requires that the Loan be secured by all of the Borrower’s
existing and after-acquired interest in certain real property and by certain tangible
and intangible personal property.
	 
	 	C.	 	The Loan has a maturity and final payment date of March 1, 2023.

	2.	 	GRANTING CLAUSE
	 
	 	 	To secure the repayment of the Indebtedness, any increases, modifications, renewals or
extensions of the Indebtedness, and any substitutions for the Indebtedness, as well as the
performance of the Borrower’s other Obligations, and in consideration of the sum of ten
dollars ($10.00) and other valuable consideration, the receipt and sufficiency of which are
acknowledged, the Borrower grants, bargains, warrants, conveys, alienates, releases,
assigns, sets over and confirms to the Trustee, IN TRUST WITH THE POWER OF SALE for the
benefit of the LENDER and to its successors and assigns forever, all of the Borrower’s
existing and after acquired interests in the Land, Improvements and Appurtenances, TO HAVE
AND TO HOLD the Land, Improvements and Appurtenances and all parts, rights, members and
appurtenances thereof, to the use, benefit and behalf of the Lender and its successors and
assigns, IN FEE SIMPLE forever.

-2-

 

	3.	 	DEFINED TERMS
	 
	 	 	The following defined terms are used in this Deed of Trust. For ease of reference, terms
relating primarily to the Security Agreement are defined in Subsection 19.1.
	 
	 	 	an “Affiliate” of any person means any entity controlled by, or under common control
with, that person.
	 
	 	 	“Appurtenances” means all rights, estates, titles, interests, privileges, easements,
tenements, hereditaments, titles, royalties, reversions, remainders and other interests,
whether presently held by the Borrower or acquired in the future, that may be conveyed as
interests in the Land under the laws of North Carolina. Appurtenances include the Easements
and the Assigned Rights.
	 
	 	 	“Assigned Rights” means all of the Borrower’s rights, easements, privileges,
tenements, hereditaments, contracts, claims, licenses or other interests, whether presently
existing or arising in the future, which, in each case, pertain to the Real Property. The
Assigned Rights include all of the Borrower’s rights in and to:

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

-3-

 

	 	(xix)	 	agreements with architects, environmental consultants,
property tax consultants, engineers, and any other third party contractors
whose services benefit the Real Property.

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

-4-

 

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

-5-

 

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

-6-

 

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

-7-

 

	 	 	minimum rents, additional rents, common area maintenance charges, parking revenues,
deficiency rents, termination payments, space contraction payments, damages following
default under a Lease, premiums payable by tenants upon their exercise of cancellation
privileges, proceeds from lease guarantees, proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by destruction or damage to the
Real Property, all rights and claims of any kind which the Borrower has or may in the future
have against the tenants under the Leases, lease guarantors, or any subtenants or other
occupants of the Real Property, all proceeds of any sale of the Real Property in violation
of the Loan Documents, any future award granted the Borrower in any court proceeding
involving any such tenant in any bankruptcy, insolvency, or reorganization proceedings in
any state or federal court, and any and all payments made by any such tenant in lieu of
rent.
	 
	 	 	“Restoration” means (A) in the case of a casualty resulting in damage to or the
destruction of the Improvements, the repair or rebuilding of the Improvements to their
original condition, or (B) in the case of the condemnation of a portion of the Real
Property, the completion of such work as may be necessary in order to remedy the effects of
the condemnation so that the value and income-generating characteristics of the Real
Property are restored.
	 
	4.	 	TITLE
	 
	 	 	The Borrower represents to and covenants with the Lender that, at the point in time of the
grant of the lien created by this Deed of Trust, the Borrower is well seized of good and
indefeasible title to the Real Property, in fee simple absolute, subject to no lien or
encumbrance except the Permitted Encumbrances, and has the right to convey the Real Property
to the Trustee. The Borrower warrants this estate and title to the Trustee and to its
successors and assigns forever, against all lawful claims and demands of all persons. The
Borrower shall maintain mortgagee title insurance issued by a solvent carrier, covering the
Real Property in an amount at least equal to the amount of the Loan’s original principal
balance. This Deed of Trust is and shall remain a valid and enforceable first lien on the
Real Property, and if the validity or enforceability of this first lien is attacked by
appropriate proceedings, the Borrower shall diligently and continuously defend it through
appropriate proceedings. Should the Borrower fail to do so, the Lender may at the Borrower’s
expense take all necessary action, including the engagement and compensation of legal
counsel, the prosecution or defense of litigation, and the compromise or discharge of
claims. The Borrower shall defend, indemnify and hold the Lender harmless in any suit or
proceeding brought to challenge or attack the validity, enforceability or priority of the
lien granted by this Deed of Trust. If a prior construction, mechanics’ or materialmen’s
lien on the Real Property arises by operation of statute during any construction or repair
of the Improvements, the Borrower shall either cause the lien to be discharged by paying
when due any amounts owed to such persons, or shall comply with Section 11 of this
Deed of Trust.
	 
	5.	 	REPRESENTATIONS OF THE TRUSTOR
	 
	 	 	The Borrower represents to the Lender as follows:

	 	5.1	 	Formation, Existence, Good Standing
	 
	 	 	 	The Borrower is a corporation duly organized, validly existing and in good standing
under the laws of Delaware and has obtained all licenses and permits and filed all

-8-

 

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

-9-

 

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

-10-

 

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

	6.	 	COVENANTS

	 	6.1	 	Good Standing
	 
	 	 	 	The Borrower shall remain in good standing as a corporation under the laws of
Delaware and shall maintain in force any statements of fictitious name and
registrations necessary to remain in good standing as a corporation under the laws
of the State of Delaware during the term of the Loan.
	 
	 	6.2	 	Qualification to Do Business

-11-

 

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

-12-

 

	 	 	 	agrees that any request for its consent to such an action shall be deemed given if
the Lender does not respond within fifteen (15) Business Days to any written request
for such a consent, if the request is accompanied by all materials required to
permit the Lender to analyze the proposed action.
	 
	 	6.7	 	Use of the Real Property
	 
	 	 	 	The Borrower agrees that the Real Property may only be used as a commercial property
and industrial processing facility and distribution warehouse, for ancillary uses
related thereto and for no other purpose.
	 
	 	6.8	 	Legal Requirements
	 
	 	 	 	The Borrower shall maintain in full force and effect all governmental approvals and
material permits and licenses required for the conduct of the Borrower’s business
and for the maintenance and operation of the Real Property in compliance with
applicable law, and shall comply in all material respects with all Legal
Requirements relating to the Real Property at all times.
	 
	 	6.9	 	Contracts and Franchises
	 
	 	 	 	The Borrower shall maintain in force all material contracts and franchises necessary
for the conduct of the Borrower’s business and for the operation of the Real
Property in accordance with good commercial practice.
	 
	 	6.10	 	Covenants Regarding Certain Title Matters
	 
	 	 	 	The Borrower shall promptly pay, perform and observe all of its obligations under
the Easements included within the Appurtenances or under reciprocal easement
agreements, operating agreements, declarations, and restrictive covenants included
in the Permitted Encumbrances, shall not modify or consent to the termination of any
of them without the prior written consent of the Lender, shall promptly furnish the
Lender with copies of all notices of default under them, and shall enforce all
covenants and conditions under them and benefiting the Real Property.
	 
	 	6.11	 	Independence of the Real Property
	 
	 	 	 	The Borrower shall maintain the independence of the Real Property from other land
and improvements not included within or located on the Land. In fulfilling this
covenant, the Borrower shall neither take any action which would make it necessary
to own or control any property other than the Real Property in order to meet the
obligations of the landlord under any Lease, or in order to comply with the Legal
Requirements, nor take any action which would cause any land or improvements other
than the Land and the Improvements to rely upon the Land or the Improvements for
those purposes.
	 
	 	6.12	 	Complete Lots and Tax Parcels
	 
	 	 	 	The Borrower shall take no action that would result in the inclusion of any portion
of the Land in a tax parcel or subdivision lot that is not entirely included within
the Land.
	 
	 	6.13	 	Real Property is not Homestead Property
	 
	 	 	 	The Real Property shall NOT BECOME HOMESTEAD PROPERTY of the Borrower or of the
spouse of any person named as the Borrower.

-13-

 

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

	 	(a)	 	Maintenance of Books and Records
	 
	 	 	 	During the term of the Loan, the Borrower shall maintain complete and
accurate accounting and operational records, including copies of all Leases
and other material written contracts relating to the Real Property, copies
of all tax statements, and evidence to support the payment of all material
property-related expenses.
	 
