Document:

Filed by Bowne Pure Compliance

EXHIBIT 4.7

PROMISSORY NOTE

			
	 	 	 
	 
	 	SAN BERNARDINO, CALIFORNIA
	$3,850,000.00
	 	AUGUST 5, 2008

FOR VALUE RECEIVED, the undersigned, NETREIT, a California corporation (“Maker”), hereby
promises to pay to MTL INSURANCE COMPANY, an Illinois corporation (“Lender”), or order, at
1200 Jorie Boulevard, Attention: Real Estate Investments, Oak Brook, Illinois 60523-2269, or at
such other place, or to such other party or parties as the holder of this Promissory Note (the
“Note”) may from time to time designate, the principal sum of Three Million Eight Hundred Fifty
Thousand and No/100 Dollars ($3,850,000.00), together with interest to be computed on the unpaid
principal balance from the date the funds are advanced at the rate of six and one-half percent
(6.50%) per annum until the date of maturity and at the rate of fourteen percent (14%) per annum
thereafter. Interest shall be calculated on the basis of a three hundred sixty (360) day year and
the actual days elapsed.

A payment of accrued interest shall be due and payable on September 1, 2008. Thereafter,
principal and interest on this Note shall be due and payable on the first (1st) day of
each month in consecutive monthly installments of Twenty-Five Thousand Nine Hundred Ninety-Five and
48/100 Dollars ($25,995.48) each, beginning October 1, 2008, and continuing on the first
(1st) day of each month thereafter until the entire indebtedness evidenced hereby is
fully paid. Unless this Note has matured earlier, pursuant to acceleration upon default or
otherwise, the entire amount of principal and accrued but unpaid interest shall be due and payable
on September 1, 2015. Absent any default, each installment shall be credited first on interest
then due and the remainder on principal, except that if any advance made by the holder hereof under
the terms of any instrument securing this Note has not been repaid, such installment may, at the
option of the holder, be credited first to repay such advance and interest thereon. All amounts
payable hereunder shall be paid in lawful money of the United States.

At its sole option, the holder of this Note may accept delinquent payments. On each
installment (or any other amount owing pursuant to this Note or any other document securing this
Note) paid after its due date there shall be a late charge of four percent (4%) of the amount of
such installment or other amount. In addition, the holder hereof may, at its sole option, require
payment of default interest on the entire unpaid principal balance of this Note and any other
amounts owing pursuant to this Note or any other document securing this Note at the rate of
fourteen percent (14%) per annum, from the date of such default until such default is cured by
Maker. Acceptance of any such delinquent installment or other amount and the late charge thereon
or default interest applicable thereto shall not constitute a waiver of the right to declare the
whole sum of principal, interest and prepayment premium immediately due and payable in the event of
any subsequent default.

This Note is closed to prepayment for the first three (3) loan years. Thereafter, this Note
may be paid in whole, together with all accrued and unpaid interest thereon, upon ninety (90) days’
prior written notice and payment of a prepayment premium during the fourth (4th) loan
year equal to four percent (4%) of the entire amount prepaid, with the prepayment premium to be
reduced to three percent (3%) during the fifth (5th) loan year and to one percent (1%)
during the sixth (6th) and seventh (7th) loan years. As used herein, the
term “loan year” shall mean each successive twelve (12) month period, with the first
(1st) loan year commencing on the due date of the first (1st) payment
hereunder, i.e. August 1, 2008, and each subsequent loan year commencing on each successive
anniversary thereof. Notwithstanding the foregoing, prepayment of this Note in full without
payment of any prepayment premium shall be permitted during the last ninety (90) days of the term
of this Note. No partial prepayments shall be permitted hereunder. Any prepayment of this Note
shall be made only on the first (1st) day of a calendar month following ninety (90) days
prior written notice to Lender.

If maturity of this Note is accelerated by the holder hereof because of an event of default,
as herein provided, or under the Deed of Trust, Security Agreement and Fixture Filing (the “Deed of
Trust”) securing this Note, and a tender of payment is made by or on behalf of Maker in an amount
necessary to satisfy the indebtedness at any time: (1) prior to judicial confirmation of
foreclosure sale; or (2) prior to trustee’s sale; such tender shall constitute an evasion of the
prepayment premium provided for in this Note, and shall be treated as a prepayment hereunder. Any
such tender must therefore include a default prepayment premium during the first three (3) loan
years equal to ten percent (10%) of all principal, and thereafter, such default prepayment premium
shall be as described above in the preceding paragraph and will apply to all sums outstanding due
Lender.

 

 

 

BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE TERMS
OF THIS NOTE, IT HAS AGREED THAT IT HAS NO RIGHT TO REPAY THIS NOTE IN WHOLE OR IN PART WITHOUT
PREMIUM EXCEPT AS OTHERWISE PROVIDED IN THE NOTE. FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES
ANY RIGHTS IT MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR
STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE OR ACQUIRED THE LOAN
EVIDENCED IN RELIANCE ON THE AGREEMENTS AND WAIVER OF MAKER AND THAT LENDER WOULD NOT HAVE MADE OR
ACQUIRED THIS LOAN WITHOUT SUCH AGREEMENTS AND WAIVER OF MAKER.

 

[Initials]

Time is of the essence for payment of all sums due under this Note. This Note shall become
immediately due and payable at the option of the holder hereof without presentment or demand or any
notice to Maker or any other person obligated hereon, upon default in the payment of any of the
principal or any interest thereon when due, or upon default in payment or failure of Maker to fully
perform all covenants, conditions, and obligations imposed under the terms and conditions of that
certain Loan Commitment issued by Lender to Maker on May 7, 2008, as accepted by Maker on May 7,
2008, as amended (the “Loan Commitment Agreement”), or any instrument securing this Note, or any
other agreement relating to the subject matter of the loan evidenced by this Note, or if any
default occurs or condition exists which authorizes the acceleration of the maturity hereof under
any of the foregoing documents. Notwithstanding the foregoing, in the event of Maker’s failure to
perform any non-monetary obligation under any of the foregoing documents, Maker shall not be in
default under this Note, unless Maker fails to cure such failure within thirty (30) days after
written notice from Lender of such failure, provided, however, said thirty (30) day cure period
shall not apply to: (1) any failure by Maker in satisfying any insurance requirements set forth in
Section 1.6 of the Deed of Trust or (2) any voluntary bankruptcy proceeding commenced by Maker.
Failure to exercise this option shall not constitute a waiver of the right to declare the whole sum
of principal, interest and prepayment premium immediately due in the event of any subsequent
default.

Except as provided herein, Maker, endorsers, guarantors and sureties of this Note, and each of
them, hereby waive (1) diligence, demand, presentment for payment, notice of non-payment, protest,
notice of protest and all other notice, (2) filing of suit, and (3) diligence in collecting this
Note. Maker, endorsers, guarantors and sureties of this Note agree that it will not be necessary
for any holder hereof, in order to enforce payment of this Note by any of them, to first institute
suit or exhaust its remedies against any maker or others liable for payment of this Note, and
consent to any extension or postponement of time of payment of this Note or any other indulgence
with respect thereto, including, but not limited to, the release of any party primarily or
secondarily liable hereon, without notice thereof to any of them. Maker, endorsers, guarantors and
sureties of this Note further severally waive the defenses of any other maker, including the
defense of the statute of limitations, or any right of offset, and the benefit of any exemption
laws as to the loan indebtedness evidenced by this Note, and consent that the holder of this Note
may extend the time of payment or otherwise modify the terms of payment of any part or the whole of
the loan indebtedness evidenced by this Note, at the request of any other person liable hereon; any
such consent shall not alter nor diminish the liability of any person.

It is the specific intent of Maker and Lender that this Note bear a lawful rate of interest,
and if any court of competent jurisdiction should determine that the interest rates (or any other
charges or costs set forth herein, or in any other Loan Document, that is deemed to be interest)
provided herein exceed that which is permitted for the type of transaction evidenced hereby, the
interest rates (and other applicable charges or costs) shall be reduced to the highest rate
permitted by applicable law, with any excess interest theretofore collected being applied against
principal or, if such principal has been fully repaid, returned to Maker on demand.

This Note shall be binding upon and inure to the benefit of the parties hereto and their
respective successors in interest and assigns.

In the event any holder hereof utilizes the services of an attorney in attempting to collect
the amounts due hereunder or to enforce the terms hereof, or of the Loan Commitment Agreement or
any other loan documents relating to the loan evidenced by this Note, or if any holder hereof
becomes party plaintiff or defendant in any legal proceeding in relation to the collateral
described in any of the documents evidencing, securing or executed in connection with the loan
evidenced by this Note (unless such document or instrument expressly provides to the contrary),
including, but not limited to, one or more Guaranties of even date herewith (collectively, the
“Loan Documents”) or for the recovery or protection of the loan indebtedness evidenced
hereby, Maker, and its successors and assigns, shall pay to such holder hereof, on demand, all
costs and expenses so incurred, including reasonable attorney’s fees, including those costs,
expenses and attorney fees incurred after the filing by or against Maker of any proceeding under
any chapter of the United States Bankruptcy Code, or similar federal or state statute, and whether
incurred in connection with the involvement of any holder hereof as creditor in such proceedings or
otherwise, and they will each make payment hereunder without prior resort of the holder hereof to
any security or against any other maker, endorser or guarantor.

 

-2-

 

If any provision hereof should be held unenforceable or invalid, in whole or in part, then
such unenforceable or void provision or part thereof shall be deemed separable from the remaining
provisions hereof and shall in no way affect the validity of this Note.

This Note is secured by the Deed of Trust of even date herewith for the benefit of Lender,
which is a lien on certain real property in San Bernardino County, California. This Note is also
secured by an Assignment of Leases and Rents and Financing Statement, all of even date herewith.

Maker acknowledges and agrees that Maker has read and understands the prohibition on Transfers
and further encumbrances in Section 3.2 of the Deed of Trust which are set forth more fully below
and confirms Maker’s agreement with the foregoing provisions by initialing the following space:

 

[Initials]

“Sales or Transfers. Unless prior thereto Trustor shall have obtained the
prior written consent of Beneficiary, which consent may be given or withheld in
Beneficiary’s sole and absolute discretion, Trustor shall be in default hereunder:

A. On sale, conveyance, assignment, further encumbrance or other transfer of:
(1) all or any part of the Trust Property or any interest therein (whether
voluntarily or by operation of law) other than leasing in the ordinary course of
business; or (2) any beneficial interest of Trustor in the Trust Property; or

B. If Trustor is a corporation, partnership, limited liability company, or
other legal entity, upon any changes in the ownership of Trustor resulting in a
transfer of fifty percent (50%) or more of such ownership interests (calculated on a
cumulative basis) as of the date hereof.

Upon the occurrence of such an event of default, Beneficiary may, in its sole
and absolute discretion, accelerate the maturity of the Note secured hereby so that
the entire principal balance plus accrued interest to date and a prepayment premium
is due and payable. In the event of any such acceleration of the Note, the
prepayment premium shall be ten percent (10%) during the first three (3) loan years
(as defined in the Note) and in accordance with the prepayment privilege set forth
in the Note thereafter. If a sale is proposed wherein the purchaser desires to
assume and agree to pay the Note, Beneficiary may, in its sole and absolute
discretion, approve such sale and assumption if it is satisfied with the purchaser,
the terms of the sale and the interest rate on the Note. In connection with any
such sale or transfer, reimbursement of all fees and costs incurred by Beneficiary,
including attorneys’ fees and costs, and payment of an assumption fee of one percent
(1%) of the then outstanding principal balance on the Note shall each be conditions
to any such approval by Beneficiary. No transfer of the Trust Property shall
relieve Trustor of its liability and obligations pursuant to the Loan Documents,
unless agreed to by Beneficiary in writing.

Notwithstanding the above and providing no default exists, transfers of
ownership interest in the Trust Property between Trustor and another entity directly
owned or controlled by Trustor will be permitted without invoking the one-time
assumption provision in the preceding paragraph, provided that Beneficiary is
provided notice and documentation of the transfer, that Trustor maintains management
control of the Trust Property and that Beneficiary is reimbursed for any
out-of-pocket costs which Beneficiary incurs relative to such transfer.”

 

-3-

 

All notices required or permitted under this Note shall be in writing and shall be given by:
(1) hand delivery to the address for notices; or (2) delivery by overnight courier service to the
address for notices; or (3) by certified mail, return receipt requested, addressed to the address
for notices by United States Mail, postage prepaid.

All notices shall be deemed received upon the earlier to occur of: (a) the hand delivery of
such notice to the address for notices; (b) one (1) day after the deposit of such notice with an
overnight courier service addressed to the address for notices; or (c) three (3) days after
depositing the notice in the United States Mail as set forth in (3) above.

All notices shall be addressed to the following addresses:

	 	 	 
	If to Maker:

	 	NetReit
	 

	 	365 S. Rancho Santa Fe Road, Suite 300
	 

	 	San Marcos, CA 92078-2338
	 
	If to Lender:

	 	MTL Insurance Company
	 

	 	1200 Jorie Boulevard
	 

	 	Oak Brook, Illinois 60523-2269
	 

	 	Attention: Vice President
	 

	 	                  Real Estate Investments

or to such other person or at such other place as any party hereto may by notice designate as a
place for service of notice.

