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HomeMy WebLinkAboutMayer Financial, LP - PCH Beach Resort, LLC - Fidelity National Title Company - GMAC Commercial Mortgage Bank - 2005-08-19THE I�OBER,,T MAYEP\,- CORPORATION August 16, 2012 Joan L. Flynn, City Clerk City of Huntington Beach Office of the City Clerk P. O. Box 190 Huntington Beach, CA 92649 Dear Ms. Flynn: The Robert Mayer Corporation is in receipt of the Legal Notice of Public Hearing. However the address you have on file at 660 Newport Center Drive, Newport Beach, CA 92660, is no longer in use. WE moved our offices last December to the following address: The Robert Mayer Corporation Attention: RJ Mayer 8951 Research Drive Irvine, CA 92618-4237 If you are sending mail to Shawn Millbern with our firm, please forward his mail to the new address as well. I would appreciate it if you would kindly notify others in your offices of our address change. Thank you very much. Sincerely, Pamela J. Woods Executive Assistant /PJw 8951 Research Drive . Irvine, CA 92618-4237 tel 949.759.8091 . fax 949.988.7176 • CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 LETTER OF TRANSMITTAL Date: June T 2005 To: City Clerk ❑ We are sending you: ❑ By Mail ❑ By Fax (pages inc. this sheet): ❑ We are hand delivering: ❑ Prints ❑ Plans ❑ Copy of letter ❑ ® Other: Legal documents (originals) Change Order c o � � a 4 0 d ('7 rn n oa� Y41 xo`�,, _ o En ttem # Original Pages Description 1 1 125 Owner Parficipafion Agreement Between Redevelopment Agency of the City of Huntington Beach (Agency) and Huntington Center Associates, LLC 2 1 86 Amended and Restated Leasehold Deed of Trust; Assignment o Leases and Profits, Security Agreement and Fixture Fihn PCH Beach Resort) 3 18 Amended and Restated Leasehold Deed of Trust Execution Copy) 4 1 4 Request for Notice (PCH Beach Resort 5 These are transmitted as checked below: ❑ For approval ® Approved as submitted ❑ Resubmit copies for approval ❑ For your use ❑ Approved as noted ❑ Submit copies for distribution ❑ As requested ❑ Returned for corrections ❑ Retum corrected prints ❑ For review/comment ❑ Other: cc: File By:' ' Kath elson - I,:eonoi c r)evelopment - exL 5542 On bchalf of Carol RdhLel - cxt. 5224 G•\rbaAc\Cirr Off2 TkAl sm=AL5\r)ocTLgtsl mAL kiaA&ix)c 0 • Nb LETTER OF TRANSMITTAL Date: June 7, 2005 To: City Clerk CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, CA 92648 ❑ We are sending you: ❑ By Mail ❑ By Fax (pages inc. this sheet): ❑ We are hand delivering: ❑ Prints ❑ Plans ❑ Copy of letter ❑ ® Other: __Legal documents (originals) Change Order Cn -4 0 Cnp C..4 1n ac�=a —4 0 din OD tRi < a� r� nv z o En Item p Original Pages Description 1 1 125 Owner Participation Agreement Between Redevelopment Agency of the City of Huntington Beach (Agency) and Huntington Center Associates, LLC 2 1 86 Amended and Restated Leasehold Deed of Trust; Assignment o Leases and Profits. Security Agreement and Fixture Filing (PCH Beach Resort 3 18 Amended and Restated Leasehold peed of Trust Execution Co 4 1 1 4 1 Request for Notice (PCH Beach Resort 5 These are transmitted as checked below: ❑ For approval ® Approved as submitted ❑ Resubmit copies for approval ❑ For your use ❑ Approved as noted ❑ Submit copies for distribution ❑ As requested ❑ Retumed for corrections ❑ Return corrected prints ❑ For reviewicomment ❑ Other: cc: File ByCS : ' Katli' elson - Econo is Development - exi. 5542 On behalf of Carol RufiLcl- exi. 5224 Q\tYxnst\Crry Cu= TUN& frrrus\Doc TUNswrrAL roz"Doc Katten *chin Rosenman LAP 1025 Thomas Jefferson St-. NW RECE�1iEp East lobby, Suite 700 Washington, DC 20007-52oi S P 13 202.625-35oo tel 2005 2022987570 fax DEPARWNTof 1 '-'O Do ba Spgnardo atten awcom 202 625 3534 dueu 202 295 1100 lax September 6. 2005 Certified ,Hail - Returit Receipt Requested Redevelopment Agency of the City of Huntington Beach City Hail 2000 Main Street Iuntington Beach, California 92648 Attm Mike Hennessey, Director of Economic Development Re: $115.000.000 Loan from CIMAC Commercial Mortgage Bank, a Utah industrial bank ("Lender") to PCII Beach Resort, I.I.C. a California limited liability company'{"(3orrower") secured by Borrower's leasehold interest in that certain property located in Huntington Beach, Califomia known as the "Hyatt Regency Huntington Reach Resort & Spa" ("Property") pursuant to that certain Ground Lease dated as of' April 4, 2001 by and between the Redevelopment Agency of the City of Huntington Beach ("Agency"), as landlord, and Borrower, as tenant ("Ground. I east") - Dear Mr. Hennessey: The undersigned counsel for Lender does hereby certify that attached hereto is a true, correct and complete (i) recorded copy of the Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing dated as of August 19, 2005 (the "Deed of"Irust") evidencing Lender's first lien security interest encumbering the Property, and a (n) copy of the executed .Amended and Restated Vote (as defined in the Dccd of Trust). As of the date hereof, there have been no assignment; of the Deed of Trust. Lender's address for notice purposes is- 6955 Union Park Center, Suite 330 Midvale, Utah 84047 Fax No-- (801) 567-2681 Attention: President = o and —xi n b C R! 200 Witmer Road d�ri N Horsham, Pennsylvania 19044 Fax No-: (215) 3284620 Attention_ Servicing - Fxecutive Vice President n �� M 0 and c-) N 8614 Westwood Center Drive, Suite 630 Vienna. Virginia 22182 Fax No.: (703) 749-4366 Attention- Lewis L. Delafield (Loan No. 1049864) WASHINGTON. DC NEW YORK LOS AN(.ELES (MICAGO CFwRWI-TE PALO ALTO IRVING WWW KATTENLAW COM Dm r, W A10 t 1207,51 1-100265! -1 t W")2a.-5.0c,:O'-- OOiAtltlttplS)14rship including professional corporations Kattenochinftsenman LLP This notice is being submitted to the Agency pursuant to Section 905.1 of the Ground Lease so that the Agency shall be required to comply with its obligations under the Ground Lease with respect to Lender, and the Deed of Trust. Best Regards, c B.A.Spignar o Enclosures DOC M WAS01(20751I-M265)41hOO924t5.09!06/21)05171mr 1035 This Document vM electronically recorded by Fidelity Nnal Major Accounts CORD"G rQUBSTED DEL TY r, _'NAL r.. q 111 ot-1()(1' Recorded at the request of and when recorded return to: Katten Muchin Rosenman LLP 1025 "Thomas Jefferson Street, N. W. Suite 700, East Tower Washington, D.C. 20007-5201 Attn: Christopher J. Hart, Esq. Recorded in Official Records, Orange County !Torn Daly, Clerk -Recorder uC��IUQIJiWiICII�I�UIiIQlIU19Q 273.00 2005000657702 10:27am 08/22/05 117 30 DI U08 A36 86 0.00 0.00 0.00 0.00 255.00 0.00 0.00 0.00 Loan No. 01-1049864 AMENDED AND RESTATED LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND PROFITS, SECURITY AGREEMENT AND FIXTURE FILING frorn PCH BEACH RESORT, LLC as Grantor to FIDELITY NATIONAL TITLE COMPANY as Trustee for the benefit of GMAC COMMERCIAL MORTGAGE BANK as Beneficiary Dated: August Iv1 , 2005 Doc 11 WAS01 (207511-00265) 416U0917,-6 08:OJr005jTime 16 50 TABLE OF CONTENTS 1. Defined Terms.......................................................................................................................6 2. The Loan ..............................................................................................................................14 3. Warranty of Title..................................................................................................................14 4. Insurance..............................................................................................................................15 5. Payment of "Taxes................................................................................................................21 6. Tax and Insurance Escrow Fund..........................................................................................22 7. Annual Budget; Accounts....................................................................................................23 8. Condemnation......................................................................................................................23 9. Leases and Profits................................................................................................................26 10. Representations Concerning I..oan.......................................................................................27 11. Single Purpose Entity: Authorization..................................................................................32 12. Maintenance of Property................................................................. ... ............ _................. 33 13. Transfer or Encumbrance of the Property..........................................................................34 14. Certificates: Affidavits .........................................................................................................36 15. Changes in the Laws Regarding Taxation....................................................... ............36 16. No Credits on Account of the Debt......................................................................................37 17. Documentary Stamps..........................................................................................................37 18. Controlling Agreement........................................................................................................37 19. Books and Records..............................................................................................................38 20. Performance of Other Agreements....................................................................................38 21. Further Assurances...............................................................................................................39 22. Recording of Deed of Trust................................................................................................41 23. Reporting Requirements....................................................... .............................................41 24. Events of Default.................................................................................................................41 ii Dcx e_WAS01(207511.00265)41600917v6,0&'0312005rrime 16 50 25. Late Payment Charge: Servicing Fees................................................................................44 26. Right to Cure Defaults........................................................... ....44 27. Remedies..............................................................................................................................44 28. Right of Entry ............................................ .........................47 29. Security Agreement............................................................................................................48 30. Actions and Proceedings......................................................................................................49 31. Waiver of Setoff and Counterclaim....................................................................................49 32. Contest of Certain Claims..................................................................................................49 33. Recovery of Sums Required to Be Paid............................................................................50 34. Marshaling and Other Matters.............................................................................................50 35 Hazardous Substances .............................. ....................................................................50 36. Asbestos............................................................. ..........................51 37. Environmental Monitoring...................................................................................................52 38. Management of the Property................................................................................................53 39. Handicapped Access ......................................................................................55 40. ERISA...................................................................... ....55 41. Indemnification......................................................... ..56 42. Recourse and Indemnification.............................................................................................57 43. Notice...................................................................................................................................58 44. Authority..............................................................................................................................59 45. Waiver of Notice..................................................................................................................59 46. Remedies of Grantor............................................................................................................59 47. Sole Discretion of Beneficiary.............................................................................................60 48. Non-Waiver..........................................................................................................................60 49. No Oral Change .................................... ........60 iii Doc R WAS01 (207511-00265) 41600917%$ 0810312005rrime 16 50 0 50. Liability................................................................................................................................60 51. Inapplicable Provisions........................................................................................................61 52. Section Headings.................................................................................................................61 53. Counterparts.........................................................................................................................61 54. Certain Definitions...............................................................................................................61 55. Assignments.........................................................................................................................61 56. SUBMISSION TO JURISDICTION............................................................ ..........61 57. Agent for Receipt of Process...............................................................................................62 A Service of Process...............................................................................................................62 59. WAIVER OF JURY TRIAL................................................................................._.......... 62 60. Homestead...........................................................................................................................63 61. CHOICE OF I.AW ........................................................................ ..........63 62. Time of Essence.................................................................................................................63 63. Survival ............. 64. No Third -Party Beneficiary Rights Created........................................................................63 65. Discharge.............................................................................................. ..63 66. Maintaining Priority of Deed of Trust.................................................................................63 67. Costs.....................................................................................................................................64 68. Trustee..................................................................................................................................64 69. Ground Lease.......................................................................................................................65 70. Leasehold Mortgage Provisions...........................................................................................68 71. Local Law Provisions..........................................................................................................68 Iv Doc a WA.S01 (207511.00265) 41600917•-608103 2005(rimc 16 50 0 • Loan No.: 01-1049864 AMENDED AND RESTATED LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES AND PROFITS, SECURITY AGREEMENT AND FIXTURE FILING WHEREAS, on October 15, 2004, GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial bank ("Beneficiarv"), made a loan to PCH BEACH RESORT, LLC, a California limited liability company, having an address c/o The Robert Mayer Corporation, 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660 ("Grantor"}, in the original principal amount of Ninety -Five Million and No/100 Dollars ($95,000,000.00) (the "Original Loan"); WHEREAS, the Original Loan is evidenced by that certain Deed of Trust Note dated as of October 15, 2004 executed by Grantor in favor of Beneficiary (the "Original Note"), and secured by, inter alga (i) that certain Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing dated as of October 15, 2004 executed by Grantor in favor of Beneficiary recorded on October 15, 2004, as Instrument No. 04-934783 and re- recorded on October 26, 2004 as Instrument No 04-963378 (the "Original Deed of Tnist"); and (ii) that certain Guaranty dated as of October 15, 2004 executed by Stephen K- Bone, an individual, and Robert L. Mayer, an individual (collectively, jointly and severally, the "Guarantor") for the benefit of Beneficiary (the "Original Guaranty"; such Original Guaranty, together with the Original Note, and the Original Deed of Trust, and all other documents evidencing, securing, guaranteeing, governing or relating to the Original Loan are hereinafter collectively referred to as the "Original Loan Documents")-. WHEREAS, Grantor and Beneficiary have agreed to refinance the Original Loan and increase the amount of Grantor's indebtedness to Beneficiary pursuant to the terms hereof, and amend and restate the Original Loan Documents in their entirety; WHEREAS, Grantor and Beneficiary have agreed to amend and restate the Original Note in its entirety by executing and delivering the Amended and Restated Deed of Trust Note (as hereby amended and restated, the "Note") to refinance the Original Loan to an amount equal to One Hundred Fifteen Million and No/100 Dollars ($ l 15,000,000.00); and WHEREAS, concurrently herewith, Grantor, Beneficiary and certain other parties are executing and delivering (i) this Amended and Restated Leasehold Deed of "Trust, Assignment of Leases and Profits, Security Agreement and fixture Filing of even date herewith (the "Deed of Trust") which amends and restates the Original Deed of Trust in its entirety, and (ii) that certain Amended and Restated Guaranty of even date herewith which amends and restates the Original Guaranty in its entirety. All capitalized terms not defined in this Note shall have the meanings ascribed thereto in this Deed of Trust NOW THEREFORE, FOR VALUE RECEIVED, Grantor and Beneficiary represent, warrant and agree that the Original Deed of Trust is hereby amended and restated in its entirety as follows: Doe 4 WASO1 (207511-00265) 01600917v6 0&'0312005r1,me 16-50 9 This Deed of Trust is dated this MOdayof August, 2005 from Grantor to FIDELITY NATIONAL TITLE COMPANY, having an address at 1300 Dove Street, Suite 310, Newport Beach, CA 92660, as "Trustee ("Trustee"), for the benefit of Beneficiary. GRANTOR, in consideration of the indebtedness herein recited and the trust herein created, and in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid by Trustee, the receipt of which is hereby acknowledged, does hereby irrevocably grant, bargain, sell, pledge, assign, warrant, transfer and convey unto Trustee and its successors and assigns forever, in trust, with power of sale, all of Grantor's leasehold interest in and to certain land in Orange County, California, more particularly described in Exhibit "A" attached hereto and made a part hereof (the "Land"); together with all of the following described property, collectively, the „Property"), TOGETHER WITH all of Grantor's right, title and interest in and to: (a) the Ground Lease (hereinafter defined) and the leasehold estate created by that certain instrument dated April 4, 2001 by and between Grantor, as lessee, and The Redevelopment Agency of the City of Huntington Beach. a public agency, as lessor (the "Ground Lessor"), a memorandum of which is dated April 4, 2001 and recorded on April 18, 2001 in the Official Records of the Orange County Recorder as Instrument No_ 20010232769 (collectively, the "Ground Lease"); and (b) all modifications, extensions and renewals of the Ground Lease and all credits, deposits (including, without limitation, any deposit of cash or securities or any other property which may be held to secure Grantor's performance of its obligations under the Ground Lease), options, privileges and rights of Grantor as tenant under the Ground Lease, including, but not limited to, the right, if any, to renew or extend the Ground Lease for a succeeding term or terms, including any and all right, title and interest, of whatever character, whether vested or contingent, and whether now or hereafter acquired, in and to the Land or Improvements (hereinafter defined) together with all rights, privileges and benefits, of whatever character, now or hereafter derived to which Grantor may be entitled by virtue of the Ground Lease or upon termination of the Ground Lease, including the right to exercise options (and interests acquired as a result thereof), give consents and receive payments, including, without limitation, insurance proceeds, pursuant to the Ground Lease, and the like; TOGETHER WITH all buildings, structures and improvements now or hereafter situated or to be situated on the Land or appurtenant thereto, including without limitation, that certain "Hyatt" hotel currently operating on the Land (collectively, the "Improvements"); TOGETHER WITH all machinery, furnishings and equipment including, without limitation, all furnaces, boilers, oil burners, radiators and piping, coal stokers, refrigeration and sprinkler systems, wash -tubs, sinks, gas and electric fixtures, awnings, window shades, kitchen cabinets, plants and shrubbery and all other equipment and machinery, motor vehicles and other vehicles, appliances, fittings and fixtures of every kind in or used in the operation of the Land and the Improvements, together with any and all replacements thereof and additions thereto, fixtures (including, without limitation, all heating, air conditioning, plumbing and bathroom, lighting, communications and elevator fixtures), inventory and articles of personal 2 Doc A WAS01 (207511-00265) a 1600917v6 08103R005.Time 16 50 property and accessions thereof and renewals, replacements thereof and substitutions therefor (including, without limitation, beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, linens, pillows, blankets, glassware, foodearts, cookware, dry cleaning facilities, dining room wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers, radios, clock radios, television sets, intercom and paging equipment, electric and electronic equipment, dictating equipment, private telephone systems, medical equipment, potted plants, heating, lighting and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and air conditioning systems, elevators, escalators, sittings, plants, apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call systems, brackets, electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage disposals, washers and dryers), other customary equipment and other property of every kind and nature, whether tangible or intangible, whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all equipment, materials and supplies of any nature whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation, enjoyment and occupancy of the Land and the Improvements (collectively, the "Personal Property"), and all proceeds and products of any such property; TOGETHER WITH all accounts, escrows (including, without limitation, the Accounts), documents, instruments, chattel paper, claims, deposits, deposit accounts, payment intangibles, investment property and general intangibles, as such terms are defined in the Uniform Commercial Code, and all agreements, contracts, certificates, instruments, and other documents, now or hereafter entered into, including, without limitation, the Management Agreement (to the extent permitted thereby), and all proceeds, substitutions and replacements thereof, all contract rights, insurance proceeds, condemnation awards or proceeds, security deposits, franchises, books, records, appraisals, architectural and engineering plans, specifications, environmental and other reports relating to the Land, trademarks (to the extent assignable, but excluding any proprietary information of Manager), trade names (to the extent assignable, but excluding Manager -owned trade names), servicemarks, logos, copyrights, goodwill, symbols, permits, licenses (to the extent assignable, but excluding any of the foregoing items which are owned by Manager), approvals, actions, tenant or guest lists (excluding any proprietary information of Manager), correspondence with present and prospective purchasers, tenants, guests and suppliers, advertising materials and telephone exchange numbers as identified in such materials (excluding any proprietary information of Manager), all refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Land as a result of tax certiorari or any applications or proceedings for reduction, and causes of action which now or hereafter relate to, are derived from or are used in connection with the Land, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (collectively, "Intangibles")- 3 Doc 9 WASOi (207511-00265)41(M917%fi3O&,03 2005..'rime.16.50 0 0 TOGETHER WITH all leases and other agreements affecting the use, enjoyment or occupancy of the Land or the Improvements heretofore or hereafter entered into, including, without limitation, subleases, licenses, concessions, tenancies and other occupancy agreements covering or encumbering all or any portion of the Land, together with any guarantees, supplements, amendments, modifications, extensions and renewals of any thereof, and all additional remainders, reversions, and other rights and estates appurtenant thereto, as the same may be amended from time to time (collectively, "Leases") - TOGETHER WITH all of Grantor's right, title and interest in and to any easements and appurtenances affecting the Property; TOGETHER WITH all of Grantor's right, title and interest in and to the Operating Agreements (defined herein) (including without limitation all of Grantor's rights, title: and interest in and to those certain Feasibility Gap Payments (as defined in the DDA (as herein defined) payable to Grantor pursuant to Attachment No. 8 (Schedule of Feasibility Gap Payments) of the DDA wherein Ground Lessor has agreed to pay or reimburse Grantor for ccrtain "Eligible Costs" (as defined in the DDA)), together with any amendments, modifications, extensions and renewals of any thereof, and all subordinations, estoppels and other rights in connection therewith; TOGETHER WITH all agreements (including, without limitation, the Management Agreement and all agreements now or hereafter entered into for the use and enjoyment of all food, liquor and other beverage licenses), contracts, certificates, instruments, franchises, permits, licenses (Including, without limitation, food, liquor and other beverage licenses, to the extent assignable), plans, specifications and other documents, now or hereafter entered into, together with any amendments, modifications, extensions and renewals of any thereof, and all subordinating estoppel rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Grantor therein and thereunder, including, without limitation, the right, while an Event of Default remains uncured, to receive and collect any sums payable to Grantor thereunder; TOGETHER WITH the right, in the name and on behalf of Grantor, to commence any action or proceeding to protect the interest of Beneficiary in the Property and while an Event of Default remains uncured, to appear in and defend any action or proceeding brought with respect to the Property; TOGETHER WITH all (i) income, rents, subrents, room rates, receipts, issues, profits, revenues (including all oil and gas or other mineral royalties or bonuses), deposits and other benefits now due or which may become due or to which Grantor is now or hereafter may become entitled or which Grantor may demand or claim arising or issuing from or out of the Leases, or arising or issuing from the operation of the business at the Land or any part thereof and all amounts paid as rents for such Land or the fees, charges, accounts or other payments for the use or occupancy of rooms and other public facilities in hotels, motels or other lodging facilities, including, without limitation, all revenues and credit card receipts collected from guest rooms, restaurants, bars, mini -bars, meeting rooms, banquet rooms, recreational facilities and 4 Doc M WA501 (207511.00265) 416009I7%6.08/03f2005fl ime 16 50 0 • otherwise; and (ii) receivables, customer obligations, installment payment obligations and other payment obligations whether already accrued, now accruing or to accrue in the future for the occupancy or use of the Property or any part thereof, or arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the possession, use or occupancy of all or any portion of the Land or personalty located thereon, or the rendering of services by Grantor or any operator or manager of the hotel or the commercial space located in the Improvements or acquired from others including, without limitation, from the rental of any office space, retail space, commercial space, parking space, guest rooms or other space, halls, stores or offices, including any deposits securing reservations of such space, exhibit or sales space of every kind, license, lease, sublease and concession fees and rentals, health club membership fees, food and beverage wholesale and retail sales, service charges, vending machine sales and proceeds, if any, from business interruption or other loss of income insurance relating to the use, enjoyment or occupancy of the Land, regardless of whether the revenues described in the preceding clauses (i) and (ii) are paid or accrued before or after the filing by or against Grantor of any petition for relief under any state or federal bankruptcy or insolvency laws (collectively, "Profits"); and TOGETHER WITH all awards heretofore and hereafter made to Grantor for taking by eminent domain the whole or any part of the Land or any easement therein, including any awards for changes of grade of streets, and TOGETHER WITH any and all rights of Grantor in and to the foregoing. TO HAVE AND TO HOLD the Property unto the Trustee and unto its successors and assigns in leasehold estate forever with all appurtenances hereunto belonging, together with all Profits therefrom. PROVIDED, HOWEVER, that upon full payment of all indebtedness hereby secured, and upon performance of all covenants, obligations and indemnities hereby secured, the Property shall be reconveyed and released to Grantor. TO SECURE to Beneficiary: (a) Payment of all indebtedness evidenced by an interest -bearing loan and debt in the original principal sum of ONE HUNDRED FIFTEEN MILLION AND NO/100 DOLLARS (S115,000,000.00) (the "Loan") evidenced by that certain Amended and Restated Deed of Trust Note dated as of the date hereof from Grantor, as maker, to Beneficiary, as payee (the "Note"), the terms of which are incorporated herein by reference as well as all renewals, extensions, modifications and recastings of the Note. (b) The performance of all covenants, obligations, indemnities and agreements required of Grantor or of any other person or entity liable under the Note, this Deed of Trust, any indemnity executed in connection with the Loan, and all other agreements, documents, and instruments evidencing, securing or otherwise relating to the indebtedness hereby secured (the Note, this Deed of Trust, the Lease Assignment, the Contract Assignment, the Financing Statement, the Environmental Agreement, the Guaranty, the Replacement Reserve Agreement, the Manager's Subordination, the Account Agreement and all such other agreements, documents and instruments are hereinafter referred to collectively as the "Loan Documents") Doc 4 WAS01(207511.06265)41600917c6.08/0)12005lTime 16 50 0 0 provided, however, that this Deed of Trust shall not secure the covenants, obligations, indemnities and agreements of Grantor and/or Guarantor under the Environmental Agreement and the Guaranty. (c) The payment of (i) interest, default interest, late charges and other sums as provided in the Loan Documents; (ii) any Extension Fee or Deferred Financing Fee (as each such term is defined in the Note; and (iii) all other monies agreed or provided to be paid by Grantor in the Loan Documents. (d) The payment of any and all future advances made to Grantor hereunder or under any Loan Document. (e) The performance of all obligations of any surety, guarantor or indemnitor of any of the obligations of Grantor under the Loan Documents. (f) The payment of all costs and expenses, including court costs, attorneys' fees, witness fees (including fees of expert witnesses), paid, advanced, or incurred by Beneficiary pursuant to the loan Documents or the Ground Lease to protect or preserve the Property or the validity or priority of this Deed of Trust, or to enforce the remedies of Beneficiary or Trustee as provided for herein or in the other Loan Documents or to enforce the rights of Grantor, as tenant, under the Ground Lease. (g) The performance by Grantor of all obligations of Grantor as landlord under any Lease of all or any portion of the Property, and the performance by Grantor of all obligations of' Grantor under the Management Agreement. (h) The performance by Grantor of all obligations as tenant under the Ground Lease, together with all renewals, extensions, modifications and recastings thereof. 1. Defined ,Perms The following terms shall have the following meanings: (a) "Access Laws" has the meaning set forth in Section 39(a) hereof. (b) "Accounts" has the meaning set forth in Section 7(b) hereof. (c) "Affiliate" means, with respect to a specified person or entity, any corporation, partnership, limited liability company, joint venture, trust or individual controlled by, under common control with, or which controls, directly or indirectly, such specified person or entity. The term "control" or "controlling interest" shall mean the ability, whether by direct or indirect ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to select the managing member or managing partner of a partnership or limited liability company, or otherwise to select, or have the power to remove and then select, a majority of those persons exercising governing authority over an entity, and, in the case of a limited partnership, shall mean the sole general partner thereof, all of the general partners thereof to the extent each has equal management control or authority, or the managing member or managing general partners thereof. as appropriate, and, in the case of a limited G Doc O.WAs01 (207511-00265) 41600917.E 0V0312005frime 16.50 liability company, shall mean the sole member thereof, all of the members thereof to the extent each has equal management control or authority, or the managing member or members thereof, as appropriate (and in any event shall mean, with respect to any of the above entities, the ownership and control, that is, the right to vote, of fifty percent (50%) or more of the residual equity interest in an entity). (d) "Asbestos" has the meaning set forth in Section 36 hereof. (e) "Beneficiary" has the meaning set forth in the preamble to this Deed of Trust. (f) "Budget" means the budget for the use and application of the Loan and gross income derived from the operation of the Property, including all expenses to be satisfied from the Accounts, as set forth in the budget delivered by Grantor to Beneficiary with respect to the balance of the current calendar year, and the annual budget to be delivered in accordance with the terms hereof for each subsequent calendar year for so long as any portion of the Debt remains outstanding. (g) "Closing Date" has the meaning set forth in Section 6 hereof. (h) "Coast Beach" has the meaning set forth in Section 13(b) hereof. (i) "Collateral" has the meaning set forth in Section 29 hereof. 6) "Condemnation" has the meaning set forth in Section 8(a) hereof. (k) "DDA" means the Amended and Restated Disposition and Development Agreement, dated September 14, 1998 between Ground Lessor and Mayer Financial (predecessor -in -interest to Grantor), as amended by the First Implementation Agreement to Amended and Restated Disposition and Development Agreement, dated May 15, 2000, as further amended by the Second Implementation Agreement to Amended and Restated Disposition and Development Agreement, dated February 5. 2001. (1) "Debt" means the outstanding principal balance of the Note from time to time, with all accrued and unpaid interest thereon, and all other sums now or hereafter due under the Loan Documents, as well as those specified in the last paragraph of this Section. (m) "Debt Service Coverage Ratio" or "DSCR" shall mean the ratio of- (1) the NO[ produced by the operation of the Property during the twelve (12) calendar month period immediately preceding the calculation, to (ii) the projected payments of principal and interest due under the Note for the twelve (12) calendar month period immediately following the calculation, as said coverage ratio is reasonably calculated by Beneficiary in accordance with its then - applicable underwriting standards and a mortgage loan constant of not less than nine and five -tenths percent (9.5%). 7 Dock. WAsOI (207514.00265) d 1600917v6.09 03f2005/Gme 16 50 (n) "Deed of Trust" has the meaning set forth in the recitals of this Deed of Trust. (o) "Default Rate" means the rate of interest payable from and after the occurrence of an Event of Default (hereinafter defined), as more particularly described in the Note; provided, however, that with respect to an Event of Default of the type described in Section 24(a) hereof, such rate of interest shall apply from and after the date on which any such payment is due, without any period of grace or cure. (p) "Development Agreement" means the Amended and Restated Development Agreement dated September 21, 1998 between the City of Huntington Beach, Mayer Financial, and Grantor and recorded on October 21, 1998 in the Official Records of the Orange County Recorder as Instrument No. 1998-07I 1512. hereof. (q) "Environmental Agreement" has the meaning set forth in Section 2(b) {r} "Environmental Laws" has the meaning set forth in Section 35 hereof. (s) "Equipment" means all machinery, furnishings, equipment, fixtures (including, without limitation, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory and articles of personal property and accessions thereof and renewals, replacements thereof and substitutions therefor (including, without limitation, beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, linens, pillows, blankets, glassware, foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers, radios, clock radios, television sets, intercom and paging equipment, electric and electronic equipment, dictating equipment, private telephone systems, medical equipment, potted plants, heating, lighting and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and air-conditioning systems, elevators, escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call systems, brackets, electrical signs, bulbs, bells, fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage disposals, washer and dryers), other customary hotel equipment and other property of every kind and nature, whether tangible or intangible, whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Grantor, or in which Grantor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation, enjoyment and occupancy of the Land and the Improvements. (t) "ERISA" has the meaning set forth in Section 40(a) hereof. 8 Doc& WAS01(20751I-00265)41600917%6.0&4_R005r]ime 16-50 0 (u) "Event of Default" has the meaning set forth in Section 24 hereof. (v) "Expenses" means the aggregate of the following items (capitalized terms in this subsection (u) and not otherwise defined herein shall have the meanings ascribed to such terms by the Uniform System of Accounts) actually incurred by Grantor, whether or not paid, during the twelve (l 2) month period ending one (1) month prior to the date on which the NO[ is to be calculated (except that capital expenses and reserves set forth in subsection (xiv) below shall be adjusted by Beneficiary to reflect projected adjustments for the subsequent twelve (12) month period beginning on the date on which the NOI is to be calculated): (i) departmental expenses incurred at departments within the Property including, without limitation, rooms, food and beverage, telephone and other; (ii) the Property's allocated share of costs and expenses of chain and system services, including, without limitation, the national and regional reservations system service under the Management Agreement; (iii) administrative and general expenses incurred by the Property; (iv) marketing, advertising, sales and business promotion expenses incurred by the Property; (v) all costs and fees of technical consultants and operational experts who are retained or employed by Manager for specialized services (including, without limitation, quality assurance inspectors) and the costs of attendance by employees of the Property at training and manpower development programs sponsored by Manager; (vi) all utility costs including heat, light power, water, telephone, and computer line charges; (vii) operations and maintenance expenses, which include the cost of necessary repair or replacement of Improvements or replacement of Equipment of like kind and quality or such kind or quality that is necessary to maintain the Property to the standards are required under the Management Agreement, this Deed of Trust or any of the Loan Documents, as determined by Beneficiary (to the extent such are paid for by Grantor from sources other than the Replacement Reserve Account); (viii) common area maintenance fees and improvement district assessments; (ix) a base management fee required under the Management Agreement (not to exceed three percent (3.0%) of the gross receipts derived from the operation of the Property and reasonable disbursements) and an incentive management fee, if any is required under the Management Agreement (which incentive management fee must have a "Hurdle Amount" as set forth in the Management Agreement); (x) any costs and expenses incurred by Manager in terminating its employees at the Property pursuant to the Management Agreement; 9 DOCU WAS01(207511.00265)41600917v6,08103R005frime 1650 (xi) Taxes and Other Charges (to the extent such are paid by Grantor from sources other than the Tax and Insurance Escrow Account); (xii) general and operating insurance premiums (to the extent such are paid by Grantor from sources other than the Tax and Insurance Escrow Account); (xiii) monthly installments made by Grantor to the Tax and Insurance Escrow Account and the Replacement Reserve Account (exclusive of the initial deposit made by Grantor to such accounts); (xiv) lease payments and associated costs on any operating (as opposed to capital) leases of Equipment; (xv) rental payments pursuant to the Ground Lease; (xvi) all costs and fees of independent professionals or other third parties who are retained by Manager to perform services required or permitted under the Management :agreement; and (xvii) such other costs and expenses incurred by Manager as are otherwise reasonably necessary for the proper and efficient operation of the Property, but excluding, depreciation, amortization or debt service. (w) "Financing Statements" means any and all UCC financing statements filed by or on behalf of Beneficiary as additional security hereunder. (x) "Governmental Authority" means any nation or goverrunent, any state or other political subdivision thereof, and any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to such government. Deed of Trust. Deed of Trust. severally. Trust. (y) "Grantor" has the meaning set forth in the preamble to this Ueed of Trust. (r.) "Ground Lease" has the meaning set forth in the granting clauses to this (aa) "Ground Lessor" has the meaning set forth in the granting clauses to this (bb) "Guarantor" means Stephen K. Bone and Robert L. Mayer, jointly and (cc) "Guaranty" has the meaning set forth in Section 2(b) hereof. (dd) "Hazardous Substances" has the meaning set forth in Section 35 hereof. (ee) "Improvements" has the meaning set forth in the recitals of this Deed of (ff) "Insurance Premiums" has the meaning set forth in Section 4(e) hereof. 