	 	(b)	 	Delivery of Financial and Property-Related Information
	 
	 	 	 	Within one hundred twenty (120) days after the end of each of its fiscal
years, or, if a Default exists, on demand by the Lender, and within sixty
(60) days after the end of each fiscal quarter, the Borrower shall deliver
to the Lender (A) copies of the financial statements of the Borrower and its
Affiliates, including balance sheets and earnings statements, and (B) a
complete and accurate operating statement for the Real Property, all in form
satisfactory to the Lender. The annual financial statements shall include a
complete rent roll certified by the Borrower to be true and correct and must
include each tenant’s name, premises, square footage, rent, lease expiration
date, renewal options and related rental rates, delinquencies and vacancies
and the existence of any unsatisfied landlord obligations, e.g. in respect
of free rent periods, unfinished tenant improvements or other leasing costs.
If the Borrower fails to deliver the items required in this Subsection,
then subject to the Notice and cure period set forth in Subsection

-14-

 

	 	 	 	6.18(c) below, the Lender may engage an accounting firm to prepare the
required items. The Borrower shall cooperate fully with any investigative
audit required to permit the accounting firm to produce these items, and the
fees and expenses incurred in connection with their preparation shall be
paid on demand by the Borrower.
	 
	 	(c)	 	Effect of Failure to Deliver Financial and Property Reports
	 
	 	 	 	If no Default exists and the Borrower fails to provide the financial and
property reports required under this Section within one hundred twenty (120)
days of the close of any fiscal year, the Lender will provide a Notice of
this failure and a thirty (30)-day opportunity to cure before a Default
shall exist.
	 
	 	(d)	 	Certification of Information
	 
	 	 	 	The annual financial and operating statements provided under this Subsection
shall be certified by an independent certified public accountant as having
been prepared in accordance with generally accepted accounting principles,
consistently applied, or, in the case of financial statements prepared on a
cash or income tax basis, or of operating statements, as not materially
misleading based on an audit conducted in accordance with generally accepted
auditing standards. The quarterly financial and operating statements
provided under this Subsection need not be audited. The Borrower shall,
however certify that such statements are true and correct.

	 	6.19	 	Estoppel Statements
	 
	 	 	 	Upon request by the Lender, the Borrower shall, within ten (10) Business Days of
Notice of the request, furnish to the Lender or to whom it may direct, a written
statement acknowledging the amount of the Indebtedness and disclosing whether any
offsets or defenses exist against the Indebtedness.
	 
	 	6.20	 	Prohibition on Certain Distributions
	 
	 	 	 	If a Default exists or would occur as a result, the Borrower shall not pay any
dividend or make any partnership, trust or other distribution, and shall not make
any payment or transfer any property in order to purchase, redeem or retire any
interest in its beneficial interests or ownership.
	 
	 	6.21	 	Use of Loan Proceeds
	 
	 	 	 	The Loan proceeds shall be used solely for business and commercial purposes.
	 
	 	6.22	 	Prohibition on Cutoff Notices
	 
	 	 	 	The Borrower shall not issue any Notice to the Lender to the effect that liens on
the Real Property after the date of the Notice will enjoy priority over the lien of
this Deed of Trust.
	 
	 	6.23	 	Prohibited Person Compliance
	 
	 	 	 	Borrower warrants, represents and covenants that neither Borrower nor any Obligor
nor any of their respective Affiliates is or will be an entity or person (i) that is
listed in the Annex to, or is otherwise subject to the provisions of, Executive
Order 13224 issued on September 24, 2001 (“EO13224”), (ii) whose name appears on the
United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most
current list of “Specifically Designated National and Blocked Persons” (which list
may be published

-15-

 

	 	 	 	from time to time in various mediums including, but not limited to, the OFAC
website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit
or supports “terrorism”, as that term is defined in EO 13224, or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties or
persons described in subparts [i] — [iv] above are herein referred to as a
“Prohibited Person”). Borrower covenants and agrees that neither Borrower, nor any
Obligor nor any of their respective Affiliates will (i) knowingly conduct any
business, nor engage in any transaction or dealing, with any Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services to or for the benefit of a Prohibited Person, or (ii) engage in
or conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
EO13224. Borrower further covenants and agrees to deliver (from time to time) to
Lender any such certification or other evidence as may be requested by Lender in its
sole and absolute discretion, confirming that (i) neither Borrower nor any Obligor
is a Prohibited Person and (ii) neither Borrower nor any Obligor has knowingly
engaged in any business, transaction or dealings with a Prohibited Person,
including, but not limited to, the making or receiving of any contribution of funds,
goods, or services, to or for the benefit of a Prohibited Person.

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

	 	7.1	 	Required Coverages

	 	(a)	 	Open Perils/Special Form/Special Perils Property
	 
	 	 	 	The Borrower shall maintain “Open Perils,” “Special Form,” or “Special
Perils” property insurance coverage in an amount not less than one hundred
percent (100%) of the replacement cost of all insurable elements of the Real
Property and of all tangible Personal Property, with coinsurance waived, or
if a coinsurance clause is in effect, with an agreed amount endorsement
acceptable to the Lender. Coverage shall extend to the Real Property and to
all tangible Personal Property.
	 
	 	(b)	 	Broad Form Boiler and Machinery
	 
	 	 	 	If any boiler or other machinery is located on or about the Real Property,
the Borrower shall maintain broad form boiler and machinery coverage,
including a form of business income coverage.
	 
	 	(c)	 	Flood
	 
	 	 	 	If the Real Property is located in a special flood hazard area (that is, an
area within the 100-year floodplain) according to the most current flood
insurance rate map issued by the Federal Emergency Management Agency and if
flood insurance is available, the Borrower shall maintain flood insurance
coverage on all insurable elements of Real Property and of all tangible
Personal Property.
	 
	 	(d)	 	Comprehensive/General Liability
	 
	 	 	 	The Borrower shall maintain commercial general liability coverage (which may
be in the form of umbrella/excess liability insurance) with a One Million
Dollar ($1,000,000) combined single limit per occurrence and a minimum
aggregate

-16-

 

	 	 	 	limit of Two Million Dollars ($2,000,000). Lender reserves the right to
require increased coverage with respect to these amounts.
	 
	 	(e)	 	Worker’s Compensation
	 
	 	 	 	The Borrower shall maintain worker’s compensation if applicable.
	 
	 	(f)	 	Elective Coverages
	 
	 	 	 	The Lender may require additional coverages appropriate to the property type
and site location. Additional coverages may include liquor liability,
earthquake, windstorm, mine subsidence, sinkhole, supplemental liability, or
coverages of other property-specific risks, as determined by Lender.

	 	7.2	 	Primary Coverage
	 
	 	 	 	Each coverage required under this Section shall be primary rather than contributing
or secondary to the coverage Borrower may carry for other properties or risks,
provided, however, that blanket coverage shall be acceptable if (a) the
policy includes limits by property location and (b) the Lender determines, in the
exercise of its discretion, that the amount of such coverage is sufficient in light
of the other risks and properties insured under the blanket policy.
	 
	 	7.3	 	How the Lender Shall Be Named
	 
	 	 	 	On all property insurance policies and coverages required under this Section
(including coverage against loss of business income), the Lender must be named as
“first mortgagee” under a standard mortgage clause. On all liability policies and
coverages, the Lender must be named as an “additional insured.” The Lender shall be
referred to verbatim as follows: Transamerica Life Insurance Company, and its
successors, assigns, and affiliates; as their interest may appear; c/o AEGON USA
Realty Advisors, Inc.; Mortgage Loan Dept.; 4333 Edgewood Rd., NE; Cedar Rapids,
Iowa 52499-5443.”
	 
	 	7.4	 	Rating
	 
	 	 	 	Each insurance carrier providing insurance required under this Section must have,
independently of its parent’s or any reinsurer’s rating, a General Policyholder
Rating of A, and a Financial Rating of X or better, as reported in the most current
issue of Best’s Insurance Guide, or as reported by Best on its internet web site.
	 
	 	7.5	 	Deductible
	 
	 	 	 	The maximum deductible on each required coverage or policy is One Hundred Thousand
Dollars ($100,000).
	 
	 	7.6	 	Notices, Changes and Renewals
	 
	 	 	 	All policies required under this Section must require the insurance carrier to give
the Lender a minimum of thirty (30) days’ notice in the event of modification,
cancellation or termination or non renewal and shall provide that no act or omission
by the insured shall invalidate or diminish the insurance provided to Lender. The
Borrower shall report to the Lender immediately any facts known to the Borrower that
may adversely affect the appropriateness or enforceability of any insurance
contract, including, without limitation, changes in the ownership or occupancy of
the Real Property, any hazard to the Real Property and any matters that may give
rise to any claim. Prior to expiration of any policy required under this Section,
the Borrower shall provide either (a) an original or certified

-17-

 

	 	 	 	copy of the renewed policy, or (b) a “binder,” an Acord 28 (real property), Acord 27
(personal property) or Acord 25 (liability) certificate, or another document
satisfactory to the Lender conferring on the Lender the rights and privileges of
mortgagee. If the Borrower meets the foregoing requirement under clause (b), the
Borrower shall supply an original or certified copy of the original policy within
ninety (90) days. All binders, certificates, documents, and original or certified
copies of policies must name the Borrower as a named insured or as an additional
insured, must include the complete and accurate property address and must bear the
original signature of the issuing insurance agent.
	 