This Note shall be construed according to the laws of the State of California. Maker hereby
submits to personal jurisdiction in the State of California for the enforcement of this Note and
waives any and all right to object to such jurisdiction for the purposes of litigation to enforce
this Note. Maker further agrees that in the event such litigation is commenced at any time when
Maker is not permanently domiciled in the State of California, Maker shall be deemed subject to
such proceeding by service of a copy of the summons, complaint and other pleadings required to
commence such litigation upon Jack K. Heilbron or Kenneth W. Elsberry, 365 S. Rancho Santa Fe Road,
Suite 300, San Marcos, California 92078-2338 or Bruce Rushall, Esq., Rushall & McGeever, 6100
Innovation Way, Carlsbad, California 92009, whom Maker hereby designates and appoints as Maker’s
agent for service of process in the State of California.

Maker agrees that this appointment of an agent for service of process is made for the mutual
benefit of Maker and Lender and may not be revoked without Lender’s consent, in its sole and
absolute discretion. Maker hereby agrees and consents that any such service of process upon such
agent shall be taken and held to be valid personal service upon Maker whether or not Maker shall be
then physically present, residing within, or doing business within the State of California, and
that any such service of process shall be of the same force and validity as if service were made
upon Maker when physically present, residing within, or doing business in the State of California.
Maker waives all claim of error by reason of any such service. Maker hereby consents to the
jurisdiction of either the Superior Court of San Bernardino County, California or the United States
District Court for the Central District of California, in any action, suit or proceeding which
Lender may at any time wish to file in connection with this Note or any related matter. Maker
irrevocably and unconditionally submits to exclusive personal and subject matter jurisdiction of
either of said Courts, stipulates that venue is proper and appropriate for any proceeding in either
of said Courts, and waives any claim that any action or proceeding brought in either of said Courts
has been brought in an inconvenient forum.

Maker agrees that (i) the obligation evidenced by this Note is an exempt transaction under the
Truth In Lending Act, 15 U.S.C., Sections 1601 et seq., and (ii) the proceeds of the
indebtedness evidenced by this Note will not be used for the purchase of registered equity
securities within the purview of Regulation “U” issued by the Board of Governors of the Federal
Reserve System.

 

-4-

 

Subject to the exceptions and qualifications described below, Maker’s liability for the
payment of the indebtedness or performance of the obligations evidenced by or created or arising
under this Note or the Deed of Trust and other Loan Documents securing this Note shall be limited
to its interest in the property encumbered by the Deed of Trust and other Loan Documents. In
addition, subject to the exceptions and qualifications described below, any judgment or decree in
any action brought to enforce the obligation of Maker to pay such indebtedness or perform such
obligations shall be enforceable against Maker only to the extent of its interest in the property
encumbered by the Deed of Trust and other Loan Documents and any
such judgment shall not be subject to execution on nor be a lien on assets of Maker other than its
interest in such property. The foregoing limitation of Maker’s liability shall be subject to the
following exceptions and qualifications:

1. N/A

2. Maker shall be fully and personally liable to the extent of loss, damage or other sums
owing to Lender and resulting from any of the following: (A) as a result of any fraud or
misrepresentation by Maker; (B) misappropriation by Maker of funds relating to or generated by the
Property; (C) any waste to the premises and improvements securing the loan evidenced by this Note;
(D) any retention of rental income, security deposits or similar income for the property securing
this Note after an event of default hereunder (other than funds used to maintain said property);
(E) any funds expended by Lender in performance of Maker’s obligation under any leases for the
property securing this Note; (F) any sums advanced by Lender to pay taxes and insurance on the
property securing this Note (other than funds paid out of Maker’s impound account with Lender);
(G) any interest due and accrued under this Note; (H) any costs incurred by Lender to enforce the
terms of this Note or the Loan Documents; (I) any removal and failure to replace any personal
property collateral securing this Note; (J) misapplication of insurance or condemnation proceeds;
(K) compliance with the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.; and (L) those
obligations set forth in that certain Indemnity Agreement Regarding Hazardous Materials of even
date herewith executed by Maker, Jack Heilbron and Kenneth Elsberry in favor of Lender.

3. Nothing contained herein shall affect or limit the ability of Lender to enforce any of its
rights or remedies with respect to any property encumbered by the Deed of Trust or other Loan
Documents.

4. Nothing contained herein shall affect or limit the rights of Lender to proceed against any
person or entity with respect to the enforcement of any guaranty or other similar rights.

MAKER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR
INDIRECTLY TO THE INDEBTEDNESS EVIDENCED BY THIS NOTE, OR ANY ACTS OR OMISSIONS OF LENDER, ITS
OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

	 	 	 	 	 
	 	NETREIT, a California corporation

 	 
	 	By:  	/s/ Kenneth W. Elsberry
 	 
	 	 	Kenneth W. Elsberry, 	 
	 	 	Secretary and Chief Financial Officer 	 
	 

 

-5-Filed by Bowne Pure Compliance

EXHIBIT 4.8

Recording Requested By

and When Recorded Return to:

Ralph C. Navarro, Esq.

Backus, Bland, Navarro & Weber LLP

444 South Flower Street, Suite 2160

Los Angeles, CA 90071

 

(Space Above This Line For Recorder’s Use)

DEED OF TRUST, SECURITY AGREEMENT

AND FIXTURE FILING

	 	 	 
	DATE:

	 	August 5, 2008
	 
	 	 
	TRUSTOR:

	 	NETREIT, a California corporation
	 

	 	365 S. Rancho Santa Fe Road, Ste. 300
	 

	 	San Marcos, CA 92078-2338
	 
	 	 
	TRUSTEE:

	 	LAWYERS TITLE COMPANY
	 

	 	4141 E. Inland Empire Blvd., Suite 290
	 

	 	Ontario, CA 91764
	 
	 	 
	BENEFICIARY:

	 	MTL INSURANCE COMPANY, an Illinois corporation
	 

	 	Attention: Real Estate Investments
	 

	 	1200 Jorie Boulevard
	 

	 	Oak Brook, Illinois 60523-2269

CONVEYANCE OF TRUST PROPERTY:

Witnesseth, that Trustor hereby irrevocably grants, transfers and assigns to Trustee, in
trust, with power of sale, all of Trustor’s estate, right, title and interest in, to and under that
certain real property located at 444 — 464 S. Waterman Avenue, in the City of San Bernardino,
County of San Bernardinio, State of California, more particularly described as follows:

See Exhibit A, attached hereto and incorporated herein by this reference;

Together with all buildings and improvements now placed as well as those hereafter to be
placed both thereon and therein, all rights and privileges appurtenant as well as to become
appurtenant to said real property, all oil and mineral rights, all appurtenances, easements,
reversions, remainders, water and water rights and water right applications, pumps and pumping
plants, pipes, flumes and ditches hereunto appertaining, all rights to the use of water as well as
all rights in ditches for the irrigation of said real property, all shares of stock evidencing such
rights or any of them, and all fixtures belonging to Trustor or at any time hereafter attached to
or used in any way in connection with the use, operation and occupancy of the above described real
property, buildings and improvements and any of them, distributing air, water, heat, electricity,
light, fuel, refrigeration, for ventilating, cooling or sanitary purposes, for the exclusion of
vermin or insects, for the removal of dust, refuse or garbage, all wall safes, engines, machinery,
boilers, furnaces, oil burners, coolers, refrigeration plants, motors, cabinets, shelving, lockers,
partitions, doors, vaults, elevators, sprinkling systems, irrigating systems, awnings, window
shades, venetian blinds, light fixtures, fire hose, fire brackets, fire boxes, fire sprinklers,
alarm systems, drapery rods, brackets, screens, floor tile, linoleum, carpets, plumbing, water
systems and power systems, incinerators, communication systems and all other heavy kitchen
equipment, installations and appliances attached to the mortgaged premises, all of said items,
whether now or hereafter to be installed, being hereby declared to be for all purposes of this
instrument a part of the realty.

 

 

 

Trustor absolutely and irrevocably assigns to Beneficiary the rents, issues, profits and
proceeds of said property. Trustor further covenants to use the rents, issues, profits and
proceeds for the following purposes (collectively, the “Property
Expenses”): (1) payments due to Beneficiary under the Note, as hereinafter defined, and the Loan
Documents, as hereinafter defined; (2) payment of real property taxes, or, if applicable, payment
towards any required impound account; (3) payment of insurance premiums or, if applicable, payment
towards any required impound account; (4) payments to discharge any and all other liens,
encumbrances, assessments and security interests in the real and personal property collateral
described herein; (5) payment of expenses to maintain the Trust Property; and (6) all other
expenses necessary for the operation of the real and personal property collateral described herein.
Trustor further represents and warrants that the rents, issues, profits and proceeds will not be
used by Trustor for any other purpose, unless and until the Property Expenses have been paid in
full, and, if the rents, issues, profits and proceeds are used for purposes other than the payment
of the Property Expenses when such Property Expenses are due and payable, a failure to pay the
Property Expenses shall be an event of default hereunder.

All property granted, transferred and assigned to the Trustee hereunder is hereinafter
sometimes referred to as the “Trust Property”, and Trustor warrants that it is well and truly
seized of a good and marketable title in fee simple to the real property hereby conveyed; that the
title to all Trust Property conveyed by this Deed of Trust is clear, free and unencumbered, and
Trustor shall forever warrant and defend the same to Beneficiary, its successors and assigns,
against all claims whatsoever.

FOR THE PURPOSE OF CREATING A FIRST AND PRIOR ENCUMBRANCE AGAINST THE TRUST PROPERTY AND
SECURING, IN SUCH ORDER OF PRIORITY AS BENEFICIARY MAY ELECT:

A. Payment of the sum of Three Million Eight Hundred Fifty Thousand and No/100 Dollars
($3,850,000.00), with interest thereon, late charges, prepayment premiums and attorneys’ fees,
according to the terms of that certain Promissory Note of even date herewith, made by Trustor,
payable to the order of Beneficiary (the “Note”), and any extensions, modifications or renewals
thereof;

B. Payment with interest thereon, in accordance with the terms of the obligation or
obligations evidencing same, of any and all additional loans or advances made by Beneficiary to
Trustor and/or the then record owner or owners of the Trust Property, or any part thereof, and any
extensions, modifications or renewals thereof;

C. Payment of all obligations incurred, and of all monies expended or advanced, by Beneficiary
pursuant to the terms of that certain Loan Commitment from Beneficiary to Trustor dated May 7,
2008, as accepted by Trustor on May 7, 2008, as amended (the “Loan Commitment Agreement”), or this
Deed of Trust, or the Assignment of Leases and Rents of even date herewith executed by Trustor
(the “Assignment of Leases and Rents”), or any other documents or instrument related to the
indebtedness hereby secured, including, but not limited to, the Borrower’s Certificate of even date
herewith, and that certain Guaranty of even date herewith, or any of the foregoing documents
(unless such document or instrument expressly provides to the contrary) (which Loan Commitment
Agreement, Deed of Trust, Note, Assignment of Leases and Rents, and related documents are
collectively referred to herein as the “Loan Documents”); and

D. Performance, payment and observance by Trustor of each covenant, agreement, term,
provision, obligation and condition contained in the Loan Documents.

This Deed of Trust is also intended to be a security agreement under the Uniform Commercial Code as
in force from time to time in the State of California.

TO PROTECT THE PROPERTY AND SECURITY GRANTED BY THIS TRUST DEED, IT IS AGREED:

1. TRUSTOR COVENANTS

1.1 Trustor’s Covenant of Payment and Performance. Trustor shall pay and perform each
of the obligations set forth in the Loan Documents in accordance with its terms.

1.2 Construction and Repair. Trustor shall promptly, and in a good and workmanlike
manner, and in conformity with plans and specifications approved by Beneficiary, complete any
improvements that may be commenced, and Trustor shall repair and restore any portions of the Trust
Property that may be damaged or destroyed. Trustor shall pay when due all claims for work
performed or materials furnished, or both, on or in connection with the Trust Property or any part
thereof, and shall pay, discharge, or cause to be removed within thirty (30) days after notice has
been given to Trustor, all mechanic’s, artisan’s, laborer’s, or materialmen’s charges, liens, claim
of liens or encumbrances upon the Trust Property. Notwithstanding the foregoing, Trustor shall
have the right to contest such charges, liens, claim of liens or encumbrances if, within such
thirty (30) day period, Trustor shall have either (1) filed a bond with respect to such lien(s) in
such amounts and in such form and content so as to cause the said lien(s) to be removed as lien(s)
against the Trust Property and delivered to
Beneficiary such proof of the removal of such liens as shall be satisfactory to Beneficiary in its
sole and absolute discretion or (2) deposited an amount equal to one and one-half (1-l/2) times the
claimed amount of lien with Beneficiary or its designee on such terms and conditions as shall be
satisfactory to Beneficiary in its sole and absolute discretion, including, without limitation, the
right to require that additional sums be deposited from time to time so that the amount deposited
shall in Beneficiary’s sole and absolute discretion be at all times not less than one and one
half (1-1/2) times the aggregate of all sums claimed by the lienors thereunder to be due and
payable and the right to apply such deposited amounts to the payment and discharge of such lien if
Beneficiary determines in its sole judgment that such lien is about to be foreclosed.