10 Doc WASO1(207511-00265)416MI7•-6OE103R005frime 16_50 (gg) "Insured Casualty" has the meaning set forth in Section 4(f)(ii) hereof (hh) "Intangibles" has the meaning set forth in the recitals of this Deed of Trust. (ii) "Land" means the real property comprising the Property, more particularly described on Exhibit "A" to this Deed of Trust. 0j) "Lease Assignment" has the meaning set forth in Section 2(b) hereof. (kk) "Leases" has the meaning set forth in the recitals of this Deed of Trust. (11) "License Agreement" means the License Agreement to Provide Landscaping and Other Improvements in the Public Right -of -Way dated February 20, 2001 between the City of I iuntington Beach, Mayer Financial and Grantor and recorded on April 18, 2001 in the Official Records of the Orange County Recorder as Instrument No. 2001-02332765. hereof. rrust. (mm) "Liquor License Documents" has the meaning set forth in Section 38(f) (nn) "Loan" has the meaning set forth in the recitals of this Deed of Trust. (oo) "Loan Documents" has the meaning set forth in the recitals of this Deed of (pp) "Lockbox Agreement" has the meaning set forth in Section 2(b) hereof. (qq) "Management Agreement" means that certain Hotel Management Agreement (Huntington Beach) dated as of April 11, 2001, by and between Grantor and Manager, pursuant to which Manager operates the Property as a hotel. (rr) "Manager" means Hyatt Corporation, a Delaware corporation. (ss) "Manager's Subordination" has the meaning set forth in Section 2(b) hereof. (tt) "Maturity Date" means the Applicable Maturity Date (as such term is defined in the Note) or any earlier acceleration of sums due under the Note pursuant to Beneficiary's declaration of an Event of Default. (uu) "Mayer Financial" means Mayer Financial, L.P. predecessor -in -interest to Grantor. (vv) "Mayer/Bone Affiliate" means and includes (i) any one or more of the direct lineal descendants, natural or adoptive, of Robert L. Mayer or Stephen K. Bone, or their respective current or former spouses, (ii) any one or more trusts, the principal beneficiaries of which are one or more of the persons described in clause (1) above, (ill) the legal representatives of any person or trust described in clause (i) or (ii) above, and (iv) an Affiliate of any Doc WAS01(207511-00265)41600917v608r0:r2005rrime.16 50 • 0 Mayer/Bone Affiliate or any general or limited partnership, corporation or limited liability company at least fifty-one percent (51%) of the voting securities or ownership interests in which are owned, directly or indirectly, by one or more of the persons or entities described in clauses (i), (ii), or (iii). (ww) "Membership Assignment" has the meaning set forth in Section 13(h) hereof. (xx) "NOV shall mean as of any date of determination, the aggregate amount of the gross income derived from the ownership or operation of the Property for the twelve (12) month period prior to each respective date of determination, or an actual annualized basis, to the extent there is not a twelve (12) calendar month period immediately preceding the date of determination, Iess the aggregate amount of Expenses for the twelve (12) month period, or such actual annualized basis, ending one (1) month prior to each respective date of determination, adjusted as Beneficiary deems necessary to reflect the net operating income of the Property in accordance with Beneficiary's then current underwriting standards NO] shall include only Profits and such other income, including any rent loss, business interruption or business income insurance proceeds, vending or concession income, late fees, forfeited security deposits and other miscellaneous tenant charges, which are actually received and Expenses actually incurred or payable during the period for which the NOI is being calculated, as set forth on operating statements satisfactory to Beneficiary. NOI shall be calculated on an accrual basis in accordance with generally accepted accounting principles consistently applied, based on the Uniform System of Accounts. (yy) "Note" has the meaning set forth in the recitals of this Deed ofTrust. (zz) "OFAC List" means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Requirements of Law, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by an Executive Order of the President of the United States. The OFAC List currently is accessible through the internet website w%%w.treas. Yov/ofac/tI I sdn.of, (aaa) "Operating Agreements" has the meaning set forth in Section 20 hereof. (bbb) "Other Charges" has the meaning set forth in Section 5 hereof. (cec) "Pedestrian Overcrossing Agreement" means the Agreement Involving the Installation of a Pedestrian Overcrossing dated February 20, 2001 by and among the City of Huntington Beach, a municipal corporation of the State of California, the Orange County Sanitation District, a public agency of the State of California, and Mayer Financial (predecessor - in -interest to Grantor), and recorded on April 18, 2001 in the Official Records of the Orange County Recorder as Instrument No. 20010232766. (ddd) "Person" means an individual, partnership, limited partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. 12 Doc 19.u'A501 (207511-00265) 41600917.fi,08103r2005lrime"16 50 (eee) "Policies" has the meaning set forth in Section 4(e) hereof. (fff) "Pritzker Affiliate" means and includes (1) any one or more of the direct lineal descendants, natural or adoptive, of Nicholas I Pritzker, deceased, or their respective current or former spouses, (ii) any one or more trusts, the principal beneficiaries of which are one or more of the persons described in clause (1) above, (iii) the legal representatives of any person or trust described in clause (i) or (ii) above, and (iv) an Affiliate of any Pritzker Affiliate or any general or limited partnership, corporation or limited liability company at least fifty-one percent (51%) of the voting securities or ownership interests in which are owned, directly or indirectly, by one or more of the persons or entities described in clauses (i), (ii), or (iii). (ggg) "Profits" has the meaning set forth in the recitals of this Deed of Trust. (hhh) "Property" has the meaning set forth in the recitals of this Deed of Trust. (iii) "Replacement Reserve Agreement" has the meaning set forth in Section 2(b) hereof. ojj) "Replacement Reserve Account" has the meaning set forth in Section 7(b) hereof. (kkk) "Requirements of Law" means (a) the organizational documents of an entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or detennination of an arbitrator, court or other Governmental Authority, or any Executive Order issued by the President of the United States, in each case applicable to or binding, upon such Person or to which such Person, any of its property or the conduct of its business is subject including, without limitation, laws, ordinances and regulations pertaining to the zoning, occupancy and subdivision of' real property. 7(b) hereof. hereof. (Ill) "Securities" has the meaning set forth in Section 21(b) hereof. (mmm)"Tax and Insurance Escrow Account" has the meaning set forth in Section (nnn) "'fax and Insurance Escrow Fund" has the meaning set forth in Section 6 (000) "Taxes" has the meaning set forth in Section 5 hereof. (ppp) "Uniform Commercial Code" means the Uniform Commercial Code, as adopted and enacted by the State or States where any of the Property is located. (qqq) "Uniform System of Accounts" has the meaning set forth in Section 10(h) hereof. 13 Doc N WAS01 (207511-00265)41600917 .GM312005ffime-16-50 • 2. The Loan (a) Upon and subject to the terms and conditions herein set forth, Beneficiary agrees to lend to Grantor and Grantor agrees to borrow from Beneficiary, the principal sum not to exceed ONE HUNDRED FIFTEEN MILLION AND NO/100 DOLLARS ($115,000,000.00). Grantor will pay the Debt at the time and in the manner provided in the Note, this Deed of Trust and the other Loan Documents. All payments made to Beneficiary in respect of the Debt after payment of principal and interest due and payable under the Note shall be applied by Beneficiary in the following order of priority: (i) first, to fund the Tax and Insurance Escrow Account; (ii) next, to reimburse Beneficiary for any unpaid costs, sums and expenses incurred or advanced by Beneficiary on Grantor's behalf or in the enforcement of Beneficiary's rights hereunder; (iii) next, to fund the Replacement Reserve Account; and (iv) thereafter, one hundred percent (100%) of the balance, it' any, to reduce the outstanding principal balance of the Loan. (b) All the covenants, conditions and agreements contained in the Note, the Amended and Restated Assignment of Leases, Rents and Profits dated as of the date hereof between Grantor and Beneficiary (the "Lease Assignment"), the Amended and Restated Environmental Indemnity Agreement dated as of the date hereof among Grantor, Guarantor and Beneficiary (the "Environmental Agreement"), the Amended and Restated Guaranty of Recourse Obligations dated as of the date hereof between Guarantor and Beneficiary (the "Guaranty"), the Amended and Restated Assignment of Contracts, Licenses, Permits, Agreements, Warranties and Approvals, dated as of the date hereof between Grantor and Beneficiary (the "Contract Assignment"), the Amended and Restated Replacement Reserve Agreement dated as of the date hereof between Grantor and Beneficiary (the "Replacement Reserve Agreement" ), the Amended and Restated Consent, Subordination and Recognition Agreement dated as of the date hereof among Grantor, Manager and Beneficiary (the "Manager's Subordination"), the Amended and Restated Deposit Account Control Agreement, dated as of the date hereof among Grantor, Beneficiary, and PNC Bank, National Association, and consented to by Manager (the "Lockbox AA re�g_ement") and the other Loan Documents are hereby made a part of this Deed of Trust to the same extent and with the same force as if fully set forth herein. 3. Warranty of Title (a) Grantor represents and warrants that Grantor has good, marketable and indefeasible leasehold title to the Property pursuant to the Ground Lease and has the full power, authority and right to execute, deliver and perform its obligations under this Deed of Trust and to acquire, encumber, mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm, pledge, assign, hypothecate and grant a security interest in the Property and that Grantor possesses an unencumbered leasehold estate in the Land and the Improvements, and that it leases the Property free and clear of all liens, encumbrances and charges whatsoever except for those exceptions approved by Beneficiary and/or shown in the title insurance policy insuring the lien 14 Does WAs01 (20751 t-00265) Co00917Y6.OV0312005lrtme 16 50 0 0 of this Deed of Trust. Grantor further represents and warrants that this Deed of Trust is and will remain a valid and enforceable first lien on and security interest in the Property, subject only to such exceptions and those expressly approved by Beneficiary. Grantor shall forever warrant, defend and preserve such title and the validity and priority of the lien of this Deed of Trust and shall forever warrant and defend such title, validity and priority to Beneficiary against the claims of all persons whomsoever. (b) Grantor represents and warrants that (i) the Ground Lease is in full force and effect and has not been modified or amended in any manner whatsoever, (ii) there are no defaults under the Ground Lease and no event has occurred, which but for the passage of time, or the giving of notice, or both, would constitute a default under the Ground Lease, (iii) all rents, additional rents and other sums due and payable under the Ground Lease have been paid in full, (iv) neither the Ground Lessor, nor Grantor has commenced any action or given or received any notice for the purpose of terminating the Ground Lease; and (v) the interest of the tenant under the Ground Lease is vested in Grantor. 4. Insurance (a) Intentionally Deleted. (b) Grantor, at its sole cost and expense, will keep the Property insured during the entire term of this Deed of Trust for the mutual benefit of Grantor and Beneficiary in accordance with the terms and provisions of this Section against loss or damage by fire and standard "all risk" perils pursuant to an insurance policy covering "all risks of physical loss" including, without limitation, not and civil commotion, vandalism, malicious mischief, burglary and theft. No such insurance policy shall contain an exception or exclusion for terrorism or terrorist acts. Such insurance policy shall (1) contain an income loss endorsement, (ii) be on a replacement cost basis with an "agreed amount" endorsement attached or with no co-insurance and, (iii) if any of the Improvements or the use of the Property shall at any time constitute legal nonconforming structures or uses, a law and ordinance endorsement. Such insurance shall be in an amount equal to the greater of: (A) the original principal amount of the Loan (in no event less than the minimum amount required to compensate for damage or loss on a replacement cost basis), (B) the then full replacement cost of the Improvements and the Equipment, without deduction for physical depreciation; and (C) such amount that the insurer would not deem Grantor or Beneficiary a co-insurer under such policies. The deductible in respect of such insurance shall not exceed the lesser of. (1) Ten Thousand and Noll 00 Dollars ($10,000.00). or (2) one percent (1%) of the face value of such policy, unless a higher deductible is required by law. The premiums for the insurance carried in accordance with this Section shall be paid annually in advance and each policy shall contain the "Replacement Cost Endorsement" with a waiver of depreciation. (c) Grantor shall also obtain and maintain during the entire term of this Deed of Trust, at its sole cost and expense, for the mutual benefit of Grantor and Beneficiary, the following policies of insurance: (i) Flood insurance if any part of the Property is currently or at any time in the future located in an area identified by the Federal Emergency Management 15 Doc #-WA501(207511-00265)<1600417v60&'0312005/Tima16 50 0 0 Agency as an area having special flood hazards and in which flood insurance has been made available under the National Flood Insurance Act of 1968 (and any amendment or successor act thereto) in an amount at least equal to the lesser of: (A) the outstanding principal amount of the Note; or (B) the full replacement cost of the Improvements and the Equipment; (ii) (A) Comprehensive public liability insurance, including broad form property damage, blanket contractual and personal injuries (including death resulting therefrom) coverages and "Dram shop" or other liquor liability coverage if alcoholic beverages are sold from or may be consumed at the Property, and containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000.00) and Two Million and No/l00 Dollars ($2,000,000.00) general aggregate for the Land and the Improvements, or such greater amount as may be required under the Management Agreement or Ground Lease; and (B) Umbrella liability insurance containing minimum limits of Ten Million and No/100 Dollars ($10,000,000.00) for the Land and the Improvements, or such greater amount as may be required under the Management .Agreement or Ground Lease: (iii) Rental loss insurance in an amount equal to the aggregate annual amount of all rents and additional rents payable by all of' the tenants under the Leases (whether or not such Leases are terminable in the event of a fire or casualty), such rental loss insurance to cover rental losses for a period of at least one year after the date of the fire or casualty in question. The amount of' such rental loss insurance shall be increased from time to time during the term of this Deed of Trust as and when new Leases and renewal Leases are entered into in accordance with the terms of this Deed of Trust, to reflect all increased rent and increased additional rent payable by all of the tenants under such renewal Leases and all rent and additional rent payable by all of the tenants under such new Leases; (iv) Business interruption insurance: (A) with loss payable to Beneficiary, its successors and/or assigns, as their respective interests may appear; (B) covering all risks required to be covered by the insurance provided for in Section 4(b); (C) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and all personal property has been repaired, the continued loss of income will be insured until the Property is restored (or if such income is not as of the date of restoration at the same level it was at prior to the loss, then until two (2) months following the restoration date), or the expiration of twenty-four (24) months from the date of the loss, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; and (D) in an amount equal to Thirty - Four Million Nine Hundred fifty Thousand and No/100 Dollars ($34,950,000.00) (based on Expenses and NOI for the Property). The amount of such business interruption insurance shall be determined prior to the date hereof and at least once each year thereafter based on clause 4(c)(iv)(D). All insurance proceeds payable to Beneficiary pursuant to this Section shall be held by Beneficiary and shall be applied to the obligations secured hereunder from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Grantor of its obligations to pay the obligations secured hereunder on the respective dates 16 Doe 4 WASOI (207511-00265) 41600917.-6,U8103i2005/rtme.16 50 • 0 of payment provided for in the Note except to the extent such amounts are actually and timely paid out of the proceeds of such business interruption insurance; (v) Insurance, in an amount equal to the lesser of Ten Million and No/100 Dollars ($10,000,000.00) per occurrence or the insurable value of the Improvements and the Equipment, against loss or damage from: (A) leakage of sprinkler systems; and (B) explosion of steam boilers, air conditioning equipment, high pressure piping, machinery and equipment, pressure vessels or similar apparatus now or hereafter installed in the Improvements; (vi) Worker's compensation insurance with respect to any employees of Grantor or Manager, as applicable, as required by any governmental authority or legal requirement: (vii) Motor vehicle liability coverage for all owned and non -owned vehicles, including rented and leased vehicles, containing minimum limits per occurrence of One Million and No/100 Dollars ($1,000,000.00) with the same minimum limits of liability umbrella coverage as is specified under clause (c)(ii)(B) above or such greater amount as may be required under the Management Agreement; (viii) Blanket crime and fidelity bond insurance coverage insuring against losses resulting from dishonest or fraudulent acts committed by Grantor's or Manager's personnel; (ix) Earthquake insurance (including subsidence), if the Property is located in an earthquake prone region as determined by Beneficiary, insuring in an amount equal to one times (1X) the probable maximum loss of the Property (as determined by Beneficiary) with a maximum deductible of no greater than ten percent (10%) of the replacement cost of the Property covered under the policy; (x) if required by Beneficiary, ordinance or law coverage to compensate for the cost of demolition and the increased cost of construction; and (xi) Such other insurance as may from time to time be reasonably required by Beneficiary or as may be required by the Management Agreement, including, without limitation, during the course of any construction of, or repairs to, any Improvements, builder's completed value risk insurance against "all risks of physical loss" including (A) collapse, water damage and transit coverage, in a nonreporting form, covering the total value of work performed or contracted for and equipment, supplies and materials furnished or contracted for, plus interest, costs and other "soft" construction costs as Beneficiary deems appropriate, and (B) a full installation floater to insure all materials stored on the Land but not yet part of the permanent installation. The insurance coverage required under this Section 4(c) may be offered under a blanket policy or policies covering the Property and other properties and assets not constituting a part of the security hereunder; provided that any such blanket policy shall specify, except in the case of public liability insurance, the portion of the total coverage of such policy that is allocated to the Property. 17 Dock WAS01(207311-00265)41600917v6,0&03R0O5ritmc_16 50 • 0 (d) Grantor shall increase the amount of insurance required to be provided hereunder at the time that each such policy is renewed (but, in any event not less frequently than once during each twelve (12) month period) by using the F.W. Dodge Building Index to determine whether there has been an increase in the replacement cost of the Improvements since the most recent adjustment of any such policy and, if there has been any such increase, the amount of insurance required to be provided hereunder shall be adjusted accordingly. (e) All policies of insurance currently in effect as of the date hereof are acceptable to Beneficiary. If Grantor shall at any time during the terra of the Loan enter into new policies of insurance, in addition to or in substitution of those policies of insurance currently in effect as of the date hereof (collectively, the "Policies"). such Policies shall comply in all respects with the following requirements: (i) be issued by an insurer fully licensed in the state where the Property is located with an investment grade rating for claims paying ability of "AA" or better by Standard & Poor's Rating Group or an equivalent rating from a rating agency of similar stature and quality or issued by an insurer otherwise acceptable to Beneficiary (or, if not acceptably rated by any of the foregoing, (A) a cut through endorsement from an acceptably rated company will be required or (B) Beneficiary will close the Loan but retain the right to require Grantor to promptly obtain, at Grantor's sole cost and expense, Policies issued by an insurer complying with the requirements of this subsection at any time if the non -complying insurer as of the date hereof is downgraded or at any other time as determined by Beneficiary in its sole discretion; provided further, although Beneficiary has not elected to exercise any of its rights relating to such non-compliance at this time, Beneficiary has not waived and does not waive any existing or future violation of, or any default that may have occurred under, any of the Loan Documents arising from such non-compliance); (ii) contain a standard "noncontributory mortgagee" clause or endorsement and a "lender's loss payable endorsement" or their equivalents and shall name Beneficiary, its successors and/or assigns, as their respective interests may appear, as an additional insured and loss payee and as the person to which all payments made by such insurance company shall be paid; (iii) contain a waiver of subrogation against Beneficiary; (iv) be maintained throughout the term of this Deed of Trust without cost to Beneficiary; (v) be assigned and delivered (either originals or certified copies) to Beneficiary; (vi) contain such provisions as Beneficiary deems reasonably necessary or appropriate to protect its interest including, without limitation, endorsements providing that neither Grantor, Beneficiary nor any other party shall be a co-insurer thereunder, that Beneficiary shall have no liability for insurance premiums thereunder and that Beneficiary• shall receive at least thirty (30) days prior written notice of any modification, reduction or cancellation; provided, however, Beneficiary must receive at least ten (10) days advance written notice in the event of a cancellation due to non- payment of any premium; and (vii) be satisfactory in form and substance to Beneficiary, and be approved by Beneficiary as to amounts, form, risk coverage, deductible, loss payees and insureds. Grantor shall have delivered to Beneficiary on the date hereof an original of each of the Policies to Beneficiary, or a copy, certified as true, correct and complete by the insurance agent, of each of the Policies. Grantor shall deliver to Beneficiary, upon Beneficiary's request, an original of each of the Policies or such certified copies from time to time. Unless such premiums are deposited in the Tax and Insurance Escrow Account, Grantor shall pay or cause Manager to pay the premiums for the Policies (the "Insurance Premiums") as they become due and payable. Not later than thirty (30) days prior to the expiration date of each of the Policies, Grantor will deliver to Beneficiary satisfactory evidence of the renewal of each Policy. Notwithstanding anything to the contrary herein, in the event that the Management Agreement 18 Dock WAS01 (207511.00265) 41600917v6 08f03/2005!Time 16 50 • 0 requires (1) greater amounts of coverage for any insurance required hereunder, or (2) additional types of insurance coverage, then the Management Agreement insurance requirements shall prevail. In the event the Grantor fails to provide, maintain, keep in force, or deliver and furnish to Beneficiary the Policies, Beneficiary may procure such insurance or single -interest insurance for such risks covering Beneficiary's interest, and Grantor will reimburse Beneficiary for all premiums paid by Beneficiary, together with interest thereon from the date paid at the Default Rate, promptly upon demand by Beneficiary. Until such payment is made by Grantor, the amount of all such premiums, together with interest thereon, shall be secured by this Deed of Trust. (t) If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Grantor shall give prompt written notice thereof to Beneficiary. (i) In the case of a loss covered by Policies, Beneficiary may: (A) settle and adjust any claim with the prior consent of Grantor, not to be unreasonably withheld or (B) allow Grantor to agree with the insurance company or companies on the amount to be paid upon the loss; provided, however, that, if no Event of Default shall have occurred and be continuing. Grantor may adjust losses aggregating not in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) if such adjustment is carried out in a competent and timely manner and provided in any case that Beneficiary shall be, and is hereby, authorized to collect and receipt for any such insurance proceeds. Notwithstanding the foregoing, if an Event of Default shall have occurred and be continuing, Beneficiary may settle and adjust any claim without consent of Grantor. The expenses incurred by Beneficiary in the adjustment and collection of insurance proceeds shall become part of the Debt, shall be secured by this Deed of Trust and shall be reimbursed by Grantor to Beneficiary on demand_ (ii) In the event of any insured damage to or destruction of the Property or any part thereof (an "Insured Casualty"), the proceeds of insurance collected shall be applied to reimburse Grantor for the cost of restoring, repairing, replacing or rebuilding the Property or the part thereof subject to the Insured Casualty, in the following manner: so long as (A) the proceeds of insurance are sufficient to enable Grantor to fully restore the Property; (B) the term of, and proceeds derived from, Grantor's business interruption insurance (or other similar in shall be sufficient to fully cover the period that the Property is undergoing restoration; (C) Beneficiary determines that the restoration is reasonably capable of being completed, and is actually completed, at least thirty (30) days prior to the Maturity Date; (D) the Ground Lease has not been, and cannot be, terminated as a result of the Insured Casualty; (E) the restoration can be completed within one hundred eighty (180) days from the date that the Insured Casualty occurred; (F) the restoration is permitted or required under the Ground Lease; and (G) the Debt Service Coverage Ratio upon completion is reasonably anticipated to be at least 1.30, then, if no Event of Default shall have occurred and be continuing, the proceeds of insurance shall be applied to the cost of restoring, repairing, replacing or rebuilding the Property or the part thereof subject to the Insured Casualty, as provided for below; and Grantor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding. NOI for purposes of this calculation shall be NOI for the twelve (12) calendar month period immediately 19 Doc Al WASO 1 (207511-00265) a 1600917Y6;0&'031200Wrima 16 50 preceding the casualty. In the event that the foregoing conditions are not satisfied, in Beneficiary's sole determination, the proceeds of insurance shall be applied to the payment of the Debt. In no case shall any such application reduce or postpone any payments otherwise required pursuant to the Note. (iii) In the event that proceeds of insurance, if any, shall be made available to Grantor for the restoring, repairing, replacing or rebuilding of the Property, Grantor hereby covenants to restore, repair, replace or rebuild the Property to be of at least equal value and of substantially the same character as prior to such damage or destruction, all to be effected in accordance with applicable law and plans and specifications approved in advance by Beneficiary and otherwise in accordance with the requirements of the Management Agreement, if any; provided, however, that Grantor shall pay all costs (and if required by Beneficiary, shall deposit the total thereof with Beneficiary in advance) of such restoring, repairing, replacing or rebuilding in excess of the net proceeds of insurance required to be made available pursuant to the terms hereof. (iv) In the event Grantor is entitled to reimbursement out of insurance proceeds held by Beneficiary, such proceeds shall be disbursed from time to time upon Beneficiary being furnished with. (A) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding; (11) funds, or, at Beneficiary's option, assurances satisfactory to Beneficiary that such funds are available, sufficient in addition to the proceeds of insurance to complete the proposed restoration, repair, replacement and rebuilding; and (C) such architect's certificates, waivers of lien for work previously performed or contemporaneously funded, contractor's sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Beneficiary may reasonably require and approve. Beneficiary may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Beneficiary prior to commencement of work (which approval shall not be unreasonably withheld). No payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time; provided, however. that with respect to material suppliers and contractors or sub -contractors whose work has been fully completed, payment may be made based on one hundred percent (100%) of the value of the work performed Funds other than proceeds of insurance shall be disbursed prior to disbursement of such proceeds, and at all times the undisbursed balance of such proceeds remaining in Beneficiary's possession, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Beneficiary by or on behalf of Grantor for that purpose, shall be at least sufficient in the judgment of Beneficiary to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens and claims of lien. Any surplus which may remain out of insurance proceeds held by Beneficiary after payment of such costs of restoration, repair, replacement or rebuilding shall be delivered to Grantor, provided such restoration was performed in accordance with the provisions of this Section and Grantor is not then in default of its obligations under the Loan Documents. If the conditions in the immediate preceding sentence have not been satisfied, Beneficiary shall apply such surplus proceeds to the payment of the Debt in any order in its sole discretion. 20 DOC N WAS01 (207511.00265) 41600917,6.08;'OV2005Mme 16 50 0 • (g) Grantor shall not carry separate insurance, concurrent in kind or form or contributing in the event of loss, with any insurance required under this Section. Notwithstanding the foregoing, Grantor may carry insurance not required under this Deed of Trust, provided any such insurance affecting the Property shall be for the mutual benefit of Grantor and Beneficiary, as their respective interests may appear, and shall be subject to all other provisions of this Section. (h) Prior to or contemporaneously with the execution of this Deed of Trust, Grantor shall provide Beneficiary with evidence that the insurance required hereunder is in full force and effect in accordance with the terms hereof with all premiums due thereunder prepaid through such period as Beneficiary may require. (1) Notwithstanding the provisions of this Section 4, if and to the extent required under the Ground Lease, Beneficiary shall make insurance proceeds available for restoration of the Property upon compliance by Grantor with the requirements of subparagraph 4(f)(ii) hereinabove or such alternative requirements as Beneficiary may reasonably require. (�} The Policies shall contain no exclusion or exception for terrorism or terrorist acts. Should the Policies exclude or except terrorism or terrorist acts, Grantor may instead provide a separate insurance policy insuring the Property for losses caused due to terrorism or terrorist acts which shall be acceptable to Beneficiary in its sole reasonable discretion and be approved by Beneficiary as to insurer, amounts, form, risk coverage, deductible, loss payees and insureds. The deductible of any such insurance may not be greater than Five Hundred Thousand and No/100 Dollars ($500,000.00) or such other amount as Beneficiary may determine. Notwithstanding the foregoing, in the event there does not exist in the marketplace any insurer meeting the requirements and qualifications set forth herein which is issuing policies in compliance with the requirements of this section, the inability to obtain the coverage set forth herein shall not constitute an Event of Default, provided that Grantor promptly obtains such coverage if an insurer later offers such coverage. 5. Pavment of Taxes Grantor shall pay all taxes (including, without limitation, any tax imposed against the Property pursuant to the Mello -Roos Community Facilities District Act of 1982 (the "MelIo- Roos Tax")), assessments, water rates and sewer rents, now or hereafter levied, assessed or imposed against the Property or any part thereof (collectively, the "Taxes") and all ground rents (including, without limitation, rent and other sums due under the Ground Lease), maintenance charges, if any, other governmental impositions, and other charges including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Land, now or hereafter levied, assessed or imposed against the Property or any part thereof (collectively, the "Other Charges") as they become due and payable. Grantor will deliver to Beneficiary evidence satisfactory to Beneficiary that the Taxes and Other Charges have been so paid, or are not then delinquent, no later than ten (10) days following the date on which the Taxes and/or Other Charges would otherwise be delinquent if not paid. Grantor shall not suffer, and shall promptly cause to be paid and discharged, any lien or charge whatsoever which may be or become a lien or charge against the Property, and shall promptly pay for all utility services provided to the Property. Grantor shall furnish to Beneficiary or its designee receipts for the 21 Doc it WAS01 (207511-00265) 416DD91 h$ 08-03l200517ime_ 16.50 payment of the Taxes, Other Charges and charges for utility services prior to the date that such obligations shall become delinquent. Grantor shall be entitled to contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount of any Taxes or Other Charges. Notwithstanding the preceding sentence, during the pendency of any such contest Grantor shall pay or cause to be paid all Taxes and Other Charges as and when due and payable, or otherwise in accordance with Section 32 hereof. 6. Tax and Insurance Escrow Fund On the date hereof (the "Closing Date"), any and all amounts currently held in that certain tax and insurance escrow established in connection with the loan funded by Beneficiary on May 29, 2003 and on October 15, 2004 will be transferred to the Tax and Insurance Escrow Fund (defined below) as of the Closing Date. Such amounts, when added to the monthly amounts to be deposited as specified below, will be sufficient in Beneficiary's reasonable estimation, to satisfy the next due Taxes and Other Charges and the next due Insurance Premiums. Grantor shall thereafter pay to Beneficiary monthly on the first (Is[) day of each calendar month: (a) one -twelfth (I/12th) of an amount which would be sufficient to pay the Taxes and Other Charges payable, or estimated by Beneficiary to be payable, during the next ensuing twelve (12) months; and (b) one -twelfth (1/12th) of an amount which would be sufficient to pay the Insurance Premiums due for the renewal of the coverage afforded by the Policies upon the expiration thereof (the amounts described in clauses (a) and (b) of Section 4 above, collectively, the "Tax and Insurance Escrow Fund"); provided, however, that the foregoing escrow impound required under subsection (b) hereof shall not apply to worker's compensation coverage required under Section 4(c)(vi) hereof and any employer's liability practices coverage which may be carried by Grantor or Manager. The Tax and Insurance Escrow Fund and the monthly installments of principal and interest payable under the Note shall be added together and shall be paid as an aggregate sum by Grantor to Beneficiary. Grantor hereby pledges to Beneficiary any and all monies now or hereafter deposited in the Tax and Insurance Escrow Fund as additional security for the payment of the Debt. Beneficiary will apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be made by Grantor pursuant to Sections 4 and 5 hereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 4 and 5 hereof, Beneficiary shall, in its discretion, return any excess to Grantor or credit such excess against future payments to be made to the Tax and Insurance Escrow Fund. If the Tax and Insurance Escrow Fund is not sufficient to pay the items set forth in Sections 4 and 5 above, Grantor shall promptly pay to Beneficiary, upon demand, an amount which Beneficiary- shall estimate as sufficient to make up the deficiency. Upon the occurrence of an Event of Default. Beneficiary may apply any sums then comprising the Tax and Insurance Escrow Fund to the payment of the Debt in any order in its sole discretion. Until expended or applied as above provided, any amounts in the "l-ax and Insurance Escrow Fund shall constitute additional security for the Debt. To the extent permitted by applicable law, the Tax and Insurance Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by Beneficiary. No earnings or interest on the Tax and Insurance Escrow Fund shall be payable to Grantor. Notwithstanding any of the foregoing, the amount required to satisfy payment of any Mello -Roos Tax shall be paid directly by Grantor and shall not be deposited in the Tax and Insurance Escrow Fund nor be applied by Beneficiary in connection therewith. 22 Doc # WAS01(207511-00265)416W917v6.0W0312005lrime 16 50 0 0 7. Annual Budget; Accounts (a) No later than November 30 of each year, Grantor shall submit to Beneficiary, for Beneficiary's approval, a form of Budget for the twelve (12) calendar months succeeding the term covered by the last approved budget. Beneficiary's approval of any proposed budget shall not be unreasonably withheld or delayed. If Beneficiary's approval or disapproval is not given prior to December 31 of that year, approval will be deemed given. (b) Beneficiary shall this day, or as soon hereafter as is practicable, establish and shall thereafter maintain the following escrow accounts at one or more federally insured institutions selected by Beneficiary (collectively, the "Accounts"), each of which shall be in Beneficiary's name and shall constitute additional security for the Loanr (i) Replacement Reserve Account, an interest -bearing account into which shall be deposited certain sums as set forth in the Replacement Reserve Agreement, from which Grantor may request withdrawal from time to time no more frequently than once in any calendar month to refurbish, repair or replace Equipment at the Property, all as more particularly set forth in the Replacement Reserve Agreement (the "Rel2lacement Reserve Account"); and (ii) "Tax and Insurance Escrow Account, into which shall be deposited on the Closing Date an amount described in the first sentence of Section G above and thereafter monthly on the first (1st) day of each calendar month, pursuant to the Budget, an amount sufficient to satisfy Grantor's obligations under, and subject to, Section b hereof (the "Tax and Insurance Fscrow Account"). (c) Beneficiary shall have sole signatory authority with respect to any and all withdrawals from the Accounts. All such withdrawals from the Replacement Reserve Account shall be made solely in accordance with the Replacement Resen e Agreement. All such withdrawals from the Tax and Insurance Escrow Account shall be made solely in accordance with this Deed of Trust, and by this instrument Grantor does hereby irrevocably authorise and direct Beneficiary to make all such withdrawals on Grantor's behalf to satisfy Grantor's obligations hereunder. 