	 	7.7	 	Unearned Premiums
	 
	 	 	 	If this Deed of Trust is foreclosed, the Lender may at its discretion cancel any of
the insurance policies required under this Section and apply any unearned premiums
to the Indebtedness.
	 
	 	7.8	 	Forced Placement of Insurance
	 
	 	 	 	If the Borrower fails to comply with the requirements of this Section, the Lender
may, at its discretion, procure any required insurance. Any premiums paid for such
insurance, or the allocable portion of any premium paid by the Lender under a
blanket policy for such insurance, shall be a demand obligation under this Deed of
Trust, and any unearned premiums under such insurance shall comprise Insurance
Proceeds and therefore a portion of the Property.

	8.	 	INSURANCE AND CONDEMNATION PROCEEDS

	 	8.1	 	Adjustment and Compromise of Claims and Awards
	 
	 	 	 	The Borrower may settle any insurance claim or condemnation proceeding if the effect
of the casualty or the condemnation may be remedied for Two Hundred Fifty Thousand
Dollars ($250,000) or less. If a greater sum is required, the Borrower may not
settle any such claim or proceeding without the advance written consent of the
Lender. If a Default exists, the Borrower may not settle any insurance claim or
condemnation proceeding without the advance written consent of the Lender.
	 
	 	8.2	 	Direct Payment to the Lender of Proceeds
	 
	 	 	 	If the Insurance Proceeds received in connection with a casualty or the Condemnation
Proceeds received in respect of a condemnation exceed Two Hundred Fifty Thousand
Dollars ($250,000), or if there is a Default, then such proceeds shall be paid
directly to the Lender. The Lender shall have the right to endorse instruments which
evidence proceeds that it is entitled to receive directly.
	 
	 	8.3	 	Availability to the Borrower of Proceeds
	 
	 	 	 	The Borrower shall have the right to use the Insurance Proceeds or the Condemnation
Proceeds to carry out the Restoration of the Real Property, if the amount received
is less than Five Million Dollars ($5,000,000), subject to the conditions set forth
in Subsections 8.4, 8.5, and 8.6 of this Section.

-18-

 

	 	 	 	If the amount received in respect of a casualty or condemnation equals or exceeds
Five Million Dollars ($5,000,000), and if the Loan-to-Value ratio of the Property on
completion will be sixty-five percent (65%) or less, as determined by the Lender in
its discretion based on its estimate of the market value of the Real Property, the
Lender shall receive such Insurance Proceeds or Condemnation Proceeds directly and
hold them in a fund for Restoration subject to the conditions set forth in
Subsections 8.4, 8.5, and 8.6 of this Section. If the Lender’s estimate of
the market value of the Real Property implies a Loan-to-Value ratio of over
sixty-five percent (65%), and the Borrower disagrees with the Lender’s estimate, the
Borrower may require that the Lender engage an independent appraiser (the “Fee
Appraiser”) to prepare and submit to AEGON a full narrative appraisal report
estimating the market value of the Real Property. The Fee Appraiser shall be
certified in North Carolina and shall be a member of a national appraisal
organization that has adopted the Uniform Standards of Professional Appraisal
Practice (USPAP) established by the Appraisal Standards Board of the Appraisal
Foundation. The Fee Appraiser will be required to use the procedure for the
appraisal of the Real Property at the time of the origination of the Loan, including
the required assumptions and limiting conditions. For purposes of this Section, the
independent appraiser’s value conclusion shall be binding on both the Lender and the
Borrower. The Borrower shall have the right to make a prepayment of the Loan,
without premium, sufficient to achieve this Loan-to-Value ratio. The independent fee
appraisal shall be at the Borrower’s expense.
	 
	 	 	 	Unless the Borrower has the right to use the Insurance Proceeds or the Condemnation
Proceeds under the foregoing paragraphs, the Lender may, in its sole and absolute
discretion, either apply them to the Loan balance or disburse them for the purposes
of repair and reconstruction, or to remedy the effects of the condemnation. No
prepayment premium will be charged on Insurance Proceeds or Condemnation Proceeds
applied to reduce the principal balance of the Loan.
	 
	 	8.4	 	Conditions to Availability of proceeds
	 
	 	 	 	The Lender shall have no obligation to release Insurance Proceeds or Condemnation
Proceeds to the Borrower, and may hold such amounts as additional security for the
Loan, if (a) a Default exists, (b) a payment Default has occurred during the
preceding twelve (12) months, or (c) if the Insurance Proceeds or Condemnation
Proceeds received by the Lender and any other funds deposited by the Borrower with
the Lender are insufficient, as determined by the Lender in its reasonable
discretion, to complete the Restoration. If a Default exists, the Lender may at its
sole and absolute discretion apply such Insurance Proceeds and Condemnation Proceeds
to the full or partial cure of the Default.
	 
	 	8.5	 	Permitted Mezzanine Financing for Rebuilding or Remediation of the Effect
of Taking by Eminent Domain
	 
	 	 	 	If the Lender reasonably determines that the Insurance Proceeds or Condemnation
Proceeds received in respect of a casualty or condemnation, as the case may be,
would be insufficient to permit the Borrower to restore the Improvements to their
condition before the casualty, or to remedy the effect on the Real Property of the
condemnation, then the Borrower shall use its commercially reasonable efforts to
secure such additional funds as are necessary to effect the Restoration. The
Borrower’s obligation to use its commercially reasonable efforts shall be limited to
securing such funds on a non-recourse basis.

-19-

 

	 	 	 	Interests in the Borrower may be pledged as security to the extent necessary in
connection with any such financing.
	 
	 	8.6	 	Draw Requirements
	 
	 	 	 	The Borrower’s right to receive Insurance Proceeds and Condemnation Proceeds held by
the Lender under this Section shall be conditioned on the Lender’s approval of plans
and specifications for the Restoration, which approval shall not be unreasonably
withheld. Each draw shall be in the minimum amount of Fifty Thousand Dollars
($50,000). Draw requests shall be accompanied by customary evidence of construction
completion, and by endorsements to the Lender’s mortgagee title insurance coverage
insuring the absence of construction, mechanics’ or materialmen’s liens. Draws based
on partial completion of the Restoration shall be subject to a ten percent (10%)
holdback. All transactional expenses shall be paid by the Borrower.

	9.	 	DEFAULT

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

	 	(a)	 	Scheduled Payments
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, (i) any regular
monthly payment of principal and interest under the Notes, on or before the
tenth (10th) day of the month in which it is due or (ii) any
other scheduled payment under the Notes, this Deed of Trust or any other
Loan Document within ten (10) days of its due date.
	 
	 	(b)	 	Payment at Maturity
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, the Indebtedness when
the Loan matures by acceleration under Section 14, because of a
transfer or encumbrance under Section 12, or by lapse of time.
	 
	 	(c)	 	Demand Obligations
	 
	 	 	 	The Borrower’s failure to pay, or to cause to be paid, within five (5)
Business Days of the Lender’s demand, any other amount required under the
Notes, this Deed of Trust or any of the other Loan Documents.

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

	 	(a)	 	Material Untruth or Misrepresentation
	 
	 	 	 	The Lender’s discovery that any representation made by the Borrower in any
Loan Document was materially and adversely untrue or misleading when made,
if the misrepresentation either was intentional or is not capable of being
cured as described in Subsection 9.3(a) below.
	 
	 	(b)	 	Due on Sale or Encumbrance

-20-

 

	 	 	 	The occurrence of any sale, conveyance, transfer or vesting that would
result in the Loan becoming immediately due and payable at the Lender’s
option under Section 12.
	 
	 	(c)	 	Voluntary Bankruptcy Filing
	 
	 	 	 	The filing by the Borrower of a petition in bankruptcy or for relief from
creditors under any present or future law that affords general protection
from creditors.
	 
	 	(d)	 	Insolvency
	 
	 	 	 	The failure of the Borrower generally to pay its debts as they become due,
its admission in writing to an inability so to pay its debts, the making by
the Borrower of a general assignment for the benefit of creditors, or a
judicial determination that the Borrower is insolvent.
	 
	 	(e)	 	Receivership
	 
	 	 	 	The appointment of a receiver or trustee to take possession of any of the
assets of the Borrower.
	 
	 	(f)	 	Levy or Attachment
	 
	 	 	 	The taking or seizure of any material portion of the Property under levy of
execution or attachment.
	 
	 	(g)	 	Lien
	 
	 	 	 	The filing against the Real Property of any lien or claim of lien for the
performance of work or the supply of materials, or the filing of any
federal, state or local tax lien against the Borrower, or against the Real
Property, unless the Borrower promptly complies with Section 11 of
this Deed of Trust.
	 