 

-2-

 

1.3 Compliance with Laws and CC&Rs. Trustor shall comply with all covenants,
conditions and restrictions affecting the Trust Property, and with all laws, ordinances and
regulations now or hereafter enacted affecting the Trust Property or the use thereof or requiring
any alterations or improvements to be made, including, but not limited to, the requirements of the
Americans With Disabilities Act, 42 U.S.C. §12101 et seq.

1.4 Maintenance and Alterations. Trustor shall neither commit nor suffer to occur any
waste upon the Trust Property, and will at all times make or cause to be made such repairs,
maintenance, renewals and replacements or otherwise, as may be necessary to maintain the Trust
Property thereon and therein in first class repair. All heating, plumbing, air-conditioning,
lighting, and other building equipment, or fixtures originally installed or thereafter placed in
such improvements shall be maintained therewith, except for the purpose of replacing the same
building equipment or fixtures, as the case may be, with equipment or fixtures having fair value,
both physical and economic, not less than the fair physical and economic value of the equipment or
fixtures so replaced. Other than in accordance with leases approved by Beneficiary, Trustor shall
make no substantial alterations to the Trust Property and shall not demolish, remove or damage any
of the improvements thereon. Trustor shall keep all buildings or improvements now or hereafter on
the Trust Property free of termites, dry rot, fungus, beetles and all other harmful and damaging
insects, and shall keep all plants, trees and shrubs on the Trust Property neatly pruned and in
good condition. Trustor shall keep the Trust Property free of rubbish and other unsightly or
unhealthful conditions.

1.5 Tax and Insurance Reserves. In addition to the monthly payments of principal and
interest payable under the terms of the Note secured hereby, Trustor covenants and agrees to pay on
the first day of each month until the indebtedness is paid, one-twelfth (1/12) of the annual taxes
and special assessments, and any other charges levied or to be levied against the Trust Property,
and one-twelfth (1/12) of the annual hazard and rental insurance premiums for the Trust Property,
said funds to be held by Beneficiary, or its agent, and used by it to pay taxes and assessments
before delinquent and to pay insurance premiums when due. Trustor further covenants and agrees
that if the reserve is not sufficient to pay all such items, upon notice of the amount of
deficiency, Trustor will immediately pay same to Beneficiary or its agent. Deposits made under
this Section 1.5 may be commingled with Beneficiary’s general corporate funds, and Beneficiary
shall have no liability to Trustor for any interest on such deposits. All amounts paid under this
Section are hereby assigned to Beneficiary as additional security for the indebtedness secured
hereby and, in the event of a default in the payment of any money or the performance of any
covenant or obligation herein contained or secured hereby, then any deposits made by the Trustor
under this paragraph may, at the option of Beneficiary, be applied to the payment of principal
and/or interest upon the indebtedness secured hereby, in lieu of being applied to any of the
purposes in this paragraph previously stated.

1.6 Insurance. Trustor will keep the improvements, now existing or hereafter erected
on the Trust Property, insured under an “All Risk” policy of extended coverage insurance (with a
vandalism and malicious mischief endorsement, a contingent liability from operation of building
laws endorsement (if applicable), a demolition cost endorsement (if applicable), an increased cost
of construction endorsement (if applicable), and, an agreed amount endorsement insuring against any
loss by fire and such other hazards and casualties, and with such other endorsements, as may be
required from time to time by Beneficiary, and written on a replacement cost basis or with a
replacement cost endorsement in an amount equal to the unpaid indebtedness secured hereby or for
not less than one hundred percent (100%) of the full insurable replacement cost (including debris
removal) of the improvements, whichever is greater, as agreed to by competent insurance appraisers
at Trustor’s expense but selected by Beneficiary, if Trustor and Beneficiary cannot agree upon such
replacement cost. Trustor will also provide insurance against loss of rents (in an amount equal to
the sum of real estate taxes, insurance premiums and rents for a period of six (6) months),
comprehensive general public liability and property damage insurance for not less than
$2,000,000.00 combined single limit on an each and every occurrence basis, sprinkler insurance and
boiler and machinery insurance, if applicable, and insurance against any other risks commonly
insured against by persons operating like properties in the locality of the Trust Property as may
be required by Beneficiary. If the Trust Property is located in a flood plain area as defined by
the Federal Insurance Administration pursuant to the Federal Flood Disaster Protection Act, Federal
Flood Insurance in the maximum obtainable amount (but not exceeding the Note amount) shall be
required. During the making of any alterations or improvements to the Trust Property, Trustor
shall also obtain and keep in force: (A) owner’s contingent liability insurance covering claims
not covered by the general

 

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comprehensive insurance referred to above; and (B) workmen’s
compensation
 insurance covering persons engaged in making such alterations or improvements. All such policies
shall be with companies or associations of companies rated A Class VIII or better by A. M. Best’s
and approved by Beneficiary, shall name Beneficiary as an additional insured with respect to
comprehensive general liability coverage and loss payee with respect to casualty and loss of rents
insurance, shall have standard noncontributory trust deed beneficiary clauses endorsed thereon
making losses payable to Beneficiary, shall include a waiver of subrogation rights, and shall
otherwise be in form, substance and amount satisfactory to Beneficiary. Acceptance of policies
tendered by Trustor shall not preclude Beneficiary from requiring other or additional insurance
against the same or other hazards. Trustor shall assign and deliver any and all policies of
insurance to Beneficiary or, at Beneficiary’s option, shall provide Beneficiary with certificates
of such insurance coverage that shall be irrevocable without thirty (30) days written notice to
Beneficiary and not subject to modification without Beneficiary’s prior written approval. At least
thirty (30) days before expiration of such policies, Trustor shall deliver renewals thereof
evidencing renewed and continued coverage for a period which is not less than the following twelve
(12) month period, together with satisfactory proof that the premium has been paid. If said
policies and proof of payment of premiums are not delivered to Beneficiary within the time
specified, Beneficiary shall have the right, but not the obligation, to obtain such insurance, or
insurance in favor of Beneficiary alone, on behalf of Trustor, and to advance the premium thereon.
Beneficiary shall have no obligation to obtain or renew any policies required to be maintained by
Trustor hereunder or to provide any type of liability insurance coverage whatsoever for Trustor.
Trustor shall pay to Beneficiary a late charge of $1,000.00 for each time that any required
insurance policy or policies or proof of payment of premiums therefore is not provided to
Beneficiary on or before the specified time period set forth herein.

In the event of loss, Trustor shall give immediate notice by mail to Beneficiary, and
Beneficiary may make proof of loss if not made promptly by Trustor. Each insurance company
concerned is authorized and directed to make payment for such loss directly to Beneficiary (instead
of to Trustor or to Trustor and Beneficiary jointly) and such insurance proceeds or any part
thereof may be applied by Beneficiary, at its option, and in such manner as it shall elect, to the
payment of interest due on the indebtedness secured hereby, to the reduction of the principal
amount of said indebtedness (in which event no prepayment premium shall be required as to such
reduction), to the payment of any other obligation secured hereby, or to the restoration or the
repair of the Trust Property. In the alternative, and at Beneficiary’s sole option, Beneficiary
may permit Trustor to use such proceeds to repair or replace all improvements damaged or destroyed,
and covered by such policy, in which event Trustor agrees to repair and rebuild the improvements on
the Trust Property without undue delay, holding Beneficiary harmless from any claims or liens and
defending Beneficiary against same. Beneficiary shall not be responsible for such insurance or for
the collection of any insurance monies, or for the insolvency of any insurer or other insurance
writer. Application of insurance proceeds by Beneficiary shall not cure or waive any default
hereunder or invalidate any act done hereunder because of such default. Any insurance proceeds and
deposits held by Beneficiary for repairs or rebuilding shall be so held without payment or
allowance of interest. At the option of Beneficiary, such insurance proceeds and deposits shall be
disbursed through a construction escrow on terms and conditions satisfactory to Beneficiary in its
sole and absolute discretion. Prior to the commencement of such rebuilding or repair, Trustor or
Trustor’s insurance company in the event said insurance company is responsible for such building
and repair shall, at its expense, prepare all plans and specifications necessary for such work, and
enter into a bonded fixed price construction contract with a contractor acceptable to Beneficiary.
Trustor shall promptly deposit with Beneficiary an amount equal to the difference between the
insurance proceeds deposited therein and such fixed price construction contract. Fulfillment of
Trustor’s obligation hereunder shall be evidenced by Beneficiary’s architect’s written
certification that such repairs or replacements have been satisfactorily completed.

In the event of sale of the Trust Property under the power of sale herein granted to the
Trustee, or foreclosure of this Deed of Trust as a mortgage, or in the event Beneficiary or a
receiver appointed by the court shall take possession of the Trust Property without sale, all
right, title and interest of Trustor in and to all insurance policies then in force shall inure to
the benefit of and pass to the beneficiary in possession, receiver or purchaser at such sale, as
the case may be, and Beneficiary is hereby appointed attorney-in-fact for the Trustor to assign and
transfer said policies. The foregoing power of attorney is a power coupled with an interest and
shall be irrevocable so long as any of the obligations secured by this Deed of Trust remains
unsatisfied.

1.7 Property Taxes and Assessments. At least five (5) days before such become
delinquent, Trustor shall pay or cause to be paid all taxes and assessments of every kind, nature
and description levied or assessed on or in the Trust Property, other than taxes and assessments
paid out of deposits made by Trustor pursuant to Section 1.5 above, and will pay when due all dues
and charges for water and water delivery, electric power and light, sewers, waste removal, bills
for repairs, and any and all other claims, encumbrances and expenses incident to the ownership of
the Trust Property, in order that no lien may be created upon the Trust Property during the term of
this Deed of Trust which is or may become prior to the lien of this Deed of Trust. Upon request,
Trustor will deposit with Beneficiary, at such place as Beneficiary may designate, receipts or
other evidence reasonably satisfactory to Beneficiary showing payment of all such taxes,
assessments and other charges. Trustor may contest in good faith the validity or amount of any
such tax, assessment, governmental charge or other charge, lien or claim of lien by appropriate
proceedings provided by law, including payment thereof under protest, if required, provided that
upon a final
determination with respect to any such contested tax, assessment or governmental charge, Trustor
will promptly pay any sums found to be due thereon. Prior to any such contest, Trustor shall
either: (A) if required as a condition to such contest, pay under protest such contested tax,
assessment or other charge, or (B) furnish Beneficiary a cash deposit or other security in an
amount and form satisfactory to Beneficiary to indemnify Beneficiary against sale or forfeiture of,
or creation of a lien against, the Trust Property. Such deposit or other security shall not bear
interest.

 

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1.8 Beneficiary’s Right to Prosecute or Defend Actions. Trustor agrees that, at
Beneficiary’s option, Beneficiary may, but shall have no obligation so to do, appear in and
prosecute or defend any action or proceeding that may affect the priority of this Deed of Trust or
the security of Beneficiary hereunder, and Trustor will pay all costs, expenses (including the cost
of searching title) and reasonable attorneys’ fees incurred in such action or proceeding at
Trustor’s sole cost and expense. Beneficiary may, at its option, but shall have no obligation so
to do, pay, purchase, contest or compromise any adverse claim, encumbrance, charge or lien, that in
the judgment of Beneficiary appears to be prior or superior to the lien of this Deed of Trust. All
amounts paid, suffered or incurred by Beneficiary in exercising the authority herein granted, shall
be secured hereby, shall be a lien on the Trust Property, shall be due and payable by Trustor to
Beneficiary immediately without demand, and shall bear interest at the default rate set forth in
the Note.

1.9 Use of Condemnation Awards. Trustor agrees that should the Trust Property or any
part thereof be taken or damaged by reason of any public improvement or condemnation proceedings,
or right of eminent domain, Trustor will immediately notify Beneficiary of any such proceedings and
will deliver copies of any and all papers delivered to or served upon Trustor to Beneficiary, and
Beneficiary shall be entitled at its option to commence, appear in and prosecute in its own name
any action or proceeding, or to make any compromise or settlement in connection with such taking or
damage. Trustor further agrees that all compensation and each and every award of damages in
connection with any condemnation for public or private use of, or injury to, the Trust Property or
any part thereof, to the extent of the indebtedness and accrued interest then remaining unpaid and
secured by the lien of this Deed of Trust, is hereby assigned and shall be paid to Beneficiary, who
may, after deducting therefrom all its expenses, including reasonable attorneys’ fees, release any
money received by it or apply the same to the last maturing installments of the indebtedness
secured hereby (in which event no prepayment premium shall be required to the extent of any
principal reduction). Trustor agrees to execute such further assignments of any compensation,
awards, damages, and rights of action, and proceeds as Beneficiary may require. At the option of
Beneficiary, such compensation and award of damages shall be disbursed through a construction
escrow on terms and conditions satisfactory to Beneficiary in its reasonable discretion. Prior to
the commencement of such rebuilding or repair, Trustor shall, at its expense, prepare all plans and
specifications necessary for such work, and enter into a bonded fixed price construction contract
with a contractor acceptable to Beneficiary. Trustor shall promptly deposit with Beneficiary an
amount equal to the difference between the compensation deposited therein and such fixed price
construction contract. Fulfillment of Trustor’s obligation hereunder shall be evidenced by
Beneficiary’s architect’s written certification that such repairs or replacements have been
satisfactorily completed.