8. Condemnation (a) Grantor shall promptly give Beneficiary written notice of the actual or threatened commencement of any condemnation or eminent domain proceeding (a "Condemnation") and shall deliver to Beneficiary copies of any and all papers served in connection with such proceedings. Beneficiary is hereby irrevocably appointed as Grantor's attorney -in -fact, coupled with an interest, with exclusive power to collect, receive and retain any award or payment for such Condemnation and to make any compromise or settlement in connection with such proceeding, subject to the provisions of this Deed of Trust. Notwithstanding any taking by any public or quasi -public authority through eminent domain or otherwise (including, without limitation, any transfer made in lieu of or in anticipation of the exercise of such taking), Grantor shall continue to pay the Debt at the time and in the manner provided for in the Note, this Deed of Trust and the other Loan Documents, and the Debt shall 23 Doc M WAS01 (207511-00265) 31600917v6 08:032003/rime.16 50 0 not be reduced until any award or payment therefor shall have been actually received after expenses of collection and applied by Beneficiary to the discharge of the Debt. Beneficiary shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided in the Note. (b) If the Property shall be the subject of a Condemnation, in whole or in part, Grantor shall give prompt written notice thereof to Beneficiary. (1) In the case of a Condemnation, Beneficiary may: (A) settle and adjust any claim with the prior written consent of Grantor, or (B) allow Grantor to agree with the condemning authority on the amount to be paid upon the Condemnation; provided, however, that, it' no Event of Default shall have occurred and be continuing, Grantor may adjust losses aggregating not in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) if such adjustment is carried out in a competent and timely manner, and provided in any case that Beneficiary shall be, and is hereby, authorized to collect and receipt for any such Condemnation award or proceeds. Notwithstanding the foregoing, if an Event of Default shall have occurred and be continuing;, Beneficiary may settle and adjust any claim without the: consent of Grantor. The expenses incurred by Beneficiary in the adjustment and collection of a Condemnation award or proceeds shall become part of the Debt, shall be secured by this Deed of Trust and shall be reimbursed by Grantor to Beneficiary on demand. (ii) In the event of any Condemnation affecting all or any portion of the Property, the award or proceeds collected upon any Condemnation shall be applied to the cost of restoring, repairing, replacing or rebuilding the Property or the part thereof subject to the Condemnation in the following manner: so long as (A) the proceeds of insurance are sufficient to enable Grantor to fully restore the Property; (B) the term of, and proceeds derived from, Grantor's business interruption insurance (or other similar insurance) shall be sufficient to fully cover the period that the Property is undergoing restoration; (C) Beneficiary determines that the restoration is reasonably capable of being completed, and is actually completed, at least thirty (30) days prior to the Maturity Date; (D) the Ground Lease has not been, and cannot be, terminated as a result of the Insured Casualty; (E) the restoration can be completed within one hundred eighty (180) days from the date that the Insured Casualty occurred; (F) the restoration is permitted or required under the Ground Lease; and (G) the Debt Service Coverage Ratio upon completion is reasonably anticipated to be at least 1.30. then, if no Event of Default shall have occurred and be continuing, the proceeds of insurance shall be applied to the cost of restoring, repairing, replacing or rebuilding the Property or the part thereof subject to the Insured Casualty, as provided for below; and Grantor hereby covenants and agrees forthwith to commence and diligently to prosecute such restoring, repairing, replacing or rebuilding. NOI for purposes of this calculation shall be NO[ for the twelve (12) calendar month period immediately preceding the casualty. In the event that the foregoing conditions are not satisfied, in Beneficiary's sole determination, the proceeds of insurance shall be applied to the payment of the Debt. In no case shall any such application reduce or postpone any payments otherwise required pursuant to the Note. 24 Doc N WAS01 (207511.00265) 61600917r-60&'O3I2005/rime.l6 50 (iii) In the event that a Condemnation award or proceeds, if any, shall be made available to Grantor for the restoring, repairing, replacing or rebuilding of the Property, Grantor hereby covenants to restore, repair, replace or rebuild the Property to be of at least equal value and of substantially the same character as prior to such Condemnation, all to be effected in accordance with applicable law and plans and specifications approved in advance by Beneficiary; provided, however, that Grantor shall pay all costs (and if required by Beneficiary, shall deposit the total thereof with Beneficiary in advance) of such restoring, repairing, replacing or rebuilding in excess of the net award or proceeds made available pursuant to the terms hereof. (iv) In the event Grantor is entitled to reimbursement out of proceeds held by Beneficiary, such proceeds shalt be disbursed from time to time upon Beneficiary being furnished with: (A) evidence satisfactory to it of the estimated cost of completion of the restoration, repair, replacement and rebuilding; (B) funds, or, at Beneficiary's option, assurances satisfactory to Beneficiary that such funds are available, sufficient in addition to the Condemnation award or proceeds to complete the proposed restoration, repair, replacement and rebuilding; and (C) such architect's certificates, waivers of lien for work previously performed or contemporaneously funded, contractor's sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Beneficiary may require and approve. Beneficiary may, in any event, require that all plans and specifications for such restoration, repair, replacement and rebuilding be submitted to and approved by Beneficiary prior to commencement of work (which approval shall not be unreasonably withheld). No payment made prior to the final completion of the restoration, repair, replacement and rebuilding shall exceed ninety percent (90%) of the value of the work performed from time to time; provided, however, that with respect to material suppliers and contractors or sub -contractors whose work has been fully completed, payment may be made based on one hundred percent (100%) of the value of the work performed. Funds other than the Condemnation award or proceeds shall be disbursed prior to disbursement of such proceeds, and at all times the undisbursed balance of such proceeds remaining in Beneficiary's possession, together with funds deposited for that purpose or irrevocably committed to the satisfaction of Beneficiary by or on behalf of Grantor for that purpose, shall be at least sufficient in the judgment of Beneficiary to pay for the cost of completion of the restoration, repair, replacement or rebuilding, free and clear of all liens and claims of lien. Any surplus which may remain out of a Condemnation award or proceeds held by Beneficiary after payment of such costs of restoration, repair, replacement or rebuilding shall be delivered to Grantor, provided such restoration was performed in accordance with the provisions of this Section, and Grantor is not then in default of its obligations under the Loan Documents. (e) Notwithstanding the provisions of this Section 8, if and to the extent required under the Ground Lease, Beneficiary shall make condemnation proceeds available for restoration of the Property upon compliance by Grantor with the requirements of subparagraph 8(b)(ii) hereinabove or such alternative requirements as Beneficiary may reasonably require. 25 Doc M. WASO1 (207511-00265) 31600917v6 OR/03!2005Mme 16 50 0 • 9. Leases and Profits (a) In connection with the Loan, Grantor has absolutely and unconditionally assigned to Beneficiary all of Grantor's right, title and interest in all current and future Leases and Profits, it being intended by Grantor that such assignment constitutes a present, absolute assignment and not an assignment for additional security only. Such assignment to Beneficiary shall not be construed to bind Beneficiary to the performance of any of the covenants, conditions or provisions contained in any such Lease or otherwise to impose any obligation upon Beneficiary. Grantor shall execute and deliver to Beneficiary such additional instruments, in form and substance reasonably satisfactory to Beneficiary, as may hereafter be requested by Beneficiary to further evidence and confirm such assignment. Nevertheless, subject to the terms of this Section, Beneficiary has granted to Grantor a revocable license to operate and manage the Property and to collect the Profits. Grantor shall hold the Profits, or a portion thereof sufficient to discharge all current sums due on the Debt, in trust for the benefit of Beneficiary for use in the payment of such sums. Upon the occurrence of an Event of' Default, the license granted to Grantor shall automatically be revoked, and Beneficiary shall, subject to the terms of the Lockbox Agreement, immediately be entitled to possession of all Profits, whether or not Beneficiary enters upon or takes control of the Property. Beneficiary is hereby granted and assigned by Grantor the right, at its option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court -appointed receiver to collect the Profits. Any Profits collected after revocation of the license may be applied toward payment of the Debt in such priority and proportions as Beneficiary in its discretion shall deem appropriate. (b) Grantor shall furnish Beneficiary with executed copies of all leases. All renewals of Leases and all proposed Leases shall provide for rental rates comparable to existing local market rates and shall be arms -length transactions and shall be subject to the prior written approval of' Beneficiary. All Leases shall provide that they are subordinate to this Deed of Trust and that the lessee agrees to attorn to Beneficiary. Grantor shall: (A) observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of the leases as security for the Debt; (B) promptly send to Beneficiary- copies of all notices of default which Grantor shall send or receive thereunder; (C) enforce all of the terms, covenants and conditions contained in the Leases on the part of the lessee thereunder to be observed or performed, short of termination thereof; (D) not collect any Profits more than one (1) month in advance; (E) not execute any other assignment of the lessor's interest in the Leases or Profits; (!") other than de minimis non -financial amendments, not alter, modify or change the terms of the Leases without the prior written consent of Beneficiary, or, except if a lessee is in default, cancel or terminate the Leases or accept a surrender thereof or convey or transfer or suffer or permit a conveyance or transfer of the Property or of any interest therein so as to effect a merger of the estates and rights of, or a termination or diminution of the obligations of, lessees thereunder; provided, however, that any Lease may be canceled if at the time of the cancellation thereof a new Lease is entered into with a bona fide, independent third - party on substantially the same terms or more favorable terms as the canceled Lease; (G) not alter, modify or change the terms of any guaranty of the Leases or cancel or terminate such guaranty without the prior written consent of Beneficiary; (11) not consent to any assignment of or subletting under the Leases not in accordance with their terns, without the prior written consent of Beneficiary; and (1) execute and deliver at the request of Beneficiary all such further 26 Doc 0 WA501 (207511-00265) 41600917y6.OB103r2005(rime 16 50 assurances, confirmations and assignments in connection with the Property as Beneficiary shall from time to time request. (c) All security deposits of lessees, whether held in cash or any other form, shall not be commingled with any other funds of Grantor and, if cash, shall be deposited by Grantor into a separate "Security Deposits Account." Any bond or other instrument which Grantor is permitted to hold in lieu of cash security deposits under any applicable legal requirements shall be maintained in full force and effect unless replaced by cash deposits as hereinabove described, shall be issued by an institution satisfactory to Beneficiary, shall, if permitted pursuant to any legal requirements, name Beneficiary as payee or mortgagee thereunder (or at Beneficiary's option, be fully assignable to Beneficiary) and shall, in all respects, comply with any applicable legal requirements and otherwise be reasonably satisfactory to Beneficiary. Grantor shall, upon request, provide Beneficiary with evidence reasonably satisfactory to Beneficiary of Grantor's compliance with the foregoing. Following the occurrence and during the continuance of any Event of Default, Grantor shall, upon Beneficiary's request, if permitted by any applicable legal requirements, turn over to Beneficiary the security deposits (and any interest theretofore earned thereon) with respect to all or any portion of the Property, to be held by Beneficiary subject to the terms of the Leases. 10. Representations Concerniniz Loan Grantor represents, warrants and covenants as follows: (a) Grantor is duly organized and validly existing in good standing under the applicable laws of the state of its creation as a limited liability company. and Grantor is qualified to do business in and is in good standing in its state of formation and in the state in which the Property is located, with full power, right, authority and legal capacity to enter into this Deed of Trust, the Loan and the loan Documents and to operate the Property as contemplated hereunder. If the issuance of any interest in Grantor is subject to any so-called "Blue Sky Laws" and/or any federal securities laws and regulations, each such issuance has been in compliance with all such laws and regulations to which it is subject. SPE PCH Beach Resort, Inc., a Delaware corporation ("SPE Beach"), is the single -purpose entity member of Grantor. SPE Beach is duly organized, validly existing and in good standing under the applicable laws of the state of its creation as a limited liability company. If the issuance of any interest in SPE Beach is subject to any so-called "Blue Sky Laws" and/or any federal securities laws and regulations, each such issuance has been in compliance with all such laws and regulations to which it is subject. (b) The execution, delivery and performance of the Loan Documents executed or delivered by Grantor and the consummation of the transactions contemplated thereby: (i) have been duly authorized by all requisite actions; (ii) have been approved or consented to by all of their respective constituent entities whose approval or consent is required to be obtained; (iii) have been duly approved or consented to by, or do not require the approval or consent of any governmental authority having jurisdiction over any of Grantor or the Property; (iv) do not and will not constitute a violation of, or default under, the governing instruments of Grantor or any applicable requirement of a governmental authority; and (v) will not be in contravention of any court or administrative order or ruling applicable to Grantor or the Property, or any mortgage, indenture, agreement, commitment or instrument to which Grantor is a party or by which it or its 27 Doc a WAS01 (207511.00265) 41600917ti6,0&-'03;2005,'rimca6 50 0 assets are bound, nor create or cause to be created any mortgage, lien, encumbrance, or charge against the assets of Grantor other than those permitted by the Loan Documents. (c) There are no actions, suits or proceedings pending, or, to the best knowledge of Grantor, threatened, nor any pending (other than in the ordinary course of business and adequately covered by Grantor's insurance), or, to the best knowledge of Grantor, threatened labor disputes, against or affecting Grantor or the Property, or any other collateral covered by the Loan Documents, or involving the validity or enforceability of the Loan Documents or the priority of the liens created or to be created thereby, at law or in equity, or before or by any governmental authority, which, if adversely determined, would, in the determination of Beneficiary, either individually or in the aggregate, have a material adverse affect on (i) the operation of the Property as contemplated hereunder, (ii) the ability of Grantor to pay all of its liabilities or to perform all of its obligations in the manner and within the time periods required under the Loan Documents, (iii) the validity, enforceability or consummation of the Loan Documents or the transactions contemplated thereby, or (iv) the title to the Property, the permitted uses of the Property or the value of the security provided by the Loan Documents. Grantor has complied with all requirements of FRISA. (d) This Deed of Trust and the other Loan Documents are the legal, valid and binding obligations of Grantor, and are not subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, nor would the operation of any of the terms of the Note, this Deed of Trust and the other Loan Documents, or the exercise of any right thereunder, render this Deed of Trust or the other Loan Documents unenforceable, in «hole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury. (e) All certifications, permits, licenses and approvals required for the legal use, occupancy and operation of the Property as a hotel, including, without limitation, any applicable liquor license, certificate of completion and occupancy permit, have been obtained and are in full force and effect. The Property is free of material damage and is in good repair, and there is no proceeding pending or, to the best of Grantor's best knowledge, threatened for the total or partial condemnation of, or affecting, the Property. (f) Except as shown on the survey provided to Beneficiary, all of the Improvements which were considered in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances upon the Land encroach upon any of the Improvements, so as to affect the value or marketability of the Property. The Property is contiguous to and has access to a physically and legally open all- weather public street, has all necessary permits and approvals for ingress and egress, is adequately serviced by public water, sewer systems and utilities and is on one or more separate tax parcels, all of which are separate and apart from any other property owned by Grantor or any other person. The Property has all necessary access by public roads or easements which in each case are not terminable and are not subordinate to any mortgage other than this Deed of Trust. The Property and all of the Improvements comply with all laws, ordinances or regulations pertaining to the use or operation of the Property, including, without limitation, applicable zoning, subdivision and land use, fire, health and safety laws, regulations and ordinances. 28 Doc 4 WA.SO1 (207511.00265) 41600917v6.OW3f2005fnme 16.50 • 0 Without limitation, the Property as presently improved and operated, fully complies with all applicable requirements of the City of Huntington Beach General Plan, the City of Huntington Beach Downtown Specific Plan, Conditional Use Permit No. 87-19, Coastal Development Permit 87-17, and the applicable terms and conditions of the DDA and the Development Agreement, and no further improvements, either on site or offsite, are required to be undertaken, made or completed by Grantor pursuant to any of the foregoing requirements, terms or conditions. (g) The Property is not subject to any Ieases, licenses or other use or occupancy agreements other than the Leases and the Management Agreement disclosed and delivered to Beneficiary in connection with this Deed of Trust. Other than the Ground Lessor, under and pursuant to the Ground Lease, no person has any possessory interest in the Property or right to occupy any portion thereof except under and pursuant to the provisions of the Leases or transient hotel guests in the ordinary course of Grantor's business. (h) The financial statements of Grantor and/or Guarantor heretofore furnished to Beneficiary and prepared by a certified public accountant are, as of the date specified therein, complete and correct in all material respects and fairly present the financial condition of Grantor and Guarantor and are, with respect to the Guarantor and managing member of Grantor, prepared in accordance with GAAP and, with respect to Grantor, the Uniform System of Accounts for the Lodging Industry as approved by the American Lodging Association (as in effect from time to time, the "Uniform System of Accounts") applied on a consistent basis. Grantor and/or Guarantor does not on the date hereof have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments which in each case are known to Grantor and/or Guarantor and which, in Grantor's opinion, are reasonably likely to result in a material adverse effect on the Property or the operation thereof as a hotel, except as referred to or reflected or provided for in the financial statements heretofore furnished to Beneficiary or as otherwise disclosed to Beneficiary herein. Since the last date of such financial statements, there has been no material adverse change in the financial condition, operations or business of Grantor and/or Guarantor from that set forth in such financial statements as of the dates thereof. (1) Intentionally deleted. 0) The Management Agreement is in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation by any party thereunder. (k) Neither the execution and delivery of the Loan Documents, Grantor's performance thereunder, the recordation of this Deed of Trust, nor the exercise of any remedies by Beneficiary, will adversely affect (i) Grantor's rights under the Management Agreement, the Leases or the Operating Agreements or (it) the licenses, registrations, permits, certificates, authorizations and approvals necessary for the operation of the Property as a hotel. 29 Doc R WAS01 (207511-00265) 41600917v6,09/0312005Irime 16 50 0 0 (1) The Leases (including, without limitation, those leases set forth on Exhibit "B" attached hereto) are in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation by any party thereunder. (m) The Operating Agreements are in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation by any party thereunder. (n) Since the date of the last inspection of the Property by Beneficiary: (i) no material portion of the Property has been damaged and not repaired to Beneficiary's satisfaction or has been taken in condemnation or other similar proceedings; and (ii) no material change has occurred in the structure or physical condition of the Property other than customary wear and tear. For purposes of this subsection, the term "material" shall mean an amount in excess of One Hundred Thousand and No/100 Dollars ($100,000.00); provided, however, that Grantor shall disclose all damage and/or eminent domain takings, including those which are non -material ($100,000.00 or less), and, for purposes of subsection (ii) hereof, the term "material" shall mean any change in an amount greater than One Hundred Thousand and No/100 Dollars ($100,000.00); provided, however, that Grantor shall disclose all changes, including those which are non -material ($100,000.00 or less). (o) Since the date of the delivery of information and documentation relating to the Property furnished to Beneficiary, no material change in the Property has occurred. (p) No default has occurred and is continuing in the performance of any obligation of Grantor or any affiliate of Grantor which would he deemed an Event of Default under the Loan Documents if they were in effect, or any instruments evidencing, securing or guaranteeing any other loan. (q) 'There exists no fact, event or disclosure in connection with the Loan that reasonably could be expected to cause the Loan to become delinquent or otherwise have a material adverse effect on the loan or the Property. (r) No material notice of violation of any municipal ordinances has been filed against the Property by any municipal department. For purposes of this subsection, the term "material" shall mean an amount in excess of One Hundred Thousand and No/100 Dollars ($100,000.00); provided, however, that Grantor shall disclose all damage and/or eminent domain takings, including those which are non -material ($100,000.00 or less). (s) Grantor has no knowledge of any latent or patent defects in the roof, foundations, sprinkler mains, garage, structural, mechanical and I-IVAC systems and masonry wall in any of the Improvements. (t) The survey of the Property delivered to Beneficiary in connection with this Deed of Trust has been performed by a duly licensed surveyor or registered professional 30 Doc rWAS01 (207511-00265) 41600917v6.09i031200i ime 16 50 • engineer in the jurisdiction in which the Property is situated and does not fail to reflect any material matter affecting the Property or the title thereto. (u) Grantor is the owner of all of the furniture, fixtures and equipment located on or used in connection with the Property, except for certain operating leases and capital leases for furniture, fixtures and equipment not to exceed Two Hundred Thousand and No/100 Dollars ($200,000.00) in total annual rent payments and One Million and No1100 Dollars ($1,000,000.00) in total aggregate rent payments. (v) The Liquor License Documents are in full force and effect and there is no default, breach or violation existing thereunder by any party thereto and no event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation by any party thereunder. (w) No portion of the Property has been or will be purchased, improved, equipped or furnished with proceeds of any illegal activity. (x) Grantor, and to the best of Grantor's knowledge, after having made diligent inquiry, (a) each Person owning an interest in Grantor and in SPIT Beach, (b) Guarantor, (c) Manager, and (d) each tenant at the Property: (1) is not currently identified on the OFAC List, and (ii) is not a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States. Grantor has implemented procedures, and will consistently apply those procedures throughout the term ol' the Loan, to ensure the foregoing representations and %varranties remain true and correct during the term of the Loan. (y) Grantor shall comply with all Requirements of Law relating to money laundering, anti -terrorism, trade embargos and economic sanctions, now or hereafter in effect. Upon Beneficiary's request from time to time during the term of the Loan, Grantor shall certify in writing to Beneficiary that Grantor's representations, warranties and obligations under subsection (x) above and this subsection (y) remain true and correct and have not been breached. Grantor shall immediately notify Beneficiary in writing if any of such representations, warranties or covenants are no longer true or have been breached or if Grantor has a reasonable basis to believe that they may no longer be true or have been breached. In connection with such an event, Grantor shall comply with all Requirements of Law and directives of Governmental Authorities and, at Beneficiary's request, provide to Beneficiary copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such an event. Grantor shall also reimburse Beneficiary for any expense incurred by Beneficiary in evaluating the effect of such an event on the Loan and Beneficiary's interest in the collateral for the Loan, in obtaining any necessary license from Governmental Authorities as may be necessary for Beneficiary to enforce its rights under the Loan Documents, and in complying with all Requirements of Law applicable to Beneficiary as the result of the existence of such an event and for any penalties or fines imposed upon Beneficiary as a result thereof 31 DOC r WAS01 (207511-00265) 416OO917v6 081O312005/rime 16_50 (z) All preferred equity has been paid in full and disbursed and no additional preferred equity is payable by Grantor to its members. 11. Single Purpose Entity; Authorization Grantor represents and warrants, and covenants for so long as any obligations secured by this Deed of Trust remain outstanding, as follows: (a) Grantor does not and will not own any asset or property other than: (i) the Property: and (ii) personal property necessary for the ownership or operation of the Property. (b) Grantor does not and will not engage in any business other than the ownership, management and operation of the Property and Grantor will conduct and operate its business in all material respects as presently conducted and operated and will not change the use of the Property. (c) Grantor will not enter into any contract or agreement with Guarantor or an Affiliate thereof, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms -length third -party basis. (d) Grantor has not incurred and will not incur any indebtedness (including any leases or other financing for Equipment ("FF&E_Finaneing")), secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation and including any debt owing to a partner or member in, or an affiliate of, Grantor), other than the (1) Debt, and (ii) trade and operational debt (not including any FF&E Financing) for contracts that are cancelable without penalty within thirty (30) days of notice, provided such trade and operational debt is incurred in the ordinary course of business with trade creditors and in amounts as are customary and reasonable under the circumstances other than certain operating leases and capital leases for furniture, fixtures and equipment not to exceed Two Hundred Thousand and No/100 Dollars ($200,000.00) in total annual rent payments acid One Million and No/100 Dollars ($1,000,000.00) in total aggregate rent payments. Except with Beneficiary's prior written approval in each instance, no indebtedness other than the Debt is or shall be secured by the Property. Beneficiary's approval shall be granted or withheld at Beneficiary's sole discretion. (e) Grantor has not made and will not make any loans or advances to any third party (including any constituent party, Guarantor or any affiliate of Grantor, or any constituent of Guarantor), except in de minimus amounts in the ordinary course of business and of the character of trade or operational expenses. (f) Grantor has done or caused to be done, and will do or cause to be done, all things necessary to preserve its existence, and Grantor will not, nor will Grantor permit any party to amend, modify or otherwise change the partnership certificate, partnership agreement, or other organizational documents, as the case may be, of Grantor or Guarantor in a manner which would adversely affect the Grantor's existence as a single purpose entity. (g) Grantor will maintain books and records and bank accounts separate from those of its affiliates and any constituent party, and Grantor and Guarantor each will file or cause 32 Doc x WAS01 (207511-00265) 41600917%-6;0&--03l2005rNrke 16 50 to be filed separate tax returns. Grantor shall not change the principal place of its business or the jurisdiction of formation without the prior written consent of Beneficiary. (h) Grantor is and will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any affiliate or constituent party of Grantor or any affiliate or constituent party of Guarantor), and will use and conduct its business in its oNvn name. (i) Neither Grantor nor any constituent party will cause or seek the dissolution or winding up, in whole or in part, of Grantor. 0) Grantor will not commingle its funds and other assets with those of, or pledge its assets for the benefit of, any affiliate or constituent party of Grantor, any affiliate or constituent party of Guarantor, or any other person. (k) Grantor does not or will not hold itself out to be responsible for the debts or obligations of any other person and does not or will not pay another person's liabilities out of its own funds. (1) Grantor and Guarantor will cause SPE Beach to comply with each of the provisions of this Section l 1 with respect to such entity's operation and status as a single purpose entity. 12. Maintenance of Property Grantor shall cause the Property to be maintained in a good and safe condition and repair. The Improvements and the Equipment shall not be removed, demolished or materially altered (except for normal replacement of the Equipment) without the prior written consent of Beneficiary. Grantor shall promptly comply with all laws, orders and ordinances affecting the Property, or the use thereof, subject to Grantor's right to contest the same as provided in this Deed of Trust. Grantor shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated, or which may be affected by any proceeding of the character referred to in Section 8 hereof, and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Except as expressly permitted in writing by Beneficiary, Grantor shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction limiting or defining the uses which may be made of the Property or any part thereof. if under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Grantor will not cause or permit such nonconforming use to be discontinued or abandoned without the prior written consent of Beneficiary. Grantor shall not without the prior written consent of Beneficiary: (a) change the use of the Land as currently configured and utilized; (b) permit or suffer to occur any waste on or to the Property or to any portion thereof, or (c) take any steps whatsoever to convert the Property, or any portion thereof, to a condominium or cooperative form of ownership. Grantor shall not enter into any license, casement, covenant or other agreement affecting the Property without the prior written consent of Beneficiary. 33 Doc 0_wAS01 (207511-00265) 41600917v6.0WO312005Mme 16 50 0 • 13. Transfer or Encumbrance of the Property (a) Grantor acknowledges that Beneficiary has examined and relied on the creditworthiness and experience of Grantor and its general partner, managing member, limited partners, members and beneficial owners, as applicable, in owning and operating properties such as the Property in agreeing to make the loan secured by this Deed of Trust, and that Beneficiary will continue to rely on Grantor's leasehold interest in the Property as a means of maintaining the value of the Property as security for repayment of the Debt. Grantor acknowledges that Beneficiary has a valid interest in maintaining the value of the Property so as to ensure that, should Grantor default in the repayment of the Debt, Beneficiary can recover the Debt by a sale of the Property. Grantor shall not, without the prior written consent of Beneficiary, directly or indirectly sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer its interest in the Property or any part thereof, or in the Ground Lease, or permit the Property or any part thereof to be sold, conveyed, alienated, mortgaged, encumbered, pledged or otherwise transferred. (b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer within the meaning of this Section shall he deemed to include: (1) an installment sales agreement wherein Grantor agrees to sell its interest in the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Grantor leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Grantor's right, title and interest in and to any Leases or any Profits; (iii) if Grantor (or any general partner or managing member (or if no managing member, any member) of Grantor) or Guarantor is a corporation, the merger, consolidation or voluntary or involuntary sale, exchange, conveyance or transfer of such corporation's stock (or the stock of any corporation directly or indirectly (at any tier) controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock, in one or a series of transactions, in any such case the result of which is that an aggregate of more than forty-nine percent (49%) of such corporation's stock (or such controlling corporation's stock) shall be vested, legally or beneficially, in a party or parties who are not now stockholders; (iv) if Grantor (or any general partner or managing member (or if no managing member, any member) of Grantor) or Guarantor is a limited or general partnership or joint venture, (A) any merger or consolidation of such entity or of any entity directly or indirectly (at any tier) controlling such entity, (B) the change, removal or resignation of a general partner, managing partner or joint venturer, the admission of a new general partner, managing partner or joint venturer, or the direct or indirect (at any tier) transfer or pledge of the legal or beneficial rights to the partnership interests of any general partner, managing partner or joint venturer or any profits or proceeds related thereto, or (C) the voluntary or involuntary merger, consolidation, sale, exchange, conveyance or direct or indirect (at any tier) transfer of legal or beneficial rights to the profits or other partnership interests in such partnership or joint venture, or the creation or issuance of new partnership interests, in one or a series of transactions, in any such case the result of which is that an aggregate of more than forty-nine percent (49%) of such entity's partnership or venturer interests shall be vested, legally or beneficially, in a party or parties who are not now partners or venturers; (v) if Grantor, Guarantor or any general partner or member of Grantor or Guarantor is a limited liability company, (A) any merger or consolidation of such entity or of any entity directly or indirectly (at any tier) controlling such entity (this subsection (A) shall not apply to Coast Beach, LLC ("Coast Beach"), so long as Hyatt Corporation shall at all times during the 34 Doc AOWAS01{207511-00265}41600917�fi3O&'03R005frime 16 50 0 • term of the Loan retain ultimate control of Coast Beach), (B) the change, removal or resignation of a managing member or of a non-member manager (or if no managing member or non-member manager, any member), or the direct or indirect (at any tier) transfer of the legal or beneficial ownership of membership interests or "units" of a managing member or of a non-member manager (or if no managing member or non-member manager, any member) or any profits or proceeds relating to such membership interests or "units", or (C) the voluntary or involuntary sale, exchange, conveyance or direct or indirect (at any tier) transfer of membership interests or "units" in such limited liability company, or the creation or issuance of new membership interests or "units" in one or a series of transactions, in any such case the result of which is that an aggregate of more than forty-nine percent (49%) of such company's membership interests or "units" shall be vested, legally or beneficially, in a party or parties who are not now members; and (vi) the removal, resignation or substitution of the Manager. (c) No sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of Grantor's interest in the Property, or of any part of the Ground Lease, shall be permitted during the term of the Loan without Beneficiary's prior written approval. Beneficiary shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Grantor's sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of its interest in the Property or in the Ground Lease without Beneficiary's consent. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of its interest in the Property or in the Ground Lease regardless of whether voluntary or not, or whether or not Beneficiary has consented to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of Grantor's interest in the Property or in the Ground Lease. (d) Beneficiary's consent to one sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of Grantor's interest in the Property shall not be deemed to be a waiver of Beneficiary's right to require such consent in the future. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of Grantor's interest in the Property made in contravention of this Section shall be null and void and of no force or effect. (e) Grantor agrees to bear and shall pay or reimburse Beneficiary on demand for all expenses (including, without limitation, Beneficiary's out-of-pocket attorneys' fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Beneficiary in connection with the review, approval or disapproval, and documentation of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer. (f) Notwithstanding anything to the contrary herein, nothing in this Section 13 shall prohibit a transfer of the interest of, or in any member of, Grantor to (i) another member of Grantor, (ii) any spouse, child, grandchild or spouse of child or grandchild of Robert L. Mayer or Stephen K. Bone, or to any trust or entity which is controlled by any one or more of the present members of Grantor, Robert L. Mayer, Stephen K. Bone, their family members and/or respective trusts and (iii) family members or trusts by any other members of Grantor not referenced in subsection (ii) above for estate planning purposes; provided that, each of the foregoing transfers do not result in a change of control of Grantor or its managing member and, if required by Beneficiary, accompanied by a non -consolidation opinion of a nationally recognized counsel (which may be Grantor's counsel) to the effect that such transfer will not 35 Doc a WAS01 (207511.00265) 01600917%b 08703l2005.rrime 16 50 0 0 change the "bankruptcy remoteness" of Grantor or the "single purpose entity" status of Grantor or allow the consolidation of Grantor with any of its members or their underlying ownership in the event of an insolvency or bankruptcy proceeding or action affecting such members or underlying ownerships. For purposes of this subsection, the term "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of such trust or entity, whether through ownership of voting securities, by contract or otherwisc. (g) Notwithstanding anything to the contrary herein, nothing in this Section 13 shall prohibit a transfer of interests of the Pritzker related members and the buyer/Bone related members in Grantor to any Pritzker Affiliate and to any MayerlBone Affiliate as expressly permitted under Grantor's Operating Agreement. (h) Intentionally Omitted. 14. Certificates: Affidavits (a) Within ten (10) days after request by Beneficiary, Grantor shall furnish Beneficiary with a statement, duly acknowledged and certified, setting forth: (i) the amount of the original principal amount of the Note; (ii) the then outstanding principal balance of the Note; (iii) the rate of interest of the Note, (iv) the date on which installments of interest and/or principal were last paid; (v) any offsets or defenses to the payment of the Debt; and (vi) that the Note, this Deed of 'Crust and the other Loan Documents are valid, legal and binding obligations of'Grantor, which have not been modified or if modified. giving particulars of such modification. (b) Within ten (10) days after written request by Beneficiary, Grantor shall furnish Beneficiary with a certificate reaffirming all representations and warranties of Grantor set forth herein and in the other Loan Documents as of the date requested by Beneficiary or, to the extent of any changes to any such representations and warranties, so stating such changes. (c) Grantor shall deliver to Beneficiary upon request, tenant estoppel certificates from each tenant under a Lease in form and substance reasonably satisfactory to Beneficiary; provided, however, that Grantor shall not be required to deliver such certificates more frequently than once in any consecutive twelve (12) month period except upon any sale or transfer (or proposed sale or transfer) of the loan by Beneficiary. (d) Grantor shall use its best efforts to deliver to Beneficiary upon request, estoppel certificates from each party under the Ground Lease and the Liquor License Documents in form and substance satisfactory to Beneficiary; provided, however, that Grantor shall not be required to deliver such certificates more frequently than once in any consecutive twelve (12) month period except upon any sale or transfer (or proposed sale or transfer) of the Loan by Beneficiary. 15. ChanQes in the Laws Rezardini! Taxation If any law is enacted, adopted or amended after the date of this Deed of Trust which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly. on the Debt or Beneficiary's interest in the Property, Grantor will pay such tax, with interest and penalties thereon, if any. In the event Beneficiary or 36 Doc F WASO1 (207511-00265) 316009170,08.'03:2005?imc lh 50 its counsel determines that the payment of such tax or interest and penalties by Grantor would be unlawful or taxable to Beneficiary or unenforceable or provide the basis for a defense of usury, then in any such event, Beneficiary shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable. 16. No Credits on Account of the Debt Grantor will not claim, demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Deed of Trust or the Debt. In the event such claim, credit or deduction shall be required by law, Beneficiary shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable. 17. Documentary Stamps If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note or this Deed of Trust, or shall impose any other tax or charge on the same, Grantor will pay for the same, with interest and penalties thereon, if any. 18. Controlline Agreement It is expressly stipulated and agreed to be the intent of Grantor and Beneficiary at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Beneficiary to contract for, charge, take, reserve, or receive a greater amount of interest than under state law) and that this Section shall control every other covenant and agreement in this Deed of Trust and the other I.,oan Documents. If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under the Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved, or received with respect to the Debt, or if Beneficiary's exercise of the option to accelerate the maturity of the Note, or if any prepayment by Grantor results in Grantor having paid any interest in excess of that permitted by applicable law, then it is Grantor's and Beneficiary's express intent that all excess amounts theretofore collected by Beneficiary shall be credited on the principal balance of the Note and all other Debt (or, if the Note and all other Debt have been or would thereby be paid in full, refunded to Grantor), and the provisions of the Note and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Beneficiary for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amorti7.ed, prorated, allocated, and spread throughout the full stated term of the Debt until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate from time to time in effect and applicable to the Debt for so long as the Debt is outstanding. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Beneficiary to accelerate the maturity of any 37 floc N WASO1 (207511-00265) 41600917.6,08.103M05/rime 16:50 interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. 19. Books and Records Grantor will maintain full and accurate books of accounts and other records reflecting the operations of the Property. Grantor will furnish, or cause to be furnished to Beneficiary, within thirty (30) days of the end of each calendar month, the following items, each certified by a senior financial officer of Grantor as true, correct and complete as of the end of and for such period (subject to normal year-end adjustments), and as having been prepared in accordance with the Uniform System of Accounts and generally accepted accounting principles, consistently applied: (a) a written occupancy statement dated as of the last day of the most recently ended calendar month identifying each of the Leases by the term, space occupied, rental required to be paid, security deposit paid, any rental concessions, and identifying any defaults or payment delinquencies thereunder; (b) monthly and trailing twelve (12) month to date operating statements detailing the total revenues received and total expenses incurred in connection with the ownership and operation of the Property, including a comparison of the budgeted income and expenses and the actual income and expenses for such month and the year to date (which operating information shall include the Improvements); and (c) a written statement dated as of the last day of the most recently ended month showing the percentage of hotel or motel rooms rented and occupied during such month and the average daily room rate charged during such month. Grantor will provide a detailed explanation of any variances of ten percent (10%) or more between budgeted and actual amounts fbr such periods. Grantor shall furnish, within one hundred twenty (120) days following the end of each calendar year, a statement of the financial affairs and condition of the Property, including a statement of profit and loss and a balance sheet for the Property for the immediately preceding fiscal year, prepared by an independent certified accountant acceptable to Beneficiary. Grantor shall deliver to Beneficiary on or before November 30 of any calendar year the hotel's annual plan prepared by Manager (which shall include the Budget), for the Property for the next succeeding calendar year in such detail as Beneficiary may reasonably request. Grantor shall promptly after receipt deliver to Beneficiary copies of all quality inspection reports or similar reports or inspection results that are delivered to it by the Manager. At any time and from time to time Grantor shall deliver to Beneficiary or its agents such other financial data as Beneficiary or its agents shall reasonably request with respect to Grantor and the ownership, maintenance, use and operation (and, if applicable, conversion and construction) of the Property. All information required to be furnished to Beneficiary pursuant to this Section shall be on the form provided by Beneficiary (which form shall accompany Beneficiary's request). Beneficiary shall have the right to conduct an independent audit of any of the above financial information at its own expense at any time during normal business hours. In the event that an error in excess of five percent (S%) of either Profits or Expenses is discovered, the cost of the audit shall be borne by Grantor. 20. Performance of Other Aereements (a) Grantor shall observe and perform each and every term to be observed or performed by Grantor pursuant to the terms of any agreement or instrument affecting or pertaining to the Property or title to the Property for the full use and enjoyment, including, without limitation, the DDA, the Development Agreement, the License Agreement, the 38 Doer WAS01(2075il-00265)41600917.b,08&03/2005/rime 16 50 • 0 Pedestrian Overcrossing Agreement, Cooperative Agreement No. 12-373, Cooperative Agreement No. 12-375, that certain Maintenance Agreement dated as of November 18, 2002 regarding the pedestrian overcrossing on the Property, and any other covenants, conditions and restrictions, casement agreements, access agreements and the like (collectively, the "Operating Agreements"). Upon written request by Beneficiary, Grantor shall deliver to Beneficiary estoppel certificates from each party to any material Operating Agreements in form and substance satisfactory to Beneficiary; provided, however, that Grantor shall not be required to deliver such certificates more frequently than once in any consecutive twelve (12) month period except upon any sale or transfer (or proposed sale or transfer) of the Loan by Beneficiary. (b) Grantor will not surrender its interests under the Operating Agreements or terminate, cancel, modify, change, supplement, alter or amend any of the material Operating Agreements (including without limitation the agreements described in subsection (a) above) orally or in writing without the express written consent of Beneficiary, and any such termination, cancellation, modification, change, supplement, alteration or amendment of the Operating Agreements without the prior written consent thereto of Beneficiary shall be void and of no force or effect. No release or forbearance of any of Grantor's obligations under the Operating Agreements, pursuant to the Operating Agreements or otherwise, shall release Grantor from any of its obligations under this Deed of `!'rust, including its obligations with respect to the payment of all sums as provided for in the Operating Agreements and the performance of all of the terms, conditions and agreements contained in the Operating Agreements to be kept, performed and complied with by the Grantor therein. (c) Grantor shall observe and perform each and every term to be observed or performed by Grantor pursuant to the terms of the Operating Agreements and shall: (i) diligently proceed to cure any default and satisfy any demand made upon it pursuant to the Operating Agreements; (i1) promptly notify Beneficiary in writing of any default notice received by Grantor under any material Operating Agreements and provide Beneficiary with copies of any notices delivered in connection therewith, (iii) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by the other party under the Operating Agreements; and (iv) grant Beneficiary the right, but Beneficiary shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of the Operating Agreements on the part of Grantor to be performed or observed to be promptly performed or observed on behalf of Grantor, to the end that the rights of Grantor in, to and under said Operating Agreements shall be kept free from default. 21. Further Assurances (a) Grantor will, at the cost of Grantor, and without expense to Beneficiary, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, 39 NX a WASOI (2075i 1-00265)41600917r6.08'03R005irime I6.50 0 0 mortgages, assignments, notices of assignment, Uniform Commercial Code financing statements or continuation statements, transfers and assurances as Beneficiary shall, from time to time, require, for the better assuring, conveying, assigning, transferring, and confirming unto Beneficiary the property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended now or hereafter so to be, or which Grantor may he or may hereafter become bound to convey or assign to Beneficiary, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust or for filing, registering or recording this Deed of Trust. Grantor, on demand, will execute and deliver and hereby authorizes Beneficiary to execute in the name of Grantor or without the signature of Grantor to the extent Beneficiary may lawfully do so, one or more financing statements, chattel mortgages or other instruments, to evidence more effectively the security interest of Beneficiary in the Property. Grantor grants to Beneficiary an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Beneficiary at law and in equity, including, without limitation, such rights and remedies available to Beneficiary pursuant to this Section; provided, however, that so long as Grantor is in compliance with the terms and conditions of this Deed of Trust, Beneficiary will first seek Grantor's assistance in exercising and perfecting such rights and remedies. (b) Subject to the terms and provisions of' Section 33 and Section 34 of the Note, Grantor acknowledges that Beneficiary intends to sell the loan evidenced by the Note and the Loan Documents to a party who may pool the Loan with a number of other loans and to have the holder of such loans grant participations therein or issue one or more classes of Mortgage - Backed, [lass -Through Certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the "Securities"). The Securities may be rated by one or more national rating agencies. Grantor acknowledges and agrees that Beneficiary may, at any time, sell, transfer or assign the Note, this Deed of Trust and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue Mortgage - Backed, Pass -Through Certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement. In this regard, Grantor agrees to make available to Beneficiary all information concerning its business and operations which Beneficiary reasonably requests. Beneficiary may share such information only with the investment banking firms, rating agencies, accounting firms, law firms and other third -party advisory firms involved with the Loan or the Securities. Beneficiary may forward to each purchaser, transferee, assignee, servicer, participant or investor in such securities or any credit rating agency rating such Securities (collectively, the "Investors") and each prospective Investor, all documents and information which Beneficiary now has or may hereafter acquire relating to Grantor and the Property, whether furnished by Grantor or otherwise, as Beneficiary determines necessary or desirable consistent with full disclosure for purposes of marketing and undemTiting the Loan. Grantor shall furnish and hereby consents to Beneficiary furnishing to such Investors or such prospective Investors any and all information concerning Grantor and the Property as may be requested by Beneficiary, any Investor or any prospective Investor in connection with any sale, transfer or participation interest. It is understood that the information provided by Grantor to Beneficiary may ultimately be incorporated into the offering documents for the Securities and thus such information may be disclosed to Investors and prospective Investors. Beneficiary and all of the aforesaid third -party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Grantor. Beneficiary, at its sole option, may also elect 40 DOC d:WASO1 (207511-00265)41690917%-6:0H10312405rrime 16-50 to split the Loan into two or more loans, each secured by liens on the Property, and sell, assign, pledge or otherwise hypothecate one or more of such loans to third parties. As more particularly set forth in the Note, Grantor shall cooperate, at no expense to Grantor, in all such efforts by executing and delivering all such documents, certificates, instruments and other things to evidence or confirm Grantor's obligations hereunder, and in no such event shall the Debt or Grantor's obligations hereunder be increased as a result thereof. Upon any transfer or proposed transfer contemplated above and by the Loan Documents, at Beneficiary's request, Grantor shall provide a reasonably customary estoppel certificate to the Investor or any prospective Investor. 22. Recording of Deed of Trust Grantor forthwith upon the execution and delivery of this Deed of Trust and thereafter, from time to time, will cause this Deed of Trust, and any security instrument creating a lien or security interest or evidencing the lien thereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien or security interest thereof upon, and the interest of Beneficiary in, the Property. Grantor will pay all filing, registration or recording fees, and all expenses incident to the preparation, execution and acknowledgment of this Deed of Trust, any mortgage supplemental thereto, any security instrument with respect to the Property and any instrument of further assurance, and all federal, state, county and municipal taxes, duties, impositions, assessments and charges arising out of or in connection with the execution and delivery of this Deed of Trust, any mortgage supplemental thereto, any security instrument with respect to the Property or any instrument of further assurance, except where prohibited by law so to do. Grantor shall hold harmless and indemnify Beneficiary, its successors and assigns, against any liability incurred by reason of the imposition of any tax on the making and recording of this Deed of Trust_ 23. Reporting ReQuirements Grantor agrees to give prompt written notice to Beneficiary of the insolvency or bankruptcy filing of Grantor or any partner thereof, or the insolvency or bankruptcy filing of Guarantor. 24. Events of Default The term "Event of Default" as used herein shall mean the occurrence or happening, at any time and from time to time, of any one or more of the following: (a) if any regularly scheduled monthly payment of principal or interest due on the Debt, or if any required deposit into any of the Accounts, is not paid prior to the fifth (5th) day after the date such payment is due or if the entire Debt is not paid on or before the Applicable Maturity Date; (b) if any other monetary sum (other than as specified in Section 24(a) and Section 24(c)) is not paid prior to the fifth (5th) day following %vritten notice from Beneficiary to Grantor that such sum is due; 41 Doc b. W AS01 (207511.00265) 41600917 v6,0810312005!Tf me_ 16_ 50 (c) subject to Grantor's right to contest as provided herein, if any of the Taxes or Other Charges are not paid when due and payable; (d) if the Policies are not kept in full force and effect, or if the Policies are not delivered to Beneficiary upon request; (e) if Grantor transfers or encumbers any portion of its interest in the Property in a manner inconsistent with the terms of this Deed of Trust; (f) if any representation or warranty of Grantor or of Guarantor, made herein, in any Loan Document, any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Beneficiary shall have been false or misleading in any material respect when made; (g) if Grantor or Guarantor shall make an assignment for the benefit of creditors, or if Grantor shall generally not be paying its debts as they become due; (h) it' a receiver, liquidator or trustee of Grantor or of Guarantor shall be appointed, or if Grantor or Guarantor shall be adjudicated as bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Grantor or Guarantor or if any proceeding for the dissolution or liquidation of Grantor, or of Guarantor shall be instituted; provided, however, that such appointment, adjudication, petition or proceeding, if involuntary and not consented to by Granter or Guarantor, shall constitute an Event of Default only if not being discharged, stayed or dismissed within ninety (90) days; (1) if Grantor shall be in default under any other mortgage or security agreement covering any part of the Property, whether it be superior or junior in lien to this Deed of Trust; 0) subject to Grantor's right to contest as provided herein, if the Property becomes subject to any mechanic's, materialman's, water, sewer, vault or other lien or encumbrance except a lien or encumbrance for local real estate taxes and assessments not then due and payable; (k) if Grantor fails to cure promptly any violations of laws, ordinances or regulations affecting the Property or pertaining to its use or operation; (1) except as permitted in this Deed of Trust, the actual or threatened alteration, improvement, demolition or removal of any of the Improvements without the prior written consent of Beneficiary; (m) if there shall occur any damage to the Property in any manner which is not covered by insurance solely as a result of Grantor's failure to maintain insurance required in accordance with this Deed of Trust; (n) if without Beneficiary's prior written consent: (i) the manager under the Management Agreement (or any succeeding management agreement) resigns or is removed and 42 Dw N WAS01 (207511.00265) 61600917r6,08103T2005,rrime 16 50 9 is not replaced with a manager approved in writing by Beneficiary within thirty (30) days; or (ii) there is any material change in or termination of the Management Agreement (or any succeeding management agreement); (o) intentionally deleted; (p) if a default by Grantor has occurred and continues beyond any applicable cure period under the Management Agreement or if any event occurs giving Manager the right to terminate or cancel the Management Agreement; (q) intentionally deleted; (r) if Grantor terminates or cancels the Management Agreement or operates the Property under the name of any hotel chain or system other than "I Ivatt"; (s) if Grantor or Guarantor shall be in default beyond any applicable notice and cure period under any term, covenant, or condition of this Deed of "Trust or any of the other Loan Documents, (t) if Grantor ceases to operate a hotel on the Property or terminates such business for any reason whatsoever (other than temporary cessation in connection with (i) any renovations to the Property or restoration of the Property after casualty or condemnation, or (ii) any force majeure event); (u) if for more than thirty (30) days after receipt of written notice from Beneficiary, Grantor shall continue to be in default under any term, covenant, or condition of this Deed of Trust, the Lease Assignment, the Environmental Agreement or any of the other Loan Documents other than as specified in any of subsections of this Section; provided, however, that if the cure of any such default cannot reasonably be effected within such thirty (30) day period and Grantor shall have promptly and diligently commenced to cure such default within such thirty (30) day period, then the period to cure shall be deemed extended for up to an additional sixty (60) days (for a total of ninety (90) days from Beneficiary's default notice) so long as Grantor diligently and continuously proceeds to cure such default to Beneficiary's satisfaction; (v) if a default has occurred and continues beyond any applicable cure period under the Ground Lease or Development Agreement rovided, however, if such default is by the non -Grantor party thereto, Grantor shall be afforded a period equal to that provided in the underlying agreement (but in no event, more than sixty (60) calendar days from the default date by the non -Grantor party) within which to cause such other party to cure the then default and provided further, the foregoing right shall in all events be inoperative and an immediate Event of Default shall exist hereunder if the default by such non -Grantor party results in a termination or purported termination of the underlying agreement), or if a default has occurred and continues beyond any applicable cure period under the DDA by Grantor; (w) if, without Beneficiary's prior written consent, there is any modification of the Ground Lease, the DDA (as it relates to the Property) or the Development Agreement (as it relates to the Property) or Grantor fails to deliver to Beneficiary promptly all notices issued in connection therewith; or 43 Doc U WAS01 (207511 -00265) a 1600917v6 08.-'03./2005/Time I6 50 0 • (x) if a default has occurred and continues beyond the expiration of any applicable notice, grace and/or cure periods under any of the Liquor License Documents. 25. Late Pavment Charge: Servicing Fees If any portion of the Debt is not paid prior to the fifth (5th) day after the date such payment is due (other than at maturity or earlier acceleration), Grantor shall pay to Beneficiary upon demand an amount equal to the lesser of: (1) the maximum amount permitted by applicable law, and (ii) five percent (5%) of such overdue portion of the Debt, to defray the expense incurred by Beneficiary in handling and processing such delinquent payment and to compensate Beneficiary for the loss of the use of such delinquent payment, and such additional amount shall be secured by this Deed of Trust and the other Loan Documents. 26. Right to Cure Defaults Upon the occurrence of any Event of Default or if Grantor fails to make any payment or to do any act as herein provided, Beneficiary may, but without any obligation to do so and without notice to or demand on Grantor and without releasing Grantor from any obligation hereunder, take such action as Beneficiary may deem necessary to protect its security for the Loan. Beneficiary is authorized to enter upon the Property for such purposes or to appear in, defend, or bring any action or proceeding, to protect its interest in the Property or to foreclose this Deed of Trust or collect the Debt, and the cost and expense thereof (including Beneficiary's attorneys' fees to the extent permitted by law), with interest at the Default Rate for the period after notice from Beneficiary that such cost or expense was incurred to the date of payment to Beneficiary, shall constitute a portion of the Debt, shall be secured by this Deed of Trust and the other Loan Documents and shall be due and payable to Beneficiary upon demand. 27. Remedies (a) Upon the occurrence of any Event of Default or if Grantor fails to make any payment or to do any action as herein provided, Beneficiary may take such action or direct Trustee to take such action, without any obligation to do so and notice or demand, except for any notice which may not be waived pursuant to applicable law or which is expressly provided for herein, and without releasing Grantor from any obligation hereunder, as Beneficiary deems advisable to protect and enforce its rights against Grantor and in and to the Property including, without limitation, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Beneficiary may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Beneficiary: (i} declare the entire Debt to be immediately due and payable; (1i) institute, or cause "Trustee to institute, judicial proceedings or nonjudicial proceedings, by notice and advertisement to the extent required by law, for the complete foreclosure of this Deed of Trust in which case the Property or any interest therein may be sold for cash, upon credit or otherwise in one or more parcels or in several interests or portions and in any order or manner; 44 Doc 0 WASO1 (207511.00265) 31600917N4.0&0312005rr,me t6 s0 (iii) sell, or cause Trustee to sell, for cash, upon credit or otherwise the Property or any part thereof and all estate, claim, demand, right, title and interest of Grantor therein and rights of redemption thereof, pursuant to the power of sale contained herein (to the extent permitted by applicable laws), or otherwise, at one or more sales, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law; (iv) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note or in the other Loan Documents; (v) recover judgment on the Note either before, during or after any proceedings for the enforcement of this Deed of Trust or the other Loan Documents; (vi) apply for the appointment of a trustee, receiver, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Grantor, Guarantor or of any person, firm or other entity liable for the payment of the Debt; (vii) subject to the terms of the Lockbox Agreement, revoke the license granted to Grantor to collect the Profits and other sums due under the Leases and enforce Beneficiary's interest in the Leases and Profits and enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Grantor and its agents and servants therefrom, and thereupon Beneficiary or Trustee may to the maximum extent permitted, or not restricted, under applicable law: (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (B) complete any construction on the Propem, in such manner and form as Beneficiary deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Property; (D) exercise all rights and powers of Grantor with respect to the Property, whether in the name of Grantor or otherwise including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Profits, earnings, revenues, and other income of the Property and every part thereof; and (E) apply the receipts from the Property to the payment of the Debt, after deducting therefrom all expenses (including Beneficiary's or Trustee's, as applicable, attorneys' fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the taxes, assessments, insurance and other charges in connection with the Property, as well as just and reasonable compensation for the services of Beneficiary or Trustee, as applicable, its counsel, agents and employees; (viii) require Grantor to pay monthly in advance to Beneficiary (to the extent permitted by applicable law), Trustee or any receiver appointed to collect the Profits, the fair and reasonable rental value for the use and occupancy of any portion of the Property occupied by Grantor and require Grantor to vacate and surrender possession of the Property to Beneficiary, Trustee or to such receiver and, in default thereof, evict Grantor by summary proceedings or otherwise; 45 Doc Y WAS01 (2075t 1-00265) 41600917.fi,091OV2005/Cime 16 50 L (ix) pursue such other rights and remedies as may be available at law or in equity or under the Uniform Commercial Code, including the right to establish a lock box for all Profits and other receivables of Grantor relating to the Property; (x) exercise any and all rights afforded to Beneficiary under the Manager's Subordination, including, without limitation, the right, to cause Manager to pay any and all sums due and owing to Grantor directly to Beneficiary. In the event of a sale, by foreclosure or otherwise, of less than all of the Property, this Deed of Trust shall continue as a lien on the remaining portion of the Property. (b) The proceeds of any sale made under or by virtue of this Section, together with any other sums which then may be held by Beneficiary under this Deed of Trust or the other Loan Documents, whether under the provisions of this Section or otherwise, shall be applied by Beneficiary to the payment of the Debt in such priority and proportion as Beneficiary in its sole discretion shall deem proper. (c) To the extent permitted by applicable law, Trustee may adjourn from time to time any sale by it to be made under or by virtue of this Deed of "Trust by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable: provision of law, Beneficiary, without further notice or publication, may make such sale at the time and place to which such sale shall be so adjourned. (d) Upon the completion of any sale or sales pursuant hereto, Trustee or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. Trustee is hereby irrevocably appointed the true and lawful attorney -in -fact of Grantor, to act in its name and stead (such power of attorney being coupled with an interest, and irrevocable), to make all necessary conveyances, assignments, transfers and deliveries of the Property and rights so sold and for that purpose Trustee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with like power, Grantor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of this Section, whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of Grantor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against Grantor and against any and all persons claiming or who may claim the same, or any part thereof from, through or under Grantor- (e) Upon any sale made under or by virtue of this Section, whether made under the power of sale herein granted (to the extent permitted by applicable law) or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Beneficiary may bid for and acquire Grantor's interest in the Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the 46 Doc K WAS01 (201511-00265) 41600917, 6:08&'0312005lrimc 16 50 0 net sales price after deducting therefrom the expenses of the sale and costs of the action and any other sums which Beneficiary is authorized to deduct under this Deed of Trust. (f) No recovery of any judgment by Beneficiary and no levy of an execution under any judgment upon the Property or upon any other property of Grantor shall affect in any manner or to any extent the lien of this Deed of Trust upon the Property or any part thereof, or any liens, rights, powers or remedies of Beneficiary hereunder, but such liens, rights, powers and remedies of Beneficiary shall continue unimpaired as before. (g) Beneficiary may terminate or rescind any proceeding or other action brought in connection with its exercise of the remedies provided in this Section at any time before the conclusion thereof, as determined in Beneficiary's sole discretion and without prejudice to Beneficiary. (h) Beneficiary may resort to any remedies and the security given by the Note, this Deed of "trust or the other loan Documents in whole or in part, and in such portions and in such order as determined by Beneficiary's sole discretion. No such action shall in any way be considered a waiver of any rights, benefits or remedies evidenced or provided by the Note, this Deed of "Trust or the other Loan Documents. The failure of Beneficiary to exercise any right, remedy or option provided in the Note, this Deed of T ust or the other Lean Documents shall not be deemed a waiver of such right, remedy or option or of any covenant or obligation secured by the Note, this Deed of Trust or the other Loan Documents. No acceptance by Beneficiary of any payment after the occurrence of any Event of Default and no payment by Beneficiary of any obligation for which Grantor is liable hereunder shall be deemed to waive or cure any Event of Default with respect to Grantor, or Grantor's liability to pay such obligation. No sale of all or any portion of the Property, no forbearance on the part of Beneficiary, and no extension of time for the payment of the whole or any portion of the Debt or any other indulgence given by Beneficiary to Grantor, shall operate to release or in any manner affect the interest of Beneficiary in the remaining Property or the liability of Grantor to pay the Debt. No waiver by Beneficiary shall be effective unless it is in writing and then only to the extent specifically stated. (i) The interests and rights of Beneficiary under the Note, this Deed of Trust or the other Loan Documents shall not be impaired by any indulgence, including: (i) any renewal, extension or modification which Beneficiary may grant with respect to any of the Debt; (ii) any surrender, compromise, release, renewal, extension, exchange or substitution which Beneficiary may grant with respect to the Property or any portion thereof; or (iii) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Debt. Grantor hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its obligations under any of the Loan Documents. 28. Right of Entry Beneficiary and its agents shall have the right to enter and inspect the Property during normal business hours upon reasonable notice. 47 Doc WASO1(207511-00265)3160091Tv6,0&'0312005/Time 16 50 0 • 29. Security Agreement This Deed of Trust is a "security agreement" within the meaning of the Uniform Commercial Code. "life Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Grantor in the Property. By executing and delivering this Deed of Trust, Grantor has granted and thereby grants to Beneficiary, as security for the Debt, a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code (such portion of the Property so subject to the Uniform Commercial Code being called in this Section the "Collateral"). Grantor hereby agrees with Beneficiary to execute and deliver to Beneficiary, in form and substance satisfactory to Beneficiary, such financing statements and such further assurances as Beneficiary may from time to time reasonably consider necessary to create, perfect or preserve Beneficiary's security interest therein granted. This Deed of Trust shall also be effective as a financing statement covering any other property and may be filed in any other appropriate filing or recording office. This Deed of Trust shall also constitute a "fixture filing" for the purposes of the Uniform Commercial Code. All or part of the Property are or are to become fixtures. If an Event of' Default shall occur, Beneficiary. in addition to any other rights and remedies which it may have. shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code including, without limitation, the right to take possession of the Collateral or any part thereof, and to take such other measures as Beneficiary may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Beneficiary, Grantor shall at its expense assemble the Collateral and make it available to Beneficiary at the Land. Grantor shall pay to Beneficiary on demand any and all expenses, including Beneficiary's attorneys' fees, incurred or paid by Beneficiary in protecting the interest in the Collateral and in enforcing the rights hereunder with respect to the Collateral. Any notice of sale, disposition or other intended action by Beneficiary with respect to the Collateral sent to Grantor in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Grantor. The proceeds of any disposition of the Collateral, or any part thereof; may be applied by Beneficiary to the payment of the Debt in such priority and proportions as Beneficiary in its discretion shall deem proper. In the event of any change in name, identity or structure of any Grantor, such Grantor shall notify Beneficiary thereof and promptly after request shall execute, file and record such Uniform Commercial Code forms as are necessary to maintain the priority of Beneficiary's lien upon and security interest in the Collateral, and shall pay all expenses and fees in connection with the filing and recording thereof. If Beneficiary shall require the filing or recording of additional Uniform Commercial Code forms or continuation statements, Grantor shall, promptly after request, execute, file and record such Uniform Commercial Code forms or continuation statements as Beneficiary shall deem necessary, and shall pay all expenses and fees in connection with the filing and recording thereof, it being understood and agreed, however, that no such additional documents shall increase Grantor's obligations under the Note, this Deed of Trust and the other Loan Documents. Grantor hereby irrevocably appoints Beneficiary as its attorney -in -fact, coupled with an interest, to file with the appropriate public office on its behalf any financing or other statements signed only by Beneficiary, as secured party, in connection with the Collateral covered by this Deed of Trust. 48 Doc it:WAS01(207511.00265)41600917,fi3O&`0312005iTime.16:50 0 0 30. Actions and Proceedings Beneficiary has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Grantor, which Beneficiary, in its discretion, decides should be brought to protect its interest in the Property. Beneficiary shall, at its option, be subrogated to the lien of any mortgage or other security instrument discharged in whole or in part by the Debt, and any such subrogation rights shall constitute additional security for the payment of the Debt. 31. Waiver of Setoff and Counterclaim All amounts due under this Deed of Trust, the Note and the other Loan Documents shall be payable without setoff, counterclaim or any deduction whatsoever. Grantor hereby waives the right to assert a counterclaim (other than compulsory counterclaims) in any action or proceeding brought against it by Beneficiary, or arising out of or in any way connected with this Deed of Trust, the Note, any of the other Loan Documents, or the Debt. 32. Contest of Certain Claims Notwithstanding the provisions of Sections 5 and 24(c) and 0) hereof, Grantor shall not be in default for failure to pay or discharge Taxes, Other Charges (other than any amounts due pursuant to the Ground Lease, which may not be subject to any contest) or a mechanic's or materialman's lien asserted against the Property if, and so long as Grantor complies with all applicable laws with respect to the contest thereof and, additionally: (a) Grantor shall have notified Beneficiary of such nonpayment and the reasons therefor within ten (10) days of obtaining knowledge thereof. (b) Grantor shall diligently and in good faith contest such Taxes. Other Charges or lien by appropriate legal proceedings which shall operate to prevent the enforcement or collection thereof and the sale of the Property or any part thereof, in satisfaction thereof-, (c) if and to the extent Grantor has not paid the Taxes, Other Charges or mechanic's or materialman's lien being contested in full to the applicable person or entity, Grantor shall have furnished to Beneficiary a cash deposit, or an indemnity- bond satisfactory to Beneficiary with a surety satisfactory to Beneficiary, in the amount of the Taxes, other Charges or mechanic's or materialman's lien claim, plus a reasonable additional sum to pay all costs, interest and penalties that may be imposed or incurred in connection therewith, to assure payment of the matters under contest and to prevent any sale or forfeiture of the Property or any part thereof-, (d) if and to the extent Grantor has not paid the Taxes, Other Charges or mechanic's or materialman's lien being contested in full to the applicable person or entity, Grantor shall promptly upon final determination thereof pay the amount of any such Taxes, Other Charges or claim so determined, together with all costs, interest and penalties which may be payable in connection therewith: and (e) the failure to pay the Taxes, Other Charges or mechanic's or materialman's lien claim does not constitute a default under any other deed of trust, mortgage or security interest covering or affecting any part of the Property. Notwithstanding the foregoing, if and to the extent Grantor has not paid the Taxes, Other Charges or mechanic's or materialman's lien being contested in full to the applicable person or entity, Grantor shall immediately upon request of Beneficiary pay (and if Grantor shall fail so to do, Beneficiary may, but shall not be required to, pay or cause to be discharged or bonded against) any such Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of Beneficiary, the Property or any part 49 Doc a WAs01 (207511-00'_b5) 3160091 O 0&-0112005iTime 16 50 0 0 thereof or interest therein may be in danger of being sold, forfeited, foreclosed, terminated, canceled or lost. Beneficiary may pay over any such cash deposit or part thereof to the claimant entitled thereto at any time when, in the reasonable judgment of Beneficiary, the entitlement of such claimant is established. 33. Recovery of Sums Required to Be Paid Beneficiary shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as they become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Beneficiary thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Grantor existing at the time such earlier action was commenced. 34. Marshaling and Other Matters Grantor hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force, and all rights of marshaling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Grantor hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Deed of Trust on behalf of Grantor, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Deed of Trust and on behalf of all persons to the extent permitted by applicable law. 35. hazardous Substances Grantor hereby represents and warrants to Beneficiary that, to the best of Grantor's knowledge, after due inquiry and investigation, except as set forth in the Phase 1 Environmental Site Assessment dated June 27, 2005, prepared by ATC Associates, Inc. (the "Phase I"): (a) the Property is not in direct or indirect violation of' any local, state, federal or other governmental authority, statute, ordinance, code, order. decree, law, rule or regulation or common law pertaining to or imposing liability or standards of conduct concerning the protection of human health, environmental regulation, contamination or clean-up including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource Conservation and Recovery Act, as amended, and any state super -lien and environmental clean-up statutes (collectively, "Environmental Lars"); (b) the Property is not subject to any private or governmental lien or judicial or administrative notice or action relating to hazardous and/or toxic, dangerous and/or regulated substances, solvents, wastes, materials, pollutants or contaminants, petroleum, tremolite, anthlophylie or actinolite or polychlorinated biphenyls (including, without limitation, any raw materials which include hazardous constituents) and any other substances, materials or solvents which are included under or regulated by Environmental Laws. including, without limitation, Asbestos (collectively, "Hazardous Substances"); (c) no Hazardous Substances are or have been, prior to Grantor's acquisition of the Property, discharged, generated, treated, disposed of or stored on, incorporated in or removed or transported from the Property other than in compliance with all Environmental Laws; (d) no underground storage tanks exist on any of the Property. So long as Grantor owns or is in possession of the Property, Grantor shall keep or cause the Property to be kept free from 50 Doc 0 WASOI (207511-00263) J160091h$,08,'03ROOSfrimc 16 50 Hazardous Substances (other than de minimis quantities of Hazardous Substances that are necessary and lawfully used in the operation of the Property as a hotel or motel and which are stored and disposed of in compliance with all Environmental Laws) and in compliance with all Environmental Laws, shall promptly notify Beneficiary if Grantor shall become aware of any Hazardous Substances on the Property and/or if Grantor shall become aware that the Property is in direct or indirect violation of any Environmental Laws and Grantor shall remove such Hazardous Substances and/or cure such violations, as applicable, as required by law, promptly after Grantor becomes aware of such Hazardous Substances or such violations, at Grantor's sole expense; and (e) Beneficiary has asked Grantor whether Grantor or any affiliate or agent of Grantor or any related party of any of the foregoing has any actual knowledge or notice of the release or threatened release of any hazardous substance (as defined in California Code of Civil Procedure Section 726.5(e) (4)) on, under or about the Property, and neither Grantor nor any affiliate or agent of Grantor nor any related party of any of the foregoing has any such actual knowledge or notice. Nothing herein shall prevent Grantor from recovering such expenses from any other party that may be liable for such removal or cure. Upon Beneficiary's request, at any time and from time to time while this Deed of Trust is in effect (but in no event more frequently than once in any three-year period or more frequently if specific facts and circumstances reasonably dictate, or otherwise at Beneficiary's election but at Beneficiary's expense), Grantor shall provide at Grantor's sole expense, an inspection or audit of the Property prepared by a licensed hydrogeologist or licensed environmental engineer approved by Beneficiary indicating the presence or absence of Hazardous Substances on the Property. If Grantor fails to provide such inspection or audit within thirty (30) days after such request, Beneficiary may order such inspection or audit, and Grantor hereby grants to Beneficiary and its employees and agents access to the Property and a license to undertake such inspection or audit. The cost of such inspection or audit shall be paid by Grantor and added to the principal balance of the sums due under the Note and this Deed of Trust and shall bear interest thereafter until paid at the Default Rate. The obligations and liabilities of Grantor under this Section shall survive any termination, satisfaction, or assignment of this Deed of Trust and the exercise by Beneficiary of any of its rights or remedies thereunder including, without limitation, the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure. 36. Asbestos (a) Grantor represents and warrants that, except as set forth in the Phase I, after due inquiry and investigation, no asbestos or any substance containing asbestos (collectively, "Asbestos") is located on the Property. Grantor shall not install in the Property, nor permit to be installed in the Property, Asbestos and shall remove any Asbestos promptly upon discovery to the satisfaction of 1eneficiary, at Grantor's sole expense. Upon Beneficiary's request, at any time and from time to time, Grantor shall provide, at Grantor's sole expense, an inspection or audit of the Property prepared by an engineering or consulting firm approved by Beneficiary, indicating the presence or absence of Asbestos on the Property. If Grantor fails to provide such inspection or audit within thirty (30) days after such request, Beneficiary may order such inspection or audit. The cost of such inspection or audit shall be paid by Grantor and added to the principal balance of the sums due under the Note and this Deed of Trust, and shall bear interest thereafter until paid at the Default Rate. The obligations and liabilities of Grantor under this Section shall survive any termination, satisfaction, or assignment of this Deed of Trust and 51 Doc Ai WASOI (207511-00265) 41600917%6.08r0312005rrjm4: 16 50 the exercise by Beneficiary of any of its rights or remedies thereunder, including, but not limited to, the acquisition of the Property by foreclosure or a conveyance in lieu of foreclosure. (b) If requested by Beneficiary, Grantor shall, subject to Beneficiary's reasonable approval, develop an operations and maintenance plan for the Property with respect to the presence of Asbestos in the Improvements (the "O&M Plan"). Grantor shall comply in all respects with the terms and conditions of the O&M Plan. Unless required by Environmental Laws, Grantor shall not modify or amend the O&M Plan without Beneficiary's prior written consent. (c) Grantor shall not remove, disturb, encapsulate or otherwise remediate the Asbestos in the Improvements except in compliance with the O&M Plan and all Environmental Laws. If Grantor makes any alterations or modifications to the Improvements that would disturb or expose any Asbestos in the Improvements or cause any of such Asbestos to become friable, Grantor shall remove or encapsulate such .Asbestos in compliance with all applicable Environmental Laws before allowing occupancy of such space or opening such space to the public. 