	 	(h)	 	Defaults under other Loan Documents
	 
	 	 	 	The existence of any default or Default under the Loan Agreement or any
other Loan Document, provided any required Notice of such default has been
given and any applicable cure period has expired.
	 
	 	(i)	 	Dissolution or Liquidation
	 
	 	 	 	The Borrower shall initiate or suffer the commencement of a proceeding for
its dissolution or liquidation, and such proceeding shall not be dismissed
within sixty (60) days, or the Borrower shall cease to exist as a legal
entity.

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

	 	(a)	 	Unintentional Misrepresentations that are Capable of Being
Cured
	 
	 	 	 	A “Default” shall exist, with Notice, if the Lender discovers that the
Borrower has unintentionally made any material and adverse misrepresentation
that is capable of being cured, unless the Borrower promptly commences and
diligently pursues a cure of the misrepresentation approved by the Lender,
and completes the cure within one hundred twenty (120) days of its receipt
of Notice. Any such cure shall place the Lender in the risk position that
would have existed had the false representation been true when made. The
Lender shall afford the Borrower an additional one hundred twenty (120) day
period in cases where construction or repair is needed to cure the potential
Default, and the cure cannot be completed

-21-

 

	 	 	 	within the first one hundred twenty (120) day cure period. During the cure
period, the Borrower has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved.
	 
	 	(b)	 	Involuntary Bankruptcy or Similar Filing
	 
	 	 	 	The Borrower becomes the subject of any petition or action seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief, or that may result in a composition of its debts,
provide for the marshaling of the Borrower’s assets for the satisfaction of
its debts, or result in the judicially ordered sale of the Borrower’s assets
for the purpose of satisfying its obligations to creditors, unless dismissed
within sixty (60) days of the filing of the petition or other action.
	 
	 	(c)	 	Entry of a Material Judgment
	 
	 	 	 	Any judgment is entered against the Borrower or any other Obligor, involving
an aggregate amount of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) or more (unless another Default then exists, in which event
there shall be no dollar limitation), and the judgment may materially and
adversely affect the value, use or operation of the Real Property, unless
the judgment is satisfied within thirty (30) days or the Borrower’s insurer
accepts full coverage and liability in writing within such thirty (30) day
period.
	 
	 	(d)	 	Other Defaults
	 
	 	 	 	The Borrower fails to observe any promise or covenant made in this Deed of
Trust, unless the failure results in a Default described elsewhere in this
Section 9, provided the Lender delivers written Notice to the
Borrower of the existence of such an act, omission or circumstance, and that
such an act, omission or circumstance shall constitute a Default under the
Loan Documents unless the Borrower promptly initiates an effort to cure the
potential Default, pursues the cure diligently and continuously, and
succeeds in effecting the cure within one hundred twenty (120) days of
receipt of Notice. The Lender shall afford the Borrower an additional one
hundred twenty (120) day period in cases where construction or repair is
needed to cure the potential Default, and the cure cannot be completed
within the first one hundred twenty (120) day cure period. During the cure
period, the Borrower has the obligation to provide on demand satisfactory
documentation of its effort to cure, and, upon completion, evidence that the
cure has been achieved. All notice and cure periods provided in this Deed of
Trust shall run concurrently with any notice or cure periods provided by law
and in any of the other Loan Documents.

	10.	 	RIGHT TO CURE
	 
	 	 	The Lender shall have the right to cure any Default. The expenses of doing so shall be part
of the Indebtedness, and the Borrower shall pay them to the Lender on demand.
	 
	11.	 	CONTEST RIGHTS

-22-

 

	 	 	The Borrower may secure the right to contest Impositions and construction, mechanics’ or
materialmen’s liens, through appropriate proceedings conducted in good faith, by either (A)
depositing with the Lender an amount equal to one hundred twenty five percent (125%) of the
amount of the Imposition or the lien, or (B) obtaining and maintaining in effect a bond
issued by a surety acceptable to the Lender, in an amount equal to the greater of (i) the
amount of a required deposit under clause (A) above and (ii) the amount required by the
surety or by the court in order to obtain a court order staying the foreclosure of the lien
pending resolution of the dispute, and releasing the lien of record. The proceeds of such a
bond must be payable directly to the Lender. The surety issuing such a bond must be
acceptable to the Lender in its reasonable discretion. After such a deposit is made or bond
issued, the Borrower shall promptly commence the contest of the lien and continuously pursue
that contest in good faith and with reasonable diligence. If the contest of the related
Imposition or lien is unsuccessful, any deposits or bond proceeds shall be used to pay the
Imposition or to satisfy the obligation from which the lien has arisen. Any surplus shall be
refunded to the Borrower.
	 
	12.	 	DUE ON TRANSFER OR ENCUMBRANCE
	 
	 	 	Upon the sale or transfer of any portion of the Property or any other conveyance, transfer
or vesting of any direct or indirect interest in the Property, including (i) any encumbrance
(other than a Permitted Encumbrance) of the Real Property (unless the Borrower contests the
encumbrance in compliance with Section 11); and (ii) the granting of any security
interest in the Property (other than Permitted Encumbrances), the Indebtedness shall, at the
Lender’s option, become immediately due and payable without Notice to the Borrower.
	 
	13.	 	ABSOLUTE ASSIGNMENT OF LEASES AND RENTS

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

-23-

 

	 	 	 	tenant a security or other deposit not actually received by Lender or (d) to
indemnify any tenant for any injury or damage to person or property sustained by any
person or persons, firm or corporation in or about the Real Property.
	 
	 	13.3	 	REPRESENTATIONS, WARRANTIES AND COVENANTS 
	 
	 	 	 	Borrower hereby represents, warrants, and covenants as follows.

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

	 	13.4	 	LICENSE
	 
	 	 	 	The Lender grants to the Borrower a conditional license, subject to the Lender’s
rights under Section 13.5 below, to collect the Rents, other than those
Rents paid more than one (1) month in advance. The Borrower may use the Rents so
collected for any lawful purpose which is consistent with the Borrower’s ongoing
performance of its obligations under the Loan Documents, provided (a) no Default
then exists and (b) the Borrower does not intend

-24-

 

	 	 	 	to cause, and has no reason to expect the occurrence of, any Default in respect of
the Obligations due to be performed in the following calendar month.
	 
	 	 	 	Any Rents excluded from the scope of this license shall be trust funds for the
benefit of the Lender. The Lender may require that such Rents be deposited in a
reserve fund to serve as additional security for the Loan, or to be used to benefit
the Real Property, under such terms and conditions as the Lender may determine in
the exercise of its sole and absolute discretion.
	 
	 	 	 	The Lender further grants to the Borrower a conditional license subject to the
Lender’s rights under Section 13.5 to take all Leasing Actions in the
ordinary course of business. The license does not extend to any Leasing Action that
permits (i) less than reasonable market rent during its original term or any
extension period, (ii) that permits prepayment of rent more than one (1) year in
advance, or such shorter period as is actually provided for rentals under the Lease,
or (iii) that modifies a Lease in any manner that increases the liability or
obligations of any successor to Borrower’s interest in such Lease or affects the
notice and cure rights available thereunder. Furthermore, any Leases to Affiliates
of Borrower, or other Leases specifically identified by Lender, must be
unconditionally subordinated to this Deed of Trust.
	 
	 	13.5	 	Revocation of License
	 
	 	 	 	Upon Default, the Lender may by Notice to the Borrower or Assignor immediately
terminate the Borrower’s licenses under Section 13.4, regardless of whether
the Real Property or any other collateral adequately secures the Loan’s eventual
repayment. Upon the termination of the Borrower’s license, the Borrower shall
immediately deliver to the Lender all Rents then in the Borrower’s possession, and
all Rents then due or accruing thereafter shall be payable by tenants directly to
the Lender. This Assignment shall constitute a direction to and full authority to
any tenant of the Real Property, upon the Lender’s written request, to pay all Rents
to the Lender, without requiring the Lender to prove to the tenant the existence of
Default. The Borrower agrees to deliver immediately to the Lender any Rents received
by the Borrower after the revocation of the Borrower’s license under Section
4, and at the Lender’s written request, shall execute such further assignments
to the Lender of any Lease as the Lender may in its sole judgment request. This
Assignment is given in connection with the Loan and in support of the performance of
the Obligations, and nothing herein contained shall be construed as (a) constituting
the Lender a “mortgagee-in-possession” of the Real Property, or (b) an assumption by
the Lender of the Borrower’s obligations as landlord under the Leases.
	 
	 	 	 	Upon the cure of all Defaults, the Lender may by Notice to the Borrower, reinstate
the licenses of the Borrower under Section 13.4 of this Deed of Trust.