1.10 Reports and Statements. Within ninety (90) days after the close of each calendar
year, Trustor will deliver to Beneficiary, a current rent roll for the Trust Property, a calendar
year financial statement and tax return for each guarantor of the Note, a calendar year financial
statement covering the operation of the Trust Property, and, if Trustor is not a single asset
entity, a calendar year financial statement for Trustor, each of which shall include a balance
sheet and supporting schedules and contain a detailed statement of income and expenses, and shall
be prepared according to generally accepted accounting practices consistently applied and in such
form as Beneficiary shall request. When requested by Beneficiary, within thirty (30) days after
the close of each calendar quarter, Trustor shall deliver to Beneficiary income and expense
statements covering the financial operation of the Trust Property for the preceding quarter,
including cash flow statements, current payables and receivables for the Trust Property, and a rent
roll for the Trust Property. Each financial statement provided by Trustor shall be accompanied by
an affidavit of Trustor certifying that said financial statement is true and correct. When
requested by Beneficiary, Trustor further agrees to promptly deliver in writing, such further
information as Beneficiary reasonably requests relating to any of such financial statements.
Trustor shall provide Beneficiary with an annual financial statement for each tenant of the Trust
Property within ninety (90) days after the close of such tenant’s fiscal year. Trustor shall
maintain its books and records of account in accordance with generally accepted accounting
practices consistently applied. Trustor further agrees that Beneficiary may, upon ten (10) days
request, have access to Trustor’s books and records to enable Beneficiary to verify the information
furnished Beneficiary pursuant to this Section 1.10. Any material error or omission in any such
financial statements or the failure to provide any such financial statements required by this
Section shall constitute a default hereunder. Trustor shall pay to Beneficiary a late charge of
$1,000.00 for each time that any required financial statement or other financial information is not
provided to Beneficiary within the specified time period set forth herein.

 

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2. ASSIGNMENT OF LEASES AND RENTS AND PURCHASE AGREEMENTS

2.1 Assignment. Trustor hereby absolutely and irrevocably grants, transfers and
assigns to Beneficiary all the right, title and interest of Trustor in and to all existing and
future leases, whether written or oral and whether for a definite term or month to month, relating
to the Trust Property, or any part thereof, including, but not limited to, those leases described
in the Assignment of Leases and Rents (the “Leases”), all rents thereunder, and all existing and
future purchase agreements (the “Purchase Agreements”). This assignment shall extend to and cover
any and all extensions and renewals of existing and future leases and purchase agreements and to
any and all present and future rights against guarantors of any such obligations and to any and all
rents, issues or profits collected under such leases or purchase agreements. This assignment is
given to facilitate payment and performance of the Note, this Deed of Trust and any other security
agreement at any time securing the Note. Pursuant to this assignment and not in lieu hereof,
Trustor may give Beneficiary separate specific assignments of rents and leases or purchase
agreements. In addition, Trustor acknowledges that this assignment creates a valid and enforceable
first priority interest of Beneficiary in and to all existing and future leases, whether written or
oral, and whether for a definite term, or month-to-month, relating to the Trust Property, or any
part thereof, all rents, issues and profits thereunder, and all existing and future purchase
agreements and proceeds thereof, and that, in the event that Trustor or any successor in interest
files for protection under any bankruptcy or insolvency laws, such rents, issues, profits and/or
proceeds shall constitute Beneficiary’s cash collateral and Trustor shall be prohibited from using
such rents, issues, profits and/or proceeds after such filing without Beneficiary’s written
agreement or an order of the appropriate court.

2.2 Payments under Leases. Trustor hereby authorizes and directs the lessees, tenants
and purchasers of the Trust Property that, upon written notice from Beneficiary, all payments
required under said leases or purchase agreements or in any way respecting same, shall be made
directly to Beneficiary as they become due. In the absence of such notice and so long as Trustor
shall not be in default hereunder Trustor shall be entitled to collect all such rents and payments.
Beneficiary shall be entitled to give such notice in the event of any breach or default by Trustor
hereunder. Receipt by Beneficiary of such rents, issues, and profits shall not constitute a waiver
of any right that Beneficiary may also enjoy under this Deed of Trust or under the laws of
California, nor shall the receipt and application thereof cure any default hereunder nor affect any
foreclosure proceeding or any sale authorized by this Deed of Trust.

2.3 Performance of Leases. Trustor expressly covenants and agrees that Trustor will
comply with the terms of all such lease or leases or purchase agreements so assigned and shall not
authorize or accept prepayment of any rent due under such lease or leases, and further covenants
and agrees that if Trustor, as lessor under such leases so assigned, fails to perform and fulfill
any term, covenant, condition or provision in such leases, or any of them, on its part to be
performed or fulfilled, at the times and in the manner in such lease or leases provided, or if
Trustor suffers or permits to occur any breach or default under the provisions of any assignment of
any lease or leases of the Trust Property or portions thereof given as additional security for the
payment of any indebtedness secured hereby, or if Trustor fails to fully protect, insure, preserve
and cause continued performance or fulfillment of the terms, covenants or provisions in such lease
or leases required to be performed or fulfilled by the lessor or seller or any of the lessees or
buyers therein or if Trustor, without Beneficiary’s prior written consent, permits or approves any
modification or alteration of a lease which is to the detriment of the Trust Property, or approves
an assignment by the lessee of such lease or leases or a subletting of all or any part of the
premises demised in such lease or leases, the effect of which would be to relieve the original
tenant or any guarantor from any liability thereunder, then in any event, at the option of
Beneficiary or of the then holder of the Note secured hereby and without notice to Trustor, such
breach or default shall constitute a default hereunder and all unpaid indebtedness secured by this
Deed of Trust shall, notwithstanding anything in the Note or this Deed of Trust to the contrary,
become due and payable as in the case of other defaults.

2.4 Beneficiary’s Rights. In the event Trustor, as the lessor in such lease or
leases, shall neglect or refuse to perform, observe and keep all of the covenants, provisions and
agreements contained in such lease or leases, Beneficiary may, but without any obligation so to do,
perform and comply with any such lease covenants, agreements and provisions, in which event all
costs and expenses incurred by Beneficiary in complying with such covenants, agreements and
provisions, shall become a part of the principal indebtedness secured by the Deed of Trust and
recoverable as such in all respects.

2.5 Lease Occupancy and Modifications. Trustor expressly covenants and agrees that
Trustor will not permit occupancy of the Trust Property for a term longer than three (3) months,
including any term of renewal, except under one (1) or more written leases. Each lease entered
into by Trustor subsequent to the date hereof and any material modification to any lease existing
as of the date hereof shall be subject to the prior written approval of Beneficiary, which approval
may be given or withheld in Beneficiary’s sole and absolute discretion.

2.6 Permits. Trustor shall deliver to Beneficiary use and occupancy permits for each
prospective lessee prior to the occupancy of the Trust Property by such lessee.

 

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2.7 Estoppel Certificates. Within ten (10) days of receipt of a request from
Beneficiary, Trustor shall deliver an estoppel certificate from each lessee certifying that the
lease is in full force and effect, that there have not been any alterations or modifications of
such lease except as set forth in full in the estoppel certificate, that the lessee does not have
any claims against Trustor, that rentals have not been prepaid more than one month in advance, and
any other information as may be requested by Beneficiary. Failure of Trustor to comply with the
terms of this Section shall be default of this Deed of Trust and Beneficiary may, at its option,
pursue any and all remedies specified herein.

2.8 Purpose of Assignment. This assignment is given to secure payment and performance
of all obligations to be performed by Trustor under the Note and all of the other Loan Documents
(unless such document or instrument expressly provides to the contrary).

3. DEFAULT PROVISIONS

3.1 Events of Default. Trustor shall be in default hereunder upon the occurrence of
any one or more of the following events of default:

A. If Trustor shall fail to make any payment required by the Note as and when due;

B. Breach of any warranty, representation or certification given in connection herewith, or
default by Trustor in the payment of any indebtedness or performance of any obligation or covenant
secured hereby (whether existing by virtue of the Note, this Deed of Trust, the other Loan
Documents, or any leases relating to the Trust Property or any portion thereof to which Trustor is
a party, or any loan agreement or any other instrument or security agreement executed and delivered
by Trustor in connection with the indebtedness hereby secured, or otherwise), according to the
terms and conditions thereof, provided, however, in the event of Trustor’s failure to perform any
nonmonetary obligation, Trustor shall not be in default under this Deed of Trust unless Trustor
fails to cure such failure within thirty (30) days after written notice from Beneficiary of such
failure; the foregoing thirty (30) day cure period shall not apply to: (1) any failure by Trustor
in satisfying the insurance requirements set forth in Section 1.6 of this Deed of Trust or (2) any
voluntary bankruptcy proceedings commenced by Trustor;

C. If Trustor shall fail or refuse to pay, before delinquent, any taxes, assessments, fees,
charges, expenses or encumbrances created, levied or assessed upon or relating to the Trust
Property;

D. If liens shall be filed against the Trust Property which shall not be released, stayed,
bonded or insured against in favor of Beneficiary, satisfied or vacated within thirty (30) days
after entry of filing;

E. If Trustor shall fail to procure and maintain insurance coverage as herein provided;

F. If any legal action or proceeding to enforce a mortgage or deed of trust or other lien upon
the Trust Property is not dismissed within sixty (60) days after the commencement thereof;

G. If by the order of a court of competent jurisdiction, Trustor shall be adjudicated
bankrupt, or be declared insolvent, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become due or shall consent
to the appointment of a receiver or receivers of all or any part of the Trust Property;

H. If any of the Trust Property shall be levied upon by virtue of any execution, attachment,
tax levy or other writ;

I. If Trustor shall become insolvent, make an assignment for the benefit of creditors, be the
subject of any bankruptcy proceedings (and for purpose of the foregoing, the term “Trustor” shall
include any of the general partners of any Trustor which is a partnership and any of the members of
any Trustor which is a limited liability company);

J. If Trustor shall be or become in default with respect to any other obligation owed by
Trustor to Beneficiary;

K. Upon the abandonment by Trustor of all or any part of the Trust Property; or

L. If Trustor leaves the Trust Property unattended or unprotected.

 

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3.2 Sales or Transfers. Unless prior thereto Trustor shall have obtained the prior
written consent of Beneficiary, which consent may be given or withheld in Beneficiary’s sole and
absolute discretion, Trustor shall be in default hereunder:

A. On sale, conveyance, assignment, further encumbrance or other transfer of: (1) all or any
part of the Trust Property or any interest therein (whether voluntarily or by operation of law)
other than leasing in the ordinary course of business; or (2) any beneficial interest of Trustor in
the Trust Property; or

B. If Trustor is a corporation, partnership, limited liability company, or other legal entity,
upon any changes in the ownership of Trustor resulting in a transfer of fifty percent (50%) or more
of such ownership interests (calculated on a cumulative basis) as of the date hereof.

Upon the occurrence of such an event of default, Beneficiary may, in its sole and absolute
discretion, accelerate the maturity of the Note secured hereby so that the entire principal balance
plus accrued interest to date and a prepayment premium is due and payable. In the event of any
such acceleration of the Note, the prepayment premium shall be ten percent (10%) during the first
three (3) loan years (as defined in the Note) and in accordance with the prepayment privilege set
forth in the Note thereafter. If a sale is proposed wherein the purchaser desires to assume and
agree to pay the Note, Beneficiary may, in its sole and absolute discretion, approve such sale and
assumption if it is satisfied with the purchaser, the terms of the sale and the interest rate on
the Note. In connection with any such sale or transfer, reimbursement of all fees and costs
incurred by Beneficiary, including attorneys’ fees and costs, and payment of an assumption fee of
one percent (1%) of the then outstanding principal balance on the Note shall each be conditions to
any such approval by Beneficiary. No transfer of the Trust Property shall relieve Trustor of its
liability and obligations pursuant to the Loan Documents, unless agreed to by Beneficiary in
writing.

Notwithstanding the above and providing no default exists, transfers of ownership interest in
the Trust Property between Trustor and another entity directly owned or controlled by Trustor will
be permitted without invoking the one-time assumption provision in the preceding paragraph,
provided that Beneficiary is provided notice and documentation of the transfer, that Trustor
maintains management control of the Trust Property and that Beneficiary is reimbursed for any
out-of-pocket costs which Beneficiary incurs relative to such transfer.

3.3
Rights and Remedies on Default. Upon the occurrence of any default under this Deed
of Trust and at any time thereafter, Trustee or Beneficiary may exercise any one or more of the
following rights and remedies:

(a) Loan
Document Remedies. Beneficiary may exercise any right or remedy provided for
in the Note or any other Loan Document.

(b) Acceleration. Beneficiary may declare the Note and all other sums secured by this
Deed of Trust immediately due and payable so that the entire principal balance plus accrued
interest to date and a prepayment premium is due and payable. In the event of any such
acceleration of the Note, the prepayment premium shall be ten percent (10%) during the first three
(3) loan years (as defined in the Note) and in accordance with the prepayment privilege set forth
in the Note thereafter.