37. Environmental Monitoring Grantor shall give prompt written notice to Beneficiary of. (a) any proceeding or inquiry by any party with respect to the presence of any Hazardous Substance on, under, from or about the Property; (b) all claims made or threatened by any third party against Grantor or the Property relating to any loss or injury resulting from any Hazardous Substance; and (c) Grantor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property to be subject to any investigation or cleanup pursuant to any Environmental Law. Grantor shall permit Beneficiary to join and participate, as a party if it so elects, in any legal proceedings or actions initiated vvith respect to the Property in connection with any Environmental Law or Hazardous Substance, and Grantor shall pay all attorneys' fees incurred by Beneficiary in connection therewith. In the event that any environmental site assessment report prepared for the Property recommends that an operations and maintenance plan be implemented for Asbestos or any Hazardous Substance, Grantor shall cause such operations and maintenance plan to be prepared and implemented at Grantor's expense upon request of Beneficiary and in accordance with the recommendation. In the event that any inspection, assessment, investigation, site monitoring, containment, cleanup, removal, restoration, corrective action or other work of any kind to prevent, cure or mitigate any release, spill, emission. leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or which is reasonably necessary or desirable under an applicable Environmental Law ("Remedial Work") is recommended, Grantor shall, at its sole cost and expense, commence and thereafter diligently prosecute to completion all such Remedial Work within thirty (30) days after written demand by Beneficiary for performance thereof (or such shorter period of time as may be required under applicable law). 52 DX e_WASOI(207511.00265)41600917v60V0V2005frLmr_16.50 38. Management of the Property Grantor further covenants and agrees with Beneficiary as follows: (a) Grantor shall cause the hotel located on the Property to be operated pursuant to the Management Agreement. (b) Grantor shall: (1) pay all sums required to be paid by Grantor under the Management Agreement and promptly perform and/or observe all of the covenants and agreements required to be performed and observed by it under the Management Agreement and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii) promptly notify Beneficiary in writing of any default under the Management Agreement of which it is aware and provide Beneficiary with copies of any notices delivered in connection therewith; (iii) promptly deliver to Beneficiary a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under the Management Agreement as required hereunder and as may be requested by Beneficiary from time to time, including without limitation, those notices, reports, budgets and similar financial information required to be delivered to Beneficiary under Section 3(a)(10 and Section 3(d) of the Manager's Subordination to the extent not provided to Beneficiary; (iv) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by the manager under the Management Agreement; (v) assign to Beneficiary any right it may have to modify the Management Agreement exercisable by Beneficiary only after an Event of Default: (vi) after an Event of Default, grant Beneficiary the right, but Beneficiary shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of Grantor to be performed or observed to be promptly performed or observed on behalf of Grantor. to the end that the rights of Grantor in, to and under the Management Agreement shall be kept unimpaired and free from default; (vii) use its reasonable efforts to obtain, from time to time, from the Manager such certificates of estoppel with respect to compliance by Grantor with the terms of the Management Agreement as may be requested by Beneficiary; (viii) exercise each individual option, if any, to extend or renew the term of the Management Agreement upon demand by Beneficiary made at any time within one year of the last day upon which any such option may be exercised, and Grantor hereby 53 Doc N. W ASOI (207511-00265) s 1600917 ti$,0V0i1200 5lrimc 16 50 expressly authorizes and appoints Beneficiary its attorney -in -fact to exercise any such option in the name of and upon behalf of Grantor, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest; and (ix) promptly notify Beneficiary in -writing and provide Beneficiary with copies of any notices delivered to Grantor, including, without limitation, any notice of violation of any laws, regulations, or ordinances or other notice from any governmental or quasi -governmental authority, or any notice of default under the Leases, the Management Agreement or any other document or agreement relating to the Property, which contain information that, if true, might materially adversely affect the value, use or operation of the Property. (c) Grantor shall not, without Beneficiary `s prior written consent: (i) surrender, terminate; or cancel the Management Agreement; (ii) reduce or consent to the reduction of the term of the Management Agmement; (iii) increase or consent to the increase of the amount of any charges under the Management Agreement except as otherwise: expressly provided therein; (iv) othenvise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under the Management Agreement in any material respect; or (v) operatc the Property under the name of any hotel chain or system other than 1-I yatt" (cl) Grantor shall not, without Beneficiary`s prior written consent, enter into transactions with any Affiliate including, without limitation, any arrangement providing for the management of the hotel on the Property, the rendering or receipt of services or the purchase or sale of inventory, except any such transaction in the: ordinary course ol' business of Grantor if the monetary or business consideration arising therefrorn would be substwitially as advantageous to Grantor as the monetary or business consideration which would obtain in a comparable transaction with a person not an Affiliate of Granter. (c) Grantor irrevocably authorizes and directs Manager to deliver to Beneficiary: (1) all operating information concerning the Property submitted by grantor to Manager; (ii) the o.-ritten results of all quality assurance inspections: of the Property performed by INIanager's Quality Assurance Directors; and (iii) such other information that Beneficiary or Beneficiary's agents may reasonably request, from time to time. including any information in the Possession of Manager relating to Grantor not included in the reports referred to above. (0 Grantor shall obsme and perform, or, if applicable, shall cause Manager to observe and perform, each and every term to be observed or pertbrmed by Grantor (and/or Manager, as the case may be) pursuant to the terms of (i) all permits and licenses for litiuor, food, beverage, and other matters, necessary for the operation of the Property, and 60 any and all other agreements to which Grantor (and/or Manager) now is or hereafter becomes a party involving, relating to or othenVise concerning the sale of food and beverages (including, without limitation, alcoholic beverages) at the Property (collectively, the "Liquor license Documents"). Additionally, Grantor shall or shall cause Manager to: (1) diligently proceed to cure any de€'ault and satisfy, any demand made upon it pursuant to any such agreement; ?4 1— K WASO., {26351 I S1G�5`s� oF6�G413,(,pg i �pp5:7irctc 16 50 (ii) promptly notify Beneficiary in writing of any default under any such agreement and provide Beneficiary with copies of any notices delivered in connection therewith; (iii) promptly enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed by any other party under any such agreements; and (iv) after an Event of' Default, grant Beneficiary the right, but Beneficiary shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of any such agreement on the part of Grantor to be performed or observed to be promptly performed or observed on behalf of Grantor, to the end that the rights of Grantor in, to and under any such agreement shall be kept unimpaired and free from default. 39. Handicapped .Access (a) Grantor agrees that the Property shall at all times strictly comply to the extent applicable with the requirements of the Americans with Disabilities Act of 19901 all state and local laws and ordinances related to handicapped access and all rules, regulations, and orders issued pursuant thereto including, without limitation. the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities (collectively, "Access Laws"). (b) Notwithstanding any provisions set forth herein or in any other document regarding Beneficiary's approval of' alterations of the Property, Grantor shall not alter the Property in any manner which would increase Grantor's responsibilities for compliance with the applicable Access Laws without the prior written approval of Beneficiary. The foregoing shall apply to tenant improvements constructed by Grantor or by any of its tenants. Beneficiary may condition any such approval upon receipt of a certificate of Access Law compliance from an architect, engineer or other person acceptable to Beneficiary. (c) Grantor agrees to give prompt written notice to Beneficiary of the receipt by Grantor of any complaints related to violation of any Access Laws and of the commencement of any proceedings or investigations which relate to compliance with applicable Access Laws. (d) Grantor agrees to indemnify Beneficiary for any or all loss, cost, liability, judgment, claim, damage or expense sustained, suffered or incurred by Beneficiary (including, without limitation, Beneficiary's reasonable attorneys' fees) arising out of or attributable or relating to any claims or lawsuits brought under any Access Laws. 40. ERISA (a) Grantor covenants and agrees that it shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Beneficiary of any of its rights under the Note, this Deed of Trust, and the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended ("ERISA"). 55 Doe if WASOI (207511.00265) 41600917v6,O81ov20051r,me 16 50 (b) Grantor further covenants and agrees to deliver to Beneficiary such certifications or other evidence from time to time throughout the term of this Deed of Trust, as requested by Beneficiary in its sole discretion, that: (1) Grantor is not an "employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the meaning of Section 3(32) of ERISA; (ii) Grantor is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of the following circumstances is true: (A) Equity interests in Grantor are publicly offered securities, within the meaning of 29 C.F.R. § 2510.3- 101 (b)(2); (B) Less than twenty-five percent (25%) of each outstanding class of equity interests in Grantor are held by "benefit plan investors" within the meaning of 29 C.F.R. § 2510.3- 101(f)(2); or (C) Grantor qualifies as an "operating company" or a "real estate operating company" within the meaning of' 29 C.F.R. § 2510.3-101(c) or (e) or an investment company registered under The Investment Company :act of 1940. 41. indemnification Subject to the limitation on recourse set forth in Section 42 below, in addition to any other indemnifications provided herein, in the Lease Assignment, the Frivirorunental Agreement or in the other Loan Documents, Grantor and Guarantor shall protect, defend, indemnify and save harmless Beneficiary from and against all liabilities, obligations, claims, demands, damages, penalties, causes of action, losses, fines, costs and expenses (including, without limitation, out-of-pocket attorneys' fees and expenses), imposed upon or incurred by or asserted against Beneficiary by reason of: (a) ownership, administration, repayment, or enforcement of the Loan, any consent, approval or waiver related thereto, or in any way related to this Deed of Trust, the Property or any interest therein or receipt of any Profits; (b) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (c) any use, nonuse or condition in, on or about the Property or any part thereof or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (d) any failure on the part of Grantor or Guarantor to perform or comply with any of the terms of this Deed of Trust; (e) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (0 the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release, or threatened release of any Hazardous Substances or Asbestos on, from, or affecting the Property or any other property; (g) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Substances or Asbestos; (h) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Substances or Asbestos; (i) any violation of the Environmental Laws, which are based upon or in any way related to such Hazardous Substances or Asbestos including, without limitation, the costs and expenses of any remedial action, out-of-pocket attorneys' and consultants' fees, investigation and laboratory fees, court costs, and litigation expenses; 0) any failure of the Property to comply with any Access haws; (k) any representation or warranty made 56 Doc 0 WASOl f207511-00265) 41600917v6.0&'03+2005.rr-me 16 50 in the Note, this Deed of Trust or the other Loan Documents being false or misleading in any respect as of the date such representation or warranty was made; (1) any claim by brokers, finders or similar persons claiming to be entitled to a commission in connection with any Lease or other transaction involving the Property or any part thereof under any legal requirement or any liability asserted against Beneficiary with respect thereto; (m) the claims of any lessee of all or any portion of the Property or any person acting through or under any lessee or otherwise arising under or as a consequence of any Lease; and (n) claims of any persons arising under or as a consequence of the Operating Agreements or the Liquor License Documents. Any amounts payable to Beneficiary by reason of the application of this Section shall be immediately due and payable, shall be secured by this Deed of Trust and shall bear interest at the Default Rate from the date loss or damage is sustained by Beneficiary until paid. The obligations and liabilities of Grantor and Guarantor under this Section shall survive any termination, satisfaction or assignment of this Deed of Trust or the entry of a judgment of foreclosure, sale of the Property by nonjudicial foreclosure sale, or delivery of a conveyance in lieu of foreclosure, but shall continue to be subject to the limitations on recourse set forth in Section 42 below, to the extent applicable, which shall also survive. 42. Recourse and Indemnification (a) Subject to the qualifications set forth in Section 9 of the Note and the qualifications set forth in the Guaranty and the Environmental Agreement, the terms and provisions of which are hereby incorporated by reference, neither Grantor nor Guarantor nor any Affiliate, partner, member, shareholder, officer or director of either of them, shall be personally liable either at law or in equity for the repayment of the Debt or the failure of performance of any other terms or provisions contained in the Deed of Trust or the other Loan Documents and Beneficiary will satisfy any judgments, orders or decrees on account of the failure to repay such Debt and/or the failure to perform any such obligation, from the Property and any other real or personal property, tangible or intangible, as Grantor, Guarantor or any other entity shall have pledged or assigned to secure the Note by any of the Loan Documents, except that Beneficiary may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Beneficiary to enforce and realize upon the Note, the Deed of Trust, the other Loan Documents, and the interests in the Property and any other collateral given to Beneficiary pursuant to the Deed of Trust and the other Loan Documents; provided, however, that, except as specifically provided in this Section, any judgment in any such action or proceeding shall be enforceable against Grantor only to the extent of Grantor's interest in the Property and in any other collateral given to Beneficiary. Beneficiary, by accepting the Note, the Deed of Trust and the other Loan Documents, agrees that it shall not sue for, seek or demand any deficiency judgment against Grantor in any such action or proceeding, under, by reason of or in connection with the Deed of Trust, the other Loan Documents or the Note.' The provisions of this Section shall not, however: (i) constitute a waiver, release or impairment of any obligation evidenced or secured by the Deed of Trust or the other Loan Documents or the Note; (ii) impair the right of Beneficiary to name Grantor as a party defendant in any action or suit for foreclosure and sale under the Deed of Trust; (iii) affect the validity or enforceability of any guaranty or indemnity made in connection with the Deed of Trust or the other Loan Documents; (iv) impair the right of Beneficiary to obtain the appointment of a receiver; (v) impair the right of Beneficiary to bring suit with respect to fraud or misrepresentation by Grantor or any other person or entity in connection with the Deed of Trust or the other Loan Documents; (vi) affect 57 Doc MAS01 (207511-00265) 41600917v6;08/03/2005/rime:16:50 • the validity or enforceability of the Loan Documents; or (vii) affect the ability or right of Beneficiary to sue any Guarantor for those matters addressed in the Guaranty or the Environmental Agreement and/or to sue Grantor for any of those matters addressed in Section 9 of the Note. (b) Nothing herein shall be deemed to be a waiver of any right which Beneficiary may have under Section 506(a), 506(b), I I I I (b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured by the Deed of Trust or to require that all collateral shall continue to secure all of the debt owing to Beneficiary in accordance with the Note, the Deed of "Trust and the other Loan Documents. 43. Notice Any notice, demand, statement, request or consent made hereunder shall be in writing and shall be deemed given on the next business day if sent by Federal Express or other reputable overnight courier and designated for next business day delivery, or on the third (3rd) day following the day such notice is deposited with the United States postal service first class certified mail, return receipt requested, at the addresses set forth below, of the party to whom such notice is to be given, or to such other address or additional party as Grantor, Guarantor or Beneficiary, as the case may be, shall in like manner designate in writing: Grantor: PCH Beach Resort, I,LC c/o The Robert Mayer Corp. 660 Newport Center Drive, Suite 1050 Ncwport Beach, CA 92660 Attn: Stephen K. Bone Attn: Robert L. Mayer, Jr. With a copy to: Rutan & Tucker 611 Anton Boulevard, Suite 1400 Costa Mesa, CA 92626 Attn: Jeffrey D. Oderman, Esq. With a copy to: Coast Beach LLC c/o Hyatt Corporation Hyatt Center 71 South Wacker Drive, 12th Floor Chicago, IL 60606 Attn: General Counsel Beneficiary: GMAC Commercial Mortgage Bank 6955 Union Park Center Midvale, UT 84047 Fax No.: (801) 567-2681 Attn: President With copies to: GMAC Commercial Mortgage Corporation 200 Witmer Road 58 Doc is W'A501 (207511-00265) 41600917c6.0810312005TTime 16 50 0 Horsham, Pennsylvania 19044 Fax No.: (215) 3284620 Attn: Servicing- Executive Vice President GMAC Commercial Mortgage Corporation 8614 Westwood Center Drive, Suite 630 Vienna, Virginia 22182 Fax No.: (703) 749-4366 Attention: Lewis L. Delafield Loan No. 01-1045911 Katten it•'fuchin Rosenman LLP 1025 Thomas Jefferson Street, N.W. Washington, D.C. 20007-5201 Fax No.: (202) 298-7570 Attn.-. Christopher J. Hart, Esq. 44. Authority Grantor represents and warrants that: (a) it has full power, authority and right to execute, deliver and perform its obligations pursuant to this Deed of Trust, give, grant, bargain, sell, alienate, enfeoff, convey, confirm, warrant, pledge, hypothecate and assign the Property pursuant to the terms hereof and to keep and observe all of the terms of this Deed of Trust on Grantor's part to be performed; and (b) Grantor is not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related Treasury Department regulations, including temporary regulations. Beneficiary represents and warrants that it has full power, authority and right to execute, deliver and perform its obligations pursuant to this Deed of Trust. 45. Waiver of Notice Neither Grantor nor Guarantor shall be entitled to any notices of any nature whatsoever from Beneficiary except with respect to matters for which this Deed of Trust specifically and expressly provides for the giving of notice by Beneficiary to Grantor or Guarantor and except with respect to matters for which Beneficiary is required by applicable law to give notice, and Grantor and Guarantor each hereby expressly waives the right to receive any notice from Beneficiary with respect to any matter for which this Deed of Trust does not specifically and expressly provide for the giving of notice by Beneficiary to Grantor or Guarantor, including, without limitation, notice of default, notice of intention to accelerate sums under the Loan Documents and notice of acceleration of sums under the Loan Documents. All notices required hereunder must be in writing, delivered by certified mail (return receipt requested), personal delivery or overnight delivery. 46. Remedies of Grantor In the event that a claim or adjudication is made that Beneficiary has acted unreasonably or has unreasonably delayed acting in any case where by law or under the Note, this Deed of Trust or the other Loan Documents, it has an obligation to act reasonably or 59 Doc WASO1 (207511.00265) 41600917v6.08�0312005:Tfmc 16 50 promptly, Beneficiary shall not he liable for any monetary damages, and Grantor's and Guarantor's remedies shall be limited to injunctive relief or declaratory judgment. 47. Sole Discretion of Beneficiary Wherever pursuant to this Deed of Trust Beneficiary exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Beneficiary, the decision of Beneficiary to approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory shall be in the discretion of Beneficiary and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein. 48. Non -Waiver The failure of Beneficiary to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Deed of Trust. Grantor shall not be relieved of Grantor's obligations hereunder by reason of: (a) the failure of Beneficiary to comply with any request of Grantor or Guarantor to take any action to foreclose this Deed of Trust or otherwise to enforce any of the provisions hereof or of the Note or the other Loan Documents; (b) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof; or (c) any agreement or stipulation by Beneficiary extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Deed of' Trust or the other Loan Documents. Beneficiary may resort for the payment of the Debt to any other security held by Beneficiary in such order and manner as Beneficiary, in its discretion, may elect. Beneficiary may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Beneficiary thereafter to foreclose this Deed of Trust. The rights and remedies of Beneficiary under this Deed of Trust shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Beneficiary shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Beneficiary shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at laws or in equity. 49. No Oral Change This Deed of Trust, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Grantor or Beneficiary, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. 50. Liability If Grantor or Guarantor consists of more than one person, the obligations and liabilities of each such person hereunder and of each of Grantor or Guarantor shall be joint and several. Subject to the provisions hereof requiring Beneficiary's consent to any transfer of the Property, this Deed of Trust shall be binding upon and inure to the benefit of Grantor, Guarantor and Beneficiary and their respective successors and assigns forever. GO Doc M WASO1 (207511-00265) 416009171616,0&0312005/rime 16.50 0 51. Inapplicable Provisions If any term, covenant or condition of this Deed of Trust is held to be invalid, illegal or unenforceable in any respect, this Deed of Trust shall be construed without such provision. 52. Section Headings The headings and captions of the various Sections of this Deed of Trust are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. 53. Counterparts This heed of 'Trust may be executed in any number of counterparts and each such duplicate original shall be deemed to be an original. 54. Certain Definitions Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, swords used in this Deed of Trust may be used interchangeably in singular or plural form and the word "Grantor" shall mean "each Grantor or any part thereof or anv interest therein", the word "Beneficiary" shall mean "Beneficiary, its successors and assigns, and any subsequent holder of the Note", the word "Debt" shall mean "the Note and any other evidence of indebtedness secured by this Deed of "Crust", the word "person" shall include an individual, corporation, partnership, trust, unincorporated association, government, governmental authority and any other entity, and the word "Property." shall include any portion of the Property and any interest therein and the words "attomevs' fees" shall include any and all attorneys' fees, paralegal and law clerk fees including, without limitation, fees at the pretrial, trial and appellate levels incurred or paid by Beneficiary in protecting its interest in the Property and Collateral and enforcing its rights hereunder. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. 55. Assignments Beneficiary shall have the right to assign or transfer its rights under this Deed of Trust without limitation. Any assignee or transferee shall be entitled to all the benefits afforded Beneficiary under this Deed of Trust. Neither Grantor nor Guarantor shall, without the prior written consent of Beneficiary, which consent may be withheld in Beneficiary's sole discretion, assign or transfer its rights under this Deed of Trust or any of the Loan Documents. 56. SUBMISSION TO JURISDICTION GRANTOR AND GUARANTOR EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OF CALIFORNIA OR FEDERAL COURT SITTING IN ORANGE. COUNTY, STATF. OF CALIFORNIA OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS DEED 61 Doe p-WAs01 (207511-00265) 415009171,d 0&--0il2005Mrine 16 50 1 L J OF TRUST. GRANTOR AND GUARANTOR EACH MAY, AT ITS SOLE DISCRETION, ELECT THE STATE OF CALIFORNIA, ORANGE COUNTY, OR THE UNITED STATES OF AMERICA FEDERAL DISTRICT COURT HAVING JURISDICTION OVER ORANGE COUNTY AS THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. GRANTOR AND GUARANTOR EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM. 57. Azent for Receipt _of Process Grantor hereby irrevocably appoints Stephen K_ Bone, having an address at c/o The Robert Mayer Corporation, 660 Newport Center Drive, Suite 1050, Newport Beach, CA 92660 as its authorized agent to accept and acknowledge, on behalf of Grantor, service of any and all process which may be served in any suit, action or proceeding of the nature referred to in Section 56 hereof in any State or Federal court within Orange County, California. If such agent shall cease so to act, Grantor shall irrevocably designate and appoint without delay another such agent satisfactory to Beneficiary, and shall promptly deliver to Beneficiary written evidence of such other agent's acceptance of such appointment. 58. Service of Process To the extent permitted by applicable law, process in any suit, action or proceeding of' the nature referred to in Section 57 hereof may be served: (a) by registered or certified mail, postage prepaid, to Grantor or Guarantor, as applicable, at the address set forth above or to such other address of which Grantor or Guarantor, as applicable, shall have given Beneficiary written notice; or (b) if Grantor or Guarantor, as applicable, shall not have made an appearance within twenty-one (21) days after service in accordance with clause (a) of this Section, by hand delivery to the agent identified in Section 57 hereof, or such successor agent as shall have been identified in accordance with Section 57 hereof. Nothing in this Section shall affect the Beneficiary's right to serve process in any manner permitted by law, or limit Beneficiary's right to bring proceedings against Grantor or Guarantor in the courts of any other jurisdiction. 59. WAIVER OF JURY TRIAL GRAN -FOR, HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE, OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE NOTE, THIS DEED OF 'CRUST OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GRANTOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE. AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BENEFICIARY IS HEREBY AUTHORIZED TO FILE A 62 Dot 0 WAS01 (207511-00265) a 1600917%6,0&iO3r,005fr,me 16 50 COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GRANTOR. 60. Homestead Grantor hereby waives and renounces all homestead and exemption rights provided by the constitution and the laws of the United States and of any state, in and to the Property as against the collection of the Debt, or any part thereof. 61. CHOICE OF LAW THIS DEED OF TRUST SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SUCH JURISDICTION. 62. Time of Essence Time is of the essence of this Deed of "I'rust and of each and every term, covenant and condition herein. 63. Sumival All covenants, representations and warranties made herein shall survive the making of the Loan and the delivery of the Note and other Loan Documents. 64. No Third-PaM Beneficiary Rights Created The parties hereto expressly declare that it is their joint and mutual intention that this Deed of Trust and the transactions contemplated hereby shall not be construed as creating a third party beneficiary contract. and neither this Deed of Trust nor any of the other Loan Documents shall be construed as giving or conferring any rights or benefits whatsoever to or upon any other persons or entities other than Grantor, Guarantor and Beneficiary. 65. Discharge If all indebtedness secured hereby is promptly paid when due and all other provisions hereof are faithfully performed, the conveyance of the Property shall be null and void, otherwise to remain in full force and effect. 66. Maintaining Priority of Deed of Trust Grantor shall, at its expense, cause the recordation of this Deed of Trust and of any other instrument evidencing or securing the Note wherever such recording would or might be required in order to protect the first lien and priority of this Deed of Trust or such instrument against the claims of third parties. Grantor hereby covenants and agrees at all times, at its sole expense, take such other action and execute and record such other instruments as may be 63 Doc a WA501(207511.00265)41600917%-6.09/03/2003/rime 16 50 necessary or desirable to preserve and protect the first lien and priority of this Deed of Trust and all other instruments evidencing or securing the Note. 67. Costs (a) Grantor acknowledges and confirms that Beneficiary shall impose certain administrative processing and/or commitment fees in connection with (a) the extension, renewal, modification, amendment and termination of its loans, (b) the release or substitution of collateral therefor, (c) obtaining certain consents, waivers and approvals with respect to the Property, or (d) the review of any Lease or proposed Lease or the preparation or review of any subordination, non -disturbance agreement. Grantor further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, whether required by law, regulation, Beneficiary or any goverrunental or quasi -governmental authority. Grantor hereby acknowledges and agrees to pay, immediately, with or without demand, all such fees (as the same may be increased or decreased from time to time), and any additional fees of a similar type or nature which may be imposed by Beneficiary from time to time, upon the occurrence of any such event or otherwise. Wherever it is provided for herein that Grantor pay any costs and expenses, such costs and expenses shall include, but not be limited to, all legal fees and disbursements of Beneficiary, whether of retained firms, the reimbursement for the expenses of in-house staff or otherwise. (b) (1) Grantor shall pay all legal fees incurred by Beneficiary in connection with (A) the preparation of the Note, this Deed of Trust and the other Loan Documents; and (B) the items set forth in subsection (A) above, and (ii) Grantor shall pay to Beneficiary on demand any and all expenses, including legal expenses and attorneys' fees, incurred or paid by Beneficiary- in protecting its interest in the Property or Personal Property or in collecting any amount payable hereunder or in enforcing its rights hereunder with respect to the Property or Personal Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Beneficiary until such expenses are paid by Grantor. 68. Trustee (a) Beneficiary shall have the irrevocable power, to be exercised at any time and from time to time hereafter with or without cause, to substitute a trustee in place of the Trustee herein named, by an instrument in writing duly executed, acknowledged, and recorded among the land records of the jurisdiction where the Property is located and, when such instrument is so recorded, all the estate of the Trustee thus superseded shall terminate and all the right, title, and interest of such Trustee hereunder shall be vested in the trustee named as successor, and such successor trustee shall have the same powers, rights, and duties which the Trustee so superseded had under this Deed of Trust. The exercise of this right to appoint a successor trustee, no matter how often exercised, shall not be deemed an exhaustion of said right. Beneficiary shall have the tight to name one or more entities as a successor trustee hereunder. 64 Doc M WAS01 (207511 A0265) 41600917c6.OBiOi/2DO5rrime-16.50 (b) Trustee, by acceptance hereof, covenants faithfully to perform and fulfill the trusts herein created, being liable, however, only for gross negligence or intentional misconduct, and hereby waives any statutory fee. (c) Trustee may resign at any time upon giving ten (10) days' notice in Writing to Grantor and to Beneficiary. (d) Beneficiary hereby ratifies and confirms any and all acts which the herein - named Trustee, or its successor in this trust, shall do lawfully by virtue hereof. Grantor hereby agrees, on behalf of itself and of its heirs, executors, administrators and assigns, that the recitals contained in any deed or deeds executed in due form by Trustee or substitute trustee, acting under the provisions of this instrument, shall be prima facie evidence of the facts recited, and that it shall not be necessary to prove in any court, otherwise than by such recitals, the existence of any facts essential to authorize the executed and delivery of such deed or deeds and the passing of title thereby. (e) Trustee shall not be required to see that this Deed of Trust is recorded, nor be liable for its validity or its priority as a first deed of trust, or otherwise, nor shall Trustee be answerable or responsible for performance or observance of the covenants and agreement imposed upon Grantor or Beneficiary by this Deed of "Trust or any other agreement. Trustee, as well as Beneficiary, shall have authority in its discretion to employ agents and attorneys in the execution of this Deed of Trust and to protect the interest of Beneficiary hereunder, and to the extent permitted by law it shall be compensated and all expenses relating to the employment of such agents and/or attorneys, including expenses of litigation, shall be paid out of the proceeds of the saie of the Property conveyed hereby should a sale be had, but if no such sale be had. all sums by all remedies at law or in equity by which the indebtedness hereby secured may be recovered. (f) Grantor shall pay all costs, fees, commissions and expenses of the Trustee, its agent and counsel, in connection with the performance of its duties hereunder. independently. (g) if Trustee constitutes more than one individual, either may act 69. Ground Lease (a) Grantor shall (i) pay all rents, additional rents and other sums required to be paid by Grantor, as tenant under and pursuant to the provisions of the Ground lease as and When such rent or other charge is payable, (11) diligently perform and observe all of the terms, covenants and conditions of the Ground Lease on the part of Grantor, as tenant thereunder, to be performed and observed prior to the expiration of any applicable grace period therein provided, and (iii) promptly notify Beneficiary of the giving of any notice by the Ground Lessor, as landlord under the Ground Lease to Grantor of any default by Grantor in the performance or observance of any of the terms, covenants or conditions of the Ground Lease on the part of Grantor, as tenant thereunder, to be performed or observed and deliver to Beneficiary a true copy of each such notice. Grantor shall not, without the prior consent of Beneficiary, surrender the leasehold estate created by the Ground Lease or terminate or cancel the Ground Lease or modify, 65 Doc M WASO1 (207511-00265) 416004170,08iO3,2005rf3me 16 50 9 • change, supplement, alter or amend the Ground Lease, in any respect, either orally or in writing, and Grantor hereby assigns to Beneficiary, as further security for the payment of the Debt and for the performance and observance of the terms, covenants and conditions of this Deed of Trust, all of the rights, privileges and prerogatives of Grantor, as tenant under the Ground Lease, to surrender the leasehold estate created by the Ground Lease or to terminate, cancel, modify, change, supplement, alter or amend the Ground Lease, and any such surrender of the leasehold estate created by the Ground Lease or termination, cancellation, modification, change, supplement, alteration or amendment of the Ground Lease without the prior consent of Beneficiary shall be void and of no force and effect. If Grantor shall default in the performance or observance of any term, covenant or condition of the Ground Lease on the part of Grantor, as tenant thereunder, to be performed or observed, then, without limiting the generality of the other provisions of this Deed of Trust, and without waiving or releasing Grantor from any of its obligations hereunder, Beneficiary shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants and conditions of the Ground Lease, as applicable, on the part of Grantor, as tenant thereunder, to be performed or observed or to be promptly performed or observed on behalf of Grantor, to the end that the rights of Grantor in, to and under the Ground Lease shall be kept unimpaired and free from default, even though the existence of such event of default or the nature thereof be questioned or denied by Grantor or by any party on behalf of Grantor. If Beneficiary shall make any payment or perform any act or take action in accordance with the preceding sentence, Beneficiary will notify Grantor of the making of any such payment, the performance of any such act, or the taking of any such action. In any such event, subject to the rights of tenants, subtenants and other occupants under the Leases. Beneficiary and any person designated by Beneficiary shall have, and are hereby granted, the right to enter upon the Property at any time and from time to time for the purpose of taking any such action. Beneficiary may pay and expend such sums of money as Beneficiary deems necessary for any such purpose and upon so doing shall be subrogated to any and all rights of the landlord under the Ground Lease. Grantor hereby agrees to pay to Beneficiary immediately and without demand, all such sums so paid and expended by Beneficiary, together with interest thereon from the day of such payment at the Default Rate (as defined in the Note). All sums so paid and expended by Beneficiary and the interest thereon shall be secured by the legal operation and effect of this Deed of Trust. If the Ground Lessor, as landlord under the Ground Lease shall deliver to Beneficiary a copy of any notice of default sent by the Ground Lessor to Grantor, as tenant under the Ground Lease, such notice shall constitute full protection to Beneficiary for any action taken or omitted to be taken by Beneficiary, in good faith, in reliance thereon. Grantor shall exercise each individual option, if any, to extend or renew the term of the Ground Lease upon demand by Beneficiary made at any time within one (1) year of the last day upon which any such option may be exercised, and Grantor hereby expressly authorizes and appoints Beneficiary its attomev-in-fact to exercise any such option in the name of and upon behalf of Grantor, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest. Grantor will not subordinate or consent to the subordination of the Ground Lease to any mortgage, security deed, lease or other interest on or in the landlord's interest in all or any part of the Property, unless, in each such case, the written consent of Beneficiary shall have been first had and obtained. (b) So long as any portion of the Debt shall remain unpaid, unless Beneficiary shall otherwise consent, the fee title to the Land and the leasehold estate therein created pursuant to the provisions of the Ground Lease shall not merge but shall always be kept separate and 66 Doc A WASOI (207511-00265) d 1600917,6:0&'0JR005!Time 16 50 0 0 distinct, notwithstanding the union of such estates in Grantor, Beneficiary, or in any other person by purchase, operation of law or otherwise. Beneficiary reserves the right, at any time, to release portions of the Property, including, but not limited to, the leasehold estate created by the Ground Lease, with or without consideration, at Beneficiary's election, without waiving or affecting any of its rights hereunder or under the Note or the other Loan Documents and any such release shall not affect Beneficiary's rights in connection with the portion of the Property not so released. (c) (1) If the Ground Lease is terminated for any reason in the event of the rejection or disaffirmance of the Ground Lease pursuant to the United States Bankruptcy Code, I l U.S.C. § 101, et seq., as the same may be amended (the "Code") or any other law affecting creditor's rights, (i) Grantor, immediately after obtaining notice thereof, shall give notice thereof to Beneficiary, (ii) Grantor, without the prior written consent of Beneficiary, shall not elect to treat the Ground Lease as terminated pursuant to Section 365(h) of the Code or any comparable federal or state statute or law, and any election by Grantor made without such consent shall be void and (Ili) this Deed of Trust and all the liens, terms, covenants and conditions of this Deed of Trust shall extend to and cover Grantor's possessory rights under Section 365(h) of the Code and to any claim for damages due to the rejection of the Ground Lease or other termination of' the Ground Lease. In addition, Grantor hereby assigns irrevocably to Beneficiary, Grantor's rights to treat the Ground Lease as terminated pursuant to Section 365(h) of the Code and to offset rents under such Ground Lease in the event any case, proceeding or other action is commenced by or against the Ground Lessor under the Code or any comparable federal or state statute or law, provided that Beneficiary shall not exercise such rights and shall permit Grantor to exercise such rights with the prior written consent of Beneficiary, not to be unreasonably withheld or delayed, unless an Event of' Default shall have occurred and be continuing. (ii) Grantor hereby assigns to Beneficiary, Grantor's right to reject the Ground Lease under Section 365 of the Code or any comparable federal or state statute or law with respect to any case, proceeding or other action commenced by or against Grantor under the Code or comparable federal or state statute or law, provided the Beneficiary shall not exercise such right, and shall permit Grantor to exercise such right with the prior written consent of Beneficiary, not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. Further, if Grantor shall desire to so reject the Ground Lease, at Beneficiary's request, Grantor shall assign its interest in the Ground Lease to Beneficiary in lieu of rejecting such Ground lease as described above, upon receipt by Grantor of written notice from Beneficiary of such request together with Beneficiary's agreement to cure any existing defaults of Grantor under such Ground Lease. (iii) Grantor hereby assigns to Beneficiary, Grantor's right to seek an extension of the 60-day period within which Grantor must accept or reject the Ground Lease under Section 365 of the Code or any comparable federal or state statute or law with respect to any case, proceeding or other action commenced by or against Grantor under the Code or comparable federal or state statute or law, provided the Beneficiary shall not exercise such right, and shall permit Grantor to exercise such right with the prior written consent of Beneficiary, not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. Further, if Grantor shall desire to so reject the Ground Lease, at Beneficiary's request, Grantor shall assign its interest in 67 0«,1 WAS01(207511-00265)41600917,-60&'03/2005(rime 16 50 0 0 the Ground Lease to Beneficiary in lieu of rejecting such Ground Lease as described above, upon receipt by Grantor of written notice from Beneficiary of such request together with Beneficiary's agreement to cure any existing defaults of Grantor under such Ground Lease. (iv) Grantor hereby agrees that if the Ground Lease is terminated for any reason in the event of the rejection or disaffirmance of the Ground Lease pursuant to the Code or any other law affecting creditor's rights, any property not removed by Grantor as permitted or required by the Ground Lease, shall at the option of Beneficiary be deemed abandoned by Grantor, provided that Beneficiary may remove any such property required to be removed by Grantor pursuant to the Ground Lease and all costs and expenses associated with such removal shall be paid by Grantor within five (5) days of receipt by Grantor of an invoice for such removal costs and expenses. (v) if there is any inconsistency between any term, provision, restriction, condition or limitation of this Deed of 'Trust and the Ground Lease, the terms of the Ground Lease shall prevail. (vi) This Deed of Trust does not encumber in any way Ground Lessor's fee interest in the Property or Ground Lessor's interest in the Ground Lease, and this Deed of "Crust is fully subordinate to Ground Lessor's fee title and all of Ground Lessor's rights under the Ground Lease_ 70. Leasehold MortQaye Provisions (a) Beneficiary shall promptly send copies of any written notice of a Default hereunder to Ground Lessor. Ground Lessor shall have the right, but not the obligation, to cure any such Default described in such notice within the cure periods provided herein. Neither Ground Lessor's right to cure a Default nor the exercise of Ground Lessor's right to cure a Default shall constitute an assumption of liability by Ground Lessor under the Ground Lease. (b) Beneficiary shall not, without the prior written consent of Ground Lessor, permit this Deed of Trust to be cross -collateralized or cross -defaulted with any other loan or encumbrance, or permit this Deed of Trust to secure any obligations other than Grantor's obligations arising from the Loan and Loan Documents and any advances made by Beneficiary to protect Beneficiary's security interest in the Property. (c) Beneficiary shall not be permitted or authorized to devote the Property to any uses or to construct any improvements thereon, other than those uses or improvements provided for and authorized by the Ground Lease. 