	14.	 	ACCELERATION
	 
	 	 	If a Default exists, the Lender may, at its option, declare the unpaid principal balance of
the Notes to be immediately due and payable, together with all accrued interest on the
Indebtedness, all costs of collection (including reasonable attorneys’ fees and expenses)
and all other charges due and payable by the Borrower under the Notes or any other Loan
Document.

-25-

 

	 	 	If the subject Default is nonmonetary in nature other than a Default arising under
Section 9.2(b), the Lender shall exercise its option to accelerate only by giving
Notice of acceleration to the Borrower. The Lender shall not give any such Notice of
acceleration until (a) the Borrower has been given any required Notice of the prospective
Default and (b) any applicable cure period has expired.
	 
	 	 	Except as expressly described in this Section, no notice of acceleration shall be required
in order for the Lender to exercise its option to accelerate the Indebtedness in the event
of Default.
	 
	15.	 	RIGHTS OF ENTRY AND TO OPERATE

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

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

-26-

 

	 	 	Upon Default, the Lender may immediately proceed to with the foreclosure of the lien of
this Deed of Trust, against all or part of the Property, and at the option of Lender, the
Trustee may foreclose this Deed of Trust by judicial proceedings in accordance with the laws
of North Carolina, or Lender may without further notice direct Trustee, and Trustee is
authorized and empowered, in accordance with applicable law relating to nonjudicial
foreclosure sales under power of sale then in effect, to foreclose the lien of this Deed of
Trust, after first having given such notice of hearing as to commencement of foreclosure
proceedings and obtained such findings or leave of court as may then be required by law, and
after having given such notice and advertising the time and place of sale in such manner as
may then be required by law, and to sell and dispose of all or any part of the Property, as
public auction for cash, in any sequence or order as the Lender may elect, and all the
right, title, and interest of Borrower therein, by sale at any place then authorized by law
as may be specified in the notice of such sale, to the highest bidder. Upon final completion
of such sale and any resales as made pursuant to law, Trustee shall execute a conveyance of
the Property, or applicable portion thereof, to the purchaser. After retaining a reasonable
fee, not to exceed five percent (5%) of the gross proceeds of sale, as compensation to
Trustee, Trustee shall apply the proceeds of the sale as follows: first, to pay all
reasonable fees, charges and costs of conducting the sale and advertising the Property, and
to pay any prior liens or encumbrances unless such sale is made subject thereto, and to pay
necessary costs, as well as to reimburse Lender for its advances, to protect and maintain
the Property, and to pay Impositions, in accordance herewith; second, to pay Lender all
accrued and unpaid interest under the Notes, then the unpaid principal balance of the Notes,
and then all of the other Indebtedness; and third, the remainder of the proceeds, if any, to
Borrower. The purchaser at the sale shall not be responsible for the application of the
proceeds. No provision in this Deed of Trust concerning foreclosure procedures which
specifies any particular actions to be taken by Trustee or Lender shall be deemed to
contradict the requirements and procedures (now or hereafter existing) of North Carolina
law, and any such contradiction shall be resolved in favor of North Carolina law applicable
at the time of foreclosure. Lender may sell the Personal Property hereunder in whole or part
and in any order, together with the remaining Property or separately. Lender may bid and
become the purchaser at any sale under this Deed of Trust and may apply against the purchase
price all or any portion of the balance of the Indebtedness.
	 
	18.	 	WAIVERS
	 
	 	 	To the maximum extent permitted by applicable law, the Borrower irrevocably and
unconditionally WAIVES and RELEASES any present or future rights (a) of reinstatement or
redemption now or hereafter available to the Lender following a Default, (b) that may exempt
the Property from any civil process, (c) to appraisal or valuation of the Property, (d) to
extension of time for payment, (e) that may subject the Lender’s exercise of its remedies to
the administration of any decedent’s estate or to any partition or liquidation action, (f)
to any homestead and exemption rights provided by the Constitution and laws of the United
States and of North Carolina, (g) to notice of acceleration or notice of intent to
accelerate (other than as expressly stated herein) following a Default, and (h) that in any
way would delay or defeat the right of the Lender to cause the sale of the Real Property for
the purpose of satisfying the Indebtedness following a Default. The Borrower agrees that the
price paid at a lawful foreclosure sale, whether by the Lender or by a third party, and
whether paid through cancellation of all or a portion of the Indebtedness or in cash, shall
conclusively establish the value of the Real Property.
	 
	 	 	The foregoing waivers shall apply to and bind any party assuming the Obligations of the
Borrower under this Deed of Trust.

-27-

 

19. SECURITY AGREEMENT AND FIXTURE FILING

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

-28-

 

	 	 	 	the specific business operations of Borrower and/or its subsidiaries), at any
time from the commencement of the Loan term through the satisfaction of all of the
Obligations.
	 
	 	 	 	“Goods” shall have the definition assigned in the UCC. “Goods” include all
detached Fixtures, items of Personal Property that may become Fixtures, property
management files, accounting books and records, reports of consultants relating to
the Real Property as commercial real estate, site plans, test borings, environmental
or geotechnical surveys, samples and test results, blueprints, construction and shop
drawings, and plans and specifications.
	 
	 	 	 	“Goods Collateral” means all Goods that relate to the Real Property as
commercial real estate and are used in the operation of the Real Property as
commercial real estate.
	 
	 	 	 	“Instrument” shall have the definition assigned in the UCC.
	 
	 	 	 	“Instrument Collateral” means all Instruments received as Rents or
identifiable Proceeds of Property or purchased by the Borrower with Rents or
identifiable Proceeds.
	 
	 	 	 	“Investment Property” shall have the definition assigned in the UCC.
	 
	 	 	 	“Investment Property Collateral” means all the Investment Property purchased
using Rents or identifiable Proceeds of Property, or received in respect of Account
Collateral.
	 
	 	 	 	“Money Collateral” means all money received in respect of Rents.
	 
	 	 	 	“Personal Property” means Account Collateral, Chattel Paper Collateral,
Commercial Tort Claim Collateral, Deposit Account Collateral, Document Collateral,
Equipment Collateral, General Intangibles Collateral, Goods Collateral, Instrument
Collateral, Investment Property Collateral, and Money Collateral but shall not
include the Excluded Collateral.
	 
	 	 	 	“Proceeds” mean all proceeds (as defined in the UCC) of any Property.
	 
	 	 	 	“UCC” means the Uniform Commercial Code as adopted in North Carolina.
	 
	 	19.2	 	Creation of Security Interest
	 
	 	 	 	This Deed of Trust shall be self-operative and shall constitute a security agreement
pursuant to the provisions of the UCC with respect to the Personal Property. The
Borrower, as debtor, hereby grants the Lender, as secured party, for the purpose of
securing the Indebtedness, a security interest in the Account Collateral, Chattel
Paper Collateral, Commercial Tort Claim Collateral, Deposit Account Collateral,
Document Collateral, Equipment Collateral, General Intangible Collateral, Goods
Collateral, Instrument Collateral, Investment Property Collateral, and Money
Collateral, in the accessions, additions, replacements, substitutions and Proceeds
of any of the foregoing items of collateral. Upon Default, the Lender shall have the
rights and remedies of a secured party under the UCC as well as all other rights and
remedies available at law or in equity, and, at the Lender’s option, the Lender may
also invoke the remedies provided elsewhere in this Deed of Trust as to such
Property. The Borrower and the Lender agree that the rights granted to the Lender as
secured party under this Section 19 are in addition

-29-

 

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

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

-30-

 

	 	 	 	replacements, renewals, and additions shall become and be immediately
subject to the security interest of this Deed of Trust.
	 
	 	(e)	 	Proceeds
	 
	 	 	 	The Borrower shall not, without the Lender’s prior written consent, dispose
of any Personal Property in any other manner, except in compliance with
Subsection 19.6(d) above.

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

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

-31-

 

20. ENVIRONMENTAL MATTERS

	 	20.1	 	Representations
	 
	 	 	 	The Borrower represents as follows:

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

	 	20.2	 	Environmental Covenants
	 
	 	 	 	The Borrower covenants as follows:

	 	(a)	 	Compliance with Environmental Laws
	 
	 	 	 	The Borrower shall, and the Borrower shall cause all employees, agents,
contractors, and tenants of the Borrower to, keep and maintain the Real
Property in compliance with all Environmental Laws.
	 
	 	(b)	 	Notices, Actions and Claims
	 
	 	 	 	The Borrower shall immediately advise the Lender in writing of (i) any
written notices from any governmental or quasi-governmental agency or
authority of violation or potential violation of any Environmental Law
received by the Borrower, (ii) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted, completed or threatened
pursuant to any Environmental Law about which Borrower has received written
notice, (iii) all claims made or threatened by any third party against the
Borrower or the Real Property relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous
Substances, and (iv) discovery by the Borrower of any occurrence or
condition on any real property adjoining or in the vicinity of the Real
Property that creates a foreseeable risk of contamination of the Real
Property by or with Hazardous Substances.