(c) Foreclosure Rights. In the event of any default hereunder, then and in each such
event, Beneficiary may declare all sums secured hereby immediately due and payable either by
commencing an action to foreclose this Deed of Trust as a mortgage, or by the delivery to Trustee
of a written declaration of default and demand for sale and of written notice of default and of
election to cause the Trust Property to be sold, which notice Trustee shall cause to be duly filed
for record in case of foreclosure by exercise of the power of sale herein. Should Beneficiary elect
to foreclose by exercise of the power of sale, Beneficiary shall also deposit with Trustee this
Deed of Trust and the Note and such receipts and evidence of expenditures made and secured hereby
as Trustee may require, and notice of sale having been given as then required by law and after
lapse of such time as may then be required by law after recordation of such notice of default,
Trustee, without demand on Trustor, shall sell the Trust Property at the time and place of sale
fixed by Trustee in its notice of sale, either as a whole or in separate parcels, and in such order
as Trustee may determine, at public auction to the highest bidder upon any terms and conditions
specified by Beneficiary and permitted by applicable law. Trustee may postpone sale of all or any
portion of the Trust Property by public announcement at the designated time and place of sale, and
from time to time thereafter may postpone such sale by public announcement at the time fixed by the
preceding postponement. Trustee shall deliver to the purchaser at the sale a Trustee’s deed or
deeds conveying the Trust Property, or any portion thereof, so sold, but without any covenant or
warranty, express or implied. The recitals in such deed or deeds of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or
Beneficiary, may
purchase at any sale. The power of sale under this Deed of Trust shall not be exhausted by any
one or more sales (or attempts to sell) as to all or any portion of the Trust Property remaining
unsold, but shall continue unimpaired until all of the Trust Property has been sold by exercise of
the power of sale and all indebtedness of Trustor to Beneficiary under this Deed of Trust, the Note
or any other Loan Document has been paid in full.

 

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(d) Right to Rescind. Beneficiary, from time to time before a Trustee’s sale, may
rescind any such notice of breach or default and of election to cause the Trust Property to be sold
by executing and delivering to Trustee a written notice of such rescission, which notice, when
recorded, shall also constitute a cancellation of any prior declaration of default and demand for
sale. The exercise by Beneficiary of such right of rescission shall not constitute a waiver of any
breach or default then existing or subsequently occurring, or impair the right of Beneficiary to
execute and deliver to Trustee, as above provided, other declarations of default and demand for
sale, and notices of breach or default, and of election to cause the Trust Property to be sold to
satisfy the obligations hereof, nor otherwise affect any provision, agreement, covenant or
condition of the Note and of this Deed of Trust or any of the rights, obligations or remedies of
the parties hereunder.

(e) UCC Remedies. With respect to all or any part of the Trust Property that is
personal or intangible, Beneficiary shall have all the rights and remedies of a secured party under
the Uniform Commercial Code. Upon request, Trustor shall assemble and make such collateral
available to Beneficiary at a place to be designated by Beneficiary which is reasonably convenient
to both parties. Upon repossession, Beneficiary may propose to retain the collateral in partial
satisfaction of the Note or sell the collateral at public or private sale in accordance with the
Uniform Commercial Code as adopted in the state where the Trust Property is situated or any other
applicable statute. Such sale may be held as a part of, distinctive from or without a trustee’s
sale or foreclosure of the real property secured by this Deed of Trust. If any notification of
disposition of all or any portion of the collateral is required by law, such notification shall be
deemed reasonably and properly given if mailed at least 10 days prior to such disposition. If
Beneficiary disposes of all or any part of the collateral after default, the proceeds of
disposition shall be applied in the following order:

(i) To the reasonable expenses of retaking, holding, preparing for sale, selling the
collateral, and the like;

(ii) To the reasonable attorneys’ fees and legal expenses incurred by Beneficiary; and

(iii) To the satisfaction of the indebtedness secured by this Deed of Trust.

(f) Remedial Advances. Should Trustor fail to make any payment or to do any act as
herein provided, then Beneficiary or Trustee, without obligation to do so and without demand upon
Trustor and without releasing Trustor from any obligation hereof, may (i) make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof,
Beneficiary or Trustee being authorized to enter upon the Trust Property for such purposes; (ii)
commence, appear in and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee, (iii) pay, purchase, contest, or compromise any
encumbrance, charge, lien, tax or assessment, or the premium for any policy of insurance required
herein; and in exercising any such power, incur any liability, expend whatever amounts in its
absolute discretion it may deem necessary therefor, including cost of evidence of title, employ
counsel and pay such counsel’s reasonable fees. Beneficiary shall be subrogated to the rights and
lien interests of any person who is paid by Beneficiary pursuant to the terms of this Section.
Trustor shall repay immediately on written notice to Trustor all sums expended or advanced
hereunder by or on behalf of Beneficiary, with interest from the date of such advance or
expenditure at the Default Rate, and the repayment thereof shall be secured hereby.

(g) Summary Possession. Beneficiary may, at Beneficiary’s option, and in person or by
agent, employee or court-appointed receiver, enter upon and take possession of the Trust Property
and continue any improvement, repair or renovation thereof at Trustor’s expense and to lease the
same or any part thereof, making such alterations as Beneficiary determines necessary, and may
terminate in any lawful manner any lease of the Trust Property, exercising with respect thereto any
right or option available to Trustor. The entering upon and taking possession of the Trust
Property, the collection of rents, issues and profits, or the proceeds of fire and other insurance
policies or compensation or awards for any taking or damage of the Trust Property, and the
application or release thereof shall not cure or waive any default or notice of default hereunder
or invalidate any act done pursuant to such notice.

 

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(h) Collection of Rents. Beneficiary may require any Tenant to make payments of
Tenant’s rent or fees directly to Beneficiary regardless of whether Beneficiary has taken
possession of the Trust Property. If any rents are
collected by Beneficiary, then Trustor irrevocably designates Beneficiary as Trustor’s
attorney-in-fact to endorse instruments received in payment thereof in the name of Trustor and to
negotiate the same and collect the proceeds. Payments by Tenants to Beneficiary in response to
Beneficiary’s demand shall satisfy the obligation for which the payments are made, whether or not
any proper grounds for the demand existed. Beneficiary may exercise Beneficiary’s rights under this
Section either in person, by agent or through a receiver.

(i) Beneficiary’s Enforcement of Leases. Beneficiary is hereby vested with full power
to use all measures, legal and equitable, deemed by Beneficiary necessary or proper to collect the
rents assigned in this Deed of Trust, including the right, in person or by agent, employee or
court-appointed receiver, to enter upon the Trust Property, or any part thereof, and take
possession thereof forthwith to the extent necessary to effect the cure of any default on the part
of Trustor as lessor in any leases or upon Trustor’s default under the Note. Trustor hereby grants
to Beneficiary full power and authority to exercise all rights, privileges and powers herein
granted at any and all times hereafter, without notice to Trustor, including the right to operate
and manage the Trust Property, make and amend leases and perform any other acts which are
reasonably necessary to protect the value, priority or enforceability of any security for the Note
and use and apply all of the rents and other income herein assigned to the payment of the costs of
exercising such remedies, of managing and operating the Trust Property, and of any indebtedness or
liability of Trustor to Beneficiary, including, but not limited to, the payment of taxes, special
assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and
restoring the improvements on the Trust Property or of making the same rentable, attorneys’ fees
incurred in connection with the enforcement of this Deed of Trust, and any principal and interest
payments due from Trustor to Beneficiary on the Note and this Deed of Trust, all in such order as
Beneficiary may determine. Beneficiary shall be under no obligation to enforce any of the rights or
claims assigned to Beneficiary hereunder or to perform or carry out any of the obligations of the
lessor under any leases and does not assume any of the liabilities in any way related to the
covenants and agreements of Trustor in any leases. It is further understood that this Deed of Trust
shall not operate to place responsibility for the control, care, management or repair of the Trust
Property, or parts thereof, upon Beneficiary nor shall it operate to make Beneficiary liable for
the carrying out of any of the terms and conditions of any leases, or for any waste of the Trust
Property by the lessee under any leases or by any other party, or for any dangerous or defective
condition of the Trust Property or for any negligence in the management, upkeep, repair or control
of the Trust Property resulting in loss or injury or death to any lessee, invitee, licensee,
employee or stranger, except as may result from the willful misconduct of Beneficiary after taking
possession of the Trust Property hereunder.

(j) Beneficiary’s Enforcement of Contracts. Beneficiary shall have the right to
enforce Trustor’s rights under all architect contracts and construction contracts and to bring an
action for the breach thereof in the name of Beneficiary or, at Beneficiary’s option, in the name
of Trustor, in the event any architect or contractor breaches their respective contracts,
regardless of whether Beneficiary has acquired or retained any interest in the Trust Property.
Trustor hereby irrevocably appoints Beneficiary as Trustor’s attorney-in-fact for the purposes of
the foregoing, which power shall be durable and coupled with an interest. Beneficiary does not
assume and shall not be obligated to perform any of Trustor’s obligations under any contract nor
shall Beneficiary be required to enforce such contracts or bring action for the breach thereof;
provided, however, any performance of the respective contracts specifically required in writing by
Beneficiary, following any default by Trustor under the Note or the contracts, and which is
properly and timely undertaken by the contractor or architect, shall be paid for by Beneficiary in
accordance with the terms and conditions of the contracts. Such payments shall bear interest at the
Default Rate from the date of advance to and including the date of full payment, and shall be
secured by any deed of trust, collateral assignment of leases and rents, security agreement,
guaranty and other documents granted to secure the Note.

(k) Appointment of Receiver. Beneficiary shall have the right to have a receiver
appointed to take possession of any or all of the Trust Property, with the power to protect and
preserve the Trust Property, to operate the Trust Property preceding foreclosure or sale, to
collect the income from the Trust Property (if any) and apply the proceeds, over and above cost of
the receivership, against the amounts owed under the Note. The receiver may serve without bond if
permitted by law. Beneficiary’s right to the appointment of a receiver shall exist whether or not
the apparent value of the Trust Property exceeds the indebtedness secured hereby by a substantial
amount. Employment by Beneficiary shall not disqualify a person from serving as a receiver. Upon
taking possession of all or any part of the Trust Property, the receiver or Beneficiary may: (i)
use, operate, manage, control and conduct business on the Trust Property and make expenditures for
all maintenance and improvements as in Beneficiary’s judgment are necessary and proper; (ii)
collect the income from the Trust Property and apply such sums to the expenses of use, operation
and management; and (iii) at Beneficiary’s option, complete any construction in progress on the
Trust Property, and in connection therewith, pay bills, borrow funds, employ contractors and make
any changes in plans or specifications as Beneficiary deems necessary or appropriate. If the
revenues produced by the Trust Property are insufficient to pay expenses, the receiver may borrow,
from Beneficiary or otherwise, such sums as the receiver or Beneficiary may deem reasonably
necessary for the purposes stated in this Section. The
amounts borrowed or advanced shall be payable by Trustor on demand and bear interest from the
date of expenditure until repaid at the Default Rate. Such sums shall become a part of the debt
secured by this Deed of Trust.

 

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(l) Specific Enforcement. Beneficiary may specifically enforce any covenant in this
Deed of Trust or Trustor’s compliance with Trustor’s warranties herein and may restrain and enjoin
the breach or prospective breach of any such covenant or the noncompliance with any condition, and
Trustor waives any requirement of the posting of any bond in connection therewith.

(m) General Creditors’ Remedies. Beneficiary shall have such other rights and remedies
as are available under any statute or at law or in equity generally, and the delineation of certain
remedies in this Deed of Trust shall not be deemed to be a limitation on any other rights and
remedies available to Beneficiary.

(n) Guaranties. If Beneficiary at any time holds additional security for any
obligations secured hereby, Beneficiary may enforce the terms thereof or otherwise realize upon the
sale thereof, at Beneficiary’s option, either before or concurrently herewith or after a sale is
made hereunder, and may apply the proceeds upon the indebtedness secured hereby without affecting
the status of or waiving any right to exhaust all or any other security, including the security
hereunder or thereunder, and without waiving any breach or default or any right or power whether
exercised hereunder or contained herein or in any such other security.

3.4 Application of Sale Proceeds. After deducting all costs and expenses of Trustee
and of this Trust, including cost of evidence of title and reasonable attorneys’ fees in connection
with a sale, as above set forth, Trustee shall apply the proceeds of sale to payment of all sums
expended under the terms hereof, not then repaid, with accrued interest at the Default Rate; and
then to the payment of all other sums then secured hereby; and the remainder, if any, shall be
distributed to the person or persons legally entitled thereto.

3.5 Remedies Cumulative. No remedy herein conferred upon or reserved to Trustee or
Beneficiary is intended to be exclusive of any other remedy herein or in any other Loan Document or
by law provided or permitted, and each such remedy shall be cumulative and in addition to every
other such remedy. Every power or remedy given by this instrument to Trustee or Beneficiary or to
which either of them may be otherwise entitled, may be exercised concurrently or independently,
from time to time and as often as may be deemed expedient by Trustee or Beneficiary and either of
them may pursue inconsistent remedies.