71. Local Law Provisions In the event of any conflict between the terms and provisions of this Section 71 and any other Section of this Deed of Trust, or if invalid under the applicable law of the state where the Property is located as to matters of creation, perfection and priority of liens and security interests, and foreclosure and other enforcement actions, the terms and provisions of this Section 71 shall govern and control. 68 DOOM WA501 (2075)1.00265)416009)7%.6.D 03R005/r,mr16.50 (a) Upon the occurrence of an Event of Default, Beneficiary and Trustee shall have each of the following rights and remedies: (i) Entry on Property, _Etc. With or without notice, and without releasing Grantor from any of the Debt, and without becoming a mortgagee in possession, to enter upon the Property and to do such acts and things as Beneficiary or Trustee deem necessary or desirable in order to inspect, investigate, assess and protect the security hereof or to cure any Event of Default, including, without limitation: (i) to take and possess all documents, books, records, papers and accounts of Grantor or the then owner of the Property; (ii) to make, terminate, enforce or modify leases of the Property upon such terms and conditions as Beneficiary deems proper; (iii) to make repairs, alterations and improvements to the Property necessary, in Trustee's or Beneficiary's sole judgment, to protect or enhance the security hereof; (iv) to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee hereunder; (v) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority hereto, the judgment of Beneficiary or Trustee being conclusive as between the parties hereto; (vi) to obtain insurance; (vii) to pay any premiums or charges with respect to insurance required to be carried hereunder; (viii) to obtain a court order to enforce Beneficiary's right to enter and inspect the Property pursuant to California Civil Code Section 2929.5, in which regard the decision of Beneficiary as to whether there exists a release or threatened release of Hazardous Substances onto the Property shall be deemed reasonable and conclusive as between the parties hereto; (ix) to have a receiver appointed pursuant to California Code of Civil Procedure Section 564 to enforce Beneficiary's rights to enter and inspect the Property for Hazardous Substances; and/or (x) to employ legal counsel, accountants, engineers, consultants, contractors and other appropriate persons to assist them; (ii) Appointment of Receiver. To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Property as a matter of strict right and without regard to: (i) the adequacy of the security for the repayment of the Debt; (ii) the existence of a declaration that the Debt is immediately due and payable; or (iii) the filing of a notice of an Event of Default; and Grantor consents to such appointment; (iii) Judicial Foreclosure; Injunction. To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the covenants of Grantor hereunder, and Grantor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Grantor waives the defense of ]aches and any applicable statute of limitations; (iv) Nonjudicial Foreclosure. To execute a written notice of such Event of Default and of the election to cause the Property to be sold to satisfy the Debt. Trustee shall give and record such notice as the law then requires as a condition precedent to a trustee's sale. When the minimum period of time required by law after 69 Doc a WAS01 (20751 I-00265) 41600917%6.0&b312005fT.me 16 50 such notice has elapsed, Trustee, without notice to or demand upon Grantor except as required by law, shall sell the Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at time of sale. Neither Grantor nor any other person or entity other than Beneficiary shall have the right to direct the order in which the Property is sold. Subject to requirements and limits imposed by law, Trustee may, from time to time postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time may postpone the sale by public announcement at the time and place fixed by the preceding postponement. A sale of less than the whole of the Property or any defective or irregular sale made hereunder shall not exhaust the power of sale provided for herein. Trustee shall deliver to the purchaser at such sale a deed conveying the Property or portion thereof so sold, but without any covenant or warranty. express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustee. Grantor or Beneficiary may purchase at the sale; Upon sale of the Property at any judicial or nonjudicial foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or any portion of the Debt. In determining such credit bid, Beneficiary may, but is not obligated to, take into account all or any of the following: (1) appraisals of the Property as such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Property prior to foreclosure; (ii.i) expenses and costs which Beneficiary anticipates will be incurred with respect to the Property after foreclosure, but prior to resale, including, without limitation, costs of' structural reports and other due diligence, costs to carry the Property prior to resale, costs of resale (e.g. commissions, attorneys' fees, and taxes), costs of any hazardous substances clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit. costs of defending or settling litigation affecting the Property; (iv) the fact of additional collateral (if any), for the Debt; and (v) such other factors or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the above, Grantor acknowledges and agrees that: (w) Beneficiary is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this paragraph does not impose upon Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Beneficiary's credit bid need not have any relation to any loan -to -value ratios specified in the Loan Documents or previously discussed between Grantor and Beneficiary; and (z) Beneficiary's credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the Property. (v) Multiple Foreclosures. To resort to and realize upon the security hereunder and any other security now or later held by Beneficiary concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both, and to apply the proceeds received upon the Debt all in such order and manner as Trustee and Beneficiary or either of them determine in their sole discretion: 70 t)ocy wnsoi(207511-00265)41600917.6o3.93Q003/riMe 16 50 0 0 (vi) Civil Code Section 736. (A) Seek a judgment that Grantor has breached its covenants, representations and/or warranties with respect to the environmental matters set forth in the Loan Documents by commencing and maintaining an action or actions in any court of competent jurisdiction for breach of contract pursuant to California Code of Civil Procedure Section 736, whether commenced prior to or after foreclosure of the Property, and seek the recovery, without limitation, of any and all costs, damages, expenses, fees, penalties, fines, judgments, indemnification payments to third parties, and other out-of-pocket costs or expenses incurred or advanced by Beneficiary relating to the cleanup, remediation or other response action required by any Environmental Law or to which Beneficiary believes necessary to protect the Property, it being conclusively presumed between Beneficiary and Grantor that all such costs and other amounts incurred or advanced by Beneficiary relating to the cleanup, remediation, or other response action of or to the Property have been made by Beneficiary in good faith; and (B) bring a separate action to enforce the provisions of the Loan Documents relating to the environmental condition of the Property and Beneficiary's right to inspect same as set forth in Section 37 hereof (such right to a separate action shall include, without limitation, the right to an action in accordance with the provisions of California Code of Civil Procedure Section 736, which separate action shall in no way be deemed to be an action within the meaning of subdivision (a) of California Code of Civil Procedure Section 726, or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of California Code of Cavil Procedure Sections 580a, 580b, 580d, or subdivision (b) of Section 726); (vii) Civil Code Section 726. Waive Beneficiary's lien against the Property or any portion thereof, whether fixtures or personal property, to the extent such Property is found to be environmentally impaired in accordance with California Code of Civil Procedure Section 726.5 and to exercise any and all rights and remedies of an unsecured creditor against Grantor and all of Grantor's assets and property for the recovery of any deficiency and Environmental Costs, including, but not limited to, seeking an attachment order under California Code of Civil Procedure Section 483.010 (as between Beneficiary and Grantor, for purposes of California Code of Civil Procedure Section 726.5, Grantor shall have the burden of proving that Grantor or any related party was not in any way negligent in permitting the release or threatened release of the Hazardous Substances. and Grantor hereby affirms that Section 35(e) herein is intended as Beneficiary's written request for information concerning the environmental condition of the Property under the terms of California Code of Civil Procedure Section 726.5); (viii) Rights to Collateral. To exercise all rights "Trustee or Beneficiary may have with respect to the Collateral under this Deed of Trust, the Uniform Commercial Code, or otherAise at law; and (ix) Other Rights. To exercise such other rights as Trustee or Beneficiary may have at law or in equity or pursuant to the terms and conditions of this Deed of Trust or anv of the other Loan Documents. In connection with any sale or sales hereunder, Beneficiary may elect to treat any of the Property which consists of a right in action or which is property that can be severed from 7I Doc N-wAso1(207511-00265)41600917.6091031200s/rime 16 50 0 0 the Property (including, without limitation, any improvements forming a part thereof) without causing structural damage thereto as if the same were personal property or a fixture, as the case may be, and dispose of the same in accordance with applicable law, separate and apart from the sale of the Property. Any sale of Collateral hereunder shall be conducted in any manner permitted by the Uniform Commercial Code. (b) Application of Foreclosure Sale Proceeds. If any foreclosure sale is effected, Trustee shall apply the proceeds of such sale in the following order of priority: First, to the costs, fees and expenses of exercising the power of sale and of sale, including, without limitation, the payment of the Trustee's fees and attorneys' fees permitted pursuant to subdivision (b) of California Civil Code Section 2924d and subdivision (b) of Section 2924k; Second, to the payment of the Debt which are secured by this Deed of Trust, in such order as Beneficiary shall determine in its sole discretion; "Third, to satisfy the outstanding balance of obligations secured by any junior liens or encumbrances in the order of their priority; and Fourth, to the Grantor or the Grantor's successor in interest. or in the event the Property has been sold or transferred to another, to the vested owner of record at the time of the "Trustee's sale. (c) Fixture Filing. This Deed of Trust is being recorded as a fixture filing and covers goods which are, and goods which are to become, fixtures on the Premises, including, without limitation, the Fixtures. The debtor is Grantor, whose mailing address is set forth in the first paragraph of this Deed of Trust. The secured party is Beneficiary, and information regarding the security interest may be obtained from Beneficiary at the address set forth in the first paragraph of this Deed of Trust. (d) Civil Code Section 2954.10. Notwithstanding any provision to the contrary, Grantor hereby agrees to pay the "Deferred Financing Fee," if any, due under Section 11 of the Note, upon an acceleration of the maturity date of the obligations secured hereby upon the conveyance of any right, title, or interest in any of the Property or any other property which is collateral for the obligations secured hereby. Grantor hereby waives any and all rights of Grantor under California Civil Code Section 2954.10, as amended from time to time, including the right to prepay the obligations secured hereby without penalty and the right to raise California Civil Code Section 2954.10 as a defense to any claim, exaction and collection by Beneficiary of all amounts owing under Section I 1 of the Note. By signing this provision where indicated below, Grantor hereby agrees to the waiver and agreement set forth in this Section, and Grantor hereby acknowledges and agrees that Grantor has given individual weight to the consideration received by Grantor for the waiver and agreement set forth in this Section, and Grantor has received adequate consideration for the waiver and agreement set forth in this Section. (e) Civil Code Section 2822. In the event that, at any time, any surety exists that is liable upon only a portion of Grantor's obligations under the Loan Documents and Grantor provides partial satisfaction of any such obligation(s), Grantor hereby waives any right it would otherwise have, under Section 2822 of the California Civil Code, to designate the portion of the obligation to be satisfied. The designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents, be made by Beneficiary rather than Grantor. 72 Doc M WAS01 (207511.00265) 41600917.-6,0&03[2005ITfine 16 50 (f) Civil Code Section 1265.210. Grantor hereby relinquishes and waives any rights and remedies it may have pursuant to California Civil Code Sections 1265.210 et seq. [SIGNATURE APPEARS ON THE FOLLOWING PAGE] 73 Doc M.WASO1 (207511-00265) a1600917%6:08M1/20051iimc 16 50 • • IN WITNESS WHEREOF, Grantor has duly executed and delivered this Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing under seal as of the day and year first above written. GRANTOR: PCH BEACH RESORT, LLC, a California limited liability company By: Grand Resort, LLC, a California limited liability company, its managing member By: RLM Management, Inc., a California corporation, its manager By: Name: Robcrt . ver Jr. "Title: Presid t 74 DOOR WA501(2075)].00265}4}6009F7v7.08115/2005ITiew 1536 0 STATE OF CALIFORNIA ) ) SS COUNTY OF ORANGE ) On August 1 2005, before me, Rg-z'< m ow, -, 5�1 personally appeared Robert L. Mayer, Jr., proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal. Notary Public (SEAL) REX MORISHITA CornrnWion # 1414842 r,� Q otary Public - CaNtorrlta Orange County - My Comm. Ex0M MaY 1, 2007 75 Doc N WAS01 (207511.00265) 41600917v6.0810312005,7ime 16 50 • EXHIBIT "A" Legal Description of Land ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS: PARCEL A: LOT 1 OF TRACT NO 50 INCLUSIVE OF CALIFORNIA. PARCEL B: 15535, AS SHOWN ON A MAP FILED IN BOOK 790, PAGES 44 TO MISCELLANEOUS MAPS, RECOR-DS OF ORANGE COUNTY, A NON-EXCLUSIVE, REVOCABLE LICENSE TO UTILIZE THAT CERTAIN AREA DEFINED AS "GRAND COAST RESORT IMPROVEMENT AREA" IN THAT CERTAIN "LICENSE AGREEMENT TO PROVIDE LANDSCAPING AND OTHER IMPROVEMENTS IN THE PUBLIC RIGHT-OF-WAY" ("AGREEMENT") RECORDED APRIL 18, 2001 AS INSTRUMENT NO. 20010232765 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AND DELINEATED ON EXHIBIT "F" ATTACHED THERETO, FOR THE INSTALLATION, MAINTENANCE, REPAIR AND REPLACEMENT OF LANDSCAPING AND OTHER IMPROVEMENTS, AS SAID LICENSE IS SET FORTH IN PARAGRAPH 2 OF THE AGREEMENT. PARCEL C: A NON-EXCLUSIVE, REVOCABLE LICENSE TO UTILIZE THAT CERTAIN AREA DEFINED AS "OVERCROSSING IMPROVEMENT AREA" IN THAT CERTAIN "LICENSE AGREEMENT TO PROVIDE LANDSCAPING AND OTHER IMPROVEMENTS IN THE PUBLIC RIGHT-OF-WAY" ("AGREEMENT") RECORDED APRIL 18, 2001 AS INSTRUMENT NO. 20010232765 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AND DELINEATED ON EXHIBIT "G" ATTACHED THERE"CO, FOR THE INSTALLATION, MAINTENANCE, REPAIR AND REPLACEMENT OF OVERCROSSING AND OTHER IMPROVEMENTS, AS SAID LICENSE IS SET FORTH IN PARAGRAPH 2 OF THE AGREEMENT. 76 Doc p.WAS01(207 511-00265)a1600917�7:0&'1512005,'1-ime 15 36 0 • PARCEL D: A NON-EXCLUSIVE APPURTENANT EASEMENT UPON, IN, OVER, UNDER AND ALONG THOSE PORTIONS OF THE LAND AS DESCRIBED IN THAT CERTAIN "WALL AND LANDSCAPING EASEMENT AND MAINTENANCE AGREEMENT", DATED MAY 30, 2003, EXECUTED BY AND BETWEEN PCH BEACH RESORT, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY AND PLC/LYON WATERFRONT LLC, A DELAWARE LIMITED LIABILITY COMPANY RECORDED JUNE 12, 2003 AS INSTRUMENT NO. 2003000690325, OF OFFICIAL RECORDS OF ORANGE COUNTY, STATE OF CALIFORNIA. 77 Doc 4_WAS01(207511-M65)41606417v7,48JISr2005rTime-15 36 i • EXHIBIT "B" LEASES Lease between PCH Beach Resort, LLC ("Landlord") and Food Pantry, Ltd., d/b/a Surf City Trading Co. by Lamonts, dated 9/5/02, for retail space #3.454 and 93.572 (totaling approximately 1,850 sq. ft.) for operation of a news, gift and sundries shop. 2. Lease between Landlord and L'Zev, LLC, dated 10/10/02, for retail space #3.464 and storage room #3.480 (totaling approximately 600 sq. ft. of retail space) for operation of a jewelry and accessories store. 3. Lease between Landlord and Rooxs, Inc. d/b/a Toes on the Nose, dated 5I1/04, for approximately 1,350 sq. ft. of retail space, for a Surf Adventure/Tour Shop. 4. Lease between Landlord and Mark Burkhardt and Margaret A. Howell d/b/a The Gallery HB, dated 3/19/04, for 1,550 sq. 11. of retail space, for an Art Gallery. 78 Doc R 14AS01 (207511-00265) 41600917%-6 0&-03f2005Ir,me 16 50 E • Government Code 27361.7 i certify under the penalty of perjury that the notary seal on this document read as follows: Name of Notary: Rex Morishita Date Commission Expires: May 1, 2007 County where bond is Filed: Orange Commission No.: 1414842 Manufacturer/Vendor No.: NNA1 Place of execution - Newport Beach Ioq� FIDELITY NATIONAL TITLE COMP NY Date - August 17, 2005 • BENEFICIARY: GMAC COMMERCIAL MORTGAGE BANK, a Utah industrial hank By: Name: __Lewis 1) 12fiId Title: 0 0 COMMONWEALTH OF VIRGINIA ) ) SS COUNTY OF FAIRFAX } On August �Lq,, �209S1 before me, ` r n , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal. (SEAL) Notary P lic Rsyo Aobinsm NOTM PUMK [ornrnontUwM of NrrgInfa commission &PIIS 1051= 0 Government Code 27361.7 I certify under the penalty of perjury that the notary seal on this document lead as follows: Name of Notary: ASYA ROBINSON Date Commission Expires: 10/31/08 State: COMMONWEALTH OF VIRGINIA Place of execution - Newport Beach Date - August 22, 2005 FIDELI AT NAL TITLE COMPANY -0 0 Loan No.: 01-1049864 $115,000,000.00 EXECUTION COPY AMENDED AND RESTATED DEED OF TRUST NOTE August A, 2005 WHEREAS, on October 15, 2004, GINIAC COININIERCIAL MORTGAGE BANK, a Utah industrial bank ("Payee"), made a mortgage loan to PCH BEACH RESORT, LLC, a California limited liability company, having an address c!o The Robert Mayer Corporation, 660 Newport Center Drive, Suite 1050, Newport L3cach, California 92660 ("Maker"), in the original principal amount of Ninety -Five Million and No/100 Dollars ($95,000,000.00) (the "Original Loan"); WHEREAS, the Original Loan is evidenced by that certain Deed of Trust Note dated as of October 15, 2004 executed by iviaker in favor of Payee (the "Original Note"), and secured by, inter alga (i) that certain Leasehold Deed of Trust, Assignment of Leases and Profits Security Agreement and Fixture Filing dated as of October 15, 2004 executed by Maker in favor of Payee recorded on October 15, 2004, as Instrument No. 04-934783 and re -recorded on October 26, 2004 as Instrument No. 04-963378 (the "Original Deed of Trust"); and (h) that certain Guaranty dated as of October 15, 2004 executed by Stephen K. Bone, an individual, and Robert L. Mayer, an individual (collectively, jointly and severally, the "Guarantor") for the benefit of Payee (the "Original Guaranty"; such Original guaranty, together with the Original Note, and the Original Deed of Trust, and all other documents evidencing,, securing, guaranteeing, governing or relating to the Original Loan are hereinafter collectively referred to as the "Original Loan Documents"); WHEREAS, Maker and Payee have agreed to refinance the Original Loan and increase the amount of Maker's indebtedness to Payee pursuant to the terms hereof, and amend and restate the Original Loan Documents in their entirety; WHEREAS, Maker and Payee have agreed. to amend and restate the Original Note in its entirety by executing and delivering this Amended and Restated Deed of Trust Note (as hereby amended and restated, the "Note") to refinance the Original Loan to an amount equal to One 1-lundred Fifteen Million and No/l 00 Dollars ($ 115,000,000.00); and WHEREAS, concurrently herewith, Maker, Payee and certain other parties are executing and delivering that certain (i) Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing of even date herewith (the "Deed of Trust") which amends and restates the Original Deed of Trust in its entirety, and (ii) Amended and Restated Guaranty of even date herewith which amends and restates the Original Guaranty in its entirety. Dock WASOI (20-,511-00265) a 1600918vi.0810?R005!Time_16 35 NOW THEREFORE, FOR VALUE RECEIVED, Maker and Payee represent, warrant and agree that the Original Note is hereby amended and restated in its entirety as follows: Maker promises to pay to the order of Payee, at one of its principal places of business at 6955 Union Park Center, Suite 330, Midvale, Utah 84047, Attn: President, or at such place as the holder hereof may from time to time designate in writing, the principal sum of ONE HUNDRED FIFTEEN MILLION AND N01100 DOLLARS ($1I5,000,000.00) (the "Loan"), in lawful money of the United States of America, with interest thereon to be computed on the unpaid principal balance from time to time outstanding at the Applicable Interest Rate (as such term is defined in Section 2 hereof), and to be paid in monthly installments on the first (lst) day of each calendar month, commencing on the second (2nd) full calendar month after the date hereof, through the Applicable Maturity Date (as defined below), interest only is payable, in arrears, at the Applicable Interest Rate, calculated from time to time in accordauzce with Section 3 hereof. The entire outstanding principal balance, together with accrued and unpaid interest and any other amounts due under this Note, shall be due and payable on the Applicable Maturity Date (as such term is defined in Section 1(b) hereof) of the Loan, as determined in accordance with Section 1 hereof or any earlier acceleration of sums due hereunder. Capitalized terms not defined herein shall have the meanings ascribed thereto in the Deed of Trust affecting the real property and improvements known as the "Hyatt Regency Huntington Beach Resort & Spa" and Iocated at 21500 Pacific Coast Highway in Huntington Beach, California 92648 (the "Property"). Maker has the option, effective at any time during the term of the Loan, to arrange for the automatic N%ire transfer, on the first day of each calendar month, of the amounts required to be paid hereunder from Maker's bank account to an account designated by Payee pursuant to the terms and conditions of an automatic payment authorization form, substantially in the form attached as Exhibit "A" hereto. 1. Loan Term. (a) The Loan shall mature on November 1, 2007 (the "Initial Maturity Date"}, subject to extension as provided in subsection 1(b) below. (b) Maker shall have two (2) options to extend the term of the Loan, for an additional twelve (12) month period each, with the first (1st) such extension period pursuant to the valid exercise of the first (1st) such extension option beginning on the first (1st) day following the Initial Maturity Date (the "First Extension Period") and, if so extended, the Loan shall mature on November 1, 2008 (the "First Extended Maturity Date"), and the second (2nd) extension period pursuant to the valid exercise of the second (2nd) such option beginning on the first (1 st) day following the First Extended Maturity Date (the "Second Extension Period") and, if so extended the Loan shall mature on November 1, 2009 (the "Second Extended Maturity Date"); the Initial Maturity Date, the First Extended Maturity Date or the Second Extended 2 Dock WAS01(207511-00265)416009180.08.+03R005/rime.16 35 Maturity Date, as applicable, are hereinafter referred to as the "Applicable Maturity Date"), subject to satisfaction of the following conditions: (i) Not more than ninety (90) days and not less than forty-five (45) days prior to the Initial Maturity Date or the First Extended Maturity Date, as applicable, Maker shall give Payee written notice of its election to extend the term of the Loan (the "Election Notice"); (ii) The Election Notice shall be accompanied by the payment in immediately available funds of an extension fee in the amount of Two Hundred Eighty -Seven Thousand Five Hundred and No/100 Dollars ($287,500.00) and other reasonable fees and charges, including servicing fees, as determined by Payee (the "Extension Fee"), together with any other reasonable internal administrative fees or costs incurred by Payee in connection therewith to be reimbursed to Payee; (ill) At the time the Election Notice is given and on the Initial Maturity Date or the First Extended Maturity Date, as applicable, no Event of Default (as such term is defined in Section 7 hereof) shall have occurred, and no event which, with the passage of time or the giving of notice, or both, would constitute an Event of Default, shall have occurred and be continuing; (iv) The Debt Service Coverage Ratio (as such term is defined in the Deed of Trust) for both (A) the twelve (12) month period immediately preceding the date of the Election Notice and (13) the twelve (12) month period immediately preceding the First Extension Period or the Second Extension Period, as applicable, shall not be less than 1.35:1.0 based on a mortgage loan constant of not less than nine and five -tenths percent (9.5%), based upon the calculation of NOI (as defined in the Deed of Trust) inclusive of a four percent (4%) replacement reserve; provided, however, that Maker shall be entitled to prepay principal sums due under the Loan, on or before the Initial Maturity Date or the First Extended Maturity Date, as applicable, in order to satisfy the foregoing ratios; (v) At the time the Election Notice is given, Maker shall obtain an interest rate cap (the "Rate Cap"), acceptable to Beneficiary in all respects, which shall in no event be higher than the Rate Cap derived as follows: ((NO[ / 1.10) / $115,000,000.00) — 3.50% (vi) If so requested by Payee in writing, Maker shall have provided Payee with: (A) an updated title report and/or endorsement acceptable to Payee; (13) updated estoppel certificate from Manager; (C) updated estoppel certificate from the Redevelopment Agency regarding the Ground Lease (as such terms are defined in the Deed of Trust); (D) a suitable interest rate protection agreement in form and content acceptable to Payee, in an amount to be determined by Payee, which agreement shall be collaterally assigned to Payee; and (E) such other updated reports or information as Payee, in connection with a then -existing material condition, may request in its commercially reasonable and good faith discretion consistent with the highest standards and practice of similar institutional Payees making loans similar to the Loan. 3 Doca.WAs01(207511-002651d160091ev7,0&-,0J12005.rrime-1635 (vii) Maker shall execute and deliver such documentation and/or title endorsements in connection with the extension of the Loan as Payee reasonably may request, including, without limitation, such modifications to the Loan Documents as Payee, its counsel or title agent may request. 2. Applicable Interest Rate. For the purpose of computing interest due on this Note, the Applicable Interest Rate shall be the sum of (i) the Current Index (defined below) plus (ii) the Margin (defined below) (the "Applicable Interest Rate"). For purposes of this Section, the following definitions shall apply: (a) As used herein, the term "Business Day" shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business. (b) As used herein, the term "Current Index" shall mean the published Index (defined below) that is available on the Rate Adjustment Date (defined below). (c) As used herein, the term "Index" shall mean the greater of (a) the average of London interbank offered rates ('11110R") for a term of one month and (b) two hundred twenty-five (225) basis points ("LIBOR Floor"). The one month LIBOR (in U.S. Dollars) is obtained from the appropriate Bloomberg display page available as of the close of business on the last Business Day immediately preceding the Rate Adjustment Date. In the event the LIBOR cannot be obtained from Bloomberg, then Payee shall use the weekly average yield on United States Treasury Securities adjusted to a constant maturity of one (1) year, as made available by the Federal Reserve Board forty-five (45) days prior to each Rate Adjustment Date. (d) As used herein, the term "Margin" shall mean three hundred fifty (350) basis points, which is equivalent to three and five -tenths of one percent (3.50%). (e) As used herein, the term "Rate Adjustment Date" shall mean the first day of each month. If Payee at any time determines, in its sole but reasonable discretion, that it has miscalculated the amount of the Applicable Interest Rate, then Payee shall give notice to Maker of the corrected amount of the Applicable Interest Rate, and (i) if the corrected Applicable Interest Rate represents an increase in the applicable monthly payment, Maker shall, within ten (10) calendar days thereafter, pay to Payee any sums that Maker would have otherwise been obligated under this Note to pay to Payee had the amount of the Applicable Interest Rate not been miscalculated, or (ii) if the corrected amount of the Applicable Interest Rate results in an overpayment by Maker to Payee, and Maker is not otherwise in breach or default under any of the terms and provisions of the Note, the Deed of Trust or any other Loan Document evidencing or securing the Note, then Payee shall thereafter pay to Maker the sums that Maker would not have otherwise been obligated to pay to Payee had the amount of the Applicable Interest Rate not been miscalculated. 4 Doc k-WAS01(207511-00265)31600919v708103R005/rimt:16 35 0 3. Calculation of Interest; Application of Payments. (a) Interest shall be paid in arrears and shall be computed on the basis of a three hundred sixty (360)-day year and shall be charged on the principal balance outstanding from time to time for the actual number of days elapsed. (b) The LIBOR rate, and the amount of interest payable monthly, shall be recalculated at each Rate Adjustment Date. (c) Payments under this Note shall be applied in accordance with the Deed of Trust. All amounts due under this Note shall be payable without setoff, counterclaim or any other deduction whatsoever. 4. BAL,LOON PAYMENT. MAKER UNDERSTANDS AND ACKNOWLEDGES THAT THIS NOTE AND THE OTHER LOAN DOCUMENTS DO NOT PROVIDE FOR AMORTIZATION OF THE PRINCIPAL SUM AND, THEREFORE, UPON THE APPLICABLE. MATURITY DATE OR EARLIER ACCELERATION, A BALLOON PAYMENT OF THE THEN OUTSTANDING BALANCE OF THE PRINCIPAL SUNI WILL BE REQUIRED, ALONG WITH PAYMENT IN FULL OF ALL OTHER SUMS DUE HEREUNDER. 5. Security for the Loan. (a) This Note is secured by: (1) the Deed of `!'rust; (ii) an Amended and Restated Assignment of leases, Rents and Profits dated as of the date hereof'hetween Maker and Payee (the "Ass_�nt"); (iii) an Amended and Restated Enviroiuncntal Indemnity Agreement dated as of the date hereof among Payee, !`Maker, Stephen K. Bone and Robert L. Mayer (such individuals are hereinafter collectively referred to as "Guarantors") (the "Environmental Agreement"); (iv) an Amended and Restated Guaranty of Recourse Obligations dated as of the date hereof among Guarantors and Payee (the "Guaranty"); (v) an Amended and Restated Assignment of Contracts, Licenses, Permits, Agreements, Warranties and Approvals, dated as of the date hereof between Maker and Payee (the "Contract Assignment"); (vi) an Amended and Restated Replacement Reserve Agreement dated as of the date hereof between Maker and Payee (the "Replacement Reserve"); and (vii) such other documents now or hereafter executed by Maker and/or others and by or in favor of Payee, which wholly or partially secure or guarantee payment of this Note including, without limitation, any collateral assignments, reserve and/or escrow accounts and Uniform Commercial Code financing Statements (such other documents, collectively, the "Other Security Documents"). (b) As used herein, the term "Loan Documents" means, collectively, this Note, the Deed of Trust, the Assignment, the Environmental Agreement, the Guaranty, the Contract Assignment, the Replacement Reserve, the Other Security Documents and any and all other documents executed as of the date hereof in connection with the Loan. 6. Late Charge. If any sum payable under this Note is not paid prior to the fifth (5th) day after the date such payment is due (other than at maturity or earlier acceleration), Maker shall pay to Payee on demand an amount equal to the lesser of: (i) five percent (5%) of 5 Doc M WAS01 (207511-00265) 41600918v7.09107l2005lrime.l6 35 • 0 such overdue and unpaid sum or (ii) the maximum lawful rate of interest permitted on the overdue obligation outstanding for the period for which such amount is overdue, to defray the expenses incurred by Payee in handling and processing such delinquent payment and to compensate Payee for the loss of the use of such delinquent payment, and such additional amount shall be secured by the Deed of Trust and the other Loan Documents. The additional payments required under this paragraph shall be in addition to and shall in no way limit any other rights and remedies provided for in this Note, the Deed of Trust or any of the Loan Documents, as well as all other remedies provided by law. 7. Events of Default. The entire outstanding principal balance of this Note, together with all accrued and unpaid interest thereon and all other sums due under the loan Documents (all such sums, collectively, the "Debt"), or any portion thereof, shall without notice become immediately due and payable at the option of Payee: (a) if any payment required in this Note is not paid prior to the fifth (5th) day after the date when due or on the Applicable Maturity Date; (b) upon the occurrence of any other default under this Note, which continues more than thirty (30) days following written notice thereof from Payee; provided, however, that if the cure of such default cannot reasonably be accomplished within such thirty (30) day period and Maker shall have promptly and diligently commenced to cure such default .within such thirty (30) day period, then the period to cure shall be deemed extended for up to an additional sixty (60) days from Payee's notice of such default so long as Maker diligently and continuously proceeds to cure such default to Payee's satisfaction; or (c) upon the happening of any other Event of Default under and as defined in the Deed of Trust (each of the foregoing, an "Event of Default"). In the event that Payee retains counsel to collect the Debt or to protect or foreclose the security provided in connection herewith, Maker also agrees to pay on demand all costs of collection incurred by Payee, including attorneys' fees for the services of counsel whether or not suit is brought. In addition, the prevailing party shall be entitled to recover attorney fees in any suit or action on appeal. 