-32-

 

	 	20.3	 	The Lender’s Right to Control Claims
	 
	 	 	 	The Lender shall have the right (but not the obligation) to join and participate in,
as a party if it so elects, any legal proceedings or actions initiated in connection
with any Hazardous Substances and to have its related and reasonable attorneys’ and
consultants’ fees paid by the Borrower upon demand.
	 
	 	20.4	 	Indemnification
	 
	 	 	 	The Borrower shall be solely responsible for, and shall indemnify, defend, and hold
harmless the Lender, the Trustee, and their respective directors, officers,
employees, agents, successors and assigns, from and against, any claim, judgment,
loss, damage, demand, cost, expense or liability of whatever kind or nature, known
or unknown, contingent or otherwise, directly or indirectly arising out of or
attributable to the use, generation, storage, release, threatened release,
discharge, disposal, or presence (whether prior to or after the date of this Deed of
Trust) of Hazardous Substances on, in, under or about the Real Property (whether by
the Borrower, a predecessor in title, any tenant, or any employees, agents,
contractor or subcontractors of any of the foregoing or any third persons at any
time occupying or present on the Real Property), including: (i) personal injury;
(ii) death; (iii) damage to property; (iv) all consequential damages; (v) the cost
of any required or necessary repair, cleanup or detoxification of the Real Property,
including the soil and ground water thereof, and the preparation and implementation
of any closure, remedial or other required plans; (vi) damage to any natural
resources; and (vii) all reasonable costs and expenses incurred by the Lender or the
Trustee in connection with clauses (i) through (vi), including reasonable attorneys’
and consultants’ fees; provided, however, that nothing contained in this
Section shall be deemed to preclude the Borrower from seeking indemnification from,
or otherwise proceeding against, any third party including any tenant or predecessor
in title to the Real Property, and further provided that this
indemnification will not extend to matters caused by the Lender’s gross negligence
or willful misconduct, or arising from a release of Hazardous Substances which
occurs after the Lender has taken possession of the Real Property, so long as the
Borrower has not caused the release through any act or omission. The covenants,
agreements, and indemnities set forth in this Section shall be binding upon the
Borrower and its successors and assigns, and shall survive repayment of the
Indebtedness, foreclosure of the Real Property, and the Borrower’s granting of a
deed to the Real Property in lieu of foreclosure. Payment shall not be a condition
precedent to this indemnity. Any costs or expenses incurred by the Lender or the
Trustee for which the Borrower is responsible or for which the Borrower has
indemnified the Lender shall be paid to the Lender on demand, with interest at the
Default Rate from the date incurred by the Lender until paid in full, and shall be
secured by this Deed of Trust. Without the prior written consent of the Lender,
which consent shall not be unreasonably withheld, the Borrower shall not enter into
any settlement agreement, consent decree, or other compromise in respect to any
claims relating to Hazardous Substances. The Lender agrees that it shall not
unreasonably delay its consideration of any written request for its consent to any
such settlement agreement, consent decree, or other compromise once all information,
reports, studies, audits, and other documentation have been submitted to the Lender.
	 
	 	20.5	 	Environmental Audits
	 
	 	 	 	If a Default exists, or the Lender has a reasonable basis to believe that a release
of Hazardous Substances may have occurred, the Lender may require that the Borrower

-33-

 

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

21. CONCERNING THE TRUSTEE

	 	21.1	 	No Liability
	 
	 	 	 	If the Trustee or anyone acting by virtue of the Trustee’s powers enters the Real
Property, the Trustee will not be personally liable for debts contracted or for
liability or damages incurred in the management or operation of the Real Property.
The Trustee will have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by the Trustee or
believed by the Trustee in good faith to be genuine. The Trustee will be entitled to
reimbursement for expenses actually incurred by the Trustee in the performance of
the Trustee’s duties and to reasonable compensation for services rendered. The
Borrower shall, from time to time, pay compensation due the Trustee under this Deed
of Trust and reimburse the Trustee for and save and hold the Trustee harmless from
and against any and all loss, cost, liability, damage and expense whatsoever
incurred by the Trustee in the performance of the Trustee’s duties.
	 
	 	21.2	 	Retention of Money
	 
	 	 	 	All money received by the Trustee must, until used or applied, be held in trust for
the purposes for which it was received, but need not be segregated in any manner
from any other money (except to the extent required by law) and the Trustee will
have no liability for interest on any money received.

-34-

 

	 	21.3	 	Successor Trustees
	 
	 	 	 	The Trustee may resign by giving notice of such resignation in writing to the
Lender. If the Trustee’s legal existence shall cease or if the Trustee resigns or
becomes disqualified from acting in the execution of this Trust or fails or refuses
to exercise the same when requested by the Lender so to do or if for any reason and
without cause the Lender prefers to appoint a substitute trustee to act instead of
the original Trustee, or any prior successor or substitute trustee, the Lender will
have full power to appoint a substitute trustee and, if preferred, several
substitute trustees in succession who shall succeed to all the estates, rights,
powers and duties of the Trustee.
	 
	 	21.4	 	Succession Instruments
	 
	 	 	 	Any new Trustee appointed will, without any further act, deed or conveyance, become
vested with all the estates, properties, rights, powers and trusts of the Trustee’s
predecessor. Upon the written request of the Lender or of any successor trustee, the
former Trustee shall execute and deliver an instrument transferring to such
successor Trustee all the estates, properties, rights, powers and trusts of the
former Trustee, and shall duly assign, transfer and deliver any of the property and
money held by the former Trustee to the successor Trustee so appointed in the former
Trustee’s place.
	 
	 	21.5	 	Performance of Duties by Agents
	 
	 	 	 	The Trustee may authorize one or more parties to act on the Trustee’s behalf to
perform the Trustee’s ministerial functions, including, without limitation, the
transmittal and posting of any notices.

22. MISCELLANEOUS

	 	22.1	 	Successors and Assigns
	 
	 	 	 	All of the terms of the Loan Documents shall apply to, be binding upon and inure to
the benefit of the successors and assigns of the Obligors, or to the holder of the
Notes, as the case may be.
	 
	 	22.2	 	Survival of Obligations
	 
	 	 	 	Each and all of the Obligations shall continue in full force and effect until the
latest of (a) the date the Indebtedness has been paid in full and the Obligations
have been performed and satisfied in full, (b) the last date permitted by law for
bringing any claim or action with respect to which the Lender may seek payment or
indemnification in connection with the Loan Documents, and (c) the date on which any
claim or action for which the Lender seeks payment or indemnification is fully and
finally resolved and, if applicable, any compromise thereof of judgment or award
thereon is paid in full.
	 
	 	22.3	 	Further Assurances
	 
	 	 	 	The Borrower, upon the request of the Lender or the Trustee, shall complete,
execute, acknowledge, deliver and record or file such further instruments and do
such further acts as may be reasonably necessary to carry out more effectively the
purposes of this Deed of Trust, to subject any property intended to be covered by
this Deed of Trust to the liens

-35-

 

	 	 	 	and security interests it creates, to place third parties on notice of those liens
and security interests, or to correct any defects which may be found in any Loan
Document.
	 
	 	22.4	 	Right of Inspection
	 
	 	 	 	The Lender shall have the right from time to time, upon reasonable advance notice to
the Borrower, to enter onto the Real Property during regular business hours for the
purpose of inspecting and reporting on its physical condition, tenancy and
operations; provided the Lender shall not unreasonably interfere with the use and
operation of the Real Property.
	 