3.6 No Waiver. No waiver of any default or failure or delay to exercise any right or
remedy by Beneficiary shall operate as a waiver of any other default or of the same default in the
future or a preclusion of any right or remedy with respect to the same or any other occurrence.

3.7 Marshaling. In case of a sale under this Deed of Trust, the Trust Property, real,
personal and mixed, may be sold in one or more parcels. Neither Trustee nor Beneficiary shall be
required to marshal Trustor’s assets.

3.8 Bankruptcy Filing. In the event that Trustor or any successor to Trustor’s
interest in the Trust Property files for relief under the United States Bankruptcy Code (the
“Bankruptcy Code” or “11 U.S.C.”): (A) all rents, issues, profits, proceeds, cash, deposit
accounts, instruments, documents of title, securities, accounts and accounts receivable generated
from, before, on and after the date of any such filing for relief shall be Beneficiary’s cash
collateral pursuant to 11 U.S.C. § 363 and Trustor shall be prohibited from using the rents,
issues, profits, proceeds, cash, deposit accounts, instruments, documents of title, securities,
accounts and accounts receivable without Beneficiary’s written agreement or an order of the
bankruptcy court; (B) Beneficiary’s interest in the Trust Property is entitled to adequate
protection in the form of continued payments in accordance with the Note and the Loan Documents or
foreclosure of its security interest and liens created hereunder; (C) the bankruptcy case will be
deemed to have been filed in bad faith with an intent to abuse the judicial process and solely to
delay and frustrate the legitimate effort of Beneficiary, the debtor’s principal secured creditor,
to enforce its rights; (D) the interest rate provided in the Note, is the minimum rate which will
provide Beneficiary with the present value of the amount owed at any time; (E) if Trustor files a
plan of reorganization classifying a portion of Beneficiary’s claim as an unsecured claim
separately from other unsecured claims, Borrower’s classification will be only in an attempt to
gerrymander a favorable vote on such plan; (F) Beneficiary’s interest will be entitled to adequate
protection and such adequate protection will be provided only by continued payments in accordance
with the Note and the Loan Documents, if, and only if, Beneficiary’s liens and security interests
remain the only liens and security interests encumbering Trustor’s real and personal property
described herein, or by foreclosure of Beneficiary’s liens and security interests created herein,
and, if Trustor does not provide adequate protection by continued payments in accordance with the
terms and conditions set forth in the Note and the Loan Documents, Beneficiary will be entitled to
relief from the automatic stay of 11 U.S.C. § 362(a) and any and all other stays under the
Bankruptcy Code so that
Beneficiary may foreclose its liens and security interests created hereunder; and (G) if Trustor
seeks to obtain post-petition financing, Beneficiary’s interest will not be adequately protected if
Trustor seeks financing which provides for a lien and/or security interest junior, equal to or
superior to the priority of Beneficiary’s liens and security interests created hereunder.

 

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3.9 Automatic Stay. In the event of the filing of any voluntary or involuntary
petition under the Bankruptcy Code by or against Trustor (other than an involuntary petition filed
by or joined in by Beneficiary), Trustor shall not assert, or request any other party to assert,
that the automatic stay under Section 362 of the Bankruptcy Code shall operate or be interpreted to
stay, interdict, condition, reduce or inhibit the ability of Beneficiary to enforce any rights it
has by virtue of this Deed of Trust, or any other rights that Beneficiary has, whether now or
hereafter acquired, against any guarantor of the Note. Further, Beneficiary shall immediately
become entitled, in addition to all other relief to which Beneficiary may be entitled under this
Deed of Trust, to obtain an order from the Bankruptcy Court or other appropriate court granting
immediate relief from the automatic stay pursuant to Section 362 of the Bankruptcy Code so as to
permit Beneficiary to pursue its rights and remedies against Trustor as provided under this Deed of
Trust and all other rights and remedies of Beneficiary at law and in equity under applicable state
law. In connection with such order, Trustor shall not contend or allege in any pleading or
petition filed in any court proceeding that Beneficiary does not have sufficient grounds for relief
from the automatic stay. Any bankruptcy petition or other action taken by Trustor to stay,
condition, or inhibit Beneficiary from exercising its remedies are hereby admitted by Trustor to be
in bad faith and Trustor further admits that Beneficiary would have just cause for relief from the
automatic stay in order to take such action authorized under state law.

4. HAZARDOUS SUBSTANCES PROVISIONS

4.1 Definition. As used herein “Hazardous Substances” shall mean and include, but
shall not be limited to, any element, substance, compound or mixture, including disease-causing
agents, which after release into the environment and upon exposure, ingestion, inhalation, or
assimilation into any organism, either directly or indirectly, will or may reasonably be
anticipated to cause death, disease, behavior abnormalities, cancer, genetic mutation,
physiological malfunctions, including malfunctions in reproduction, or physical deformations in
such organisms or their offspring, and all hazardous and toxic substances, wastes (whether solid,
liquid or gaseous) or materials, any pollutants or contaminants (including, without limitation,
asbestos and raw materials which include hazardous constituents), petroleum products or any other
substances, or materials which are included under or regulated by any local, state or federal law,
rule or regulation pertaining to environmental regulation, contamination, cleanup or disclosure,
including, without limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§ 9601, et seq., The Resources Conservation and Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. § 6901, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. § 5101, et seq., 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 and Control Act, 15 U.S.C. § 2601,
et seq., the Safe Drinking Water Act, 42 U.S.C. § 300 et seq., any
and all applicable environmental laws of the State of California, and any other federal, state or
local law, ordinance, rule or regulation governing hazardous substances, as such may be amended
from time-to-time and the regulations now or hereafter adopted, published and/or promulgated
pursuant thereto (all such laws, rules and regulations being referred to collectively as
“Environmental Laws”). Trustor warrants, represents and covenants, from and after the date hereof,
as follows:

A. Trustor has had performed by independent contractors reasonable investigations, studies and
tests as to any possible environmental contamination, liabilities or problems with respect to the
Trust Property, including, without limitation, the storage, disposal, presence, discharge or
release of any Hazardous Substances at or with respect to the Trust Property, and that all of such
investigations, studies, and tests have been delivered to Beneficiary.

B. None of Trustor, the Trust Property, nor any other property owned by Trustor as of the date
of this Deed of Trust is: (1) subject to any private or governmental lien or judicial or
administrative notice, order or action relating to Hazardous Substances or environmental problems,
impairments or liabilities with respect to the Trust Property or such other property; or (2) is in,
or with any applicable notice and/or lapse of time, and/or failure to take certain curative or
remedial actions, will be in, either direct or indirect violation of any Environmental Laws.

C. No Hazardous Substances are located on or have been stored or used on or about the Trust
Property except in compliance with applicable Environmental Laws as may exist from time to time.
No Hazardous Substances have been or are being processed or disposed of on, in or about or released
or discharged from (including ground water contamination) the Trust Property and no above or
underground storage tanks exist on the Trust Property. Trustor shall not allow: (1) any Hazardous
Substances to exist or be stored, located, possessed, managed, used or otherwise handled on, in,
under, about or around the Trust Property except for office products which are used, stored and
disposed of in compliance with applicable Environmental Laws in existence from time to time; or
(2) any Hazardous Substances to be discharged, processed or
otherwise released or disposed of in, on, above, under or around the Trust Property. Trustor shall
comply with all Environmental Laws affecting or relating to the Trust Property.

 

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D. Trustor shall immediately notify Beneficiary should Trustor become aware of: (1) any
Hazardous Substance or other environmental problem or liability affecting or relating to the Trust
Property; (2) any lien, action or notice of the nature described in subparagraph B above; or
(3) any litigation or threat of litigation relating to any alleged unauthorized release of any
Hazardous Substance or the existence of any Hazardous Substance or other environmental
contamination, liability or problem with respect to or arising out of or in connection with the
Trust Property. Trustor shall, at its own cost and expense, take all remedial or response actions
or other actions (to the extent and at the time or from time to time) as shall be necessary or
advisable for the cleanup of the Trust Property, including all removal, containment, corrective and
remedial actions in accordance with all applicable Environmental Laws (and in all events in a
manner satisfactory to Beneficiary), and shall further pay or cause to be paid at no expense to
Beneficiary all cleanup, administrative, and enforcement costs of applicable government agencies or
the parties protected by such Environmental Laws which may be asserted against the Trust Property,
the owner thereof or a lienholder secured thereby. All costs (including, without limitation, those
costs set forth above), damages, liabilities, losses, claims, expenses (including attorneys’ fees
and disbursements) which are incurred by Beneficiary, without the requirement that Beneficiary wait
for the ultimate outcome of any litigation, claim or other proceeding, together with interest
thereon at the default rate set forth in the Note, shall be paid by Trustor to Beneficiary within
ten (10) days after notice to Trustor from Beneficiary itemizing the amounts incurred to the
effective date of such notice.

E. Trustor hereby covenants and agrees not to do or take action or omit or fail to take any
such action which will result in an unauthorized release of any Hazardous Substances or the
existence of any Hazardous Substance or other environmental contamination, liability or problem
with respect to the Trust Property. Upon any such unauthorized release or discovery of the
existence of any such Hazardous Substance or other environmental contamination, liability or
problem, Trustor agrees to promptly give written notice to Beneficiary of the exact nature, scope
and extent thereof.

F. Trustor does hereby covenant and agree that it will indemnify, defend and save harmless
Beneficiary, and its officers, directors, shareholders, employees, agents and attorneys for, from
and against any loss, claim, actions, liabilities, costs, attorneys’ fees and expenses including,
without limitation, civil penalties, punitive damages and criminal penalties arising or resulting
from any environmental matter described, covered or referred to in this Deed of Trust and Trustor
hereby covenants to indemnify, defend and save Beneficiary and its officers, directors,
shareholders, employees, agents and attorneys harmless for, from and against, any loss, damage,
fines, penalties, claims or duty to clean up or dispose of wastes or materials on or relating to
the Trust Property, regardless of any inspections or other action made or taken by Beneficiary on
the Trust Property or as a result of any conveyance of title of the Trust Property to the
Beneficiary or otherwise. Trustor agrees to remain fully liable and shall indemnify, defend and
hold harmless Beneficiary and its officers, directors, shareholders, employees, agents and
attorneys for, from and against any costs, expenses, cleanup costs, waste disposal costs,
litigation costs, fines, penalties, including without limitation those costs, expenses, penalties
and fines within the meaning of Environmental Laws, and other related liabilities, upon the
occurrence of a breach of any of the Trustor’s foregoing representations and warranties.

G. Beneficiary shall have the right: (1) at any time that Beneficiary reasonably suspects the
presence of asbestos or radon or of another Hazardous Substance subject to regulation under
Environmental Laws above, in, on, under, from or around the Trust Property; and (2) upon and after
any event of default hereunder, to require Trustor, at the sole cost and expense of Trustor, to
employ a qualified independent environmental auditor, acceptable to Beneficiary, to conduct an
environmental audit of the Trust Property to determine whether there is any asbestos, radon or any
other Hazardous Substance above, in, on, under, from or around the Trust Property, such that the
Trust Property, any activity related to the Trust Property or the Hazardous Substance is subject to
regulation under Environmental Laws. Beneficiary shall instruct such auditor to conduct such audit
in such a manner as to minimize interference with the operation of the Trust Property.

H. Beneficiary shall have the right from time to time during the term of the Note to enter
upon the Trust Property for purposes of inspection for the presence or detection of Hazardous
Substances or any other violation of Environmental Laws. Trustor shall pay to Beneficiary a
reasonable inspection fee in connection with any such inspection.

4.2 Survival of Indemnities. All warranties, representations, indemnities, covenants
and agreements in Section 4.1 above shall be deemed to be continuing and shall remain true and
correct in all material respects from the date hereof until the indebtedness secured hereby shall
have been completely satisfied, and any limitations period with respect to any claims under each of
the Environmental Laws has expired. Trustor’s indemnities, covenants and agreements above in
Section 4.1 shall survive the termination of this Deed of Trust, any exercise of any remedy by
Beneficiary under the Note or this Deed of Trust, including foreclosure of the lien of this Deed of
Trust (or deed in lieu thereof or similar actions to the same effect), even if, as a
part of such foreclosure, deed in lieu of foreclosure or similar action, the indebtedness secured
hereby is satisfied in full. It shall, at the option of Beneficiary, be an event of default
hereunder and under the Note if any of the representations or warranties now be or at any time
hereafter become untrue or misleading or if the Trust Property becomes subject to any claim, notice
or action of a nature described in Subsection 4.1.B hereof. In addition to all other remedies that
Beneficiary may have, Beneficiary may accelerate payment of the Note as provided therein and in
this Deed of Trust.