8. Default Rate Interest. Maker does hereby agree that upon the occurrence of an Event of Default, including Maker's failure to pay the Debt in full on the :applicable Maturity Date, Payee shall be entitled to receive, and Maker shall pay, interest on the entire outstanding principal balance and any other amounts due at the rate equal to the Applicable Interest Rate plus five percent (5%) (the "Default Rate"), but not to exceed the maximum rate permitted by applicable law. Interest shall accrue and be payable at the Default Rate from the occurrence of the Event of Default until all such Events of Default have been frilly cured. The Default Rate interest shall be deemed secured by the Deed of Trust. This provision, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Payee by reason of the occurrence of any Event of Default. The additional payments required under this paragraph shall be in addition to and shall in no way limit any other rights and remedies provided for in this Note, the Deed of Trust or any of the Loan Documents, as well as all other remedies provided by law. 9. Limitations on Recourse. (a) Subject to the qualifications set forth in this Section, neither Maker nor any Guarantor nor any affiliate, partner, member, shareholder, officer or director of either of them shall be personally liable either at law or in equity for the repayment of the Debt or the failure of performance of any other obligation evidenced by the Note or 0 Doc 0-WASGI (207511.W265) 41600918r7 0810312005/r[me 16 35 0 _0 contained in the Deed of Trust or the Other Security Documents, and Payee will satisfy any judgments, orders or decrees on account of the failure to repay such Debt and/or the failure to perform any such obligation, from the Property and any other real or personal property, tangible or intangible, as Maker, any Guarantor or any other entity shall have pledged or assigned to secure this Note by any of the Loan Documents, except that Payee may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Payee to enforce and realize upon this Note, the Deed of Trust, the Other Security Documents, and the interests in the Property and any other collateral given to Payee pursuant to the Deed of Trust and the Other Security Documents; provided, however, that, except as specifically provided in this Section, any judgment in any such action or proceeding shall be enforceable against Maker only to the extent of Maker's interest in the Property and in any other collateral given to Payee. Payee, by accepting this Note, the Deed of Trust and the Other Security Documents, agrees that it shall not sue for, seek or demand any deficiency judgment against Maker in any such action or proceeding, under, by reason of or in connection with the Deed of Trust, the Other Security Documents or this Note_ The provisions of this Section shall not, however: (i) constitute a waiver, release or impairment of any obligation evidenced or secured by the Deed of Trust, the Environmental Agreement, the Guaranty or the Other Security Documents or this Note; (ii) impair the right of Payee to name Maker as a party defendant in any action or suit for foreclosure and sale under the Deed of Trust; (iii) affect the validity or enforceability of any guaranty or indemnity made in connection with the Deed of Trust, this Note or the Other Security Documents; (iv) impair the right of Payee to obtain the appointment of a receiver; (v) impair the enforcement of the Contract Assignment; (vi) impair the right of Payee to bring suit with respect to fraud or misrepresentation by Maker or any other person or entity in connection with the Deed of Trust, this Note, the Environmental Agreement, the Guaranty or the Other Security Documents; (vii) affect the validity or enforceability of the Environmental Agreement or limit the liability of Maker or any Guarantor thereunder; or (viii) affect the validity or enforceability of the Guaranty or limit the liability of any Guarantor thereunder. (b) Nothing herein shall be deemed to be a waiver of any right which Payee may have under Section 506(a), 506(b), l 111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured by the Deed of Trust or to require that all collateral shall continue to secure all of the debt owing to Payee in accordance with this Note, the Deed of Trust, the Environmental :agreement, the Guaranty and the Other Security Documents. (c) Notwithstanding the foregoing provisions of this Section or any other provision in the Loan Documents, Maker and Guarantors, jointly and severally, shall be fully liable for and shall indemnify Payee for any or all loss, cost, liability, judgment, claim, damage or expense sustained, suffered or incurred by Payee (including, without limitation, Payee's attorneys' fees) arising out of or attributable or relating to: (i) fraud or misrepresentation by Maker or any Guarantor in connection with the Loan; 7 Doc# WAs01(207511-00265)41600918v706A3R005lrime 16.35 • (ii) the gross negligence or willful misconduct of Maker or any Guarantor, their respective agents or employees, with respect to their obligations to Payee or with respect to the operation of the Property, or the physical waste of the Property; (iii) the breach of provisions in the Deed of Trust or the Environmental Agreement concerning Environmental Laws, Hazardous Substances and Asbestos, and any indemnification of Payee therein with respect to such Environmental Laws, Hazardous Substances and Asbestos; (iv) the removal or disposal of any portion of the Property after an Event of Default under this Note, the Deed of "Crust, the Environmental Agreement, the Guaranty or any other Loan Document; (v) the misapplication or conversion by Maker or any Guarantor of: (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Property; (B) any awards or other amounts received in connection with the condemnation of all or a portion of the Property; or (C) rents, issues, profits, proceeds, accounts or other amounts received by Maker or any Guarantor (in the case of clause (C) following an Event of Default under this Note, the Deed of Trust, the Environmental Agreement, the Guaranty or any other Loan Document); (vi) Maker's failure to pay taxes, assessments, occupancy taxes, charges for labor or materials or other charges that result in liens on any portion of the Property; provided, however, such failure shall not be operative to the extent that Payee has caused sums on deposit in the Tax and Insurance Escrow Account to be applied on account of the Debt rather than applied to such taxes, assessments or charges; provided, further, however that Maker's and any Guarantor's liability hereunder shall cease with respect to such amounts incurred from and after such time, if any, that Payee forecloses the Deed of Trust or accepts a deed in lieu of foreclosure of the Deed of Trust; (vii) deductible limits in accordance with the requirements of the Loan Documents; provided, however, that Maker's and any Guarantor's liability hereunder shall cease with respect to such amounts incurred from and after such time, if any, that Payee forecloses the Deed of Trust or accepts deed in lieu of foreclosure of the Deed of Trust; (viii) the costs incurred by Payee (including reasonable attorneys' fees) in connection with the collection or enforcement of the Debt; (ix) Maker's failure to make any Property repairs or alterations required under the Loan Documents, including, without limitation, alterations required in order to comply with the Americans With Disabilities Act; (x) Maker's failure to permit on -site inspections of the Property or to provide financial reports and information pertaining to the Property as required by the Deed of Trust, unless, in either case, such failure is the result of a good faith error and is cured within ten (10) days after notice; 8 Doc M: WAS01 (207511-00265) 41600918v?,0&'03r2005/rime:16 35 • (xi) any security deposits or advance deposits or retained rents and profits collected with respect to the Property which are not delivered to Payee upon a foreclosure of the Property or action in lieu thereof; (xii) Maker's failure to comply with the provisions of Section 11 of the Deed of Trust pertaining to its single -purpose, single asset entity status; and (xiii) any claim, penalty, charge or other lien against the Property arising from Maker's failure to comply with prevailing wage laws with respect to the Property. (d) Notwithstanding the foregoing, the agreement of Payee not to pursue recourse liability as set forth in subsection (a) above SHALL BE AND BECOME NULL AND VOID and shall be of no further force or effect if. W any financial information concerning Maker or any Guarantor provided by Maker or any Guarantor (or their agents, employees, or authorized representatives) is fraudulent in any respect, contains any fraudulent information or misrepresents in any material respect the financial condition of Maker or any Guarantor; (ii) Maker files for relief or protection under any federal, state or other bankruptcy, insolvency, reorganization or other creditor -relief laws; (iii) an involuntary filing or petition is made, under any of such laws, against Maker by any of its creditors (other than Payee) and such involuntary filing is not unconditionally dismissed or vacated within ninety (90) days; (iv) Maker fails to obtain Payee's prior written consent to any subordinate financing (other than those certain approved operating leases and capital leases for furniture, fixtures and equipment not to exceed Two Hundred Thousand and No/100 Dollars ($200,000.00) in total annual rent payments and One Million and No/100 Dollars ($1,000,000.00) in total aggregate rent payments); (v) Maker fails to obtain Payee's prior written consent, if consent is required under any Loan Document, to any transfer of the Property or of any direct or indirect ownership interest in Maker; or (vi) Maker fails to obtain Payee's prior written consent to any material modifications of the Ground Lease. (e) Nothing in this Section shall be interpreted or construed to impair, limit the liability of or otherwise affect the terms, conditions, requirements and obligations of any Guarantor under the Guaranty or Maker or any Guarantor under the Environmental Agreement. 10. Prepayment. (a) Except as set forth in clause (b) of this Section, the principal balance of this Note may be prepaid, in whole or in part (in increments of not less than One Hundred 9 Doc WAS01(207511-00265)416MI80.09103n003frime 1635 • 0 Thousand and No/100 Dollars ($100,000.00) upon: (i) not less than thirty (30) days prior written notice to Payee specifying the date on which prepayment is to be made (the "Prepayment_ Date"); (ii) payment of accrued interest to and including the Prepayment Date or, if the Prepayment Date is not the first day of a month, accrued interest to and including the last day of the calendar month in which the Prepayment Date occurs; and (iii) payment of all other sums then due under this Note, the Deed of Trust and the other Loan Documents to the extent then payable, including, ,without limitation, sums specified in Section 11 hereof. If any such notice of prepayment is given, the principal amount set forth in such notice and the other sums required under this Section 10 shall be due and payable on the Prepayment Date; provided, however, that Maker may revoke any such prepayment election on or before the date which is ten (10) calendar days prior to the Prepayment Date by written notice to Payee. (b) Notwithstanding clause (a) of this section, (i) this Note may not be prepaid, in whole or in part, prior to August 1, 2006 (the period of time from the date hereof through such date being the "Lockout Period"), and (ii) following the expiration of the Lockout Period, no voluntary prepayment of this Note shall be permitted except as otherwise permitted pursuant to Section 1(b)(iv) hereof. Maker explicitly acknowledges and agrees the Lockout Period is justifiable and reasonable in order for Payee to receive the economic return it has bargained for and expects in connection with its reservation of funds for the Loan. If all or any part of the principal amount of this Note is prepaid upon acceleration of the Loan following the occurrence of an Event of Default during the Lockout Period, then in addition to the payments othen6se required under this Note, Maker shall be required to pay to Payee an amount (the "Breakage Fee") equal to (1) the present value of the Discount YAanount (as hereinafter defined) as determined by Payee, discounted at a rate equal to the most current Index from the end of the Lockout Period to the date of such prepayment, plus (2) any and all losses, costs, fees and expenses of Payee, each to the extent that such losses, costs, fees and expenses are incurred or sustained directly or indirectly as a result of such prepayment of the Loan, including without limitation, any costs or expenses of Payee in canceling or breaking any LIBOR contract or interest rate hedging agreement which Payee may have entered into in connection with this Loan. As used herein, ("Discount Amount") shall mean an amount equal to the product of (x) the principal amount of such prepayment, (y) the Margin, and (z) a fraction, the numerator of which shall equal the actual number of days from and including the date of such prepayment to but excluding the final date of the Lockout Period and the denominator of which is three hundred and sixty (360). The Breakage Fee to be paid in connection with any prepayment under this clause shall be determined in good faith by Payee and shall be conclusive and binding on Maker absent manifest error. For purposes of this clause, the amount of this Note (or the portion of the principal of this Note to be prepaid upon acceleration) on the date of prepayment shall be determined after giving effect to any payment of scheduled amortization made on such date. 11. Deferred Financing Fee. Upon the earlier to occur of (i) payment in full of all amounts due under this Note, (it) the Applicable Maturity Date, or (iii) acceleration of payment of all amounts due under this Note in accordance with Section 7 above, Maker shall pay to Payee an amount to Nine Hundred Fifty Thousand and No/100 Dollars ($950,000.00) (the "Deferred Financing Fee"); provided, however. that if Maker procures a permanent loan with GMAC Commercial Mortgage Corporation ("GM.ACCM"), Lender or any affiliate of either GMACCM or Lender (i.e., Maker satisfies all then -applicable underwriting and legal requirements of 10 Doc # WAS01 (207511-0O265) 41600918�7 08:0312005/Time 16 35 GMACCM for its permanent loan program and does, in fact close such loan), then the Deferred Financing Fee shall be waived. 12. No Usury. It is expressly stipulated and agreed to be the intent of Maker and Payee at all times to comply with applicable state law or applicable United States federal law (to the extent that it permits Payee to contract for, charge, take, reserve, or receive a greater amount of interest than under state law) and that this Section shall control every other covenant and agreement in this Note and the other Loan Documents. If the applicable law (state or federal) is ever judicially interpreted so as to render usurious any amount called for under this Note or under any of the other Loan Documents, or contracted for, charged, taken, reserved, or received with respect to the Debt, or if Payee's exercise of the option to accelerate the maturity of this Note, or if any prepayment by Maker results in Maker having paid any interest in excess of that permitted by applicable law, then it is Maker's and Payee's express intent that all excess amounts theretofore collected by Payee shall be credited on the principal balance of this Note and all other Debt (or, if this Note and all other Debt have been or would thereby be paid in full, refunded to Maker), and the provisions of this Note and the other Loan Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law but so as to permit the recovery of the fullest amount otherwise called for hereunder or thereunder. All sums paid or agreed to be paid to Payee for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Debt until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate from time to time in effect and applicable to the Debt for so long as the Debt is outstanding. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Payee to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration. Maker represents, covenants and warrants that (i) the indebtedness evidenced by this Note is being obtained for the purpose of acquiring and carrying on a business or commercial enterprise, (ii) all proceeds of such indebtedness will be used solely in connection with such business or commercial enterprise, and (iii) the proceeds of such indebtedness will not be used for the purchase of registered equity securities within the purview of Regulation "U" issued by the Board of Governors at the Federal Reserve System. 13. Transfers Not Permitted. Without the prior written consent of Payee, Maker shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer, or permit the direct or indirect transfer of the Property or ownership interests of Maker or Maker's managing member, at any tier, except for transfers otherwise permitted in the Deed of Trust. 14. Authority. Maker represents that Maker has full power, authority and legal right to execute, deliver and perform its obligations pursuant to this Note, the Deed of Trust and the other Loan Documents to which it is a party and that this Note, the Deed of Trust and the other Loan Documents constitute valid and binding obligations of Maker. Doe M WASOI (207511.00265) 416009180Q&'03:2005 Time 16 35 15. Notice. All notices or other communications required or permitted to be given pursuant hereto shall be given in the manner specified in the Deed of Trust directed to the parties at their respective addresses as provided therein. 16. WAIVER OF .JURY TRIAL. MAKER AND PAYEE EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS NOTE, THE DEED OF TRUST, OR THE OTIIF.R LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY hIAKF,R AND PAYEE, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH RIGHT TO TRIAL BY JURY WOULD OTHERWISE ACCRUE. MAKER AND PAYEE EACH ARE HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACII OTHER. 17. Loan Assumption. The Loan may not be assumed at any time by any person, party or entity, including without limitation any affiliate of Maker. Maker expressly acknowledges that Payee has relied, in part, upon Maker and the direct and indirect equity ownership of Maker and the operational experience and expertise of such equity ownership in Payee's agreement to extend funds under the Loan. 18. Governing Law. The Note shall be governed by and construed in accordance with the laws of the State in which the real property encumbered by the Deed of "Trust is located and the applicable laws of the United Stags of America. 19. Extension of 'Time. Maker consents to any extension of time for the payment hereof, release of all or any part of the security for the payment hereof or release of any party liable for Maker's liabilities or Maker's obligations under the loan Documents. Any such extension or release may be made without notice to Maker and without discharging; Maker's liability. 20. Time of Essence. Time is of the essence of each liability and obligation of Maker hereunder. 21. Certain Waivers. To the fullest extent permitted by law, Maker and all guarantors, sureties and endorsers, severally waive all applicable exemption rights, whether under any state constitution, homestead laws or otherwise, and also severally waive diligence, valuation and appraisement, presentment for payment, protest and demand, notice of protest, notice of default, notice of intention to accelerate all sums under the Note or the Loan Documents, notice of acceleration of all sums under the Note or the Loan Documents, demand and dishonor and diligence in collection and nonpayment of this Note and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note (except notice of default and any other notice as specifically provided for in this Note, the Deed of Trust or the Loan Documents). To the fullest extent permitted by law, Maker 12 [Mc w WAS01 t2075l l •00265) 41600919�7;0&-03!2005, rime.16.3 5 ! 0 further waives all benefit that might accrue to Maker by virtue of any present or future laws exempting the Property, or any other property, real or personal, or the proceeds arising from any sale of any such property, from attachment, levy, or sale under execution, or providing for any stay of execution to be issued on any judgment recovered on this Note or in any action to foreclose the Deed of Trust, injunction against sale pursuant to power of sale, exemption from civil process or extension of time for payment. Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue of this Note, or any writ of execution issued thereon, may be sold upon any such writ in whole or in part in any order desired by Payee. 22. Effect of Waiver. No failure to exercise, and no delay in exercising any right, power or remedy hereunder or under any other Loan Document shall impair any right, power or remedy which Payee may have, nor shall any such delay be construed to be a waiver of any of such rights, powers or remedies, or an acquiescence in any breach or default under this Note or any other Loan Document, nor shall any waiver of any breach or default of 1,laker hereunder or under any other Loan Document be deemed a waiver of any default or breach subsequently occurring. The rights and remedies herein specified are cumulative and not exclusive of any rights or remedies which Payee would otherwise have. 23. Severahility of Provisions. In case any one or more of the provisions contained in this Note should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 24. Successors and Assigns. This .agreement shall be binding upon and inure to the benett of Maker. Payee and their respective successors and assigns; provided, however, that, except as specifically provided herein or in the Deed of Trust, Maker may not, directly or indirectly, sell, assign or otherwise transfer all or any part of the Property or any interest therein, or any of Maker's rights and obligations under this Agreement, or take or permit any other action prohibited by Section 13 of the Deed of Trust, without the prior written consent of Payee, which Payee may give or withhold in its sole and absolute discretion. 25. Transfer of Loan. (a) Payee may, at any time at no cost to Maker, sell, transfer or assign this Note, the Deed of Trust and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass - through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement. Payee may forward to each purchaser, transferee, assignee, servicer, participant or investor in such securities or any credit rating agency rating such securities (collectively, the "Investor") and each prospective Investor, all documents and information which Payee now has or may hereafter acquire relating to Maker, Guarantors and the Property, whether furnished by Maker, Guarantors or otherwise, as Payee reasonably determines necessary or desirable consistent with full disclosure for purposes of marketing and underwriting the Loan; provided, however, that Payee shall use reasonable efforts not to unnecessarily disclose Maker's and Guarantors' confidential information. Maker shall furnish and hereby consents to Payee furnishing to such Investors or such prospective Investors any and all information concerning Maker, Guarantors and the Property as may be requested by Payee, any 13 Doc* WAS01 (207511.00265) 16 35 • Investor or any prospective Investor in connection with any sale, transfer or participation interest. (b) Upon any transfer or proposed transfer contemplated above and by the Loan Documents, at Payee's request, Maker and each Guarantor shall provide an estoppel certificate to the Investor or any prospective Investor in such form, substance and detail as Payee, such Investor or prospective Investor may reasonably require. 26. Remedies Available. The remedies of Payee, as provided herein or in any other Loan Document, shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of Payee, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Payee, including specifically any failure to exercise any right, remedy or recourse, shall be deemed to be a waiver or release of the same, and any waiver or release with reference to any one event shall not be construed as continuing or as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to a subsequent event. 27. Maker's Covenants. Maker agrees that (a) the obligation evidenced by this Note is an exempted transaction under the Truth -in -Lending Act, 15 U.S.C. § 1601, et sq . (1982); (b) said obligation constitutes a business loan for the purpose of the application of any laws that distinguish between consumer loans and business loans and that have as their purpose the protection of consumers in the state in which the real property encumbered by the Deed of Trust is located; (c) at the option of the Payee, the United States District Court for the district in which the Property is located and any court of competent jurisdiction of the state in which the Property is located shall have jurisdiction in any action, suit or other proceeding arising out of or relating to any act taken or omitted hereunder or the enforcement of this Note, the Deed of Trust and the Loan Documents and Maker shall not assert in any such action, suit or other proceeding that it is not personally subject to the jurisdiction of the courts in this subsection (c) that the action, suit or other proceeding is brought in an inconvenient forum or that the venue of the action, suit or other proceeding is improper; and (d) it hereby waives any objections to venue. 28. Payee. Reference in this Note to "Pavee" shall mean the original Payee hereunder so long as such Payee shall be the holder of this Note and thereafter shall mean any subsequent holder of this Note. 29. Miscellaneous. (a) No release of any security for the Debt or any person liable for payment of the Debt, no extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of the Loan Documents made by agreement between Payee and any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Maker, and any other person or party who might be or become liable for the payment of all or any part of the Debt, under the Loan Documents. (b) This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Maker or Payee, but 14 Doc M WASO1 (207511-00265) 41600918008/03120051rimc16.35 only by an agreement or other document in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. (c) Whenever used, the singular number shall include the plural, the plural the singular, and the words "P_ ayee" and "Maker" shall include their respective successors, assigns, heirs, executors and administrators, all to the extent provided in Section 24 hereof. (d) If Maker consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several. 30. Submission to Jurisdiction. MAKER AND PAYEE EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY CALIFORNIA STATE OR FEDERAL COURT SITTING IN ORANGE COUNTY OVER ANY SUIT, :ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE AND HEREBY AGREE NOT TO ASSERT THAT IT IS NOT SUBJECT TO THE. JURISDICTION OF THE FOREGOING COURTS. EITHER MAKER OR PAYEE MAY, AT ITS SOLE DISCRETION, ELECT THE STATE OF CALIFORNIA, ORANGE COUNTY, OR THE UNITED STA'TES OF AMERICA FEDERAL DISTRICT COURT HAVING JURISDICTION OVER ORANGE COUNTY AS THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. MAKER AND PAYEE EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMIT -FED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCI I VF.NUF AS BEING AN INCONVENIENT FORUM OR IMPROPER VENUE. 31. Service of Process. Process in any suit, action or proceeding of the nature referred to in Section 30 hereof may be sen-ed in any manner permitted by law and nothing herein shall limit Payee's right to bring proceedings against Maker in the courts of any other jurisdiction. 32. "Tax Identification Number. Maker represents and warrants that its current tax identification number is 33-0949279. 33. Securitization and 'Transfer. Payee may, at no cost to Maker, sell the Loan, interests in the Loan, issue securities backed by or evidencing ownership of the Loan in one or more public or private offerings and/or further tranche the Loan or divide the Loan into two or more component parts or notes at (as described more fully in Section 34 below) at any time without Maker's or Guarantors' consent; provided, however, in no event shall such sale, securitization or tranche affect the overall loan economics (aggregate note interest rate, debt service payments, term, etc.) expected by Maker or Guarantors or alter Maker's or Guarantors' substantive rights or obligations under the Loan Documents. Payee currently intends to retain the rights to service the Loan. Maker shall cooperate with Payee in connection with the sale, participation or the securitization of all or a part of the Loan and obtaining ratings from one or more rating agencies, which cooperation shall include (1) providing additional information regarding the Property, Maker or any of its affiliates or Guarantors, including without limitation, additional appraisals, environmental reports, engineering reports and similar due diligence materials, and updates, verifications and consents with respect to such materials that were delivered on or prior to the Closing Date (as defined in the Deed of Trust), (ii) supplying such 15 Doc 9_WAS01(20751I.00265)4160091Sv708J0312005rrime 16-35 documentation, financial statements, and reports that may be required to comply with Regulation S-X of the federal securities law, (iii) making modifications to the Loan Documents or the organizational documents, revisions to existing opinions or supplying additional opinions, (iv) delivering additional estoppel letters, subordination agreements or similar agreements and (v) participating (including senior management of Maker) in meetings and presentations to the rating agencies and prospective investors, in each case as required by the rating agency or agencies or prospective investors, provided that no such modification, revision, additional documents, or other action in connection with such cooperation shall affect the overall loan economics (aggregate note interest rate, debt service payments, term, etc.), increase the substantive obligations or decrease the substantive rights of Maker or Guarantors pursuant to the Loan Documents. No portion of the cost of providing such additional opinions, additional documents, revisions to existing opinions or modifications to the Loan Documents or other actions in connection with such cooperation shall be borne by Maker. At the request of Payee, Maker shall make such representations and warranties as of the date of the securitization as are customary for borrowers to make in securitization transactions, review any factual information or disclosures with respect to the Property, Maker, and its affiliates contained in any private placement memorandum, prospectus, registration statement, or other offering materials relating to any sale or securitization of the Loan, and Maker shall indemnify Payee against any loss or expense incurred as a result of any misstatements or omissions in any written offering material approved by Maker, its sponsor or parent or any of their affiliates to the extent such misstatements or omissions were made in reliance on the representations and warranties of Maker. 34. Note Structure. Payee shall have the right, in its sole discretion, between the Closing Date and a sale, participation or securitization of the Loan, to require that the Loan be divided into two or more separate (or component) notes, of which the aggregate weighted average coupon rate shall, as of the sale or securitization, equal the initial Interest Rate on the Loan on the Closing Date (adjusted to account for amortization), but each of which may have a different interest rate and a different amortization schedule, which notes may be included in separate transactions, and which notes may be secured by pari-passu or senior/subordinate deeds of trust and security agreements. In no event shall such bifurcation of this Note affect the overall loan economics expected by Maker or Guarantors or alter Maker's or Guarantors' substantive rights or obligations under the Loan Documents. [SIGNATURE APPEARS ON FOLLOWING PAGE] 16 Doc #:WAS01 (207511-00265) 41600918d1;09/03/20051rime:16:35 IN WITNESS WHEREOF, Maker has duly executed and delivered this Amended and Restated Deed of Trust Note under seal as of the day and year first above written. MAKER: PCH BEACH RESORT, LLC, a California limited liability company By: Grand Resort, LLC, a California limited liability company, its managing member By: RLhagement, Inc., a California core Q046ft manager 17 Doe#-WAS01(20;511-00265)41600918%110&'0312005t15me 16:35 By Name: R rt Iv Jr. Title: Pr sid t EXHIBIT "Alt GMAC Commercial Mortgage Bank Note: All borrowers with fixed-rate loans may sign up for GMACCM's Automatic Mortgage Payment Service. With the Automatic Payment Service, monthly mortgage and escrow payments are automatically deducted from the borrower's bank account_ To sign up for the Automatic Mortgage Payment Service, simply fill out the form below, and return the form, plus a voided check, to the GMACCM Attorney noted below. The GMACCM Attorney will forward the form, with the legal documents, to the GMACCM Deliver Manager, oho will insure that Servicing Accounttng(Auto Debit Department receives the form_ GMACCM Servicing will handle all the arrangements to get you started on this time and cost -saving payment service. If there are any changes to your regular payment, GMACCM Servicing will send you a notice in advance of your debit- This will give you plenty of time to review the ad)ustments before your payment. If you have any question, you can call your Servicing Client Relations Manager Your Automatic Mortgage Payment will begin about one month after you complete and return the attached form to our office, and will be confinned by a letter From GMACCM Servicing. All of your account information will be kept confidential AUPONIA 17IC NJOKI-GALE PAYMERT SERVICE Authorization form hereby authorize GMAC Commercial Mortgage to begin cWuctions from my account with the financial institution named below for payment of my mortgage I authorize (Name of Banking Institution) to charge my account the amount of my Regular Mortgage Payment on the due date of my mortgage note each month, payable to GMAC Commercial Mortgage. Loan Number as shown on vour statement - Name on your account (Please print): Account Number from which you wish funds transferred (Exactly as shown on Financial Institution Records): Checking Account Number: Your mailing address- Street Money Market Account Number: City State Daytime Phone NUnlber- (_) Signature(s) (Exactly as shown on Financial Institution Records) If two signatures required, Both persons must sign this form: Zip Code Date Date: IMPORTANT NOTE: to ensure proper bank coding of your payment, it is imperative that you ATTACK A DEPOSIT SLIP OR VOIDED CHECK that you have marked "VOID" showing your complete account number. Your Automatic Mortgage Payment Service will begin approximately one month after GMAC Commercial Mortgage has received this completed form_ RETURN TO: Christopher J- Hart, F.sq- of Katten Muchin Zavis Rosenman, Washington, DC Doc 10_ WAS01 (207511.00265) 4160091Ev7 0&103f2005fTimc 16_35 'CORDWO 7QUESTED This Document s electronically recorded by Fidelity IWIonal Major Accounts OFFICIAL BUSINESS Document entitled to free recording per Government Code Section 6103 Recording Requested By and When Recorded Mail To: Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder JMNJJJUJJJJHMJU JAJ NNRJ NO FEE 2005000658639 01:03pm 08/22/05 103 15 R23 4 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH 2000 Main Street Huntinbnon Beach, CA 92648 Attn: Executive Director a (Space Above For Recorder's Use) REQUEST FOR NOTICE Request is hereby made on this 164 day of August, 2005, that a copy of any NOTICE OF DEFAULT and a copy of any NOTICE OF SALE under that certain Amended and Restated Leasehold Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing recorded as Instrument No. AGEDWOS7702 in the Official Records of Orange County, California on August 9-A, 2005, executed by PCH Beach Resort, LLC, as Trustor, in which GMAC Commercial Mortgage Bank is named as Beneficiary, and Fidelity National Title Company, as Trustee, and describing the following real property: Please see Exhibit "A", attached hereto and incorporated herein. be mailed to REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH at the following address: Redevelopment Agency of the City of Huntington Beach City I fall 2000 Main Street Huntington Beach, California 92648 Attn: Director of Economic Development NOTICE: A copy of any notice of default and of any notice of sale will be sent only to the address contained in this recorded request. If your address changes, a new request must be recorded. [End — Signature Block On Next Page] 1620191,40-0014 633570-0. 48Y1905 i IN WITNESS WHEREOF, the undersigned has executed this Request for Notice as of the date set forth above. PCH BEACH RESORT, LLC, a California limited liability company By: Grand Resort, LLC, a California limited liability company, its managing member By: RLM Management, Inc., a California corporation, its manager By. Name: Ro )1ide Ma r, Jr. Title: Pret 162;0147.70-0U 14 633570 02 jft; 0 *5 -2- 0 • STATE OF CALIFORNIA ) ss. COUNTY OF Orange ) On August (�2 , 2005, before me, RJEY- tlp S\AI % , Notary Public, personally appeared Robert L. Mayer, Jr-, proved to me on the basis of satisfactory evidence) to be the person(a) whose name} is/are- subscribed to the within instrument and acknowledged to me that beAAefthey executed the same in hisAw9thw authorized capacity(ies), and that by his/lieHfrcir signaturef on the instrument the personfo or the entity upon behalf of which the personeacted, executed the instrument. Witness my hand and official seal. Notary Public Roc Mcgro w [SEAL] Commbsron * 1414942 -i notary Pubdc - Cautomla orarw cam* My Comm. Ezprea May 1. 2007 162/019740-0014 633570 02 aOS.'I 545 —3- PYWRIT "A" DESCRIPTION OF PROPERTY All that certain land situated in the State of California, County of Orange, City of Huntington Beach, and is described as follows: Parcel A: Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of Miscellaneous Maps, Re cords of Orange County, California Parcel B: A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right -Of -Way" ("Agreement") recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of landscaping and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel C- A non-exclusive revocable license to utilize that certain area defined as "Overcrossing Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right -Of -Way" ("Agreement") recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County. California, and delineated on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of overcrossing and other improvements, as said license is set forth in paragraph 2 of the Agreement. Parcel D: A non-exclusive appurtenant easement upon, in, over, under and along those portions of the land as described in that certain "Wall and Landscaping Easement and Maintenance Agreement", dated May 30, 2003, executed by and between PCH Beach Resorts, I.I,C, a California limited liability company and PLC/Lyon Waterfront LLC, a Delaware limited liability company recorded June 12, 2003 as Instrument No. 2003000690325, of Official Records of Orange County, State of California. EXHIBIT "A" i,357()02309;!40-00i TO REQUEST FOR NOTICE h �3S?0 02 aOR: I SOS C� KANE, BALLMER & BERKMAN A LAW CORPORATION 515 SOUTII FIGUEROA STRF,ET. SUITE 1850 LOS ANGELES. CALIFORNIA 90071 TELEPHONE (213) 617-000 FAX (213 ) 62 5-0931 MEMORANDUM TO: David Biggs FROM: Rebecca Gemmel DATE: September 30, 2003 /b0yb RECEIVED OCT 12003 DEPAP,TkIE.'IT OF ECONOMIC DEv'ELOI°MENT RE: Assignment of Rights, Benefits and Interests Under Disposition and Development Agreement Please find enclosed for execution the Assignment of Rights, Benefits and Interests Under Disposition and Development Agreement. Please execute the Agency Consent attached thereto where marked with the Sign Here Tag. Please be sure to fill in the appropriate date in the space across from the Agency signature block. Upon execution by the Agency, please make a copy for your files and forward the original to: Deborah L. Babb Allen Matkins Leck Gamble & Mallory, LLP 515 South Figueroa, 7th Floor Los Angeles, CA 90071-3398 If possible, please forward a copy of the executed document to our office. If you have any questions, please do not hesitate to contact me directly. C B CALIFORNIA BANK TRUST -I'RU5T ASSIGNMENT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT (,)ow} THIS ASSIGNMENT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT ("Assignment") is made as of July 1y . 200�3 by PLC WATERFRQNT_LLQ., Delaware limited liability company ("Assignor"), to CALIFORNIA BANK & TRUST, a California banking corporation ("Assignee") - RECITALS A. Assignor is justly indebted to Assignee for money actually loaned or to be loaned and advanced to Assignor under a Construction Loan Promissory Note of even date herewith, in the sum of Twenty Million Dollars ($20,000.0.00.00) ("Note") executed by Assignor and payable and delivered to Assignee herein, according to the terms set out in the Note. All the terms, provisions, conditions, covenants, stipulations and agreements contained in that Note are hereby made a part of this Assignment to the same extent and with the same and like force and effect as if they were fully set forth herein. Unless otherwise defined herein, capitalized terms shall have the same meanings as set forth in the Loan Agreement (Land Acquisition Loan) by and between Assignor and Assignee dated as of the date hereof ("Loan Agreement"). B. The Note is executed in connection with the Loan Agreement and is secured by a Deed of Trust, Assignment of Leases and Security Agreement ("Deed of Trust") in favor of Assignee covering certain real property located in Orange County, California more particularly described in Exhibit "A" attached to each Deed_ of Trust.("Property"), including all on -site and off - site improvements (collectively "Project") to be constructed thereon. C. Assignee requires as a condition to making the loan ("Loan') to Assignor evidenced by the Note that Assignor assign to Assignee all of Assignor's rights, benefits, title and interests in and to that certain Amended and Restated Disposition and. Development Agreement dated as of Septem� ber 14,_1998 and recorded November_16, 1998, executed by NLVQX_Emancial Ltd. ("Mayer') (and assigned to Assignor) and Redevelopment Agency of the City of Huntington Beach ("Agency") with respect to the Property and/or the Project, as amended rby that certain First. Implementation Agreement to Amended —and. Restated Disposition m and Developent Agreement dated as of b'iay 15, 2000 by and between Agency and Mayer, and as amended further by that certain Second lmplementation Agreement to Amended and Restated Disposition and ,Development Agreement -dated as of. February _5,_2001 by and between Agency and Mayer, together with any and all existing and future amendments, modifications, implementation agreements, supplements and addenda thereto (collectively "Disposition and Development Agreement") in connection with the construction of the Project and related improvements on the Property. Assignor is willing to enter into this Assignment to effectuate the foregoing assignment so as to induce Assignee to make the above -described loan to Assignor. TERMS AND CONDITIONS NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt whereof is hereby acknowledged: 258607 ASSIGNMENT OF DISPOSITION AND DEVELOPMENT AGREEMENT. 1.1. Assignment Clause. Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in and to the Disposition and Development Agreement, and hereby creates in favor of Lender a security interest in the Disposition and Development Agreement under the California Uniform Commercial Code. 1.2. Assignee as Attorney -in -Fact for Assignor. Assignor hereby irrevocably appoints Assignee as its attorney in fact with full power of substitution and authority, which appointment is coupled with an interest, to receive, demand, exercise and enforce any and all of Assignor's rights with respect to the Disposition and Development Agreement and to perform any and all acts in the name of Assignor or at the option of Assignee, in the name of Assignee with the same force and effect as if performed by Assignor in the absence of this Assignment. 2. PURPOSE OF ASSIGNMENT. This Assignment is made for the purposes of securing 2.1. Note PoMente. Payment of the principal sum, interest and indebtedness evidenced by the Note. 2.2. Payment gf Other Sums. Payment of all other sums with interest thereon becoming due and payable to Assignee under the provisions of this Assignment or of the Note, the Deed of Trust, or the Loan Agreement. 2.3. Performance of Other Obligations. The performance and discharge of each and every obligation, covenant and agreement of Assignor contained herein or in the Note, the Deed of Trust, the Loan Agreement or any other document or instrument executed by Assignor in connection therewith. 3. GENERAL PROVISIONS. This Assignment is made on the following terms, covenants and conditions' 3.1. No Default. So long as no "Event of Default" (as defined in the Loan Agreement, Note and/or Deed of Trust) has occurred, Assignor shall have the right to enjoy all of the rights arising out of the Disposition and Development Agreement. 3.2. Event of Default. Upon or at any time after an Event of Default has occurred, Assignee shall have the right to enforce Assignor's rights and interest with respect to the Disposition and Development Agreement. Upon the occurrence of any Event of Default by Assignor, Assignee may, without affecting any of Assignee's rights and remedies against Assignor under any other instrument, document or agreement, exercise Assignee's rights under this Assignment as Assignor's attorney in fact or in any other manner permitted by law. In addition, Assignee shall have and possess, without limitation, any and all rights and remedies of a secured party under the California Uniform Commercial Code or as otherwise provided by law. 3.3. Assignor's Representations and Warranties. Assignor hereby represents and warrants to Assignee that- 3.3.1. No Prior Assignment. No previous assignment of Assignor's interest in and to or rights under the Disposition and Development Agreement has been made: 3.3.2. Pgrformance Under the Disposition and Development Agreement. All covenants, agreements and conditions required to be performed or occur under the Disposition and Development Agreement as of the date hereof by Assignor have been performed or occurred. 