	 	22.5	 	Expense Indemnification
	 
	 	 	 	The Borrower shall pay all filing and recording fees, documentary stamps, intangible
taxes, and all expenses incident to the execution and acknowledgment of this Deed of
Trust, the Notes or any of the other Loan Documents, any supplements, amendments,
renewals or extensions of any of them, or any instrument entered into under
Subsection 22.3. The Borrower shall pay or reimburse the Lender, upon demand,
for all costs and expenses, including appraisal and reappraisal costs of the
Property and reasonable attorneys’ and legal assistants’ fees, which the Lender may
incur in connection with enforcement proceedings under the Notes, this Deed of
Trust, or any of the other Loan Documents (including all fees and costs incurred in
enforcing or protecting the Notes, this Deed of Trust, or any of the other Loan
Documents in any bankruptcy proceeding), and reasonable attorneys’ and legal
assistants’ fees incurred by the Lender in any other suit, action, legal proceeding
or dispute of any kind in which the Lender is made a party or appears as party
plaintiff or defendant, affecting the Indebtedness, the Notes, this Deed of Trust,
any of the other Loan Documents, or the Property, or required to protect or sustain
the lien of this Deed of Trust. The Borrower shall be obligated to pay (or
to reimburse the Lender) for such fees, costs and expenses and shall indemnify and
hold the Lender and the Trustee harmless from and against any and all loss, cost,
expense, liability, damage and claims and causes of action, including reasonable
attorneys’ fees, incurred or accruing by reason of the Borrower’s failure to
promptly repay any such fees, costs and expenses. If any suit or action is brought
to enforce or interpret any of the terms of this Deed of Trust (including any effort
to modify or vacate any automatic stay or injunction, any trial, any appeal, any
petition for review or any bankruptcy proceeding), the Lender shall be entitled to
recover all expenses reasonably incurred in preparation for or during the suit or
action or in connection with any appeal of the related decision, whether or not
taxable as costs. Such expenses include reasonable attorneys’ fees, witness fees
(expert or otherwise), deposition costs, copying charges and other expenses. Whether
or not any court action is involved, all reasonable expenses, including the costs of
searching records, obtaining title reports, appraisals, environmental assessments,
surveying costs, title insurance premiums, trustee fees, and other reasonable
attorneys’ fees, incurred by the Lender that are necessary at any time in the
Lender’s opinion for the protection of its interest or enforcement of its rights
shall become a part of the Indebtedness payable on demand and shall bear interest
from the date of expenditure until repaid at the interest rate as provided in the
Notes. The Borrower shall also pay all such costs and fees, including those of the
Lender’s attorneys, witnesses and appraisers, that are incurred after a trustee’s
sale or foreclosure in connection with an action for a deficiency judgment against
Borrower and the same shall not be secured by this Deed of Trust.

-36-

 

	 	22.6	 	General Indemnification
	 
	 	 	 	The Borrower shall indemnify, defend and hold the Lender harmless against: (i) any
and all claims for brokerage, leasing, finder’s or similar fees which may be made
relating to the Real Property or the Indebtedness and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits costs and expenses
(including the Lender’s reasonable attorneys’ fees, together with reasonable
appellate counsel fees, if any) of whatever kind or nature which may be asserted
against, imposed on or incurred by the Lender in connection with the Indebtedness,
this Deed of Trust, the Real Property or any part thereof, or the operation,
maintenance and/or use thereof, or the exercise by the Lender of any rights or
remedies granted to it under this Deed of Trust or pursuant to applicable law;
provided, however, that nothing herein shall be construed to obligate the Borrower
to indemnify, defend and hold harmless the Lender from and against any of the
foregoing which is imposed on or incurred by the Lender by reason of the Lender’s
willful misconduct or gross negligence.
	 
	 	22.7	 	Recording and Filing
	 
	 	 	 	The Borrower shall cause this Deed of Trust and all amendments, supplements, and
substitutions to be recorded, filed, re-recorded and re-filed in such manner and in
such places as the Lender may reasonably request. The Borrower will pay all
recording filing, re-recording and re-filing taxes, fees and other charges.
	 
	 	22.8	 	No Waiver
	 
	 	 	 	No deliberate or unintentional failure by the Lender to require strict performance
by the Borrower of any Obligation shall be deemed a waiver, and the Lender shall
have the right at any time to require strict performance by the Borrower of any
Obligation.
	 
	 	22.9	 	Covenants Running with the Land
	 
	 	 	 	All Obligations are intended by the parties to be and shall be construed as
covenants running with the Land.
	 
	 	22.10	 	Severability
	 
	 	 	 	The Loan Documents are intended to be performed in accordance with, and only to the
extent permitted by, all applicable Legal Requirements. Any provision of the Loan
Documents that is prohibited or unenforceable in any jurisdiction shall nevertheless
be construed and given effect to the extent possible. The invalidity or
unenforceability of any provision in a particular jurisdiction shall neither
invalidate nor render unenforceable any other provision of the Loan Documents in
that jurisdiction, and shall not affect the validity or enforceability of that
provision in any other jurisdiction. If a provision is held to be invalid or
unenforceable as to a particular person or under a particular circumstance, it shall
nevertheless be presumed valid and enforceable as to others, or under other
circumstances.
	 
	 	22.11	 	Usury
	 
	 	 	 	The parties intend that no provision of the Notes or the Loan Documents be
interpreted, construed, applied, or enforced so as to permit or require the payment
or collection of interest in excess of the Maximum Permitted Rate. In this regard,
the Borrower and the Lender each stipulate and agree that it is their common and
overriding intent to contract

-37-

 

	 	 	 	in strict compliance with applicable usury laws. Accordingly, none of the terms of
this Deed of Trust, the Notes or any of the other Loan Documents shall ever be
construed to create a contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the Maximum Permitted Rate, and
the Borrower shall never be liable for interest in excess of the Maximum Permitted
Rate. Therefore, (a) in the event that the Indebtedness and Obligations are prepaid
or the maturity of the Indebtedness and Obligations is accelerated by reason of an
election by the Lender, unearned interest shall be canceled and, if theretofore
paid, shall either be refunded to the Borrower or credited on the Indebtedness, as
the Lender may elect; (b) the aggregate of all interest and other charges
constituting interest under applicable laws and contracted for, chargeable or
receivable under the Notes and the other Loan Documents or otherwise in connection
with the transaction contemplated thereby shall never exceed the maximum amount of
interest, nor produce a rate in excess of the Maximum Permitted Rate; and (c) if any
excess interest is provided for or received, it shall be deemed a mistake, and the
same shall, at the option of the Lender, either be refunded to the Borrower or
credited on the unpaid principal amount (if any), and the Indebtedness shall be
automatically reformed so as to permit only the collection of the interest at the
Maximum Permitted Rate. Furthermore, if any provision of the Notes or any of the
other Loan Documents is interpreted, construed, applied, or enforced, in such a
manner as to provide for interest in excess of the Maximum Permitted Rate, then the
parties intend that such provision automatically shall be deemed reformed
retroactively so as to require payment only of interest at the Maximum Permitted
Rate. If, for any reason whatsoever, interest paid or received during the full term
of the applicable Indebtedness produces a rate which exceeds the Maximum Permitted
Rate, then the amount of such excess shall be deemed credited retroactively in
reduction of the then outstanding principal amount of the Indebtedness, together
with interest at such Maximum Permitted Rate. The Lender shall credit against the
principal of such Indebtedness (or, if such Indebtedness shall have been paid in
full, shall refund to the payor of such interest) such portion of said interest as
shall be necessary to cause the interest paid to produce a rate equal to the Maximum
Permitted Rate. All sums paid or agreed to be paid to the Lender for the use,
forbearance or detention of money shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread in equal parts throughout the full term
of the applicable Indebtedness, so that the interest rate is uniform throughout the
full term of such Indebtedness. In connection with all calculations to determine the
Maximum Permitted Rate, the parties intend that all charges be excluded to the
extent they are properly excludable under applicable usury laws, as they from time
to time are determined to apply to this transaction. The provisions of this Section
shall control all agreements, whether now or hereafter existing and whether written
or oral, between the Borrower and the Lender.
	 
	 	22.12	 	Entire Agreement
	 
	 	 	 	The Loan Documents contain the entire agreements between the parties relating to the
financing of the Real Property, and all prior agreements which are not contained in
the Loan Documents, other than the unsecured Environmental Indemnity Agreement, are
terminated. The Loan Documents represent the final agreement between the parties and
may not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties. The Loan Documents may be amended, revised, waived, discharged, released or
terminated only by a written instrument or instruments executed by the party against

-38-

 

	 	 	 	whom enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge, release
or termination that is not so documented shall be null and void.
	 
	 	22.13	 	Notices
	 
	 	 	 	In order for any demand, consent, approval or other communication to be effective
under the terms of this Deed of Trust, “Notice” must be provided under the terms of
this Subsection. All Notices must be in writing. Notices may be (a) delivered by
hand, (b) transmitted by facsimile (with a duplicate copy sent by first class mail,
postage prepaid), (c) sent by certified or registered mail, postage prepaid, return
receipt requested, or (d) sent by reputable overnight courier service, delivery
charges prepaid. Notices shall be addressed as set forth below:

If to the Lender:

Transamerica Life Insurance Company

c/o AEGON USA Realty Advisors, Inc.

4333 Edgewood Road, N.E.

Cedar Rapids, Iowa 52499-5443

Attn: Mortgage Loan Department

Reference: Loan No. D700218

Fax Number: (319) 369-2277

If to the Borrower:

John B. Sanfilippo & Son, Inc.

1703 North Randall Road

Mail Code — 2NW-EX

Elgin, Illinois 60123

Attn: Michael J. Valentine

Fax Number: (866) 610-1294

If to the Trustee:

First American Title Insurance Company

1932 Fleming Road,

Greensboro, North Carolina 27410

	 	 	 	Notices delivered by hand or by overnight courier shall be deemed given when
actually received or when refused by their intended recipient. Notices sent by
facsimile will be deemed delivered when a legible copy has been received (provided
receipt has been verified by telephone confirmation or one of the other permitted
means of giving Notices under this Subsection). Mailed Notices shall be deemed given
on the date of the first attempted delivery (whether or not actually received).
Either the Lender, the Trustee or the Borrower may change its address for Notice by
giving at least fifteen (15) Business Days’ prior Notice of such change to the other
parties.