 

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5. SECURITY AGREEMENT

5.1 Collateral. As security for the indebtedness secured by this Deed of Trust,
Trustor, as debtor, hereby grants to Beneficiary, as secured party, a security interest in, and
lien on, the following, whether now existing or hereafter acquired (collectively the “Collateral”):

A. All insurance policies required to be maintained by Trustor hereunder, together with all
cash proceeds, general intangibles, rights to payment, contract rights and accounts arising
therefrom;

B. All leases and purchase agreements, as described herein, and all proceeds of any judgment,
award or settlement in any condemnation or eminent domain proceeding, together with all general
intangibles, contract rights and accounts arising therefrom;

C. All furniture, furnishings, equipment and fixtures, whether owned or leased by Trustor, now
or hereafter located on the Trust Property, or stored in an off-site warehouse or other off-site
storage for future use on or for incorporation into the Trust Property;

D. All building materials and supplies, carpet, rugs and other floor coverings, shades,
venetian blinds, drapes, curtains, tapestries, screens, works of art, and lighting fixtures,
whether owned or leased by Trustor, now or hereafter located on the Trust Property, or stored in an
off-site warehouse or other off-site storage for future use on or for incorporation into the Trust
Property;

E. All operating equipment, whether owned or leased by Trustor, now or hereafter located on
the Trust Property, or stored in an off-site warehouse or in other of-site storage for future use
on or for incorporation into the Trust Property including, without limitation, appliances,
apparatus, equipment, machinery, air conditioning equipment, fire extinguishers and landscaping and
gardening equipment;

F. All office equipment, goods and software, whether owned or leased by Trustor, now or
hereafter located on the Trust Property or stored in an off-site warehouse or in other off-site
storage for future use on the Trust Property including without limitation, all safes and cash
registers and all accounting, duplicating and communication equipment, facsimile equipment, and
computers;

G. All operating supplies, whether owned or leased by Trustor, now or hereafter located on the
Trust Property, or stored in an off-site warehouse or in other off-site storage for future use on
the Trust Property including without limitation, all books of account, cleaning and landscaping
supplies, mechanical stores, and printed forms;

H. Any and all other Trustor owned trade fixtures, equipment, apparatus, personal property and
inventory located on the Trust Property or used or held in an off-site warehouse or other off-site
storage for future use on, or for incorporation into, or used or useful in connection with, the
Trust Property, as improved, owned and operated by Trustor;

I. All tradenames, trademarks or servicemarks now or hereafter used in connection with the use
or operation of the Trust Property;

J. All of Trustor’s cash proceeds, accounts receivable, rights to payment, accounts, contract
rights, notes, drafts, acceptances, deposit accounts, instruments, documents, payment intangibles,
general intangibles, chattel paper, electronic chattel paper, letter-of-credit rights, letters of
credit, money, and investment property now existing or hereafter arising out of or in connection
with or in any way related to the Trust Property;

K. All of Trustor’s right, title and interest in and to that certain Amendment Number 3 to
Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate dated June 20, 2008
with ICO Fund IX, LLC and all amounts held in escrow by Commonwealth Land Title Company pursuant
thereto.

 

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L. Any and all renewals, replacements, additions and substitutions for or to the
above-mentioned items; and

M. All proceeds of the aforementioned items.

These security interests and liens shall secure all the indebtedness secured by this Deed of
Trust and all indebtedness of Trustor owing to Beneficiary, now existing or hereafter arising.

5.2 Warranties and Covenants Regarding Collateral. Trustor as debtor hereby warrants
and covenants:

A. Except for the security interest and lien granted in Section 5.1 hereof, Trustor is, and as
to the portions of the Collateral to be acquired after the date hereof will be, the owner of the
Collateral free from any lien, security interest, adverse claim, or encumbrance. Trustor shall
notify Beneficiary as secured party of, and shall defend the Collateral against, all claims and
demands of all other persons at any time claiming any interest therein.

B. Trustor at all reasonable times, upon request of Beneficiary from time to time, shall
submit up-to-date schedules of the items comprising the Collateral in such detail as Beneficiary
shall require.

C. Trustor shall not sell or offer to sell or otherwise transfer the Collateral or any
interest therein, nor remove the Collateral or any part thereof, or allow it to be removed from the
Trust Property without the prior written consent of Beneficiary unless Trustor shall promptly
replace such Collateral with substitute Collateral of at least equal market value. All
replacements shall be free of any other lien, security interest or encumbrance of any nature.

D. Trustor shall have and maintain insurance at all times with respect to all the Collateral
conforming to the requirements of Section 1.6 of this Deed of Trust. Trustor hereby appoints
Beneficiary as attorney in fact for Trustor in obtaining, adjusting, settling and canceling such
insurance and endorsing any drafts. Any amounts collected or received under any such policies
shall be subject to the terms of Section 1.6 hereof. The foregoing power of attorney is a power
coupled with an interest and shall be irrevocable so long as any of the obligations secured by this
Deed of Trust remains unsatisfied.

E. Trustor shall keep the Collateral free from any adverse lien, claim, security interest or
encumbrance whether voluntarily or involuntarily created and in good order and repair and shall not
waste or destroy the Collateral or any part thereof. Trustor shall not use the Collateral in
violation of any statute or ordinance. Beneficiary may examine and inspect the Collateral at any
time, wherever located. Trustor will promptly notify Beneficiary of any levy, restraint or any
other seizure by legal process or otherwise of any part of the Collateral, and of any threatened or
filed claims or proceedings that might in any way affect or impair any of the terms hereof.

F. Trustor shall pay promptly when due all taxes and assessments upon the Collateral or for
its use or operation.

G. Trustor hereby irrevocably authorizes Beneficiary to file and/or record all instruments
(including security agreements, financing statements, continuation statements, etc.) in a timely
and proper manner, as required by Beneficiary to establish, maintain, continue and guarantee the
perfected security interests of Beneficiary in the Collateral, and will promptly on demand pay all
costs and expenses of filing and recording, including the costs of any search deemed necessary by
Beneficiary from time to time to establish and determine the validity and the continuing priority
of the security interest of Beneficiary, and will pay all other claims and charges that in the
opinion of Beneficiary might prejudice, imperil or otherwise affect the Collateral or Beneficiary’s
security interest therein.

H. Trustor shall negotiate, execute and assign all documents deemed reasonably necessary by
Beneficiary to perfect its security interest in materials stored off-site.

5.3 Fixture Filing. This Deed of Trust constitutes a fixture filing as defined in
Sections 9334 and 9502(c) of the California Uniform Commercial Code, as amended or recodified from
time to time. This Deed of Trust is to be recorded in the real estate records of the County in
which the Property is located and covers goods which are, or are to become, fixtures.

 

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6. RELEASES

6.1 Reconveyance. Upon payment in full and performance of all the obligations secured
by this Deed of Trust, the lien of this Deed of Trust upon the Trust Property shall be released by
reconveyance by deed of release, which said
reconveyance and release shall be without warranty and shall operate to reconvey the estate vested
in Trustee hereby. The grantee in any deed of release executed pursuant to this Deed of Trust may
be described as “the person or persons legally entitled thereto” and the recitals therein of any
matters or facts shall be conclusive proof of the truthfulness thereof.

6.2 Releases. Beneficiary may at any time, without notice, release any person liable
for payment of any indebtedness secured hereby or extend or modify the time for payment and
performance of the obligations secured hereby by agreement with Trustor or by agreement with
subsequent owners of the Trust Property. Beneficiary may, at any time, without liability therefor
and without notice direct Trustee to: (A) release and reconvey by deed of release any part of the
Trust Property from the lien hereof; (B) consent to the making and recording of any maps or plats
of the Trust Property; or (C) join in granting any easement on the Trust Property. Any such
release, extension, modification or other act described in this Section 6.2 shall not affect the
personal liability of any person for the payment and performance of the obligations secured hereby
or the lien of this Deed of Trust upon the Trust Property or the remaining portion thereof.

7. GENERAL PROVISIONS

7.1 No Waiver. The taking or acceptance of this Deed of Trust shall in no event be
considered as a waiver of or in any manner affecting or impairing any other security that
Beneficiary may have, or acquire simultaneously herewith, or hereafter acquire for the payment of
the indebtedness hereby secured, nor shall the taking by Beneficiary at any time of any such
additional security be construed as a waiver of, or in any way affecting or impairing the security
of this Deed of Trust; and Beneficiary may resort, for the payment of the indebtedness secured
hereby, to its several securities therefor in such order and manner as it may determine.

7.2 Beneficiary’s Right to Extend, Reduce and Release. Without affecting the
obligation of Trustor to pay and perform as herein required; without affecting the personal
liability of any person for payment of the indebtedness secured hereby; and without affecting the
lien or priority of lien hereof on the Trust Property, Beneficiary may, at its option, extend the
time for payment of said indebtedness or any part thereof, reduce the payments thereon, give
partial releases of any parts of the Trust Property from the lien, terms and provisions hereof,
release any person liable on any of said indebtedness, accept a renewal note therefor, modify the
terms of said indebtedness, take or release other additional security or join in any extension or
subordination agreement, or direct the Trustee to release from this Deed of Trust any part of the
Trust Property. Any such action by Beneficiary or Trustee at Beneficiary’s direction may be taken
without the consent of any junior lienholder, and shall not affect the priority of this Deed of
Trust over any junior lien.

7.3 Additional Indebtedness. This instrument shall be construed as covering and
securing the indebtedness herein mentioned and any and all additional indebtedness, whether as
future advancement or otherwise, together with any renewals, modifications or extensions of the
said indebtedness herein secured or any advancements, and any and all costs of collecting the same.

7.4 Advances by Beneficiary. If Trustor shall fail to pay any taxes, assessments,
expenses or charges, or to keep all of the Trust Property free from liens and claims of liens, or
to keep and maintain and repair the Trust Property, or to procure and maintain insurance thereon,
or to do any other thing required of Trustor, all as herein provided, Beneficiary at its option,
but without any obligation so to do, may advance the necessary monies to pay the same or to
accomplish said maintenance and repairs or to procure and maintain such insurance and all such
monies so advanced shall be added to the indebtedness secured hereby, and shall bear interest at
the default rate set forth in the Note, from the date of such advance. All such advancements shall
be due and payable by Trustor to Beneficiary upon demand and, should Trustor fail to repay to
Beneficiary any such advancements as herein required immediately after demand for payment of same,
Beneficiary may, at its option, declare all sums secured by this Deed of Trust to be immediately
due and payable and may avail itself of any and all remedies provided herein for default.

7.5 Waiver of Statute of Limitations. The right to plead any and all statutes of
limitations as a defense to any obligation secured by this Deed of Trust is hereby waived.

7.6 No Offset. No offset or claim that Trustor now or may in the future have against
Beneficiary shall relieve Trustor from paying installments or performing any other obligation
herein secured hereby.

7.7 Change to Deed of Trust. This Deed of Trust cannot be changed except by
agreement, in writing, signed by Trustor and Beneficiary.

 

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7.8 Partial Invalidity. Should any term, provision, covenant or condition of this
Deed of Trust be held to be void or invalid the same shall not affect any other term, provision,
covenant or condition of this Deed of Trust, but the remainder hereof shall be effective as though
such term, provision, covenant had not been contained herein. Should this instrument be or become
ineffective as a deed of trust, then this instrument shall be construed and enforced as a realty
mortgage with the Trustor being the mortgagor, and Beneficiary being the mortgagee.

7.9 Acceptance by Trustee. Trustee accepts this trust when this Deed of Trust, duly
executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to
notify any party hereto of pending sale under any other Deed of Trust or of any action or
proceeding in which Trustor, Beneficiary, or Trustee shall be a party, unless brought by Trustee.

7.10 Substitution of Trustee. Beneficiary may from time to time, for any reason or
cause, substitute a successor or successors to any Trustee named herein or acting hereunder to
execute this Trust. Upon such appointment, and without any conveyance to any successor Trustee,
the latter shall be vested with all title, powers, and duties conferred upon any trustee herein
named or acting hereunder. Each such appointment and substitution shall be made by written notice
through registered or certified mail, postage prepaid, to Trustor, Trustee, and the successor
Trustee and by recording notice of such in the office of the San Bernardino County Recorder. Such
notice of substitution of Trustee shall be executed and acknowledged by Beneficiary and shall
contain reference to this Trust Deed and its place of record and describe the Trust Property and
when so recorded shall be conclusive proof of proper appointment of the successor Trustee.

7.11 Usury Disclaimer. It is the specific intent of Trustor and Beneficiary that the
Note bear a lawful rate of interest and if any court of competent jurisdiction should determine
that the interest rates (or any other charges or costs set forth in the Note, or in any other Loan
Document, which may be deemed to be an interest charge) provided therein exceed that which is
statutorily permitted for the type of transaction evidenced thereby, the interest rates (and other
applicable charges or costs) shall be reduced to the highest rate permitted by applicable law, with
any excess interest theretofore collected being applied against the Note principal or, if such
principal has been fully repaid, returned to Trustor on demand.

7.12 Trust Irrevocable. The trust created hereby is irrevocable by Trustor.

7.13 Waivers by Trustor. Except as provided herein, Trustor waives any requirements
of presentment, demands for payment, notices of nonpayment or late payment, protest, notices of
protest, notices of dishonor and all other formalities. Trustor waives any right to require
Beneficiary to proceed against or exhaust any other security held for the indebtedness secured
hereby, or to proceed against any guarantor of such indebtedness, or to pursue any other remedy
available to Beneficiary and, Beneficiary may resort to its several remedies and/or securities in
such order as it may determine. Trustor also waives all rights of redemption to the maximum extent
permitted by law.