258607 • 3.3.3. No Modification or Transfer of Disposition and Dev to m nt Agreement. Assignor agrees not to materially amend, assign, sell, pledge or otherwise transfer or encumher in any manner Assignor's interest in or rights under and to the Disposition and Development Agreement without the prior written consent of Assignee so long as this Assignment remains in effect. 3.4. Indemnification of Assignee. Assignor hereby agrees to protect, indemnify, defend and hold Assignee free and harmless from and against any and all claims, causes of action, demands, damages, liens, liabilities, losses, costs and expenses (including reasonable attorneys' fees) to which Assignee may become exposed or which Assignee may incur in exercising any of Assignee's rights under this Assignment, except where caused by the gross negligence or willful misconduct of Assignee. Assignor hereby expressly agrees that Assignee shall not be liable for any loss sustained by Assignor resulting from Assignee's exercise of the rights herein assigned to Assignee after default by Assignor: provided, however, that Assignor shall not indemnify Assignee from and against any and all claims, causes of action, demands, damages, liens, liabilities, losses, costs and expenses arising (a) after Assignee has exercised any of its rights hereunder, and (b) as a result of Assignee's action or failure to act pursuant to such rights. 3.6. No Liability.. Notwithstanding any provision of the Disposition and Development Agreement to the contrary, Assignee shall not be personally liable under the Disposition and Development Agreement, and Assignee's liability under the Disposition and Development Agreement for any obligations of Assignor shall be limited to the ownership interest of Assignee in the Property. From and after Assignee acquiring title, possession or control of the Property, whether by itself or through a court -appointed receiver, Assignee shall only be liable for obligations under the Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property. 3.6. Termination of As$i,gnmgn. Upon payment in full of the principal sum, interest and indebtedness secured hereby and by said Note, Deed of Trust and Loan Agreement, this Assignment shall become void and of no further force or effect, but the affidavit, certificate, letter or statement of any officer, agent or attorney of Assignee showing any part of said principal, interest or indebtedness to remain unpaid shall be and constitute conclusive evidence absent a contrary court order of the validity, effectiveness and continuing force of this Assignment and any person may, and is hereby authorized to, rely thereon. 3.7. Binding Obligations Uudpr This Assignment. This Assignment, together with the covenants and warranties herein contained, shall inure to the benefit of Assignee, to any lender participating in the Note, and to any subsequent holder of said Note, and shall be binding upon Assignor, its successors and assigns. 3.8. Severability. If any one or more of the provisions contained in this Assignment shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Assignment, but this Assignment shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein_ 3.9. Governing Law. This Assignment shall be governed by and construed according to the laws of the State of California. 3.10. Attorneys' Fees. In the event of any dispute arising out of this Assignment or any action or proceeding to enforce the provisions of this Assignment, the prevailing party in such dispute, action or proceeding shall be entitled to recover from the losing party all costs and expenses incurred by the prevailing party in connection therewith, including without limitation court costs and reasonable attorneys' fees and expenses. 258607. • 3.11. Continuing Effectiveness of AssigMent. This Assignment, and the respective rights, duties and obligations of the parties hereto, shall remain in full force and effect regart3less of any renewals, modifications of the Loan, including without limitation the future inclusion of any additional "Collateral" (as defined in the Loan Agreement) for the Loan, as expressly provided in the Loan Documents. This Assignment shall become effective and be self -operative without the execution of any further instruments with respect to each "Lot" (as defined in the Loan Agreement) described in Exhibit "A", whether such Lot is now, or in the future will be, encumbered by the Deed of Trust, without any further action by Assignor or Assignee immediately upon the inclusion of such Lot as part of the Collateral for the Loan. [Signatures continued on the following page.] 258607 0 i IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written. PLC Waterfront LLC, a Delaware limited liability company, its managing member By: WB IV/PLC Homes, LLC, a Delaware limited liability company, its sole member By: By: Christopher C. Gibbs, President Daniel O'Bannon, Secretary 258601 • 0 CONSENT The undersigned Agency hereby consents to the transfer and assignment recited in the Assignment to which this Consent is attached. The undersigned hereby agrees and acknowledges that upon the Assignee or its successors or assigns giving the undersigned written notice of Assignee's exercise of its rights under the Assignment, the undersigned will recognize and attorn to Assignee in accordance with the Assignment so long as Assignee complies with the Section 508(b) of the Disposition and Development Agreement. The undersigned further acknowledges and represents that: (i) The undersigned has not assigned its interest under the Disposition and Development Agreement as it relates to the Property to any other person or entity; (ii) There presently exists no unpaid claims due to the undersigned arising out of the performance by the undersigned relating to the Disposition and Development Agreement as it relates to the Property; and (iii) The undersigned has no present claim against or lien upon the Property arising out of the undersigned's performance of any work or service on or relating to the Property. The undersigned hereby acknowledges that the Deed of Trust is an "approved Mortgage" as set forth in 401(1)(c) of the Disposition and Development Agreement and the undersigned further acknowledges and agrees that the Note, the Deed of Trust, the Loan Agreement, and any other documents between Assignee and Assignor are solely for the benefit of Assignee and Assignor, except as provided in Section 508(c) and (d) of the Disposition and Development Agreement, and the undersigned has no interest in or claim upon any funds advanced thereunder by virtue of its consent to this Assignment. The undersigned further acknowledges and agrees that no material change, modification or amendment to the Disposition and Development Agreement which relates to the Property from and after the date hereof shall be valid without the prior written consent of Assignee, which consent shall not be unreasonably conditioned, withheld or delayed_ The undersigned further acknowledges and agrees that, notwithstanding any provision of the Disposition and Development Agreement to the contrary, Assignee shall not be personally Liable under the Disposition and Development Agreement for any obligations of Assignor, and Assignee's liability under the Disposition and Development Agreement shall be limited to the ownership interest of Assignee in the Property. From and after Assignee acquiring title, possession or control of the Property, whether by itself or through a court -appointed receiver, Assignee shall only be liable for obligations under the [The balance of this page is intentionally left blank.] 258607 • Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property. Dated: Oct . 3 . 2003 %W606II0101 By: 1��nZ4, / Name' Connie Brockway Title: Agency Clerk APPROVED: REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: (2i� soe.:An Name: Ray oglnver Its: Executive Director JE NERAL OUNSEL OF TINTINGTON REDEVELOPMENT ENCHE Y OF TC[TY OF BEACH A r C1AL COU SE OF THE REDEVELOPMENT ENCY OF THE (ATY OF HUNTINGTON BEACH - RIGHTS OF THE AGENCY PURSUANT OT SECTION 508 OF THE DISPOSITION AND DEVELOPMENT AGREEMENT ARE ACKNOWLEDGED AND AGREED TO: CALIFORNIA BANK & TRUST, a California banking corporation M its 258607 • 0 EXHIBIT "B" LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN IS IN THE STATE OF CALIFORNIA, ORANGE COUNTY, AND IS DESCRIBED AS FOLLOWS: LOT 21 OF TRACT NO. 15549, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 842. PAGES 28 TO 44, INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM, ANY AND ALI, OIL, OIL RIGHTS, PETROLEUM, MINERALS, MINERAL RIGHTS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBON SUBSTANCES BY WHATSOEVER NAME KNOWN, GEOTHERMAL RESOURCES, AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING, PROSPECTING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE SAME FROM THE SITE OR ANY OTHER I —AND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE DESCRIBED HEREIN, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE SITE, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUtiNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES: WITHOUT, HOWEVER THE RIGHT TO ENTER, DRILL, MINE, STORE, EXPLORE OR OPERATE ON OR THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE SITE, AS EXCEPTED AND RESERVED BY THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, IN A DEED RECORDED APRIL 18, 2001 AS INSTRUMENT NO. 2001-0232774 OF OFFICIAL RECORDS. Assessor's Parcel No: 024-053-01, 024-253-02 AND 024-253.03 PARCEL B= TEMPORARY CONSTRUCTION EASEMENTS OVER LOT BB OF TRACT 15549 AS DELINEATED N THAT CERTAIN DOCUMENT ENTITLED 'TEMP_ORA.R � — STRUCTION EASEMENT" RECORDED JUNE 12, 2003, AS INSTRUMENT NO. _200400690324— OF OFFICIAL RECORDS. SAID EASEMENT IN TEMPORARY IN NATURE AND IS SUBJECT TO THE TERM, CONDITIONS AND LIMITATIONS CONTAINED THEREIN. PARCEL G WALL AND LANDSCAPE EASEMENTS AS DELINEATED IN THAT CERTAIN "WALL AND LANDSCAPE EASEMENT AND MAINTEI\ANCE__AGREEMENT—J.UNEr12,_2003, AS INSTRUMENT NO. 2003000690325 OF OFFICIAL RECORDS. 258607 _10/e.1i2303 10:213 KANE�aLLMER & EERK"K1N = 4 171437508? . NO.341 G001 KANE, BALLMER & BERKMAN A Law Corporation 515 South Figueroa Street, Suite 1850 Los Angeles, California 90071 Telephone. (213) 617-0480; Fax: (213) 625-0931 TRA:'vSNUTTAL SHEET TO: David Biggs Fax: (714) 375-5087 FROM: Rebecca Gemmel DATE: October 1, 2003 PAGES: (including this sheet) 10 FU_E NO: 150-2 MESSAGE. - Attached you will find the executed documents you requested. IN CASE OF ANY PROBLEMS PLEASE CALL US M94EDIATELY. �FID�f. 77 ENTIAJT�$i30Ci i BENG T E 1 U�T� ' AY 1 ' ^'';•x: -'-+AiIV OON PROI1 CTFD SYE'AT?Olkx1EY_GI�_ P�GB.. ..it it iAteae23 aniyfbi tfie.pasa�btoin it is �r}xeszed =yau �_ie- 'dzd rerapietif or Meer went, then -ems is-aoticrioyoua That ch' simma n,.du �qPYWg of this dticiu rout u iprohibitcd -Xtbis wasaecrWed m eiioF,' - t OC 01-2023 11:33 213 625 0931 97i P.01 10.29 KIa E . PLL MER & EERKMFry -) 17145755e87 NU . 341 9002 10'G1�200J 09:i7 FAQ 213 620IW6 ALLEN. XjiTKiNS • �001 Allen Matkins Leck Gapuble & Mallory L.Lp erlipmeys •r lam �3,5 sou0, Feuerae Tth Floor Los Arteeks California 90071.3398 Allen Matkills — - telephone. 218 622 WWS facsimile. 213 620 8816 www.ellenMatkinS.t:om facsimile comtrsertb Please see axtaclsed. to_ Rebecca J. Gemmel, Esq. company. Kane. Ballmer & Bewman f_ 21.3 625 0931 t. 213 617 0480 writer. Deborah L Babb t. 213 955 5636 e. dbabb0allenmatkins.com R!s stusrtttes. WM54 4OQ . total pQ&9 including cover sheoL date. October 012003 ortino win be sent vtL mail messenger fadexlcourrer Note The kfternitlon pertined IM p:a bcsrnva doeonrrt is eenad"nGat and it -ntvVed onlp for VW use of the iriTftwuas named above. If M• r+Mdv of mi Massa" in Rot a* k"ftdsa rCC*W +C vW r1 Pormy notmW chit any 65aar*Inaton, dimbUion or copyhv of Otis commtm-Utm IS st" MM *W- It You Have MaNveid thk cornmwicabw In error. plaoce irvne&ataty notify us Br Wwoone and retum the oA9inal document to us at the above addre" +rtii U-5. Wi We voll reimburse you W fie posti9e. Tha* yap. ILos Angeles Cenwry C:cy Or,agc Caunry San Diego San Frnnc;sco = 213 625 0331 L1-2603 11 33 grr. P,$2 1 ;CANS. SAULMER 8 EERKirPiN a _7ia375te;z_? ?�,/0i/2Gr03 (7�c9 � • NO.341 0003 C B CALZFORNIA�BANK YxusT T R u s r ASSIGNMENT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT THIS ASSIGNM.Z:VT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT ('Assignment') is made as of Jkly lb. 2003. by PLC WATERFRONT LLC. a Delaware limited liability company ('Assignor), to CALIFORNLA BANK & TRUST. a California basking corporation ("As6ignee' 7. I igiTCAU A. Assignor is justly indebted to Assignee for money actuary losned or to be loaned and advanced to Assignor under a Construction Loan Promissory Note of even date herewith, in the sum of Twenty Milhor, Dallare (a2Q440.44a_40) ('Note-) executed by Assignor and payable and delivered to Assignee herein, according to :he terms set out in the Note. All the terms, provisions. conditions, covenaats. atipulataons and agreements contained in that Note are harsby msde a part of this Assignment :o the same extent and with the same and like force and C&ct as 1J they were fully set forth herein. Unless otherwise defined herein, capitalized terms shall have the same meanings as set forth in the Loan Agreement (Land Acquisition Loan) ny and between Assignox and Assignee dated as of the date hereof CLoan Agreement"). B. The Note is executed in connecraa with the Loan Agreement snd is secured by a Deed of Trust. As.-ign.men: of Leases and Se:unty Agreement ("Deed of Trust") in favor of Assignee coveriug eertaim real property located ?aCalifornia Orange County. Califormore particularly described in Exhibit W attached to each Deed of Trust (-Property'). including all on -site and oft -site improvements (collectively "Project') to be constructed thereon. C. Assignee requires as a condition to mak2ng the loan {'loan") to Asaignor evidenced by the Note that Assignor assign to Assagnee all of Assignor's rights, benefits. title and interests in and to that certain Amended and. Restated Disposition and Development Agreement dated as of September 14. 1998 and. recorded November_ 16, 1998, executed by Mayer Financial Ltd. ("Mayer'} (and asaigned to Assignor) znd Redevelopment Agency of the City of Huntingtoa Beach i Agency) with respect to the Property znXcr the Prcject, a9 amended by that certain First Implementatioa Agreement to Amended and Restated Disposition and Development Agreement dated as of May 15. 2000 by sad between Agency aid Mayer, sad as amended harsher by that crrtain Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of February 5. 2001 by and between Agency and Mayer. together with agy and all existing and future amendments. modifications. -implementation agreements. aupplementa and addenda thereto (col ecnveiy 'Disposition and Developtneut Agreement") in connection with the cnn3truction of the Project and related improvements on the Property. Aasignor is willing to enter into this Assignment to effectuate the foregoing assigasaent so as to induce Assignee to make the above -described loan to Assignor. TERMS AND COtiQITJQNS NOW THL- RUORE. FOR GOOD AND VALUABLE CONSIDERATION. the receipt whereof is hereby acknowledged: 258607 j7i F.03 OC:7-01-20e3 11'34 213 625 0931 KAN=_, EAL LiMER &=ERKMAN 4 1?143755087 . • NO.341 G2e4 ASSPCKN11gNT OF DISP ON '�T -1 . fEN . 1.1. A55_iZJLMPZ Clause. Assinor hereby assigns, transfers and conveys to Assignee all of Assignor's right, title and interest in and to the Diapositinn and Development Agreement, and hereby creates m favor of Lender a security interest in the Disposition and Development Agreemen; under the Cnldorraa Uniform Commercial Code. I Z. a Attu - - a f s' n Aasignor hereby irrevocably appoirts Assignee as ito attorney in fact with full power of mbst:tuuor. and authority, which appointment is couplet' with an interest, to receive. demand, exer.ee and enforce any and all of Ass4nor-s rights with respect to the Disposition and Development Agreement and to perform any and all sct9 in the name of Assignor or at the option of Assignee, in the name of Assig:ue with the same force erd erect as if performed by Assignor i_n the absence of this Assignment. 2_ PUR OSE OF A.SSIG , . This Assignment is mad* for the purposes of securing - ?A. Note_E13ye:}ts. Payment of the principal sum. interest and indebtedness evidenced by the Ncte. 2.2. Paying -at of Other SuMl. Payment of all other sums with interest thereon becommt due and payable to Assignee undaT the provisions of this Assignment or of the Note, the Deed of Tr ust, or the Loan Agreement. 2.3_ er o tnancg_ of Other 4 UgWiong. The perfortrance and discharge of each and every obligation, covenant and agreement of Aaaignor contained herein or in the Note. the Deed of T-ruat, the Iran Agreement or any other document or instrument executed by Assignor in connection therewith. 8. DENERAL R0 SI�. This Assignment is made on the following terms, covenants and conditions: 8.1. N.Q_ pQtsluA. So long as no Teat of Default' (as defined in the Loan Agreement, Note and/or Deed of Trust) has occurred, Assignor shall have the right to enjoy all of the ri;b_s arising out of the Disposition and Development Agreement. 3.2. Event of Default. Upon or at any time after an Event of Default has occurred. Assignee shall have the right to enforce Assignor's rights and interest with respect to the Disposition and Development Agreement. Upon the occu=stnce of any Event of Default by Assignor. Assignee may. without affecting any of Assignee's rights and remsdies against Assignor under any other instrument, document or agreement, exercise Assignee's rights under this Assignment as Assignor's attorney in fact or in any other manner permitted by law. In addition. A99W,ee shall have and possess, without Iimitstion. any and all rights and remedies of a secured party under the Cal6yrnia Uaiorm Commercial Code or as otherwise provided by law. 3.3. &2siP'r gX 4 ZSjLr ns gad Werrant Assignor hereby represents and warrants to Assignee :.hat: &.3.1. No Poor $,ssiEmr:ueaL. too previous as4ig=ent of Assignor's interest in and to or rights under the Disposition and Development Agreement has beer, made. 3.3.2. Perfi2rrnanpe Under itle Dispogition gpcl L)evelqpment AiTre.qxnezi All covenants- agreements and conditions requized to be performed or otc•.0 under the Disposition and Development Agreement as of the date hereof by Assignor have beer. performed cr occurred- 258GOT 2 rrT-PI _ _ 35 213 625 0931 96;, P.04 KANE. UPLLt1GR S I EkK( Hti 17:43"r55297 • hu. '{41 5;00.5 3.5.3. No lyiOdt�]LAt� ot-�Tranjr� his peron and Devclonment Agreement. Assignor agrees hot to ma!erially amend, assign, sell, piedgc or otherwise transfer or enc,.Lmber in 3ry manner Assignor's interest in tr rights under and to the Disposition and Development Agreeman- vwithoL: the prior wntten consent of Assignee so long as t:.Ls Assignment remain! 1r. effect_ 3.4. frtdemni&Qatigja of_Aani ee. Assignor hereby agrees to protect, indemnify. defend and hold Assignee free and harmless from and sgainat any and all c'.aims. causes of action. demands damages. liens. Liabilities, losses, costr, and espeases (including reasonable attorneys' fees) to which Assignee may become exposed or wbach Assig-.%ee may incur ir. exercnsing any of Assignee's rights under ;hi; Assignment. except where caused by the gross negligence or willful misconduct of Assignee. Agaignor hereby a-,mressly agrees that Assignee shall not be liable for any loss sustained by Assignor resulting from Assignee's exercise of the rights herein assigned to Assignee after default by Assignor, provided, however. that Assignor shall not ttsdet~aify Asugme from and against any and all cla.im3. causes of action, demanda. damage°, liens, liabilities. losses, costs and expenses arising (a) after Assignee has exermsed any of its rights hereos:der, and (b) as a result of Assignee'z action or failure to act pursuant to such rights. 3.5. No Liability. Notwithstanding any provision of the Disposition and Development Agreement to the contrary. A;sigree shall not be personally liable under tie Disposition and Developmeat Agreement, and Assignees liability =der the D position srd Development Agreement for any obligations of Assignor shall be limited to the ownership i_*iterest of Assignee in the Properry. From and after Assignee acquiring title. possession or control of the Property. whether by itself or through a court -appointed receiver, Assignee shell only be Diable for obligations undo: the Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property. 3.6. Ta atjo3k of si t, Upon payment in full of the orinclpal suns, interest and indebtedness secured hereby and by said Note, Deed of Trust ant Loan Agreament, this Assignment shall become void and of nn further force or effect, but the affidavit, certificate, letter or statement of any officer, agent or attorney of Assignee showing arty part of said prinaDaL interest cr indebtedness to remain unpaid shall be and eonatitute: conclusive evidence abaeut a contrary court order of the va'i6ty, effaetiveneas and eon muiug force of this AFslg=eat and any person may, and iz- hereby authorized to, rely thereon. 3.7. Hinding Qblir-Ations Mader This Assignrnont. Thin Asa:grunent, together aritr the covenants and warrantie9 herein contained, shell inure to to the benefit of Amignee. to any lender participating in the Note, and to azxy subsequent holder of saA Note, and stall be binding upon Assignor. its suctesaar9 and assigns. 3.8. eve ill . If any one or more of the provisions contained in th.Ls 4aoignment shall for any reason be held to be invalid, illegal or unenforceable in any respect, each invalidity. MecaLty of unenforceability shall aot affect any other provision of this Assgn=ent, but this 4asigasaent shall be co"trued as if such invalid. -illegal or unenforceable provision had never been contained herein. 3.9. Gov@rn� dishy, This Assignment ahall be governed by and construed according to the laws of the State of California. 3.10. to a s' Les. In the event of any dispute arising out of this Assignment or any action or proceeding to enforce the provisions of this Assignment, the prevailing party in such dispute, action or proceeding shall be entitled to recover from the losing party at- costs and expenses mcarred by the provaili4g pasty in con.ncction tbcrewah, inClutiitg W1tS0::t limitation court costa and reasonable attorneys' fees and expenses. 258607 OC7-01-2223 :1 : 35 212 625 Z931 97% F.05 1e�:29 -CANE, BALLMER & HERKMAN 4 17143755067 .�p�0l�zee� S NU.341 PW6 5.71. Coatinui Eff -tivSnsss of AgsiEnmeaS. This Asst;a=ent. and the respective rights, duttes and obligations of the parties hereto. shall remain in full force and effect regardless of any renew. modifications of the Loan, iacludine without limitation tbLe future inclusion of any ad6ti0oal 'Collateral' (as defined in the Loan Agreement) for the lawn, as expressly provided in the Loan, Documents. Thie Assign=ent shall become effective and be self - operative without the execution of any bother instruinerts with re9pect to each "Lot" (as defined in tho Loan Agreement) described u: Exhibit "A", whether such Lot ie now. or in the future will be. enc tabered by the Deed of '[Mist. anthout env further action by Assignor or Assignee immediately upon the intlusion of such Lot as part of & Collateral for the Laau- [Signatures continued on the Wowing page.} 258607 4 � � P.06 OCT-01-2003 11:36 217 625 0931 9?% - - ---- - - - - - NU. 341 t72'u7 _1d�21i20U3 _12:29 CANEI EALLMER 8 EcRKh' 17143�155067 IN 1A°ITNESS WHEREOF, A89igu0r hae executed this :4aaignment as of the dire first above wnttem PLC Waterfront LLC. a Delaware limitsd liability company, its managing member By: WB IVfPLC Homes. LL.C, a Delaware limited liability company, lte sole member Christopher C. Gibbs. Preaident By. Daniel O'Bannon. Secretary 255607 5 oc;-01-2ee7 11: 3a- 217 625 0931 97;: P.O? 122E3 1U;cy CANE. BA!'_IER & bt_KKMPN � 1-114375tWE • NO.:i41 UWL4 EV The undersigned Agency hereby consents to the transfer and assignment recited in the Ass:gnment to which this Consent :s attached. The undersigned 6areby acknowledges and agrees that Assignor ic, or will become, the owner of the Property and the undersigned consents to the transfer of Property to Assignor. The under§i;ned hereby agrees and acknowledges that upon the Assignee or its successors or assigns giving the understgriad written notice of Assignee'a exercise of its righta under the Assignment, the undersigned vvill recognize and a:torn to Assignee in accordance with the Assignment so long as Assignee complies with the Section 509(b) of the Disposition and Development Agreement, The undersigned further acknowledges and represents that: W The undersigned has not assigned its interest under the Disposition and Development Agreement as it relates to the Property to any other person or entity; (ii) There presently exists no unpaid claims clue to the vaders.igned arising out, of the performance by the uncieraigned relatLag to the Disposition and Development Agreetoeat as it relates to the Property. and (iii) The undersi6ned hag no present claim against or Lien upon the Property arising = out of the undersigned'a performance of any work or service on or relating w the Property. The undersigned hereby consents to the Note, the Deed of Trust and the Loan Agreement and further aclmowjedges and agree3 that the Note, tho Deed of Trust, the Loan Agreement. and any other documents between Assignee and Assignor are solely far the benefit of Assignee and A.ssipor, except as provided in Section 5O8(c) and (d) of the Disposition and Development Agreemant, and the undersigned has no interest in or claim upon any funda advanced thereunder by virtue of its consent to this Assignment. The undersigned further acknowledges and agrees that no material change, modification or amendment to the Disposition and Development Agreement which relates to the Property from and after the date hereof shall be valid without the prior written consent of Assignee, which consent shall not be unreasonably conditioned, withheld or delayed - The undersigned further acicrowledges and agrees that, Notwithstanding any provision of the Disposition an3 Development Agreement to the contrary. Assignee shall not be personally liable under the Disposition and Development Agreemeat for gar obligations of Assignor, and Assignee's liability under the Disposition and Development Agreement ehell be limited to the ownership interest of Assignee in the Property From and after Assignee acquiring title, possession or control of the Property, whether by itself or through a court -appointed receiver. Assignee shall only be liable for obligations under the (The balance of this page is intentiouCy left blank.) 258607 212 625 0331 97 P.QB OC--01-2Oe3 11:37 __ _ •_0. d_��1�E3 10:cy KRNt• �,LLf1ER 8 E�RK+"� a 1714j755087 N0.341 ()09 I lDiapositioe and Development Agreement accruing during the penod of time that Assignee is the owner of the Property. �f I Dated: July 10. 2003 REDEVELOPMENT AGENCY OF THE CITY 4 OF HUNTINGTON REACH I By: Name: Iu ATTESTED- Y.- Name: Title: APPROVED: By GENERAL COUNSEL OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGFON BEACH APPROVED: By: SPECIAL COUNSEL OF THE REDEVELOPMENT AGE.YCY Of THE CITY OF HUIvTINGTON BEACH- RIGHTS OF THE AGENCY PURSUANT OT SECTION 508 OF THE DISPOSITION AND DEVELOPMENT AGIREEMEN7 ARE ACT01OWLEDGED AND AGREED TO. CALIFORN:A BANK & TRUST. a California banking corpoLstion By: its 2s8607 7 OCT-01-2e23 11:37 213 625 0931 97% P.09 WiO,12�.03 Ife:29 KANE. SALLr,�R & EERKMAN i 17143755OW-7 NO.341 D010 EXAIBIT "B" LEGAL. DESCRIPTION THE LALND REFERRED TO HEREIN IS IN THE STATE OF CALIFORNIA. ORANGE COUNTY, AND IS DESCRIBED AS FOLLOWS: LOT ZI OF TRACT NO. 15549. IN THE CITY OF HUI`'rINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORUNIA AS PER MAP FILED N- BOOK 842. PAGES 28 TO 44; INCLUSIVE. OF MISCELLANEOUS MAPS. IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM, AN'Y AND ALL OIL. OIL RIGHTS, PETROLEUM. MINERALS! MINERAL RIGHTS, NATURAL GAS RIGHTS. AND OTHER HYDROCARBON SUBSTANCES BY WHATSOEVER NAME KNOWN, GEOTHERMAL RESOURCES. AND ALL PRODUCTS, DERIVED FROM ANY OF THE FOREGOING. 'THAT MAY BE WITHIN OR UNDER THE LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING. IKINING. EXPLORING,, PROSPECTING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE. SAME FROM THE SITE OR ANY OTHER LAND. INCLUDING THE RIGh'-T TO WHIPSTOCK OR DIRECTIOI`A.LLY DRILL AND MINE FROM LANDS OTHER THAN THOSE DESCRIBED HEREIN, OIL OR GAS WELLS, TU-NNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE SITE, AND TO BOTTOM SUCH WHLPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF. AND TO REDRILI., RET'J-N-NEL, EQUIP. MAiN"CAIN. REPAIR, DEEPEN AND OPERATE ANY SUCH %'ELLS OR MINES; WITHOUT, HOWEVER THE RIGHT TO ENTER, DRILL, MINE. STORE. EXPLORE OR OPERATE ON OR THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE SITE, AS EXCEPTED AND RESERVED BY THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, IN A DEED RECORDED APRIL 18. 2001 AS II TI UMENT NO. 2001-0232 r 74 OF OFFICIAL RECORDS. Aseessor's Parcel No: 024-05M1. D24-253.02 AND 024-253-03 PARCEL $: TEM?ORA.AY CONSTRUCTION EASEMENTS OVER LOT BB OF TRACT 15549 AS DELINEATED iv THAT CERTAIN DOCUMENT ENTITLED "TEMPORARY CONSTRUCTION EASEMENT" RECORDED TUNE 12. Z003. AS INSTRUMENT NO. 2003DO0690324 OF OFF ECLAL RECORDS. SAID EASEMENT IN TEMPORARY IN NATURE AND IS SUBJECT TO THE TERM. CONDITIONS AND LIMITA?IONS CONTAiti-ED THEREIN. PARCEL C: WAIL AND LANDSCAPE EASEMENTS AS DELINEATED IN THAT CERTAIN -WALL ND LANDSCAPE EASEMENT AND MAINTENANCE AGREEMENT" JUNE 12. 2003, AS INSTRUMENT NO. 2W3004690325 OF OFFICIAL RECORDS. 259607 z 213 625 0931 5�% P.10 GC �-ai-202�_ 11 � 37 __ f_ 9 C B CALIFORNIA BANK 7a1.'S* TRus-i ASSIGNMENT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT THIS ASSIGNMENT OF RIGHTS, BENEFITS AND INTERESTS UNDER DISPOSITION AND DEVELOPMENT AGREEMENT Assignment") is made as of June Z 2003, by PI.C/LYON WATERFRONT RESIDENTIAL LLC. a Delaware limited liability company ('Assignor"). to CALIFORNIA BANK & TRUST. a California banking corporation ('Assignee") - RECITALS A- Assignor is justly indebted to Assignee for money actually loaned or to be loaned and advanced to Assignor under a Construction Loan Promissory Dote of even date herewith. in the sum of Twelve Million Dollars (512.000.000.00) ("Note') executed by Assignor and payable and delivered to Assignee herein. according to the terms set out in the Note All the terms, provisions. conditions. covenants. stipulations and agreements contained in that Note are hereby made a part of this Assignment to the same extent and with the same and like force and effect as if they were fully set forth herein- Unless otherwise defined herein. capitalized terms shall have the same meanings as set forth in the Loan Agreement (Land Acquisition Loan) by and between Assignor and Assignee dated as of the date hereof ('Loan Agreement-) B The Note is executed in connection with the Loan Agreement and is secured by a Deed of Trust. Assignment of Leases and Security Agreement ("Deed of Trust') in favor of Assignee covering certain real property located in Orange County. California more particularly described in Exhibit "A" attached to each Deed of Trus_4 ('Property"). including all on -site and off -site improvements (collectively "Project") to be constructed thereon. C Assignee requires as a condition to making the loan to Assignor evidenced by the Note that Assignor assign to Assignee all of Assignor's rights. benefits. title and interests in and to that certain Amended and Restated Disposition and Development Agreement dated as of September 14. 1998 and recorded November 16. 1998. executed by Mayer Financial Ltd ("Mayer") (and assigned to Assignor) and RedeveIopment Agency of the City of Huntington Beach (Agency') with respect to the Property andlor the Project. as amended by that certain First Implementation Agreement to Amended arid Restated Disposition and Development Agreement dazed as of May 15. 2000 by and between Agency and Mayer. and as amended further by that certain Second irnplernentation Agreement to .Amended and Restated Disposition and Development Agreement dated as of hebruar} S. 2001 by and between Agency and Maier. together with any and all existing and future amendments, modifications. implementation agreements. supplements and addenda thereto (collectively "Disposition and Development Agreement") in connection with the construction of the Project and related improvements on the Property_ Assignor is willing to enter into this Assignment to effectuate the foregoing assignment so as to induce Assignee to make the above - described loan to Assignor TE&NJS AND CONDITIONS NOW THEREFORE. FOR GOOD AND VALUABLE CONSIDERATION. the receipt whereof is hereby acknowledged 252193 • 0 1. ASSIGNMENT OF DISPOSITION AND DEVELOPMENT AGREEMENT. 1.1. Assignment Clause Assignor hereby assigns, transfers and conveys to Assignee all of Assignor's right. title and interest in and to the Disposition and Development Agreement, and hereby creates in favor of Lender a security interest in the Disposition and Development Agreement under the California Uniform Commercial Code- 1.2. Amignee as _ Attorney -in -Fact for Assignor. Assignor hereby irrevocably appoints Assignee as its attorney in fact with full power of substitution and authority, which appointment is coupled with an interest. to receive, demand. exercise and enforce any and all of Assignor's rights with respect to the Disposition and Development Agreement and to perform any and all acts in the name of Assignor or at the option of Assignee. in the name of Assignee with the same force and effect as if performed by Assignor in the absence of this Assignment- 2. PURPOSEOF ASSIGNMENT. This Assignment is made for the purposes of securing: 2.1. dote Payments. Payment of the principal sum. interest and indebtedness evidenced by the Note 2.2. Payment of Other _Suits. Payment of all other sums with interest thereon becoming due and payable to Assignee under the provisions of this Assignment or of the Note, the Deed of Trust. or the Loan Agreement- 2.3. Performance of Other Obligations. The performance and discharge of each and every obligation, covenant and agreement of Assignor contained herein or in the tiote. [he Deed of Trust. the Loan Agreement or any other document or instrument executed by Assignor in connection therewith. 3. GENERAL PROVISIONS. This Assignment is made on the following terms, covenants and conditions 3.1. No D fault. So long as no 'Event of Default" (as defined in the Loan Agreement. Note andlor Deed of Trust) has occurred. Assignor shall have the right to enjoy all of the rights arising out of the Disposition and Development Agreement 3.2. Event of _Default. Upon or at any time after an Event of Default has occurred. Assignee shall have the right to enforce Assignor's rights and interest with respect to the Disposition and Development Agreement_ Upon the occurrence of any Event of Default by Assignor. Assignee may, without affecting any of Assignee's rights and remedies against Assignor under any other instrument. document or agreement, exercise Assignee's rights under this Assignment as Assignor's attorney in fact or in any other manner permitted by law_ In addition. Assignee shall have and possess. without limitation. any and all rights and remedies of a secured party under the California Uniform Commercial Code or as otherwise provided by law 3.3. Assi$no6—Representa-Dons and Warranties. Assignor hereby represents and warrants to Assignee that: 3.3.1. No Prior Assignment. No previous assignment of Assignor's interest in and to or rights under the Disposition and Development Agreement has been made. 3.3.2. rm nce Under the Disposition me All covenants. agreements and conditions required to be performed or occur under the Disposition and Development Agreement as of the date hereof by Assignor have been performed or occurred 252193 3.3.3. No Modification r i i n and Devglopment Agreement. Assignor agrees not to materially amend, assign. sell, pledge or otherwise transfer or encumber in any manner Assignor's interest in or rights under and to the Disposition and Development Agreement without the prior written consent of Assignee so long as this Assignment remains in effect. 3.4. Indemnification 44 _Assignee. Assignor hereby agrees to protect. indemnify, defend and hold Assignee free and harmless from and against any and all claims, causes of action. demands. damages, liens, liabilities. losses, costs and expenses (including reasonable attorneys' fees) to which Assignee may become exposed or which Assignee may incur in exercising any of Assignee's rights under this Assignment, except where caused by the gross negligence or willful misconduct of Assignee_ Assignor hereby expressly agrees that Assignee shall not be liable for any loss sustained by Assignor resulting from Assignee's exercise of the rights herein assigned to Assignee after default by Assignor. provided, however, that Assignor shall not indemnify Assignee from and against any and all claims. causes of action. demands, damages. liens. liabilities. losses. costs and expenses arising (a) after Assignee has exercised any of its rights hereunder. and (b) as a result of Assignee's action or failure to act pursuant to such rights. 3.5. No LiabilUx- Notwithstanding any provision of the Disposition and Development Agreement to the contrary. Assignee shall not be personally liable under the Disposition and Development Agreement. and Assignee's liability under the Disposition and Development Agreement for any obligations of Assignor shall be limited to the ownership interest of Assignee in the Property - From and after Assignee acquiring title. possession or control of the Property, whether by itself or through a court -appointed receiver. Assignee shall only be liable for obligations under the Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property- 3.6. Termination of Assignment. Upon payment in full of the principal sum. interest and indebtedness secured hereby and by said Note. Deed of Trust and Loan Agreement. this Assignment shall become void and of no further force or effect. but the affidavit, certificate. letter or statement of any officer. agent or attorney of Assignee showing any part of said principal. interest or indebtedness to remain unpaid shall be and constitute conclusive evidence absent a contrary court order of the validity. effectiveness and continuing force of this Assignment and any person may. and is hereby authorized to, rely thereon 3.7. Binding Obligations Under This Assignment. This Assignment. together with the covenants and warranties herein contained, shall inure to the benefit of Assignee, to any lender participating in the Note. and to any subsequent holder of said Note. and shall be binding upon Assignor. its successors and assigns. 3.S Severability. If any one or more of the provisions contained in this Assignment shall for any reason be held to be invalid. illegal or unenforceable in any respect. such invalidity. illegality or unenforceability shall not affect any other provision of this Assignment. but this Assignment shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein 3.9. Governing Law. This Assignment shall be governed by and construed according to the laws of the State of California_ 3.10. Attorn-eys' Felts• In the event of any dispute arising out of this Assignment or any action or proceeding to enforce the provisions of this Assignment. the prevailing party in such dispute, action or proceeding shall be entitled to recover from the losing party all costs and expenses 252193 3 0 0 incurred by the prevailing party in connection therewith. including without limitation court costs and reasonable attorneys fees and expenses written. IN WITNESS WHEREOF. Assignor has executed this Assignment as of the date first above PLCILYON WATERFRONT RESIDENTIAL L.L.C. a Delaware limited liability company Bc PLC Waterfront L.L.C. a Delaware limited liability company. its managing member By WB IV/PLC Homes. LLC. a Delaware limited liability company. its sole member By - By: 252193 4 Christopher C. Gibbs, President Daniel O'Bannon. Secretary • The undersigned Agency hereby consents to the transfer and assignment recited in the Assignment to which this Consent is attached. The undersigned hereby agrees and acknowledges that upon the Assignee or its successors or assigns giving the undersigned w-ritten notice of Assignee's exercise of its rights under the Assignment. the undersigned will recognize and attorn to ,'Assignee in accorci<�ance with the Assignment so lung as Assignee complies with the Section 508(b) of the Disposition and Development Agreement_ The undersigned further acknowledges and represents that M The undersigned has riot assigned its interest under the Disposition and Development Agreement as it relates to the Property to any other person or entity: 00 There presently exists no unpaid claims due to the undersigned arising out of the performance by the undersigned relating to the Disposition and Development .Agreement as it relates to the Property, and (iii) The undersigned has no present claim against or lien upon the Property arising out of the undersigned's performance of any work or service on or relating to the Property The undersigned further ackno%%Iedges and agrees that the mote. the. Deed of Trust. the Loan Agreement. and any other dOCL1men15 between Assignee and Assignor are solely for the benefit of Assignee and Assignor. except as provided in Section 508(c) and (d) of the Disposition and Development Agreement. and the undersigned has no interest in or claim upon any funds advanced thereunder by virtue of its consent to this Assignment The undersigned further acknowledges and agrt-es that no material change, mWifrcation or amendment to the Disposition and Development Agreement which relaWs to the Property from and after the date hereof shall be valid without the prior written consent of Assignee, which consent shall not he unreasonably conditioned. withheld or delaved_ 'he undersigned further acknowledges and agrees that. notwithstanding any ptovision of the Disposition and Development Agreement to the contrary. Assignee shall riot be personally liable under the Disposition and Development Agreement for any obligations of Assignor, and Assignee's liability under the Disposition and Development Agreement shall Ix? limited to the ownership interest of Assignee in the Property. From and after Assignee acquiring title. possession or control of the Property, whether- by itself or through a court -appointed receiver. Assignee shall only be liable for obligations under the [The balance of this page is intentionally left blank_[ 252193 C� E Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property. Dated- June 1D. 2003 REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By: Aw c Name: -David C. BiggS Its:T)Ppjit-y Executive Director APPROVED- 1�yl ENERAL COUNSEL OF THE EVELOPMENT (J//01j AGENCY OF THE CITY OF HU INGTON BEACH APPROVED: By See Attached Counterpart. SPECIAL COUNSEL OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH RIGHTS OF THE AGENCY PURSUANT OT SECTION 508 OF THE DISPOSITION AND DEVELOPMENT AGREEMENT ARE ACKNOWLEDGED AND AGREED TO: CALIFORNIA BANK & TRUST. a California banking corporation By: its 252193 6 Disposition and Development Agreement accruing during the period of time that Assignee is the owner of the Property_ Dated: June— 2003 ATTESTED: By: _ Name- Title APPROVED REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH By:_ Name Its. By: _.� GENERAL. COUNSEL OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVED: By k^ SPECIAL) OUNSEI_ OF AGENCY F THE; CITY, REDEVELOPMENT HUNTINGTON BEACH RIGHTS OF THE AGENCY PURSUANT OT SECTION 508 OF THE DISPOSITION AND DEVELOPMENT AGREE -ME 7 ARE ACKNOWLEDGED AND AGREED TO: CALIFORNIA BANK & TRUST. a California banking corporation By. its 252193 6