-39-

 

	 	22.14	 	Counterparts
	 
	 	 	 	This Deed of Trust may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute but one instrument.
	 
	 	22.15	 	Choice of Law
	 
	 	 	 	This Deed of Trust shall be interpreted, construed, applied, and enforced according
to, and will be governed by, the laws of North Carolina, without regard to any
choice of law principle which, but for this provision, would require the application
of the law of another jurisdiction and regardless of where executed or delivered,
where payable or paid, where any cause of action accrues in connection with this
transaction, where any action or other proceeding involving the Loan is instituted,
or whether the laws of North Carolina otherwise would apply the laws of another
jurisdiction.
	 
	 	22.16	 	Forum Selection
	 
	 	 	 	The Borrower and Lender (by acceptance hereof) agree that the sole and exclusive
forum for the determination of any action relating to the validity and
enforceability of the Notes, this Deed of Trust and the other Loan Documents, and
any other instruments securing the Notes shall be either in an appropriate court of
the State of North Carolina or the applicable United States District Court, except
as otherwise set forth in the Loan Documents and except for actions relating to the
enforcement of the Deed of Trust which shall be venued as required under applicable
law.
	 
	 	22.17	 	Sole Benefit
	 
	 	 	 	This Deed of Trust and the other Loan Documents have been executed for the sole
benefit of the Borrower, the Trustee and the Lender and the successors and assigns
of the Lender. No other party shall have rights thereunder or be entitled to assume
that the parties thereto will insist upon strict performance of their mutual
obligations hereunder, any of which may be waived from time to time. The Borrower
shall have no right to assign any of its rights under the Loan Documents to any
party whatsoever.
	 
	 	22.18	 	Release of Claims
	 
	 	 	 	The Borrower hereby RELEASES, DISCHARGES and ACQUITS forever the Lender and the
Trustee and their officers, directors, trustees, agents, employees and counsel (in
each case, past, present or future) from any and all Claims existing as of the date
hereof (or the date of actual execution hereof by the Borrower, if later). As used
herein, the term “Claim” shall mean any and all liabilities, claims, defenses,
demands, actions, causes of action, judgments, deficiencies, interest, liens, costs
or expenses (including court costs, penalties, attorneys’ fees and disbursements,
and amounts paid in settlement) of any kind and character whatsoever, including
claims for usury, breach of contract, breach of commitment, negligent
misrepresentation or failure to act in good faith, in each case whether now known or
unknown, suspected or unsuspected, asserted or unasserted or primary or contingent,
and whether arising out of written documents, unwritten undertakings, course of
conduct, tort, violations of laws or regulations or otherwise.
	 
	 	22.19	 	No Partnership

-40-

 

	 	 	 	Nothing contained in the Loan Documents is intended to create any partnership, joint
venture or association between the Borrower and the Lender, or in any way make the
Lender a co-principal with the Borrower with reference to the Property.
	 
	 	22.20	 	Payoff Procedures
	 
	 	 	 	If the Borrower pays or causes to be paid to the Lender all of the Indebtedness,
then the Trustee’s interest in the Real Property shall cease, and upon receipt by
the Lender of such payment, the Lender shall either (a) release this Deed of Trust,
or (b) assign the Loan Documents and endorse the Notes (in either case without
recourse or warranty of any kind) to a takeout lender, upon payment (in the latter
case) of an administrative fee of Seven Hundred Fifty Dollars ($750).
	 
	 	22.21	 	Future Advances
	 
	 	 	 	This Deed of Trust secures (a) all present and future loan disbursements made by the
Lender under the Notes, and (b) all other sums from time to time owing to the Lender
under the Loan Documents. The amount of the present disbursement secured hereby is
Forty-five Million Dollars ($45,000,000), which is also the maximum amount the
Lender has agreed to lend. In the event that the Lender hereafter agrees to make
any additional disbursement, the maximum principal amount which may be secured
hereby at any one time is Ninety Million Dollars ($90,000,000). The time period
within which such future disbursements are to be made is the period between the date
of this Deed of Trust and the date which is fifteen (15) years from the date of this
Deed of Trust. Disbursements secured hereby shall not be required to be evidenced by
a “written instrument or notation” as described in Section 45-68 (2) of the North
Carolina General Statutes, it being the intent of the parties that the requirements
of Section 45-68 (2) for a “written instrument or notation” for each advance shall
not be applicable to disbursements made under the Deed of Trust and Notes.
	 
	 	22.22	 	Interpretation

	 	(a)	 	Headings and General Application
	 
	 	 	 	The section, subsection, paragraph and subparagraph headings of this Deed of
Trust are provided for convenience of reference only and shall in no way
affect, modify or define, or be used in construing, the text of the
sections, subsections, paragraphs or subparagraphs. If the text requires,
words used in the singular shall be read as including the plural, and
pronouns of any gender shall include all genders.
	 
	 	(b)	 	Result of Negotiations
	 
	 	 	 	This Deed of Trust results from negotiations between the Borrower and the
Lender and from their mutual efforts. Therefore, it shall be so construed,
and not as though it had been prepared solely by the Lender.
	 
	 	(c)	 	Reference to Particulars
	 
	 	 	 	The scope of a general statement made in this Deed of Trust or in any other
Loan Document shall not be construed as having been reduced through the
inclusion of references to particular items that would be included within
the statement’s scope. Therefore, unless the relevant provision of a Loan
Document contains specific language to the contrary, the term “include”
shall mean “include, but

-41-

 

	 	 	 	shall not be limited to” and the term “including” shall mean “including,
without limitation.”
	 
	 	22.23	 	Joint and Several Liability
	 
	 	 	 	If there is more than one individual or entity executing this Deed of Trust as the
Borrower, liability of such individuals and entities under this Deed of Trust shall
be joint and several.
	 
	 	22.24	 	Time of Essence
	 
	 	 	 	Time is of the essence of each and every covenant, condition and provision of this
Deed of Trust to be performed by the Borrower.
	 
	 	22.25	 	Jury Waiver
	 
	 	 	 	THE BORROWER AND BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (I) UNDER
THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENT OR (II) ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS DEED OF TRUST OR ANY OTHER LOAN
DOCUMENT, AND THE BORROWER AND BY ITS ACCEPTANCE HEREOF, THE LENDER, AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.
	 
	 	22.26	 	Renewal, Extension, Modification and Waiver
	 
	 	 	 	The Lender may enter into a modification of any Loan Document or of the
Environmental Indemnity Agreement without the consent of any person not a party to
the document being modified. The Lender may waive any covenant or condition of any
Loan Document or of the Environmental Indemnity Agreement, in whole or in part, at
the request of any person then having an interest in the Property or in any way
liable for any part of the Indebtedness. The Lender may take, release, or resort to
any security for the Notes and the Obligations and may release any party primarily
or secondarily liable on any Loan Document or on the Environmental Indemnity
Agreement, all without affecting any liability not expressly released in writing by
the Lender.
	 
	 	22.27	 	Cumulative Remedies
	 
	 	 	 	Every right and remedy provided in this Deed of Trust shall be cumulative of every
other right or remedy of the Lender, whether conferred by law or by grant or
contract, and may be enforced concurrently with any such right or remedy. The
acceptance of the performance of any obligation to cure any Default shall not be
construed as a waiver of any rights with respect to any other past, present or
future Default. No waiver in a particular instance of the requirement that any
Obligation be performed shall be construed as a waiver with respect to any other
Obligation or instance. Furthermore, the Borrower hereby waives any rights or
remedies on account of any extensions of time, releases granted or other dealings
between the Lender and any subsequent owner of the Property as such activities are
contemplated or otherwise addressed in Section 45-45.1 of the North Carolina General
Statutes or any similar or subsequent law.
	 
	 	22.28	 	No Obligation to Marshal Assets

-42-

 

	 	 	 	No holder of any deed of trust, security interest or other encumbrance affecting all
or any portion of the Real Property, which encumbrance is inferior to the title and
security interest of this Deed of Trust, shall have any right to require the Lender
to marshal assets.
	 
	 	22.29	 	Transfer of Ownership
	 
	 	 	 	The Lender may, without notice to the Borrower, deal with any person in whom
ownership of any part of the Real Property has vested, without in any way vitiating
or discharging the Borrower from liability for any of the Obligations.

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

	 	 	 	 	 
	 	BORROWER:

JOHN B. SANFILIPPO & SON, INC.,

a Delaware corporation [SEAL]

 	 
	 	By:  	/s/ Michael J. Valentine
 	 
	 	 	Michael J. Valentine 	 
	 	 	Its Chief Financial Officer and
Group President 	 
	 

-43-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]