7.14 Notices. All notices required or permitted under this Deed of Trust shall be in
writing and shall be given by: (1) hand delivery to the address for notices; or (2) delivery by
overnight courier service to the address for notices; or (3) by United States Mail, postage
prepaid, certified mail, return receipt requested, addressed to the address for notices.

All notices shall be deemed received upon the earlier to occur of: (a) the hand delivery of
such notice to the address for notices; (b) one (1) day after the deposit of such notice with an
overnight courier service addressed to the address for notices; or (c) three (3) days after
depositing the notice in the United States Mail as set forth in (3) above.

All notices shall be addressed to the addresses set forth on the first page of this Deed of
Trust, or to such other person or at such other place as any party hereto may by notice designate
as a place for service of notice.

7.15 Inspection of Trust Property. Beneficiary or Trustee, or both, or their
respective agents, shall have the right to inspect the Trust Property at all reasonable times.

7.16 Construction. Time is of the essence hereof. This Deed of Trust applies to,
inures to the benefit of and binds all parties hereto, their heirs, legatees, devisees, personal
representatives, successors and assigns. The liability of each person or party signing this Deed
of Trust as Trustor shall be joint and several. The term “Beneficiary” shall include not only the
original Beneficiary hereunder but also any future Assignee of the beneficial interest hereof or
any future owner and holder, including pledges, of the Note secured hereby. The captions used
herein are for convenience only and shall not enter into the interpretation hereof, and the
provisions hereof shall apply to the parties according to the context thereof and without regard
for the number or gender of words or expressions used.

 

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7.17 Survival of Representations. Trustor acknowledges that as special consideration
for the loan made by Beneficiary to Trustor, as evidenced by the Note secured by this Deed of
Trust, all representations made by Trustor, to Beneficiary, including but not limited to those set
forth in the Loan Commitment Agreement, shall survive the making of the loan evidenced by the Note
secured by this Deed of Trust. Trustor further acknowledges that each such representation was an
important factor in Beneficiary’s determination of the ability of the property to support the debt
service of the loan evidenced by the Note secured by this Deed of Trust through its income
producing capability. As no additional financing was contemplated in such representations,
Beneficiary shall be permitted to declare an event of default if, without Beneficiary’s prior
written consent, Trustor creates or permits any other mortgage lien on the Trust Property or fails
to pay when the same shall become due, all lawful claims and demands of mechanics, materialmen,
laborers, and others which, if unpaid might result in or permit the creation of, a lien on the
Trust Property or on the revenues, rents, issues, income and profits arising therefrom.

7.18 Change in Property Tax Laws. In the event of the enactment, after this date, of
any law of the State of California, or other governmental authority having jurisdiction, deducting
from the value of the Trust Property for the purpose of taxing the amount of any lien thereon, or
imposing the payment of the whole or any part of the taxes or assessments or charges or liens
herein required to be paid by Trustor, or changing in any way the laws relating to the taxation of
deeds of trust or mortgages or debts secured by mortgages or deeds of trust or the mortgagees’ and
beneficiaries’ interest in the Trust Property, or the manner of collection of taxes, so as to
affect this Deed of Trust or the loan indebtedness secured hereby or the Beneficiary hereof or
holder of the Note evidencing the loan indebtedness secured hereby, then in any such event, the
Trustor, upon demand by the Beneficiary under this Deed of Trust or holder of the Note, shall pay
such taxes or assessments or reimburse the Beneficiary or holder of such Note therefor; provided,
however, that if, in the opinion of counsel for Beneficiary or holder of such Note: (A) it might
be unlawful to require Trustor to make such payment; or (B) the making of such payment might result
in the imposition of interest beyond the maximum amount permitted by law, then, and in such event,
the Beneficiary or holder of such Note may elect, by notice in writing given to the Trustor, to
declare all of the indebtedness secured hereby to be and become due and payable within sixty (60)
days from the giving of such notice without payment of any prepayment premium. Notwithstanding the
foregoing, it is understood and agreed that Trustor is not obligated to pay any portion of the
federal or state income tax for which the Beneficiary or holder may be liable.

7.19 Litigation. If Beneficiary is made a party defendant to any litigation
concerning this Deed of Trust or any of the other loan documents, or leases relating to the Trust
Property or any part thereof or interest therein, or the occupancy thereof by Trustor, then Trustor
shall indemnify, defend and hold Beneficiary harmless from all liability by reason of such
litigation, including reasonable attorneys’ fees and expenses incurred by Beneficiary in any such
litigation, whether or not such litigation is prosecuted to judgment.

7.20 Rights of Beneficiary. Acceptance by Beneficiary of any sum on account of any
indebtedness secured hereby, after the date when such sum is due or after recording a notice of
default and election to sell, shall not constitute a waiver of the right either to require prompt
payment when due of all sums secured hereunder or to declare a default for failure to pay or a
waiver of the right to proceed with the sale of the Trust Property under such notice for any unpaid
balance of said indebtedness. Any delay by Beneficiary in exercising any right or remedy
hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of any right or remedy hereunder. The failure of Beneficiary to exercise any option or
right to accelerate the maturity of the sums secured by this Deed of Trust by reason of any past,
present or future event which would permit acceleration under this Deed of Trust shall not be a
waiver of Beneficiary’s right to accelerate such sums. The procurement of insurance or the payment
of taxes or other liens or charges by Beneficiary shall not be a waiver of Beneficiary’s right to
accelerate the maturity of the sums secured by this Deed of Trust. Beneficiary’s receipt of any
awards, proceeds or damages under the terms of this Deed of Trust shall not operate to cure or
waive default by Trustor. No waiver by Beneficiary of any right under this Deed of Trust shall be
effective unless in writing. Consent by Beneficiary to one transaction, occurrence, amendment,
change, modification or option to exercise shall not be deemed to be consent to nor a waiver of the
right to require such consent to any other transaction, occurrence, amendment, change, modification
or option to exercise.

7.21 Further Assurances. Trustor will, upon request of the Beneficiary, promptly
correct any defect, error or omission that may be discovered in the contents of this Deed of Trust
or in the execution or acknowledgment hereof, and will execute, acknowledge and deliver such
further instruments and do such further acts as may be necessary or as may be reasonably requested
by the Beneficiary to carry out more effectively the purposes of this Deed of Trust to subject to
the liens and security interests hereby created on any of Trustor’s properties, rights or interest
covered or intended to be covered hereby, and to perfect and maintain such liens and security
interest.

 

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7.22 Representations Regarding Existence and Execution. Trustor hereby represents and
warrants as follows:

A. Trustor is a corporation validly existing under the Laws of the State of California with
the requisite power to: (1) incur the indebtedness evidenced by the Note; (2) grant the lien of
this Deed of Trust; and (3) enter into the other Loan Documents and any other instruments executed
and delivered to Beneficiary concurrently herewith or in connection with the Note;

B. Kenneth W. Elsberry is the Secretary and Chief Financial Officer of Trustor authorized to
execute on behalf of Trustor the Note, this Deed of Trust, the other Loan Documents, and any other
instruments executed and delivered to Beneficiary concurrently herewith;

C. The execution of this Deed of Trust, the Note, the other Loan Documents, and any other
instruments executed and delivered to Beneficiary concurrently herewith, and the full and complete
performance of the provisions hereof, are authorized, and will not result in any breach of, or
constitute a default under, or result in the creation of any lien, charge or encumbrance (other
than those contained herein) upon any property or asset of Trustor under any indenture, mortgage,
Deed of Trust, bank loan, or credit agreement, or other instrument to which Trustor is a party or
by which Trustor is bound;

D. The financial statements given by Trustor to Beneficiary in connection with the loan
evidenced by the Note accurately reflect Trustor’s financial condition;

E. Save and except for taxes and assessments that are to be paid by Trustor as specified
herein, Trustor will not create or suffer to permit to be created, subsequent to the date of
execution and delivery of this Deed of Trust, any lien or encumbrance upon the Trust Property
except as allowed by the terms of the Loan Documents;

F. There are no lawsuits pending or threatened against Trustor or instituted by Trustor in
which the party defendant has counterclaimed against Trustor;

G. This Deed of Trust and the other Loan Documents upon their execution, will in all respects
be legal, valid, and binding upon Trustor and enforceable by Beneficiary according to their terms;

H. Beneficiary’s liens and security interests created hereunder are valid first liens and
security interests encumbering Trustor’s real and personal property described herein;

I. All representations, warranties and covenants of Trustor contained herein or incorporated
by reference shall survive the recording of this Deed of Trust and the funding of the loan
evidenced by the Note secured hereby and shall remain continuing obligations, warranties, and
representations of Trustor during any time when any portion of the obligations secured by this Deed
of Trust remain outstanding.

7.23 Jurisdiction and Agent for Service. This Deed of Trust shall be construed
according to the laws of the State of California. Trustor hereby submits to personal jurisdiction
in the State of California for the enforcement of this Deed of Trust and waives any and all right
to object to such jurisdiction for the purposes of litigation to enforce this Deed of Trust.
Trustor further agrees that in the event such litigation is commenced at any time when Trustor is
not permanently domiciled in the State of California, Trustor shall be deemed subject to such
proceeding by service of a copy of the summons, complaint and other pleadings required to commence
such litigation upon Jack K. Heilbron or Kenneth W. Elsberry, 365 S. Rancho Santa Fe Road, Suite
300, San Marcos, California 92078-2338 or Bruce Rushall, Esq., Rushall & McGeever, 6100 Innovation
Way, Carlsbad, California 92009, whom Trustor hereby designates and appoints as Trustor’s agent for
service of process in the State of California.

Trustor agrees that this appointment of an agent for service of process is made for the mutual
benefit of Trustor and Beneficiary and may not be revoked without Beneficiary’s consent, in its
sole and absolute discretion. Trustor hereby agrees and consents that any such service of process
upon such agent shall be taken and held to be valid personal service upon Trustor whether or not
Trustor shall be then physically present, residing within, or doing business within the State of
California, and that any such service of process shall be of the same force and validity as if
service were made upon Trustor when physically present, residing with, or doing business in the
State of California. Trustor waives all claim of error by reason of any such service. Trustor
hereby consents to the jurisdiction of either the Superior Court of San Bernardino County,
California or the United States District Court for the Central District of California, in any
action, suit or proceeding which Beneficiary may at any time wish to file in connection with this
Deed of Trust or any related matter. Trustor irrevocably and unconditionally submits to exclusive
personal and subject matter jurisdiction of either of said Courts, stipulates that venue is proper
and appropriate for any
proceeding in either of said Courts, and waives any claim that any action or proceeding brought in
either of said Courts has been brought in an inconvenient forum.

 

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7.24 Jury Waiver. TRUSTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR
OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE INDEBTEDNESS EVIDENCED BY THE NOTE AND/OR THE
LOAN DOCUMENTS, OR ANY ACTS OR OMISSIONS OF BENEFICIARY, ITS OFFICERS, EMPLOYEES, DIRECTORS OR
AGENTS IN CONNECTION THEREWITH.

7.25 Acknowledgment of Review. Trustor represents and acknowledges that Trustor has
read this Deed of Trust and has had the opportunity to have counsel review the same, and that any
rule of construction to the effect that ambiguities are to be resolved against the drafting party
shall not apply in the interpretation of this Deed of Trust.

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first
hereinabove written.

	 	 	 	 	 
	 	NETREIT, a California corporation

 	 
	 	By:  	/s/ Kenneth W. Elsberry
 	 
	 	 	Kenneth W. Elsberry, 	 
	 	 	Secretary and Chief Financial Officer 	 
	 

 

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	STATE OF
	 	)
	 
	 	)  SS.
	COUNTY OF
	 	)

On                      before me,                     , Notary Public, personally appeared
                     who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

WITNESS my hand and official seal.

Signature
_____________________________                     (Seal)

 

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EXHIBIT A

All that certain real property situated in the County of San Bernardino, State of California,
described as follows:

Parcel 1:

That portion of the East 3/5 of Lot 6, Block 7, Rancho San Bernardino, in the City of San
Bernardino, County of San Bernardino, State of California, as per Plat recorded in Book 7, Pages 2
and 2A of Maps, records of said County, lying Southeasterly of the property conveyed to the San
Bernardino County Flood Control District by Deed recorded April 2, 1959, in Book 4778, Page 139 of
Official Records.

Excepting therefrom that portion conveyed to the County of San Bernardino by Deed recorded April
12, 1961, in Book 5401, Page 400 of Official Records.

Parcel 2:

That portion of the Easterly 100 feet of the West 2/5 of Lot 6, Block 7, Rancho San Bernardino, in
the City of San Bernardino, County of San Bernardino, State of California, as per Plat recorded in
Book 7, Pages 2 and 2A of Maps, records of said County, lying Southeasterly of the parcel of land
conveyed to the San Bernardino County Flood Control District, by Deed recorded June 29, 1960 in
Book 5173, Page 387 of Official Records.

Excepting therefrom the South 55 feet, measured from the centerline of Mill Street, 82.5 feet in
width, as conveyed to the County of San Bernardino, by Deed recorded May 31, 1961 in Book 5444,
Page 350 of Official Records.

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